Legislature(2001 - 2002)

03/21/2002 09:14 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 21, 2002                                                                                           
                         9:14 A.M.                                                                                              
                                                                                                                                
TAPE HFC 02 - 58, Side A                                                                                                        
TAPE HFC 02 - 58, Side B                                                                                                        
TAPE HFC 02 - 59, Side A                                                                                                        
TAPE HFC 02 - 59, Side B       (not used)                                                                                       
TAPE HFC 02 - 60, Side A                                                                                                        
TAPE HFC 02 - 60, Side B                                                                                                        
TAPE HFC 02 - 61, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 9:14 A.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
none                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Lisa  Murkowski; Representative  Peggy Wilson;                                                                   
Representative Gary Stevens; Representative  Ethan Berkowitz;                                                                   
Representative  Jeannette  James; Representative  Joe  Hayes;                                                                   
Representative Sharon  Cissna; Representative  Andrew Halcro;                                                                   
Representative   Gretchen   Guess;   Representative   Charles                                                                   
Chenault;  Representative John  Coghill; Representative  Beth                                                                   
Kerttula;  Representative Drew  Scalzi; Representative  Kevin                                                                   
Meyer; Speaker Brian Porter; Representative Harry Crawford                                                                      
                                                                                                                                
JUNEAU TESTIMONY                                                                                                              
                                                                                                                                
Mary Lou Spartz; Cindy Cashen;  Joe Sonneman; Matt Felix; Pam                                                                   
Watts; Jay Hogan; George Rogers; Dixie Hood; Don Etheridge                                                                      
                                                                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
ANCHORAGE                                                                                                                     
                                                                                                                                
Ed Earnhart;  Delisa  Culpepper; Frank  Dillon; R.B.  Stiles;                                                                   
John  Shively;  Pat Senner;  Dale  Bonadurant;  Kip  Knudsen;                                                                   
Terry  Martin;   Richard  Snyder;   David  Paperman;   Eugene                                                                   
Kulawik; Arthur Curtis; John Blaine                                                                                             
                                                                                                                                
BETHEL                                                                                                                        
                                                                                                                                
Bario Notti                                                                                                                     
                                                                                                                                
FAIRBANKS                                                                                                                     
                                                                                                                                
Richard  Heacock; Taber  Rehbaum;  Eileen Cummings;  Margaret                                                                   
Wilson; Annette Freiburger; Marta  Mueller; Fred Dean; Jennie                                                                   
Bell-Dean;  Carl  Benson;  Jeri Lanier;  Carl  Benson;  Henry                                                                   
Cole; Andy Harrington; Pat D. Sweetsir                                                                                          
                                                                                                                                
HOMER                                                                                                                         
                                                                                                                                
Mary Griswold; Bruce Hendrickson; Charles Davis                                                                                 
                                                                                                                                
KENAI                                                                                                                         
                                                                                                                                
Robert Wiseman; Dayne Clark                                                                                                     
                                                                                                                                
KETCHIKAN                                                                                                                     
                                                                                                                                
Don Westlund                                                                                                                    
                                                                                                                                
KODIAK                                                                                                                        
                                                                                                                                
Pat Carlson; Mike Milligan; Dr. Bob Johnson; Dave Jones                                                                         
                                                                                                                                
MAT-SU                                                                                                                        
                                                                                                                                
Larry Meshkin; Jim Watenpaugh; Doug Millard; Ted Cremer                                                                         
                                                                                                                                
PETERSBURG                                                                                                                    
                                                                                                                                
Roxane Lee; Tom Laurent; Brian Lynch; Marilyn Menish Meucci                                                                     
                                                                                                                                
SEWARD                                                                                                                        
                                                                                                                                
Jerry Dixon                                                                                                                     
                                                                                                                                
SITKA                                                                                                                         
                                                                                                                                
A.E. Tony Zimmer; Tom Conley; Steve Bradshaw                                                                                    
                                                                                                                                
WRANGELL                                                                                                                      
                                                                                                                                
Bob  Robbins; John  Baker; James  Stough;  Woody Wilson;  Mac                                                                   
McMurren;  Kenneth Mason;  Robert  Prunella; Don  McConachie;                                                                   
LaTonnie Barlow; Janell Privett                                                                                                 
                                                                                                                                
OFFNETS                                                                                                                       
                                                                                                                                
Paula Harris; Ed Martin, Cooper  Landing; Dr. Johnson; Walter                                                                   
Sampson, Nana;  Roswell Schaeffer,  NW Arctic Borough;  Glenn                                                                   
Skin;  Mike Reeves;  Sandra  Dauenhauer;  Mailyn Booth;  Mike                                                                   
Rieves; William  Arnold; Helen  Nienheusser; Linda  Reynolds;                                                                   
Craig Lingle                                                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
          STATEWIDE TESTIMONY ON REVENUE MEASURES                                                                             
                  on the following bills:                                                                                     
                                                                                                                                
HB 20     An Act relating to state aid to municipalities and                                                                    
          certain  other  recipients,  and  for  the  village                                                                   
          public   safety   officer  program;   relating   to                                                                   
          municipal dividends;  relating to the public safety                                                                   
          foundation program;  and providing for an effective                                                                   
          date.                                                                                                                 
                                                                                                                                
          Discussed and HELD in Committee.                                                                                      
                                                                                                                                
