Legislature(2019 - 2020)BELTZ 105 (TSBldg)

04/03/2019 01:30 PM JUDICIARY

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Audio Topic
01:33:03 PM Start
01:33:41 PM SJR4
02:38:14 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SJR 5 CONST. AM.:PERMANENT FUND & DIVIDEND TELECONFERENCED
<Bill Hearing Canceled>
<Pending Referral>
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SJR 4 CONST. AM: STATE TAX; INTIATIVE TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                         April 3, 2019                                                                                          
                           1:33 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Shelley Hughes, Chair                                                                                                   
Senator Peter Micciche                                                                                                          
Senator Jesse Kiehl                                                                                                             
Senator Mike Shower                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lora Reinbold, Vice Chair                                                                                               
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 4                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
prohibiting the  establishment of,  or increase  to, a  state tax                                                               
without the approval of the voters  of the state; and relating to                                                               
the initiative process.                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE JOINT RESOLUTION NO. 5                                                                                                   
Proposing amendments to the Constitution of the State of Alaska                                                                 
relating to the Alaska permanent fund and the permanent fund                                                                    
dividend.                                                                                                                       
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SJR 4                                                                                                                   
SHORT TITLE: CONST. AM: STATE TAX; INTIATIVE                                                                                    
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/19       (S)       STA, JUD, FIN                                                                                          
03/26/19       (S)       STA AT 1:30 PM BUTROVICH 205                                                                           
03/26/19       (S)       Heard & Held                                                                                           
03/26/19       (S)       MINUTE(STA)                                                                                            
03/27/19       (S)       STA AT 6:00 PM BUTROVICH 205                                                                           
03/27/19       (S)       Heard & Held                                                                                           
03/27/19       (S)       MINUTE(STA)                                                                                            
03/28/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/28/19       (S)       Moved CSSJR 4(STA) Out of Committee                                                                    
03/28/19       (S)       MINUTE(STA)                                                                                            
03/29/19       (S)       STA RPT CS 5NR SAME TITLE                                                                              
03/29/19       (S)       NR:    SHOWER,    REINBOLD,    MICCICHE,                                                               
                         COGHILL, KAWASAKI                                                                                      
04/01/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/01/19       (S)       Scheduled but Not Heard                                                                                
04/03/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MIKE BARNHILL, Policy Director                                                                                                  
Office of Management and Budget                                                                                                 
Office of the Governor                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT: Presented  SJR 4  and answered  questions on                                                             
behalf of the administration during the hearing on SJR 4.                                                                       
                                                                                                                                
WILLIAM MILKS, Assistant Attorney General                                                                                       
Civil Division                                                                                                                  
Labor & State Affairs Division                                                                                                  
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a  sectional analysis  and answered                                                             
questions during the hearing on SJR 4.                                                                                          
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:33:03 PM                                                                                                                    
CHAIR  SHELLEY  HUGHES  called   the  Senate  Judiciary  Standing                                                             
Committee meeting  to order at 1:33  p.m. Present at the  call to                                                               
order  were Senators  Kiehl, Shower,  and  Chair Hughes.  Senator                                                               
Micciche arrived as the meeting was in progress.                                                                                
                                                                                                                                
             SJR 4-CONST. AM: STATE TAX; INTIATIVE                                                                          
                                                                                                                                
1:33:41 PM                                                                                                                    
CHAIR  HUGHES  announced that  the  order  of business  would  be                                                               
SENATE  JOINT  RESOLUTION  NO. 4,  Proposing  amendments  to  the                                                               
Constitution   of   the   State   of   Alaska   prohibiting   the                                                               
establishment  of,  or  increase  to, a  state  tax  without  the                                                               
approval  of  the  voters  of  the state;  and  relating  to  the                                                               
initiative process.                                                                                                             
                                                                                                                                
[Before the  committee was CSSJR 4(STA),  work order 31-GS1070\U,                                                               
Version U.]                                                                                                                     
                                                                                                                                
1:34:34 PM                                                                                                                    
MIKE BARNHILL, Policy Director,  Office of Management and Budget,                                                               
Office of  the Governor, Juneau,  said that  SJR 4 is  a proposed                                                               
constitutional amendment  that would require  any new tax  or tax                                                               
rate increase to  be approved by the legislature  and the public.                                                               
He   briefly  mentioned   other  constitutional   amendments  the                                                               
administration  has proposed  and stated  that these  resolutions                                                               
form a foundational piece of  Governor Dunleavy's plan to restore                                                               
the state to fiscal stability and to restrain state spending.                                                                   
                                                                                                                                
He said  that SJR  4 would  amend Article IX,  Section 1,  of the                                                               
Constitution  of the  State of  Alaska. He  pointed out  that the                                                               
pieces already exist in the  Constitution of the State of Alaska.                                                               
If  the  legislature establishes  a  new  tax by  legislation  or                                                               
increases  the tax  rate,  the people  currently  have the  power                                                               
through  the  referendum process  to  consider  and overturn  the                                                               
legislature's determination.  Conversely, if the  people initiate                                                               
a  tax measure  the  legislature can  overturn their  initiative,                                                               
after two years has lapsed.                                                                                                     
                                                                                                                                
