Legislature(2021 - 2022)BUTROVICH 205

04/30/2021 01:30 PM JUDICIARY

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Heard & Held
-- Invited & Public Testimony --
Heard & Held
-- Invited & Public Testimony --
**Streamed live on AKL.tv**
           SJR 7-CONST. AM: STATE TAX; VOTER APPROVAL                                                                       
2:42:18 PM                                                                                                                    
CHAIR   HOLLAND  reconvened   the  meeting   and  announced   the                                                               
consideration  of  SENATE  JOINT   RESOLUTION  NO.  7,  Proposing                                                               
amendments to  the Constitution of  the State of  Alaska relating                                                               
to  prohibiting the  establishment  of a  state  tax without  the                                                               
approval  of  the  voters  of  the state;  and  relating  to  the                                                               
initiative process.                                                                                                             
[This was the first hearing on SJR 7.]                                                                                          
2:42:41 PM                                                                                                                    
MIKE  BARNHILL,  Deputy   Commissioner,  Department  of  Revenue,                                                               
Juneau,  Alaska, began  a  PowerPoint on  SJR  7 by  paraphrasing                                                               
slide 2:                                                                                                                        
        • SJR 7 amends article 9, section 1 of the Alaska                                                                       
        • Requires voter approval for any new tax enacted                                                                       
          by the legislature                                                                                                    
          • Article 9, section 1(b)                                                                                             
          • A form of direct democracy                                                                                          
          • Functionally,   authorizes     an    automatic                                                                      
             referendum on new taxes                                                                                            
        • Requires legislative approval for any new tax                                                                         
          enacted by initiative                                                                                                 
          • Article 9, section 1(c)                                                                                             
          • Amends the people's constitutional initiative                                                                       
        • Functionally, a form of checks and balances                                                                           
MR.  BARNHILL  characterized  section  1  (b)  as  a  prepackaged                                                               
referendum.  Whenever the  legislature  enacts a  new state  tax,                                                               
under this  amendment to  the constitution,  voters will  have an                                                               
opportunity  to  reject it.  If  Alaskans  were  to enact  a  tax                                                               
through  the  initiative process,  section  1  (c) would  require                                                               
legislature  approval.  In this  sense,  SJR  5 would  amend  the                                                               
people's  constitutional  initiative  power  to  add  legislative                                                               
approval,  thus  providing a  form  of  checks and  balances.  He                                                               
characterized this as essentially  coupling direct democracy with                                                               
representative democracy  by requiring both for  the enactment of                                                               
any new state tax.                                                                                                              
2:45:07 PM                                                                                                                    
SENATOR SHOWER asked if the  people have ever taxed themselves in                                                               
this manner.                                                                                                                    
MR. BARNHILL answered  no, then clarified that  the marijuana tax                                                               
was done by initiative.                                                                                                         
2:45:27 PM                                                                                                                    
SENATOR MYERS concurred.                                                                                                        
2:45:53 PM                                                                                                                    
SENATOR  KIEHL asked  what  is  wrong that  needs  fixing in  the                                                               
current referendum language.                                                                                                    
MR.   BARNHILL  responded   that   nothing  is   broken.  SJR   7                                                               
acknowledges  it is  likely that  the  state cannot  rely on  oil                                                               
taxes  so  the state  will  need  to rely  on  taxes  to pay  for                                                               
government. The policy concept in SJR  7 is to provide the people                                                               
with  a   more  powerful  voice  and   legislative  consideration                                                               
whenever enacting a new state tax.                                                                                              
SENATOR  KIEHL pointed  out  that the  state  has previously  had                                                               
statewide  taxes, including  initiatives that  enacted taxes  and                                                               
legislatively-enacted   taxes  that   were  later   repealed.  He                                                               
maintained he did not understand the need for SJR 7.                                                                            
MR. BARNHILL  restated that the  intent of SJR  7 is to  give the                                                               
people a stronger voice.                                                                                                        
2:47:37 PM                                                                                                                    
SENATOR  HUGHES  said  SJR  7  relates  to  any  new  taxes.  She                                                               
described a scenario  in which a 2 percent sales  tax is enacted.                                                               
She asked if the legislature  subsequently raises the tax rate to                                                               
10 percent whether it would be considered a new tax under SJR 7.                                                                
MR.  BARNHILL  responded  that   the  hypothetical  scenario  she                                                               
described  would  not  go  before   the  voters.  He  recalled  a                                                               
resolution before  the legislature  in the last  legislature that                                                               
proposed  amending Alaska's  Constitution  by  requiring any  new                                                               
taxes  or  increases  to  taxes  would  require  voter  approval.                                                               
However, the language requiring  voter approval for any increases                                                               
to taxes was removed in SJR 7.                                                                                                  
2:48:25 PM                                                                                                                    
SENATOR SHOWER  stated that the  legislature has  been discussing                                                               
tax issues for  years. He offered his view that  SJR 7 relates to                                                               
a broad-based  tax rather than  the marijuana tax, which  is more                                                               
of a  user fee.  He said  that the  state will  need to  enact an                                                               
income  tax,  sales tax,  or  other  tax  to pay  for  government                                                               
2:49:27 PM                                                                                                                    
MR. BARNHILL reviewed voter approval in other states on slide 3:                                                                
        • Other States That Require Voter Approval of New                                                                       
          or Increased Taxes:                                                                                                   
           • Colorado (1992)                                                                                                    
           • "Taxpayer Bill of Rights" (TABOR)                                                                                  
           • Requires voter approval of new taxes and                                                                           
             increases to existing taxes at state and local                                                                     
