Legislature(2003 - 2004)
04/03/2003 03:35 PM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
April 3, 2003
3:35 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator John Cowdery, Vice Chair
Senator Fred Dyson
Senator Gretchen Guess
MEMBERS ABSENT
Senator Lyman Hoffman
COMMITTEE CALENDAR
SENATE BILL NO. 117
"An Act eliminating the longevity bonus program and making
related conforming changes; and providing for an effective
date."
MOVED SB 117 OUT OF COMMITTEE
SENATE BILL NO. 137
"An Act imposing a tax on employment; and providing for an
effective date."
MOVED CS SB 137 (STA) OUT OF COMMITTEE
SENATE BILL NO. 29
"An Act establishing a sunset date for each department of state
government; relating to the review of the functions of state
agencies, certain instrumentalities of the state, and other
persons and offices."
SCHEDULED BUT NOT HEARD
SENATE BILL NO. 148
"An Act relating to allowable absences for certain members of
the armed forces and their spouses and dependents for purposes
of eligibility for permanent fund dividends; and providing for
an effective date."
BILL POSTPONED TO 4/8/03
PREVIOUS ACTION
SB 117 - See State Affairs minutes dated 3/27/03
SB 137 - No previous action to record.
WITNESS REGISTER
Lorilyn Swanson
415 Willoughby Avenue
Juneau, AK 99801
POSITION STATEMENT: Opposed to SB 117
Doris Peck
3250 Tongass Blvd,
Juneau, AK 99801
POSITION STATEMENT: Opposed to SB 117
Doris Robbins
P.O. Box 21011
Juneau, AK 99802
POSITION STATEMENT: Opposed to SB 117
Maxine Derr
701 Lori Dr.
Anchorage, AK 99504
POSITION STATEMENT: Opposed to SB 117
Patricia Barber
2060 Belmont Dr.
Anchorage, AK 99517
POSITION STATEMENT: Opposed to SB 117
J.R. Hank Langman
3921 Astro Circle
Anchorage, AK 99517
POSITION STATEMENT: Opposed to SB 117
John Webster
660 Coville Lane
Palmer, AK 99645
POSITION STATEMENT: Opposed to SB 117
Ernie Line
2645 Whispering Woods
Wasilla, AK 99645
POSITION STATEMENT: Opposed to SB 117
Louise Harris
P.O. Box 874287
Wasilla, AK 99645
POSITION STATEMENT: Opposed to SB 117
Nancy Mendenhall
1907 Yankovich
Fairbanks, AK 99709
John Boulette
P.O. Box 56896
North Pole, AK 99705
POSITION STATEMENT: Opposed to SB 117
Niilo Koponen
710 Chena Ridge Road
Fairbanks, AK 99709
POSITION STATEMENT: Opposed to SB 117
Geneneiva Pearson
P.O. Box 669
Kodiak, AK 99615
POSITION STATEMENT: Opposed to SB 117
Evan Cundiff
41115 Sterling Hwy
Homer, AK 99603
POSITION STATEMENT: Opposed to SB 117
Earl Glanville
38290 Sterling Hwy
Anchor Point, AK 99556
POSITION STATEMENT: Opposed to SB 117
Vi Jerrel
P.O. Box 938
Homer, AK 99603
POSITION STATEMENT: Opposed to SB 117
Ed Zastrow
3530 Denali Ave
Ketchikan, AK 99901
POSITION STATEMENT: Opposed to SB 117
Guy Townsend
830 Peterson Street
Ketchikan, AK 99901
POSITION STATEMENT: Opposed to SB 117
Lenore Jones
5125 Silver Salmon Drive
Kenai, AK 99611
POSITION STATEMENT: Opposed to SB 117
Vivian Swanson
P.O. Box 1483 Soldotna, AK 99669
POSITION STATEMENT: Opposed to SB 117
Monty Richardson
Seward, AK 99664
POSITION STATEMENT: Opposed to SB 117
Robert Montegue
Anchorage Pioneer Home
POSITION STATEMENT: Opposed to SB 117
Tom Davis
P.O. Box 877730
Wasilla, AK 99687
POSITION STATEMENT: Opposed to SB 117
Robert Thibodeau
1616 Glacier Ave
Juneau, AK 99801
POSITION STATEMENT: Opposed to SB 117
Larry Persily
Deputy Commissioner
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Testified on SB 137
Jim Sykes
P.O. Box 696
Palmer, AK 99645
POSITION STATEMENT: Testified on SB 137
ACTION NARRATIVE
TAPE 03-14, SIDE A
CHAIR GARY called the Senate State Affairs Standing Committee
meeting to order at 3:35 p.m. Present were Senators Dyson, Guess
and Chair Gary Stevens. Senator Cowdery arrived momentarily.
