00 HOUSE BILL NO. 433 01 "An Act establishing a tax credit for taxpayers engaged in a trade or business 02 who employ certain persons who are state residents; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. LEGISLATIVE FINDINGS. The legislature finds that 06 (1) it is in the best interest of the state to have a steady work force and to have 07 its residents gainfully employed; 08 (2) during 1995, private industry and state and local governments employed 09 more than 78,000 nonresidents; 10 (3) nonresidents made up 22.6 percent of all wage and salary workers in the 11 private sector and in state and local government in 1995; 12 (4) in 1995, nonresidents earned more than $923,000,000, a nearly $9,000,000 13 increase over 1994; 14 (5) more than 27,000 nonresidents were newly hired in the third quarter of 01 1995 alone; 02 (6) nonresident hire is not a new phenomenon in Alaska; since inception of 03 territorial status, seasonal employment, particularly in fishing and forestry, has been common; 04 there is a continual flow of population between Alaska and other states, but, with regard to 05 transient employment, the traffic is virtually "one way"; a small percentage of Alaska residents 06 earn wages in other states, while one in eight dollars of wages paid in Alaska are paid to 07 nonresidents; 08 (7) many residents of Alaska could have filled the positions that went to 09 nonresidents; maximizing the employment of Alaskans not only ensures that maximum benefit 10 accrues to the state from economic development activity, but also reduces demands upon state 11 "safety net" programs, such as unemployment insurance and public assistance; 12 (8) Alaska's jobless rate was 9.4 percent in January 1997; the unemployment 13 figures ranged from a high of 20.4 percent in the Yukon-Kuskokwim census area to 4.6 14 percent in the North Slope area; even in areas of Alaska with large amounts of commercial 15 activity, the unemployment figures varied; Anchorage, the state's largest city, had a January 16 unemployment rate of 6.1 percent, Fairbanks had a rate of 9.4 percent, while Juneau's rate was 17 8.1 percent; the Matanuska-Susitna Borough's unemployment rate for that same time period 18 was 12.8 percent and the Kenai Peninsula Borough's rate was 19 percent; the average for the 19 nation at the same time was 5.9 percent; 20 (9) the seasonally adjusted unemployment rate in January 1997 for Alaska was 21 7.5 percent, while it was 5.4 percent for the United States; 22 (10) more than 29,000 Alaskans were unemployed in January 1997, an increase 23 of 3,000 from December 1996. 24 * Sec. 2. AS 43.20 is amended by adding a new section to read: 25 Sec. 43.20.023. Credit for taxpayer employing state resident. (a) Subject 26 to (b) of this section, a taxpayer engaged in a trade or business is entitled to a credit 27 against the taxpayer's tax liability under this chapter for employing a person who, at 28 the time of the person's first employment by the taxpayer, was 29 (1) a resident of the state; and 30 (2) a graduate of or had been a student at a qualifying postsecondary 31 educational institution located in the state. 01 (b) The credit claimed by a taxpayer under (a) of this section is $1,000 for 02 each employee described in (a) of this section. The amount of a credit under this 03 section 04 (1) may be claimed only during the taxpayer's tax year in which the 05 taxpayer first employed the state resident; 06 (2) may not 07 (A) be claimed as a credit under another provision of this title; 08 or 09 (B) also be allowed as a deduction under 26 U.S.C. 170 against 10 the tax imposed by this chapter. 11 (c) In this section, 12 (1) "postsecondary educational institution" has the meaning given in 13 AS 14.48.210; 14 (2) "qualifying postsecondary educational institution" means a 15 postsecondary educational institution that, for educational services rendered during the 16 period the person was a student at the institution, received state funds, grants, or other 17 aid; in this paragraph, "state funds, grants, or other aid" does not include student loans, 18 grants, or scholarships; 19 (3) "resident" means an individual who is physically present in the state 20 with the intent to remain permanently in the state under the requirements of 21 AS 01.10.055 and has been physically present in the state for at least one year at the 22 time of the person's first employment by the taxpayer. 23 * Sec. 3. This Act takes effect January 1, 1999, and applies to persons employed and 24 expenses incurred after December 31, 1998, for which the credit authorized by sec. 2 of this 25 Act may be claimed.