Legislature(2021 - 2022)DAVIS 106
05/15/2021 11:30 AM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| HB37 | |
| HB202|| HB37 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 202 | TELECONFERENCED | |
| += | HB 37 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
May 15, 2021
11:33 a.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Adam Wool
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story
Representative Mike Prax
Representative David Eastman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 37
"An Act relating to deposits into the dividend fund; relating to
income of and appropriations from the earnings reserve account;
relating to the taxation of income of individuals, partners,
shareholders in S corporations, trusts, and estates; 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."
- HEARD & HELD
HOUSE BILL NO. 202
"An Act relating to the Alaska permanent fund; relating to
dividends for state residents; relating to the use of certain
state income; and providing for an effective date."
- MOVED HB 202 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 37
SHORT TITLE: INCOME TAX; PERMANENT FUND; EARNINGS RES.
SPONSOR(s): REPRESENTATIVE(s) WOOL
02/18/21 (H) PREFILE RELEASED 1/8/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) CRA, STA, FIN
04/28/21 (H) W&M REPLACES CRA REFERRAL
04/28/21 (H) BILL REPRINTED
05/11/21 (H) W&M AT 11:30 AM DAVIS 106
05/11/21 (H) -- MEETING CANCELED --
05/13/21 (H) W&M AT 11:30 AM DAVIS 106
05/13/21 (H) Heard & Held
05/13/21 (H) MINUTE(W&M)
05/15/21 (H) W&M AT 11:30 AM DAVIS 106
BILL: HB 202
SHORT TITLE: PERMANENT FUND DIVIDEND; ROYALTIES
SPONSOR(s): REPRESENTATIVE(s) MERRICK
05/05/21 (H) READ THE FIRST TIME - REFERRALS
05/05/21 (H) W&M, FIN
05/07/21 (H) FIN AT 1:30 PM ADAMS 519
05/07/21 (H) <Bill Hearing Canceled>
05/11/21 (H) W&M AT 11:30 AM DAVIS 106
05/11/21 (H) -- MEETING CANCELED --
05/13/21 (H) W&M AT 11:30 AM DAVIS 106
05/13/21 (H) Heard & Held
05/13/21 (H) MINUTE(W&M)
05/14/21 (H) FIN AT 1:30 PM ADAMS 519
05/14/21 (H) <Bill Hearing Canceled>
05/15/21 (H) W&M AT 11:30 AM DAVIS 106
WITNESS REGISTER
KEN ALPER, Staff
Representative Adam Wool
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"House Bill 37; Income tax and POMV Allocation," dated 5/13/21,
on behalf of Representative Wool, prime sponsor.
NICOLE REYNOLDS, Deputy Director
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
37.
BERT HOUGHTALING
Big Lake, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
CRIS EICHENLAUB
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
SHERRY EICHENLAUB
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
KATIE BOTZ
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and in
support of HB 37.
ADAM HYKES
Homer, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
MIKE COONS
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
CLIFF GROH
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 202 and
HB 37.
BARBARA TYNDALL
North Pole, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
ANDRA RICE
North Pole, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
MELISSA GUDOBBA
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
JAMES SQUYRES
Rural Deltana, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
GARY MCDONALD
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
ROBERT COELTER
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
THOMAS BELLANICH
Ketchikan, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
JEAN HOLT
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
RENEE WELLINGTON
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 202 and HB
37.
LAURA BONNER
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to 202 and in
support of HB 37.
DAVE JOHNSON
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 202 and HB 37.
JOHN SONIN
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 202 and HB 37.
JANET MCCABE
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 202.
ELEANOR ANDREWS
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 202.
PETER MICHALSKI
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 202 and HB 37.
REPRESENTATIVE KELLY MERRICK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As the prime sponsor, answered questions
during the hearing on HB 202.
TALLY TEAL, Staff
Representative Kelly Merrick
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
202, on behalf of Representative Merrick, prime sponsor.
CONOR BELL, Fiscal Analyst
Legislative Finance Division
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
202.
ACTION NARRATIVE
11:33:32 AM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 11:33 a.m. Representatives Wool,
Prax, Josephson, Spohnholz, and Schrage were present at the call
to order. Representatives Story and Eastman arrived as the
meeting was in progress.
HB 37-INCOME TAX; PERMANENT FUND; EARNINGS RES.
11:34:22 AM
CHAIR SPOHNHOLZ announced that the first order of business would
be HOUSE BILL NO. 37, "An Act relating to deposits into the
dividend fund; relating to income of and appropriations from the
earnings reserve account; relating to the taxation of income of
individuals, partners, shareholders in S corporations, trusts,
and estates; relating to a payment against the individual income
tax from the Permanent Fund Dividend (PFD) disbursement;
repealing tax credits applied against the tax on individuals
under the Alaska Net Income Tax Act; and providing for an
effective date."
11:34:55 AM
KEN ALPER, Staff, Representative Adam Wool, Alaska State
Legislature, resumed a PowerPoint presentation, titled "House
Bill 37; Income tax and POMV Allocation" [hard copy included in
the committee packet], on behalf of Representative Wool, prime
sponsor. He began on slide 15, which recalled the results of a
Commonwealth North study that showed a small preference for
sales taxes although a majority of responses supported both
options [sales and income tax]. Slide 16 indicated that
Alaska's tax burden is 5.8 percent in combined state and local
income tax, which is less than any other state. The next lowest
are Wyoming and Tennessee at 7 percent. He noted that if HB 37
were to pass, Alaska's tax burden would be approximately 2.7
percent. Similarly, slide 17 suggested that "adding a moderate
tax would not change that much," showing that $700 million in
new and increased taxes would have boosted Alaska from the
lowest to the second lowest tax state in the country.
11:38:32 AM
MR. ALPER advanced to slides 18 and 19, which detailed HB 37 and
read as follows [original punctuation provided]:
Flat rate 2.5% tax based on federal "Adjusted Gross
Income" (AGI
• Metric that is the most widely used among states
with income taxes
• Includes all income: wages, self employment,
earnings of partnerships and S-corps, capital
gains, retirement, etc.
• "Adjustments" to income (i.e. non-taxed items)
include retirement contributions, students loan
interest, and alimony payments.
