Legislature(2017 - 2018)HOUSE FINANCE 519
02/17/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Public Testimony | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 115 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 17, 2017
1:36 p.m.
1:36:11 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 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
Bob Bartholomew, Finance Director, City and Borough of
Juneau (CBJ), Juneau; Martin Steepetin, Self, Juneau; Pat
Race, Self, Juneau; Luann McVey, Self, Juneau; Abbe
Hensly, Alaska Early Childhood Advocacy Group, Juneau;
Jerry McCune, United Fishermen of Alaska, Juneau; Dan
DeSloover, Self, Juneau; Kevin Allen, Self, Juneau;
Senator Shelley Hughes, Representative Louise Stutes,
Representative Colleen Sullivan-Leonard; Representative
Justin Parish
PRESENT VIA TELECONFERENCE
Ed Rasmuson, Self, Anchorage; Kathy Hanson, Self, Bethel;
Pauline Hessing, Self, Anchorage; Julia Person, Self,
Homer; Richard McGahan, Self, Kenai; David Landry, Self,
Anchorage; Pat Holmes, Self, Kodiak; Nancy Bird, Self,
Cordova; Eileen Bechtol, Self, Homer; Ryker Dial, Self,
Fairbanks; Garvan Bucaria, Self, Wasilla; Rodney
Dial, Self, Ketchikan; Shannon Connelly, Self,
Palmer; Barbara Haney, Self, Fairbanks; Patrick
Dalton, Self, Delta Junction; Dave Otness, Self, Cordova;
Mike Milligan, Self, Kodiak; Dave Brighton, Kenai
Peninsula Education Association, Kenai; Lynda Raymond,
Self, Homer; Charles McKee, Self, Anchorage; Deborah
Dale, Self, Ketchikan; Mike Coons, Self, Palmer; Sue
Sherif, Self, Fairbanks; Carrie Harris, Self, Palmer;
Pamela Samash, Self, Nenana; Robert Smith, self,
Cordova; Douglas Pengilly, Self, Kodiak; Fred
Sturman, Self, Soldotna; Ronald Keffer, Self, Homer;
Michael McCarthy, Self, Homer; Dave Hanson, Self,
Anchorage; Sam Cason, Self, Anchorage; Steve St. Clair,
Self, Wasilla; Kate Graber, Self, Palmer; Michael
Sallee, Self, Ketchikan; Donna Lee, Self, Chickaloon;
Trevor Storrs, Alaska Children's Trust (ACT), Anchorage;
Teresa Wallen, Self, Wasilla; Jake Jacobsen, Self,
Kodiak; Nick Szabo, Self, Kodiak; George Pierce, Self,
Kasilof; Patrick McCoy, Self, Unalakleet; Dave Jones,
Assistant Superintendent, Kenai Peninsula Borough School
District, Soldotna; Pencia Rose Beaton, Self, Anchorage;
Alicia Amberg, Alaska Miners Association (AMA), Anchorage;
David Trantham, Self, Bethel; Bonnie Burgan-Kelly, Self,
Palmer; Thomas Williams, Self, Chugiak; Karen Perry, Self,
Chugiak; Carmen Gutierrez, Self, Anchorage; Stephen
Senisch, Self, Wasilla; Janice Raisanen, Self, Wasilla;
Arlene Ronda, Self, Homer; Richard Gustafson, Self, Homer;
Merrick Peirce, Self, Fairbanks; Jerry Alderman, Self,
Anchorage; Jeffrey Todd Brown, Self, Anchorage; William
Harrington, Self, Anchorage; Michael Chambers, United for
Liberty, Anchorage; Terrence Shanigan, Self, Anchorage;
Christine Nees, Self, Anchorage; David Nees, Alaska Policy
Forum, Anchorage; Janet McCabe Self Anchorage; Robin
Smith, Self, Anchorage; Paul Kendall, Self, Anchorage;
Kelly Repnow, Self, Palmer; Stephen Wright, Self, Wasilla;
Ed Larrivee II, Self, Anchorage; James Squyres, Self,
Rural Deltana; Richard Heller, Self, Butte; Sharon Cissna,
Self, Anchorage; John Farleigh, Self, Anchorage;
Larry Michaelson, Self, Meadow Lakes; Cindy Michaelson,
Self, Meadow Lakes; Ron Johnson, Self, Butte; Janet
Johnson, Self, Butte; Pamela Goode Self Rural Deltana;
Denny Kay Weather, Self, Hawkins Island; Shelee
Chamberlain, Self, Anchorage; Brian Feldmann, Self,
Fairbanks; Ross Mullins, Self, Cordova; Michael
Sheldon, Self, Petersburg; David Parish, Self, Juneau;
William Deaton, Self, Cordova; Mary Nanuwak, Self, Bethel;
Ross Bieling, Self, Anchorage; Ed Martin, Self, Cooper
Landing; Evan Eads, Self, Fairbanks.
SUMMARY
HB 115 INCOME TAX; PFD CREDIT; PERM FUND INCOME
HB 115 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster indicated that all members of the committee
were present. He reported that the committee would be
hearing public testimony on HB 115. Testimony was limited
to 2 minutes and the deadline for signing up for the day
was 3:15 P.M.
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."
^PUBLIC TESTIMONY
1:37:59 PM
ED RASMUSON, SELF, ANCHORAGE (via teleconference), spoke
in support of HB 115. He believed the state's fiscal
challenges needed to be addressed in the current year and
appreciated the efforts of legislators. He thought the bill
addressed two of the four needed elements of a
comprehensive fiscal plan. He believed a percentage of
market value (POMV) model, which preserved the Permanent
Fund Dividend (PFD) and used earnings to support the state
general fund (GF), was a much-needed structure in
combination with a broad-based revenue source. He added
that the other remaining necessary elements of a
comprehensive fiscal plan were sensible budget reductions
and a revision of the state's oil and gas production tax
credit system. He asserted that all four elements were
within reach. He opined that Alaska's over-reliance on a
single source of revenue was catching up with the economy.
As an Alaskan, he was willing to pay his fair share and
encouraged legislators to do their part.
1:41:00 PM
KATHY HANSON, SELF, BETHEL (via teleconference), spoke in
favor of an equitable approach to the state's fiscal
crisis. She thought the state's budget had already been cut
to the bone and cutting the PFD was not a fair solution.
However, she saw a state income tax as a reasonable option.
She was aware that no one liked to pay taxes but reasoned
that Alaskans could not continue to expect essential
services without contributing to them. She asked members to
support a state income tax based on an individual's federal
tax obligation. She advocated spreading the burden to all
parts of society.
1:42:54 PM
BOB BARTHOLOMEW, FINANCE DIRECTOR, CITY AND BOROUGH OF
JUNEAU (CBJ), JUNEAU, spoke in support of HB 115. He
reported that CBJ had signed a resolution supporting an
increase in state revenues and a restructuring of the
Permanent Fund (PF). He looked at HB 115 from a policy
perspective posing the question whether there was a
specific need or a public justification for revenues the
state was trying to raise. He noted obligations that had
been presented by Commissioner Hoffbeck of the Department
of Revenue (DOR) including school debt reimbursement and
pension obligations. Legally, both commitments had to be
met. He asserted that the state had a reason to raise
revenues. In terms of the best way to do so, he assessed
who should pay. He remarked that commitments had been made
many years prior regarding school debt reimbursement and
pensions. Local governments had met their obligations for
over a decade and he asked the state to do the same. He
highlighted that good tax policy included elements of
fairness, justification, and diversification. He reasoned
that HB 115 allowed for citizen buy-in. An income tax would
capture the participation from non-residents who benefited
from state services. He also noted that 105 communities had
a sales tax, which affected residents and non-residents
alike. He reiterated CBJ's support of HB 115 and thanked
the legislature for its efforts.
1:46:25 PM
PAULINE HESSING, SELF, ANCHORAGE (via teleconference),
urged members to support HB 115. She spoke in favor of a
personal income tax and of capping the PFD at $1000. She
appreciated the information provided by the Institute of
Social and Economic Research (ISER). She thought it was
necessary to modify the oil tax system making it based on a
range of oil prices. She hoped that Alaskans would share in
the spirit of generosity and willingness to cooperate,
similar to what she found in the hearts of its citizens
when she moved to Alaska in 1976.