MR.  BARNHILL  characterized SJR  4  as  an  effort to  make  the                                                               
process  more  efficient  and  automatic.  For  example,  if  the                                                               
legislature  establishes  or increases  a  tax  rate, the  people                                                               
automatically  have  the right  to  consider  it at  a  statewide                                                               
election  without   going  through   the  process   of  gathering                                                               
signatures to  place the  matter on  the ballot.  Conversely, the                                                               
legislature could consider  an initiated tax law  after two years                                                               
has lapsed. This  would bring it closer in time,  so in order for                                                               
an initiated  tax to take  effect, the legislature would  need to                                                               
approve it  [at the next  legislative session].  He characterized                                                               
it  as a  simpler process  than  the one  in SJR  6, which  would                                                               
create a spending limit.                                                                                                        
                                                                                                                                
1:37:10 PM                                                                                                                    
MR. BARNHILL  provided the genesis  of the policy  background for                                                               
SJR  4.  In  1992,  the   State  of  Colorado  through  a  ballot                                                               
initiative amended its constitution  to require what is popularly                                                               
known as the Taxpayer Bill of  Rights. It requires people to vote                                                               
for  the  establishment  any  state  or local  taxes  or  for  an                                                               
increase  to  any  tax  rate. Three  other  states  have  adopted                                                               
similar processes.  Washington amended its constitution  on local                                                               
property taxes to  require a three-fifths vote  of a municipality                                                               
if the proposed property tax  increase was more than one percent.                                                               
In 1996,  California amended its  constitution to require  a vote                                                               
for  any  increase to  local  taxes  or fees.  Finally,  Missouri                                                               
amended its constitution to require a  vote of the people for any                                                               
tax  increase in  excess of  $50 million  or one  percent of  the                                                               
state revenues. Other  examples of similar efforts  to change the                                                               
constitution exist, he said.                                                                                                    
                                                                                                                                
1:38:40 PM                                                                                                                    
WILLIAM MILKS, Assistant Attorney  General, Civil Division, Labor                                                               
& State Affairs, Department of  Law, Juneau, provided a sectional                                                               
analysis for SJR 4. He reviewed Section 1.                                                                                      
                                                                                                                                
     Section 1:  This section would add  two new subsections                                                                    
     to  the tax  clause of  the Alaska  Constitution. Taken                                                                    
     together, the  two subsections  would require  that any                                                                    
     new state  tax or increase  to the rate of  an existing                                                                    
     state tax be  approved by both the  legislature and the                                                                    
     voters.                                                                                                                    
                                                                                                                                
1:39:27 PM                                                                                                                    
MR.  MILKS  said  that  Section  [1,  subsections  (b)  and  (c)]                                                               
encompass the key changes Mr. Barnhill has described.                                                                           
                                                                                                                                
     Subsection (b)  would require  any law  enacted through                                                                    
     the  legislative process  that  would  establish a  new                                                                    
     state tax  or increase  the rate  of an  existing state                                                                    
     tax  shall not  take effect  unless the  voters approve                                                                    
     the  proposed law  in the  next statewide  election. If                                                                    
     the  voters approve  the proposed  law,  it would  take                                                                    
     effect 90 days  after the election was  certified or on                                                                    
     a special effective date concurred  in by two-thirds of                                                                    
     the members of each house, whichever date is later.                                                                        
                                                                                                                                
     Subsection (c) would require that  any law proposed for                                                                    
     enactment through  the initiative process  and approved                                                                    
     by the voters  that would establish a new  state tax or                                                                    
     increase the  rate of an  existing state tax  shall not                                                                    
     take  effect  unless  the legislature,  by  resolution,                                                                    
     approved the initiated  measure by the end  of the next                                                                    
     regular session. The legislature  would have to approve                                                                    
     it  by  majority  vote  in  a  joint  session.  If  the                                                                    
     legislature  approved  of  the  initiated  measure,  it                                                                    
     would  take  effect  90 days  after  the  legislature's                                                                    
     approval.                                                                                                                  
                                                                                                                                
MR. MILKS turned to Section [2]:                                                                                                
                                                                                                                                
     Section 2: This section  would make a conforming change                                                                    
     to the initiative  process in Section 6  of Article XI,                                                                    
     providing   an   exception   to  the   effective   date                                                                    
     requirements for initiatives.                                                                                              
                                                                                                                                
MR. MILKS  said that this would  make a conforming change  to the                                                               
initiative process  to provide that,  except as provided  in this                                                               
taxation article,  an initiative would  become law 90  days after                                                               
certification.  He explained  that  in the  taxation article  the                                                               
process voters  can by initiative  establish a tax or  increase a                                                               
tax subject to the legislature's consideration.                                                                                 
                                                                                                                                