• So-called "itemized" deductions, like mortgage
interest, are taken after AGI and would therefore
be taxed
"Standard Deduction": First $10,000 of income ($20,000
for joint filers) is not taxed
• PFD payments are also non-taxable income
MR. ALPER turned to slide 20, which read as follows [original
punctuation provided]:
Income Tax- Technical Provisions
• Tax paid by Alaska residents on all their income
regardless of where earned
o Credit is given for income taxes paid to
other states for income earned in that state
• Tax paid by nonresidents on income earned in the
state
• Tax also applies to trusts and estates, who would
be separate taxpayers
• Detailed provisions to establish what income is
"from a source in the state"
• Employer withholding from wages with periodic
payments from employers to the state
• Employers send employees annual wage statement
similar to the federal W-2
• Annual Tax returns due same day as federal return
• Department of Revenue to establish regulations to
prevent tax avoidance
• Income tax exempted from general DOR requirement
to file electronically
Most state income tax payments are deductible from
federal taxes for those who itemize; thus, a portion
of taxes paid will be saved due to reduced payments to
the IRS.
11:43:21 AM
MR. ALPER progressed to slide 21, which read [original
punctuation provided]:
Permanent Fund Changes
• Replaces the current Dividend formula to one
based on 20% of the annual Percent of Market
Value draw
• Repeals the statutory 50% "corpus" deposit of
royalties from leases signed after 1979
o The 25% constitutional requirement remains:
25% of all royalties, bonus payments, etc.
will continue to be deposited
o The additional 25% is approximately $57
million in FY2021; this amount would remain
in the general fund available for
appropriation
• Repeals the "Amerada Hess" set-aside, where the
annual earnings on a specific $420 million
settlement from the early 1990s are excluded from
the POMV and dividend calculations
o About $27 million / year which currently
goes to the Capital Income Fund
• HB 37 allows an Alaskan, as part of their PFD
application, to apply some or all of their
dividend towards their income tax obligation
MR. ALPER addressed implementation and costs on slide 22, which
read as follows [original punctuation provided]:
Implementation and Costs
• Bill as written has an effective date of January
1, 2022
• Major implementation effort for the Department of
Revenue:
o Software procurement / programming of system
into Tax Revenue Management System / working
with national tax software vendors such as
TurboTax
o Forms development
o Staff recruitment
o Public education
• Likely the withholding system will be set up
first, so employers are able to begin withholding
next year
• First annual returns will be due in early 2023
• Fiscal note includes an initial capital cost of
$8.5 million, plus 69 additional staff at an
annual cost of about $8.3 million / year (1.4% of
revenue)
11:47:55 AM
MR. ALPER continued on slide 23, which read as follows [original
punctuation provided]:
Revenue and Impacts
• The LB&A Committee hired the Institute on
Taxation and Economic Policy (ITEP) last fall, to
look at several different "flat rate" income tax
options
• This bill (2.5%, $10k/$20k standard deduction)
was "Option 2"
• The consultant estimated $581 million annual
revenue (Fiscal note: $580 million)
MR. ALPER turned to slide 24, which read [original punctuation
provided]:
Dividend Impact
• The forecasted FY2023 POMV draw is just under
$3.2 billion
• A dividend based on 20% of that would be a $640
million appropriation, working out to roughly a
$960 dividend per person
• For the majority of Alaskans, their tax burden
will be less than their dividend, meaning they
will still receive a net payment from the state
MR. ALPER concluded on slide 25, which read as follows [original
punctuation provided]:
HB 37 is the only bill that has been introduced this
year that resolves the entire fiscal deficit
• Adds approximately $640 million / year in new
revenue
o $580 million in tax revenue plus $57 million
in additional UGF royalties
• Clarifies and reduces the state's commitment to
PFDs
• New dividend payment will be about $640 million
• Budget would be balanced at any oil price greater
than about $50
With these two pieces roughly equal, it means that the
net effect is about the same as not having a tax and
paying zero dividend
• This enables us to afford the dividend into the
future while maintaining a stable budget
11:51:27 AM
CO-CHAIR SPOHNHOLZ invited questions from committee members.
11:51:31 AM
REPRESENTATIVE JOSEPHSON returned to slide 21 and asked why
repealing the statutory 50 percent "corpus" deposit of royalties
from leases signed after 1979 would be good policy.
11:52:02 AM
REPRESENTATIVE WOOL responded that the additional 25 percent,
which adds approximately $57 million to the permanent fund,
would make the bill balanced and pay for itself. He explained
that the revenue from the income tax plus the $57 million would
match the dividend payment, making the proposal "self-
sufficient."
REPRESENTATIVE JOSEPHSON said he likes the bill; however, he
wondered whether there should be concern that the public may
think this is all that would be required. He pointed out that
the bill doesn't address the state's infrastructure needs or
capital budgets; unfunded liabilities; debt issues; deferred
maintenance, etc. He asked whether it would be hard to come bac
to the table a second time.
REPRESENTATIVE WOOL stated that once the budget is paid, there's
a residual amount of $300-$400 million, which could be used for
enhanced capital budgets, unfunded liabilities, or deposited
into the constitutional budget reserve (CBR) or statutory budget
reserve (SBR), as opposed to having to put the residual moneys
towards an ad hoc dividend payment. He reiterated that HB 37
proposes a solution for revenue and the dividend that is fully
self-sufficient.
11:54:56 AM
REPRESENTATIVE PRAX asked whether the sponsor had performed
"additional iterations of the model." He shared his
understanding that the bill would reduce a person's annual
income by 2.5 percent; further, that it would take money out of
the private economy and affect jobs.
CO-CHAIR SPOHNHOLZ sought to confirm that Representative Prax
was asking about additional drag on the economy.
11:56:34 AM
REPRESENTATIVE WOOL reminded the committee that Alaska has the
lowest taxes in the country. He asked, if a person didn't want
to come to Alaska because of a slight increase in taxes, where
else would they go. He contended that it would not be a drag on
the economy. He posited that it would help lower-income
Alaskans by putting cash in their pockets, so they can go to the
store and spend it, thereby boosting the economy.
CO-CHAIR SPOHNHOLZ noted that, per Department of Labor &
Workforce Development (DLWD), there is a cost of not doing
anything as well. She reported that the state had lost 50,000
people in outmigration in the last 8 years, as the budget
situation has made Alaska less attractive. Further, she noted
that budget cuts impact private sector jobs as well.
11:58:57 AM
REPRESENTATIVE PRAX asked whether there had been an attempt to
measure the likelihood of the bill earning the projected levels
while accounting for a change in behavior due to the new
implementation of an income tax.