The first order of business was SB 117.
SB 117-ELIMINATING LONGEVITY BONUS PROGRAM
CHAIR GARY STEVENS announced this was the second hearing for SB
117 and he would take testimony for one hour. He asked
individuals who spoke during the previous hearing to allow
others the opportunity to express their views. He said he would
rotate testimony among the different sites.
LORILYN SWANSON, the manager of Fireweed Place in Juneau,
opposed SB 117 and read the following into the record:
Last week I presented written testimony to you but had
to leave prior to testifying.
My one suggestion to you in that testimony was that
you consider contacting the Longevity Office for
addresses of constituents in your district so that you
could contact them first hand and get an overall sense
of how important this monthly income is to them. This
went along with the fact that the Governor's office is
stating and still is that they are hearing more on the
pull-tab legislation and very little from seniors on
the longevity bonus issue. I hope that you have been
able to contact some of your constituents prior to
making a decision to pass this bill out of your
committee today.
This past week seniors receiving the longevity bonus
received a letter from the Governor on the safety net
programs. This letter offended many. They felt that
they were being told to apply for welfare. Much has
been said about the so-called safety nets that the
state has in place for seniors. Much has not been said
about the fact that any senior cannot make over $914
up to $1,025.01 and special income groups $1,656 or
they will not qualify for these safety nets. These
safety nets are not going to help most seniors now
receiving the longevity bonus as their income will not
fall to this poverty level but it will be close.
The permanent fund is also at question this year. Yes
this would affect all Alaskans but especially a major
loss to low income seniors should they also lose the
longevity bonus.
This program was an incentive to seniors in order to
allow them to stay in Alaska. We need the seniors in
Alaska. Listen to your constituents. Listen to the
seniors. There is sense of panic from those who
currently show the bonus as 20 to 30 percent of their
income. You have and will hear more testimony on how
the bonus is used for necessities such as rent, fuel,
electricity, and prescriptions. It is true.
Sooner or later someone is going to have to step up to
the plate and show seniors that he or she is willing
to make a stand for them, let it be you, do not pass
SB 117 out of your committee today.
SENATOR JOHN COWDERY questioned whether she would favor placing
a question on the Permanent Fund Dividend application asking the
applicant to contribute part of his or her dividend to seniors
to continue the longevity bonus program.
MS. SWANSON thought that would be a good idea. She didn't think
cutting the program completely on July 1 was fair.
DORIS PECK from Juneau spoke for those who are 75 and older to
oppose SB 117. Many of these people are struggling with their
own budgets. Few are able to move into the work force and none
that she interviewed want to step into the welfare safety net.
She said, "Please don't jerk the rug from beneath the elders.
They live on budgets too."
DORIS ROBBINS from Juneau represented the Retired Public
Employees of Alaska. She does not receive the bonus, but
believes the state should keep its promise to seniors. The
program is phasing itself out with the youngest recipient at 72
years old. Seniors are important to Alaska's economy because
they keep most of their money circulating within the state. They
are carriers of our Alaska heritage and serve as good role
models. She said she would be willing to donate from her
permanent fund to keep the bonus program alive.
MAXINE DERR from Anchorage opposed SB 117. She is thankful for
the program because she has no pension even though she worked
for many years. She favored a means based test.
