Legislature(1993 - 1994)
1994-03-09 Senate Journal
Full Journal pdf1994-03-09 Senate Journal Page 3105 SB 344 SENATE BILL NO. 344 BY THE SENATE 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." 1994-03-09 Senate Journal Page 3106 SB 344 was read the first time and referred to the Labor and Commerce, Judiciary and Finance Committees. Fiscal notes published today from Department of Labor, Department of Revenue, Department of Commerce and Economic Development, Department of Administration. Zero fiscal notes published today from Department of Administration, Department of Law, Department of Environmental Conservation, Department of Military and Veterans Affairs, Department of Natural Resources, Department of Transportation and Public Facilities, Department of Public Safety, Department of Corrections, Department of Health and Social Services, Department of Community and Regional Affairs. Governor's transmittal letter dated March 7: Dear Mr. President: 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. 1994-03-09 Senate Journal Page 3107 SB 344 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. 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