12:01:11 PM
MR. ALPER said that level of technical modeling had not been
performed. He recalled testimony from the Tax Foundation about
the economic impact of a sales tax versus an income tax;
specifically, the argument that a sales tax is preferable
because it doesn't tax investable income while an income tax is
more likely to slow future job creation in theory. He indicated
that there are pros and cons to all options. He posited that
the time has come for a decision to be made, whatever it may be.
He emphasized that either a tax needs to be implemented or the
dividend program will cease to exist; alternatively, structured
overdraws from the permanent fund will damage the long-term
economy. He shared his belief that while no one wants to tax
Alaskans, it is the best solution going forward.
12:02:35 PM
REPRESENTATIVE SCHRAGE agreed with Representative Prax that
creating a tax would influence business decisions; however, he
argued that risk is another a huge consideration for businesses,
indicating that the struggles Alaska is facing is also hampering
business. He suggested weighing the cons of a new tax with the
cons of maintaining the status quo and the continued buildup of
deferred maintenance, for example. Additionally, he disagreed
with the idea that taxing takes money out of the private
economy. He explained that a tax allows for things, such as
investment in the university, state employees, and road repair,
which sends money back into the economy to circulate throughout
the state. He asked about the diversion of royalties to the
General Fund, specifically inquiring about how the
sustainability of the fund would be impacted if 25 percent of
the royalties would no longer be diverted to the fund.
MR. ALPER clarified that 25 percent of royalties would always go
to the permanent fund, per the constitutional requirement,
adding that no one is advocating for changing that. He
explained that the additional 25 percent is approximately $57
million, which is the amount that would remain in the General
Fund for appropriation under HB 37. He noted that there were
only two years that the incremental 50 percent corpus deposit of
royalties from leases signed after 1979 did not get deposited:
fiscal year 2018 (FY 18) and FY 19. He continued to explain
that if the $57 million were to remain in the General Fund for
annual appropriations instead of deposited into the corpus, it
would slightly reduce the size of the permanent fund itself,
therefore slightly reducing the percent of market value (POMV)
draw over time. He indicated that contrasting the pros and cons
of that decision is a policy choice to be made by the
legislature if this bill were to move forward. He noted that
the proposed legislation would still work as a tax and permanent
fund bill without that provision.
REPRESENTATIVE SCHRAGE gathered that its impact on the
sustainability of the fund would be fairly negligible.
MR. ALPER agreed.
12:07:06 PM
REPRESENTATIVE EASTMAN inquired about the initial cost of
setting up the new "bureaucracy" [tax program], as well as the
ongoing cost in the out years.
REPRESENTATIVE WOOL directed attention to the bottom of slide
22. He contended the verbiage "bureaucracy," as a tax
collection system already exists. Nonetheless, he acknowledged
that there would be an initial cost for software, as well as a
continual cost for the labor involved in maintaining the
program.
12:08:31 PM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue, reported that DOR would expect to hire 69 people for
administering the tax. The cost to employ those 69 new
positions would be about $6.4 million per year in salary and
benefits in addition to $216,000 for office setup the first year
and approximately $6,900 in the out years. Further, the 69
employees would also need office space, estimated at about
$125,000 per year to rent the additional space. She noted that
the new hires would be distributed between the Anchorage and
Juneau offices. She continued to explain that the fiscal note
includes funds for traveling to account for training and public
outreach equaling $25,000 the first year and $12,500 in FY 23.
12:11:00 PM
MR. ALPER said the Tax Division, is currently a "business tax
administering entity." He pointed out that there would be
nearly 400,000 additional taxpayers if the bill were to pass,
adding that the administrative burden is large. He believed
that the department's proposal is a reasonable increment to
handle the volume. He reported that less than 1.5 percent on
the incremental revenue would go into the cost of administering
the program.
CHAIR SPOHNHOLZ said, "fairly efficient as they go."
12:11:58 PM
REPRESENTATIVE WOOL addressed multi-state complex filers and
considered the example of the owner of Hilcorp who lives in
Texas. He explained that if the bill were to pass, he would
have to pay his individual income tax in Alaska through his
corporation. Further, if he did business in California, for
example, which has an income tax as well, he would have to pay
tax in that state too. He concluded that if HB 37 were to pass,
the oil corporation would have to pay taxes in Alaska, which
would require a more complex analysis.
CHAIR SPOHNHOLZ acknowledged the interesting challenge that came
with the sale of BP assets to Hilcorp given the different
corporate structure, which created a $30 million revenue gap for
the state of Alaska in a time of financial strain.
12:12:57 PM
REPRESENTATIVE EASTMAN asked whether liens would be placed on
Alaskans' property if they didn't have the ability to pay the
new tax.
MR. ALPER deferred the question to Ms. Reynolds. He understood
that it is among the available tools for compliance if people
don't pay their taxes.
12:13:38 PM
MS. REYNOLDS responded that those provisions already exist in
statute, adding that the options would be pursued if necessary.
CHAIR SPOHNHOLZ pointed out that if that were to happen it would
be about enforcing the law.
12:14:02 PM
REPRESENTATIVE EASTMAN argued that when imposing a new tax,
evaluating the strength of the portion of the economy that would
bear the brunt of that tax should be considered instead of the
state's tax burden. He asked how the strength of Alaska's
economy compares to other states.
REPRESENTATIVE WOOL said he did not perform an analysis on the
"strength of the economy." He opined that Alaska's economy is
facing challenges because of its predominant reliance on oil
revenue, which has been declining, causing many services to
suffer. He pointed out that when people consider relocation,
they consider tax rates, as well the quality of education and
the safety of the community, for example. He emphasized that
the tax proposed in HB 37 is a low flat tax; further, many
people wouldn't pay it because unlike any other state, Alaska
gives its citizens a check every year in the form of the
dividend. He reiterated that for many, the dividend would
offset the tax. He added that many others would still receive
the PFD. He stated that this small measure would sustain the
dividend program while being fully self-sustaining.
12:17:40 PM
REPRESENTATIVE PRAX shared his understanding that there are two
particular oil fields that optimistically, could come online and
increase production by approximately 300,000 barrels per day.
He asked whether those leases were post 1979.
REPRESENTATIVE WOOL said he did not have the answer readily
available; further, he noted that he's not "married" to the
provision pertaining to the diversion of the 25 percent of
royalties. He said if it were the will of the committee to
maintain the current structure, he wouldn't "fall on [his]
sword" on that particular item.