        Section 3: This section would require that this                                                                         
     amendment be placed on the ballot in the 2020 general                                                                      
     election.                                                                                                                  
                                                                                                                                
MR.  MILKS  explained Section  [3]  provides  that the  amendment                                                               
would be on the ballot in the next general election.                                                                            
                                                                                                                                
1:41:21 PM                                                                                                                    
CHAIR HUGHES said if a new  tax is established it would take time                                                               
for the  administration to set up  the tax. She said  it made her                                                               
wonder about  the effective dates. For  example, at the end  of a                                                               
legislative session or after a  November election, the start date                                                               
of an  initiative process  would fall  at an  odd time.  Also, it                                                               
would  not  give the  administration  any  preparation time.  She                                                               
asked whether the administration would  be amenable to change the                                                               
effective date to January 1 of  the following fiscal year for the                                                               
initiative and the legislature process.                                                                                         
                                                                                                                                
MR. BARNHILL  responded that it  was an intriguing  proposal that                                                               
he  would  consult  on  and  report back  to  the  committee.  He                                                               
acknowledged  that  from  the administration's  perspective  that                                                               
making a  new tax effective  on January  1 made sense  since most                                                               
taxes run on a calendar year timeline.                                                                                          
                                                                                                                                
1:42:24 PM                                                                                                                    
MR. MILKS  said he understood  the issue raised by  Chair Hughes.                                                               
This proposed resolution would address  the circumstance when the                                                               
legislature  passes a  law that  establishes  a new  tax or  rate                                                               
increase  subsequently approved  by  the voters.  He referred  to                                                               
subsection (b), which provides that  the law would take effect 90                                                               
days after the  election was certified or on  a special effective                                                               
date  concurred  in  by  the   legislature.  However,  a  similar                                                               
provision  is not  included for  the second  way in  which a  tax                                                               
could be implemented.  He said that the legislature  could pass a                                                               
bill to change  the effective date. He agreed it  made more sense                                                               
to implement the new tax or  tax rate increase on the next fiscal                                                               
year, he said.                                                                                                                  
                                                                                                                                
CHAIR  HUGHES  deferred to  the  administration  to consider  and                                                               
report back to the committee.                                                                                                   
                                                                                                                                
1:43:52 PM                                                                                                                    
SENATOR KIEHL turned to the effective  date. He was unsure if the                                                               
legislature  would have  another  chance to  vote  to change  the                                                               
effective  date when  the legislature  initiates  the process  by                                                               
passing a  bill, which  is subsequently  approved by  the voters.                                                               
For  example,  the  language following  a  general  election  [in                                                               
subsection (b)],  reads "or    an effective date provided  for by                                                               
concurrence of  two-thirds of the  membership of each  house." He                                                               
asked whether this vote could happen after the voter approval.                                                                  
                                                                                                                                
MR. MILKS asked to review the language.                                                                                         
                                                                                                                                
1:45:25 PM                                                                                                                    
At-ease.                                                                                                                        
                                                                                                                                
1:45:44 PM                                                                                                                    
CHAIR HUGHES reconvened the meeting.                                                                                            
                                                                                                                                
1:45:48 PM                                                                                                                    
MR. MILKS answered  no. He offered his belief  that this language                                                               
would pertain to any law passed by the legislature.                                                                             
                                                                                                                                
SENATOR KIEHL  stated that it was  "not crystal clear" in  SJR 4.                                                               
He asked  whether any provision  was made for the  legislature to                                                               
provide  an effective  date  during the  approval  process of  an                                                               
initiated  process.   Although  he   did  not  see   an  explicit                                                               
provision,  he  thought it  pertained  to  Chair Hughes'  earlier                                                               
question.                                                                                                                       
                                                                                                                                
CHAIR HUGHES  asked how the  effective date currently  would work                                                               
for an initiative process.                                                                                                      
                                                                                                                                
MR. MILKS  said the initiative  process is covered  under Article                                                               
XI. The effective  date provision on an initiative  is in Section                                                               
6 and provides  that an initiative law becomes  effective 90 days                                                               
after certification.                                                                                                            
                                                                                                                                
1:47:47 PM                                                                                                                    
SENATOR  KIEHL  restated  his  question.  He  asked  whether  the                                                               
legislature could adjust the effective  date for an initiated tax                                                               
in its resolution.                                                                                                              
                                                                                                                                
MR. MILKS responded that if  the legislature introduced a bill to                                                               
implement or  change taxes, it  could set another  effective date                                                               
by a two-thirds vote. In terms  of an initiative process, the tax                                                               
would  not take  effect  unless the  legislature, by  resolution,                                                               
approved the initiative  law by a majority vote  in joint session                                                               
before the  adjournment of the next  regular legislative session.                                                               
If approved  by the  legislature the  initiated law  would become                                                               
effective  ninety days  after approval  [per subsection  (c)]. He                                                               
said  that should  provide  clarity on  the  earlier question  by                                                               
Chair Hughes.                                                                                                                   
                                                                                                                                