PATRICIA BARBER has lived in Alaska for more than 40 years and
her husband is a third generation Alaskan. She wanted to rebut
the comments made by the Administration stating that the program
is inequitable. She doesn't receive the bonus but that is no
reason to cut it for others; life isn't always equitable. The
Administration's logic is personally offensive and others in her
same situation have similar feelings.
"Our seniors are visible and in some communities, vital... It's
a win-win situation. The seniors who now receive the bonus
should continue to do so. Period, end of subject."
J.R. HANK LANGMAN has lived in Alaska since 1949 and his wife
has been an Alaskan since 1944. He asked, "How can you believe
that you can remove from the economy of Alaska, $47 million and
not hurt the economy?" The safety net programs couldn't possibly
cushion the small communities across the state against this loss
of revenue.
JOHN WEBSTER from Palmer is a 40 year resident of Alaska. He
spent His career working for the U.S. Postal Service in
Anchorage. He is distraught at the termination of the longevity
bonus because it reduces his income 9 percent. He pointed out
longevity dollars turn over many times creating jobs for others.
He closed saying," Take my longevity and make an instant
Democrat out of me."
ERNIE LINE from Wasilla opposed SB 117. He has been in Alaska
since 1945 when Forth Avenue was the only paved road in town. He
has recently suffered a number of illnesses and physical
setbacks and the longevity bonus helps make ends meet.
He questioned why there is so much antipathy to an income tax.
He said, "Don't pick on the seniors, we're not really as bad as
some people make us out to be."
LOUISE HARRIS, President of Palmer Senior Center, is 89 years
old. The bonus checks are spent in Alaska and provide economic
stimulus to communities. In addition, the program probably costs
the state less than public assistance and certainly it has a
different meaning for older Alaskans. People in their 70s, 80s
and 90s shouldn't be expected to reenter the workforce to
replace the bonus checks.
NANCY MENDENHALL from Fairbanks opposed SB 117. The program has
been successful in encouraging retirees to remain in Alaska.
Seniors invest considerable time, money and resources to make
their communities better places to live. She asked whether data
was available to show the contributions made by seniors and
whether they wouldn't more than offset the longevity bonus
program.
JOHN BOULETTE from North Pole opposed SB 117. He has lived in
Alaska for 39 year, is 72 years old and gets the smallest bonus.
It helps pay for his utilities and prescription drugs. He has
spent the last 18 years volunteering in his community and he
remembers when there were few volunteers because no one could
afford to live in Alaska when they weren't working.
NIILO KOPONEN opposed SB 117. He is a former member of the
Legislature and has lived in Alaska since 1952. He remembers
when the program was instituted during the Hammond
Administration. The phase-out was written as a contractual
agreement with the people who were then receiving the bonus.
Eliminating the program would break this contract, it would
adversely impact small communities and it would impact families
of seniors.
GENENEIVA DEE DEE PEARSON from Kodiak opposed SB 117. She does
not receive the bonus but still doesn't want to see the program
cut. She wondered whether the Governor and legislators weren't
counting on seniors being around for the next election. An
income tax would be fair.
EVAN CUNDIFF opposed SB117. He and his wife have lived in Homer
for 45 years and they plan to die in Alaska. He believes
eliminating the longevity bonus program is a travesty. The
letter from the Governor stated that no one should be paid the
bonus since more Alaskans over 65 don't receive the bonus than
do elicited the suggestion to take everyone off the state
payroll and start over again. This would include all state
employees as well as all state legislators. He closed saying,
"If we must conserve, let's put a little compassion in our
conservatism."
EARL GLANVILLE from Anchor Point opposed SB 117. He moved to
Alaska in 1943. Because there has been such a rapid growth in
state government, he asked that the Governor eliminate all state
employees that do nothing more than hold down a chair and
shuffle papers.
VI JERREL from Homer opposed SB 117. Although she doesn't
receive a bonus check, she feels it is necessary to protect
those seniors who do get a check. There has been lots of good
testimony given in defense of the program. There is a public
perception that the salaries for the Governor and many of his
top administrators could be reduced and added to the bonus
program. "If Governor Murkowski had campaigned on his request to
eliminate the longevity bonus program, Fran Ulmer would be
governor today."
