Legislature(2015 - 2016)HOUSE FINANCE 519

04/14/2016 05:00 PM FINANCE


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05:03:12 PM Start
05:04:51 PM HB245 || HB250
05:04:51 PM Public Testomony: Hb 245 and Hb 250
07:50:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time --
+= HB 245 PERM. FUND:DEPOSITS;DIVIDEND;EARNINGS TELECONFERENCED
-- Public Testimony Limited to 2 min. each --
+= HB 250 INDIV. INCOME TAX: CREDITS; RETURNS TELECONFERENCED
-- Public Testimony Limited to 2 min. each --
- Call in or arrive at your LIO by 7:30 pm or
testimony will close early
- Please call 465-4648 to obtain the call-in
phone number
- Written testimony may be submitted to the
House Finance Committee via email to
lhscfin@akleg.gov
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 245                                                                                                            
                                                                                                                                
     "An  Act   relating  to   the  Alaska  permanent   fund;                                                                   
     relating  to   appropriations  to  the   dividend  fund;                                                                   
     relating  to  income  of   the  Alaska  permanent  fund;                                                                   
     relating  to the earnings  reserve account;  relating to                                                                   
     the Alaska  permanent fund  dividend; making  conforming                                                                   
     amendments; and providing for an effective date."                                                                          
                                                                                                                                
HOUSE BILL NO. 250                                                                                                            
                                                                                                                                
     "An  Act   relating  to   the  taxation  of   income  of                                                                   
     individuals; repealing  tax credits applied  against the                                                                   
     tax  on individuals  under  the  Alaska Net  Income  Tax                                                                   
     Act; and providing for an effective date."                                                                                 
                                                                                                                                
^PUBLIC TESTOMONY: HB 245 and HB 250                                                                                          
                                                                                                                                
5:04:51 PM                                                                                                                    
                                                                                                                                
DAVID   LANDRY,   SELF,   ANCHORAGE   (via   teleconference),                                                                   
supported a  personal income tax.  He felt that to  solve the                                                                   
problem there would  actually have to be a  higher income tax                                                                   
than proposed  which would be  more equitable and  better for                                                                   
rural  Alaska. He  described  his work  experience  reporting                                                                   
that  over the  last 18  months he  had clients  come to  him                                                                   
with plans and  then decided to defer. Uncertainty  was a big                                                                   
issue for  contractors.  He suggested getting  an income  tax                                                                   
on the books as soon as possible for more predictability.                                                                       
                                                                                                                                
5:07:29 PM                                                                                                                    
                                                                                                                                
DAVID  MORGAN, SELF,  ANCHORAGE (via  teleconference),  was a                                                                   
member  of  Common  Wealth  North   and  was  a  professional                                                                   
economist.  He  was  currently   looking  at  Gunnar  Knapp's                                                                   
report and  referenced page 32.  He noted that an  income tax                                                                   
would  result  in  a  higher loss  of  jobs  by  pulling  out                                                                   
dollars  in  the  aggregate format.  However,  only  half  of                                                                   
Alaskans  paid  federal  income   tax  and  only  25  percent                                                                   
itemize their taxes.  He disagreed with the  fairness concept                                                                   
of an  income tax.  He also  thought using  savings from  the                                                                   
Permanent   Fund  (PF)   would   be  necessary   along   with                                                                   
conducting further studies. He thanked the committee.                                                                           
                                                                                                                                
5:09:40 PM                                                                                                                    
                                                                                                                                
GARY   HUTCHISON,  SELF,   FAIRBANKS  (via   teleconference),                                                                   
supported HB 245.  He thought an income tax  was important to                                                                   
consider  but did not  believe the  legislature should  hurry                                                                   
to implement  it. He thought  a tax needed  to be  applied in                                                                   
conjunction  with  managing  the  State  of  Alaska's  Public                                                                   
Employment Retirement  System (PERS) liability.  If the state                                                                   
was going  to remove  money from the  economy with  an income                                                                   
tax  he thought  it was  necessary for  the state  to have  a                                                                   
tool  for management  of its  PERS  and Teacher's  Retirement                                                                   
System (TRS) unfunded liabilities.                                                                                              
                                                                                                                                
5:11:38 PM                                                                                                                    
                                                                                                                                
GEORGE PIERCE, SELF,  KASILOF   (via  teleconference),  urged                                                                   
the state not  to take his Permanent Fund Dividend  (PFD). He                                                                   
supported  cutting tax  credits  and thought  the state  gave                                                                   
everything  to the  oil companies.  He wanted  the people  of                                                                   
Alaska to  be able to  vote on whether  the state  should use                                                                   
their  PFD. He thought  it was  time for  the legislature  to                                                                   
impose an income  tax and other taxes. He suggested  that the                                                                   
legislature needed fixing. He spoke against major projects.                                                                     
                                                                                                                                
Vice-Chair  Saddler  indicated  that  Representative  Gattis,                                                                   
Representative  Munoz, and Representative  Edgmon had  joined                                                                   
the meeting.                                                                                                                    
                                                                                                                                
5:13:59 PM                                                                                                                    
                                                                                                                                
TAM  AGOSTI-GISLER,  SELF,  ANCHORAGE  (via  teleconference),                                                                   
spoke  in  favor  of  the  Percent  of  Market  Value  (POMV)                                                                   
approach regarding  the PF and  supported an income  tax. She                                                                   
asked  the legislature  not to  balance  the budget  strictly                                                                   
with cuts.                                                                                                                      
                                                                                                                                
Vice-Chair  Saddler   relayed  that  Co-Chair   Thompson  had                                                                   
joined the meeting.                                                                                                             
                                                                                                                                
5:15:20 PM                                                                                                                    
                                                                                                                                
ED MARTIN, SELF,  COOPER LANDING (via teleconference),  spoke                                                                   
of  a  YouTube   video  in  which  five   previous  governors                                                                   
discussed taxes.  He spoke against a personal  income tax. He                                                                   
thought  it  was  unfair.  He did  not  feel  like  Alaskan's                                                                   
should  be  taxed  on  their   PFD.  He  suggested  that  the                                                                   
legislature needed  to cut more and reduce  spending. He felt                                                                   
that both the  governor and the legislature  needed to create                                                                   
new  wealth from  Alaska's resource.  He recommended  selling                                                                   
some  of  the   state's  land.  He  urged  the   use  of  the                                                                   
Constitutional Budget Reserve (CBR).                                                                                            
                                                                                                                                
5:18:48 PM                                                                                                                    
                                                                                                                                
TOMAS BOUTIN,  SELF, JUNEAU, opposed  a personal  income tax.                                                                   
He spoke  of producing less of  what the state  consumed than                                                                   
any other state.  He opined that the state  could not support                                                                   
itself  with  oil  by  taxing  each  other.  He  thought  the                                                                   
state's  options  were  to  increase   production  or  reduce                                                                   
consumption.  State government was  a measure of  consumption                                                                   
rather than production.  He reported that fewer  than half of                                                                   
Alaskans  paid  a  federal income  tax.  Therefore,  a  state                                                                   
income tax  would tax a minority  of Alaskans and  only those                                                                   
who worked.  He opined that  taxing workers and  job creators                                                                   
set up an adverse  selection: the people who  would be likely                                                                   
to  leave.  He  mentioned  the $11  billion  debt  the  state                                                                   
currently  had. He  thought an  income  tax would  exacerbate                                                                   
the state's problems.                                                                                                           
                                                                                                                                
5:21:47 PM                                                                                                                    
                                                                                                                                
RON  FUHRER, NEA  ALASKA,  JUNEAU, supported  HB  245 and  HB                                                                   
250. He wondered  what future would be left  for Alaskans and                                                                   
their  children. He  thought  the deficit  was  too large  to                                                                   
address  without  restructuring how  the  state  used the  PF                                                                   
earnings.  He thought  a sustainable  draw  was necessary  to                                                                   
preserve  the dividend  for future  generations  and to  help                                                                   
pay for essential  services such as public safety  and public                                                                   
education. He supported  passing a broad-based  tax and urged                                                                   
members to pass a long-term fiscal plan.                                                                                        
                                                                                                                                
5:23:39 PM                                                                                                                    
                                                                                                                                
BEV HOFFMAN,  SELF, BETHEL (via teleconference),  supported a                                                                   
personal  income tax  and  opposed tax  credits  for oil  and                                                                   
mining  companies.  She  relayed some  labor  statistics  for                                                                   
2014. Reports documented  an increase in resident  wages of 4                                                                   
percent  to $13.9  billion.  Non-resident  wages increased  7                                                                   
percent  to 2.6  billion. The  total wages  for 2014  equaled                                                                   
$16.5  billion   which  were  going  untaxed.   She  did  not                                                                   
understand why  the deficit was  such a problem. She  did not                                                                   
mind  contributing even  though  she did  not make  a lot  in                                                                   
retirement.   She  counted   on  her   PFD  for  paying   for                                                                   
electricity, heating  fuel, and water. She  supported capping                                                                   
the PFD.  She also suggested an  "opt out" choice  for Alaska                                                                   
residents. She supported  the use of the PF  Earnings Reserve                                                                   
Account  (ERA) with  the caveat  that the  fund continued  to                                                                   
grow.    She  encouraged  members   to  continue  eliminating                                                                   
"fluff" in  the budget.  She urged  members to work  together                                                                   
for all of Alaska.                                                                                                              
                                                                                                                                