HB 229    An Act imposing a tax  on employment; and providing                                                                   
          for an effective date.                                                                                                
                                                                                                                                
          Discussed and HELD in Committee.                                                                                      
                                                                                                                                
HB 303    An  Act relating to  the levy  and collection  of a                                                                   
          sales tax; and providing for an effective date.                                                                       
                                                                                                                                
          Discussed and HELD in Committee.                                                                                      
                                                                                                                                
HB 304    An  Act relating  to disposition  of income  of the                                                                   
          permanent fund; and providing for an effective                                                                        
          date.                                                                                                                 
                                                                                                                                
          Discussed and HELD in Committee.                                                                                      
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order.  He stated that there  would be statewide testimony                                                                   
taken on possible revenue options  available to the State and                                                                   
announced   that  each   sponsor   would   provide  a   brief                                                                   
introduction on each bill.                                                                                                      
                                                                                                                                
REPRESENTATIVE GARY  STEVENS spoke to HB 229,  proposing that                                                                   
it be a part  of a long-term fiscal plan.  The  cost would be                                                                   
$100 dollars per year and would  be paid by every individual,                                                                   
19 years of age  and older.  It would also  include the self-                                                                   
employed and would  be deducted from the first  two paychecks                                                                   
                st                                                                                                              
after  January 1   of each  year. He  added that  there is  a                                                                   
provision contained  in the bill that would  prohibit the tax                                                                   
from   being  taken   more   than  once   per   year.     The                                                                   
administrating  costs  for  the  program  would  be  $117,400                                                                   
dollars.   The amount of revenue  that would in  raised would                                                                   
be $38 million dollars.  He noted  that it would be deposited                                                                   
into  the general  fund  and accounted  for  separately.   It                                                                   
could be used for education.                                                                                                    
                                                                                                                                
Representative  Stevens advised that  in the House  Labor and                                                                   
Commerce Committee, the state  income tax was attached to it.                                                                   
He requested that be removed.                                                                                                   
                                                                                                                                
Vice-Chair Bunde stated that the  myth that the proposed bill                                                                   
is an  education should  not be  perpetuated.  He  encouraged                                                                   
the sponsor  to not call it  an education tax.   He commented                                                                   
that  he  does  not  oppose  the  head  tax,  but  the  false                                                                   
information should not continue.                                                                                                
                                                                                                                                
Representative  Stevens  acknowledged  that it  is  a tax  on                                                                   
employment.                                                                                                                     
                                                                                                                                
REPRESENTATIVE    JIM    WHITAKER    introduced    HB    304.                                                                   
Representative Whitaker noted  that the bill had gone through                                                                   
the   House   State  Affairs   Committee   with   significant                                                                   
discussion.     The  work  draft  that  evolved   from  those                                                                   
discussions is provided.   From the earnings  of the Earnings                                                                   
Reserve Account,  $200 million  dollars would be  transferred                                                                   
to the general  fund in the initial year and  thereafter; the                                                                   
$200 million  dollars would be  the inflation factor  and the                                                                   
population factor.  He indicated  that was the essence of the                                                                   
bill.                                                                                                                           
                                                                                                                                
Representative  Hudson inquired  the procedures for  offering                                                                   
amendments.                                                                                                                     
                                                                                                                                
Co-Chair Williams replied that would occur tomorrow.                                                                            
                                                                                                                                
REPRESENTATIVE JOHN  DAVIES provided a brief  introduction to                                                                   
HB 401, which  would increase motor fuel tax.   He emphasized                                                                   
that  it is not  a sales  tax on  gas and  indicated that  it                                                                   
would increase from  eight cents to eighteen  cents a gallon.                                                                   
He advised that Alaska had a motor  fuel tax before statehood                                                                   
at four  cents  a gallon  and it was  a dedicated  fund.   In                                                                   
1961, that  amount was  increased to  eight cents per  gallon                                                                   
and has  stayed at  that amount  ever since.   Alaska  is the                                                                   
lowest paying state in the nation  in terms of the motor fuel                                                                   
tax.                                                                                                                            
                                                                                                                                
Representative  J. Davies  added  that the  bill proposes  to                                                                   
create a special  highway maintenance account  in the general                                                                   
fund and place  all the revenues from the eighteen  cents per                                                                   
gallon would go into that account,  approximately $57 million                                                                   
dollar).                                                                                                                        
                                                                                                                                
Representative   J.  Davies  added   that  additionally,   he                                                                   
proposes that  all the revenues  generated from  the Division                                                                   
of Motor  Vehicles (DMV) would  be placed into  that account-                                                                   
approximately  $24 million  dollars.   He  proposed that  the                                                                   
expense of running  the DMV office and maintaining  the State                                                                   
highways  would be  appropriated  from those  funds for  that                                                                   
purpose.   There would be  approximately $18 million  dollars                                                                   
that could be used for highway maintenance.                                                                                     
                                                                                                                                
He interjected  that this would  not be a dedicated  fund and                                                                   
would create  approximately $75  million dollars  for running                                                                   
highway maintenance.  He claimed  that with those two sources                                                                   
of  revenue, there  could be  an annual  revenue stream  that                                                                   
could be enough to run the State's highways.                                                                                    
                                                                                                                                
Representative Hudson  asked the anticipated net  increase in                                                                   
new revenues.                                                                                                                   
                                                                                                                                
Representative  Davies replied  that  would be  approximately                                                                   
$30 million new dollars.                                                                                                        
                                                                                                                                
