Legislature(1993 - 1994)
1994-03-07 House Journal
Full Journal pdf1994-03-07 House Journal Page 2645 HB 519 HOUSE BILL NO. 519 by the House Rules Committee by request of the Governor, entitled: "An Act relating to the establishment, collection, and enforcement of an employment tax; and providing for an effective date." was read the first time and referred to the Labor & Commerce, State Affairs and Finance Committees. The following fiscal notes apply: Fiscal note, Dept. of Administration, 3/7/94 Fiscal note, Dept. of Commerce & Economic Development, 3/7/94 Fiscal note, Dept. of Labor, 3/7/94 Fiscal note, Dept. of Revenue, 3/7/94 Zero fiscal note, Dept. of Administration, 3/7/94 Zero fiscal note, Dept. of Community & Regional Affairs, 3/7/94 1994-03-07 House Journal Page 2646 HB 519 Zero fiscal note, Dept. of Corrections, 3/7/94 Zero fiscal note, Dept. of Environmental Conservation, 3/7/94 Zero fiscal note, Department of Health & Social Services, 3/7/94 Zero fiscal note, Dept. of Law, 3/7/94 Zero fiscal note, Dept. of Military & Veterans Affairs, 3/7/94 Zero fiscal note, Dept. of Natural Resources, 3/7/94 Zero fiscal note, Dept. of Public Safety, 3/794 Zero fiscal note, Dept. of Transportation & Public Facilities, 3/7/94 The Governor's transmittal letter, dated March 7, 1994, appears below: "Dear Speaker Barnes: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill instituting an employment tax of $100 per year on individuals working in Alaska. This employment tax bill is one of several relatively modest revenue proposals I am offering this session to help offset the large revenue shortfalls that Alaska is facing in fiscal year 1995 and will be facing in the years to follow. Tax proposals are never popular, but it is time for Alaska's leaders to face the reality that with lower oil revenue, Alaska can no longer afford to provide necessary state services without a larger contribution from both Alaska residents and non-resident workers. Budget cuts alone cannot fill the revenue shortfalls without causing a major impact on the state economy. Some use of the state's reserve funds will undoubtedly be necessary to help balance the budget, but relying solely on reserves to make ends meet will deplete these funds rapidly and leave the state in a more serious fiscal situation two to three years from now. Relying on reserve funds to solve this year's fiscal dilemma would be the easy way out, but our leadership responsibilities require state leaders to make some tough decisions, and to reach a fiscal solution that does not solve this year's problem at the expense of aggravating Alaska's future fiscal health. New revenue is an essential part of this solution. 1994-03-07 House Journal Page 2647 HB 519 It is important to keep in mind that if the employment tax and the other proposals that I have introduced are all enacted into law, Alaskans will still have by far the lowest state tax burden in the nation. And when the permanent fund dividend is included, Alaskans will still on balance pay nothing for state services, because the dividend will continue to more than offset the total of state taxes and fees collected from individuals. The employment tax would be levied on individuals age 19 and older working in Alaska, whether employed by others or self-employed. At $100 per year, the tax is expected to generate about $31 million annually, with about 25 percent of the total tax collections contributed by non-resident workers. Remittance of the employment tax withheld by employers would be streamlined by linking the remittance with the other payroll taxes that employers are required to report and remit to the state. In addition, the bill contains a provision to minimize the burden of the tax by spreading the collection of the tax over more than one paycheck for low-wage or part-time workers. In summary, the employment tax is a modest revenue measure that will help balance the state budget not only in fiscal year 1995, but in the following years as well. I urge your support for this legislation. Sincerely, /s/ Walter J. Hickel Governor"