Vice-Chair   Saddler   acknowledged   Co-Chair   Neuman   and                                                                   
Representative Pruitt at the table.                                                                                             
                                                                                                                                
5:26:14 PM                                                                                                                    
                                                                                                                                
DENNIS   KNEBEL,   SELF,  ANCHORAGE   (via   teleconference),                                                                   
supported  HB 245. He  urged members  to act expediently  and                                                                   
to work together.  He opined that a sustainable  budget would                                                                   
keep Alaskan's  working. He also  supported action  to extend                                                                   
the life of  the CBR using a  portion of the ERA to  fill the                                                                   
budget gap.  Additional budget reductions and  additional tax                                                                   
measures  would be necessary  to resolve  the state's  fiscal                                                                   
woes. He thanked members for their leadership.                                                                                  
                                                                                                                                
5:27:52 PM                                                                                                                    
                                                                                                                                
CINDY    BETTINE,    BUSINESS    OWNER,   BIG    LAKE    (via                                                                   
teleconference), supported  using the ERA to help  bridge the                                                                   
budget  gap and  added immediate  action  was necessary.  She                                                                   
thought every Alaskan  should contribute. She did  not have a                                                                   
problem  with other options  to raise  revenues, but  dipping                                                                   
into the  ERA was the first  right step. She  appreciated the                                                                   
work done  by legislators  and encouraged  members to  act in                                                                   
the current session.                                                                                                            
                                                                                                                                
5:29:24 PM                                                                                                                    
                                                                                                                                
PATRICIA  FISHER, SELF,  MEADOW  LAKES (via  teleconference),                                                                   
supported  HB 245 and  encouraged members  to take  immediate                                                                   
action  to  address   the  budget  crisis.  She   believed  a                                                                   
comprehensive  approach to  solving the  state's fiscal  woes                                                                   
was absolutely  necessary and included restructuring  the PF,                                                                   
imposing    taxes,    and   further    cutting    unnecessary                                                                   
expenditures.    She   reemphasized    the   need    to   act                                                                   
expeditiously.                                                                                                                  
                                                                                                                                
5:30:34 PM                                                                                                                    
                                                                                                                                
JIM SYKES, SELF,  PALMER (via teleconference),  had not heard                                                                   
whether the budget  gap could be solved without  touching the                                                                   
PFD. He  thought it  was possible.  He encouraged members  to                                                                   
review  the   Institute  of  Social  and   Economic  Research                                                                   
(ISER)'s findings  that it was  less damaging to  the economy                                                                   
to pay the full  PFD and tax it back rather  than to transfer                                                                   
half of  the PFD  directly to  state government. He  believed                                                                   
the  state could  not  afford to  subsidize  oil credits  and                                                                   
carry-forwards with  PFD's. He urged the members  to keep the                                                                   
PFD and  to continue  inflation proofing  the PF. He  thought                                                                   
the POMV  at 5.2 percent was  too high and was  impossible to                                                                   
reach.  He stressed  the importance  of  getting things  done                                                                   
correctly  rather  than  quickly.  He  thought  the  PFD  and                                                                   
inflation  proofing  had  been  the  glue  that  held  things                                                                   
together and  urged the legislature  not to touch  them under                                                                   
any conditions. He thanked members for their hard work.                                                                         
                                                                                                                                
5:32:40 PM                                                                                                                    
                                                                                                                                
FRED STURMAN,  SELF, SOLDOTNA  (via teleconference),  told of                                                                   
two  friends  that  had  lost work.  He  invited  members  to                                                                   
explain to  his friends that  the legislature wanted  to take                                                                   
their  PFD's, impose  an income  tax, initiate  a sales  tax,                                                                   
and  take  other   measures  in  order  to   keep  government                                                                   
employees  in  their  jobs  making   $150  thousand  to  $200                                                                   
thousand.  He continued  that government  had never  produced                                                                   
new  money,  but  rather  spent   it.  He  suggested  several                                                                   
potential  areas  of government  that  could be  reduced.  He                                                                   
reemphasized the need to reduce government.                                                                                     
                                                                                                                                
5:35:07 PM                                                                                                                    
                                                                                                                                
DRUE PEARCE,  SELF, ANCHORAGE,  spoke in  support of  HB 245.                                                                   
She  stated  that the  fiscal  crisis  facing the  state  was                                                                   
dire.  During  the  time  she  served  as  a  legislator  she                                                                   
recalled  making  substantial  budget cuts  when  oil  prices                                                                   
were $9.50  per barrel. However,  at that time the  state did                                                                   
not  face  a  lack  of reserves  as  it  did  currently.  She                                                                   
stressed that  the state could  not afford the  government it                                                                   
had. She commended  the legislature for making  the cuts that                                                                   
it  had. However,  the  problems  the  state faced  was  only                                                                   
partly  due   to  over-spending.  The  committee   substitute                                                                   
represented a major  step in protecting the  state's economic                                                                   
future.  She  supported structured  use  of  the PF  to  help                                                                   
close  the  deficit.  She supported  action  in  the  current                                                                   
session to extend  the life of the CBR by using  a portion of                                                                   
the  ERA to  fill the  budget  hole. She  was an  owner of  a                                                                   
small  Anchorage-based  business   and  was  concerned  about                                                                   
protecting  her investment  and  keeping  her business  doors                                                                   
open. She  stated that support  in the current  session would                                                                   
protect  private sector  jobs  and investment.  She was  sure                                                                   
the  enormity  of  the  budget   gap  was  overwhelming.  She                                                                   
implored the  committee to  act expeditiously, otherwise  the                                                                   
price would be huge.                                                                                                            
                                                                                                                                
5:37:48 PM                                                                                                                    
                                                                                                                                
JOELLE   HALLE,   AFLCIO,   ANCHORAGE,   relayed   that   her                                                                   
organization was  proud to be  participating in  the Alaska's                                                                   
Future  group. She  stated that  the  organization was  fully                                                                   
supportive  of restructuring the  PF to  make sure  the state                                                                   
could pay  for the services it  provided and to  ensure there                                                                   
was a  dividend in  the future.  She stated  that one  of the                                                                   
ways  to  protect  the  dividend   into  the  future  was  to                                                                   
restructure the  fund presently.  The option would  provide a                                                                   
meaningful  contribution  of   about  $1.7  billion  or  $1.8                                                                   
billion to  filling the  state's $4 million  budget gap.   In                                                                   
light  of some  of  the  current conversations  she  surmised                                                                   
that the  most regressive  thing that  the legislature  could                                                                   
do  was nothing.  She implored  members to  take action.  She                                                                   
thanked committee members for their time and service.                                                                           
                                                                                                                                
5:39:44 PM                                                                                                                    
                                                                                                                                
BILL  CORBUS, SELF,  JUNEAU,  relayed that  he  had been  the                                                                   
commissioner  of  the  Department  of Revenue  from  2003  to                                                                   
2006. He  urged the  committee to  support HB  245; it  was a                                                                   
good  compromise and  was an  important  ingredient to  solve                                                                   
the state's fiscal dilemma.                                                                                                     
                                                                                                                                
Vice-Chair  Saddler announced  that  Representative Gara  had                                                                   
joined the meeting.                                                                                                             
                                                                                                                                
5:40:52 PM                                                                                                                    
                                                                                                                                
ELEANOR ANDREWS,  ALASKA'S FUTURE,  JUNEAU, relayed  that she                                                                   
had  been  in  Juneau  over  50  years  and  had  raised  her                                                                   
children  and grandchildren.  She had  been the  commissioner                                                                   
of Department  of Administration  (DOA)  during the crash  in                                                                   
1986.  Following her  employment  with the  state  she was  a                                                                   
very successful  business person. She stated that  Alaska was                                                                   
a place of opportunity,  but if the state did  not act to use                                                                   
part of  the ERA  to fill  the gap and  strategically  plan a                                                                   
sustainable  budget for  the future she  predicted the  state                                                                   
would experience  a similar crash  to that in 1986  and 1987.                                                                   
It had  been her displeasure  to help the governor  sequester                                                                   
50 percent  of the  operating budget.  She reported  that not                                                                   
one city  or village received  a municipal grant. She  had to                                                                   
meet with vendors  to get them to agree to  accepting pennies                                                                   
on  the dollar  for  payment for  their  services. The  state                                                                   
could  barely  fund  its  defense  agencies.  She  remembered                                                                   
being  in  Anchorage  when  whole   subdivisions  emptied  as                                                                   
people lost their  jobs. The banks could not  handle the keys                                                                   
dropped  off for people's  mortgages. She  thought the  state                                                                   
had  some time  to  plan what  would  happen.  She was  aware                                                                   
there would  be a reduced budget  and there would not  be big                                                                   
mega projects. She  thought it was important to  look at what                                                                   
was essential,  what was constitutionally required,  what was                                                                   
statutorily required,  and what  would keep the  economy from                                                                   
bottoming  out. She opined  that she  would much rather  have                                                                   
people and herself  receive half of the dividend  and to look                                                                   
forward to it. She supported restructuring the PF.                                                                              
                                                                                                                                