Representative Hudson noted that  it would not include marine                                                                   
fuel taxes.                                                                                                                     
                                                                                                                                
Representative  Lancaster noted that  there is a  marine fuel                                                                   
highway tax already.                                                                                                            
                                                                                                                                
Representative J. Davies responded  that the road maintenance                                                                   
and the marine highway system are two separate budgets.                                                                         
                                                                                                                                
Representative  Hudson pointed  out that  the marine  highway                                                                   
fuel is purchased  out of Puget Sound and there  are no taxes                                                                   
on those sales.                                                                                                                 
                                                                                                                                
Representative JEANNETTE JAMES  asked the amount needed to do                                                                   
a "good" job in taking care of the highways.                                                                                    
                                                                                                                                
Representative    Davies    responded   that    number    was                                                                   
approximately  $83   million  dollars  as  received   by  the                                                                   
Department.                                                                                                                     
                                                                                                                                
Representative  James commented  that a  couple of years  ago                                                                   
that  the  amount  was  much  more.    She  asked  about  the                                                                   
connection  to  the increase  maintenance  rather  than  just                                                                   
filling  the  gap.   She  thought  that  the issue  was  very                                                                   
different   than  filling   the   gap  and   not   addressing                                                                   
maintenance.                                                                                                                    
                                                                                                                                
Discussion   followed  between   Representative  Davies   and                                                                   
Representative  James regarding how  the increase  motor fuel                                                                   
tax would  be used and  if the public  would benefit  from it                                                                   
with increased services.                                                                                                        
                                                                                                                                
Representative Lancaster  asked if the same  multiplier would                                                                   
be used  as used  in the  revenue safe  share communities  of                                                                   
$1800 dollars a lane mile.                                                                                                      
                                                                                                                                
Representative  J. Davies  did  not know  the  detail of  the                                                                   
calculation.   He  added  that the  aviation  costs had  been                                                                   
included  in  the  number,  which   he  has.    Some  highway                                                                   
maintenance  stations do both  so some  of those numbers  are                                                                   
difficult to divide.                                                                                                            
                                                                                                                                
Representative Moses stated that  the bill is very important.                                                                   
He commented  on the relationship  between the  Alaska Marine                                                                   
Highway  and the  motor  fuel tax  and  recommended that  the                                                                   
intent of the Legislature be mentioned.                                                                                         
                                                                                                                                
STATEWIDE TESTIMONY                                                                                                           
                                                                                                                                
ROXANNE LEE,  PETERSBURG, noted  strong opposition to  HB 303                                                                   
and testified in opposition to  any new sales tax.  She spoke                                                                   
in favor of a statewide income tax.                                                                                             
                                                                                                                                
TONY  ZIMMER,  SITKA,  testified  in  opposition  to  new  or                                                                   
additional State sales tax.                                                                                                     
                                                                                                                                
Vice-Chair Bunde  asked if he  supported the premise  of some                                                                   
sort of tax for State services.                                                                                                 
                                                                                                                                
PAT CARLSON,  KODIAK, spoke in  support of the  proposed head                                                                   
tax  and in  opposition to  any additional  sales tax.     He                                                                   
noted support for the motor fuel tax.                                                                                           
                                                                                                                                
MIKE MILLIGAN, KODIAK, stressed  the need to raise the tax on                                                                   
motor fuel and voiced support  for HB 401.  He commented that                                                                   
the last time that tax was raised  was 1961.  He stressed the                                                                   
need to keep State ferries running.                                                                                             
                                                                                                                                
BOB ROBBINS,  WRANGELL,  testified in  opposition to  any new                                                                   
sales tax.   Mr. Robbins  testified in  favor of  a statewide                                                                   
income tax.                                                                                                                     
                                                                                                                                
JOHN BAKER,  WRANGELL, testified in opposition  to additional                                                                   
sales tax and testified in favor of a statewide income tax.                                                                     
                                                                                                                                
JAMES STOUGH,  WRANGELL, testified  in opposition to  any new                                                                   
or sales taxes.                                                                                                                 
                                                                                                                                
Representative Hudson  asked the percentage of  the local tax                                                                   
base, which consists of sales  tax, and the percentage of the                                                                   
property tax.                                                                                                                   
                                                                                                                                
Mr. Stough responded about half.                                                                                                
                                                                                                                                
WOODY WILSON,  WRANGELL, testified  in opposition to  any new                                                                   
or  additional sales  taxes.     He warned  that adding  more                                                                   
taxes would be  devastating to business in  Southeast Alaska.                                                                   
Businesses are currently  stressed.  He claimed  that a sales                                                                   
tax would not be in the best interest  of "who pays what" and                                                                   
the non-residents  contribution.   He compared those  figures                                                                   
to a statewide income tax.                                                                                                      
                                                                                                                                
Vice-Chair Bunde  shared his view.  He claimed  that Alaskans                                                                   
for 20 years  have asked that "someone" else  pay their dues.                                                                   
He  claimed that  an  income tax,  there  would  be only  10%                                                                   
earned through non-residents fee  and would amount to $13,000                                                                   
dollars.   He  did not  think that  would generate  a lot  of                                                                   
revenue.                                                                                                                        
                                                                                                                                
Co-Chair   Williams   requested   that  testifiers   not   be                                                                   
challenged.                                                                                                                     
                                                                                                                                