12:18:44 PM
MR. ALPER explained that when estimating the royalty deposits,
DOR uses a blended average around 30-31 percent. He added that
the great bulk of the current oil is paying at the 25 percent
rate. Of the two new pending fields referenced by
Representative Prax, under current state law, PCAA would be
depositing at the 50 percent rate, which would be a substantial
increase in royalties, he acknowledged. The other field,
Willow, is a federal lease in the NPRA and would therefore, pay
at the 25 percent rate.
REPRESENTATIVE PRAX believed the oil leases on the North Slope
are worth further consideration, because if production were to
increase, it would change the future outlook.
12:20:49 PM
REPRESENTATIVE SCHRAGE questioned the real alternatives to this
proposal, indicating that there aren't many. He conveyed that
currently, the budget isn't balanced, and the legislature
continues to deficit spend. Alternatively, services could be
cut, which only hurts Alaskans; similarly, cutting the dividend
negatively impacts Alaskans as well. He said at least this
proposal would tax out-of-state workers and provide an equitable
system. He said taxes could be raised on oil companies and
tourists, thereby targeting specific segments of the population.
He continued to point out that any company that is an LLC or an
S-corporation doesn't pay anything in taxes. He said the state
could continue to pick "winners and losers" by continuing to
target the few segments that are already being taxed;
alternatively, this measure would spread out the burden and
allow the state to function with drivable roads and schools that
don't have classrooms with upwards of 40 students. He asked,
"Is there an alternative I'm missing?"
REPRESENTATIVE WOOL said Representative Schrage made some valid
points. He clarified that technically, the budget is balanced
because the legislature has not yet committed to a PFD amount.
He explained that currently, state revenue in addition to the
POMV draw provides a surplus after paying out the budget;
however, he pointed out that it may not be sustainable if the
price and production of oil were to drop. Further, the budget
may have to increase over time when accounting for pay increases
and inflation. He noted that Alaska pays some of the highest
rates for medical care, while doctors, who do very well in this
state, pay nothing in income tax presently.
12:23:57 PM
MR. ALPER returned to slide 10 and reminded the committee that
Alaska's private economy has grown tremendously in the past 40
years whereas the state economy is largely tied to the oil and
gas economy. He pointed out that there is a large private
sector economy in healthcare, financial services,
transportation, and mining, that is not fully contributing to
the state's operational costs.
CHAIR SPOHNHOLZ agreed that there is a certain efficiency to an
income tax that would allow the size of government to grow to
meet the needs of the people that services are provided to. She
addressed the rhetoric that taxes and government are a drain on
the economy, noting that public safety and education are
critical to a functioning economy. She added that when the
military and the oil industry are looking at continuing to
operate in Alaska, they want to ensure that both of those
services are strong so their employees and military services
members feel safe and secure and that their children will
receive a quality education. She continued to explain that
revenue isn't keeping up with the growing population, which
makes meeting the constitutional obligations of providing for
the education and public safety of Alaskans a challenge.
12:25:42 PM
REPRESENTATIVE SCHRAGE agreed. He observed that the budget
becomes bloated when oil revenue increases; however, when oil
prices drop, the budget gets cut and doesn't meet the needs of
the people. He said it's hard to have equilibrium when the
state services are based on the price of a barrel of oil, as
opposed to the needs of the citizens. He pushed back against
the idea that the budget is balanced, explaining that it's only
balanced if the statutory dividend isn't paid. With the
inclusion of the statutory dividend, there is a massive
structural deficit, and that's without a capital budget.
CHAIR SPOHNHOLZ agreed. She noted that some people are
uncomfortable with the size of the statutory dividend, herself
included.
12:27:05 PM
REPRESENTATIVE EASTMAN asked where the burden of criminal
prosecutions or investigations would fall.
REPRESENTATIVE WOOL said he has heard this line of questioning
before in regard to setting up some sort of "tax police." He
emphasized that he is not interested in creating an enforcement
division that would "knock down doors." In response to
Representative Spohnholz, he pointed out that if 20,000 people
were to relocate to Alaska, it would put stress on the system,
because without a method to extract revenue from the population,
public services would be strained. He indicated that this bill
would address that issue.
12:29:29 PM
MR. ALPERT in response to Representative Eastman, clarified that
DOR's fiscal note does not include positions for investigators
or police. Instead, it accounts for tax auditors, technicians,
and data entry positions to handle the paper filing. He noted
that there is an additional fiscal note from the Office of
Administrative Hearings, DOA, which handles tax appeals, as
there would be a small incremental increase to their workload.
CHAIR SPOHNHOLZ added that DPS would have included a fiscal note
if they felt the need to. She said there is no suggestion
anywhere in the bill that there would be heavy enforcement of
tax law in Alaska, adding that she is uncomfortable with the
inference that there would be.
12:30:41 PM
CHAIR SPOHNHOLZ announced that HB 37 was held over; [however, it
was subsequently brought back before the committee for the
purpose of hearing public testimony HB 37 and HB 202
simultaneously.]
HB 202-PERMANENT FUND DIVIDEND; ROYALTIES
HB 37-INCOME TAX; PERMANENT FUND; EARNINGS RES.
[Contains discussion of SJR 6 and SJR 7.]
12:31:01 PM
CHAIR SPOHNHOLZ announced that the final order of business would
be HOUSE BILL NO. 202, "An Act relating to the Alaska permanent
fund; relating to dividends for state residents; relating to the
use of certain state income; and providing for an effective
date." and HOUSE BILL NO. 37, "An Act relating to deposits into
the dividend fund; relating to income of and appropriations from
the earnings reserve account; relating to the taxation of income
of individuals, partners, shareholders in S corporations,
trusts, and estates; 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."
12:31:31 PM
CHAIR SPOHNHOLZ opened public testimony on HB 202 and HB 37.
12:32:00 PM
BERT HOUGHTALING stated his strong opposition to HB 202 and HB
37. Instead, he advocated for the passage of SJR 6, which he
believed would resolve the issues pertaining to the dividend.
He explained that his opposition to the proposed legislation
revolved around the removal of the statutory dividend formula.
He opined that the bills would "take away from the children of
Alaska by taxing every single one of them."