ED ZASTROW from Ketchikan has lived in Alaska for 45 years. He
spoke on behalf of 30 seniors from the Ketchikan Senior Center
whose signatures were faxed to the Chair as an expression of
opposition to SB 117.
He is also the president of the local AARP chapter and all those
members are opposed to the bill. Representative Williams and
Senator Taylor spent over two hours in a pre legislative hearing
and are aware of the opposition.
GUY TOWNSEND from Ketchikan opposed SB 117. He arrived in
Ketchikan in 1936 He wondered if this is the start of longevity
recipients leaving Alaska.
LENORE JONES from Kenai opposed SB 117. When she read the
Governor's letter that stated the bonus program was inequitable
she was amazed that the Governor thought the Legislature could
pass laws to make everyone equal. Seniors currently receiving
the bonus have already paid their dues to the state.
VIVIAN SWANSON from Kenai opposed SB 117. She is the president
of the local AARP chapter and they believe those receiving the
bonus depend on it as part of their monthly budget.
MONTY RICHARDSON from Seward opposed SB 117. He and his wife
receive the bonus and its elimination combined with new user
fees will considerably impact their economic status. Although
they won't be lined up at the welfare office, there are many
Alaskan seniors who are barely scrimping by on incomes close to
the poverty level. The children of these low-income seniors will
suffer and do without if the bonus program is eliminated. He
agreed with Mike Doogan; those not receiving the bonus have but
one leg while those currently receiving it have two legs. The
Governor's proposal is to see that everyone has just one leg.
ROBERT MONTEGUE spoke on behalf of the residents of the
Anchorage Pioneer home to oppose SB 117. Many of the residents
have sent public opinion messages to legislators and a letter to
the Governor as well.
TOM DAVIS, the director of the Chugiak Senior Center, testified
for the seniors at the center in opposition to SB 117. They
asked that the bill be thrown out as frivolous legislation. Many
of the Governor's safety net programs can't really be supported
as a safety net and the Governor's proposed budget recognizes
that.
SIDE B
4:25 pm
ROBERT THIBODEAU from Juneau spoke as a member of the Juneau
Commission on Aging in opposition to SB 117. He read the
conclusions the McDowell Group reached regarding the economic
impact of seniors.
Alaska seniors are one of the largest single sources
of money flowing into the state. Senior retirement
income and medical payments have a significant
beneficial effect on the state economy. At the same
time, more than half of Alaska seniors live
precariously on the edge of solvency. For some,
financial considerations may determine whether they
continue to reside in the state. For many others, a
combination of financial benefits available from state
and municipal governments is critical to their well-
being.
He said his parents came here in 1922 and they left in 1953
because seniors did not retire in Alaska. In 1988 just two
percent of the senior population was in Alaska.
Seniors contribute a great deal to Alaska and if the state is
interested in supporting the tourist industry and the fishing
industry it should also support the senior citizen industry.
CHAIR GARY STEVENS said he would read the names of everyone that
signed up to testify but didn't get the chance. He encouraged
anyone who wanted to object to anything that was said previously
to speak up. He read the following names:
JUNEAU: Barbara Deboff, Wallace Deboff, Ralph C. Hunt, Betty
Hunt, Maxine McCoy, George Rogers, Maurice Long, Jim Carroll,
Jean Clayton, Norma Sherwin, Alto Van Sickle, Ernestine Denny,
Ethel Ryman, Julie Morris, Rosalee Walker, Judy Wygant, Mike
Race
ANCHORAGE: John Stripe, Ron Hammett, Jesse Wooten, Ron Cowan,
Madge Anderson, Ruth Talley, David Ring, Ervin McKenzie, John
Anderson, Gordon Geiss, Ed Barber, Nella Wooten and six
observers
MAT SU: Jim Watenpaugh, Jim Fleming, Bill Church, Patricia
Fleming, Jim Sykes,
FAIRBANKS: Ed Shellinger, Glenn Hackney, Betty Hufman, Joe
Strunka, Glen Franklin, Charlotte Davis, George Taylor, Walter
Shuros, Janette Hanneman and seven observers
KODIAK: Marjorie Thera
KETCHIKAN: Don MacMillan, Ernest Smeltzer, Mabel Smeltzer,
Shirley Carlin
KENAI: Vivian Jolin, W.E. Jolin
SEWARD: Florita Richardson, Margaret Anderson
There was no one that disagreed with previous testimony on SB
117.