Representative Davies agreed.   He pointed out that an income                                                                   
tax  would have  a fairer  base than  the proposed  statewide                                                                   
sales tax.  He reiterated that  an income tax would be a more                                                                   
fair system.                                                                                                                    
                                                                                                                                
MAC  MCMURREN,  WRANGELL,  testified  in  opposition  to  any                                                                   
additional  sales tax.   He  claimed  that such  a tax  would                                                                   
devastate  the  Wrangell area.    Mr. McMurren  testified  in                                                                   
support of using the income of the permanent fund.                                                                              
                                                                                                                                
RICHARD  HEACOCK,  FAIRBANKS,   represented  members  of  all                                                                   
"faiths".   He testified in favor  of a statewide  income tax                                                                   
and urged that it be adopted immediately.                                                                                       
                                                                                                                                
                                                                                                                                
TAPE HFC 02 - 58, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
TABER REHBAUM,  FAIRBANKS, testified in support  of using the                                                                   
earnings  reserve  and  testified  in favor  of  a  statewide                                                                   
income   tax.     Ms.   Rehbaum   voiced  her   support   for                                                                   
implementation of  an alcohol tax.  She claimed  that budgets                                                                   
cuts are no longer a way to address the State's fiscal gap.                                                                     
                                                                                                                                
EILEEN  CUMMINGS,  FAIRBANKS,   testified  in  opposition  to                                                                   
additional sales tax.  She testified  in favor of a statewide                                                                   
income  tax.   Ms. Cummings  voiced  support for  HB 401  and                                                                   
alcohol tax.                                                                                                                    
                                                                                                                                
ANNETTE  FREIBURGER,   FAIRBANKS,   voiced  support   for  an                                                                   
enhanced alcohol  tax. She testified in favor  of a statewide                                                                   
income tax.                                                                                                                     
                                                                                                                                
MARTA MUELLER,  FAIRBANKS, testified in favor  of a statewide                                                                   
income tax, while voicing support  for HB 304, HB 225, and HB
401.                                                                                                                            
                                                                                                                                
ED MARTIN, COOPER  LANDING, spoke in support  of an increased                                                                   
gas tax.  He added support for  an education tax.  Mr. Martin                                                                   
encouraged the State  to place an increase of 20%  tax on the                                                                   
oil  companies.   He  testified in  strong  opposition to  an                                                                   
additional sales  tax unless it was implemented  only for the                                                                   
summertime.                                                                                                                     
                                                                                                                                
FRED  DEAN, FAIRBANKS,  testified  in  favor  of a  statewide                                                                   
income tax and voiced support  for development of new revenue                                                                   
sources.    Mr.  Dean proposed  capping  the  Permanent  Fund                                                                   
Dividend (PFD).  He noted his  appreciation for the work done                                                                   
by the fiscal policy council.                                                                                                   
                                                                                                                                
WALTER  SAMPSON,  NANA, testified  in  favor  of a  statewide                                                                   
income tax.   He added  support for HB  225 and  the proposed                                                                   
school tax.   He  added support  for a cruise  ship tax.   He                                                                   
stressed  that a  sales  tax would  be  devastating to  rural                                                                   
Alaska.                                                                                                                         
                                                                                                                                
ROSWELL SCHAEFFER,  NORTHWEST ARCTIC BOROUGH,  encouraged the                                                                   
Legislature  to look at  a statewide fiscal  plan.   He urged                                                                   
support of  a school and liquor  tax.  He noted that  a limit                                                                   
on the PFD would benefit the State.   Mr. Schaeffer testified                                                                   
in opposition  to any additional  statewide sales taxes.   He                                                                   
thought  that a  gas tax  would  be difficult  for the  rural                                                                   
communities to meet.                                                                                                            
                                                                                                                                
ED EARNHART,  ANCHORAGE,  testified in  favor of a  statewide                                                                   
income tax.  He  believed that a sales tax would  not be fair                                                                   
as many communities already have a high one.                                                                                    
                                                                                                                                
DELISA  CULPEPPER,   ANCHORAGE,  spoke   in  support   of  an                                                                   
increased alcohol tax.                                                                                                          
                                                                                                                                
FRANK   DILLON,  PRESIDENT,   ALASKA  TRUCKERS   ASSOCIATION,                                                                   
ANCHORAGE,  spoke  against  an  increase  to fuel  tax.    He                                                                   
commented  on   how  it  would   affect  Anchorage   and  the                                                                   
communities surrounding it.                                                                                                     
                                                                                                                                
R.B. STILES,  ANCHORAGE,  spoke in support  of a  progressive                                                                   
broad based tax and the utilization  of the earnings from the                                                                   
permanent fund.   He commented  that the taxes should  not be                                                                   
implemented all  at the same time  because of the  "shock" it                                                                   
will have to the State's economy.                                                                                               
                                                                                                                                
JOHN SHIVELY,  ANCHORAGE, testified  in support of  using the                                                                   
income earnings from  the permanent fund.  Mr.  Shively spoke                                                                   
in favor of  implementing a statewide income  tax over having                                                                   
a sales tax.                                                                                                                    
                                                                                                                                
ROBERT WISEMAN, KENAI, commented  that he did not support any                                                                   
new  taxes and  that the  budget should  be further  reduced.                                                                   
Mr. Wiseman  added his  support for using  the income  of the                                                                   
permanent fund.                                                                                                                 
                                                                                                                                