12:33:31 PM
CRIS EICHENLAUB opined that Alaska is "grossly" mismanaging its
resources as the largest state with the most resources and the
smallest population. He characterized the permanent fund
dividend (PFD) as the "best bang for our buck," adding his
belief that the people should have the first call on all revenue
[decisions].
12:35:45 PM
SHERRY EICHENLAUB stated her opposition to HB 202 and HB 37 and
aligned herself with the comments from the two previous
testifiers.
12:36:16 PM
KATIE BOTZ stated her opposition to HB 202 and support for HB
37. She shared her belief that an income tax would help close
the fiscal gap. Additionally, she advocated for a "50/50 share
of the PFD."
12:37:06 PM
ADAM HYKES, recalled an earlier statement from Mr. Alper
regarding the repeal of the Amerada Hess settlement provision,
which he interpreted as an indication that the bill wouldn't
work without taking money that would have otherwise gone towards
the PFD. He said, "In the case that's it's not always
guaranteed in some years, then why is it reliable for you and
not for us?" Further, he opposed the idea that the PFD is a
negative tax. He shared his belief that Alaskans want the
legislature to spend less and fix the budget. He opined that
rushing the implementation of a new tax and depending on the
permanent fund to fill the gaps in the budget are both fiscally
irresponsible. He concluded that as a stakeholder in Alaska, he
did not give [the legislature] permission to take his children's
inheritance. He stated his opposition to HB 202 and HB 37.
12:39:33 PM
MIKE COONS emphasized that whether wealthy or poor, people
should be able to spend the PFD on whatever they want. He
stated his full opposition to both bills and added that he
supports SJR 6 and SJR 7. He suggested that the legislature has
no intention of working with Alaskans or the governor on a
solution.
12:41:44 PM
CLIFF GROH expressed that the state needs a comprehensive
strategy that looks beyond the next fiscal year to address
Alaska's deep structural deficit. He opined that the strategy
needs to include a revised PFD formula that is sustainable;
protection for the permanent fund against overspending; and new
revenues to help pay for public services. He believed that HB
202 goes too far to balance the budget (indisc.) of the dividend
to avoid collecting taxes from high earners in Alaska, some of
whom are nonresidents. He advocated for a sustainable dividend
formula in addition to broad-based taxes, preferably an income
tax.
12:43:55 PM
BARBARA TYNDALL stated her opposition to HB 37, which she
characterized as a plan to rob the people of Alaska and give
their money to special interests because the legislature and
administration had failed to live within their means.
Additionally, she believed HB 202 would "exacerbate the
manipulation by the legislature for the fund's original intent
and make it a political football rather than a market-driven
process." She argued that HB 202 would cut the people out of
the process almost entirely. She urged a "no" vote on HB 202
and HB 37.
12:45:18 PM
ANDRA RICE shared that she relies on a full PFD for her heating
oil and doesn't want it taken away from her grandchildren. She
said she loves Alaska, adding that the dividend belongs to the
people, as does their income. She reiterated her opposition to
both HB 202 and HB 37.
12:46:44 PM
MELISSA GUDOBBA stated that she believed the legislature is
trying to "bamboozle" and "hoodwink" Alaskans. She argued that
if people are willing to give up their liberties for temporary
securities, then they don't deserve either. She believed that
growing the government when revenues are high and not being able
to pay for those programs when revenue is low is irresponsible.
She concluded by stating her opposition to HB 202 and HB 37.
12:48:49 PM
JAMES SQUYRES [Due to technical difficulties, the majority of
Mr. Squyres' testimony is indiscernible throughout.]
12:51:21 PM
GARY MCDONALD urged the legislators to listen to the previous
testifiers. He said, "Mr. Wool is trying to pull the wool over
your eyes if he gets both bills."
12:52:07 PM
ROBERT COELTER stated his opposition to HB 202 and HB 37 as a
taxpayer and proponent of small government. He believed that HB
37 would enlarge government by taking people's money to increase
government spending. Further, he opined that HB 202 would make
government larger.
12:53:36 PM
THOMAS BELLANICH stated his opposition to HB 202 and HB 37. He
opined that children should not be taxed, because they are the
future. Further, that if a tax were to be implemented, it
should be a wage tax, as opposed to an income tax. He
emphasized that many rely on the dividend for clothing, heating,
food, and hunting, and that taking it away would be wrong. He
reiterated his belief that a wage tax is preferable, as it would
allow the state to tax nonresidents.
12:55:45 PM
JEAN HOLT stated her opposition to HB 202 and HB 37. She
believed both bills would eliminate Alaskans' ability to receive
their share of mineral rights through the PFD. She advocated
for SJR 6 and SJR 7.
12:56:58 PM
RENEE WELLINGTON expressed her opposition to HB 202 and HB 37,
especially after the difficult year Alaska has faced. She
opposed implementing an income tax to "grow" government and
reducing the PFD. She urged the legislature to listen to
Alaskans and stop catering to special interest groups.
12:58:32 PM
LAURA BONNER said she's pleased to see a proposal that would
change the outdated PFD formula, which no longer works. She
opined that HB 37 is more sustainable for future generations,
while still providing a dividend. She pointed out that in the
future, oil royalties may decrease; therefore, she opined that
HB 202 would not be the best solution. She believed HB 37 would
offer a new source of revenue, which is desperately needed to
provide services. She concluded that an income tax wouldn't be
popular, but it's necessary.
1:00:00 PM
DAVE JOHNSON disclosed that he has worked in Prudhoe Bay for
over 20 years, adding that over 50 percent of his nonresident
coworkers do not pay taxes. He stated his support for both HB
37 and HB 202. He pointed out that it's easy to "throw stones"
at solutions. He emphasized the need to pick a solution, as the
state is in a tough spot from drawing down its savings.
1:00:51 PM
JOHN SONIN expressed his support for HB 37. Regarding HB 202,
he said he was not as clear on how it would be implemented, but
he is supportive. He shared his belief that future generations
should be able to share in the "gifts" of the permanent fund.
1:03:08 PM
JANET MCCABE stated her support for HB 202. She said adopting
this bill would be a major step towards giving Alaska much
needed fiscal stability. For years, she said, the legislature
has disagreed about the percentage of POMV funds to use for
dividends and the percentage to use for state services. HB 202
would solve that issue by drawing funds for the dividend by a
totally separate source. Instead, the dividend would be a fixed
percent of annual mineral revenues. She believed the resulting
stability would benefit and strengthen Alaska's economy.
