Legislature(2021 - 2022)BUTROVICH 205

05/07/2021 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 109 EXTEND BAR ASS'N BOARD OF GOVERNORS TELECONFERENCED
Heard & Held
+= SJR 6 CONST. AM: PERM FUND & PFDS TELECONFERENCED
<Bill Hearing Rescheduled to 05/10/2021>
+= SJR 5 CONST. AM: APPROP LIMIT; BUDGET RESERVE TELECONFERENCED
Moved CSSJR 5(JUD) Out of Committee
+= SJR 7 CONST. AM: STATE TAX; VOTER APPROVAL TELECONFERENCED
Moved CSSJR 7(JUD) Out of Committee
+ SB 39 BALLOT CUSTODY/TAMPERING; VOTER REG; MAIL TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
           SJR 7-CONST. AM: STATE TAX; VOTER APPROVAL                                                                       
                                                                                                                                
1:52:10 PM                                                                                                                    
CHAIR  HOLLAND  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 is the third hearing on  SJR 7. Previous hearings were held                                                               
on 4/30/21 and 5/3/21. Public  testimony was opened and closed on                                                               
4/30/21.]                                                                                                                       
                                                                                                                                
1:53:01 PM                                                                                                                    
SENATOR  MYERS  moved  to  adopt Amendment  1,  [work  order  32-                                                               
GS1711\A.1]:                                                                                                                    
                                                      32-GS1711\A.1                                                             
                                                            Nauman                                                              
                                                            5/3/21                                                              
                          AMENDMENT 1                                                                                       
                                                                                                                                
                                                                                                                                
OFFERED IN THE SENATE                          BY SENATOR MYERS                                                                 
     TO:  SJR 7                                                                                                                 
                                                                                                                                
     Page 1, line 2, following "state;":                                                                                      
          Insert "requiring a two-thirds vote in each house                                                                   
     of the  legislature to change  the rate of  an existing                                                                  
     state tax;"                                                                                                              
                                                                                                                                
     Page 2, following line 13:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(d)  Notwithstanding Section 14 of Article II,                                                                       
     the rate  of an  existing state tax  may be  changed by                                                                    
     the  legislature only  upon  affirmative  vote of  two-                                                                    
     thirds   of  the   members  of   each   house  of   the                                                                    
     legislature.  Nothing  in  this subsection  alters  the                                                                    
     ability  of  the  people  to  change  the  rate  of  an                                                                    
     existing state tax by initiative  or to reject a change                                                                    
     in  the rate  of  an  existing state  tax  made by  the                                                                    
     legislature by referendum."                                                                                                
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
SENATOR MYERS explained  Amendment 1 will address  a concern that                                                               
Senator  Hughes raised.  The  public might  approve  a 2  percent                                                               
statewide  sales  tax   in  one  year  but  the   next  year  the                                                               
legislature could  raise that tax  to 10 percent. Since  it would                                                               
not be establishing a new tax, it  would not be subject to a vote                                                               
of the people. He recalled that  the City of North Pole initially                                                               
enacted a sales  tax of 3 percent  but the tax is  now 5 percent.                                                               
Since it would be cumbersome to  go back to the voters each time,                                                               
Amendment 1  raises a higher  bar by requiring a  two-thirds vote                                                               
in  each house  of  the  legislature to  change  the  rate of  an                                                               
existing   state  tax,   which  he   thought  was   a  reasonable                                                               
compromise.                                                                                                                     
                                                                                                                                
1:54:44 PM                                                                                                                    
SENATOR KIEHL  asked if  Amendment 1 was  intended to  affect the                                                               
base rates or the effective rates.                                                                                              
                                                                                                                                
SENATOR MYERS responded that Amendment  1 is intended to apply to                                                               
the base rate. He said his  point was not to require a two-thirds                                                               
vote  by the  legislature  unless  the base  rate  of  a tax  was                                                               
raised.                                                                                                                         
                                                                                                                                
SENATOR KIEHL recalled that  former colleague Representative Gara                                                               
once introduced  a bill to  delete the gross value  reduction for                                                               
Alaska's oil taxes. That would not  have changed the rate but the                                                               
government's  share would  significantly  increase,  he said.  He                                                               
asked  if Amendment  1 would  require  a super  majority or  two-                                                               
thirds vote.                                                                                                                    
                                                                                                                                
SENATOR MYERS said he was unsure.                                                                                               
                                                                                                                                
SENATOR KIEHL noted  that if an existing tax type  had a negative                                                               
adjustment applied  to the  basis, it would  not change  the base                                                               
rate.  Although this  would  significantly  increase the  state's                                                               
take, it would not be impacted by Amendment 1.                                                                                  
                                                                                                                                
SENATOR MYERS asked for clarification  if he was speaking about a                                                               
negative change in the rate.                                                                                                    
                                                                                                                                
SENATOR KIEHL explained  that his scenario relates  to a negative                                                               
change in  the basis.  Thus, it  would increase  the value  to be                                                               
taxed  by  some legislatively  determined  number,  such that  it                                                               
would effectively  increase the  tax but not  touch the  rate. It                                                               
would be the  same as if the legislature deleted  the gross value                                                               
reduction, he said.                                                                                                             
                                                                                                                                
1:56:56 PM                                                                                                                    
SENATOR  MYERS asked  if this  would be  similar to  property tax                                                               
exemptions,  such that  residents can  reduce their  property tax                                                               
liability from $20,000 to $10,000.                                                                                              
                                                                                                                                
SENATOR  KIEHL  answered that  the  scenario  he described  would                                                               
effectively change the tax liability  for those receiving the tax                                                               
exemption.                                                                                                                      
                                                                                                                                
SENATOR MYERS responded that the  scenario he described would not                                                               
take a two-thirds vote under Amendment 1.                                                                                       
                                                                                                                                
CHAIR  HOLLAND  removed his  objection.  There  being no  further                                                               
objection, Amendment 1 was adopted.                                                                                             
                                                                                                                                
1:58:08 PM                                                                                                                    
SENATOR  MYERS  moved  to  adopt Amendment  2,  [work  order  32-                                                               
GS1711\A.2]:                                                                                                                    
                                                   32-GS1711\A.2                                                                
                                                         Nauman                                                                 
                                                         5/4/21                                                                 
                          AMENDMENT 2                                                                                       
                                                                                                                                
                                                                                                                                
OFFERED IN THE SENATE                          BY SENATOR MYERS                                                                 
     TO:  SJR 7                                                                                                                 
                                                                                                                                
     Page 2, line 8:                                                                                                            
          Delete "by a majority vote in joint session"                                                                          
                                                                                                                                
SENATOR HOLLAND objected for discussion purposes.                                                                               
                                                                                                                                
SENATOR MYERS  explained Amendment  2. If  the voters  approved a                                                               
tax  through the  initiative process,  Amendment 2  would require                                                               
the  legislature  to  approve  it  by  resolution.  However,  the                                                               
legislature would  not need  to approve  the resolution  in joint                                                               
session. He  highlighted that it  can be cumbersome to  require a                                                               
joint  session  since  one  presiding  officer  could  block  the                                                               
session.                                                                                                                        
                                                                                                                                
CHAIR HOLLAND asked if the administration has any comments.                                                                     
                                                                                                                                
1:59:47 PM                                                                                                                    
MIKE  BARNHILL,  Deputy   Commissioner,  Department  of  Revenue,                                                               
Juneau, Alaska, responded that the  administration has no opinion                                                               
on  Amendment  2.  He  related his  understanding  that  for  the                                                               
legislature to approve  an initiated tax under  Amendment 2 would                                                               
require a simple  majority or 21 votes in the  House and 11 votes                                                               
in the Senate.                                                                                                                  
                                                                                                                                
2:00:16 PM                                                                                                                    
SENATOR KIEHL asked if the  requirement to approve the resolution                                                               
in  joint  session  is removed,  whether  the  legislature  could                                                               
choose to approve the resolution  in joint session rather than in                                                               
regular sessions.                                                                                                               
                                                                                                                                
SENATOR  MYERS suggested  that Legislative  Legal Services  could                                                               
confirm  whether the  legislature  could do  so.  He related  his                                                               
understanding  that   joint  sessions   are  used   for  specific                                                               
purposes. He said  it seemed unlikely the  legislature would call                                                               
a joint session for any matter it is not required to do so.                                                                     
                                                                                                                                
2:01:25 PM"                                                                                                                   
SENATOR HUGHES  asked Mr. Milks  if the committee were  to delete                                                               
the  language  "in  joint  session" whether  it  would  give  the                                                               
legislature either option.                                                                                                      
                                                                                                                                
2:01:53 PM                                                                                                                    
WILLIAM MILKS,  Senior Assistant Attorney General,  Legislation &                                                               
Regulations Section,  Civil Division, Department of  Law, Juneau,                                                               
Alaska, stated  that proposed  bill includes  the language  "by a                                                               
majority vote  in joint session."  If the committee  removes that                                                               
language, it will change the  voting requirement since a majority                                                               
vote in joint session differs from  a majority vote of each body.                                                               
He did not  think the legislature would be able  to do a majority                                                               
vote in joint  session because it would be  contrary to Amendment                                                               
2.  He referred  to page  2 lines  7 to  8 of  Amendment 2  which                                                               
reads, "to not  take effect unless the  legislature by resolution                                                               
approves the  initiated law  before the  adjournment of  the next                                                               
regular session." He said the  legislative history would show the                                                               
initial  requirement  for  joint  session  was  removed.  As  Mr.                                                               
Barnhill stated, it would mean  each house was acting by majority                                                               
vote, he said.                                                                                                                  
                                                                                                                                
2:04:08 PM                                                                                                                    
SENATOR HUGHES  asked for  clarification whether  the legislature                                                               
would have the option to  approve the resolution in joint session                                                               
or in regular session under Amendment 2.                                                                                        
                                                                                                                                
MR. MILKS  responded that  because the  legislature acts  in each                                                               
house by majority vote except  for a few rare circumstances, that                                                               
there would be  a question about the ability to  take this action                                                               
in  a  joint  session.  He   highlighted  that  the  Constitution                                                               
indicates meeting and acting by  a majority vote in joint session                                                               
for approval of appointments.                                                                                                   
                                                                                                                                
2:05:34 PM                                                                                                                    
SENATOR HUGHES acknowledged that  politics could arise since each                                                               
body may  be controlled by different  parties. Therefore, meeting                                                               
in joint  session rather  than approving  the resolution  in each                                                               
body could change  the outcome. She asked  the administration why                                                               
the bill required a joint session for approval.                                                                                 
                                                                                                                                
MR.  BARNHILL  offered  his view  that  the  language  represents                                                               
parity in drafting with other provisions in the Constitution.                                                                   
                                                                                                                                
2:06:56 PM                                                                                                                    
SENATOR KIEHL offered  his view that under the  Uniform Rules, it                                                               
was unlikely the  legislature could send a resolution  to a joint                                                               
session. He expressed concern it  would remove an opportunity for                                                               
a governor to convene a  joint session. He highlighted that under                                                               
Amendment 2, any  committee chair could stop  the resolution from                                                               
being  heard. He  argued  that having  the  joint session  option                                                               
would allow  a governor  to make  the case  that the  people have                                                               
voted and the  resolution should be considered.  The governor has                                                               
the  ability  to  convene  a  joint  session.  While  SJR  7  has                                                               
troubling components, this amendment  would give the governor the                                                               
opportunity to at least put legislators  on the record if they go                                                               
against what the voters decide.  He suggested that Amendment 2 is                                                               
likely the wrong direction to go.                                                                                               
                                                                                                                                
2:09:03 PM                                                                                                                    
SENATOR MYERS recalled Senator Kiehl  previously raised the issue                                                               
that a committee  chair could block the  resolution. However, the                                                               
legislature could  use Rule 48  to discharge the  resolution from                                                               
committee, he  said. He  cautioned that  if the  legislature must                                                               
approve  the resolution  in joint  session,  a presiding  officer                                                               
could block the joint session.  He related his understanding that                                                               
the governor could call the  legislature into special session but                                                               
he was  not aware  that the governor  could call  the legislature                                                               
into a joint session.                                                                                                           
                                                                                                                                
SENATOR  KIEHL referred  to Article  3, Section  17, which  read,                                                               
"Whenever the  governor considers it  in the public  interest, he                                                               
may convene  the legislature, either  house or the two  houses in                                                               
joint session."                                                                                                                 
                                                                                                                                
SENATOR MYERS said he stands corrected.                                                                                         
                                                                                                                                
2:10:30 PM                                                                                                                    
CHAIR HOLLAND  said he tended  to favor the original  language in                                                               
the bill.                                                                                                                       
                                                                                                                                
SENATOR MYERS withdrew Amendment 2.                                                                                             
                                                                                                                                
2:11:38 PM                                                                                                                    
SENATOR  KIEHL stated  his objection  to  SJR 7.  He offered  his                                                               
belief  that SJR  7 was  anti-democratic and  anti-republican. In                                                               
essence, SJR 7  does not provide a philosophy of  government or a                                                               
philosophy of how  government should function. Instead,  it is an                                                               
attempt to  make any attempt  to institute taxes  more difficult.                                                               
It is  not a relationship  between the people and  the government                                                               
that  represents them  but  a  means to  put  something into  the                                                               
foundational document. He said he will object to moving SJR 7.                                                                  
                                                                                                                                
2:13:21 PM                                                                                                                    
SENATOR HUGHES remarked that it is  rare for taxes to go down but                                                               
it is common  for them to go  up over time. She  offered her view                                                               
that government doesn't  produce its own wealth but  it relies on                                                               
the private  sector to do so.  She said she preferred  to make it                                                               
more difficult to institute taxes  and add checks and balances on                                                               
it. She  expressed concern that  Alaska's spending per  capita is                                                               
so high. She  recalled that research has  shown Alaska's spending                                                               
per capita is  higher than other states since  the state provides                                                               
services  in  rural  Alaska.  Although she  has  a  little  mixed                                                               
feelings  about SJR  7,  she  likes the  checks  and balances  it                                                               
provides.  She   acknowledged  she  is  willing   to  make  tough                                                               
decisions so she is willing to move SJR 7 forward.                                                                              
                                                                                                                                
2:14:51 PM                                                                                                                    
SENATOR SHOWER  offered his  view that  constitutional amendments                                                               
should  be  done  cautiously to  avoid  unintended  consequences.                                                               
While he  doesn't want to  limit the legislature's ability  to do                                                               
its job, he also recognizes  the initiative process is cumbersome                                                               
and expensive.  He cited the  legislature's inability  to protect                                                               
and provide  the permanent  fund dividend (PFD)  in the  past six                                                               
years as an example of the  legislature not following the will of                                                               
the people.  He viewed SJR 7  as giving the people  more voice in                                                               
the process. He agreed that SJR  7 should be carefully vetted. He                                                               
offered his support for SJR 7.                                                                                                  
                                                                                                                                
2:16:37 PM                                                                                                                    
SENATOR MYERS  referred to  the Alaska  Constitution's structure.                                                               
He  said  that  policy  decisions   are  written  in  the  Alaska                                                               
Constitution  beginning with  Article  1,  which establishes  the                                                               
rights  of the  people.  Articles  2 through  4  provide for  the                                                               
structure of government and the  balance of powers. The remaining                                                               
articles pertain  to policy calls  on taxation,  managing natural                                                               
resources, and  education. He offered his  view that occasionally                                                               
constitutional amendments  are needed to address  policy changes.                                                               
Ultimately,  the policy  call in  SJR 7  identifies that  perhaps                                                               
government,  in  particular  the   legislature,  has  become  too                                                               
powerful and  needs to be  restrained a little.  He characterized                                                               
SJR  7 as  being about  trust and  whether the  people trust  the                                                               
legislature. SJR 7  is one means of showing  that the legislature                                                               
is worthy of their trust, he said.                                                                                              
                                                                                                                                
2:18:28 PM                                                                                                                    
SENATOR SHOWER moved to report  SJR 7, as amended, from committee                                                               
with individual recommendations and attached fiscal note(s).                                                                    
                                                                                                                                
SENATOR KIEHL maintained his objection.                                                                                         
                                                                                                                                
2:18:43 PM                                                                                                                    
A roll  call vote was  taken. Senators Myers, Hughes,  Shower and                                                               
Holland  voted  in  favor  of  moving SJR  7,  as  amended,  from                                                               
committee and  Senator Kiehl voted  against it.  Therefore, CSSJR
7(JUD) was reported from committee by a 4:1 vote.                                                                               
                                                                                                                                

Document Name Date/Time Subjects
SJR7_A.2.pdf SJUD 5/7/2021 1:30:00 PM
SJR 7
SJR7_A.1.pdf SJUD 5/7/2021 1:30:00 PM
SJR 7
SJR 5 Amendment Package (SJUD).pdf SJUD 5/7/2021 1:30:00 PM
SJR 5
SJR 5 Legal memo.pdf SJUD 5/7/2021 1:30:00 PM
SJR 5
SJR 7 Attorney General Opinion.pdf SJUD 5/7/2021 1:30:00 PM
SJR 7
SJR 5 Amendment 7.pdf SJUD 5/7/2021 1:30:00 PM
SJR 5
SJR 7 legal opinion.pdf SJUD 5/7/2021 1:30:00 PM
SJR 7
SJR 5 Legal Memo 2.pdf SJUD 5/7/2021 1:30:00 PM
SJR 5