Legislature(2019 - 2020)BUTROVICH 205
03/26/2019 01:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SJR6 | |
| SJR4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SJR 6 | TELECONFERENCED | |
| *+ | SJR 4 | TELECONFERENCED | |
| + | TELECONFERENCED |
SJR 4-CONST. AM: STATE TAX; INTIATIVE
3:35:46 PM
CHAIR SHOWER reconvened the meeting and announced the
consideration of SENATE JOINT RESOLUTION NO. 4, Proposing
amendments to the Constitution of the State of Alaska
prohibiting the establishment of, or increase to, a state tax
without the approval of the voters of the state; and relating to
the initiative process.
3:36:09 PM
MIKE BARNHILL, Policy Director, Office of Management and Budget,
Office of the Governor, Juneau, introduced himself.
3:36:15 PM
BILL MILKS, Assistant Attorney General, Civil Division, Labor
and State Affairs Section, Department of Law, Juneau, introduced
himself.
MR. BARNHILL explained that SJR 4 amends art. IX, sec. 1,
Constitution of the State of Alaska to require a vote of the
people on any new state tax or increase to an existing state tax
that the legislature enacts. Conversely, any new state revenue
or increase to an existing state revenue that the people pass
through the initiative process would require approval from the
legislature. This legislation is patterned after the Colorado
taxpayer bill of rights which has a provision that requires a
vote of the people for any new or increased state or local
revenue. He highlighted that two other states have similarly
amended their state constitutions. Missouri requires a vote of
the people if a new state tax increases revenue by more than $50
million; and Washington State requires a three-fifths vote of
the people for local property taxing jurisdictions to increase
property taxes in excess of one percent of the property value.
MR. BARNHILL related that Governor Dunleavy strongly believes
that the people should have a say in matters relating to new
revenues, increasing revenues, and the permanent fund dividend.
He said that Alaska's constitution already has direct democracy
measures through referendum and initiative and SJR 4 brings
those together more closely.
3:39:42 PM
MR. MILKS presented a sectional analysis for SJR 4, speaking to
the following prepared document:
Section 1: This section would add two new subsections
to the tax clause of the Alaska Constitution. Taken
together, the two subsections would require that any
new state tax or increase to the rate of an existing
state tax be approved by both the legislature and the
voters.
Subsection (b) would require that any law enacted
through the legislative process that would establish a
new state tax or increase the rate of an existing
state tax shall not take effect unless the voters
approve the proposed law in the next statewide
election. If the voters approve the proposed law, it
would take effect 90 days after the election was
certified.
Subsection (c) would require that any law proposed for
enactment through the initiative process and approved
by the voters that would establish a new state tax or
increase the rate of an existing state tax shall not
take effect unless the legislature, by resolution,
approved the initiated measure by the end of the next
regular session. The legislature would have to approve
it by majority vote in a joint session. If the
legislature approved of the initiated measure, it
would take effect 90 days after the legislature's
approval.
Section 2: This section would make a conforming change
to the initiative process in Section 6 of Article XI,
providing an exception to the effective date
requirements for initiatives.
Section 3: This section would require that this
amendment be placed on the ballot in the 2020 general
election.
3:42:34 PM
CHAIR SHOWER asked if there were questions.
3:42:55 PM
SENATOR REINBOLD observed that SJR 4 is far broader than she
realized. She asked if it would apply to new or existing taxes
on income, fish, alcohol, oil, education, or designated general
funds since some view the latter as fees. She noted that some
people think that it's a tax on children who don't directly
receive their PFDs.
MR. MILKS said there is a distinction between taxes and fees.
The resolution would amend art. IX, sec. 1, relating to taxing
power. It does not amend art. IX, sec. 7, relating to dedicated
funds and including licensing fees.
SENATOR REINBOLD responded, "Just to verify. We can't increase
taxes on fish, alcohol, education - nothing basically. ...It
sounds like we can't do taxes on virtually anything or some
people would say increase fees."
MR. MILKS clarified that the resolution is not intended to apply
to licensing fees.