5:43:18 PM                                                                                                                    
                                                                                                                                
NANCY  HILSTRAND, SELF,  KACHEMAK  BAY (via  teleconference),                                                                   
supported HB 250.  She wanted to see self-determination  come                                                                   
back to  the state similar to  what existed in the  70's. She                                                                   
hoped the legislature  would reinstate the state  income tax.                                                                   
She  reported  having  a value-added  fish  processing  plant                                                                   
with 60  employees. About  50 percent  of her employees  came                                                                   
from out-of-state.  She  thought it was  important that  they                                                                   
paid  into  Alaska's  economy   before  leaving  rather  than                                                                   
taking it  all with  them. She believed  the same  tax should                                                                   
apply to  oil, mining,  logging, and  fishing companies.  She                                                                   
thanked the legislature  for its work and hoped  action would                                                                   
be taken soon.                                                                                                                  
                                                                                                                                
5:44:37 PM                                                                                                                    
                                                                                                                                
PATRICK DALTON,  SELF, DELTA  JUNCTION (via  teleconference),                                                                   
reported  that  David  Ramsey  had  anecdotal  evidence  that                                                                   
millionaires  were  leaving  states  with  income  taxes.  He                                                                   
continued  that when  the multi-millionaires  left states  to                                                                   
avoid income  taxes they  also took many  jobs with  them. He                                                                   
thought it  was a  big fallacy  for the state  to try  to tax                                                                   
its  way  out of  its  fiscal  hole.  He thought  the  larger                                                                   
problem was  that the state was  spending too much  without a                                                                   
base  to  support it.  He  relayed  that  the state  had  two                                                                   
historical models  of economic science. He mentioned  the tax                                                                   
cuts accompanied  by deregulation in  the early 80's  and tax                                                                   
cuts in the  roaring 20's. He wanted the legislature  to stop                                                                   
taxing and  start cutting  the state  budget. He thanked  the                                                                   
committee  for  listening  to  his testimony  and  hoped  the                                                                   
legislature would consider the issues carefully.                                                                                
                                                                                                                                
5:46:44 PM                                                                                                                    
                                                                                                                                
MATTHEW  BLATTMACHR,  SELF, ANCHORAGE  (via  teleconference),                                                                   
addressed HB  245 and noted that  there was no  silver bullet                                                                   
to dealing with  the state's fiscal crisis. He  agreed that a                                                                   
multi-faceted  approach was needed.  He thought that  cutting                                                                   
spending  and  implementing  new   sources  of  revenue  were                                                                   
necessary. He commented  that the PF was created  for a rainy                                                                   
day. He  believed it  was a rainy  day as  well as  the right                                                                   
time to  consider restructuring the  PF. He spoke to  HB 250.                                                                   
He thought  multiple sources  of revenue  were needed  to pay                                                                   
for  state  government.  He  noted   that  HB  250  had  some                                                                   
unintended   consequences  to   functioning  and   profitable                                                                   
industries  in Alaska,  specifically  the  trust and  estates                                                                   
industry  where it  generated  a significant  amount of  free                                                                   
revenue to  the state. The revenue  would go away  over night                                                                   
with  an  income  tax  bill  without  certain  provisions  in                                                                   
place.  He thanked  the committee  for its  work and for  the                                                                   
opportunity to testify.                                                                                                         
                                                                                                                                
Vice-Chair  Saddler  asked if  he  opposed HB  250  or if  he                                                                   
wanted to see it amended.                                                                                                       
                                                                                                                                
Mr.  Blattmacher  stated  that  he  was  in  support  of  the                                                                   
concept behind HB 250 but wanted to see it amended.                                                                             
                                                                                                                                
5:49:12 PM                                                                                                                    
                                                                                                                                
TIM  ROBINSON, SELF,  PALMER  (via teleconference),  did  not                                                                   
believe the  budget crisis  would end  with only one  action.                                                                   
He  thought  a  global approach  was  needed  which  included                                                                   
imposing an income  tax. He believed that the  plane loads of                                                                   
people coming  to Alaska to  work could certainly  contribute                                                                   
their  fair  share  towards  the   infrastructure  they  were                                                                   
using. He  opined they paid nothing  in Alaska and  took from                                                                   
the state.  He spoke  of a  testifier from  the previous  day                                                                   
who told  of not  making any  money in  the oil industry  for                                                                   
more than  eight years.  He  thought that if a  person worked                                                                   
at something  for 8 years and  did not make money  they would                                                                   
likely  give  it  up.  The  testifier  was  fighting  against                                                                   
amending the tax  credits. He stated the oil  industry needed                                                                   
to  be taxed  by the  state remarking  that  it was  Alaska's                                                                   
oil. He  stated that it  was a rainy  day, but the  PF needed                                                                   
to be protected.  He favored increasing income  taxes and oil                                                                   
taxes. He claimed  that they would not be taxes  but rather a                                                                   
share of  Alaska's revenue. He  remarked that  BP's president                                                                   
received +a $3 million raise in the prior year.                                                                                 
                                                                                                                                
5:51:53 PM                                                                                                                    
                                                                                                                                
ROSS MULLINS,  SELF, CORDOVA  (via teleconference),  spoke in                                                                   
support of  HB 245 and  HB 250. He  supported the use  of the                                                                   
PF and  was in  favor of  an income  tax to  help spread  the                                                                   
pain of  the dividend cuts.  The income  tax would help  in a                                                                   
progressive   manner  and  would   counteract  some   of  the                                                                   
regressive  aspects  of  the   PFD  reductions.  He  strongly                                                                   
supported  the   governor's  approach.  He  thought   a  POMV                                                                   
approach  was much  more  risky. He  opined  that the  budget                                                                   
reserves and  all revenues should  go to the PF,  which would                                                                   
be the future of the state. It  had been a significant factor                                                                   
in the state's growth. He believed  the fund should be looked                                                                   
to for  future revenues.  He believed appropriate  sideboards                                                                   
were necessary to protect the PF restricting spending.                                                                          
                                                                                                                                
5:54:58 PM                                                                                                                    
                                                                                                                                
LISA  ELLANNA,  SELF,  NOME (via  teleconference),  spoke  in                                                                   
support  of  HB 250,  but  disagreed  with the  proposed  tax                                                                   
matrix.  She was a  single mother  of four  children and  did                                                                   
not  receive  any  state assistance  or  child  support.  She                                                                   
noted that  it was a fact for  many people in the  state. She                                                                   
fully  supported a  state income  tax and  believed it  would                                                                   
tie  people  to  their  government.  She  believed  it  would                                                                   
increase  government  accountability  and public  voice.  She                                                                   
strongly  disagreed with  the  matrix where  married  couples                                                                   
were paying less  taxes than single parents.  Married couples                                                                   
had  2 times  more earning  power  and because  of that  they                                                                   
should be  paying more  than single  parents. She asked  that                                                                   
the  structure of  tax  be crafted  in  an  ethical way.  She                                                                   
thanked the members for the opportunity to share.                                                                               
                                                                                                                                
5:57:43 PM                                                                                                                    
                                                                                                                                
RICHARD   GREEN,   SELF,  FAIRBANKS   (via   teleconference),                                                                   
testified  in support of  HB 245  and HB  250. He thought  it                                                                   
was critical  to address  the budget  deficit in the  current                                                                   
session by  reducing the state's  operating budget  and using                                                                   
the  ERA to  pay  for services.  He  asked  the committee  to                                                                   
never  underestimate  the  common  sense and  memory  of  the                                                                   
Alaskan voter. He reiterated his support for both bills.                                                                        
                                                                                                                                