1:49:21 PM                                                                                                                    
CHAIR HUGHES said  the way this is written for  an initiated law,                                                               
the legislature  could not change  the effective date.  It simply                                                               
would become law ninety days after approval.                                                                                    
                                                                                                                                
MR. MILKS agreed.                                                                                                               
                                                                                                                                
1:49:44 PM                                                                                                                    
SENATOR KIEHL  offered his belief  that Alaska's voters  used the                                                               
initiative  process  several times  in  the  past. He  asked  for                                                               
further clarification on what part of  a proposal would go to the                                                               
voters  for  approval  if  the  legislature  made  statutory  and                                                               
regulatory changes related  to the operation of  a legal industry                                                               
[such as a  marijuana law], but it also included  a tax. He asked                                                               
whether voter approval would be limited  to the tax portion or if                                                               
it would apply to the entire proposal.                                                                                          
                                                                                                                                
MR.  MILKS said  that  if  the legislature  sought  to create  or                                                               
change a  tax, the portion regarding  the tax change would  go to                                                               
the voters for approval.                                                                                                        
                                                                                                                                
1:51:02 PM                                                                                                                    
CHAIR HUGHES  said she  believes Senator  Kiehl was  referring to                                                               
the marijuana initiative.  She said a lot more  was involved than                                                               
just the  tax piece. She  asked for further clarification  on how                                                               
the  marijuana initiative  would have  worked if  this resolution                                                               
had been in place.                                                                                                              
                                                                                                                                
SENATOR  KIEHL clarified  that his  scenario  indicated that  the                                                               
legislature  passed a  law,  and it  was not  passed  by a  voter                                                               
initiative.                                                                                                                     
                                                                                                                                
MR. MILKS  answered that  if the  legislature passed  a marijuana                                                               
tax,  it would  go to  the voters  for approval.  He referred  to                                                               
language, "the law  shall not take effect," which  really means a                                                               
portion of the  law. He asked why this language  was selected. In                                                               
further response to Senator Kiehl,  he reiterated that the voters                                                               
would vote  on the tax  portion, and  not the other  issues since                                                               
the legislature is  a law-making body. A law  that would increase                                                               
or change taxes would not  take effect unless the voters approved                                                               
it.                                                                                                                             
                                                                                                                                
1:52:57 PM                                                                                                                    
SENATOR KIEHL said  that the proposed language says  that the law                                                               
shall not take effect, what it  really means is that a portion of                                                               
the   law  shall   not  take   effect.  He   asked  for   further                                                               
clarification on the choice of this language.                                                                                   
                                                                                                                                
MR. MILKS said that the subject  of this resolution is taxes so a                                                               
law that would  increase or change taxes shall  not effect unless                                                               
the voters approve it.                                                                                                          
                                                                                                                                
CHAIR HUGHES  referred to the  marijuana initiative in  which the                                                               
legislature  passed multiple  laws, she  said. She  asked whether                                                               
the  legislature   would  subsequently   approve  only   the  tax                                                               
provision of an initiative passed by voter approval.                                                                            
                                                                                                                                
MR. MILKS answered yes, that is correct.                                                                                        
                                                                                                                                
1:54:13 PM                                                                                                                    
SENATOR  KIEHL pointed  out the  voters created  the cruise  ship                                                               
initiative, including a gambling and  head tax. He asked how that                                                               
would apply  under SJR 4,  whether the legislature would  vote on                                                               
those separately or together.                                                                                                   
                                                                                                                                
MR.  BARNHILL responded  that if  the resolution  was phrased  in                                                               
terms  of a  bill, Senator  Kiehl's concern  would be  well taken                                                               
since a  bill contains  multiple laws.  He said  in terms  of the                                                               
marijuana initiative,  the bill  had laws pertaining  to criminal                                                               
provisions,  tax  provisions and  other  things.  However, SJR  4                                                               
applies to the law specific  to establishing or increasing a tax.                                                               
He offered his belief that the language is quite clear.                                                                         
                                                                                                                                
1:55:47 PM                                                                                                                    
CHAIR  HUGHES  asked whether  a  bill  that touches  on  multiple                                                               
things  would  be  considered  a   single  law  or  if  would  be                                                               
considered passing a group of laws.                                                                                             
                                                                                                                                
SENATOR  KIEHL  directed  attention  to the  second  sentence  in                                                               
Article  II, Section  14  of  the Constitution  of  the State  of                                                               
Alaska.                                                                                                                         
                                                                                                                                
     Section  14. Passage  of Bills.  The legislature  shall                                                                    
     establish  the procedure  for enactment  of bills  into                                                                    
     law. No bill may become  law unless it has passed three                                                                    
     readings in  each house on three  separate days, except                                                                    
     that  any bill  may be  advanced from  second to  third                                                                    
     reading  on  the  same day  by  concurrence  of  three-                                                                    
     fourths  of  the  house considering  it.  No  bill  may                                                                    
     become law  without an affirmative  vote of  a majority                                                                    
     of the membership  of each house. The yeas  and nays on                                                                    
     final passage shall be entered in the journal.                                                                             
                                                                                                                                