3:46:30 PM
MR. BARNHILL agreed with Mr. Milks that there is a distinction
between taxes and fees. He said the intent in SJR 4 is that it
would require a vote of the people for the legislature to
initiate any new state tax or increase an existing state tax. He
added, "For user fees, license fees, fees that we frequently
consider as designated general fund - those would fall outside
of the definition of tax for purposes of the constitution and
would not be subject to going to a vote of the people."
SENATOR REINBOLD observed that this creates a loophole because
things now identified as a tax could be re-designated as a fee.
MR. BARNHILL said the administration would be happy to draft the
legislation to close any loopholes that are identified. He
opined that constitutional amendments always try to strike a
balance between language that is too restrictive and language
that is too general. He reiterated agreement with Mr. Milks that
taxes would be subject to a vote of the people but fees would
not.
MR. MILKS said the Alaska Supreme Court sometimes looks at what
the dictionary said about key terms when the constitution was
framed. He read the following from a 1955 dictionary: "A tax is
a charge laid by government upon persons or property for public
purposes." He said that is key; a tax on the sale of alcohol
would be a tax but what the bar pays to hold a license would be
a licensing fee. He said that is the intent of the resolution
but he agrees with Mr. Barnhill that suggestions to improve the
language were welcome.
3:49:23 PM
SENATOR COGHILL listed various taxes in the statutes and
highlighted that there are two pages of exemptions. He asked,
should the resolution pass, if any modification to an exemption
would require a vote of the people.
MR. MILKS restated that SJR 4 addresses establishing a new state
tax and increasing an existing state tax, both of which would
require a vote of the people. He also summarized the similar
provisions that amended the Colorado and California
constitutions.
3:51:04 PM
SENATOR COGHILL suggested that before passing SJR 4, the
committee might want to review all the tax exemptions or place
clarifying sideboards. He mentioned excise taxes, fish landing
taxes, and unemployment insurance and said he agrees with
Senator Reinbold that the application could be very broad. He
suggested that it may be difficult to make the case that
something is a fee but the tipping point may be the public fee
for individual use versus the public fee that is broad-based
use. He reiterated that dealing with the exemptions embedded in
the law would be a real conundrum.
MR. BARNHILL advised that he and Mr. Milks would get back to the
committee after they review the Colorado Supreme Court cases
relating to increasing a tax rate and whether that includes just
the increase to the rate in statute or whether it also includes
an indirect increase through changing an exemption.
SENATOR COGHILL said he likes the idea of a low broad-based tax
because it applies to everybody and generally affects the state
positively. He noted that if Colorado isn't part of the United
States Court of Appeals for the Ninth Circuit, it doesn't matter
what that state did.
3:54:18 PM
MR. MILKS clarified that the Colorado Supreme Court would be the
definitive interpreter of the Colorado State Constitution.
SENATOR COGHILL said it could be a conundrum if the legislature
decided to tax income from other states.
MR. BARNHILL said an Alaskan court would look at cases decided
by the Colorado Supreme Court as persuasive but not binding.
CHAIR SHOWER summarized that an Alaska court could look at and
potentially use the information from the Colorado court even
though that state is not under the jurisdiction of the Ninth
Circuit.
MR. MILKS opined that the Alaska court would look at the intent
of the legislature and how the proposal was communicated to the
voters before it looked at other states.
SENATOR MICCICHE talked about the recent ballot measure to
tighten protections for fish habitat from development and noted
that the warring bumper stickers inaccurately reduced what was
an intricate issue to either you like fish or you hate fish. He
said despite the fact that legislators will sit through hours of
meetings to learn the details of SJR 4, it, too, could be
reduced to warring bumper stickers that ask if you want to pay
more money or not. He said he struggles with SJR 4 because
conservative districts like his will be ceding their vote to
districts like Anchorage and Southeast that are much more likely
to support a broad-based tax. He questioned how carefully
considered policy can result from what comes down to a bumper
sticker war.
MR. BARNHILL responded, "The important thing here is that we're
combining the best of representational democracy, which really
does resist the sound bite - the bumper sticker, with direct
democracy." This involves the legislative process and it
consults the people. He opined that policy makers are
responsible for resisting the sound bite or bumper sticker and
having substantive discussion with the people of Alaska to
convey the reasons that this is important.
MR. MILKS added that the framers of the constitution decided
they wanted the people to have a role through the initiative and
referendum processes.
