Legislature(2017 - 2018)HOUSE FINANCE 519

03/29/2017 05:30 PM FINANCE

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Audio Topic
05:35:09 PM Start
05:35:58 PM HB115
05:37:15 PM Public Testimony: All Other Lios, Offnets
07:45:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= HB 115 INCOME TAX; PFD CREDIT; PERM FUND INCOME TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit Two Minutes> --
5:30 - 8:00 PM All Other LIOs, Off Nets
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+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 29, 2017                                                                                            
                         5:35 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
5:35:09 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 5:35 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Bill  Corbus,  Self,  Juneau;  Representative  Chris  Birch;                                                                    
Representative DeLena Johnson                                                                                                   
                                                                                                                                
PRESENT  VIA  TELECONFERENCEDavid   Otness,  Self,  Cordova;                                                                  
Nancy Bird,  Self, Cordova; Ron  Keffer, Self,  Homer; Clyde                                                                    
Boyer,  Self,   Homer;  Julia  Person,  Self,   Homer;  Jake                                                                    
Jacobson, Self,  Kodiak; Stephen  Taufen, Self,  Kodiak; Pat                                                                    
Holmes,  Self,  Kodiak;  Doug   Walrath,  Self,  Nome;  Eric                                                                    
Osborne,  Self, Nome;  Sue  Steinacher,  Self, Nome;  George                                                                    
Pierce, Self,  Kasilof; Ken  Huckeba, Self,  Wasilla; Aedene                                                                    
Arthur, Self,  Butte; Ghert  Abbott, Self,  Ketchikan; Steve                                                                    
St. Clair, Self, Wasilla; Abigail  St. Clair, Self, Wasilla;                                                                    
Beth Fread, Self, Palmer; Nick  Steen, Self, Wasilla; Martin                                                                    
Spargo,  Self,  Wasilla;  John  Dull,  Self,  Sitka;  Rachel                                                                    
Neuendorf,  Self,  Soldotna;  Bill  Warren,  Self,  Nikiski;                                                                    
Rocky Emerson,  Self, Nikiski;  Mary Nanuwak,  Self, Bethel;                                                                    
Sarah  Vance, Self,  Homer; Rob  Lund,  Self, Homer;  Pamela                                                                    
Brodie,  Self, Homer;  Arlene  Ronda,  Self, Homer;  Akcinia                                                                    
Kulikov,  Self,  Homer;  Earl Lackey,  Self,  Palmer;  Kelly                                                                    
Repnow,  Self,   Palmer;  Kewaunee  Repnow,   Self,  Palmer;                                                                    
Yaquina  Repnow,   Self,  Palmer;  Dennis   Terpstra,  Self,                                                                    
Talkeetna;  Bobette Stubblefield,  Self, Wasilla;  Kyle May,                                                                    
Self,  Prudhoe Bay;  Christine Klein,  Self, Anchorage;  Dan                                                                    
Bardwell,  Self, Wasilla;  Lissa  Lake,  Self, Wasilla;  Ken                                                                    
Dormady,  Self, Soldotna;  Evelynn  Trefon, Self,  Newhalen;                                                                    
Jeffrey  Knauf,  Self,   Anchorage;  Kathleen  Jones,  Self,                                                                    
Palmer; Ross  Mullins, Self, Cordova; Morgan  Evensen, Self,                                                                    
Willow; Phillip  Knight, Self, Wasilla; Jon  Faulkner, Self,                                                                    
Homer; Stephen  Wright, Self,  Wasilla; Craig  Hooser, Self,                                                                    
Wasilla; David Karpik, Self, Kenai;                                                                                             
SUMMARY                                                                                                                       
                                                                                                                                
HB 115    INCOME TAX; PFD CREDIT; PERM FUND INCOME                                                                              
                                                                                                                                
          HB 115 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
Co-Chair Foster addressed the meeting agenda.                                                                                   
                                                                                                                                
HOUSE BILL NO. 115                                                                                                            
                                                                                                                                
     "An  Act  relating  to  the  permanent  fund  dividend;                                                                    
     relating  to the  appropriation of  certain amounts  of                                                                    
     the earnings reserve account;  relating to the taxation                                                                    
     of  income  of  individuals;   relating  to  a  payment                                                                    
     against the  individual income  tax from  the permanent                                                                    
     fund  dividend  disbursement;   repealing  tax  credits                                                                    
     applied  against  the  tax  on  individuals  under  the                                                                    
     Alaska  Net  Income  Tax  Act;  and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
5:35:58 PM                                                                                                                    
                                                                                                                                
^PUBLIC TESTIMONY: ALL OTHER LIOS, OFFNETS                                                                                    
                                                                                                                                
5:37:15 PM                                                                                                                    
                                                                                                                                
BILL CORBUS,  SELF, JUNEAU,  spoke in  support of  the bill,                                                                    
which he believed  was a very important step  in solving the                                                                    
state's fiscal  dilemma. He believed  an income tax  and the                                                                    
use of the  Permanent Fund would fill most  of the remainder                                                                    
of  the fiscal  gap.  He  believed it  was  a good  solution                                                                    
because  it  would  urge  Alaskans to  be  involved  in  the                                                                    
legislative budget process.                                                                                                     
                                                                                                                                
5:38:50 PM                                                                                                                    
                                                                                                                                
DAVID  OTNESS,  SELF,  CORDOVA (via  teleconference),  spoke                                                                    
against  the  bill.  He  found it  astounding  that  so  few                                                                    
testifiers  were   holding  past  governors   and  lawmakers                                                                    
accountable for  the current budget  problem. He was  not an                                                                    
opponent  of  income tax,  but  he  did not  support  giving                                                                    
credits  to   oil  companies.  He   could  not   accept  the                                                                    
provisions of  the bill under the  current circumstances. He                                                                    
believed the bill would hurt  individuals who were less well                                                                    
off.  He equated  the bill  to stealing  from the  mouths of                                                                    
babes.                                                                                                                          
                                                                                                                                
5:42:05 PM                                                                                                                    
                                                                                                                                
NANCY  BIRD, SELF,  CORDOVA (via  teleconference), testified                                                                    
in support  of the bill.  She spoke  out of concern  for the                                                                    
state's  future.  She wanted  a  stable  economy that  could                                                                    
support  roads,   infrastructure,  and  the   management  of                                                                    
resources at  places like Department  of Fish and  Game. She                                                                    
wanted to stop  the bleeding from the  state's reserves. She                                                                    
supported an income  tax and wished the  previous income tax                                                                    
had never  been discontinued.  She urged the  legislature to                                                                    
limit its use  of budget cuts. She opined  that further cuts                                                                    
would hurt the economy and the state's citizens.                                                                                
                                                                                                                                
5:43:52 PM                                                                                                                    
                                                                                                                                
RON  KEFFER,  SELF,  HOMER (via  teleconference),  spoke  in                                                                    
support of the  legislation. He had testified  on a previous                                                                    
version  of  the  bill  and  saw that  much  of  the  public                                                                    
comments  had  been  taken  into account  in  the  new  bill                                                                    
version. He stated the income  tax was now based on adjusted                                                                    
gross income. He  stated that the use of  the Permanent Fund                                                                    
created an appropriate use of  the funds into the future. He                                                                    
believed  the state's  budget would  be on  a more  positive                                                                    
course.  He  did  not  support   the  Senate's  proposal  of                                                                    
"draconian" cuts.                                                                                                               
                                                                                                                                
5:46:15 PM                                                                                                                    
                                                                                                                                
CLYDE BOYER, SELF, HOMER (via  teleconference), was in favor                                                                    
of an income  tax. He believed it would be  wise to consider                                                                    
how  the  previous  income  tax  had  been  implemented.  He                                                                    
thought the implementation  should be in 2018,  not 2019. He                                                                    
supported the  use of rates  that would enhance  the state's                                                                    
revenues. He  thought if  the state did  its own  tax return                                                                    
structure it would require a  large department to administer                                                                    
the tax. He supported basing the tax off the federal taxes.                                                                     
                                                                                                                                
5:48:20 PM                                                                                                                    
                                                                                                                                
JULIA  PERSON, SELF,  HOMER (via  teleconference), testified                                                                    
in support  of the  bill. She supported  an income  tax. She                                                                    
shared details  about her  life and  history in  Alaska. She                                                                    
spoke to individuals  taking money with them  when they left                                                                    
the  state.  She  wanted  a  system that  was  as  fair  and                                                                    
equitable as possible.                                                                                                          
                                                                                                                                
5:49:28 PM                                                                                                                    
                                                                                                                                
JAKE JACOBSON,  SELF, KODIAK (via  teleconference), believed                                                                    
the bill should be simplified;  he believed all bills should                                                                    
only deal  with one issue. He  was not opposed to  an income                                                                    
tax. He was strongly  opposed to restructuring the Permanent                                                                    
Fund  Dividend (PFD),  which he  equated with  stealing from                                                                    
babies. He did not support  oil credits to oil companies. He                                                                    
stressed that the  PFD was not welfare, it was  the right of                                                                    
Alaskans. He asked the committee to keep it simple.                                                                             
                                                                                                                                
5:51:21 PM                                                                                                                    
                                                                                                                                
STEPHEN   TAUFEN,   SELF,   KODIAK   (via   teleconference),                                                                    
testified against  the bill.  He did  not believe  an income                                                                    
tax penciled  out. He believed  the state needed  a resource                                                                    
economic  sovereign  commission   related  to  resources  in                                                                    
Alaska  including timber,  fisheries,  and  other. He  spoke                                                                    
about timber  resources. He strongly opposed  a state income                                                                    
tax.                                                                                                                            
                                                                                                                                
Co-Chair Foster  recognized Representatives Chris  Birch and                                                                    
DeLena Johnson in the audience.                                                                                                 
                                                                                                                                
5:54:02 PM                                                                                                                    
                                                                                                                                
PAT HOLMES, SELF, KODIAK  (via teleconference), testified in                                                                    
support  of  the  bill. He  respected  the  legislature  for                                                                    
trying  to raise  revenue.  He recalled  the  past when  the                                                                    
budget had been able to  support education, the ferries, and                                                                    
other services.  He believed the  bill had real  promise. He                                                                    
believed subsidies and tax credits  for oil companies needed                                                                    
to  be cut.  He  would  like to  see  the  House and  Senate                                                                    
resolve  conflict   of  interest  issues.  He   thanked  the                                                                    
committee for its work.                                                                                                         
                                                                                                                                
5:56:48 PM                                                                                                                    
                                                                                                                                
DOUG  WALRATH, SELF,  NOME (via  teleconference), asked  his                                                                    
young  children to  introduce themselves.  He supported  the                                                                    
legislation. He  was concerned for  what the state  faced in                                                                    
the  future  if  the  fiscal crisis  was  not  addressed  at                                                                    
present. He was in favor  of a comprehensive fiscal plan. He                                                                    
wondered where  the state would  be in  ten years if  a plan                                                                    
was not implemented at present.                                                                                                 
                                                                                                                                
5:59:11 PM                                                                                                                    
                                                                                                                                
ERIC  OSBORNE,   SELF,  NOME  (via   teleconference),  spoke                                                                    
against the  bill. He believed  the legislature  was putting                                                                    
the cart  before the horse.  He spoke against  subsidies for                                                                    
oil companies. He  stated that Alaska was a  lone example of                                                                    
otherwise failed resource states.  He spoke to money pouring                                                                    
into  a  resource-rich state  while  people  got poorer  and                                                                    
poorer. He  spoke against restructuring the  Permanent Fund,                                                                    
which he  believed would lead  the state towards  becoming a                                                                    
failed resource  state. He spoke  about past  state leaders.                                                                    
He  believed they  were becoming  political mercenaries.  He                                                                    
asked the legislature to get  its priorities straight and to                                                                    
tax the resources coming out of the ground.                                                                                     
                                                                                                                                
Co-Chair Foster relayed that the  committee was also hearing                                                                    
HB 111  that was aimed at  addressing oil and gas  taxes and                                                                    
credits.                                                                                                                        
                                                                                                                                
6:02:35 PM                                                                                                                    
                                                                                                                                
SUE  STEINACHER,  SELF,  NOME  (via  teleconference),  urged                                                                    
support  of an  income tax.  She  stated the  cuts that  had                                                                    
already  come from  the PFD  took the  same amount  of money                                                                    
from a  child or  adult. She believed  the income  tax would                                                                    
balance  the  fairness  of  its  impact  on  residents.  She                                                                    
applauded the  committee for  its responsibility  to promote                                                                    
an income tax.                                                                                                                  
                                                                                                                                
6:04:21 PM                                                                                                                    
                                                                                                                                
GEORGE PIERCE, SELF, KASILOF  (via teleconference), spoke in                                                                    
support  of a  state  income tax;  however,  he opposed  the                                                                    
bill. He was against taking  money from the PFD. He stressed                                                                    
that the  people's wealth was  disappearing. He  supported a                                                                    
PFD advisory vote for the people  to decide on the issue. He                                                                    
disputed earlier testimony  that the bill would  result in a                                                                    
$1,250 PFD  payment. He  noted there  was another  bill that                                                                    
would reexamine the issue every  three years. He believed it                                                                    
should be called the destruction  of the PFD. He supported a                                                                    
cap  on   government  spending.  He  underscored   that  the                                                                    
legislature got  the state into  its budget  predicament. He                                                                    
supported  taxing  s   corporations  and  limited  liability                                                                    
companies. He  stressed the legislature should  make cuts in                                                                    
its  own  backyard. He  did  not  support subsidies  to  oil                                                                    
companies.                                                                                                                      
                                                                                                                                
6:07:42 PM                                                                                                                    
                                                                                                                                
KEN HUCKEBA,  SELF, WASILLA (via  teleconference), testified                                                                    
against   the   bill.   He  spoke   to   extravagant   state                                                                    
expenditures. He believed it was  welfare to take money from                                                                    
people who earn  money for a living to give  a PFD. He spoke                                                                    
against blowing  huge sums of  money on lease sales.  He did                                                                    
not  think it  was  possible to  tax the  state  out of  the                                                                    
spending problem.                                                                                                               
                                                                                                                                
6:12:31 PM                                                                                                                    
                                                                                                                                
AEDENE ARTHUR,  SELF, BUTTE (via  teleconference), testified                                                                    
in support  of an income  tax. She  shared that she  and her                                                                    
husband  had moved  to  Alaska  in 1968  and  had taught  in                                                                    
various villages until 1982.  She provided information about                                                                    
her family. Most of the  individuals in her family qualified                                                                    
for  Medicaid.   She  was  thankful  to   receive  teachers'                                                                    
retirement. She did  not believe the bill  should pertain to                                                                    
both  the PFD  and  income tax.  She was  tired  of the  oil                                                                    
industry not paying  its share and of  companies coming into                                                                    
Alaska  and  developing  things  and  spending  the  state's                                                                    
money.  She  believed   individuals  working  seasonally  in                                                                    
Alaska should be paying a  non-resident tax. She thanked the                                                                    
committee for its work.                                                                                                         
                                                                                                                                
6:16:51 PM                                                                                                                    
                                                                                                                                
GHERT  ABBOTT, SELF,  KETCHIKAN (via  teleconference), spoke                                                                    
in  support of  the income  tax  contained in  the bill.  He                                                                    
believed the only alternative to  an income tax were further                                                                    
cuts  to  the  PFD  and  a state  sales  tax.  He  stated  a                                                                    
progressive  income  tax  spread  the  financial  pain  more                                                                    
equitably. He hoped the legislature would pass the bill.                                                                        
                                                                                                                                
6:18:18 PM                                                                                                                    
                                                                                                                                
STEVE  ST.   CLAIR,  SELF,  WASILLA   (via  teleconference),                                                                    
testified  in  opposition  to  the  bill.  He  believed  the                                                                    
legislature had  increased the budget above  and beyond what                                                                    
the people wanted.  He did not support cuts to  the PFD or a                                                                    
regressive tax  via the change  to the PFD. He  suggested no                                                                    
changes to  the dividend and  substantive cuts to  the state                                                                    
budget. He  believed most legislators were  being dishonest,                                                                    
ignorant of facts,  or incompetent. He stated  that too many                                                                    
Alaskans were oblivious to the  budget issues. He advised to                                                                    
do no harm to Alaskans.                                                                                                         
                                                                                                                                
6:20:41 PM                                                                                                                    
                                                                                                                                
ABIGAIL  ST.  CLAIR,  SELF,  WASILLA  (via  teleconference),                                                                    
spoke  against the  bill. She  believed the  legislature was                                                                    
overspending. She urged the legislature  to manage its money                                                                    
appropriately.  She discussed  that  the state  had a  large                                                                    
population  of  veterans,  herself  included.  She  did  not                                                                    
support  taking  money  from  the PFD.    She  believed  the                                                                    
legislature was responsible to run  the state as efficiently                                                                    
as  possible.  She concluded  that  funds  were limited  and                                                                    
there were other options available.                                                                                             
                                                                                                                                
6:22:29 PM                                                                                                                    
                                                                                                                                
BETH FREAD,  SELF, PALMER (via teleconference),  was against                                                                    
the  bill.   She  believed   there  had   been  disingenuous                                                                    
statements  made by  legislators  that the  state  was in  a                                                                    
financial  crisis. She  spoke to  the  state's savings.  She                                                                    
detailed the  legislature was robbing legacy  funds from the                                                                    
Permanent  Fund. She  believed the  legislature was  robbing                                                                    
residents.                                                                                                                      
                                                                                                                                
6:24:34 PM                                                                                                                    
                                                                                                                                
NICK  STEEN,  SELF,   WASILLA  (via  teleconference),  spoke                                                                    
against the bill.  He stressed the "wants" had  not been cut                                                                    
from the budget.  He believed the "needs"  should be funded.                                                                    
He  listed  the legislative  chef,  the  Anchorage LIO,  the                                                                    
gasline, and  other as unnecessary expenses.  He supported a                                                                    
clean and  simple program,  not the  one established  in the                                                                    
bill.  He  did  not  believe  the  state  needed  additional                                                                    
revenue at present.                                                                                                             
                                                                                                                                
6:26:23 PM                                                                                                                    
                                                                                                                                
MARTIN   SPARGO,   SELF,   WASILLA   (via   teleconference),                                                                    
testified in favor of the  bill. He thanked the sponsors for                                                                    
their work.  He opined  that plenty  of cutting  had already                                                                    
occurred. He referred to a  publication from March 25 and he                                                                    
shared  that he  commercial fished.  He was  unclear on  the                                                                    
withholding for  independent contractors.  He referred  to a                                                                    
note  where  the  requirement would  be  removed.  He  would                                                                    
prefer to  not have to  collect from his employees  who were                                                                    
independent  contractors.  He  pointed to  other  provisions                                                                    
such  as like-kind  exchange.  He was  curious  how the  tax                                                                    
would be implemented.                                                                                                           
                                                                                                                                
Co-Chair Foster asked Mr. Spargo  to email the committee and                                                                    
he would follow up with an answer.                                                                                              
                                                                                                                                
Co-Chair  Seaton clarified  that the  independent contractor                                                                    
portion would be  removed from the bill. He  referred to the                                                                    
like-kind  exchange, which  was a  bit more  complicated and                                                                    
some details had to be worked out.                                                                                              
                                                                                                                                
6:30:49 PM                                                                                                                    
                                                                                                                                
JOHN  DULL,  SELF,  SITKA  (via  teleconference),  spoke  in                                                                    
support  of an  income tax,  but he  believed the  bill fell                                                                    
short  of rolling  out a  proper  income tax.  He asked  the                                                                    
committee to research  brackets and to forget  about the PFD                                                                    
credit. He implored the legislature  to enact an income tax.                                                                    
He supported a 2018 implementation  date as opposed to 2019.                                                                    
He thanked the committee for its work.                                                                                          
                                                                                                                                
6:32:31 PM                                                                                                                    
                                                                                                                                
RACHEL  NEUENDORF,  SELF,   SOLDOTNA  (via  teleconference),                                                                    
testified against the bill. She  spoke in support of drastic                                                                    
cuts to state  government. She asked how much  it would cost                                                                    
to implement  the tax.  She believed the  PFD had  become an                                                                    
entitlement,   she  suggested   getting  rid   of  it.   She                                                                    
recommended taxing tourists  and other. She did  not want to                                                                    
spend more and more income on the state's budget.                                                                               
                                                                                                                                
6:34:44 PM                                                                                                                    
                                                                                                                                
BILL WARREN,  SELF, NIKISKI  (via teleconference),  spoke in                                                                    
strong support of the bill. He  shared that he was a 66-year                                                                    
resident. He  stressed that  the state  had a  budget crisis                                                                    
and  a  balanced approach  to  the  problem was  needed.  He                                                                    
stated the tax  proposed in the bill was  fair. He applauded                                                                    
the  hard work  of  the finance  committee.  He referred  to                                                                    
Alaska  Gasline Development  Corporation (AGDC).  He thanked                                                                    
the  committee  for  its  hard  work.  He  believed  it  was                                                                    
necessary for everyone to work together.                                                                                        
                                                                                                                                
6:36:58 PM                                                                                                                    
                                                                                                                                
ROCKY  EMERSON, SELF,  NIKISKI  (via teleconference),  spoke                                                                    
against the bill.  He shared that he is  a disabled veteran.                                                                    
He believed  the use of  the Permanent  Fund should go  to a                                                                    
vote of  the people. He  suggested a PFD buy-out  option for                                                                    
senior  residents of  the state.  He thought  an income  tax                                                                    
would  be   better  than  a  sales   tax,  particularly  for                                                                    
residents  on  a  fixed  income.   He  referred  to  savings                                                                    
accounts  the legislature  had not  considered.  He did  not                                                                    
want to have to leave Alaska and could not afford to leave.                                                                     
                                                                                                                                
6:39:12 PM                                                                                                                    
                                                                                                                                
MARY  NANUWAK,  SELF,  BETHEL  (via  teleconference),  spoke                                                                    
against  the bill.  She stressed  that  the current  session                                                                    
resembled the  sessions that had  occurred in the  past. She                                                                    
underscored  that the  monetary  problems  facing the  state                                                                    
were  the  fault of  the  legislature,  not of  the  state's                                                                    
citizens. She  had been  paying to the  State of  Alaska her                                                                    
entire life  and she had  received nothing in return,  but a                                                                    
denial of needed services. She  thought it was shameful. She                                                                    
spoke to negative impacts on  residents. She shared that she                                                                    
listened to  legislative sessions daily. She  continued that                                                                    
many Native people from rural  areas had not been testifying                                                                    
because the legislature did not have translators for non-                                                                       
English speakers.                                                                                                               
                                                                                                                                
6:44:54 PM                                                                                                                    
                                                                                                                                
SARAH VANCE,  SELF, HOMER  (via teleconference),  opposed HB                                                                    
115.  She  represented one  of  the  families that  suffered                                                                    
greatly  from the  cut  to  the PFD.  She  had a  one-income                                                                    
family of six.  She believed in an income tax  but a simpler                                                                    
version. She opposed the state  touching the PFD. She agreed                                                                    
with  those people  who had  testified that  they could  not                                                                    
trust their legislators. She emphasized not taking the PFD.                                                                     
                                                                                                                                
6:47:24 PM                                                                                                                    
                                                                                                                                
ROB LUND, SELF, HOMER (via teleconference), read prepared                                                                       
testimony on behalf of his wife, Judith Lund:                                                                                   
                                                                                                                                
     It  is evident  from Alaska's  current budget  problems                                                                    
     that  maintaining   an  economy  that   is  essentially                                                                    
     supported  by a  single  industry puts  the state,  the                                                                    
     people,  and their  future  in  a precarious  position.                                                                    
     Without  a diversified  revenue base,  Alaska faces  an                                                                    
     uncertain  future, controlled  in  large  part, not  by                                                                    
     Alaskans but  by wealthy and powerful  corporations and                                                                    
     by institutions from other  states and other countries.                                                                    
     Without  a  diversified  revenue based,  controlled  by                                                                    
     Alaskans, our state  and our fellow Alaskans,  are in a                                                                    
     dangerous position.  Resource extraction has  been, and                                                                    
     will  continue to  be, our  major industry,  but it  is                                                                    
     apparent that  this reliance  has [inaudible]  and lead                                                                    
     to  a  complacent  approach   to  our  state's  future.                                                                    
     Because we  are a  small state  in population,  we face                                                                    
     special  challenges   in  solving  our   problems.  The                                                                    
     residents  of  Alaska  should  be  expected  to  assume                                                                    
     responsibilities  both   for  funding  our   state  and                                                                    
     determining the  services to be offered.  Taxes are the                                                                    
     means by which that is  achieved. An income tax has two                                                                    
     desirable  features.  It  most fairly  distributes  the                                                                    
     burden  of  funding  and   it  requires  commitment  to                                                                    
     supporting the services we need  to prosper and grow in                                                                    
     the present  and for  years to come.  Even if  we could                                                                    
     cut our  way to  a balanced budget  without drastically                                                                    
     compromising the  state's economy, I would  still be in                                                                    
     favor of this  tax because it requires  a commitment to                                                                    
     the  future of  our state  and by  the citizens  of the                                                                    
     state  and that  seems to  me to  be an  issue of  real                                                                    
     importance. I  strongly support this bill  and urge our                                                                    
     representatives to  vote for  it. It is  an intelligent                                                                    
     effort to  solve Alaska's budget  problems and it  is a                                                                    
     path to a more secure and prosperous future.                                                                               
                                                                                                                                
                                                                                                                                
6:49:53 PM                                                                                                                    
                                                                                                                                
PAMELA BRODIE,  SELF, HOMER (via  teleconference), supported                                                                    
HB 115.  She was  happy to  see the  tax was  graduated. She                                                                    
opposed  capping  the  PFD. She  thought  that  capping  the                                                                    
dividend was tantamount  to taxing all Alaskans  at the same                                                                    
level, making it the most  unfair way of handling the budget                                                                    
crisis.  She  urged  proper inflation  proofing  and  quoted                                                                    
someone  who  said,  "Inflation  was like  a  thief  in  the                                                                    
night." She also thought oil tax reform was necessary.                                                                          
                                                                                                                                
6:52:04 PM                                                                                                                    
                                                                                                                                
ARLENE  RONDA, SELF,  HOMER (via  teleconference), supported                                                                    
HB 115. She thought it was  time for a graduated income tax.                                                                    
She urged  the legislature to  make sure to  inflation proof                                                                    
the Permanent Fund. She also  urged restructuring oil taxes.                                                                    
She appreciated the work that had been done thus far.                                                                           
                                                                                                                                
6:54:26 PM                                                                                                                    
                                                                                                                                
AKCINIA KULIKOV,  SELF, HOMER (via  teleconference), opposed                                                                    
HB 115.  She was a mother  of seven with six  children still                                                                    
at home. She had been greatly  affected when the PFD was cut                                                                    
in half.  It was very  expensive to  live in Alaska  and she                                                                    
was concerned  by the  potential effects  of an  income tax.                                                                    
She was concerned about how  the income tax would affect the                                                                    
community  of commercial  fishermen who  were self-employed.                                                                    
She urged members not to take her PFD.                                                                                          
                                                                                                                                
6:56:54 PM                                                                                                                    
                                                                                                                                
EARL  LACKEY, SELF,  PALMER (via  teleconference), spoke  in                                                                    
opposition of  HB 115.  He felt it  taxed everything  he had                                                                    
worked  for   and  gave  67  percent   to  state  government                                                                    
spending. He mentioned small oil  companies who had invested                                                                    
in Alaska. He  thought changing the oil  tax structure after                                                                    
the  fact was  unfair. He  supported a  state sales  tax. He                                                                    
urged members to oppose the legislation.                                                                                        
                                                                                                                                
6:58:54 PM                                                                                                                    
                                                                                                                                
KELLY REPNOW, SELF, PALMER  (via teleconference), opposed HB                                                                    
115.  He referred  to  a Dr.  Seuss story.  He  read from  a                                                                    
letter  written  by  the  Co-Chairs  of  the  House  Finance                                                                    
Committee. He  emphasized that  if the  state wanted  to use                                                                    
money from the  Permanent Fund, then it should  borrow it as                                                                    
a loan. He thought the  state's situation would right itself                                                                    
in  time, and  did not  need to  overcorrect at  present. He                                                                    
also thought  the bill should  be separated into  two bills.                                                                    
He thanked the committee for hearing his testimony.                                                                             
                                                                                                                                
7:02:30 PM                                                                                                                    
                                                                                                                                
KEWAUNEE REPNOW, SELF,  PALMER (via teleconference), opposed                                                                    
HB  115. She  came  from  a family  of  11.  She wanted  the                                                                    
Permanent Fund left in the hands of the children.                                                                               
                                                                                                                                
7:03:08 PM                                                                                                                    
                                                                                                                                
YAQUINA REPNOW,  SELF, PALMER (via  teleconference), opposed                                                                    
HB  115. She  came  from  a family  of  11.  She wanted  the                                                                    
Permanent Fund left in the hands of the children.                                                                               
                                                                                                                                
Representative  Wilson  thanked  the  young  testifiers  for                                                                    
taking the time to give their testimonies.                                                                                      
                                                                                                                                
7:04:11 PM                                                                                                                    
                                                                                                                                
DENNIS  TERPSTRA,  SELF,   TALKEETNA  (via  teleconference),                                                                    
opposed  HB 115.  He appreciated  that  the state  was in  a                                                                    
budgetary  situation, but  felt that  some of  the specialty                                                                    
interests  should be  examined.  He noted  some issues  with                                                                    
SB21  in  that  tax  credits needed  to  be  more  carefully                                                                    
evaluated.                                                                                                                      
                                                                                                                                
7:05:52 PM                                                                                                                    
                                                                                                                                
BOBETTE  STUBBLEFIELD, SELF,  WASILLA (via  teleconference),                                                                    
opposed  HB 115.  She  asked the  committee  to implement  a                                                                    
state  sales tax  rather  than an  income  tax. She  thought                                                                    
Alaska's economy would be impacted  more with an income tax.                                                                    
A sales tax  was also a discretionary tax. It  was an easier                                                                    
tax to  track. She did  not want  to see people's  take home                                                                    
income  affected.  She  thanked the  committee  members  for                                                                    
their service.                                                                                                                  
                                                                                                                                
7:08:14 PM                                                                                                                    
                                                                                                                                
KYLE MAY,  SELF, PRUDHOE BAY (via  teleconference), strongly                                                                    
opposed HB 115.  He did not see anything in  the bill saying                                                                    
it  would  collect  taxes   from  out-of-state  workers.  He                                                                    
favored a  state sales  tax. He  thought more  money towards                                                                    
education  was not  working. He  thanked  the committee  for                                                                    
hearing his testimony.                                                                                                          
                                                                                                                                
7:10:33 PM                                                                                                                    
                                                                                                                                
CHRISTINE  KLEIN,  SELF,   ANCHORAGE  (via  teleconference),                                                                    
strongly  supported HB 115.  She  appreciated  the work  the                                                                    
committee had  done. She  thought the  state needed  a state                                                                    
income  tax.  She  reported  having  been  raised  in  rural                                                                    
Alaska. She has paid a state  income tax and a school tax as                                                                    
well.  She thought  Alaskans should  have more  skin in  the                                                                    
game.  She wanted  to see  the  fiscal issue  dealt with  at                                                                    
present. Using  the PFD and  implementing an income  tax was                                                                    
equitable. She applauded the committee.                                                                                         
                                                                                                                                
7:13:44 PM                                                                                                                    
                                                                                                                                
DAN  BARDWELL, SELF,  WASILLA (via  teleconference), opposed                                                                    
HB  115.  He  was  appalled  with  the  performance  of  the                                                                    
legislature.  He also  thought  more would  be  done if  the                                                                    
capital was in the Anchorage area.                                                                                              
                                                                                                                                
7:15:12 PM                                                                                                                    
                                                                                                                                
LISSA  LAKE, SELF,  WASILLA (via  teleconference), spoke  in                                                                    
opposition  of HB  115. She  had lived  in Arizona  prior to                                                                    
retiring in  Alaska. She had  seen a  sales tax and  a state                                                                    
income  tax in  Arizona and  did  not see  any benefit.  She                                                                    
would be more  open to a sales  tax or a gas  tax as opposed                                                                    
to an  income tax. She  thought there other ways  to balance                                                                    
the budget.  She thought there  was a significant  amount of                                                                    
waste  in  the  state.  She also  thought  there  should  be                                                                    
tighter  restrictions  on who  could  receive  the PFD.  She                                                                    
suggested  an education  fund that  people could  contribute                                                                    
their children's  PFD for public education.  She opposed the                                                                    
legislation and thanked the committee for its time.                                                                             
                                                                                                                                
7:19:02 PM                                                                                                                    
                                                                                                                                
KEN  DORMADY, SELF,  SOLDOTNA (via  teleconference), opposed                                                                    
HB 115.  He did  not think  the state was  being run  by the                                                                    
right people. He  mentioned that there were  slush funds and                                                                    
he  felt  like  he  was  being  lied  to.  He  wondered  why                                                                    
Anchorage  did not  have a  sales  tax. He  thought the  PFD                                                                    
should not be touched and  that the legislature should avoid                                                                    
implementing  an income  tax. He  thought further  cuts were                                                                    
necessary.  He mentioned  a  lot of  families  in his  areas                                                                    
going through hardship. He thought  there were other ways of                                                                    
making   up  the   revenue.  He   was  disgusted   with  the                                                                    
legislature.                                                                                                                    
                                                                                                                                
7:22:20 PM                                                                                                                    
                                                                                                                                
EVELYNN TREFON,  SELF, NEWHALEN (via  teleconference), spoke                                                                    
in  support of  an income  tax.  She thought  an income  tax                                                                    
would capture  money that would  otherwise leave  the state.                                                                    
She  wanted to  see some  of the  income tax  go towards  an                                                                    
education fund.  She also recommended an  amendment reducing                                                                    
the PFD  to $1,000. She  calculated that $130  million could                                                                    
then  be put  to the  essential services  of the  state. She                                                                    
thanked the committee for their efforts.                                                                                        
                                                                                                                                
Vice-Chair Gara complimented Ms.  Trefon and thanked her for                                                                    
her testimony.                                                                                                                  
                                                                                                                                
7:24:23 PM                                                                                                                    
                                                                                                                                
JEFFREY   KNAUF,  SELF,   ANCHORAGE  (via   teleconference),                                                                    
opposed HB115.  He thought the government  was oversized and                                                                    
needed  to be  reduced. He  had heard  several remarks  that                                                                    
Alaska  was corrupt.  He thought  an  additional 37  percent                                                                    
needed to  be cut from  the budget.  He talked about  an oil                                                                    
project  he was  involved  in and  having  a difficult  time                                                                    
attracting investment  from outside the state.  He felt that                                                                    
Alaska needed  to be open  for business. He asked  about the                                                                    
plan if the PFD was cut.                                                                                                        
                                                                                                                                
Co-Chair Foster  invited the  previous testifier  to provide                                                                    
any additional testimony in writing.                                                                                            
                                                                                                                                
7:28:25 PM                                                                                                                    
                                                                                                                                
KATHLEEN JONES, SELF, PALMER  (via teleconference), spoke in                                                                    
support of HB  115. She spoke of meeting her  husband on the                                                                    
North  Slope. She  recalled some  advice  from Governor  Jay                                                                    
Hammond. She  also supported  a state sales  tax. She  had a                                                                    
business in Hope, Alaska, and  had encountered tourists that                                                                    
were willing  to pay a  sales tax. She suggested  a seasonal                                                                    
state sales tax from May  through December. She also favored                                                                    
capping  the  PFD.  She  supported  HB  115  and  encouraged                                                                    
members to do so as well. She thanked the committee.                                                                            
                                                                                                                                
7:31:12 PM                                                                                                                    
                                                                                                                                
ROSS MULLINS,  SELF, CORDOVA (via teleconference),  spoke in                                                                    
favor  of HB  115. He  was  a commercial  fisherman and  had                                                                    
experienced  the  Exxon  Valdez   spill.  He  applauded  the                                                                    
committee for the legislation. He  anticipated a battle with                                                                    
the Senate on  a state income tax. He gave  kudos to the new                                                                    
make-up of the House. He  also supported capping the PFD. He                                                                    
mentioned having listened to a  presentation by Rietveld. He                                                                    
thanked the committee.                                                                                                          
                                                                                                                                
7:34:10 PM                                                                                                                    
                                                                                                                                
MORGAN EVENSEN, SELF, WILLOW  (via teleconference), spoke in                                                                    
opposition to HB 115. She thanked the committee.                                                                                
                                                                                                                                
7:34:40 PM                                                                                                                    
                                                                                                                                
PHILLIP KNIGHT, SELF,  WASILLA (via teleconference), opposed                                                                    
HB 115.  He had lived  in Alaska for  over 30 years.  He was                                                                    
facing retirement and opposed the legislation.                                                                                  
                                                                                                                                
7:35:30 PM                                                                                                                    
                                                                                                                                
JON  FAULKNER,  SELF,   HOMER  (via  teleconference),  spoke                                                                    
against  HB 115.  He indicated  he  was one  of the  largest                                                                    
private sectors  employers in the  area. He  thought private                                                                    
dollars were  being invested in  the public sector.  He felt                                                                    
that  the  state would  be  taking  the people's  money.  He                                                                    
stated  that there  was nothing  fiscally responsible  about                                                                    
taking money  from the  Earnings Reserve  Fund (ERA)  to pay                                                                    
for government. He did not oppose  a state income tax but he                                                                    
did  oppose  raiding the  ERA  and  ultimately the  PFD.  He                                                                    
ultimately  opposed HB 115  and thought  it was  one of  the                                                                    
worst bills he had seen in his 55 years in Alaska.                                                                              
                                                                                                                                
7:38:00 PM                                                                                                                    
                                                                                                                                
STEPHEN  WRIGHT, SELF,  WASILLA (via  teleconference), spoke                                                                    
in opposition  of HB 115. He  was looking at  a presentation                                                                    
which he disagreed with.  He thought streamlining government                                                                    
would  be  a  much   better  situation.  He  advocated  more                                                                    
efficient  government. He  did  not want  to see  government                                                                    
propped  up. He  thought a  significant amount  of posturing                                                                    
had occurred. He thought taking  from the private sector was                                                                    
not a good idea. He opposed the bill.                                                                                           
                                                                                                                                
7:41:15 PM                                                                                                                    
                                                                                                                                
CRAIG  HOOSER, SELF,  WASILLA (via  teleconference), opposed                                                                    
HB 115.  He was  a lifelong resident  of Alaska.  He thought                                                                    
the state should manage what  it had. He favored getting rid                                                                    
of the PFD  altogether. However, he did not  think the extra                                                                    
money would be spent wisely.                                                                                                    
                                                                                                                                
7:43:34 PM                                                                                                                    
                                                                                                                                
DAVID KARPIK,  SELF, KENAI (via teleconference),  opposed HB                                                                    
115.  He was  a small  business  owner. He  did not  support                                                                    
maximizing  the PFD.  He thought  the cost  of staffing  for                                                                    
implementation  of the  tax while  giving out  money in  the                                                                    
form of  the PFD would  add another layer of  government. He                                                                    
thanked the committee.                                                                                                          
                                                                                                                                
Co-Chair Foster CLOSED Public Testimony.                                                                                        
                                                                                                                                
Co-Chair Foster  reviewed the agenda for  the following day.                                                                    
He noted  that amendments were  due in his office  on Friday                                                                    
at 4:00 pm.                                                                                                                     
                                                                                                                                
Co-Chair Seaton clarified that amendments  would be taken on                                                                    
both portions of the bill:  the PF and the individual income                                                                    
tax.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
7:45:44 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 7:45 p.m.                                                                                          

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