DAYNE CLARK, KENAI, testified  in favor of a statewide income                                                                   
tax.    Mr. Clark voiced  opposition to any  additional sales                                                                   
tax and support for using the  income from the permanent fund                                                                   
and capping it.                                                                                                                 
                                                                                                                                
MARY  LOU   SPARTZ,  JUNEAU,   testified  in  opposition   to                                                                   
additional sales  tax.   She added that  she did  not support                                                                   
imposing  an education  tax,  as  that should  be  part of  a                                                                   
"larger idea" for taxation.  Ms.  Spartz testified in support                                                                   
of using  the income  from the permanent  fund.   She claimed                                                                   
that  it was  never intended  to  100% support  of the  State                                                                   
government.   Ms. Spartz  voiced her  support of a  statewide                                                                   
income tax.                                                                                                                     
                                                                                                                                
CINDY CASHEN, MADD, JUNEAU, spoke  in support for an increase                                                                   
to the alcohol excise tax.                                                                                                      
                                                                                                                                
JOE SONNEMON,  JUNEAU, urged that  the State avoid  dedicated                                                                   
funds  and force  agencies to  come to  the Legislature  each                                                                   
year.  He added  that dedicated funds take away  the power of                                                                   
the Legislature  to make  decisions.   He stated that  people                                                                   
"like"  dedicated funds  and often times  tax themselves  too                                                                   
much.   The Founders of the  Constitution did warn  the State                                                                   
to  avoid that  type of  funds.   Mr.  Sonnemon testified  in                                                                   
favor  of a statewide  income  tax and in  opposition to  any                                                                   
additional sales tax.                                                                                                           
                                                                                                                                
PAM WATTS,  JUNEAU, voiced  support for  an increase  alcohol                                                                   
tax.                                                                                                                            
                                                                                                                                
SANDRA DAUENHAUER  testified in  support of using  the income                                                                   
of  the  permanent  fund.    She  voiced  her  opposition  to                                                                   
additional sales tax.                                                                                                           
                                                                                                                                
MAILYN BOOTH  noted her  support of using  the income  of the                                                                   
permanent fund.                                                                                                                 
                                                                                                                                
MIKE  RIEVES,  HOLLIS,  testified  in favor  of  a  statewide                                                                   
income tax.   He  voiced opposition  to any additional  sales                                                                   
taxes.                                                                                                                          
                                                                                                                                
TOM CONLEY, SITKA, testified in  support of revenue measures.                                                                   
He added favor of a statewide  income tax.  Mr. Conley voiced                                                                   
opposition  to any additional  sales tax.   Mr. Conley  noted                                                                   
his support  for an  increased alcohol  tax and an  increased                                                                   
gas  tax.    Mr.  Conley  stressed   his  opposition  to  any                                                                   
additional sales taxes.                                                                                                         
                                                                                                                                
STEVE  BRADSHAW,  SITKA,  testified  in  support  of  revenue                                                                   
generating  measures  as soon  as  possible.   He  added  his                                                                   
opposition  to  additional  sales  taxation.    Mr.  Bradshaw                                                                   
testified in favor of a statewide income tax.                                                                                   
                                                                                                                                
TAPE HFC 02 - 59, Side A                                                                                                      
                                                                                                                                
                                                                                                                                
GLENN SKINS,  testified in  favor of  a statewide income  tax                                                                   
and in opposition to any additional sales taxation.                                                                             
                                                                                                                                
MARY  GRISWOLD, HOMER,  testified  in support  for using  the                                                                   
income  generated from  the permanent  fund.   She added  her                                                                   
support of a statewide income tax.                                                                                              
                                                                                                                                
PAT SENNER, PRESIDENT, ALASKA  NURSES ASSOCIATION, ANCHORAGE,                                                                   
voiced support for HB 225 and  an increase to the alcohol tax                                                                   
to at least ten cents per drink.                                                                                                
                                                                                                                                
KIP  KNUDSEN, ANCHORAGE,  voiced his  support of  stabilizing                                                                   
the State's revenue source and further spending reductions.                                                                     
                                                                                                                                
TERRY MARTIN, ANCHORAGE, commented  that Alaska does not have                                                                   
a revenue gap and voiced his support  for a 50-50 program. He                                                                   
opposed  cutting the budget  and implementation  of  a cruise                                                                   
ship taxes.   Representative Martin  testified in  support of                                                                   
using the income from the permanent fund.                                                                                       
                                                                                                                                
KENNETH   MASON,  WRANGELL,   testified   in  opposition   to                                                                   
additional sales tax.                                                                                                           
                                                                                                                                
DAVE  JONES, KODIAK,  testified  in  support  of finding  new                                                                   
revenue  measures.  He  added  his support  for  a  statewide                                                                   
income tax.  Mr.  Jones spoke in support of  using the income                                                                   
of the permanent fund. He added  his support for an increased                                                                   
alcohol tax and  gas tax. Mr. Jones voiced  strong opposition                                                                   
to additional sales tax.                                                                                                        
                                                                                                                                
JERI LANIER,  FAIRBANKS,  testified in  favor of a  statewide                                                                   
income  tax  and  voiced  strong  support  for  an  increased                                                                   
alcohol tax. Ms. Lanier spoke  in support of an increased gas                                                                   
tax. She testified against an education tax.                                                                                    
                                                                                                                                