Further, she emphasized the importance of passing HB 202 to
protect the permanent fund and POMV revenue, which is now the
state's primary source of income. She concluded that passing HB
202 this session would be an important and beneficial
achievement.
1:04:50 PM
ELEANOR ANDREWS stated her support for HB 202. She believed
that without a fiscal plan that provides sustainable income from
every source, Alaska would be worse off than it was before the
discovery of oil. She indicated that HB 202 would provide an
additional source of revenue. She pointed out that government-
provided services that everyone enjoys would not be possible if
the permanent fund ceased to exist.
1:06:19 PM
PETER MICHALSKI said he agreed with the previous testifier's
comments regarding HB 202. Additionally, he opined that HB 37
would maintain the dividend program while implementing a minimal
tax. He believed HB 202 and HB 37 would put the legislature on
the right track towards fulfilling the constitutional
requirement of providing education, public safety, roads, and
other services.
1:08:08 PM
CHAIR SPOHNHOLZ closed public testimony on HB 37 and HB 202.
[HB 37 was held over.]
1:08:33 PM
The committee took an at-ease from 1:08 p.m. to 1:12 p.m.
1:12:39 PM
CHAIR SPOHNHOLZ moved to adopt Amendment 1 to HB 202, labeled
32-LS0884\I.1, Nauman, 5/13/21, which read:
Page 5, line 16:
Delete "30"
Insert "50"
1:12:49 PM
REPRESENTATIVE STORY objected for the purpose of discussion.
1:12:53 PM
CHAIR SPOHNHOLZ explained that Amendment 1 would increase the
percentage of royalties the legislature may appropriate to the
dividend fund from 30 percent to 50 percent, which would allow
the dividend to remain tied to resource production while
allowing more of the revenue to go towards Alaskans through
dividends. She opined that the concept of the bill is
intriguing; however, she said she had "heartburn" in regard to
the proposed PFD formula and the corresponding amount in HB 202.
She noted that as currently drafted, HB 202 would produce a
dividend of $442 in FY 21, which she characterized as "low."
Per ITEP, she reminded the committee that a PFD reduction would
be the hardest on lower-income individuals and that 95 percent
of Alaskans would be worse off with a PFD cut, as opposed to
other forms of revenue. She added that the only people who are
better off with a PFD reduction are those in the top 5 percent
who make $228,000 a year or more. She reiterated that the
proposed amendment would increase the percentage of royalties
that would go to dividends and, if adopted, would produce a
dividend of $763 in FY 21, which would provide more certainty.
1:14:43 PM
REPRESENTATIVE STORY removed her objection.
1:14:46 PM
REPRESENTATIVE JOSEPHSON objected. He said given that the
current statutory dividend formula provides for a dividend of
$3,400, Amendment 1 would be a marked decrease. Nonetheless, he
reported that as it's currently written, the bill would have
resulted in a dividend of $1,600 in the "productive" years of FY
08 through FY 12; therefore, he presumed that if Amendment 1
were to pass, the dividend would have increased to approximately
$2,000 in those years. He asked why that is affordable.
1:15:54 PM
CHAIR SPOHNHOLZ noted that she only possessed modeling from the
Legislative Finance Division that dated back to FY 16. Further,
she reported that in FY 18, 50 percent of royalties would
produce a dividend of $1,008, which is significantly smaller
than the figure referenced by Representative Josephson.
REPRESENTATIVE JOSEPHSON clarified that he had referenced data
from 2008, as opposed to 2018.
CHAIR SPOHNHOLZ responded that she didn't have the information
for that year. Further, she recalled that 2008 was a fairly
high oil price environment, indicating that the state had more
money at that point in time. She reiterated that in FY 21,
Amendment 1 would yield a dividend of $763, which is still
modest and much lower than the historic average of the dividend
at approximately $1,100.
REPRESENTATIVE JOSEPHSON indicated that he liked the spirit of
generosity in which the amendment was proposed. However, he
pointed out that in a world without COVID and AARPA funds, the
proposal would cross into deficit spending without new revenue,
which is concerning.
CHAIR SPOHNHOLZ opined that Representative Josephson's statement
would be true if the dividend were the only solution to the
fiscal problem; however, she expressed her opposition to a
"permanent fund only solution," adding that it would be "the
most regressive thing that you could do." Further, she believed
that for 95 percent of Alaskans, a "PFD only solution" would be
worse than an income tax, as proposed by Representative Wool.
She stated her belief that HB 37 is a practical measure, which
would leverage the funding sustainability of the permanent fund
and require Alaskans to chip in through an updated PFD formula
while balancing the regressivity with an income tax. She
reiterated her objection to the premise that the dividend is the
only considerable solution to address Alaska's fiscal situation.
She pointed out that if Amendment 1 to HB 202 were to pass,
there are other bills that would complement the proposed
legislation, such as income and oil tax revenue bills that could
help while still keeping Alaska competitive and balance the
budget while providing for a more reasonable dividend than what
is currently proposed in the original draft of HB 202.
1:19:10 PM
REPRESENTATIVE SCHRAGE requested that the bill sponsor speak to
Amendment 1.
1:19:35 PM
REPRESENTATIVE KELLY MERRICK, Alaska State Legislature, prime
sponsor of HB 202, stated that the original intent of the
legislation was to avoid overdrawing the POMV. She deferred to
her staff, Ms. Teal, to explain the implications of Amendment 1.
1:20:09 PM
TALLY TEAL, Staff, Representative Kelly Merrick, Alaska State
Legislature, on behalf of Representative Merrick, prime sponsor
of HB 202, said based on cursory modeling from the Legislative
Finance Division, the budget reserves would increase before
leveling off and the dividend amount would be slightly under
$800. Most concerning, she said, is the $39 million overdraw
from the earnings reserve account (ERA) in FY 23. She noted
that modeling showed FY 23 as the only year in which the ERA
would be overdrawn.
1:20:56 PM
CHAIR SPOHNHOLZ stated that she wouldn't support an ERA
overdraw, adding that other revenue measures could complement
this legislation.
1:21:05 PM
REPRESENTATIVE EASTMAN observed that Amendment 1 appeared to be
talking about a cap. He asked whether the dividend was intended
to be capped at "whatever amount that 50 percent of those
categories of money is" and the legislature would not be able to
appropriate more money to a dividend in a separate
appropriation.
