Legislature(2001 - 2002)
03/15/2002 09:10 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 347
"An Act relating to taxation."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Donley stated the Committee has been working with the
Department of Revenue to address technical drafting needs; however,
a title change could be addressed.
Senator Hoffman stated the title "should be left as broad as
possible" in order for other measures to be added to address the
state's fiscal gap.
AT EASE 9:24 AM / 9:27 AM
Amendment #1: This amendment changes the bill title to read as
follows.
"An act relating to alcoholic beverages."
Senator Leman moved for adoption.
Senator Hoffman objected.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Austerman, Senator Leman, Senator
Ward, Co-Chair Donley, Senator Wilken
OPPOSED: Senator Hoffman
ABSENT: Co-Chair Kelly, Senator Olson
The motion PASSED (6-1-2)
AT EASE 9:36 AM/ 9:38 AM
Amendment #2: This amendment amends the title to read as follows.
"An act relating to alcoholic beverages; and providing
for an effective date."
This amendment also inserts a new section on page 3, following line
4 to read as follows.
*Sec. 5. The uncodified law of the State of Alaska is
amended by adding a new section to read:
CONDITIONAL EFFECT. This Act takes effect only if a
version of SJR 23, proposing amendments to the Constitution of
the State of Alaska relating to an appropriation limit and a
spending limit, is passed by the legislature and approved by
the voters during the 2002 general election.
*Sec.6. If this Act takes effect under sec.5, it takes
effect on January 1, 2003.
Senator Ward stated this amendment would send "a clear message" to
the voters of Alaska, that if the budget is passed with a two
percent increase as currently projected, it "would trigger an
alcohol tax" and perhaps other taxes including a sales tax. He
stated that the alcohol tax increase in this bill would go into
effect if the people of the State approved a constitutional
spending limit as specified in SJR 23.
Senator Ward reiterated that the people of the State want to have
"restraints" in government, and he wants to let people know that
"the State of Alaska is going to live within its means." He
furthered, "at the end of this year, we're going to reach into the
budget reserve account, and still not live within our means." He
continued that SJR 23 would give the voters a chance to vote on a
constitutional spending limit, and he stressed that if the citizens
of the State approve a limit, the Legislature is going to have to
prioritize projects and make difficult decisions about which
projects to fund.
Senator Ward voiced appreciation for the efforts of those people
working to "promote sobriety and reduce the terrible" effects of
alcohol. He continued that the "affects of alcohol are a lot more
devastating than cigarettes." He opined the Legislature "passed a
cigarette tax, and all that happened was more government," and
"more government is one of the most harmful things that is
happening to Alaska right now…it is making people dependent, they
believe there is an obligation of cradle to grave, and it causes
harm. We need to get a handle on government" and help encourage
growth in our economy. He summarized this alcohol tax, without a
spending limit, "doesn't reduce, it doesn't restrict, and it just
takes more spending and puts it on top of an open checking
account."
Senator Ward moved for the adoption of Amendment #2.
Senator Wilken objected to the motion.
Senator Austerman noted there is other legislation that addresses
"larger based taxes," and this amendment, if passed, should be
reworded to include passage of SJR 23 "and/or SJR 33." He explained
that SJR 33 would impose a limit on the level of income or sales
taxes.
Senator Hoffman questioned the effectiveness of SJR 23. He stated
the Legislature needs to "bridge the gap" and work toward "gaining
the people's trust" by responsibly using the revenue generated from
taxes. He continued that "this amendment seems meaningless, as it
just affects whether this tax goes into effect or not."
Senator Ward responded that Senator Hoffman is correct in saying
the Legislature needs to work to gain people's trust, and he
declared, "I don't trust us to reduce the budget." He stressed he
would not be introducing this amendment if he believed the
Legislature or the Administration could live within its means.
Senator Ward stated this discussion involves "creating money" by
taking money from people who drink alcohol. He voiced his support
for this tax; however, believes the money generated would be "spent
on more government just like the tobacco money was," and he
believes this amendment would help make the government operate
within its means.