1:48:25 PM
JULIA PERSON, SELF, HOMER (via teleconference), supported
HB 115 and the reinstitution of a state income tax. As a
lifelong Alaskan, she had seen many seasonal workers make
significant money, utilize state services, and leave the
state without supporting it. The Homer sales tax was an
exception. She elaborated that an income tax was an
equitable way of supporting the state.
1:49:33 PM
RICHARD MCGAHAN, SELF, KENAI (via teleconference), spoke
in favor of cutting Alaska's budget. He compared the
state's spending 20 years prior to the present. He opined
that it had increased tenfold. He supposed that without
additional budget cuts the state would be much deeper in
debt in 20 years. He was a homesteader of 62 years in
Alaska and did not favor large government. He offered that
without the legislature doing things differently government
would continue to grow.
1:51:04 PM
DAVID LANDRY, SELF, ANCHORAGE (via teleconference),
spoke in favor of HB 115. He opined that instability had a
negative effect on the economy. He preferred paying an
income tax than losing his business. He supported an income
tax over a sales tax, as he thought a sales tax would more
negatively impact rural Alaska.
1:53:11 PM
PAT HOLMES, SELF, KODIAK (via teleconference), supported HB
115. He remarked that things had significantly changed
since statehood prior to oil. He recommended having a brief
summary of the 4 items in the bill and their meaning. He
asked about the appropriation of certain amounts of the
earnings reserve account (ERA). There was a discussion
about reducing the percentage from 21 percent to 4.75
percent. He wanted members to explain the related section
for him to understand it better. He supported an income tax
and reflected on when he was a young man making enough
money to pay one. He thought it was the only fair way to
collect revenues. He opposed altering the PFD and believed
it would negatively impact low-income folks. He asked for
more information regarding a change to the oil and gas tax
structure. He expressed concerns that rural Alaska would be
inequitably affected by a reduction to the amount of the
PFD.
Co-Chair Foster indicated that Co-Chair Seaton would reach
out to him to answer his questions.
1:55:58 PM
NANCY BIRD, SELF, CORDOVA (via teleconference),
strongly supported HB 115. She called attention to an
opinion piece in the Anchorage Dispatch News by Dermot
Cole. She agreed that Alaska's legislators had never needed
to master the art of compromise more than presently. She
felt that everyone needed to contribute. She thanked the
committee and urged members to continue their efforts in
getting the legislation passed.
1:57:15 PM
EILEEN BECHTOL, SELF, HOMER (via teleconference),
spoke in support of HB 115 and a POMV model. She thanked
Co-Chair Seaton and Co-Chair Foster for the courage to
introduce the legislation. She opined that a POMV model
provided a more stable revenue source for the state budget.
She thought a state income tax was more equitable than a
state sales tax. She thought it was important to capture
taxes from those that worked in Alaska and lived elsewhere.
She spoke about the hard work of state employees. She was
aware that the health and safety of Alaska had to be
funded. She listed a number of agency divisions and
programs that she felt needed to be funded.
1:59:02 PM
RYKER DIAL, SELF, FAIRBANKS (via teleconference), spoke in
opposition to HB 115. He thought the bill would result in a
large exodus of people from the state. The change resulting
from the legislation would affect him to the extent that he
would be unlikely to settle in Alaska. He urged members to
turn to the two largest expenditures within the government:
Health and Social Services and Education. He noted there
were 133 communities across the state in which the 5-year
federal welfare limit did not apply. Alaska had more
residents on welfare per captia than any other state in the
U.S. He thought it was a great disservice to burden hard
working Alaskans. He asserted that the dependence on
government prevented Alaskans from growing. He believed the
school system needed restructuring to make things more
equitable for hard working, productive Alaskans. He urged
legislators to fight for Alaska's future.
2:00:50 PM
GARVAN BUCARIA, SELF, WASILLA (via teleconference),
spoke in opposition to HB 115. He opined that further cuts
were needed prior to making changes to the PF. He thought
it risked the health of the PF. He opposed a state income
tax and the increased spending to administer the tax. He
recommended cutting funding to the governor's gas line
project.
2:02:39 PM
MARTIN STEEPETIN, SELF, JUNEAU, spoke in support of HB
115. He relayed that he had worked all over the state in a
number of professions and with several different people. He
supported the tough decision of digging into the PF but
wanted to protect it for the future. He hoped the
legislature would take action in the current session. He
suggested that people were reluctant to spend money until a
decision was made.
2:06:06 PM
RODNEY DIAL, SELF, KETCHIKAN (via teleconference),
spoke in opposition of HB 115. He opined that by passing
the legislation the PFD would turn into a welfare program.
He clarified that the budget deficit was not a result of
the urban areas paying enough, as they already paid $1.5
billion per year in taxes. He suggested that the cost
stemmed from the rural areas paying nothing for services
while being dependent on the state. He thought Alaska had
become a magnet for welfare recipients. He felt that the
$25 minimum fee in HB 115 represented an insignificant
contribution from the people who were the greatest users of
state resources. He asserted that it was not a shared
sacrifice for 100,000 Alaskan households to get $25 less
free money while working Alaskans paid the brunt of the
tax. In an effort to isolate rural Alaska from the
realities of modern life, including taxes, the state would
create an environment in which those that would pay an
income tax could afford to move and likely would. The
greatest users of state resources would not be able to
afford to move and would stay. He opined that the
legislation was discriminatory in nature. He relayed that
the proposal would not tax one of the main sources of
income in some rural communities: dividends from
corporations that were not taxed at the federal level. They
would not be subject to a state income tax. He referred to
a federal statute having to do with income exclusions based
on race. He purported that it would result in
discriminatory taxation and would divide Alaskans. He
wanted the legislature to ensure that the tax burden would
be shared by all Alaskans. He agreed with Representative
Ortiz's idea concerning credit for areas that already paid
local taxes such as the required local contribution. He
could support the PFD draw but not the discriminatory parts
of the income tax. He urged members not to allow the
advancement of the legislation from committee.
2:09:03 PM
SHANNON CONNELLY, SELF, PALMER (via teleconference),
opposed HB 115. She opined that a monster had been created
in the form of government. She thought the legislation
would steal from the PF as well as from the pockets of
Alaskans. She pointed out that the legislature had not
created a sustainable budget and that the legislation would
contribute to additional expenses with tax collection
activities. She continued that legislators had not shown
financial responsibility for growing government. She
reasoned that the legislature needed to make necessary
budget reductions to reverse government growth. She urged
members to do what was best for the state by opposing HB
115.
2:10:30 PM
BARBARA HANEY, SELF, FAIRBANKS (via teleconference),
spoke in opposition to HB 115. She argued that no one would
want to come to Alaska once the legislation passed. She did
not believe a $25 head tax would solve Alaska's problems,
especially since the state already took a portion of the
people's PFD without solving it. In addition, she did not
think the Marijuana tax would solve the state's fiscal
crisis. She opined that there would be a large increase in
absentee ownership and relayed a personal experience. She
firmly opposed HB 115.
Representative Wilson informed the testifier that a person
that did not generate any income would not be subject to
the $25 head tax. Ms. Haney disagreed.
2:13:28 PM
PATRICK DALTON, SELF, DELTA JUNCTION (via teleconference),
spoke against HB 115. He supposed it was regrettable when
the state lost employees but even more regrettable when it
lost employers. He mentioned that Dave Ramsey, a
millionaire in Alaska, confirmed he would leave the state
if income taxes were imposed because of the multiplier
affect an income tax would have. He opined that an income
tax would be counter-productive. Alaska spent more on
government per capita than any other state. He explained
that the state spent too much on government and needed
further reductions to its budget. He mentioned practices
from the Regan era. He thought smaller government was
better and opposed an income tax.
2:16:06 PM
DAVE OTNESS, SELF, CORDOVA (via teleconference), spoke in
favor of an income tax. He thought the elephant in the
living room was oil tax credits. He believed oil tax
credits needed to be revisited prior to dipping into the
PFD. He spoke in favor of the new bi-partisan group in the
House. He reiterated that he did not want to see the PFD
disturbed.