CHAIR GARY STEVENS stated the testimony in opposition to SB 117
was enormous. He thanked everyone for their testimony and he
appreciated the stories and pioneer experiences in Alaska. He
expressed appreciation for the service the seniors have given
and continue to give to the state and nation.
He pointed out this is the Governor's bill and the committee was
asked by both the Administration and the majority leadership to
move the bill to the Finance Committee where it will be
discussed with other fiscal items.
SENATOR COWDERY said he didn't believe there would be a do pass
in the room but he was going to make a motion to move SB 117
from committee with individual recommendations.
CHAIR GARY STEVENS asked whether there were any objections.
SENATOR GUESS objected and asked to speak to her objection. She
said:
I've actually been giving this a tremendous amount of
thought and I appreciate everyone's testimony and
thank you for recognizing what people put in.
The other day I told someone that I've never gotten
more e-mail correspondence and testimony on an issue.
I've only been here three years, but dealt with most
of the controversial issues in those three years.
Someone said, "Well they must be really organized."
and I said no, they're scared. I really do think
that's the fact. I don't honestly think the Governor
has the support and Senator Cowdery pointed out
there's not going to be a do pass on this bill. No one
more than me knows the fiscal problems of this state.
I think this is a shortsighted policy, honestly. I
think it does break a promise and I honestly think
it's just plain mean, but I don't want to impugn
everything. I don't think it was meant to be that way.
I understand the pressure to support a Governor
especially for the majority but I truly believe if
there's a time to stop a bill it's this time. There
areother bills that are more financial bills, but this
one's keeping people up at night and I think we just
need to say, "You know, we respect that you put it
forward, but it needs to stop here." I disagree with
moving it out. I don't think it's the right thing for
the committee.
SENATOR COWDERY informed members he and his wife receive the
bonus.
SENATOR GUESS informed members her mother-in-law receives the
bonus.
CHAIR GARY STEVENS informed members his mother-in-law receives
the bonus.
CHAIR GARY STEVENS called for a roll call vote on the motion to
move SB 117 to the Finance Committee. Senators Cowdery, Dyson
and Chair Gary Stevens voted yea and Senator Guess voted nay.
The motion passed and SB 117 moved from committee.
CHAIR GARY STEVENS called an at-ease at 4:40 pm and reconvened
the hearing at 4:45 pm.
TAPE 03-15
SIDE A
4:45 pm
SB 137-EMPLOYMENT TAX FOR EDUCATION
CHAIR GARY STEVENS asked for a motion to adopt the committee
substitute (CS).
SENATOR JOHN COWDERY made a motion to adopt the CS \S Kurtz for
SB 137 for discussion purposes. There being no objection, it was
so ordered.
CHAIR GARY STEVENS explained the bill would impose a $100 a year
tax on each employed individual age 19 or older. The money would
be deducted in $50 increments from an employees first two
paychecks after July 1 of each year and after the first $1,000
in wages was earned. The Department of Revenue estimates this
bill would generate $39 million this year and in every
subsequent year. They project the need for ten full time
permanent workers and ten temporary clerks during the tax season
for operation. The estimated operating cost is $1.2 million in
year one and $820 thousand in subsequent years.
It is intended to supplement educational funding and reduce the
draw from the Constitutional Budget Reserve. It would apply to
workers from out of state and would be part of a long-range
fiscal plan.
SENATOR COWDERY asked if someone that started work in December
and earned $800 would be subject to the tax.