Representative Davies pointed  out that home heating fuel was                                                                   
not being included in the proposed fuel tax.                                                                                    
                                                                                                                                
CARL BENSON,  FAIRBANKS,  testified in  favor of a  statewide                                                                   
income  tax.  Mr.  Benson  voiced  support  for  leaving  the                                                                   
Permanent  Fund  as it  is.   He  noted  his support  for  an                                                                   
increased gas  tax.  He pointed  out that if the  current gas                                                                   
tax were  doubled, it  would amount to  five cents  less than                                                                   
the national average.  Mr. Benson testified in  opposition to                                                                   
any additional sales taxes.                                                                                                     
                                                                                                                                
TOM  LAURENT  JR,  PETERSBURG,  testified  in  opposition  to                                                                   
additional sales  taxation.  He  thought that having  a sales                                                                   
tax  would  make  the State  loose  their  tax  exemption  in                                                                   
Washington State.   Mr. Laurent  voiced favor of  a statewide                                                                   
income tax.  He suggested making  some major Alaska highways,                                                                   
toll roads.                                                                                                                     
                                                                                                                                
JERRY DIXON,  SEWARD, voiced concerns regarding  education in                                                                   
the State  of Alaska  and testified in  favor of  a statewide                                                                   
income tax.                                                                                                                     
                                                                                                                                
DARIO  NOTTI,  BETHEL,  testified  in  support  of  enhancing                                                                   
revenue  measures.    Mr.  Notti   spoke  in  support  of  an                                                                   
increased motor fuel  tax and in favor of a  statewide income                                                                   
tax.   Mr.  Notti  voiced  support  for further  cruise  ship                                                                   
taxation.   He noted  strong opposition  to additional  sales                                                                   
taxation, but  if it were essential  for a full plan  then it                                                                   
should  be very  small.   He  voiced  support  for using  the                                                                   
income of the permanent fund.                                                                                                   
                                                                                                                                
BRUCE HENDRICKSON, HOMER, testified  in favor of implementing                                                                   
a  statewide   income  tax.  He  voiced  opposition   to  any                                                                   
additional sales taxes.                                                                                                         
                                                                                                                                
DR. BOB  JOHNSON, KODIAK, voiced  concerns about  any further                                                                   
budget cuts.  He noted his support  for using the income from                                                                   
the permanent  fund.   Dr. Johnson  testified  in favor  of a                                                                   
statewide income  tax and opposition to any  additional sales                                                                   
taxation.                                                                                                                       
                                                                                                                                
                                                                                                                                
RECESSED:      11:25 A.M.                                                                                                       
RECONVENED:     1:55 P.M.                                                                                                       
                                                                                                                                
                                                                                                                                
TAPE HFC 02 - 60, Side A                                                                                                      
                                                                                                                                
                                                                                                                                
JAY HOGAN, JUNEAU,  advised that the Permanent  Fund needs to                                                                   
be handled wisely  and all the income to the  fund is already                                                                   
considered  general  fund money.    Mr. Hogan  spoke  against                                                                   
inflation proofing  the fund.  He distributed  and referenced                                                                   
his handout.  [Copy on File].                                                                                                   
                                                                                                                                
Mr. Hogan commented on the types  of things that other states                                                                   
use their  "permanent fund  type accounts"  for.  He  pointed                                                                   
out that  some states  use this  type of  fund to  adequately                                                                   
support education.   He assumed that if education  were taken                                                                   
off   the  table,   budgetary  restraints   would  still   be                                                                   
necessary, however, the foundation  formula would continue to                                                                   
be substantially driven by the  Legislature.  He advised that                                                                   
any budget would  "stumble" over the financial  needs of such                                                                   
a large  program.   He claimed  that education  would be  the                                                                   
best program to  designate for the use of the  permanent fund                                                                   
earnings.                                                                                                                       
                                                                                                                                
Mr. Hogan stated that the funds  in the Constitutional Budget                                                                   
Reserve (CBR) have not served the intended purpose.                                                                             
                                                                                                                                
In  response  to  queries  by  Vice-Chair  Bunde,  Mr.  Hogan                                                                   
explained that Alaska Housing  Finance Corporation (AHFC) had                                                                   
been capitalized out of the general fund.                                                                                       
                                                                                                                                
REPRESENTATIVE GRETCHEN GUESS  questioned the reaction to the                                                                   
political  feasibility   for  fully  funding   the  education                                                                   
program.                                                                                                                        
                                                                                                                                
Mr. Hogan  explained that a  separate endowment would  not be                                                                   
needed.  He recommended a similar  plan, as used by the State                                                                   
of New  Mexico.  Traditionally,  Alaska has spelled  out fund                                                                   
sources.   Mr.  Hogan did  not  believe that  the "style"  of                                                                   
appropriation would need to be changed.                                                                                         
                                                                                                                                
Representative  Hudson agreed with  the comments made  by Mr.                                                                   
Hogan suggesting  that the dividend  is Alaska's  "rainy day"                                                                   
account.                                                                                                                        
                                                                                                                                
DON WESTLUND,  KETCHIKAN, spoke  in support for  an increased                                                                   
gas tax.  Mr.  Westlund proposed that the State  adopt both a                                                                   
resident  and  non-resident  income   tax.  He  testified  in                                                                   
support of using the income of  the permanent fund.  He added                                                                   
support of providing the current  dividend to only those that                                                                   
currently  receive it and  then it  be discontinued  with the                                                                   
person either no longer resides in Alaska or dies.                                                                              
                                                                                                                                