CHAIR SPOHNHOLZ shared her belief that Representative Eastman
may be speaking to the underlying bill, as Amendment 1 simply
instructs the deletion of "30" and the insertion of "50" on page
5, line 16.
REPRESENTATIVE EASTMAN asked whether "50" represents a cap and
whether the intent was to increase the cap to 50 percent.
CHAIR SPOHNHOLZ remarked. "I believe, Representative Eastman,
that you understand that all bills and legislation are subject
to appropriation by the legislature."
REPRESENTATIVE EASTMAN said he is confused about what Amendment
1 is attempting to accomplish. He asked again whether it
pertains to a cap or not.
CHAIR SPOHNHOLZ responded, "We are talking about increasing the
amount of funds that are available to the dividend, as proposed
by HB 202."
1:22:29 PM
REPRESENTATIVE WOOL conveyed that he shares some of the concerns
that Representative Josephson expressed. He explained that he
appreciated that the bill, in its original form, would not
produce any overdraws. Further, he characterized 30 percent of
royalties as sustainable and highlighted the surplus, which was
forecasted in the fiscal modeling. He opined that increasing 30
to 50 would push up against the wall of that surplus and asked
whether the price of oil and the budget would have to stay in
narrow parameters to maintain sustainability. He emphasized
that he was not opposed to a dividend of $700; however, he
wanted to make sure that it would be affordable.
CHAIR SPOHNHOLZ deferred the question to Conor Bell.
1:24:22 PM
CONOR BELL, Fiscal Analyst, Legislative Finance Division,
explained that the division's modeling assumes that any deficits
are filled with the constitutional budget reserve (CBR) until
the CBR reaches a minimal balance of $500 million, which is the
recommended minimum balance for short-term cash flow purposes.
He confirmed that based on the division's modeling, there would
be an unplanned ERA draw of $9 million [if Amendment 1 were to
pass]. He continued to note that there are alternative options,
such as drawing the CBR below $500 million. Alternatively,
different oil prices and revenue assumptions could produce
different outcomes.
1:25:23 PM
REPRESENTATIVE WOOL sought to confirm that above 30 percent, a
CBR draw may be assumed, as opposed to a draw from the ERA. He
concluded that to pay out a 50 percent royalty in FY 22, the CBR
would have to be drawn down to $500 million. He asked whether
that is correct.
MR. BELL clarified that based on the Legislative Finance
Division's modeling, there would be a $355 million deficit,
which would be filled from the CBR, resulting in an ending
balance of $544 million in the CBR. Additionally, in FY 23, a
small ERA draw would be required, as the $97 million deficit
would bring the CBR down to its minimum recommended balance of
$500 million.
1:26:27 PM
CHAIR SPOHNHOLZ acknowledged that [Amendment 1] would reduce the
available revenue to pay for government and dividends; however,
she strongly believed that a PFD of $442 would be too low. She
characterized a dividend of that size as "bad policy" and
"politically untenable," as the public would be angry. She
opined that [HB 202] could be one piece of an overall fiscal
plan. She added that she would be uncomfortable with a
"permanent fund-only solution." She explained that she proposed
Amendment 1 in an attempt to stay within constitutional
limitations while creating a modest change to the dividend,
which would be part of a broader discussion.
1:27:43 PM
REPRESENTATIVE STORY sought to confirm that that there would be
a $39 million overdraw of the ERA [if Amendment 1 were to pass].
She asked whether there would be [additional overdraws] in the
following years.
MS. TEAL responded that based on the modeling, that was the only
year in which a deficit would need to be filled through some
measure. She added that the proposal appeared to be sustainable
in the outyears.
REPRESENTATIVE STORY asked, "How many years did you roll out?"
MS. TEAL shared her understanding that the Legislative Finance
Division's fiscal model forecasts through FY 30 or FY 31.
1:28:47 PM
REPRESENTATIVE SCHRAGE pointed out that there would still be 15
to 20 percent of the natural resource income going to the
general fund. Provided Amendment 1 requires an additional
revenue measure, he questioned why not have all the remaining
natural resource income go to the PFD and backfill with a
revenue measure? Further, he noted that [Amendment 1] would
leave no funds available for a capital budget. He asked the
sponsor of the proposed amendment to respond.
CHAIR SPOHNHOLZ reiterated that the proposed legislation would
seek to balance the budget using only the dividend. She
acknowledged that a method for funding the capital budget had
not been considered unless additional measures were enacted.
She understood that this proposal is one piece of a broader
conversation, such as geobonding or federal funding, and could
not stand alone if the budget were to function. She relayed
that she and Representative Merrick are in strong alignment on
the notion of a robust capital budget, and she explained that
she thought increasing [the cap] from 30 to 50 was a compromise.
Nonetheless, she said she continues to be uncomfortable with a
dividend that is less than $1,000.
1:30:53 PM
REPRESENTATIVE MERRICK, in response to Representative Schrage's
comments about constitutional requirements going to the
permanent fund and the rest going to dividends, noted that the
scenario in question was modeled by the Legislative Finance
Division. She deferred to Ms. Teal.
MS. TEAL deferred to Mr. Bell.
1:31:21 PM
MR. BELL responded that if only 25 percent of royalties were to
go the permanent fund's principal account, there would no longer
be an ERA overdraw. However, there would still be deficits in
FY 22 and FY 23, followed by a surplus in FY 24 based on the
division's modeling.
1:32:06 PM
REPRESENTATIVE JOSEPHSON asked Mr. Bell whether the small
deficits in FY 22 and FY 23 are associated with the bill in its
current form or Amendment 1.
MR. BELL answered Amendment 1.
REPRESENTATIVE JOSEPHSON sought to confirm that the $37 million
in FY 23 was still being discussed.
MR. BELL clarified that if the legislature were to forego paying
the additional statutory royalties to the principal and instead
pay only the constitutionally required 25 percent to the
principal and 50 percent of total royalties to the PFD, then
there would no longer be an ERA overdraw.
1:33:16 PM
REPRESENTATIVE MERRICK shared her understanding of
Representative Schrage's questions as "if [the legislature] paid
the constitutional requirements to the permanent fund, then paid
100 percent of the other royalties." She asked Mr. Bell to
comment.
1:33:42 PM
MR. BELL responded that there would be larger deficits under the
proposed scenario. He explained that if the constitutionally
required 25 percent were paid to the principal and the entire
remainder of royalties was allocated to the dividend, the FY 22
PFD would amount to $1,700 and there would be a deficit of $900
million.