CHAIR GARY STEVENS explained the accounting would run through
the fiscal year, from July 1 through June 30 and if the worker
did not meet the $1,000 threshold, they wouldn't be subject to
the tax.
SENATOR COWDERY asked who would collect the tax.
CHAIR GARY STEVENS informed him the employer would collect the
tax and remit it to the Department of Revenue. He then asked Mr.
Persily to come forward to speak to the issue.
LARRY PERSILY, Deputy Commissioner of the Department of Revenue,
explained it would be set up in much the same way as an income
tax even though this was not an income tax. The employer would
withhold the money and send in monthly reports to the Department
of Revenue. For someone who works in two different jobs and had
the money withheld both times, the department would process a
refund for that person.
CHAIR GARY STEVENS asked if there would be a form available for
the employee to show subsequent employers that they had already
paid the tax.
DEPUTY COMMISSIONER PERSILY elaborated saying either the pay
stub would show the money had been paid or there would be a form
that the employer would fill out for subsequent employers.
People holding down two jobs might be charged more than once and
require a refund. The department would expect to process several
thousand refunds, but they would do everything possible through
employer education to keep the number to a minimum because there
is a cost to a refund.
CHAIR GARY STEVENS asked if employers would be able to check on-
line to determine that an employee had already paid.
DEPUTY COMMISSIONER PERSILY advised the department would make
the process as automated as possible. Prior to 1980, the $10 tax
was added to the state income tax due which made collection very
easy. Without an income tax, the department would have to set up
a procedure.
SENATOR COWDERY asked if the employee couldn't carry a card
showing they had paid just like those with insured cars.
DEPUTY COMMISSIONER PERSILY said they would develop a similar
procedure that would save the state the expense of a refund and
employers the expense of withholding when they didn't need to
withhold.
SENATOR GRETCHEN GUESS asked if there was any estimate for the
cost to businesses.
DEPUTY COMMISSIONER PERSILY said they did not have that
information. Businesses are already withholding for state
unemployment, federal taxes and FICA so it wouldn't be difficult
to add another line to their withholding, but there would be the
cost of one more form and one more government entity to send a
payment to.
He pointed out the original fiscal note addressed the
traditional January 1 to December 31 tax year and would take
effect in January 1, 2004. This would give the department six or
seven months to develop a tax program. Because the CS has a July
1, 2003 effective date, the department would need to amend the
fiscal note to reflect increased FY 03 expenses to have the
program in place June 30. He warned this is a tight time frame
and everyone needs to understand that all the pieces wouldn't be
ready on June 30. Increased outsourcing would be necessary to
fit the adjusted timeframe but the department would do its best
to get the program in place in 60 days if that is the
legislative intent so the revenue would be available in FY 04.
CHAIR GARY STEVENS asked Mr. Persily to confirm he would amend
the fiscal note before the bill was heard in the Finance
Committee.
DEPUTY COMMISSIONER PERSILY agreed to submit the revised fiscal
note to the Chair by the following day.
SENATOR GUESS asked if sole proprietors and partnerships were
included.
CHAIR GARY STEVENS replied they are responsible for paying as
well.
DEPUTY COMMISSIONER PERSILY said anyone receiving compensation
would have to pay. If not through wage withholding the
individual would have to issue the department a check for $100.
He added, the self-employed people would be the biggest
enforcement issue.
CHAIR GARY STEVENS followed up and asked if the self-employed
paid the $10 head tax the state collected in the 70s.
DEPUTY COMMISSIONER PERSILY replied they did pay. At that time
there was a state income tax so it was easy for the state to
collect when the return was filed. Anyone that receives
compensation in the state would be subject to the tax.
SENATOR GUESS asked the Chair whether this would include trust
fund income.
CHAIR GARY STEVENS replied the tax targets compensation for
personal services.
DEPUTY COMMISSIONER PERSILY agreed.
SENATOR GUESS said she asked the question because Mr. Persily
said this isn't an income tax. She added this seems to be worse
than an income tax since it's collected only if you work and
surmised that was why he made the comment.