          • Colorado voters approved marijuana tax in 2013                                                                      
        • Missouri (1996)                                                                                                       
         • Requires voter approval of tax increases of                                                                          
            $50mm (adj. for inflation)                                                                                          
         • 2018 Proposition D, $400mm increase to gasoline                                                                      
            tax, defeated at polls                                                                                              
        • Washington (2001)                                                                                                     
          • Requires voter approval of certain increases to                                                                     
             real and personal property tax ("levy lid                                                                          
          • In recent years, 75% of levy lid lifts have                                                                         
             been approved by voter                                                                                             
MR.  BARNHILL directed  attention  to a  spreadsheet in  member's                                                               
packets that  lists taxes considered  in Colorado,  Missouri, and                                                               
Washington. He  reported that  5 of 15  tax proposals  put before                                                               
the  voters  in Colorado  were  approved  and  3 of  11  measures                                                               
Missouri put before the voters were approved.                                                                                   
2:51:25 PM                                                                                                                    
MR. BARNHILL reviewed considerations on slide 4:                                                                                
        • Considerations:                                                                                                       
        • Voter consent to new taxes may increase tax                                                                           
          • Hug & Sporri, "Referendums, Trust and Tax                                                                           
             Evasion," European J. of Pol. Econ. (Mar. 2011)                                                                    
        • Requirement of    voter   consent    can   delay                                                                      
         implementation and collection of new revenues                                                                          
        • National Council of State Legislatures has                                                                            
          considered generally the pros and cons of "tax                                                                        
          and expenditure limitations"                                                                                          
MR. BARNHILL  referred to the  Hug &  Sporri study listed  on the                                                               
slide.  This study  showed tax  compliance actually  increased in                                                               
those countries  in which the voters  were asked to consent  to a                                                               
new tax.                                                                                                                        
He stated  that delays in  enacting new taxes by  requiring voter                                                               
approval  can   be  disruptive  to  governments   during  revenue                                                               
MR.  BARNHILL  pointed   to  the  pros  and  cons   of  "Tax  and                                                               
Expenditure Limitations" shown on slides  5 and 6. He stated that                                                               
this information is  posted on NCSL's website,  which members can                                                               
2:53:17 PM                                                                                                                    
SENATOR   HUGHES  asked   if  any   studies   found  that   voter                                                               
participation increases when tax proposals are on the ballot.                                                                   
MR. BARNHILL  answered that he was  unsure of any studies  but it                                                               
makes sense that more voters would come to the polls.                                                                           
2:53:44 PM                                                                                                                    
CHAIR HOLLAND opened public testimony on SJR 7.                                                                                 
2:54:08 PM                                                                                                                    
MIKE COONS,  President, Association  of Mature  American Citizens                                                               
(AMAC), Mat-Su  Chapter, Palmer, Alaska,  read into the  record a                                                               
letter by Bob Carlson, President, AMAC Action to Senator Hughes:                                                                
     We  are   pleased  to  support  SJR   7,  proposing  an                                                                    
     amendment to  the Constitution of  the State  of Alaska                                                                    
     to prohibit the establishment  of state tax without the                                                                    
     approval  of the  voters  of  the state.  Specifically,                                                                    
     this  amendment provides  the  citizens  of Alaska  the                                                                    
     right to  reject, by  popular vote, a  new tax.  And if                                                                    
     they approve it, the amendment  provides for a check by                                                                    
     the legislature before such a tax could take effect.                                                                       
     This  is an  excellent approach  to preventing  runaway                                                                    
     taxation and  it serves well  to protect  Alaskans, and                                                                    
     specifically seniors on fixed and modest income.                                                                           
     I am  pleased to offer our  organization's full support                                                                    
     for SJR 7.                                                                                                                 
     Bob Carlson, President                                                                                                     
     AMAC Action                                                                                                                
MR. COONS  said AMAC's Mat-Su  Chapter membership  fully supports                                                               
SJR  7. He  offered his  belief  that it  is the  people who  run                                                               
government by telling  government what to do. SJR  7 provides the                                                               
means  for the  voters to  make the  final decisions  on any  new                                                               
taxes in Alaska.                                                                                                                
2:56:55 PM                                                                                                                    
CHAIR HOLLAND  stated those wishing to  provide written testimony                                                               
can submit them to senate.judiciary@akleg.gov.                                                                                  
2:57:07 PM                                                                                                                    
BERT  HOUGHTALING, representing  self, Big  Lake, Alaska,  stated                                                               
that  he supports  voter approval  of any  new taxes  or any  old                                                               
taxes since  taxes affect Alaskans.  For example, the  House Ways                                                               
and  Means Committee  is currently  discussing statutory  changes                                                               
that  would implement  taxes.  If the  legislature  passes a  tax                                                               
bill,  Alaskans will  not  vote on  it. SJR  7  will ensure  that                                                               
legislators  will not  be able  to  make decisions  on new  taxes                                                               
without first obtaining the approval by Alaskans.                                                                               
2:59:05 PM                                                                                                                    
CHAIR HOLLAND closed public testimony on SJR 7.                                                                                 
2:59:14 PM                                                                                                                    
SENATOR  KIEHL  said  he  still   has  questions  on  what  would                                                               
constitute a new tax and how SJR 7 will affect local taxes.                                                                     
[SJR 7 was held in committee.]                                                                                                  

Document Name Date/Time Subjects
SJR5 - Testimony - Apr 30.pdf SJUD 4/30/2021 1:30:00 PM