SENATOR MICCICHE said he supports the right of the people to
have a role in government through the initiative and referendum
processes but he wonders how far a representative government
should go and still be fruitful in answering to the people.
MR. BARNHILL responded that a tension exists now between direct
democracy and representational democracy. The substantive public
discussion in the referendum over Senate Bill 21 relating to
progressivity and oil production tax is evidence of that. He
said he believes that sort of high level discussion can occur in
this context, but he also believes that if the legislature were
to pass a broad-based income or sales tax, it's inevitable that
a group of stakeholders would seek a referendum on that. This
tightens the relationship between the roles of the legislature
and the people, he said.
4:03:53 PM
SENATOR REINBOLD said the idea of no new taxes without a vote of
the people sounds like a generally good idea because the
constitution calls for government established by the will of the
people. However, the people vote for legislators to go to Juneau
for 90 days to dig deep into issues. She said part of the reason
she wants to support SJR 4 is because of how abusive the federal
income tax has become, but it's not clear what the overall
impact will be. "I don't know if this is going to impact bonds.
Are bonds technically a tax? Can we really vote to bond
ourselves into taxes? Is that basically where we're going?" She
further questioned whether this was intended to limit the size
and scope of government. She predicted a massive boom in the
state if SJR 6 and SJR 4 were to pass.
MR. BARNHILL responded that the two resolutions combined will
have an impact similar to what happened in 1992 when the voters
passed the Colorado taxpayer bill of rights. The intent was to
restrain the growth of government spending and to require
consultation with the people when enacting new taxes. He said
Colorado has thrived economically since that legislation passed.
SENATOR COGHILL asked how this interacts with art. IX, sec. 11,
Constitution of the State of Alaska relating to the exemptions
for bonding.
MR. MILKS pointed out that the proposed legislation is about
taxes, not bonding. He said bonding is about borrowing money and
the constitution places certain restrictions on borrowing.
SENATOR COGHILL suggested he think about whether special
assessments would be a tax. He also asked the reasoning for the
statewide election to be held more than 120 days after
enactment.
4:09:35 PM
MR. BARNHILL said he didn't know the intention or the reason
that it was different than for referendums, which is 180 days
after adjournment.
SENATOR COGHILL suggested the committee think of that as a
timeframe issue.
MR. MILKS offered to follow up with the information.
4:10:18 PM
CHAIR SHOWER stated that he would hold SJR 4 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SSTA OFFICIAL AGENDA MEMO.pdf |
SSTA 3/26/2019 1:30:00 PM |
agenda |
| SJR 6 Sponsor Statement.pdf |
SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR006A.PDF |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Slide Show Presentation & Analysis.pdf |
SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 ver A Sectional 3.21.19.pdf |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Fiscal Note.PDF |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Additional Slides.pdf |
SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| 3.25.2019 - SJR6 Responses.pdf |
SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Various Written testimonies.pdf |
SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| 03.27.2019 - SJR6 MORE Responses to SSTA.pdf |
SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 4 Transmittal Letter.pdf |
SJUD 4/15/2019 1:30:00 PM SJUD 4/22/2019 6:00:00 PM SSTA 3/26/2019 1:30:00 PM SSTA 3/27/2019 6:00:00 PM SSTA 3/28/2019 3:30:00 PM |
SJR 4 |
| SJR 4 version A.pdf |
SJUD 4/22/2019 6:00:00 PM SSTA 3/26/2019 1:30:00 PM SSTA 3/27/2019 6:00:00 PM SSTA 3/28/2019 3:30:00 PM |
SJR 4 |
| SJR 4 Sectional Analysis.pdf |
SJUD 4/22/2019 6:00:00 PM SSTA 3/26/2019 1:30:00 PM SSTA 3/27/2019 6:00:00 PM SSTA 3/28/2019 3:30:00 PM |
SJR 4 |
| SJR 4 Fiscal Note GOV-DOE.pdf |
SJUD 4/15/2019 1:30:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 4 |
| SJR 4 Fiscal Note - DLWD.pdf |
SJUD 4/15/2019 1:30:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 4 |
| Senate State Affairs - SJR 6 Written Testimony uploaded (04-05-19).pdf |
SSTA 3/26/2019 1:30:00 PM |
SJR 6 |