5:59:12 PM                                                                                                                    
                                                                                                                                
CYNTHIA HENRY,  SELF, FAIRBANKS  (via teleconference),  spoke                                                                   
in  support of  HB  245  and in  opposition  to  HB 250.  She                                                                   
appreciated the hard  work of the legislature  in the current                                                                   
session.  She  operated  a retail  business  in  Alaska  with                                                                   
multiple  mall locations  in  Anchorage.  She felt  that  the                                                                   
fate of her business  was at the mercy of a  healthy economy.                                                                   
She  observed decreased  mall  traffic  where her  businesses                                                                   
were located and  a cautiousness among customers.  She opined                                                                   
that  the ripple  effect  of  reduced consumer  spending  was                                                                   
accelerating  and permeating  the Alaska  economy. She  asked                                                                   
that  the legislature  vote against  implementing a  personal                                                                   
income  tax.  Companies  in the  oil  industry  were  already                                                                   
cutting back  and leaving the  state. She had  grave concerns                                                                   
about  the  impact of  the  job  losses and  uncertainty  for                                                                   
Alaska's  small  businesses  such  as  hers.  She  felt  that                                                                   
imposing a personal  income tax would exacerbate  an already-                                                                   
weak  economy.   She  thought   that  after  cuts   to  state                                                                   
government,  the  best tool  the  state  had to  address  the                                                                   
deficit  was  to  use  a  portion  of  the  ERA  to  pay  for                                                                   
government  services.   She  suggested  that   the  remaining                                                                   
deficit should  be funded  by the CBR.   She thought  that in                                                                   
following  her  suggestions the  life  of  the CBR  would  be                                                                   
extended  and   a  sustainable  dividend  program   would  be                                                                   
maintained.  Acting  immediately  would  save  the  dividend,                                                                   
avoid  a recession,  and maintain  the  state's bond  rating.                                                                   
Enacting   legislation  utilizing   earnings   from  the   PF                                                                   
combined  with  a  draw  from  the  CBR  would  provide  some                                                                   
certainty  for the private  sector that  the legislature  was                                                                   
managing the state's  fiscal challenge. As a  result, private                                                                   
sector jobs  would be  protected and  private sector  support                                                                   
of investment would continue.                                                                                                   
                                                                                                                                
6:01:16 PM                                                                                                                    
                                                                                                                                
SUSAN SPRINKLE,  SELF, FAIRBANKS (via teleconference),  spoke                                                                   
in support  of HB 250 and  wanted an income tax  imposed. She                                                                   
stated  that according  to  a 2014  report,  $2.6 billion  in                                                                   
wages  were paid  to non-residents  working  in Alaska.  Non-                                                                   
residents worked  in many different industries  including the                                                                   
oil, fishing,  seafood, logging,  and mining industries.  She                                                                   
encouraged  taxing  for  the  use  of  public  services.  She                                                                   
stressed  that  solely  making   cuts  would  not  solve  the                                                                   
state's  fiscal issues.  She believed  the  state should  pay                                                                   
its  way. She  mentioned  being in  favor  of supporting  the                                                                   
university  system  appropriately.  She  wanted  to  see  the                                                                   
research system remain intact at the university.                                                                                
                                                                                                                                
6:03:44 PM                                                                                                                    
                                                                                                                                
WALTER ROBINSON,  SELF, FAIRBANKS  (via teleconference),  had                                                                   
grave  concerns  over  the  state's   fiscal  challenges  and                                                                   
believed  it was  necessary to  address the  problems in  the                                                                   
current   year.  He   believed  state   services  were   very                                                                   
important  to a healthy  economy. Both  of his children  were                                                                   
home  schooled   and  needed  support  for  the   state  that                                                                   
supported home  school programs. He  supported HB 245  and HB                                                                   
250. He  asked members to take  immediate action and  do what                                                                   
was right.                                                                                                                      
                                                                                                                                
6:05:08 PM                                                                                                                    
                                                                                                                                
JAMES  SQUYRES,  SELF, RURAL  DELTANA  (via  teleconference),                                                                   
spoke  against using  the  earnings  reserves and  an  income                                                                   
tax. He opposed  both bills. He was a  self-described Article                                                                   
1, Section 2  Alaskan. He stated that the government  was too                                                                   
bloated and  inefficient. He mentioned  that when  bills were                                                                   
passed  out of  committee without  notice  to Alaskans  about                                                                   
changes  distrust  formed.  He  also  noted  that  trust  was                                                                   
impeded  because  of  testimony  from  the  public  being  so                                                                   
limited in  committee hearings.  He knew  of some people  who                                                                   
had worked  years on  a particular issue  only to  have their                                                                   
time before  the committee  reduced to  a very short  period,                                                                   
sometimes being  cut off or  dropped from the  teleconference                                                                   
line.  He   questioned  whether  legislators   were  actually                                                                   
listening to  Alaskans. He thought the  legislature currently                                                                   
had tools to address  the deficit without HB 245  and HB 250.                                                                   
He did not support the bills.                                                                                                   
                                                                                                                                
6:07:09 PM                                                                                                                    
                                                                                                                                
PAUL  KENDALL, SELF,  ANCHORAGE  (via teleconference),  spoke                                                                   
against both  bills. He wondered  what the legislature  would                                                                   
do  if the  stock market  dropped significantly  and the  oil                                                                   
companies  decided to  shut down  the pipeline.  He asked  if                                                                   
legislators  would   hunt  Alaskans  down  to   pay  for  the                                                                   
retirement compensation  for unionized employees.  He thought                                                                   
it  was  unbelievable  that  the state  was  in  its  current                                                                   
situation. He spoke  in favor of a capital  move and believed                                                                   
the legislature  needed to  meet for 90  days to 6  months to                                                                   
be able  to answer  some probing  and challenging  questions.                                                                   
He spoke  to defining essential  services. He  believed there                                                                   
were  five life  essential services  including water,  sewer,                                                                   
trash,  and  electricity,  and communications.  In  terms  of                                                                   
necessity  and   in  his  estimation,  everything   else  was                                                                   
debatable.                                                                                                                      
                                                                                                                                
6:09:40 PM                                                                                                                    
                                                                                                                                
ED MARTIN  III,  SELF, STERLING  (via teleconference),  spoke                                                                   
in opposition to  HB 245 and HB 250. He stressed  that Alaska                                                                   
was a  resource-rich state.  He thought it  was a  shame that                                                                   
only  1   percent  of  Alaska   land  was  held   in  private                                                                   
ownership. He  thought it  was time to  let loose of  some of                                                                   
the state's resources  like timber. He suggested  that Alaska                                                                   
was on  a three-legged  stool:  oil, fish,  and tourism.   He                                                                   
compared taxing  Alaskans and  taking away their  dividend to                                                                   
giving  a man a  fish which  he would  eat for  a day  rather                                                                   
than teaching  him how to fish  so he could feed  himself for                                                                   
a lifetime. He  wondered where the state would  be sitting in                                                                   
five years if the  state took the money in the  current year.                                                                   
He  believed in  creating  new  wealth. He  suggested  giving                                                                   
Alaska's land  to the people  predicting they  would produce.                                                                   
It  was both  a short-term  and long-term  solution. He  also                                                                   
mentioned the  burden for a small  business owner to  have to                                                                   
do the paperwork  accompanying taxes. He opposed  both pieces                                                                   
of  legislation.  He felt  the  state  should sell  down  its                                                                   
assets before coming to the people for a hand-out.                                                                              
                                                                                                                                
6:12:06 PM                                                                                                                    
                                                                                                                                
WILLIAM  DEATON, SELF,  CORDOVA  (via teleconference),  spoke                                                                   
in  opposition  of  HB  245  and  HB  250.  He  believed  the                                                                   
legislature  needed   to  reduce   the  scope  and   size  of                                                                   
government and government  spending. He suggested  one of the                                                                   
cuts  should be  defunding  Planned Parenthood.  He  implored                                                                   
the  state   to  cut  government  spending.   Small  business                                                                   
owners,  such as  himself,  did not  want  to pay  additional                                                                   
taxes on the  money they made. He encouraged  the legislature                                                                   
to make the hard decisions quickly.                                                                                             
                                                                                                                                
6:13:17 PM                                                                                                                    
                                                                                                                                
BILL LAMBERT,  SELF, NORTH  POLE (via teleconference),  spoke                                                                   
in opposition  to HB 245 and  HB 250. He thought  every state                                                                   
agency should  be accountable  for their electricity,  sewer,                                                                   
and  water. He  would love  to  see every  Alaskan with  land                                                                   
rights of  3 acres.  It would  encourage an expansion  across                                                                   
the state. He thanked the committee.                                                                                            
                                                                                                                                
6:15:27 PM                                                                                                                    
                                                                                                                                
COLLEEN BICKFORD,  SELF, ANCHORAGE (via teleconference),  was                                                                   
concerned  about  the state's  fiscal  future.  She spoke  in                                                                   
support  of HB  250.  She thought  it was  crucial  to use  a                                                                   
portion  of the  ERA for  the budget.  She was  not fully  in                                                                   
support  of HB  245  as written,  but  supported the  general                                                                   
concept. She appreciated the opportunity to testify.                                                                            
                                                                                                                                