1:56:26 PM                                                                                                                    
MR. MILKS clarified  that a bill can include  many changes before                                                               
it  becomes  law as  long  as  it  meets  the same  subject  rule                                                               
requirement. However,  a constitutional amendment that  refers to                                                               
a law  to enact  a state  tax or increase  the tax  is addressing                                                               
that issue. He said  that the intent is to put  one subset of the                                                               
various public  policies on  a general  topic. However,  only the                                                               
tax change  would go to the  voters, which is the  intent of this                                                               
provision.    When   the    Alaska   Supreme    Court   considers                                                               
constitutional amendments it uses  a common, plain understanding.                                                               
He clarified that this resolution is about a change in tax law.                                                                 
                                                                                                                                
CHAIR  HUGHES  said when  something  becomes  the law,  it  means                                                               
something becomes  the law of  the land  and is codified.  A bill                                                               
could  contain  multiple features,  which  is  important for  the                                                               
record to reflect.                                                                                                              
                                                                                                                                
1:58:30 PM                                                                                                                    
SENATOR  KIEHL  asked  how  the  legislature  would  vote  on  an                                                               
initiative that institutes multiple taxes.                                                                                      
                                                                                                                                
MR. MILKS asked  if he was referring to an  initiative that would                                                               
enact multiple tax  laws, such as the cruise  ship initiative. If                                                               
so, he responded that the  legislature would need to approve each                                                               
tax separately. The  resolution refers to a state tax  and if two                                                               
taxes were  on a  ballot, the legislature  would need  to approve                                                               
each one.                                                                                                                       
                                                                                                                                
SENATOR  KIEHL  asked  who  would   prepare  the  resolution  the                                                               
legislature would need to create and approve.                                                                                   
                                                                                                                                
MR. MILKS  answered that the legislative  counsel [in Legislative                                                               
Legal Services] would do so.                                                                                                    
                                                                                                                                
SENATOR KIEHL  asked for  further clarification  on the  type and                                                               
form  of  resolution,  and  if  it  would  be  subject  to  three                                                               
readings, and hearings in substantive  committees. He said he was                                                               
unsure the role the governor envisions for the legislature.                                                                     
                                                                                                                                
2:01:08 PM                                                                                                                    
MR. MILKS  answered that it  would apply the Constitution  of the                                                               
State of Alaska,  which refers to, "shall not  take effect unless                                                               
the  legislature by  resolution approves  the initiated  law." He                                                               
said  the legislature's  rules would  need to  comply with  this,                                                               
such that a resolution would  be presented for the legislature to                                                               
consider.  He characterized  the process  as somewhat  similar to                                                               
the  one used  on executive  orders.  The governor  can issue  an                                                               
executive  order and  under Article  III, Section  23, "?  unless                                                               
disapproved  by  a resolution  by  the  majority of  the  members                                                               
meeting in joint session," the  executive order would become law.                                                               
He envisioned the legislative counsel  would consider as a guide,                                                               
but what would be intended, if  approved by the voters, is that a                                                               
resolution would be before the  legislature to approve the action                                                               
of the voters or not.                                                                                                           
                                                                                                                                
2:02:44 PM                                                                                                                    
SENATOR  KIEHL  thought  the  example  was  good,  that  with  an                                                               
executive order, the Constitution of  the State of Alaska assumes                                                               
the  governor  has the  power  to  use  executive power  and  the                                                               
legislature must act to stop it.  He said that SJR 4 assumes that                                                               
the voters don't  necessarily know what they are  doing when they                                                               
use their  power of  initiative, that  they need  a check  by the                                                               
legislature. He asked whether the  voters were entitled to a vote                                                               
in joint session.                                                                                                               
                                                                                                                                
MR. MILKS  responded that  the proposed  language says  that "the                                                               
law shall  not take effect  unless the legislature  by resolution                                                               
approves the  initiated law by  a majority vote in  joint session                                                               
before the adjournment of the  next regular session." He said the                                                               
bill  drafter's  intent  is  that   a  mandatory  action  by  the                                                               
legislature would be required.                                                                                                  
                                                                                                                                
2:03:45 PM                                                                                                                    
CHAIR HUGHES said it appeared it  would be mandatory that a joint                                                               
session's intention  was to approve the  people's initiative. She                                                               
asked whether she was reading it correctly.                                                                                     
                                                                                                                                
MR.  MILKS  offered  his  belief   that  she  is  looking  at  it                                                               
correctly.                                                                                                                      
                                                                                                                                
CHAIR HUGHES asked whether that was the administration's intent.                                                                
                                                                                                                                
