Legislature(1997 - 1998)
1997-03-05 House Journal
Full Journal pdf1997-03-05 House Journal Page 0543 HB 169 HOUSE BILL NO. 169 by the House Rules Committee by request of the Governor, entitled: An Act relating to welfare to work tax credits under the Alaska Net Income Tax Act; and providing for an effective date. was read the first time and referred to the Health, Education & Social Services, State Affairs, and Finance Committees. The following fiscal notes apply: Fiscal note, Dept. of Revenue, 3/5/97 Indeterminate fiscal note, Dept. of Health & Social Services, 3/5/97 Zero fiscal note, Dept. of Labor, 3/5/97 The Governor's transmittal letter, dated March 4, 1997, appears below: Dear Speaker Phillips: Last year I signed into law a bill commonly referred to as welfare reform, but I called it a bill to put Alaskans to work. Today I am sending to the Legislature part two of that effort to take people off the 1997-03-05 House Journal Page 0544 HB 169 welfare rolls and put them on the payrolls. With this bill I am launching my Alaska Business Investment Incentive Plan which will include several measures to be presented over the next two weeks. This bill establishes the Alaska welfare to work program which offers a tax credit to corporations that hire people who receive public assistance. The tax credit will provide an incentive to corporations to hire public aid recipients which will assist in the states effort to move people off of welfare. This new program would offer an employer a tax credit of 15 percent of an employees eligible wages, capped at $1,000 per employee. Additional credit of up to $500 may be earned if the employer provides training that qualifies as a work activity under last years reform bill. To compare that with our current costs under welfare, the average public assistance payment is $778 per month, or $4,668 over six months--far exceeding the $1,000 to $1,500 tax credit proposed in this legislation. In order for an employer to earn the credit, the employee must remain in the job for 180 days or 400 hours. The employment does not, however, have to be uninterrupted or within a year of initial hire. This ensures that employers who experience a need for a temporary layoff, or work in seasonal industries, are eligible for the tax credit. The Alaska Welfare to Work program mirrors the federal work opportunity tax credit program and should operate seamlessly with that national effort so the Department of Labor can easily administer both programs and avoid confusion for employers. Unlike the federal program, though, the Alaska credit would only apply to the hiring of people in Alaska. Because thats the whole point of this program-- hiring Alaskans--this bill also eliminates a current provision in state law that allows out-of-state corporations to take a credit on their Alaska income tax for hiring someone on public assistance in Los Angeles, or Detroit, or anywhere in the other 49 states. That federal credit is actually relatively small compared to the credit in this proposal. Corporations hiring Alaskans stand to gain much more under the Welfare to Work plan than they would lose in applying the federal credit to Alaska corporate income tax. 1997-03-05 House Journal Page 0545 HB 169 Jobs are the answer to reducing our welfare rolls. To the extent this new program can encourage the private sector to help people work their way off public assistance, we are all better served. Lets continue the work we began last year by passing this bill and getting Alaskans to work. Sincerely, /s/ Tony Knowles Governor **The presence of Representative Hanley was noted.