6:16:32 PM                                                                                                                    
                                                                                                                                
SHARON  DALTON, SELF,  DELTA JUNCTION  (via  teleconference),                                                                   
spoke in  opposition to HB  245 and HB  250. She  opposed new                                                                   
taxes and  relayed that people  lived in Alaska  for personal                                                                   
freedom.  She  stated   that  cuts  needed  to   be  made  to                                                                   
government.  She pointed  out that  taxes would  lead her  to                                                                   
shut  the   doors  to   her  family's   small  business   and                                                                   
potentially move  to the Lower 48. She believed  the constant                                                                   
sense of  entitlement needed to  be stopped. She  mentioned a                                                                   
96 page  plan online  that would  balance the budget  without                                                                   
any  taxation.  She  thought   the  legislature  was  driving                                                                   
people out of the state with more taxes.                                                                                        
                                                                                                                                
Vice-Chair  Saddler  conveyed  that  Representative  Kawasaki                                                                   
had joined the meeting.                                                                                                         
                                                                                                                                
6:18:39 PM                                                                                                                    
                                                                                                                                
TERRIE GOTTSTEIN,  SELF, ANCHORAGE (via teleconference),  was                                                                   
in support  of HB 250 but did  not believe the bill  went far                                                                   
enough. She  thought a  multi-faceted approach was  necessary                                                                   
to solve  the state's  budget crisis. She  did not  support a                                                                   
sales  tax   because  she   believed  it   disproportionately                                                                   
impacted  rural communities.  She  stated  making changes  to                                                                   
the  PF was  necessary, but  it  was an  important source  of                                                                   
cash to  rural communities. She  thought the governor's  plan                                                                   
would  sustain the  PF.  She mentioned  a  video produced  by                                                                   
youth in  Alaska that  likened Alaskans  to trust fund  kids.                                                                   
She  stated that  new  revenue  sources were  necessary.  She                                                                   
thought  an  income  tax  was the  fairest  way  to  generate                                                                   
revenue and  would capture  money from out-of-state  workers.                                                                   
She wanted  to pay  her way  and thought  most Alaskans  felt                                                                   
the same.                                                                                                                       
                                                                                                                                
6:21:23 PM                                                                                                                    
                                                                                                                                
LAUREN  BLANCHETT,  SELF,  ANCHORAGE   (via  teleconference),                                                                   
spoke in support  of HB 245 and  HB 250. She was  not married                                                                   
to  the details  in  HB 245,  but  supported  the concept  of                                                                   
restructuring the  PF. She favored a balanced  approach which                                                                   
included generating  new revenue  sources, restructuring  the                                                                   
PF, instituting  an income  tax, and  making additional  cuts                                                                   
to  government spending.  However, she  did not  want to  see                                                                   
the  education  system  or certain  other  critical  services                                                                   
decimated.  She reiterated  her  support for  HB  245 and  HB                                                                   
250.                                                                                                                            
                                                                                                                                
6:22:36 PM                                                                                                                    
                                                                                                                                
ANDY HOLLEMAN,  PRESIDENT,  ANCHORAGE EDUCATION  ASSOCIATION,                                                                   
ANCHORAGE, (via  teleconference), testified in  support of HB                                                                   
245 and  HB 250. He  relayed that an  income tax should  be a                                                                   
small part  of a  package of taxes.  Although multiple  taxes                                                                   
were  not something  people  liked,  it meant  that  everyone                                                                   
would  be paying  something.  He thought  it  was crucial  to                                                                   
make use  of the ERA, generate  moderate other  revenues, and                                                                   
make  other  moderate  reductions   as  part  of  an  overall                                                                   
package.  He advocated  making changes  in the current  year.                                                                   
He  opined that  long-term residents  were  ready to  support                                                                   
the legislature  in his  concept and  offered the support  of                                                                   
his members as well.                                                                                                            
                                                                                                                                
6:23:37 PM                                                                                                                    
                                                                                                                                
JORDEN NIGRO,  SELF, JUNEAU, spoke  in support of HB  245 and                                                                   
HB 250. She  stated that some people were leaving  because of                                                                   
the economy. She  grew up in Juneau and it was  her home. She                                                                   
was not  leaving and wanted to  be part of the  solution. She                                                                   
thought both  of the bills  gave Alaskans the  opportunity to                                                                   
be part of the  solution. She was aware that there  was not a                                                                   
simple answer but believed many people wanted to stay.                                                                          
                                                                                                                                
6:25:11 PM                                                                                                                    
                                                                                                                                
ALYSE  GALVIN, SELF,  ANCHORAGE  (via teleconference),  spoke                                                                   
in  favor of  HB 250  and  opposed HB  245.  She believed  an                                                                   
income tax  was more equitable than  a cap on the  PFD. Also,                                                                   
an  income  tax  would  capture  revenues  from  out-of-state                                                                   
workers.  She thought  it  was important  for  all people  to                                                                   
pull  together  to  do  their   part.  She  stated  that  the                                                                   
solution  should not  come  from one  section  or another  or                                                                   
only from  the state's  savings account.  She continued  that                                                                   
drawing  exclusively from  savings diminished  the chance  of                                                                   
using  the  reserves in  the  future.  She asked  members  to                                                                   
support HB 250.                                                                                                                 
                                                                                                                                
KELSI  PULCZNSKI,   SELF,  ANCHORAGE  (via   teleconference),                                                                   
spoke in  opposition to  HB 250. She  believed it  was absurd                                                                   
that the  legislature was considering  an income tax  to fund                                                                   
the  state's extravagant  spending.  She was  a recipient  of                                                                   
the Alaska Performance  Scholarship but believed  the program                                                                   
should be cut.  She stated that without the  program her life                                                                   
would be  harder. However,  she saw the  program as  a luxury                                                                   
that could  not be  afforded by the  state. She stressed  the                                                                   
need  to  downsize  state  government   and  services;  every                                                                   
department  had  waste  that  to cut.  She  referred  to  the                                                                   
irresponsible   spending   associated  with   the   Anchorage                                                                   
Legislative  Information  Office   and  the  expense  of  the                                                                   
building.  She  thought  education,   healthcare,  and  state                                                                   
services  should  be  reduced  significantly.  Instituting  a                                                                   
broad-based  tax told her  that Alaskan  lawmakers had  given                                                                   
up. They had  given up on responsible spending,  right sizing                                                                   
government,  their constituents,  and  themselves. She  urged                                                                   
members to oppose HB 250.                                                                                                       
                                                                                                                                
6:29:50 PM                                                                                                                    
                                                                                                                                
OLIVIA PIDGEON,  SELF, ANCHORAGE (via teleconference),  spoke                                                                   
in strong opposition  to HB 250. She remarked  that the state                                                                   
had  a  plethora of  extra  services  it  did not  need.  She                                                                   
thought  education,  healthcare,  and  state  services  could                                                                   
stand to  take cuts. She  spoke to irresponsible  spending at                                                                   
the  University  of  Alaska  Anchorage.  She  was  a  college                                                                   
student  and  was her  own  sole  provider. She  opined  that                                                                   
state  government was  trying  to tax  its  way out  of a  $4                                                                   
billion  deficit.  She  thought  that passing  HB  250  would                                                                   
perpetuate  the  fiscal problem.  She  asked members  not  to                                                                   
support the legislation.                                                                                                        
                                                                                                                                
6:31:14 PM                                                                                                                    
                                                                                                                                
MERRICK   PIERCE,  SELF,   FAIRBANKS  (via   teleconference),                                                                   
offered// that  state spending  needed to be curtailed  prior                                                                   
to the  implementation of  the bills.  He spoke to  excessive                                                                   
spending by  the legislature in  the areas of travel  and per                                                                   
diem.  He also  criticized the  $32  million expenditure  for                                                                   
the Anchorage  LIO. He stated  that the severance  tax policy                                                                   
did not  capture a  fair share of  oil revenues.  He provided                                                                   
some  figures  related to  the  state's  oil tax  system.  He                                                                   
alluded to  the ramifications  of a reduction  of the  PFD by                                                                   
$1000  per person.  It  equated  to a  hit  to the  Fairbanks                                                                   
North  Star  Borough  in  the  amount  of  $100  million.  He                                                                   
relayed  that 2500  people  had left  over  the previous  1.5                                                                   
years  and  noted   all  of  the  vacant  office   space.  He                                                                   
discouraged an income  tax or a raid on the  PF until further                                                                   
reductions were made.                                                                                                           
                                                                                                                                
6:33:24 PM                                                                                                                    
                                                                                                                                
PAM   THROOP,    SELF,   FAIRBANKS   (via    teleconference),                                                                   
appreciated Gavel-to-Gavel.  She believed that  most Alaskans                                                                   
would not be  opposed to an income  tax or the use  of the PF                                                                   
if  oil and  gas companies  had  been asked  to  pay more  of                                                                   
their share.  She implored  the committee to  take a  look at                                                                   
the  issue.  She  did  not  think   it  would  hurt  the  oil                                                                   
companies to  pitch in especially  when the people  of Alaska                                                                   
were  being  asked to  contribute.  She  stated that  BP  had                                                                   
shutdown 3  of its  5 rigs. Conoco  Phillips laid  off people                                                                   
within weeks of  the passage of SB 21. She stated  that SB 21                                                                   
had  not done  what  it was  supposed to  do.  She could  not                                                                   
support either  bill until  something was  done with  oil and                                                                   
gas tax credits.                                                                                                                
                                                                                                                                