2:04:54 PM                                                                                                                    
At-ease.                                                                                                                        
                                                                                                                                
2:04:54 PM                                                                                                                    
SENATOR MICCICHE joined the meeting.                                                                                            
                                                                                                                                
2:05:56 PM                                                                                                                    
CHAIR HUGHES reconvened the meeting.                                                                                            
                                                                                                                                
2:06:04 PM                                                                                                                    
MR.  BARNHILL,  after consultation,  explained  that  it was  the                                                               
intent  of  the  administration  to  allow  the  legislature  the                                                               
discretion on  whether to take  up a resolution in  joint session                                                               
to approve  the voter's action.  If the legislature chose  not to                                                               
take up the initiated law, the tax would not become effective.                                                                  
                                                                                                                                
SENATOR  KIEHL expressed  concern since  six senators  could make                                                               
the decision not  to take it up. He also  questioned more broadly                                                               
what tax would trigger this process.                                                                                            
                                                                                                                                
MR.  MILKS  answered  that  a  tax is  a  charge  levied  by  the                                                               
government for a public purpose  to force contributions of wealth                                                               
to meet the public needs of  government. He said the term he used                                                               
was one used when the  constitutional framers passed Article VII,                                                               
Section  1,  whereas  a  user  fee  or  a  license,  which  is  a                                                               
permission to do  something such as professional  fees or fishing                                                               
license.  He said  that an  income tax  or a  sales tax  would be                                                               
subject to a vote of the people.                                                                                                
                                                                                                                                
2:09:59 PM                                                                                                                    
SENATOR KIEHL asked whether the  Division of Motor Vehicles (DMV)                                                               
constitutes a fee  or a tax since it  raises about two-and-a-half                                                               
times more than what it costs to run the DMV.                                                                                   
                                                                                                                                
MR. MILKS  said a driver's  license is a  fee for purpose,  so it                                                               
would be a user fee.                                                                                                            
                                                                                                                                
SENATOR  KIEHL  related  a  scenario  in  which  the  legislature                                                               
doubled its  fees for  the DMV,  or five times  what it  costs to                                                               
administer  the program.  He asked  whether it  would still  be a                                                               
fee.                                                                                                                            
                                                                                                                                
MR. MILKS responded that a tax  is an effort to raise revenue for                                                               
general government spending  as opposed to a user  fee to finance                                                               
a particular  service. He said if  the question is whether  a fee                                                               
could  be raised  so  high that  it could  be  interpreted to  be                                                               
considered a tax,  the answer is that it is  conceivable it could                                                               
be   interpreted   in   that  way.   When   the   courts   review                                                               
constitutional amendments, it uses  what would be considered "the                                                               
plain understanding  of the public."  For example,  if commercial                                                               
license  fees  are sustaining  a  program,  the court  would  not                                                               
interpret the fees  as constituting a tax.  However, the scenario                                                               
previously  described  in which  generated  revenue  was used  to                                                               
sustain  government,  arguably  could  be considered  a  tax.  He                                                               
clarified that  the intent  of this resolution  is to  follow the                                                               
traditional meaning of tax.                                                                                                     
                                                                                                                                
2:13:14 PM                                                                                                                    
SENATOR  SHOWER asked  if the  intent of  SJR 4  is to  cover the                                                               
generic income  tax or  sales tax.  He characterized  the desired                                                               
language as clear,  concise, and correct. He said the  goal is to                                                               
be as  simple and clear  as possible.  He asked whether  it would                                                               
simplify the  issue to further define  a tax or if  it would make                                                               
it more complex.                                                                                                                
                                                                                                                                
MR. BARNHILL  answered that the  intent of the  administration is                                                               
"tax" be interpreted as the  common people would understand to be                                                               
a tax and as the Constitution of  the State of Alaska uses it and                                                               
not to  complicate it.  A potential  rule of  thumb is  that most                                                               
taxes in Alaska are placed in Title 43.                                                                                         
                                                                                                                                
2:15:12 PM                                                                                                                    
SENATOR SHOWER asked for further  clarification on the definition                                                               
of a tax.                                                                                                                       
                                                                                                                                
MR. BARNHILL  said that  Mr. Milks  gave the  definition earlier,                                                               
which could be restated.                                                                                                        
                                                                                                                                
CHAIR  HUGHES commented  that  the  tax is  a  levy collected  to                                                               
provide for  general government services and  a fee is a  levy to                                                               
provide a  service that benefits  the group of people  from which                                                               
the money is collected.                                                                                                         
                                                                                                                                
MR. MILKS  said that accurately describes  the difference between                                                               
a tax and a license fee.  The Constitution of the State of Alaska                                                               
already envisions these are different  things because Article IX,                                                               
Section 1 refers to tax, and  Section 7 refers to tax or license.                                                               
He explained  that the  types of  taxes vary,  including personal                                                               
income tax,  corporate income taxes,  sales taxes,  excise taxes,                                                               
alcohol taxes.  However, fees are  paid for liquor  licenses. Mr.                                                               
Barnhill mentioned other states establish taxes.                                                                                
                                                                                                                                
