03/14/2002 08:09 AM House STA

HB 303-STATEWIDE SALES TAX                                                                                                    
                                                                                                                                
Number 0185                                                                                                                     
                                                                                                                                
CHAIR  COGHILL announced  that the  first order  of business  was                                                               
HOUSE BILL NO.  303, "An Act relating to the  levy and collection                                                               
of a sales tax; and providing for an effective date."                                                                           
                                                                                                                                
CHAIR  COGHILL  explained that  there  was  a proposed  committee                                                               
substitute (CS),  version 22-LS1206\P,  Kurtz, 3/8/02.   He noted                                                               
that the  major change is in  Section 1, as discussed  in a prior                                                               
meeting and in regard to the municipalities.  He said:                                                                          
                                                                                                                                
     If  they so  chose to  comply,  then there  could be  a                                                                    
     remittance to a  municipality.  If requested  to do so,                                                                    
     it  would be  what was  in the  last CS.   But  the new                                                                    
     language would  be:  "the municipality's  sales and use                                                                    
     tax  ordinance  is  consistent  with  AS.43.44."    And                                                                    
     they're asking ... that if  there is going to be codes,                                                                    
     that we would give them some incentive to comply.                                                                          
                                                                                                                                
Number 0309                                                                                                                     
                                                                                                                                
CHAIR  COGHILL   asked  if   everyone  remembered   the  previous                                                               
discussion.  He said that "the  bill was the same," therefore, he                                                               
asked if  there was any  objection to [adopting the  proposed CS,                                                               
version  22-LS1206\P, Kurtz,  3/8/02, as  a work  draft].   There                                                               
being no objection, Version P was adopted.                                                                                      
                                                                                                                                
Number 0332                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS  asked  where  the  charge  back  to  the                                                               
municipality was [in the bill]  for "us" collecting the sales tax                                                               
for "them".   He mentioned  previous discussion regarding  a fee,                                                               
the  previous  testimony of  Larry  [Persily],  and a  discussion                                                               
about [the  amount of] one percent.   He said, "So  we just want,                                                               
instead of a one percent, a reasonable fee."                                                                                    
                                                                                                                                
CHAIR COGHILL concurred with Representative Stevens.                                                                            
                                                                                                                                
Number 0390                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON stated  that she  is adamantly  opposed to                                                               
the   sales  tax.      She  asked   for   confirmation  that   61                                                               
municipalities would be "affected by this."                                                                                     
                                                                                                                                
CHAIR COGHILL confirmed it would be a total of 97.                                                                              
                                                                                                                                
REPRESENTATIVE  WILSON said  97 municipalities  around the  state                                                               
already have a sales  tax.  She expressed that she  was at a loss                                                               
for  words,  because  she  was  so  upset  about  this  [proposed                                                               
legislation].  She noted that  her municipality [of Wrangell] has                                                               
the  highest [sales  tax] in  the state  and said  that [if  this                                                               
legislation were  passed] it  would be  devastating to  her area.                                                               
Because of that, she said, she is opposed to the bill.                                                                          
                                                                                                                                
Number 0460                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE  stated that  he is  just as  passionately in                                                               
favor  of this  sales tax  [as Representative  Wilson is  against                                                               
it].   He noted that tax  is discretionary income and  added, "As                                                               
long  as we  have limits  placed  on this  tax."   He stated  his                                                               
belief that,  as long  as there is  a [permanent  fund] dividend,                                                               
and people coming  to [Alaska] who are not taxed,  then he thinks                                                               
it  "more   of  a  fair   tax  than  the  income   tax,  itself."                                                               
Representative  Fate said  he is  not thinking  in terms  of "my"                                                               
community or  "their" community,  but of what  is needed  for the                                                               
entire  state of  Alaska.   Furthermore, he  said he  thinks this                                                               
discussion needs  to take place at  a higher level; "this  has to                                                               
be  discussed in  other committees  and where  it is  headed for,                                                               
rather than to close it off."                                                                                                   
                                                                                                                                