2:18:27 PM
MIKE MILLIGAN, SELF, KODIAK (via teleconference), spoke
in support of HB 115 thanking Co-Chair Seaton for
introducing the legislation. He agreed with the previous
speaker about the effects of SB 21. He spoke in favor of an
income tax and thought it should be attached to a PFD
application. He also thought it would be a good idea to
attach property taxes to the PFD application. He was
troubled by the amount of people receiving PFD's from out
of state. He also supported capturing taxes from out of
state workers.
2:20:54 PM
DAVE BRIGHTON, KENAI PENINSULA EDUCATION ASSOCIATION, KENAI
(via teleconference), favored HB 115 commenting that it was
a balanced solution. He spoke of the negative impacts on
his son's education caused by school district budget cuts.
Several programs were being cut. He noted that 43 percent
of the budget had been cut over the last 4 years. He
supported an income tax and the use of the Permanent Fund
Earnings Reserves to cover government services. He urged
members to support the bill and to solve the state's
financial crisis in the current year.
2:22:52 PM
LYNDA RAYMOND, SELF, HOMER (via teleconference), was a
49 year resident of Alaska. She reported that when she
first moved to the state it had a much smaller population
but was fiscally responsible. She reported that legislators
had worked hard to ensure the state's functionality and
sustainability. She thought that presently legislators had
ignored their responsibility for restoring fiscal
sustainability of the state budget. She wanted to see a
solution adopted in the current session but did not want
education further reduced. She opposed tax credits to oil
companies, and supported a state income tax. She opposed a
state sales tax or reducing Alaskans' PFD, as they were
regressive options. If it was necessary to reduce the PFD,
she encouraged a state income tax to accompany the
reduction. She urged members to fix the problem and to
support HB 115.
2:25:23 PM
CHARLES MCKEE, SELF, ANCHORAGE (via teleconference),
accused the legislature of gross negligence. He quoted an
Alaska statute. He spoke to items outside of the bill. He
did not believe he was being heard by legislators.
2:29:17 PM
PAT RACE, SELF, JUNEAU, spoke in favor of HB 115. He
thought Alaskans should be responsible and contribute to
state government through an income tax. He thought an
income tax increased budgetary diversity; it was a mark of
ownership and a declaration of independence against outside
influence. He spoke of the history of the original income
tax in Alaska and the foundational role it played to
statehood. He mentioned having spoken to George Rodgers, a
respected economist that regretted the legislature not
zeroing out the income tax but leaving it on the books. He
encouraged members to take the difficult step of putting
the income tax back in place.
2:31:12 PM
DEBORAH DALE, SELF, KETCHIKAN (via teleconference), spoke
in opposition to the bill, especially to the income tax
portion. She spoke about her family history and her work
experience. She reported that she and her husband owned a
business of which she was the bookkeeper. She reported that
the business could not afford insurance and would be unable
to afford costs if an income tax was reinstated. She
underscored the current health insurance crisis and
discussed high insurance premiums. She reported that she
would be looking at closing her business if an income tax
passed.
2:34:30 PM
MIKE COONS, SELF, PALMER (via teleconference), testified
against the legislation. He referred to specific portions
of the bill. He shared his experience working on the North
Slope and spoke to an income tax in Louisiana. He was
opposed to taxing Alaskans and people from out of state
working on the North Slope. He did not support taxing
working Alaskans if lower income residents were not going
to pay a tax. He thought it was a myth and lie that a state
income tax would generate enough income to pay for
government.
2:36:51 PM
SUE SHERIF, SELF, FAIRBANKS (via teleconference), thanked
the co-chairs and the House for their bipartisan efforts in
the current year. She supported the legislation. She
supported a temporary cap on PFDs, the use of some of the
fund's earnings, and an income tax. She thought it was
reasonable to ask residents to pay a modest income tax. She
believed it would be hard to find a state with a lower tax
burden. She believed it was necessary for Alaskans to step
up to the plate.
2:39:18 PM
CARRIE HARRIS, SELF, PALMER (via teleconference), spoke
against HB 115. She believed that meaningful oil and mining
tax reform was needed. She stressed the state was not a
business partner with the oil and mining companies but the
owners of rich resources. As the owner of Alaska's
resources, she felt it was time the state collected more
for them. She opined that the legislature needed to reduce
its budget as well as to sell the Anchorage Legislative
Information Office building. She highlighted the need to
generate new sources of revenue including cannabis. She
furthered that that all of her suggestions should be
implemented prior to imposing an income tax. She encouraged
members to act or they would be removed through the
election process.
2:41:20 PM
PAMELA SAMASH, SELF, NENANA (via teleconference), spoke
in opposition of HB 115. She did not believe the people
should have to carry the weight of government. She spoke to
the difficulty in living in the state including extreme
temperatures and the high cost of heating and electric
bills. She felt the government was working against the
people. She opined that if people could not survive in
Alaska the state would be unable to obtain taxes. She
recommended the state help its residents instead of
suppressing and draining them. She did not believe the
legislature had done its job. She purported that losing
half of the people's dividend was a sacrifice. She urged
members to vote against HB 115.
2:43:39 PM
ROBERT SMITH, SELF, CORDOVA (via teleconference), spoke in
favor of an income tax. He did not like seeing people come
to Alaska, make their living, and take their money out of
state. He thought it was unconscionable for the state to
take PFD money from Alaskans while it continued to pay oil
companies to take oil out of Alaska. He furthered that
taking PFD monies hurt the poorest Alaskans. An income tax
made non-Alaskans contribute their share. He noted a
lockdown the Department of Fish and Game had imposed on
certain fisheries. He opined that by allowing the
Department of Fish and Game to close fisheries for decades,
year-round residents were more dependent on their PFD. He
believed there was more room for reductions to the budget
and a more rational use of the state's money by the
government.
2:45:30 PM
DOUGLAS PENGILLY, SELF, KODIAK (via teleconference),
favored HB 115. He thought the bill provided a good
approach. He asserted that the sources of income for state
government needed to be diversified and reasoned that the
state could not continue to rely on oil revenues. He
commented that the legislation was an equitable way to
spread the costs to Alaskan residents. He recognized that
each resident needed to have skin in the game. He was
certain that if the state tried to cut its budget further,
there would be an exodus of people out of Alaska.
Co-Chair Foster recognized Senator Shelley Hughes,
Representative Louise Stutes, and Representative Colleen
Sullivan-Leonard in the audience.
2:47:48 PM
FRED STURMAN, SELF, SOLDOTNA (via teleconference),
believed the legislature caused the state's fiscal problems
by increasing salaries, buying additional buildings, and
spending too much money. He relayed a story about a friend
who had recently had his work hours reduced. He also
mentioned a contractor friend who had to reduce his staff
for the year. He thought the legislature should take a
closer look at the effects of taxing people and taking
money out of the economy.
2:50:03 PM
RONALD KEFFER, SELF, HOMER (via teleconference), spoke
in favor of HB 115. He purported that if nothing was done
to provide a stable and balanced state budget, the
resulting uncertainty would cause the recession in Alaska
to worsen. He did not believe oil revenues would return to
previous high levels that afforded the state a large
budget. It was important to adopt a method of balancing a
budget that was fair and sustainable. He thought the burden
of taxation should be apportioned fairly. He reported that
the PF was established with the expectation of using the
earnings to support state government. He believed reducing
the PFD was a regressive step. The bill moderated that step
by retaining the dividend at a reasonable level. He thought
the income tax was fair and captured both resident and non-
resident income. He spoke to the level of administration
needed to implement a tax. He argued that a simple tax
would require less administration. He urged legislators to
support the legislation.
2:52:23 PM
MICHAEL MCCARTHY, SELF, HOMER (via teleconference), spoke
in favor of HB 115. He appreciated the fiscal certainty it
offered. He mentioned that the Dow Jones industrial average
was $20,623. He supposed it was at an artificial high
similar to the 2008 recession. He indicated he was also
concerned with the potential repeal of the Dodd-Frank Act.
He thought Alaska needed a stable fiscal plan to survive
outside impacts. He had asked several people if they would
support a state income tax. All but one person replied
affirmatively. He also reported that all persons he talked
with agreed that out-of-state workers should pay a tax on
their Alaska income. He did not believe cutting the state
budget further was the right step for the state and that
additional cuts would have unintended consequences. He
urged members to support the bill.
2:54:36 PM
DAVE HANSON, SELF, ANCHORAGE (via teleconference),
strongly supported HB 115. He made 3 points. First, Alaska
had an income tax for 31 years similar to the one in HB
115. Secondly, in the US, Alaska was the only state that
did not have an income tax or a statewide sales tax.
Thirdly, 17 percent of a state income tax would be paid by
non-residents and the federal government. Alaskans would
pay 83 percent of the tax bill. Without an income tax,
Alaskans were paying 100 percent of the state's revenue
needs from savings accounts, earning reserves, and reduced
PFDs. He reasoned that the best spending cap was an income
tax because when people funded government directly from
their pockets they paid attention to how government spent
its money. He mentioned one of ISER's studies, which he
thought provided good information.
2:58:09 PM
SAM CASON, SELF, ANCHORAGE (via teleconference), supported
HB 115. He spoke in favor of a sustainable solution. He
thanked Co-Chair Seaton for providing a structure that
addressed both an immediate solution and a more permanent
one. He reiterated his support for HB 115.
2:59:42 PM
LUANN MCVEY, SELF, JUNEAU, supported HB 115. She spoke
about the reductions that had been made to education. She
emphasized the efforts of teachers to tailor instruction to
each child. She provided additional information regarding
her experience as a past teacher and the requirements to
provide quality education. She stressed the importance of
properly funding education. She thought a state income tax
would help to provide that funding. She also favored doing
without a PFD.
3:02:10 PM
ABBE HENSLY, ALASKA EARLY CHILDHOOD ADVOCACY GROUP,
JUNEAU, spoke in favor of HB 115. She provided information
regarding the advocacy group. The group supported the
legislature in developing a long-term fiscal plan that
minimized costly unintended consequences, invested in the
state's human infrastructure, and generated revenue. The
group supported the legislature making budget decisions
that maintained or increased services and support for young
children and their families and encouraged maximizing all
available funding opportunities. She emphasized the need
for a long-term fiscal plan to be put into place in the
current legislative session. She would provide a copy of
the group's resolution supporting HB 115.
3:04:42 PM
STEVE ST. CLAIR, SELF, WASILLA (via teleconference),
spoke in opposition to HB 115. He wondered why the bill was
being considered. He mentioned that changing or reducing
the PFD was the most regressive option. He opposed an
income tax as well. He urged members to stop punishing
those who want to work. He thought a redistribution of
wealth was a bad plan. He mentioned a plan he had been
involved with writing. He reminded members that they
represented the people. He urged members to vote no on
HB 115.
3:07:50 PM
KATE GRABER, SELF, PALMER (via teleconference), favored
HB 115. She argued that something needed to be done to save
the state. She did not advocate for additional cuts to the
budget, but rather wanted to see services maintained and
state workers employed. She felt that Alaska needed to
maintain its quality of life no matter the cost. She
believed the legislation represented a good start and hoped
the committee would pass it.
3:10:53 PM
MICHAEL SALLEE, SELF, KETCHIKAN (via teleconference),
suggested that prior to implementing any sales tax or
change to the PFD he recommended 2 things. First, he
recommended charging fossil fuel companies royalties at a
rate equivalent to what they paid in other oil producing
states. Secondly, fossil fuel companies and timber
extractors should be charged a carbon tax calculated based
on the currently externalized environmental and health
costs. He was not opposed to an income tax or the use of PF
earnings as long as the fund remained protected via
inflation proofing and a spending limit. He was neutral
regarding HB 115.
3:13:25 PM
DONNA LEE, SELF, CHICKALOON (via teleconference),
supported HB 115. She had 2 children in Alaska with
families. She wanted to see services maintained. She saw HB
115 as a way of relieving the state of its fiscal woes. She
did not want to see the state's monetary resources dwindle
before finding a solution to its problems. She viewed a
state income tax as more equitable than a state sales tax.
She wanted to see the PFD remain intact. She supposed that
a 4.75 percent draw from the PF was reasonable. She
reviewed some of the details of HB 115 and reiterated her
support for the legislation. She urged the legislature to
make good decisions for the future of the people of Alaska
and to compromise.
3:15:55 PM
TREVOR STORRS, ALASKA CHILDREN'S TRUST (ACT), ANCHORAGE
(via teleconference), spoke in favor of HB 115 and a
sustainable fiscal solution. He advocated for a combined
approach, which included further efficiencies and new
revenue sources. The long-term fiscal plan needed to
include investment in the state's most valuable resource:
its children. He relayed that in the following week ISER
would be releasing a report commissioned by ACT that
analyzed the effects of alternative revenue measures on
families with children. He reported that when families were
negatively impacted economically the amount of
interpersonal violence increased. The goal of the report
was to provide lawmakers with information to allow them to
make the best decision that will help ACT to prevent child
abuse and neglect. He confirmed that the report showed that
cuts to the PFD would have the greatest negative impacts
for families with children than any other tax measure. He
provided additional details of the report. He urged members
to invest in prevention, which would reduce costs, improve
the health of Alaskans, and grow the economy.
3:18:30 PM
TERESA WALLEN, SELF, WASILLA (via teleconference),
opposed HB 115. She noted the high cost of living in
Alaska. She also noted the benefits of living in the state,
particularly in Anchorage, because of the available medical
care. She presumed HB 115 would negatively impact Alaska's
healthcare industry. She spoke to the multiple nursing
positions open in the state and conveyed that she knew of
several nurses considering leaving the state. She opined
that it was never a good idea to tax productivity. She
relayed a number of questions for the legislature to
consider. She reemphasized that a state income tax would be
detrimental to the healthcare industry in Alaska.
3:24:05 PM
JERRY MCCUNE, UNITED FISHERMEN OF ALASKA, JUNEAU,
indicated the organization was neutral regarding HB 115. He
brought up a question about specific section of the bill
regarding statute AS 43.22.050 on page 8, line 6. The
section addressed captains being required to withhold
monies from their crew. He reviewed the standard practice
of how captains paid their crew. He had several detailed
questions that he felt needed to be addressed within the
context of the bill. United Fishermen of Alaska wanted to
be a part of the solution but needed its questions answered
first.
3:27:00 PM
DAN DESLOOVER, SELF, JUNEAU, testified in support of HB
115. He thought having diverse and sustainable funding for
public institutions was critical. He shared having a
2-year-old daughter and his concerns about the challenges
she would face growing up. He did not want to have to
explain to her in 20 years that Alaska had the ability to
strengthen the public education system, provide for the
health and safety of Alaska, support sustainable
industries, and protect the environment but failed to do so
because legislators did not want to compromise on a
sustainable budget. Alaskans faced substantial issues
including climate change, the support for public education
and healthcare was up in the air at the federal level.
Alaskans needed to be able to count on one another. He
spoke about evidence showing that having strong, well-
funded public institutions was the best way for a state to
ensure its ability to provide for its citizens. While
seeking efficiencies and looking for cost cutting was
important, he believed affirming state government to carry
out the will of the people was the best way to help provide
for the welfare of all. He believed that drawing from the
PF responsibly, instituting a progressive income tax, and
making sure that resource extractors paid their fair share
was a good way to move forward. He encouraged the
legislature to go forward with HB 115 and to consider ways
in which to make income taxation more fair and progressive.
He thought Alaskans should do their best to assist others
that were not as fortunate.
Co-Chair Foster indicated that after the following
testifier the committee would be taking a 10-minute break.
When everyone came back, they would be hearing the
remaining testifiers; at present 86 people were signed up
to testify.
3:30:03 PM
KEVIN ALLEN, SELF, JUNEAU, spoke in favor of HB 115. He
appreciated the legislation being brought forward. He
talked about a teleconference from 1991 with several
governors together. He was concerned with things ending up
similar to last year at the end of session. He thanked the
committee.
Co-Chair Foster would be hearing testimony for those at
off-net sites.
3:32:36 PM
AT EASE
3:50:22 PM
RECONVENED
Co-Chair Foster noted only 68 phone lines were available.
He asked people to use alternative options to the off net
lines if possible.
Vice-Chair Gara clarified that Co-Chair Foster was speaking
about people who had already testified.
Co-Chair Foster agreed.
3:51:43 PM
JAKE JACOBSEN, SELF, KODIAK (via teleconference), was
opposed to the Permanent Fund portion of the legislation.
He thought the legislature should leave PFDs in place but
supported an income tax. He was also in favor of a state
sales tax and suggested a rebate program for people whose
income fell below the poverty level equal to the tax they
would pay in the same year. He opposed spending on mega
projects including the Alaska Liquefied Natural Gas Line
(AKLNG) project. He also supported a capital move out of
Juneau. He asserted that the credibility of the legislature
was damaged by the corruption reported in the newspaper
including the Anchorage Legislative Information Office, the
abuse of travel and per diem, and the lack of ethics in a
person's ability to recuse themselves in a vote. He
supported the passage of HB 44 introduced by Representative
Jason Grenn [HB 44 was legislation introduced in 2017
regarding legislative ethics around voting and conflicts].
He also thought one of the most important issues for the
legislature to address was the issue of big oil. He opposed
HB 115 for several reasons, most importantly because of its
complexity. He argued that each bill should address a
single issue. He furthered that the bill would fail because
it was trying to address too many issues.
3:54:41 PM
NICK SZABO, SELF, KODIAK (via teleconference), thanked the
co-chairs for introducing the legislation. He was not
completely familiar with all of the specifics of the bill.
However, he supported the concept of an income tax and
utilizing earnings from the Permanent Fund. He believed it
was necessary to be selective about cutting the budget.
Cuts could transfer liability to local entities such as
schools.
3:56:40 PM
GEORGE PIERCE, SELF, KASILOF (via teleconference),
supported the income tax portion of the bill, but not the
Permanent Fund reduction. Although he did not want taxes,
he supported an income tax over a sales tax. He asked the
committee to restructure oil and gas credits as well as
other tax structures prior to taking away PFDs. He referred
to credits provided to Point Thomson and listed other tax
credits he opposed. He stressed that the state was in a
recession and should be trimming back. He believed the two
issues in the legislation should be separate. He emphasized
the need for the legislature to address tax incentives to
the oil industry. He urged the committee to stop increasing
government.
3:59:11 PM
PATRICK MCCOY, SELF, UNALAKLEET (via teleconference),
testified in opposition to the bill because of the cost of
implementing a tax. He mentioned the money being spent
excessively by school districts on travel to sporting
events. He did not think the current financial situation
was different from other times in the past. He mentioned
the cost of groceries in the state and noted price
differences between rural and urban areas. He stated the
bill would extract more from Alaskans by taking money from
PFDs and adding taxes. He opined that it was already a
sacrifice to live in Alaska because of the high cost of
living. He suggested implementing a bed tax to target
tourists. He strongly opposed HB 115.
4:04:40 PM
DAVE JONES, ASSISTANT SUPERINTENDENT, KENAI PENINSULA
BOROUGH SCHOOL DISTRICT, SOLDOTNA (via teleconference),
testified in favor of HB 115. He advocated for the
development of a multi-revenue fiscal plan that would
provide sustained, reliable, and adequate educational
funding for Alaska's students. He asserted that HB 115 met
the school district's priority. He was also representing
the Alaska Association of School Business officials. The
entity partnered with other members to create a set of
joint position statements regarding legislative priorities.
He read a portion of the 2017 joint position statement:
"Alaska's most important need is to immediately
develop and implement a long term multi-revenue fiscal
plan."
He reiterated the entity's support of HB 115. He urged
members to act in the current year. He did not want to see
another year of non-action. He thanked members for
introducing a needed fiscal plan for Alaska.
4:06:42 PM
PENCIA ROSE BEATON, SELF, ANCHORAGE (via teleconference),
spoke against HB 115. She provided background information
about her family's history in Alaska. She relayed that she
did not feel she was properly represented in the
legislature and agreed with a previous speaker that the
government was guilty of gross negligence. She wanted
smaller government with people involved who cared about the
economy and about the needs of Alaskans. She admonished the
legislature to stop stealing from Alaskans. She opposed
HB 115.
4:08:33 PM
ALICIA AMBERG, ALASKA MINERS ASSOCIATION (AMA), ANCHORAGE
(via teleconference), spoke in favor of HB 115. She shared
information about the association and read from a prepared
statement:
AMA has a positon about fiscal policy that reads,
"Immediately implement a comprehensive, long-term
fiscal plan in 2017 that ensures responsible spending
at a sustainable level of between $4.1 - $4.5 billion
dollars. Such a plan should include budget reductions,
use of Permanent Fund earnings, and new revenue from
broad-based taxes. In order to reduce state government
expenses, the legislature should repeal laws that
create expenditures but are not a necessary government
function. Ensure State of Alaska fiscal policy
includes strategies to grow and diversify the Alaska
private economy."
We maintain that budget reductions are imperative for
a sustainable budget for Alaska. We urge the
Legislature to keep examining all state expenditures
to identify efficiencies and reductions. For specifics
regarding these suggestions, we would refer the
Committee to the Commonwealth North report.
In addressing revenue measures to provide for
essential state functions and services, step one must
be use of the Permanent Fund, which was created to
fund a significant portion of state services when
revenues from oil could no longer be the funding
source for most of state government. There are many
options for additional revenue sources to fill any
remaining gap to fund government, including income
tax.
Thank you for the opportunity to provide comment. We
commend your committee for consideration of solutions
to our fiscal challenges.
4:10:49 PM
DAVID TRANTHAM, SELF, BETHEL (via teleconference),
testified in favor of the legislation. He shared that he
was a 71 year resident of Alaska. He commended the
committee for putting a bill on the table and stressed the
need to diversify the state's revenue. He believed the
legislature had provided the opportunity for citizens to
speak their minds. He underscored that something needed to
be done in the current year to address the budget crisis
facing the state. He recalled the highs and lows of his
past. He stated it was necessary to buckle down. He stated
there was a cost to everything. He discussed the need for
everyone to be a part of the solution. He thanked the
committee for offering the bill.
4:14:55 PM
BONNIE BURGAN-KELLY, SELF, PALMER (via teleconference), was
opposed to any taxes until additional budget cuts were
made. She stated that five years previously everyone could
see that oil production was approaching an end. She pointed
to large projects the legislature had funded instead of
taking action. She supported a plan proposed by Senator
Mike Dunleavy [SB 84 - Legislation introduced in 2017
regarding the Permanent Fund earnings, dividends, and the
general fund] and encouraged members to consider it.
4:16:28 PM
THOMAS WILLIAMS, SELF, CHUGIAK (via teleconference),
testified against the bill. He stated change was needed and
the state government was still too large. He believed
spending half the state's budget on healthcare and
education was too much. He remarked that the one thing that
kept the state alive was its resources. He did not support
cuts to the dividend. He stated the legislature had taken
money out of people's pockets. He supported a budget
reduction plan by Senator Mike Dunleavy. He did not know
anyone who wanted to pay new taxes. He thought individuals
wanted to make other people pay more taxes. He wondered if
the issues would be put to a vote of the people.
Co-Chair Foster clarified that the committee was currently
taking public testimony on HB 115.
Mr. Williams restated his question.
Co-Chair Foster indicated that the issue would need to be
discussed at another time.
4:20:08 PM
KAREN PERRY, SELF, CHUGIAK (via teleconference), spoke
against HB 115. She thought the bill should be called the
"Rob Alaskans Blind Bill." She agreed with other callers
who suggested breaking the legislation up into multiple
bills. She asserted that Alaska was in a recession and
HB 115 would make things much worse. She opined that the
legislature needed to be concerned with the overall economy
of Alaska rather than the growth of state government. She
asked if the committee members had read, "Diapering the
Devil" by former Governor Jay Hammond or the model by the
Institute of Social and Economic Research (ISER). She
stressed that presently the state took 75 percent of all
mineral lease revenues but could not manage money well. She
contended that the legislature wanted to steal from hard
working Alaskans. She believed the legislature had
continued to spend for years. She did not support putting
the burden on the people. She strongly suggested the
committee invite Brad Keithly, the founder of Alaskans for
Sustainable Budgets, to Juneau to present facts making the
case for using the Jay Hammond plan. She thought the
committee would want to get all of the facts before making
a decision. She asked the committee to do its due
diligence. She avowed that an income tax would penalize
hard working producers of the state. It would add more
onerous red tape to small business owners and would deter
others from starting a small business. She addressed the
proposed capital gains tax, which she opposed. She argued
that government needed to make further reductions rather
than taxing Alaskans. She strongly opposed HB 115.
4:24:19 PM
Co-Chair Foster pointed out that Co-Chair Seaton was
currently chairing a House Finance Subcommittee. He noted
that presently there were plenty of open phone lines for
folks that wanted to call in to testify.
4:24:59 PM
CARMEN GUTIERREZ, SELF, ANCHORAGE (via teleconference),
spoke in support of HB 115. She paid an income tax in the
70s and opposed the elimination of the tax in the 80s. She
believed Alaskans had a long history of entitlement in
which they received infrastructure benefits without paying
for them. She believed entitlement needed to cease. She
supported a progressive income tax and opposed additional
budget cuts. She valued Alaska as a state and did not want
to live in a place that became stingy and ugly because of
government cuts to services. She opined that the state
needed to generate revenue to cover the budget. She thought
a progressive income tax was the most fair and equitable
means of increasing revenues. She believed the bill
protected the PF for future generations. She urged the
committee to pass HB 115.
4:30:01 PM
STEPHEN SENISCH, SELF, WASILLA (via teleconference), spoke
against HB 115. He suggested the bill would tax all
Alaskans, lead to fewer people living in the state, and
result in less revenue. He supported reducing the size and
scope of state government to a more sustainable level. He
referred to the Alaska Policy Forum and articles on its
website. He believed every Alaskan should read the articles
that showed how to solve the budget problem without taxing
every Alaskan. He remarked the state had foolishly spent
$50 million on the AKLNG project when it would not be
economically feasible for several decades. He underscored
that legislators needed to do their jobs to make further
cuts to government.
4:32:46 PM
JANICE RAISANEN, SELF, WASILLA (via teleconference),
testified in opposition to HB 115. She expressed her
frustration that the hearing was being held on a Friday
afternoon while most Alaskans were working. She was opposed
to a state income tax. She believed the people in Alaska
taking advantage of welfare and social programs were the
same people who would only pay the minimum tax of $25 if
the legislation were adopted. Although capturing taxes from
out-of-state workers would be helpful, their families did
not utilize the state's social and welfare programs. She
argued that the state needed to reach out to the people
taking advantage of the state that were not working. She
saw a state sales tax as a more equitable option. She was
tired of people that worked hard giving to all of the
welfare and social programs. She made it clear that
spending for those programs should stop. She reiterated her
support of a state sales tax over an income tax. She opined
that it was time for people to take responsibility for
their own well-being versus relying on the government. She
supported additional cuts rather than taxing working
people.
4:35:39 PM
ARLENE RONDA, SELF, HOMER (via teleconference), spoke in
support of HB 115. She reported that she and her husband
came to Alaska in the territorial days, liked what they
saw, and made Alaska their home. She and family supported
an income tax in the 70s. In the early days, she paid a
state income tax willingly to support state government.
Following that time when oil was discovered the state
income tax went away and the PF was wisely started.
Presently, oil income was no longer dependable. She
asserted that it was time for all Alaskans to contribute in
a fair and balanced way towards state services. She
commended the co-chairs for putting forth the bill. She
underscored her support.
4:37:03 PM
RICHARD GUSTAFSON, SELF, HOMER (via teleconference),
thanked Co-Chair Foster and Co-Chair Seaton for trying to
stop kicking the can down the road. He was in favor of an
income tax and hoped the bill would protect and inflation
proof the Permanent Fund.
4:38:38 PM
MERRICK PEIRCE, SELF, FAIRBANKS (via teleconference),
testified against the bill. He opined that the least
recessionary approach was needed to reduce the deficit. He
offered that Robin Brena had outlined such an approach to
ensure that Alaska received a sure and balanced return for
oil particularly from the legacy fields such a Prudhoe Bay.
He suggested that members invite Mr. Brena to testify
before the committee to explain how SB 21 [oil tax
legislation passed in 2013] has utterly failed Alaska. He
cited some statistics around the oil tax legislation. He
argued that taking money from Alaskan families in the form
of an income tax in combination with a regressive raid of
dividends would deepen the state's recession. He furthered
that raising taxes in a recession was the worst possible
remedy. He claimed that it was morally wrong to use an
income tax and a raid on dividends to subsidize the give-a-
way of the state's oil. He added that the state's long-term
obligations, including a massive underfunded pension
system, would not be met with HB 115. He believed the first
priority needed to be taking a fair return for the state's
oil followed by making sensible budget reductions.
4:41:37 PM
JERRY ALDERMAN, SELF, ANCHORAGE (via teleconference),
supported HB 115. He was confused by the numbers listed on
the Sponsor Statement, as they did not add up to the number
mentioned previously. He did not want the bill to fund only
a portion of the state deficit. He did not want further
reductions to the state budget. He supported solving the
entire fiscal problem as soon as possible.
Co-Chair Foster referred Mr. Alderman to Co-Chair Seaton's
office to assist him with some of the numbers he noted.
4:43:22 PM
JEFFREY TODD BROWN, SELF, ANCHORAGE (via teleconference),
spoke in opposition to HB 115. He believed the bill was
extreme and disagreed with comments made that the bill was
progressive. He provided an example related to home
mortgages. He believed in a broad-based system of taxation
than what was presented in the bill. He acknowledged the
importance of government and the structure it provided.
However, he believed everyone needed to share in the
burden. He supported a sales tax and a corporate tax. He
thought Alaska needed broad-based taxation implemented a
little at a time. He asserted that the legislature was
wasting money.
4:46:50 PM
WILLIAM HARRINGTON, SELF, ANCHORAGE (via teleconference),
opposed HB 115. He referred to chronic mismanagement of the
state. He was a senior that received benefits because of
decades of working. He thought the state was moving away
from being an elder-friendly state. He suggested that there
would be unintended consequences from driving the senior
population out of state. He spoke to the lack of fiduciary
responsibility of the legislature to the citizens of
Alaska.
4:49:36 PM
MICHAEL CHAMBERS, UNITED FOR LIBERTY, ANCHORAGE (via
teleconference), reported that three years prior he had had
the opportunity to meet with 5 legislators during a special
session. He liked having direct access to his legislators.
He was involved in designing a 96-page budget book, which
incorporated $1.5 billion in reductions. He provided an
example of one of the recommended reductions. He had
delivered the book to each legislator while visiting in
Juneau during the current session. He encouraged all
legislators to visit a particular website. He relayed the
mission of the group. He remarked that there was a
communication disconnect between legislators and Alaskans.
He mentioned the massive redundancies within state
government. He suggested that many legislators were
advocating the restructuring of the PFD and incorporating
an assortment of tax schemes. He supported Senator
Dunleavy's plan to right-size government. He argued against
HB 115.
4:52:29 PM
TERRENCE SHANIGAN, SELF, ANCHORAGE (via teleconference),
opposed HB 115. He reported that only one-third of the
government's budget paid for employee salaries. He thought
further cuts were necessary. There were competing services
that needed to be eliminated. He advocated further
reductions. In the previous year, only 3.5 percent had been
cut from the operating budget. He disagreed that the budget
had not been reduced to the bone. He thought legislators
needed to work harder at identifying further reductions. He
relayed a statement from a member of the other body. He
thought a sustainable budget was impossible in state
government. He suggested constructing a budget that the
state could afford from the ground up. He claimed having
identified $1.5 billion reductions that could be made
rather than raiding the PF.
4:57:17 PM
CHRISTINE NEES, SELF, ANCHORAGE (via teleconference), spoke
against HB 115. She thought state spending was similar to
giving a credit card to a teenager and sending them to the
mall. She thought certain exemptions should be included in
the capital gains portion of the bill. She hoped for a more
appropriate state model.
5:00:00 PM
DAVID NEES, ALASKA POLICY FORUM, ANCHORAGE (via
teleconference), spoke in opposition to the bill. He
indicated there had been a stress test applied to the
legislation, which was rated negative 6. In other words, it
impaired 6 functions of freedom for Alaskans. He
highlighted that in Section 4 of the bill the word "shall"
was changed to "May." The use of the word "may" was a
problem because it gave the legislature permission not to
appropriate money. He also pointed out that the bill did
not have a start date. Therefore, it was unclear if the
calendar year or a state fiscal year applied. He provided
some figures accompanying the proposed tax legislation. He
suggested that the tax proposed was not fair. He noted a
retroactive clause as well.
5:02:28 PM
JANET MCCABE SELF ANCHORAGE (via teleconference), spoke
in support of HB 115. She and her husband had been
homeowners in Anchorage since 1965. She had seen many
attempts to solve the problem of relying on a single
volatile source of state revenue. She believed uncertainty
and instability were damaging Alaska's economy. She did not
think making additional cuts was the solution. She had
witnessed a stream of people leaving the state. She opined
that for Alaska to flourish it must have a stable and
consistent revenue structure. She agreed with a previous
testifier that businesses in Alaska were holding their
breath. She professed that HB 115 was the best opportunity
Alaska has had to establish a stable revenue structure. She
furthered that the legislation was predicated on fairness
to all Alaskans. She highlighted that by protecting the PF
and the PFD rural Alaskans would continue to have
assistance in heating their homes and subsisting. She
considered it a privilege to pay an income tax based on
each individual's ability to pay. She supposed that because
HB 115 combined revenue sources there was no way to be able
to please everyone. She concluded by asking the legislature
to come together and pass HB 115 in the current session.
5:05:03 PM
ROBIN SMITH, SELF, ANCHORAGE (via teleconference),
testified in support of HB 115. She thanked the committee
for working on the issue of designing a much-needed stable
fiscal plan. She reported being a small business owner with
her husband for over 45 years. She spoke to great
opportunities provided in Alaska. She admitted her business
was currently struggling because of the downturn in the
economy. She purported that Alaskans needed to take
responsibility by paying their fair share for the benefits
they received. She was willing to pay an income tax. She
made note that a portion of people's state income tax could
be written off their federal income tax. She wanted to
maintain a good quality of life for herself and others. She
ascribed that children were Alaska's future and spoke to
the importance of education. She was deeply concerned about
further cuts to healthcare, transportation, and other
arenas. She was aware that because Alaska was an enormous
state, costs were higher than in others. She reasoned that
every state in the U.S. operated on tax revenues. She
remarked that Alaska has been fortunate to have an abundant
supply of oil. She supposed that with the drop in oil
prices she would have to capitulate to taxation. She found
it curious that some Alaskans wanted to see additional cuts
made to the budget but were not willing to specify what
areas should be reduced. She highlighted that Alaskans had
become accustomed to receiving free services. However, she
asserted that it was time to start paying for them. She
reiterated her appreciation of the hard work of the writers
of the bill.
5:10:04 PM
Co-Chair Foster understood that some individuals had time
constraints. He offered the email address to submit written
testimony.
5:10:43 PM
PAUL KENDALL, SELF, ANCHORAGE (via teleconference), called
for a point of order. He asked about the rules and laws
that governed the current public testimony.
Co-Chair Foster explained that the committee was currently
taking public testimony. Members wanted to hear what the
public had to say and to create a record. He encouraged Mr.
Kendall to proceed with his testimony.
Mr. Kendall testified that all the state's problems were 98
percent leadership-based. He accused the legislature of
going to Juneau to negotiate in secret. He spoke to the
complexity of the issues being considered. His comments
reflected his discontent with the legislature. He read from
Alaska's constitution. He further relayed his
dissatisfaction with the legislature. He opposed decreasing
the PFD. He continued to provide testimony regarding his
dissatisfaction.
5:19:58 PM
KELLY REPNOW, SELF, PALMER (via teleconference), testified
against HB 115. He believed the issues in HB 115 should be
addressed in separate legislation. He favored a 2-year cap.
He saw the legislation as a way of taking the Permanent
Fund and turning it into permanent funding. He suggested
that the perception of the state's fiscal situation changed
when there was a change in governors. He suggested using
the funds from the Constitutional Budget Reserve (CBR)
prior to using the PF. He also advocated taking out a PF
loan with a promise to repay if cash was needed. He favored
cutting spending not funding unnecessary projects. He
considered tapping the PFD to be "kid taxation." Money in
the form of PFDs went directly into the local economy. He
recommended town hall meetings on HB 115. He spoke to a
number of state expenditures. He spoke to the North Pole
refinery that had been shut down due to reductions. He
believed individuals should support legislation proposed by
Senator Dunleavy. He reiterated that the issues existing in
HB 115 should be addressed in separate legislation and that
there should be a 2-year cap in place.
5:24:10 PM
STEPHEN WRIGHT, SELF, WASILLA (via teleconference), opposed
HB 115. He believed the bill was a lemon. He did not
support the use of the Permanent Fund and thought
additional cuts were necessary. He continued to provide
some statistics. He concluded that he was a "No" vote on
the bill. He also noted that the economy needed further
boosting.
5:27:10 PM
ED LARRIVEE II, SELF, ANCHORAGE (via teleconference),
opposed HB 115. He claimed citizens did not want and income
tax or their PFD taken away. He opined that the state
needed legislators that represented the people of Alaska.
He suggested that legislators should listen to a particular
morning radio show. He relayed that he would only be open
to a state income tax after legislators reduced the budget.
5:30:50 PM
JAMES SQUYRES, SELF, RURAL DELTANA (via
teleconference), testified in opposition to HB 115. He
thought the bill went too far and that he preferred Senator
Dunleavey's bill. [The call was dropped].
5:32:32 PM
RICHARD HELLER, SELF, BUTTE (via teleconference), opposed
HB 115. He favored Senator Dunleavy's bill. He opined that
the governor's AKLNG project was a boondoggle. He spoke to
the negative aspects of the project. [The call was
dropped].
5:33:20 PM
AT EASE
5:36:13 PM
RECONVENED
SHARON CISSNA, SELF, ANCHORAGE (via teleconference), spoke
in favor of HB 115. She stated that the state needed many
voices. She provided some historical background about
herself and her family. She thought the state was having
some issues. She thanked the committee for having the
hearing. She relayed that she would be sending in some
information and thanked the committee.
Vice-Chair Gara wanted to say hello and thanked her for all
of her service.
Co-Chair Foster explained that there had been some
technical difficulties.
Mr. Squyres resumed his testimony. He thought the POMV's
feature had gone too far. He supported Senator Dunleavey's
legislation. He thought it was more moderate than HB 115.
He thought the capital gains tax contained in the bill was
a scalping tax. He mentioned he was familiar with the
capital gains sliding tax, as he had been an accountant in
Texas. He provided examples of the complexity of the
proposed tax. He reiterated his opposition to the bill.
5:45:05 PM
JOHN FARLEIGH, SELF, ANCHORAGE (via teleconference),
supplied some historical background about his family in
Alaska. He was concerned how his kids and grandchildren
would survive in the state. He had been a commercial
fisherman for 25 years. He supported HB 115 including the
15 percent income tax and he supported using a POMV model.
He supported restructuring oil tax credits and using the PF
earnings. He objected to people using state services
without paying for them.
5:49:30 PM
LARRY MICHAELSON, SELF, MEADOW LAKES (via
teleconference), strongly opposed HB 115. He recently
retired and lived on a fixed income. He felt the rules were
changing. He reported that his property taxes have
increased by 35 percent. He thought that HB 115 would force
people to consider moving from the state because of the
burden caused by additional reductions. He strongly opposed
HB 115.
5:52:43 PM
CINDY MICHAELSON, SELF, MEADOW LAKES (via teleconference),
spoke in opposition to the legislation. She thought
additional cuts were necessary. She opined that she did not
want to be responsible for subsidizing people choosing to
live in rural Alaska. She believed an income tax would only
provide additional funds to the legislature to waste. She
suggested the state live within its means.
5:55:00 PM
RON JOHNSON, SELF, BUTTE (via teleconference), adamantly
opposed HB 115. He thought an income tax disproportionately
affected Alaskans. He believed that the capital gains tax
hit people too hard. He thought the state had done very
little to cut the operating budget. He emphasized his
support for Senator Dunleavey's plan. He requested further
hearings on HB 115, as the legislation greatly affected all
Alaskans.
5:57:41 PM
JANET JOHNSON, SELF, BUTTE (via teleconference), opposed HB
115. She agreed with her husband's testimony. She believed
there were too many issues being addressed in one bill. She
wanted to see the topics dealt with in separate
legislation. She furthered that there should be duration
caps on bills. She surmised that the state had a spending
problem rather than a revenue problem. She agreed with
Senator Dunleavy's plan to right-size government.
5:58:48 PM
Mr. Heller was back online. He continued to speak in
opposition of HB 115. He believed that an income tax was a
bad idea. He suggested opening up Alaska's resources to
generate revenue. He wondered why Republican members on the
finance committee were not on some of the subcommittees. He
advocated moving the legislature to Anchorage. He thought
the state's spending habits were ridiculous. He asserted
that people from out of state came to Alaska, got their
Alaska driver's license, and were receiving fraudulent
PFDs. He reemphasized that it was time for the legislature
to stop spending money.
6:02:09 PM
PAMELA GOODE SELF RURAL DELTANA (via teleconference),
spoke in opposition of HB 115. She argued that for the
previous 10 years there had been a significant amount of
money flowing into the state dramatically increasing the
size and scope of government. She thought the increase
caused a substantial amount of fiscal irresponsibility. She
surmised the drop in oil prices was not the reason for the
problem but a contributing factor. She reasoned that the
legislature was using the fiscal crisis as a way of getting
into the PF and extracting taxes from high wage earners.
She opined that HB 115 did not fix the fiscal problem. She
thought the bill attacked new investors and destroyed
freedom and liberty. She opposed HB 115.
6:05:14 PM
DENNY KAY WEATHER, SELF, HAWKINS ISLAND (via
teleconference), strongly opposed HB 115. She believed that
any money going into the state coffers would be spent. She
provided a historical example. She reported that Governor
Hammond came up with the PFD to safeguard the state's
assets. She did not believe legislators had done their job.
She added that the governor had already created a hardship
for Alaskans by reducing their dividends. She suggested
making additional cuts. She appreciated legislators being
available to hear public testimony.
6:09:01 PM
SHELEE CHAMBERLAIN, SELF, ANCHORAGE (via teleconference),
opposed HB 115. She also opposed giving oil companies tax
credits, which she believed lead to the creation of the
legislation. She praised Governor Walker for trying to
protect the PFD by taping the dividend. She was highly
opposed to taking money from the PF earnings reserve. She
commented that many small communities were already burdened
with a sales tax. She surmised a state income tax would add
to that burden. She spoke to the possibility of being taxed
twice on the PFD. She added that a minimum tax of $25 was
difficult for some people. She thanked the committee for
hearing her testimony.
6:11:51 PM
BRIAN FELDMANN, SELF, FAIRBANKS (via teleconference),
supported HB 115. He favored an income tax and a 6 percent
sales tax but opposed taking the people's dividend. He
opined that the legislature should repay previous draws. He
believed the oil companies should pay more taxes and
advocated the development of Alaska's future in order to
generate new revenues.
6:15:40 PM
ROSS MULLINS, SELF, CORDOVA (via teleconference), spoke in
support of HB 115. He emphasized the importance of
protecting and growing the corpus of the PF. He was happy
to see a bi-partisan House. He thought the legislature
needed to move forward and do the right thing. He really
did not want his PFD touched but realized that something
had to be done.
6:19:03 PM
MICHAEL SHELDON, SELF, PETERSBURG (via teleconference),
spoke against HB 115. He opposed restructuring the PF and
creating an income tax. He thought the bill would cause
more hardship on working Alaskans. He thought the
representatives needed to work towards stabilizing the
economy by controlling state spending. He did not want to
see the PF decimated. He read from the Alaska Constitution.
He urged members to put the decision to use the PF earnings
to a vote of the people.
6:23:11 PM
DAVID PARISH, SELF, JUNEAU (via teleconference), spoke in
favor of HB 115. He thought there was a suitable compromise
that would provide a good education to his grandchildren,
provide street maintenance, and continue stable ferry
service on the Alaska Marine Highway System. He mentioned
other programs and entities that he would like to see
preserved. He thought HB 115 was the first step toward a
solution.
6:25:19 PM
WILLIAM DEATON, SELF, CORDOVA (via teleconference),
approved of cutting education because, as a 15-year-old
boy, he was capable of learning on his own. He was against
funding Planned Parenthood, as they did not provide pre-
natal care. He spoke in opposition of HB 115 and supported
Senator Dunleavey's plan. He also encouraged more cuts to
the budget. He suggested putting any changes to the PF to a
vote of the people. He opposed HB 115.
6:27:34 PM
MARY NANUWAK, SELF, BETHEL (via teleconference), spoke
against HB 115. She did not like that the Alaska
Legislature did not want to hear from Alaska's indigenous
people. She did not approve of multiple topics in the bill.
She maintained that original Alaskans should have a say in
any decisions being made about the affairs of Alaska. She
noted the difficulty of small villages being able to speak
to the legislature. She urged members to consider children,
elders, and people without money.
6:33:09 PM
ROSS BIELING, SELF, ANCHORAGE (via teleconference),
spoke against HB 115. He reported that gross spending
investment dropped for those states that had implemented an
income tax. He thought that the capital gains portion of
the bill would definitely scare off investors. He noted
some of the other challenges including healthcare costs. He
did not believe that HB 115 was the way to get things done.
6:35:53 PM
ED MARTIN, SELF, COOPER LANDING (via teleconference), spoke
in opposition to HB 115. He provided a quote from the first
United States President, Thomas Jefferson. He spoke about
the use of the PF and about protecting the PFD. He thought
it was necessary to generate new wealth for the citizens of
Alaska. He mentioned a homestead that had been subdivided
and a program called the Alaska Land Voucher. He expressed
concerns about adding 50 more people to the payroll to
administer a state income tax. He observed that the state
had a serious problem with just paying for what it
currently had. He urged members to look for opportunities
to create new wealth.
6:40:40 PM
EVAN EADS, SELF, FAIRBANKS (via teleconference), was unsure
if he approved of the entire bill, although he supported an
income tax. He spoke to some of the history of a state
income tax under Governor Hammond's administration. He did
not approve of out-of-state workers not contributing to the
state budget. He suggested implementing an income tax that
was capped for residents of Alaska at the amount of the
dividend. He thanked the committee members for their time.
Co-Chair Seaton reported having to go to a subcommittee
finance meeting and thanked everyone who testified.
HB 115 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the following
Monday.
ADJOURNMENT
6:46:04 PM
The meeting was adjourned at 6:46 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 115 Support Documents PKT 1 2.16.17.pdf |
HFIN 2/17/2017 1:30:00 PM |
HB 115 |
| HB 115 Opposition lettersPKT 2 2.16.17.pdf |
HFIN 2/17/2017 1:30:00 PM |
HB 115 |
| HB 115 Opposition Documents PKT 3 2.17.17.pdf |
HFIN 2/17/2017 1:30:00 PM |
HB 115 |
| HB 115 Support Documents PKT 2 2.17.17.pdf |
HFIN 2/17/2017 1:30:00 PM |
HB 115 |
| HB 115 Supporting Doc An Introduction to Alaska Income Tax OptionsIssues Hanson.pdf |
HFIN 2/17/2017 1:30:00 PM |
HB 115 |