Legislature(1997 - 1998)

1997-03-05 Senate Journal

Full Journal pdf

1997-03-05                     Senate Journal                      Page 0572
SB 116                                                                       
SENATE BILL NO. 116 BY THE SENATE 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.                                               

1997-03-05                     Senate Journal                      Page 0573
SB 116                                                                       
was read the first time and referred to the State Affairs, Health,             
Education and Social Services and Finance Committees.                          
Fiscal note published today from Department of Revenue.  Zero                  
fiscal notes published today from Department of Labor, Department              
of Health and Social Services.                                                 
Governors transmittal letter dated March 4:                                    
Dear President Miller:                                                         
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 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.                                                                

1997-03-05                     Senate Journal                      Page 0574
SB 116                                                                       
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.                             
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.                                                              
						Tony Knowles