6:35:41 PM                                                                                                                    
                                                                                                                                
EARL  WHITT, SELF,  ANCHORAGE (via  teleconference), did  not                                                                   
see anything in  HB 250 that precluded a personal  income tax                                                                   
to  military members,  whether  active guard  or reserve.  He                                                                   
wondered if he was correct.                                                                                                     
                                                                                                                                
Vice-Chair Saddler replied in the affirmative.                                                                                  
                                                                                                                                
Mr. Whitt  encouraged the  committee look  into an  amendment                                                                   
to exempt  active duty military,  guard, and reserve  members                                                                   
from paying  an income  tax. He  spoke to  other states  that                                                                   
had exempted military  service members from income  taxes. He                                                                   
thanked the committee for all that it did.                                                                                      
                                                                                                                                
6:37:59 PM                                                                                                                    
                                                                                                                                
PAUL  RODERICK,  SELF,  ANCHOR  POINT  (via  teleconference),                                                                   
suggested that  if the  state was going  to impose  an income                                                                   
tax it  should consider a larger  percentage, as the  cost of                                                                   
administering it would  be the same. He supported  HB 250. He                                                                   
opposed HB 245.  He wanted the PF left alone.  He thought the                                                                   
legislature was  moving too fast  to make good  decisions. He                                                                   
did not  believe the state had  cut enough. He  remarked that                                                                   
no  one  wanted   to  lose  anything,  but   thought  it  was                                                                   
necessary. He  thought it would  be important to  address how                                                                   
the potential changes  would affect people at  the low income                                                                   
level. He thanked the committee.                                                                                                
                                                                                                                                
6:40:20 PM                                                                                                                    
                                                                                                                                
ROBERT  MCCOY, SELF,  ANCHORAGE  (via teleconference),  spoke                                                                   
in opposition  to  HB 250. He  believed an  income tax  would                                                                   
penalize  the  most  productive   people  in  the  state.  He                                                                   
thought  the PFD was  one of  the worse  things instated.  He                                                                   
believed that having  an income tax and keeping  the PFD took                                                                   
money from  productive people and  placed it in the  hands of                                                                   
2 and 3  year-olds who were  not yet productive. He  spoke in                                                                   
support of  curtailing or restructuring  the PFD  favoring HB                                                                   
245.  He added  that  he thought  a sales  tax  was fair.  He                                                                   
reiterated his opposition to an income tax.                                                                                     
                                                                                                                                
Vice-Chair  Saddler asked  if  Mr. McCoy  was  in support  or                                                                   
opposition to HB 245.                                                                                                           
                                                                                                                                
Mr. McCoy was in favor of HB 245.                                                                                               
                                                                                                                                
6:43:16 PM                                                                                                                    
                                                                                                                                
JEREMY  PRICE,  AMERICANS  FOR   PROSPERITY,  ANCHORAGE  (via                                                                   
teleconference),  spoke in  opposition to  HB 250. The  group                                                                   
supported  the reduction  of  the  size of  state  government                                                                   
which would  only come through  real reform with  substantive                                                                   
legislation  overhauling   ever  growing  and   unsustainable                                                                   
programs.  The group  also  supported  using PF  savings  and                                                                   
earnings before  taxes. He proclaimed  that Alaskans  did not                                                                   
pay   their  fair   share   in  taxes   he   asked  for   the                                                                   
consideration  of   the  following:  According   to  the  Tax                                                                   
Foundation,  Alaska  had one  of  the highest  corporate  tax                                                                   
rates  in   the  entire  country   at  9.43  percent.   Also,                                                                   
according  to  the Tax  Foundation,  Alaska  was one  of  the                                                                   
highest  states   with  the  percentage  of   private  sector                                                                   
workers who  were employed by  pass through businesses  where                                                                   
the employer was  paying taxes through the  individual income                                                                   
tax  code  rather  than  the  corporate  tax  code.  Over  58                                                                   
percent  of private sector  workers in  Alaska were  employed                                                                   
through  these self-employed  businesses;  limited  liability                                                                   
corporations,  sole  proprietorships   and  "S"  corporations                                                                   
where owners  paid taxes  through the  individual income  tax                                                                   
code. As such,  increasing income taxes on  these individuals                                                                   
would harm  small businesses disproportionately.  The biggest                                                                   
risk takers in  the state were those who had  created a small                                                                   
business.  They had  invested the  most and  had the most  to                                                                   
lose  with an  individual income  tax.  These small  business                                                                   
owners were  also the job creators  in Alaska. He  provided a                                                                   
personal  perspective  about  his  family  business.  He  had                                                                   
watched his  parents struggle  to keep their business  afloat                                                                   
during tough  economic  times. Presently,  he thought  it was                                                                   
harder than ever  to grow a successful business.  He implored                                                                   
the committee to keep from making it more difficult.                                                                            
                                                                                                                                
6:45:46 PM                                                                                                                    
                                                                                                                                
TOM BRICE,  SELF, JUNEAU, spoke in  support of HB 245  and HB                                                                   
250. He  spoke to an income  tax and noted that  $2.6 billion                                                                   
worth  of wages  were  leaving  the state  with  out-of-state                                                                   
workers.  He  opined  that those  workers  should  contribute                                                                   
some  of  their  earnings  to   help  pay  for  services.  He                                                                   
provided  examples  of  state  services  he  appreciated.  He                                                                   
thought both bills helped move the state forward.                                                                               
                                                                                                                                
6:48:25 PM                                                                                                                    
                                                                                                                                
PAUL  FUHS, SELF,  JUNEAU, wanted  to address  the issues  of                                                                   
fairness  and  repressiveness.  He  noted  he  had  read  the                                                                   
report  put out by  the Rasmussen  group. He  thought it  was                                                                   
very shallow  and, it was clear  that someone did  not really                                                                   
understand  how the state's  budget operated.  He thought  it                                                                   
was regressive  to take $1000  from people particularly  from                                                                   
the  lowest end  of the  income  scale. He  wondered how  the                                                                   
state  would  pay  for  the  services   without  turning  the                                                                   
state's savings  into revenue  producing assets. The  part of                                                                   
the budget that  was designated general funds  (DGF) was paid                                                                   
for by  the people of Alaska.  The state's entire  regulatory                                                                   
structure was  paid for by  fees collected from  Alaskans. In                                                                   
2016  Alaska  paid  for  services   in  the  amount  of  $877                                                                   
million.  The largest  piece  of unrestricted  general  funds                                                                   
(UGF)  was Medicaid  and  school  funding -  services  people                                                                   
depended  on.  The  state  paid   $7  thousand  per  Medicaid                                                                   
recipient. In  urban areas, the  state paid $20  thousand per                                                                   
student and  in rural areas the  state paid $30  thousand per                                                                   
student for  education. Personally he  was willing to  pay an                                                                   
income  tax  even  though  it would  only  raise  about  $200                                                                   
million  and  did   not  fit  the  state's   budget  gap.  He                                                                   
suggested  that  unless  legislation   such  as  HB  245  was                                                                   
adopted the  state would  not get any  closer to  solving its                                                                   
fiscal problems.  Ironically, the people that needed  some of                                                                   
the programs the most would likely suffer the most.                                                                             
                                                                                                                                
Vice-Chair  Saddler  asked  for clarification  on  Mr.  Fuhs'                                                                   
positions on the bills.                                                                                                         
                                                                                                                                
Mr.  Fuhs responded  that he  was  willing to  pay an  income                                                                   
tax,  but did not  know if  it was  the best  policy for  the                                                                   
state. He  supported HB  245 or some  version that  turns the                                                                   
state's saving into revenue producing assets.                                                                                   
                                                                                                                                
6:50:36 PM                                                                                                                    
                                                                                                                                
STEVE  GIBSON,  SELF,  HOMER  (via  teleconference),  relayed                                                                   
that he  was a small business  owner. He believed HB  245 was                                                                   
on  the   right  track,   but  he  supported   Representative                                                                   
Seaton's  version.  He thought  it  was better  to  use a  15                                                                   
percent  federal income  tax liability,  otherwise, it  would                                                                   
not be a  very serious effort  at imposing a tax.  He offered                                                                   
that  the  state should  consider  an  income tax  and  other                                                                   
taxes before  considering the use  of the PFD,  especially if                                                                   
the state  was going to  associate it with royalties  instead                                                                   
of the stock  market. He thought  the oil field did  not look                                                                   
hopeful in  the future. He  thought it  would be a  poor idea                                                                   
to invest  in a  sovereign wealth  fund in  the long  run. He                                                                   
realized  that because  of the  revenue  shortfall the  state                                                                   
would have  to appropriate some of  the PF, but it  was not a                                                                   
long term  plan. He furthered that  an income tax was  a much                                                                   
more equitable revenue generator than a sales tax.                                                                              
                                                                                                                                