1:34:18 PM
REPRESENTATIVE WOOL asked Mr. Bell what budget numbers were used
for his calculations.
MR. BELL said [the division] had been working off of the
governor's amended budget and the capital budget as outlined in
the Office of Management & Budget's (OMB's) 10-year plan. He
highlighted another assumption pertaining to permanent fund
investment returns below the current fiscal year to date.
1:35:13 PM
CHAIR SPOHNHOLZ [received confirmation that Representative Story
had removed her objection to Amendment 1.]
REPRESENTATIVE STORY recalled someone else had also objected.
[It had been Representative Josephson.]
CHAIR SPOHNHOLZ asked if there was any further objection.
1:35:19 PM
REPRESENTATIVE EASTMAN objected. He said he believed that if
Amendment 1 were to pass and legislators were to exceed the 50
percent threshold through multiple appropriation vehicles, a
lawsuit would likely be engendered.
CHAIR SPOHNHOLZ remarked, "I presume you mean the underlying
bill could potentially create that same situation."
REPRESENTATIVE EASTMAN replied, "Yeah, I'm trying to figure out
how it doesn't, but I'm not seeing that."
CHAIR SPOHNHOLZ clarified for the public that the amendment
would only change "30" to "50."
1:36:30 PM
A roll call vote was taken. Representatives Josephson, Story,
and Spohnholz voted in favor of the adoption of Amendment 1.
Representatives Wool, Schrage, and Eastman voted against it.
Therefore, Amendment 1 failed by a vote of 3-3.
1:37:32 PM
CHAIR SPOHNHOLZ invited further discussion on the underlying
bill, HB 202.
1:37:41 PM
REPRESENTATIVE JOSEPHSON shared one reason that he likes HB 202
is that it wouldn't suffocate government. He recalled that oil
prices crashed around fall 2014; therefore, the legislature had
been aware of this problem for seven years while generally
lacking the courage to do something about it aside from the
POMV. He opined that the proposed legislation is fiscally
responsible because it wouldn't interfere with publicly
requested services. He stated his intention to support moving
the bill from committee if an objection were made.
1:39:03 PM
REPRESENTATIVE SCHRAGE expressed his general agreement with most
of the statements from the previous speaker. He believed that
HB 202 would provide for services that the state depends on,
such as roads and education, regardless of one's income bracket.
Further, he appreciated that the proposed legislation would tie
dividends to natural resource production. However, he expressed
his concern that out-of-state workers come to work in Alaska
while contributing nothing to the state, which he characterized
as a "huge issue" that the legislature will have to reconcile at
some point. Nonetheless, he conveyed his support for the bill.
1:40:21 PM
REPRESENTATIVE WOOL stated his support for HB 202 and commended
its sustainability. He indicated that he was comfortable with
30 percent going towards the dividend, which could always be
added to in the future.
1:41:19 PM
REPRESENTATIVE STORY said she would have preferred the bill if
Amendment 1 had passed; nonetheless, she expressed her intent to
support it. She reiterated that the legislation would not
eliminate the potential of increasing the dividend through other
mechanisms.
1:41:56 PM
REPRESENTATIVE EASTMAN stated that normally, he doesn't favor
holding bills longer than necessary, adding that he would like
to vote the bill out of committee so that he could be a "no"
vote and recommend that others do the same. However, he posited
that because the proposed legislation is not trivial, as it
recalculates the dividend and would reduce the current dividend
by 87 percent, the committee should acquire more feedback from
the public before advancing it to the next committee of
referral. He said he would be a "no" vote because public
testimony had been limited, characterizing it as "bad process."
1:42:51 PM
CHAIR SPOHNHOLZ said she would allow the bill to move from
committee; however, she emphasized that she does not support a
dividend of $450. She shared a personal anecdote. She advised
that a dividend of that size would be bad for 95 percent of
Alaskans and only sufficient for those who earn upwards of
$228,000 per year, which is only 5 percent of Alaskans.
1:45:23 PM
REPRESENTATIVE WOOL moved to report HB 202 out of committee with
individual recommendations.
1:45:35 PM
REPRESENTATIVE EASTMAN objected.
1:45:37 PM
A roll call vote was taken. Representatives Josephson, Schrage,
Wool, and Story voted in favor of reporting HB 202 from
committee. Representatives Eastman and Spohnholz voted against
it. Therefore, HB 202 was reported out of the House Special
Committee on Ways and Means by a vote of 4-2.
[Although not stated on the record, the vote was voided due to a
failure to mention the fiscal note.]
1:46:29 PM
The committee took a brief at-ease.
1:46:43 PM
REPRESENTATIVE WOOL moved to report HB 202 out of committee with
individual recommendations and the accompanying fiscal notes.
1:46:56 PM
REPRESENTATIVE EASTMAN maintained his objection.
1:46:58 PM
A roll call vote was taken. Representatives Josephson, Schrage,
Wool, and Story voted in favor of reporting HB 202 from
committee. Representatives Eastman and Spohnholz voted against
it. Therefore, HB 202 was reported out of the House Special
Committee on Ways and Means by a vote of 4-2.
1:47:58 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
1:48 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 202 Testimony - Support as of 5.15.21.pdf |
HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Testimony - Opposition as of 5.15.21.pdf |
HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Amendment #1.pdf |
HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 37 Testimony - AML Resolution 2019-06.pdf |
HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 202 Sponsor Statement 5.5.2021.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Sectional Analysis 5.5.2021.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Flowchart.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Fiscal Note OMB-PFD 5.9.21.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Fiscal Model Output REVISED.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 202 Testimony - Opposition as of 5.11.21.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM |
HB 202 |
| HB 37 Testimony - Opposition as of 5.15.21.pdf |
HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 Sponsor Statement.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 Sectional Analysis.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 ITEP Flat Tax Report 12.2020.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 Fiscal Note DOR-TAX - Updated 5.11.21.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 Fiscal Note DOA-OAH 5.7.21.pdf |
HW&M 5/11/2021 11:30:00 AM HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 Presentation 5.13.21.pdf |
HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |
| HB 37 Fiscal Model.pdf |
HW&M 5/13/2021 11:30:00 AM HW&M 5/15/2021 11:30:00 AM HW&M 5/18/2021 11:30:00 AM |
HB 37 |