BRIAN   LYNCH,  PETERSBURG,   testified   in  opposition   to                                                                   
additional sales  taxes.  Mr. Lynch advised  that sales taxes                                                                   
are regressive  and that they  are not deductible  on federal                                                                   
income taxes.                                                                                                                   
                                                                                                                                
LARRY  MESHKIN,   MAT-SU,  suggested  further   budget  cuts,                                                                   
suggesting an additional  12% cut in spending  in the State's                                                                   
operating budget.                                                                                                               
                                                                                                                                
JIM  WATENPAUGH,  MAT-SU,  spoke   against  new  taxes.    He                                                                   
acknowledged that  the gap must be addressed.   He voiced his                                                                   
support for a State sales tax.                                                                                                  
                                                                                                                                
LINDA REYNOLDS  reiterated comments  made by Mr.  Watenpaugh.                                                                   
She questioned  the cost  associated with the  administration                                                                   
of "programs".   Ms. Reynolds spoke to the  serious recession                                                                   
occurring  within Alaska.   Ms. Reynolds  voiced support  for                                                                   
cutting  the  budget  except  to  necessary  services.    She                                                                   
stressed that  the people  of the  State want serious  budget                                                                   
cuts.    Ms.   Reynolds  testified  against   implementing  a                                                                   
statewide  income  tax  and  urged   responsible  Legislative                                                                   
spending.   Ms. Reynolds emphasized  her opposition  to using                                                                   
the income of the permanent fund.                                                                                               
                                                                                                                                
LATONNIE  BARLOW, WRANGELL,  testified in  opposition to  any                                                                   
State sales taxation.  She testified  in favor of a statewide                                                                   
income tax.                                                                                                                     
                                                                                                                                
                                                                                                                                
TAPE HFC 02 - 60, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
CHARLES  DAVIS,  HOMER, testified  in  favor  of a  statewide                                                                   
income tax.   He recommended that  the price for  the State's                                                                   
resources should  be increased in order that  the State makes                                                                   
more money.                                                                                                                     
                                                                                                                                
CARL BENSON,  FAIRBANKS,  stressed that  Alaska is now  faced                                                                   
with  state  level  decisions.   He  testified  in  favor  of                                                                   
implementing  a statewide income  tax and  in support  for an                                                                   
increased tax  to gas.   Mr. Benson  voiced support  of using                                                                   
the  income  from  the  permanent fund.    He  voiced  strong                                                                   
opposition to a statewide sales tax.                                                                                            
                                                                                                                                
HENRY COLE, FAIRBANKS, indicated  his support for a statewide                                                                   
income  tax.    Mr.  Cole voiced  opposition  to a  statewide                                                                   
sales tax.                                                                                                                      
                                                                                                                                
RICHARD SNYDER, ANCHORAGE, testified  in favor of a statewide                                                                   
income tax and opposition to using a State sales tax.                                                                           
                                                                                                                                
DAVID PAPERMAN, ANCHORAGE, testified  in favor of a statewide                                                                   
income tax.   Mr. Paperman voiced his opposition  to reducing                                                                   
the State dividend.   He commented on the need  for continued                                                                   
public safety and voiced opposition  to any cuts to that type                                                                   
service.                                                                                                                        
                                                                                                                                
EUGENE KULAWIK, ANCHORAGE, testified  in support of using the                                                                   
income from  the permanent  fund.   Mr. Kulawik testified  in                                                                   
favor of implementation of a statewide income tax.                                                                              
                                                                                                                                
ARTHUR CURTIS,  ANCHORAGE, testified in favor  of a statewide                                                                   
income tax.   He thought  that would  be the most  simple and                                                                   
fair way  to increase revenue  for the State and  that people                                                                   
of Alaska have  an obligation to pay those  taxes. Mr. Curtis                                                                   
noted his  support for  using the  income from the  permanent                                                                   
fund.                                                                                                                           
                                                                                                                                
JOHN BLAINE,  ANCHORAGE,  testified in  favor of a  statewide                                                                   
income tax.   She added her  support for using the  income of                                                                   
the permanent fund.                                                                                                             
                                                                                                                                
JANELL  PRIVETT,  WRANGELL, voiced  support  whatever  fiscal                                                                   
plan  the Legislature  determines.    She noted  support  for                                                                   
using  the  income of  the  permanent  fund and  capping  the                                                                   
dividend.   She  maintained that  the dividend  is a  "gift".                                                                   
She  added  that it  is  essential  that education  be  fully                                                                   
funded.                                                                                                                         
                                                                                                                                
DIXIE  HOOD,  JUNEAU, voiced  opposition  to  HB 303  and  to                                                                   
implementation of  a State sales  tax.  She stressed  that it                                                                   
would not  be fair to implement  a sales tax statewide.   Ms.                                                                   
Hood voiced  support  for a statewide  income  tax and  of an                                                                   
increased gas tax.  Ms. Hood voiced  support for an increased                                                                   
alcohol  tax.  She  added her  support for  using the  income                                                                   
from  the permanent  fund.   She urged  that the  Legislature                                                                   
demonstrate  leadership in  providing a  good fiscal  policy.                                                                   
She  pointed  out  that  broad   based  taxes  are  supported                                                                   
statewide.                                                                                                                      
                                                                                                                                
