Legislature(2009 - 2010)

2009-04-01 Senate Journal

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2009-04-01                     Senate Journal                      Page 0726
SB 178                                                                                                                        
SENATE BILL NO. 178 BY THE SENATE RULES COMMITTEE                                                                               
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           

2009-04-01                     Senate Journal                      Page 0727
           "An Act relating to contributions, interest, penalties,                                                             
              and payments under the Alaska Employment Security                                                                
          Act; and providing for an effective date."                                                                            
was read the first time and referred to the Labor and Commerce and                                                              
Judiciary Committees.                                                                                                           
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, zero, Department of Labor and Workforce                                                                     
Governor's transmittal letter dated March 31:                                                                                   
Dear President Stevens:                                                                                                         
Under the authority of article III, section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to contributions, interest,                                                     
penalties, and payments under the Alaska Employment Security Act.                                                               
Under current law, most employers are required to pay employment                                                                
security contributions quarterly based on their payroll and experience                                                          
rate. However, under AS 23.20.277 and AS 23.20.278, nonprofit                                                                   
organizations and governmental entities can elect to be classified as                                                           
"reimbursable employers." A "reimbursable employer" only pays                                                                   
employment security contributions when an employee of the                                                                       
reimbursable employer receives unemployment compensation                                                                        
benefits. The "reimbursable employer" reimburses the unemployment                                                               
compensation fund for the amount that the fund paid in unemployment                                                             
benefits to the employee.                                                                                                       
This bill would amend AS 23.20.277 and AS 23.20.278 to extend to                                                                
federally recognized tribes and their subdivisions, subsidiaries, and                                                           
businesses the option to choose to become a reimbursable employer.                                                              
The bill does not change the jurisdictional relationship between the                                                            
state and federally recognized tribes.                                                                                          
This bill is being proposed to bring the state into compliance with                                                             
federal unemployment compensation law and its treatment of federally                                                            
recognized tribes. The Federal Unemployment Tax Act (26 U.S.C.                                                                  
3306, FUTA) now directs certified state unemployment insurance                                                                  

2009-04-01                     Senate Journal                      Page 0728
programs to offer federally recognized tribes the option to become a                                                            
reimbursable employer. Of the 33 states that have federally recognized                                                          
tribes, Alaska is the only state that has not yet passed conforming                                                             
As the state unemployment insurance program is federally certified,                                                             
the state receives federal money to support the administration of the                                                           
program. Because the state has a certified program, employers in the                                                            
state are eligible for a tax credit of up to 90 percent of the federal                                                          
unemployment tax that employers are required to pay.                                                                            
To maintain its certification, the state must amend the Alaska                                                                  
Employment Security Act to be consistent with FUTA's requirements                                                               
for federally recognized tribes. Failure to bring the Alaska                                                                    
Employment Security Act into compliance with federal legislation                                                                
may result in the loss of approximately $20,000,000 in administrative                                                           
funding under FUTA. Noncompliance could also result in the loss of                                                              
approximately $111,000,000 in FUTA tax credits to employers in this                                                             
This bill has an immediate effective date. I urge your support of this                                                          
important legislation.                                                                                                          
Sarah Palin