Senator Leman stated he does not support this amendment, as this
bill and SJR 23 are both important measures, and combining them
might "complicate" efforts. He remarked he is confident the voters
would approve SJR 23. He voiced support of Senator Ward's comments,
but did not believe this would be the best way to proceed.
Senator Hoffman stated the Legislature has made efforts to control
spending, and noted the State of Alaska was the only state to
reduce government in the 1990's.
Senator Ward remarked that Alaska spends more "public money" per
capita than any other state. He stressed that the Legislature
should reduce the size of government now before the state's
resources are depleted. He reiterated that Alaska is "spending too
much," and a spending limit is necessary to make the government
reduce spending.
Senator Austerman voiced appreciation of the discussion and
stressed the need for the state to have a long-term fiscal plan. He
asserted the Legislature must work "as a group to prioritize," and
warned that until spending is prioritized, the Legislature would
never be able to live within the means of a budget. He contended
that these types of conversations would continue every year if a
long-term plan is not in place.
Co-Chair Donley voiced appreciation for all the comments; however,
noted he does not wish to "link" this bill with SJR 23.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Ward
OPPOSED: Senator Hoffman, Senator Leman, Senator Wilken, Senator
Austerman, Co-Chair Donley
ABSENT: Co-Chair Kelly, Senator Olson
The motion FAILED (5-2-2)
Senator Leman suggested the Committee consider taxing low alcohol
content beverages, including ciders, at a separate rate; however,
if that were the case, the Committee should hear testimony before
taking any action.
Senator Green asked if the revenue generated from this bill would
fund a specific program or would be deposited into the general
fund.
AT EASE 9:54 AM / 9:55 AM
Co-Chair Donley responded that revenues generated from this tax
would be general funds.
Senator Wilken inquired as to how the calculations on the chart
distributed by Co-Chair Donley titled "% Proposed Tax of Total
$4.25 Drink Price" [copy on file] were determined.
Senator Austerman stated the chart appears to reflect the
percentage increase per drink generated by the proposed tax.
Senator Wilken noted that retailer margins and patrons costs need
to be factored into the percentage increase. He calculated that
under existing law, the tax is approximately 4.3 percent of the
cost of a $4.00 drink, and under the new law, it would be about 13
percent. He stated the cost of a $4.00 drink, with the retail
margin factored at 100 percent and the patron costs factored in,
would increase approximately 10 percent.
Senator Leman made a motion to move SB 347 as amended from
Committee with the accompanying fiscal note.
Senator Hoffman objected to the bill based on the title restriction
and the targeting of a single industry for taxation.
Senator Leman stated there are "other vehicles" in the House of
Representatives and in the Senate pertaining to Alaska's fiscal
challenge.
Senator Austerman again stressed the need for a long-range plan;
however, voiced support for this bill because of the "industry set
of woes the State of Alaska has, driven by the consumption of
alcohol." He stated this tax could help address these expenses.
Senator Hoffman, referring to Senator Leman's comment "that there
are other vehicles out there;" stated that if he were assured that
other tax measures were forthcoming and would be passed, he might
withdraw his objection.
Senator Green stressed her opposition to this discussion inferring
that the revenue generated from this tax would support programs
"that combat alcoholism" instead of being designated as general
funds. She stated that taxes are intended to raise revenue, not to
"penalize" people.
SFC 02 # 33, Side B 10:02 AM
Senator Austerman agreed that the revenue generated from this tax
would be general fund money; which could fund a wide variety of
alcohol related programs.
A roll call was taken on the motion.
IN FAVOR: Senator Leman, Senator Austerman, Senator Green, Senator
Wilken, Co-Chair Donley
OPPOSED: Senator Hoffman
ABSENT: Senator Ward, Senator Olson, Co-Chair Kelly
The motion PASSED (5-1-3)
CS SB 347(FIN) was REPORTED from Committee with a new fiscal note
dated 3/10/02 in the amount of $74.5 from the Department of
Revenue.
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