DON  ETHERIDGE,  AFL-CIO,  JUNEAU,   noted  his  support  for                                                                   
implementing a statewide income tax.                                                                                            
                                                                                                                                
MARILYN MENISH-MEUCCI,  PETERSBURG,  testified in support  of                                                                   
using  the income  of  the permanent  fund.    She noted  her                                                                   
support for a statewide income  tax.   She recommended that a                                                                   
fund be  established for  education from  the Permanent  Fund                                                                   
money.    Ms. Meucci  recommended  that  the  State  consider                                                                   
discontinuing property  tax reduction for seniors  and voiced                                                                   
strong opposition to a State sales tax.                                                                                         
                                                                                                                                
                                                                                                                                
RECESS:        3:15 P.M.                                                                                                        
RECONVENE:     6:15 P.M.                                                                                                        
                                                                                                                                
                                                                                                                                
TAPE HFC 02 - 61, Side A                                                                                                      
                                                                                                                                
                                                                                                                                
DOUG MILLARD, MAT-SU,  voiced support for a  State sales tax.                                                                   
Mr.  Millard voiced  support  for limitations  to  be put  on                                                                   
State  spending.     He  testified  against   implementing  a                                                                   
statewide income tax.                                                                                                           
                                                                                                                                
TED CREMER, MAT-SU, voiced support for a State sales tax.                                                                       
                                                                                                                                
ANDY HARRINGTON, FAIRBANKS, voiced  support for a State sales                                                                   
tax.   He commented  that there  is a  benefit in  collecting                                                                   
taxes from  tourists.  Mr.  Harrington testified in  favor of                                                                   
implementing a statewide income tax.                                                                                            
                                                                                                                                
PAT SWEETSIR,  FAIRBANKS, voiced  concerns about the  cuts to                                                                   
the mental health  budget and the cuts to the  Village Public                                                                   
Safety Officer (VPSO) budget cuts.                                                                                              
                                                                                                                                
GAIL  IGO,   ANCHORAGE,  testified  in  support   of  revenue                                                                   
generating  measures.    She voiced  her  concern  about  the                                                                   
education system statewide.                                                                                                     
                                                                                                                                
MAXINE RADER,  ANCHORAGE, testified  in favor of  a statewide                                                                   
income tax.  She added her opposition  to using the income of                                                                   
the  permanent  fund  and testified  against  implementing  a                                                                   
statewide income tax.                                                                                                           
                                                                                                                                
DENNY  WEATHERS,  CORDOVA, recommended  further  cutting  the                                                                   
Legislature's funding.   He added  his support in  moving the                                                                   
Legislature to Anchorage.  He  thought that would save costs.                                                                   
Mr. Weathers spoke against taxation of any kind.                                                                                
                                                                                                                                
TOM BOUTIN,  JUNEAU, testified in  support of a  State income                                                                   
tax.  [Copy of testimony on file].                                                                                              
                                                                                                                                
BARBARA  MILLER, MAT-SU,  voiced support  for further  budget                                                                   
cuts.   She  noted  her support  for a  State  sales tax  and                                                                   
statewide property taxes.                                                                                                       
                                                                                                                                
WILLIAM MILLER,  MAT-SU, spoke  in support of  further budget                                                                   
cuts.  He noted  his support for a State sales  tax but noted                                                                   
his support  for food  and medicine  exemptions.  Mr.  Miller                                                                   
testified against implementing a statewide income tax.                                                                          
                                                                                                                                
                                                                                                                                
RECESSED:      6:35 P.M.                                                                                                        
RECONVENED:    6:44 P.M.                                                                                                        
                                                                                                                                
                                                                                                                                
HARRY  EATON,   KENAI,  testified   in  support   of  revenue                                                                   
measures.    Mr.  Eaton  testified   against  implementing  a                                                                   
statewide income  tax. He stressed  that less than  one third                                                                   
of Alaskans would carry the burden of the income tax.                                                                           
                                                                                                                                
JOHN  MALTAS,  ANCHORAGE,  testified in  support  of  revenue                                                                   
measures.   Mr.  Maltas  voiced his  support  of a  statewide                                                                   
income tax.                                                                                                                     
                                                                                                                                
                                                                                                                                
RECESSED:      6:48 P.M.                                                                                                        
RECONVENED:    7:02 P.M.                                                                                                        
                                                                                                                                
                                                                                                                                
PAT MARLEY, MAT-SU, Spoke in opposition of any new taxes.                                                                       
                                                                                                                                
JERRY  MCDONNELL,   ANCHORAGE,  testified   in  favor   of  a                                                                   
statewide income  tax. Mr. McDonnell mentioned  that if there                                                                   
is a statewide sales tax that  there should be exemptions for                                                                   
food.                                                                                                                           
                                                                                                                                
PATRICK  CLARK, ANCHORAGE,  spoke  in opposition  of any  new                                                                   
taxes and recommended that there be further budget cuts.                                                                        
                                                                                                                                
JULIE CLARK,  ANCHORAGE, urged  that there be  further budget                                                                   
cuts.                                                                                                                           
                                                                                                                                
                                                                                                                                
RECESSED:      7:08 P.M.                                                                                                        
RECONVENED:    7:13 P.M.                                                                                                        
                                                                                                                                
The Committee adjourned at 7:15 P.M.                                                                                            
                                                                                                                                
                                                                                                                                

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