Legislature(2009 - 2010)
2009-04-01 Senate Journal
Full Journal pdf2009-04-01 Senate Journal Page 0726 SB 178 SENATE BILL NO. 178 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: 2009-04-01 Senate Journal Page 0727 "An Act relating to contributions, interest, penalties, and payments under the Alaska Employment Security Act; and providing for an effective date." was read the first time and referred to the Labor and Commerce and Judiciary Committees. The following fiscal information was published today: Fiscal Note No. 1, zero, Department of Labor and Workforce Development Governor's transmittal letter dated March 31: Dear President Stevens: Under the authority of article III, section 18, of the Alaska Constitution, I am transmitting a bill relating to contributions, interest, penalties, and payments under the Alaska Employment Security Act. Under current law, most employers are required to pay employment security contributions quarterly based on their payroll and experience rate. However, under AS 23.20.277 and AS 23.20.278, nonprofit organizations and governmental entities can elect to be classified as "reimbursable employers." A "reimbursable employer" only pays employment security contributions when an employee of the reimbursable employer receives unemployment compensation benefits. The "reimbursable employer" reimburses the unemployment compensation fund for the amount that the fund paid in unemployment benefits to the employee. This bill would amend AS 23.20.277 and AS 23.20.278 to extend to federally recognized tribes and their subdivisions, subsidiaries, and businesses the option to choose to become a reimbursable employer. The bill does not change the jurisdictional relationship between the state and federally recognized tribes. This bill is being proposed to bring the state into compliance with federal unemployment compensation law and its treatment of federally recognized tribes. The Federal Unemployment Tax Act (26 U.S.C. 3306, FUTA) now directs certified state unemployment insurance 2009-04-01 Senate Journal Page 0728 programs to offer federally recognized tribes the option to become a reimbursable employer. Of the 33 states that have federally recognized tribes, Alaska is the only state that has not yet passed conforming legislation. As the state unemployment insurance program is federally certified, the state receives federal money to support the administration of the program. Because the state has a certified program, employers in the state are eligible for a tax credit of up to 90 percent of the federal unemployment tax that employers are required to pay. To maintain its certification, the state must amend the Alaska Employment Security Act to be consistent with FUTA's requirements for federally recognized tribes. Failure to bring the Alaska Employment Security Act into compliance with federal legislation may result in the loss of approximately $20,000,000 in administrative funding under FUTA. Noncompliance could also result in the loss of approximately $111,000,000 in FUTA tax credits to employers in this state. This bill has an immediate effective date. I urge your support of this important legislation. Sincerely, /s/ Sarah Palin Governor