DEPUTY COMMISSIONER PERSILY replied he made the comment because
the Administration doesn't favor an income tax.
SENATOR GUESS asked why the $1,000 figure was selected.
CHAIR GARY STEVENS said it was somewhat arbitrary, but they
didn't want someone to lose $100 from his or her first paycheck
if that's all they earned.
SENATOR GUESS advised she took issue with the education smoke
screen because this was about supplanting funds not additional
funds. The bill contains no language that these are additional
funds. This is a worker tax and not a tax for education, which
is confusing to people because they are led to believe there
would be more money for schools. However, because of the way the
constitution is written, this money can't be used directly that
way and it's unfortunate that perception is continued.
SENATOR COWDERY asked for further clarification of what revenue
would be taxed.
DEPUTY COMMISSIONER PERSILY replied he was speaking to work
draft Q that defines compensation as wages, salaries,
commissions, tips or remuneration paid for personal services.
Individuals living on a trust fund or retirement wouldn't pay
this tax.
SENATOR COWDERY added Social Security would be exempt as would
mortgage income.
DEPUTY COMMISSIONER PERSILY didn't believe those would apply
because they aren't compensation for payment for personal
services.
SENATOR COWDERY then asked how the department would enforce
payment. For instance, what would happen if an employee paid
twice and one of the employers withheld the money from the
state?
DEPUTY COMMISSIONER PERSILY assured him employees seem to track
their paychecks closely and the department would take action
against any employer that collected the money and didn't remit
it to the state.
SENATOR COWDERY commented he likes to hire youths for summer odd
jobs and he pays them in cash and wondered how those payments
would be handled.
DEPUTY COMMISSIONER PERSILY admitted those types of compensation
would probably slip through. The department wouldn't target
youths that wash cars, mow lawn and shovel snow because there
are larger issues to go after.
SENATOR COWDERY said he agreed but wanted that stated.
CHAIR GARY STEVENS stated for the record that the \S version was
being discussed.
SENATOR GUESS asked why 19 years of age was selected rather than
18.
DEPUTY COMMISSIONER PERSILY wasn't sure why that age was
selected since 18 is the age of emancipation. It was an
arbitrary decision.
JIM SYKES from Palmer advised he had version \H and realized
this wasn't the latest draft, but wanted to know how the
department would know that out of state workers hired by out of
state corporations that operate in Alaska would collect and
remit the tax. Although he doesn't agree with Senator Guess
regarding dedicated funds, he thought perhaps the bill should be
given a new title to call it a worker's tax. Second he wondered
whether this was contemplated as part of another tax package
because education and the elderly appear to be targeted. He
doesn't see any kind of legislation to get extra windfall
profits from the high price of oil. That would bring in much
more than SB 137 could in every year that the price of oil
exceeded $18 per barrel. He would like to see a package of taxes
so everyone, summer guest workers, residents and businesses that
operate in Alaska share the tax burden fairly.
CHAIR GARY STEVENS asked Mr. Persily to respond to the first
question.
DEPUTY COMMISSIONER PERSILY explained out of state corporations
already pay a corporate income tax so the state knows who they
are. Also they file quarterly returns with the Department of
Labor for unemployment insurance. The Department of Revenue
would run data checks with the Department of Labor and with
corporate taxes, but employer compliance is generally good on
this type of tax because it is so easy to catch companies that
are non-compliant and the penalties are steep.
CHAIR GARY STEVENS added this is not part of a package of taxes.
It is one tax requested by the Governor in his speech to the
Legislature where he asked for consideration of a sales tax or
this head tax for education.
There were no further questions and he asked for a motion.
SENATOR COWDERY made a motion to move CSSB 137 \S version from
committee with unanimous consent and attached fiscal note.
SENATOR GUESS objected.
Senators Dyson, Cowdery and Chair Stevens voted yea and Senator
Guess voted nay. The motion passed and CSSB 137 (STA) moved from
committee.
CHAIR GARY STEVENS adjourned the meeting at 5:00 pm.
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