2:17:54 PM                                                                                                                    
SENATOR  MICCICHE said  that it  is clear  that if  the committee                                                               
wanted  to limit  the type  of tax  it should  be defined  in the                                                               
resolution,  which it  has the  authority to  do. The  resolution                                                               
does  not apply  to fees,  such as  hunting and  fishing fees  or                                                               
motor  vehicle  fees.  This  resolution  applies  to  all  taxes,                                                               
including  corporate  taxes,  fuel  taxes,  fish  taxes,  alcohol                                                               
taxes, cannabis taxes, oil and  gas taxes, estate taxes and other                                                               
taxes.  He  questioned   whether  that  is  the   intent  of  the                                                               
administration, but the  committee must decide if it  wants SJR 4                                                               
to stay in this form.                                                                                                           
                                                                                                                                
MR. BARNHILL agreed.                                                                                                            
                                                                                                                                
2:19:05 PM                                                                                                                    
SENATOR KIEHL suggested that the  proposed language raises dozens                                                               
of  questions.   The  committee   could  decide  to   revise  the                                                               
resolution to address  the easy cases since the  hard cases would                                                               
likely end up in court.                                                                                                         
                                                                                                                                
CHAIR HUGHES said  at first blush that she would  prefer to clear                                                               
the matter.  She asked whether  Senator Shower would  be amenable                                                               
to clarifying the definition of a tax.                                                                                          
                                                                                                                                
2:20:07 PM                                                                                                                    
SENATOR SHOWER answered  yes. He offered his belief  that this is                                                               
a necessary discussion.                                                                                                         
                                                                                                                                
MR.   BARNHILL   acknowledged   a  willingness   to   engage   in                                                               
conversations with members to consider ideas.                                                                                   
                                                                                                                                
2:20:54 PM                                                                                                                    
SENATOR KIEHL  asked whether the intent  is for this to  apply to                                                               
political subdivisions in the state.                                                                                            
                                                                                                                                
MR. MILKS answered that SJR 4 refers to a state tax.                                                                            
                                                                                                                                
MR. BARNHILL  pointed out  that other  states have  amended their                                                               
constitutions to  explicitly indicate  if it  applies at  a local                                                               
level or a local level and  at the state level. He clarified that                                                               
SJR 4 does not indicate it would apply at a local level.                                                                        
                                                                                                                                
2:21:42 PM                                                                                                                    
SENATOR MICCICHE  explained one advantage some  members who serve                                                               
on other  committees have is  that they can review  bills several                                                               
times and consider policy. He  said he struggles with whether the                                                               
current  system of  electing  or  not reelecting  representatives                                                               
based  on  their actions  suffices  and  whether the  legislature                                                               
should be able to trump the voter in the initiative process.                                                                    
                                                                                                                                
He said that  the Constitution of the State of  Alaska allows the                                                               
public  to   disagree  with   legislative  actions   through  the                                                               
initiative or  referendum process.  If successful,  an initiative                                                               
would  become law  for  two years  before  the legislature  could                                                               
change it. Although  the people would give  up substantial rights                                                               
in  this resolution,  they gain  some. However,  he fundamentally                                                               
believes it  is the people's  right to overrule  the legislature.                                                               
He struggles  with SJR 4,  because he is  unsure of how  it would                                                               
change behaviors of legislators and the public.                                                                                 
                                                                                                                                
2:24:01 PM                                                                                                                    
CHAIR HUGHES  explained that the first  part of SJR 4  would give                                                               
the people  ability to  overrule the  legislature. She  asked for                                                               
further clarification  on how  it has  typically worked  in other                                                               
jurisdictions  and if  the voters  routinely  turn down  proposed                                                               
local or state taxes.                                                                                                           
                                                                                                                                
MR. BARNHILL  answered that he  cannot speak exhaustively  on the                                                               
experiences in  other states. However,  he has  reviewed Colorado                                                               
since  it  was  the  inspiration   for  SJR  4.  He  related  his                                                               
understanding that  Colorado, which  amended its  constitution in                                                               
1992, has had  a dozen new taxes  or increases to taxes  put to a                                                               
direct  vote  since  then,  approving  several.  Colorado  voters                                                               
approved an  increase to the  tobacco tax in 2004,  the marijuana                                                               
tax in 2012, and an increase to the marijuana tax in 2014.                                                                      
                                                                                                                                
2:25:41 PM                                                                                                                    
CHAIR HUGHES pointed out that  the legislature could call a joint                                                               
session, but  if the legislature chose  not to hold one  it would                                                               
be  a de  facto disapproval.  However,  in doing  so, the  public                                                               
would not know individual sentiment.                                                                                            
                                                                                                                                
