Legislature(1999 - 2000)
1999-02-10 House Journal
Full Journal pdf1999-02-10 House Journal Page 0196 HB 91 HOUSE BILL NO. 91 by the House Rules Committee by request of the Governor, entitled: "An Act relating to taxation, including taxation of income of individuals, estates, and trusts; and providing for an effective date." was read the first time and referred to the State Affairs and Finance Committees. The following fiscal note applies: Fiscal note, Dept. of Revenue, 2/10/99 The Governor's transmittal letter dated February 9, 1999, appears below: "Dear Speaker Porter: As part of the Alaska Balanced Budget Plan I proposed to close Alaskas budget gap within the next 18 months, today I am transmitting a bill to re-impose a state income tax on individuals. The current size of our fiscal gapthe difference between annual revenues and expendituresexceeds one billion dollars. Because of our sizeable savings account, the Constitutional Budget Reserve (CBR), we have been able to fill this gap over the past several years. 1999-02-10 House Journal Page 0197 HB 91 However, the CBR is currently projected to run dry in the next three years. Although we have cut the budget substantially over the past four years, and further cuts and efficiencies must take place, budget cuts alone will not solve a budget gap of this proportion if basic state services to Alaskans are to be preserved. One part of the plan is to transfer $4 billion dollars from the Earnings Reserve Account of the Permanent Fund to the CBR. This will generate approximately $550 million annually. However, this too will not close the gap. I believe an income tax is the fairest way to provide the additional $350 million dollars needed to balance our budget in the next 18 months. Alaskas tremendous natural resource wealth has allowed us to maintain the basic services of state government for many years without significant contributions from the Alaskans who benefit from those services. We also have been able to return dividends from that wealth to Alaskans. But existing revenue sources simply will not sustain the basic services -- the schools, protection of our children, contributions to local communities, and other basic health and safety programs -- on which Alaskans rely. A state individual income tax is one way to address at least a part of the budget gap. Alaska is the only state that has neither a state personal income tax nor a statewide sales tax. I believe an income tax is one of the fairest ways to raise revenue. It taxes people on their ability to pay and taxes people who work in Alaska, whether they live here or not. Non-residents can begin to contribute to the state- provided services they receive. The tax set out in the attached bill begins with a simple percentage of the federal tax we pay. It then provides every Alaskan a credit, based on the Permanent Fund Dividend that person receives, as a way to compensate for the federal tax we pay on our dividends. This feature of the bill, because it provides a per-capita credit, protects families. Under the bill, a family of four earning $60,000 would pay no tax. 1999-02-10 House Journal Page 0198 HB 91 I urge your prompt consideration of this bill. You may not agree that the structure of the proposed tax is the best, and I welcome your suggestions for alternatives. But we cannot afford to wait until all our reserves are expended. The Legislature must act this year to protect the future of all Alaskans. Sincerely, /s/ Tony Knowles Governor"