Legislature(1993 - 1994)

1994-03-09 Senate Journal

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1994-03-09                     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                  
						Walter J. Hickel