6:53:02 PM                                                                                                                    
                                                                                                                                
DEENA   MITCHELL,  SELF,   ANCHORAGE  (via   teleconference),                                                                   
strongly  supported an  income  tax, which  she believed  was                                                                   
the  most  simple and  equitable  way  to  tax and  bring  in                                                                   
revenue.  She  added that  the  tax  should  be at  a  higher                                                                   
amount  than 6  percent.  She supported  the  POMV method  to                                                                   
access the PF.  She was very willing to pay  for the services                                                                   
she received and supported HB 245 and HB 250.                                                                                   
                                                                                                                                
6:54:02 PM                                                                                                                    
                                                                                                                                
PATRICK    SCHLICHTING,    SELF,    DELTA    JUNCTION    (via                                                                   
teleconference),  spoke  in  support  of an  income  tax.  He                                                                   
believed it was  the civic responsibility of  all Alaskans to                                                                   
support the state  and that everyone should have  skin in the                                                                   
game. He  was disheartened with  cuts that had been  made. He                                                                   
spoke to unplowed  roads by Department of  Transportation and                                                                   
Public Facilities due  to a lack of funds. He  stated that an                                                                   
income tax would  capture revenues from  out-of-state workers                                                                   
who enjoyed  the infrastructure  and benefits  of Alaska  - a                                                                   
small price  to pay. He suggested  that the state  would find                                                                   
a level of  tax that people could  afford. As far as  the PF,                                                                   
he  thought  it was  meant  to  be  used  at some  point.  He                                                                   
offered  that currently  Alaskans had trust  issues with  the                                                                   
legislature.  He   spoke  to  the  expense  of   the  LIO  in                                                                   
Anchorage  and how  the  issues  surrounding it  had  created                                                                   
distrust. He favored an income tax.                                                                                             
                                                                                                                                
6:56:39 PM                                                                                                                    
                                                                                                                                
JEANINE  ST.  JOHN,  SELF,  ANCHORAGE  (via  teleconference),                                                                   
remarked that  the state  had been fortunate  to live  on oil                                                                   
for a  long time but  should not count  on it in  the future.                                                                   
She supported  HB 245 or  some version  of using the  ERA. He                                                                   
also supported  reducing the PFD.  In general,  she supported                                                                   
HB  250. She  agreed that  an  income tax  was necessary  and                                                                   
that people  should have skin  in the game. However,  she was                                                                   
concerned that  there had not been  a lot of time  to discuss                                                                   
the  issue. She  believed the  point  earlier about  military                                                                   
exemption  required   consideration.  She  believed   it  was                                                                   
urgent to  come up with  a structure  to use monies  from the                                                                   
ERA. She thanked the committee.                                                                                                 
                                                                                                                                
6:58:55 PM                                                                                                                    
                                                                                                                                
JEAN ELLIS,  SELF, PETERSBURG (via teleconference),  spoke in                                                                   
support of an income  tax under HB 250. She was  opposed to a                                                                   
state  sales  tax.  She  supported  HB  245  and  believed  a                                                                   
restructuring  of  the  PF was  important.  She  opined  that                                                                   
capping the  PFD at  $1000 was more  than people  received in                                                                   
some years  in the  past and more  than people might  receive                                                                   
in future years.                                                                                                                
                                                                                                                                
7:00:22 PM                                                                                                                    
                                                                                                                                
LINDA MURPHY,  SELF, SOLDOTNA (via teleconference),  spoke in                                                                   
support  of  HB 245  and  HB  250.  She stated  that  it  was                                                                   
critical  for the  legislature to  do something  immediately.                                                                   
She was  in support  of a state  income tax, giving  everyone                                                                   
skin in  the game. She  did not want to  see the PFD  go away                                                                   
completely but  thought HB 245  was a well thought  out piece                                                                   
of legislation.  She urged members to support the bills.                                                                        
                                                                                                                                
Vice-Chair Saddler asked her position on an income tax.                                                                         
                                                                                                                                
Ms. Murphy replied that she was in favor of an income tax.                                                                      
                                                                                                                                
7:01:53 PM                                                                                                                    
                                                                                                                                
MEG  NORDALE,  SELF,  FAIRBANKS   (via  teleconference),  was                                                                   
concerned about  the fiscal challenges  of the state  and was                                                                   
and the  future of Alaska. She  believed it was time  to make                                                                   
the  hard  decisions  required  to  address  Alaska's  fiscal                                                                   
issues. A  healthy state economy  was crucial for  a vigorous                                                                   
and healthy private  sector economy. She spoke  in support of                                                                   
implementing  a fiscal  plan  using a  portion  of the  ERAs,                                                                   
making cuts  to spending,  and generating  new revenues.  She                                                                   
opined  that  HB  245  would  provide  fiscal  stability  for                                                                   
Alaska's  future.  She  felt   the  private  sector's  future                                                                   
depended  on  the legislature's  proactive  work  during  the                                                                   
session.  She believed  the worst  decision  was no  decision                                                                   
and a  poorly timed one was  no different. She  urged support                                                                   
for HB 245 and HB 250.                                                                                                          
                                                                                                                                
7:04:06 PM                                                                                                                    
                                                                                                                                
WILLIE  LEWIS, SELF,  ANCHORAGE  (via teleconference),  spoke                                                                   
about  climate change.  He noted  that  oil was  down and  he                                                                   
referred  to supply  and demand.  He wanted  to know why  the                                                                   
discussion  was  not about  renewable  energy.  He wanted  to                                                                   
know why the state  had to hold hands with  the oil companies                                                                   
when oil was declining.                                                                                                         
                                                                                                                                
7:06:15 PM                                                                                                                    
                                                                                                                                
NAJA  BRANDT, SELF,  NOME (via  teleconference), spoke  about                                                                   
the income  tax. She believed  that it was unfair  for single                                                                   
parents  to  have  to pay  more  than  married  couples.  She                                                                   
stated that  her mother was  a single  parent and had  a hard                                                                   
time with money. She reiterated that it was not fair.                                                                           
                                                                                                                                
7:07:07 PM                                                                                                                    
                                                                                                                                
CARL KANCIR,  SELF, ANCHORAGE (via teleconference),  spoke in                                                                   
opposition of HB  245, HB 250, and a sales tax.  He felt that                                                                   
money had been spent in excess.                                                                                                 
                                                                                                                                
7:08:16 PM                                                                                                                    
                                                                                                                                
JEFF  BARNARD, SELF,  JUNEAU (via  teleconference),  believed                                                                   
it was  time for the  legislature to  grow a backbone  and to                                                                   
address  the state's  issues.  He  suggested that  the  state                                                                   
needed to  do something  other than drawing  from the  PF. He                                                                   
favored  broad-based  taxes.  He encouraged  members  to  act                                                                   
immediately.                                                                                                                    
                                                                                                                                
7:09:14 PM                                                                                                                    
                                                                                                                                
RICHARD  OLSEN, SELF,  HOMER (via  teleconference), he  urged                                                                   
the legislature  to set  a precedent. He  did not  support to                                                                   
the use  of the  PF. He  emphasized that  there was  a reason                                                                   
for the word "permanent".                                                                                                       
                                                                                                                                
7:11:46 PM                                                                                                                    
                                                                                                                                
EDWARD   WITBECK,    SELF,   KENAI   (via    teleconference),                                                                   
recommended taxing  the coal  companies and mining  companies                                                                   
25 percent  rather than 6  percent. He suggested  halting the                                                                   
oil  incentives and  about multiple  oil companies  including                                                                   
BlueCrest  and  Furie  who received  credits.  He  encouraged                                                                   
further taxing the industry.                                                                                                    
                                                                                                                                
7:13:57 PM                                                                                                                    
                                                                                                                                
DAVID  OTNESS,  SELF,  CORDOVA  (via  teleconference),  spoke                                                                   
against dipping  into the PFD  and expecting people  in rural                                                                   
Alaska  to  prop  up  the economy  of  the  urban  areas.  He                                                                   
thought that was  what HB 245 was doing. He did  not want the                                                                   
proposed legislation  passed in a hurry. He thought  it was a                                                                   
drastic  step reaching  into  the PF.  It  was something  the                                                                   
state  fought  for long  and  hard.   He  did not  think  the                                                                   
legislation had to pass in the current year.                                                                                    
                                                                                                                                