Number 0565                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD   said  he  shares  the   sentiments  of                                                               
[Representative Wilson].   He stated his belief that  a sales tax                                                               
is  very regressive.   He  indicated that  [a sales  tax] is  the                                                               
purview of the communities.  He  said he believes that taxing the                                                               
[permanent fund] dividend by 50  percent is a regressive tax, and                                                               
to balance  that out a more  progressive tax is needed.   He said                                                               
he  thinks the  income tax  is the  more progressive  [tax].   He                                                               
noted that when the fiscal  policy discussion first began, one of                                                               
the "prerequisites"  was for  fairness and balance.   He  said he                                                               
does not believe that both a tax  on the dividend and a sales tax                                                               
is not balanced or fair; it  taxes the "bottom end" more heavily.                                                               
He said  he would like  to see  the House State  Affairs Standing                                                               
Committee  send  a  balanced  package up  to  the  House  Finance                                                               
Standing Committee.                                                                                                             
                                                                                                                                
Number 0705                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEVENS  said he is not  a great fan of  sales tax                                                               
either and - while he  understands what Representatives [Crawford                                                               
and Wilson] are saying and  understands, also, that AML is taking                                                               
a strong opposition to  the addition of a sales tax  - he said he                                                               
thinks  "it all  has to  be part  of the  mix."   He agreed  with                                                               
Representative Fate,  regarding getting  this legislation  to the                                                               
House Finance Standing  Committee.  He added that  he hopes other                                                               
[tax  bills] would  reach that  committee  concurrently, so  that                                                               
they  may  all be  discussed.    He said  it  is  true that  many                                                               
communities do  rely on sales  tax to  run their cities,  his own                                                               
included.                                                                                                                       
                                                                                                                                
Number 0774                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON  emphasized that she thought  this proposed                                                               
legislation  was very  unfair to  those 97  municipalities.   She                                                               
noted that  the larger  municipalities in the  state have  "a lot                                                               
more money  to deal  with," and indicated  that "there's  so much                                                               
more  for   them,"  because   of  diversification   within  those                                                               
communities.  She said that  the community of [Wrangell] also has                                                               
a substantial property tax, and it  is carrying it's share of the                                                               
burden  heavily, at  this time,  because  it does  not share  the                                                               
advantages  of  large  municipalities.   She  concluded:    "This                                                               
[does] nothing  but allow  the larger  municipalities to  do what                                                               
they need  to do, on the  backs of the small  municipalities, and                                                               
that's not right, and it's not fair."                                                                                           
                                                                                                                                
Number 0844                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES said, "I second that."                                                                                     
                                                                                                                                
Number 0880                                                                                                                     
                                                                                                                                
CHAIR COGHILL asked, "Is there any movement on the bill?"                                                                       
                                                                                                                                
Number 0890                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE said, "I would move the bill."                                                                              
                                                                                                                                
CHAIR COGHILL asked Representative Whittaker  if he would like to                                                               
offer some final comments.                                                                                                      
                                                                                                                                
REPRESENTATIVE  JIM  WHITTAKER,   Alaska  State  Legislature,  as                                                               
sponsor  of  HB 303,  noted  that  a  couple  of years  ago  [the                                                               
legislature] discussed  having a  fiscal policy that  would allow                                                               
the state  to pay its  bills.  It was  known that there  would be                                                               
difficulties and challenges  for each community, [as  a result of                                                               
such a  policy].  He  indicated that  the present moment  was the                                                               
moment for the  committee to make a decision whether  or not [the                                                               
legislature] would have a fiscal policy.                                                                                        
                                                                                                                                
CHAIR COGHILL reminded  the committee that there was  a motion on                                                               
the floor to  move CSHB 303, version  22-LS1206\P, Kurtz, 3/8/02,                                                               
out  of   committee  with  individual  recommendations   and  the                                                               
accompanying fiscal note.                                                                                                       
                                                                                                                                
REPRESENTATIVE WILSON requested a roll call vote.                                                                               
                                                                                                                                
A  roll call  vote was  taken.   Representatives Crawford,  Fate,                                                               
Hayes, James, and Stevens voted  to move CSHB 303 from committee.                                                               
Representatives Wilson and Coghill  voted against it.  Therefore,                                                               
CSHB 303(STA) was reported from  the House State Affairs Standing                                                               
Committee by a vote of 5-2.