2:26:50 PM                                                                                                                    
SENATOR  KIEHL  asked whether  changing  "who  or what"  products                                                               
would be  subject to an  existing tax  and if that  would trigger                                                               
provisions in  SJR 4.  For example, currently  a bill  before the                                                               
legislature would expand who must  pay the other tobacco products                                                               
excise tax.                                                                                                                     
                                                                                                                                
MR.  MILKS pointed  out  that Senator  Kiehl  is describing  what                                                               
seems   to  be   a  change   in   exemption  from   a  tax.   The                                                               
administration's  intent is  that changes  to the  tobacco excise                                                               
tax would trigger a vote since it is an existing tax.                                                                           
                                                                                                                                
SENATOR  KIEHL said  that  the marijuana  industry  has asked  to                                                               
restructure  the industry's  tax, which  should result  in a  net                                                               
neutral  tax.  In  addition,  the  legislature  could  alter  the                                                               
effective  rate  of a  tax,  such  as  an  oil tax,  through  the                                                               
appropriation process  and while that might  not nominally change                                                               
the rate, he wondered if it would trigger a vote.                                                                               
                                                                                                                                
2:29:09 PM                                                                                                                    
MR. BARNHILL  reiterated Mr. Milk's testimony  that the intention                                                               
of SJR 4 would be to  trigger a vote when the legislature creates                                                               
a new  tax or a statutory  tax rate increase. Nothing  else would                                                               
trigger a  vote. Further, Colorado  set recent precedent  when it                                                               
decided that an indirect tax rate  increase on a certain class of                                                               
people did not trigger the provisions.                                                                                          
                                                                                                                                
SENATOR MICCICHE said he was not  sure that he agreed. He offered                                                               
his belief  that changing exemptions could  dramatically change a                                                               
tax rate by including a whole  new class of taxpayers. He said it                                                               
would need to be on a case-by-case basis and not a boilerplate.                                                                 
                                                                                                                                
MR.  MILKS said  he understood  Senator Micciche's  statement. He                                                               
reiterated  that a  new tax  or a  change in  the statutory  rate                                                               
would trigger the  provision for a direct vote, but  not a change                                                               
in deductions  or exemptions.  Naturally, the  language in  SJR 4                                                               
could be modified, he said.                                                                                                     
                                                                                                                                
CHAIR HUGHES  wondered whether the  administration would  be open                                                               
to amending  SJR 4  to include  something that  would effectively                                                               
impact  the tax  rate,  such as  changing  deductions. She  asked                                                               
whether SJR 4 needed to be fixed.                                                                                               
                                                                                                                                
MR. BARNHILL expressed a willingness  to discuss it. He explained                                                               
that the  administration was trying  to strike a  balance between                                                               
specificity and  generality that works  constitutionally. Loading                                                               
up the constitution with a lot  of detail would make it more like                                                               
a statute.  He clarified that  he and  Mr. Milks were  present to                                                               
explain what  the drafters intended. He  acknowledged the anxiety                                                               
about lack of precision in constitutional terms.                                                                                
                                                                                                                                
2:32:39 PM                                                                                                                    
SENATOR  SHOWER agreed  that  the Constitution  of  the State  of                                                               
Alaska provides  more of a  60,000-foot view while  the statutory                                                               
language provides considerably more  detail. He characterized the                                                               
constitution as  more of  an idea document  and laws  provide the                                                               
specificity. He  affirmed the goal  is to protect the  rights and                                                               
power of the people.                                                                                                            
                                                                                                                                
2:34:52 PM                                                                                                                    
MR. BARNHILL said that members' comments were fair comments.                                                                    
                                                                                                                                
2:35:11 PM                                                                                                                    
SENATOR MICCICHE  said that  currently people  have the  right to                                                               
strike anything  the legislature  does except  for appropriations                                                               
through a referendum process. He  clarified that SJR 4 would make                                                               
that process automatic.                                                                                                         
                                                                                                                                
He  further  clarified that  Alaskans  have  a right  through  an                                                               
initiative  process to  pass a  law that  the legislature  cannot                                                               
strike. This resolution  would allow the legislature  to strike a                                                               
law by the  people. He characterized the overall  change would be                                                               
for people to  lose a significant right. Although  it sounds fair                                                               
because it allows people to collect  signatures and put it on the                                                               
ballot,  it is  not. Essentially  six senators  could prevent  an                                                               
initiated law  from occurring,  he said.  He maintained  that the                                                               
people would  be giving up  a pretty substantial right  under SJR                                                               
4.                                                                                                                              
                                                                                                                                
[SJR 4 was held in committee.]                                                                                                  
                                                                                                                                
2:38:00 PM                                                                                                                    
CHAIR HUGHES reviewed upcoming committee announcements.                                                                         
                                                                                                                                
2:38:14 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Hughes  adjourned the  Senate Judiciary  Standing Committee                                                               
meeting at 2:38 p.m.                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
SJR4 Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4
SJR4 Transmittal Letter.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4
SJR4 Sectional Analysis Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJR 4
SJR4 Explanation of Changes Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4