7:15:48 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
7:30:13 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
GARVIN BUCARIA,  SELF, WASILLA (via teleconference),  opposed                                                                   
HB 250. He  thought it was hasty  to be imposing a  state tax                                                                   
and would cost  more in administrative fees.  He also opposed                                                                   
HB 245  and supported  keeping the  existing PF program.  The                                                                   
structure  of the  PF  program administered  investments  far                                                                   
more effectively  that the Department of Revenue.  He favored                                                                   
drastic  cuts to state  spending including  funding for  mega                                                                   
projects. Additionally  he opposed new bonding.  He supported                                                                   
the  oil  production   tax  incentives,  as  he   wanted  the                                                                   
industry  to remain  healthy.  He recommended  balancing  the                                                                   
budget  with CBR  monies and  other slush  funds. He  advised                                                                   
members not  to be  intimidated by  the current governor  who                                                                   
had  a  pipedream  regarding the  natural  gas  pipeline.  He                                                                   
spoke  against   funding  many  of  the  mega   projects.  He                                                                   
reiterated his opposition to both pieces of legislation.                                                                        
                                                                                                                                
7:33:11 PM                                                                                                                    
                                                                                                                                
BERNIE   HOFFMAN,  SELF,   FAIRBANKS  (via   teleconference),                                                                   
agreed that a  multifaceted approach was needed  to close the                                                                   
state's budget  gap. She did not  support the 5  percent draw                                                                   
from  the  PF. She  recommended  a  20 percent  reduction  in                                                                   
state expenses  across the board  without cherry  picking and                                                                   
suggested imposing  a 10 percent  sales tax. She  thought oil                                                                   
tax credits  needed to be  modified. She further  recommended                                                                   
tripling  the gas  tax,  doubling the  taxes  on alcohol  and                                                                   
tobacco, and  suspend all large  projects. She  recommended a                                                                   
sales   tax  exempting   food,   water,  prescriptions,   and                                                                   
healthcare.  She  suggested  tapping  the PFD  but  only  for                                                                   
education  without using  it to build  structures. She  spoke                                                                   
of using  the overflow  of the  Power Cost Equalization  fund                                                                   
to close the budget gap.                                                                                                        
                                                                                                                                
7:35:37 PM                                                                                                                    
                                                                                                                                
HOLLIS HALL,  SELF, FAIRBANKS (via teleconference),  spoke in                                                                   
favor  of  both pieces  of  legislation.  He thought  HB  245                                                                   
would allow  all Alaskans  to share  the burden. He  believed                                                                   
HB 250  would allow those that  were more affluent  and those                                                                   
out-of-state workers  to share some  of the costs  of running                                                                   
the  state.  He was  pleased  with  the House's  actions.  He                                                                   
thanked the committee for working hard.                                                                                         
                                                                                                                                
7:36:31 PM                                                                                                                    
                                                                                                                                
JOEL  SWITZER, SELF,  FAIRBANKS  (via teleconference),  spoke                                                                   
in favor  of HB 250. He  felt that out-of-state  workers made                                                                   
up  a large  portion of  the workforce  and as  beneficiaries                                                                   
could help  support state  government. He  wanted to  see the                                                                   
PF left alone,  as it had been a model for  other governments                                                                   
around the world including Saudi Arabia. He opposed HB 245.                                                                     
                                                                                                                                
7:38:19 PM                                                                                                                    
                                                                                                                                
DAVID  BOYLE,  SELF,  ANCHORAGE   (via  teleconference),  was                                                                   
opposed to HB 250.  He did not want to pay  for the 1 percent                                                                   
art  program.  He  also  did not  want  to  pay  for  college                                                                   
students  under the  Alaska Performance  Scholarship  Program                                                                   
because in  18 years they  should have accumulated  well over                                                                   
26 thousand  of PFD payments  they could  be used to  pay for                                                                   
college. He did  not want to pay for the LIO  in Anchorage or                                                                   
for  annual merit  pay increases.  He mentioned  a number  of                                                                   
other things  he did  not want  to pay  for. He reviewed  the                                                                   
fiscal note which advocated hiring an additional 44 full-                                                                       
time state  employees and another  16 part-time  employees to                                                                   
administer  an  income tax.    He  thought the  governor  was                                                                   
trying to  grow government in  the Department of  Revenue and                                                                   
the Department of  Health and Social Services.  He opposed HB                                                                   
250 and  urged members to not  let the governor  rush members                                                                   
into a panic.  Rather, he encouraged then to  take their time                                                                   
and  make   good  decisions.   He  respected  the   work  the                                                                   
legislature was doing.                                                                                                          
                                                                                                                                
7:40:10 PM                                                                                                                    
                                                                                                                                
MIKE  SWAIN, SELF,  ANCHORAGE  (via teleconference),  opposed                                                                   
HB 245.  He suggested amending HB  250 to a flat  income tax.                                                                   
He mentioned  that the  PF was  a rainy  day account.  He did                                                                   
not believe  PF monies were  intended to fund  government. He                                                                   
thought   HB  245   was  an   implementation  of   continuing                                                                   
government revenue  and as such  opposed it. He  relayed that                                                                   
because the  share of  Alaska's wealth within  the PF  was an                                                                   
investment  return,  the  PFD  was of  more  value  than  the                                                                   
current day  oil investments.  Alaska's PFD  was a  return of                                                                   
value  of  an  investment,  good   or  bad,  rather  than  an                                                                   
expense.  Incorporating a  link between  the PFD directly  to                                                                   
oil royalties would  be a direct tax, redistributing  royalty                                                                   
oil tax  directly to  the public. The  PFD was vital  because                                                                   
it was a return on an investment.                                                                                               
                                                                                                                                
7:42:51 PM                                                                                                                    
                                                                                                                                
GARRET FLOYD, SELF, ANCHORAGE   (via  teleconference),  spoke                                                                   
in favor of HB  245 and HB 250. He asked  legislators to make                                                                   
the tough  calls that  had to  be made.  He advocated  broad-                                                                   
based  taxes.  He  urged  members  to  pass  both  pieces  of                                                                   
legislation and thanked them for their service.                                                                                 
                                                                                                                                
7:44:19 PM                                                                                                                    
                                                                                                                                
DOUG GOERING,  SELF, FAIRBANKS (via teleconference),  relayed                                                                   
one aspect  of the  PFD program.  He understood  that in  the                                                                   
previous year the  state distributed roughly $1.4  billion in                                                                   
PFD checks.  His guess was that  $700 million of  that payout                                                                   
went  to the  federal government  as  federal tax  liability.                                                                   
While  he was  in  favor of  raising  revenues  by both  some                                                                   
restructuring of  the PFD payout  program and a  state income                                                                   
tax he  urged members  to think carefully  about how  the two                                                                   
programs were  structured. He believed  that there was  a way                                                                   
they  could   be  structured   such  that  the   federal  tax                                                                   
liability   would   be   significantly    reduced,   if   not                                                                   
eliminated. As  a result, several  $100 million  would remain                                                                   
in  Alaska rather  than leaving  the state  as was  currently                                                                   
the  case.  He  thought  handing  out  a  dividend  and  then                                                                   
collecting  state  income  tax  on  that  dividend  bolstered                                                                   
federal revenues  needlessly. He  offered that the  two bills                                                                   
could  be  combined  in  such  a way  that  the  federal  tax                                                                   
liability   would  be  significantly   reduced.  He   thanked                                                                   
members for their service and their time.                                                                                       
                                                                                                                                
7:46:23 PM                                                                                                                    
                                                                                                                                
SARA WILLSON,  SELF, JUNEAU  (via teleconference),  supported                                                                   
the use  of the PF for  government operations. She  opposed a                                                                   
personal  income tax due  to administrative  costs. She  also                                                                   
questioned  whether the numerous  out-of-state workers  would                                                                   
comply with  the proposed regulation  to pay a  percentage of                                                                   
federal  income tax.  She suggested  that the  income tax  be                                                                   
implemented  similar to  the way Social  Security taxes  were                                                                   
deducted.  She thought  it  would involve  less  bureaucratic                                                                   
and administrative costs. She thanked the committee.                                                                            
                                                                                                                                
7:47:27 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
7:47:48 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
DEBORAH  BROLLINI,  SELF,  ANCHORAGE   (via  teleconference),                                                                   
spoke against  HB 245  and HB  250. She  felt that if  Alaska                                                                   
wanted  to  increase  revenues  it  needed  to  increase  oil                                                                   
production through the Trans-Alaska Pipeline System (TAPS).                                                                     
She believed Alaskans needed to be reminded where state                                                                         
revenue was generated. She thanked members for their time.                                                                      
                                                                                                                                
7:49:36 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler CLOSED public testimony.                                                                                     
                                                                                                                                
HB 245 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
HB 250 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
Vice-Chair Saddler reminded members that amendments for HB                                                                      
245, HB 250, and HB 249 were due by Friday, April 15, 2016,                                                                     
at 5:00PM.                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects