Legislature(2001 - 2002)
03/21/2002 09:14 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SUMMARY
STATEWIDE TESTIMONY ON REVENUE MEASURES
on the following bills:
HB 20 An Act relating to state aid to municipalities and
certain other recipients, and for the village
public safety officer program; relating to
municipal dividends; relating to the public safety
foundation program; and providing for an effective
date.
Discussed and HELD in Committee.
HB 229 An Act imposing a tax on employment; and providing
for an effective date.
Discussed and HELD in Committee.
HB 303 An Act relating to the levy and collection of a
sales tax; and providing for an effective date.
Discussed and HELD in Committee.
HB 304 An Act relating to disposition of income of the
permanent fund; and providing for an effective
date.
Discussed and HELD in Committee.
Co-Chair Williams called the House Finance Committee meeting
to order. He stated that there would be statewide testimony
taken on possible revenue options available to the State and
announced that each sponsor would provide a brief
introduction on each bill.
REPRESENTATIVE GARY STEVENS spoke to HB 229, proposing that
it be a part of a long-term fiscal plan. The cost would be
$100 dollars per year and would be paid by every individual,
19 years of age and older. It would also include the self-
employed and would be deducted from the first two paychecks
st
after January 1 of each year. He added that there is a
provision contained in the bill that would prohibit the tax
from being taken more than once per year. The
administrating costs for the program would be $117,400
dollars. The amount of revenue that would in raised would
be $38 million dollars. He noted that it would be deposited
into the general fund and accounted for separately. It
could be used for education.
Representative Stevens advised that in the House Labor and
Commerce Committee, the state income tax was attached to it.
He requested that be removed.
Vice-Chair Bunde stated that the myth that the proposed bill
is an education should not be perpetuated. He encouraged
the sponsor to not call it an education tax. He commented
that he does not oppose the head tax, but the false
information should not continue.
Representative Stevens acknowledged that it is a tax on
employment.
REPRESENTATIVE JIM WHITAKER introduced HB 304.
Representative Whitaker noted that the bill had gone through
the House State Affairs Committee with significant
discussion. The work draft that evolved from those
discussions is provided. From the earnings of the Earnings
Reserve Account, $200 million dollars would be transferred
to the general fund in the initial year and thereafter; the
$200 million dollars would be the inflation factor and the
population factor. He indicated that was the essence of the
bill.
Representative Hudson inquired the procedures for offering
amendments.
Co-Chair Williams replied that would occur tomorrow.
REPRESENTATIVE JOHN DAVIES provided a brief introduction to
HB 401, which would increase motor fuel tax. He emphasized
that it is not a sales tax on gas and indicated that it
would increase from eight cents to eighteen cents a gallon.
He advised that Alaska had a motor fuel tax before statehood
at four cents a gallon and it was a dedicated fund. In
1961, that amount was increased to eight cents per gallon
and has stayed at that amount ever since. Alaska is the
lowest paying state in the nation in terms of the motor fuel
tax.
Representative J. Davies added that the bill proposes to
create a special highway maintenance account in the general
fund and place all the revenues from the eighteen cents per
gallon would go into that account, approximately $57 million
dollar).
Representative J. Davies added that additionally, he
proposes that all the revenues generated from the Division
of Motor Vehicles (DMV) would be placed into that account-
approximately $24 million dollars. He proposed that the
expense of running the DMV office and maintaining the State
highways would be appropriated from those funds for that
purpose. There would be approximately $18 million dollars
that could be used for highway maintenance.
He interjected that this would not be a dedicated fund and
would create approximately $75 million dollars for running
highway maintenance. He claimed that with those two sources
of revenue, there could be an annual revenue stream that
could be enough to run the State's highways.
Representative Hudson asked the anticipated net increase in
new revenues.
Representative Davies replied that would be approximately
$30 million new dollars.
Representative Hudson noted that it would not include marine
fuel taxes.
Representative Lancaster noted that there is a marine fuel
highway tax already.
Representative J. Davies responded that the road maintenance
and the marine highway system are two separate budgets.
Representative Hudson pointed out that the marine highway
fuel is purchased out of Puget Sound and there are no taxes
on those sales.
Representative JEANNETTE JAMES asked the amount needed to do
a "good" job in taking care of the highways.
Representative Davies responded that number was
approximately $83 million dollars as received by the
Department.
Representative James commented that a couple of years ago
that the amount was much more. She asked about the
connection to the increase maintenance rather than just
filling the gap. She thought that the issue was very
different than filling the gap and not addressing
maintenance.
Discussion followed between Representative Davies and
Representative James regarding how the increase motor fuel
tax would be used and if the public would benefit from it
with increased services.
Representative Lancaster asked if the same multiplier would
be used as used in the revenue safe share communities of
$1800 dollars a lane mile.
Representative J. Davies did not know the detail of the
calculation. He added that the aviation costs had been
included in the number, which he has. Some highway
maintenance stations do both so some of those numbers are
difficult to divide.
Representative Moses stated that the bill is very important.
He commented on the relationship between the Alaska Marine
Highway and the motor fuel tax and recommended that the
intent of the Legislature be mentioned.
STATEWIDE TESTIMONY
ROXANNE LEE, PETERSBURG, noted strong opposition to HB 303
and testified in opposition to any new sales tax. She spoke
in favor of a statewide income tax.
TONY ZIMMER, SITKA, testified in opposition to new or
additional State sales tax.
Vice-Chair Bunde asked if he supported the premise of some
sort of tax for State services.
PAT CARLSON, KODIAK, spoke in support of the proposed head
tax and in opposition to any additional sales tax. He
noted support for the motor fuel tax.
MIKE MILLIGAN, KODIAK, stressed the need to raise the tax on
motor fuel and voiced support for HB 401. He commented that
the last time that tax was raised was 1961. He stressed the
need to keep State ferries running.
BOB ROBBINS, WRANGELL, testified in opposition to any new
sales tax. Mr. Robbins testified in favor of a statewide
income tax.
JOHN BAKER, WRANGELL, testified in opposition to additional
sales tax and testified in favor of a statewide income tax.
JAMES STOUGH, WRANGELL, testified in opposition to any new
or sales taxes.
Representative Hudson asked the percentage of the local tax
base, which consists of sales tax, and the percentage of the
property tax.
Mr. Stough responded about half.
WOODY WILSON, WRANGELL, testified in opposition to any new
or additional sales taxes. He warned that adding more
taxes would be devastating to business in Southeast Alaska.
Businesses are currently stressed. He claimed that a sales
tax would not be in the best interest of "who pays what" and
the non-residents contribution. He compared those figures
to a statewide income tax.
Vice-Chair Bunde shared his view. He claimed that Alaskans
for 20 years have asked that "someone" else pay their dues.
He claimed that an income tax, there would be only 10%
earned through non-residents fee and would amount to $13,000
dollars. He did not think that would generate a lot of
revenue.
Co-Chair Williams requested that testifiers not be
challenged.
Representative Davies agreed. He pointed out that an income
tax would have a fairer base than the proposed statewide
sales tax. He reiterated that an income tax would be a more
fair system.
MAC MCMURREN, WRANGELL, testified in opposition to any
additional sales tax. He claimed that such a tax would
devastate the Wrangell area. Mr. McMurren testified in
support of using the income of the permanent fund.
RICHARD HEACOCK, FAIRBANKS, represented members of all
"faiths". He testified in favor of a statewide income tax
and urged that it be adopted immediately.
TAPE HFC 02 - 58, Side B
TABER REHBAUM, FAIRBANKS, testified in support of using the
earnings reserve and testified in favor of a statewide
income tax. Ms. Rehbaum voiced her support for
implementation of an alcohol tax. She claimed that budgets
cuts are no longer a way to address the State's fiscal gap.
EILEEN CUMMINGS, FAIRBANKS, testified in opposition to
additional sales tax. She testified in favor of a statewide
income tax. Ms. Cummings voiced support for HB 401 and
alcohol tax.
ANNETTE FREIBURGER, FAIRBANKS, voiced support for an
enhanced alcohol tax. She testified in favor of a statewide
income tax.
MARTA MUELLER, FAIRBANKS, testified in favor of a statewide
income tax, while voicing support for HB 304, HB 225, and HB
401.
ED MARTIN, COOPER LANDING, spoke in support of an increased
gas tax. He added support for an education tax. Mr. Martin
encouraged the State to place an increase of 20% tax on the
oil companies. He testified in strong opposition to an
additional sales tax unless it was implemented only for the
summertime.
FRED DEAN, FAIRBANKS, testified in favor of a statewide
income tax and voiced support for development of new revenue
sources. Mr. Dean proposed capping the Permanent Fund
Dividend (PFD). He noted his appreciation for the work done
by the fiscal policy council.
WALTER SAMPSON, NANA, testified in favor of a statewide
income tax. He added support for HB 225 and the proposed
school tax. He added support for a cruise ship tax. He
stressed that a sales tax would be devastating to rural
Alaska.
ROSWELL SCHAEFFER, NORTHWEST ARCTIC BOROUGH, encouraged the
Legislature to look at a statewide fiscal plan. He urged
support of a school and liquor tax. He noted that a limit
on the PFD would benefit the State. Mr. Schaeffer testified
in opposition to any additional statewide sales taxes. He
thought that a gas tax would be difficult for the rural
communities to meet.
ED EARNHART, ANCHORAGE, testified in favor of a statewide
income tax. He believed that a sales tax would not be fair
as many communities already have a high one.
DELISA CULPEPPER, ANCHORAGE, spoke in support of an
increased alcohol tax.
FRANK DILLON, PRESIDENT, ALASKA TRUCKERS ASSOCIATION,
ANCHORAGE, spoke against an increase to fuel tax. He
commented on how it would affect Anchorage and the
communities surrounding it.
R.B. STILES, ANCHORAGE, spoke in support of a progressive
broad based tax and the utilization of the earnings from the
permanent fund. He commented that the taxes should not be
implemented all at the same time because of the "shock" it
will have to the State's economy.
JOHN SHIVELY, ANCHORAGE, testified in support of using the
income earnings from the permanent fund. Mr. Shively spoke
in favor of implementing a statewide income tax over having
a sales tax.
ROBERT WISEMAN, KENAI, commented that he did not support any
new taxes and that the budget should be further reduced.
Mr. Wiseman added his support for using the income of the
permanent fund.
DAYNE CLARK, KENAI, testified in favor of a statewide income
tax. Mr. Clark voiced opposition to any additional sales
tax and support for using the income from the permanent fund
and capping it.
MARY LOU SPARTZ, JUNEAU, testified in opposition to
additional sales tax. She added that she did not support
imposing an education tax, as that should be part of a
"larger idea" for taxation. Ms. Spartz testified in support
of using the income from the permanent fund. She claimed
that it was never intended to 100% support of the State
government. Ms. Spartz voiced her support of a statewide
income tax.
CINDY CASHEN, MADD, JUNEAU, spoke in support for an increase
to the alcohol excise tax.
JOE SONNEMON, JUNEAU, urged that the State avoid dedicated
funds and force agencies to come to the Legislature each
year. He added that dedicated funds take away the power of
the Legislature to make decisions. He stated that people
"like" dedicated funds and often times tax themselves too
much. The Founders of the Constitution did warn the State
to avoid that type of funds. Mr. Sonnemon testified in
favor of a statewide income tax and in opposition to any
additional sales tax.
PAM WATTS, JUNEAU, voiced support for an increase alcohol
tax.
SANDRA DAUENHAUER testified in support of using the income
of the permanent fund. She voiced her opposition to
additional sales tax.
MAILYN BOOTH noted her support of using the income of the
permanent fund.
MIKE RIEVES, HOLLIS, testified in favor of a statewide
income tax. He voiced opposition to any additional sales
taxes.
TOM CONLEY, SITKA, testified in support of revenue measures.
He added favor of a statewide income tax. Mr. Conley voiced
opposition to any additional sales tax. Mr. Conley noted
his support for an increased alcohol tax and an increased
gas tax. Mr. Conley stressed his opposition to any
additional sales taxes.
STEVE BRADSHAW, SITKA, testified in support of revenue
generating measures as soon as possible. He added his
opposition to additional sales taxation. Mr. Bradshaw
testified in favor of a statewide income tax.
TAPE HFC 02 - 59, Side A
GLENN SKINS, testified in favor of a statewide income tax
and in opposition to any additional sales taxation.
MARY GRISWOLD, HOMER, testified in support for using the
income generated from the permanent fund. She added her
support of a statewide income tax.
PAT SENNER, PRESIDENT, ALASKA NURSES ASSOCIATION, ANCHORAGE,
voiced support for HB 225 and an increase to the alcohol tax
to at least ten cents per drink.
KIP KNUDSEN, ANCHORAGE, voiced his support of stabilizing
the State's revenue source and further spending reductions.
TERRY MARTIN, ANCHORAGE, commented that Alaska does not have
a revenue gap and voiced his support for a 50-50 program. He
opposed cutting the budget and implementation of a cruise
ship taxes. Representative Martin testified in support of
using the income from the permanent fund.
KENNETH MASON, WRANGELL, testified in opposition to
additional sales tax.
DAVE JONES, KODIAK, testified in support of finding new
revenue measures. He added his support for a statewide
income tax. Mr. Jones spoke in support of using the income
of the permanent fund. He added his support for an increased
alcohol tax and gas tax. Mr. Jones voiced strong opposition
to additional sales tax.
JERI LANIER, FAIRBANKS, testified in favor of a statewide
income tax and voiced strong support for an increased
alcohol tax. Ms. Lanier spoke in support of an increased gas
tax. She testified against an education tax.
Representative Davies pointed out that home heating fuel was
not being included in the proposed fuel tax.
CARL BENSON, FAIRBANKS, testified in favor of a statewide
income tax. Mr. Benson voiced support for leaving the
Permanent Fund as it is. He noted his support for an
increased gas tax. He pointed out that if the current gas
tax were doubled, it would amount to five cents less than
the national average. Mr. Benson testified in opposition to
any additional sales taxes.
TOM LAURENT JR, PETERSBURG, testified in opposition to
additional sales taxation. He thought that having a sales
tax would make the State loose their tax exemption in
Washington State. Mr. Laurent voiced favor of a statewide
income tax. He suggested making some major Alaska highways,
toll roads.
JERRY DIXON, SEWARD, voiced concerns regarding education in
the State of Alaska and testified in favor of a statewide
income tax.
DARIO NOTTI, BETHEL, testified in support of enhancing
revenue measures. Mr. Notti spoke in support of an
increased motor fuel tax and in favor of a statewide income
tax. Mr. Notti voiced support for further cruise ship
taxation. He noted strong opposition to additional sales
taxation, but if it were essential for a full plan then it
should be very small. He voiced support for using the
income of the permanent fund.
BRUCE HENDRICKSON, HOMER, testified in favor of implementing
a statewide income tax. He voiced opposition to any
additional sales taxes.
DR. BOB JOHNSON, KODIAK, voiced concerns about any further
budget cuts. He noted his support for using the income from
the permanent fund. Dr. Johnson testified in favor of a
statewide income tax and opposition to any additional sales
taxation.
RECESSED: 11:25 A.M.
RECONVENED: 1:55 P.M.
TAPE HFC 02 - 60, Side A
JAY HOGAN, JUNEAU, advised that the Permanent Fund needs to
be handled wisely and all the income to the fund is already
considered general fund money. Mr. Hogan spoke against
inflation proofing the fund. He distributed and referenced
his handout. [Copy on File].
Mr. Hogan commented on the types of things that other states
use their "permanent fund type accounts" for. He pointed
out that some states use this type of fund to adequately
support education. He assumed that if education were taken
off the table, budgetary restraints would still be
necessary, however, the foundation formula would continue to
be substantially driven by the Legislature. He advised that
any budget would "stumble" over the financial needs of such
a large program. He claimed that education would be the
best program to designate for the use of the permanent fund
earnings.
Mr. Hogan stated that the funds in the Constitutional Budget
Reserve (CBR) have not served the intended purpose.
In response to queries by Vice-Chair Bunde, Mr. Hogan
explained that Alaska Housing Finance Corporation (AHFC) had
been capitalized out of the general fund.
REPRESENTATIVE GRETCHEN GUESS questioned the reaction to the
political feasibility for fully funding the education
program.
Mr. Hogan explained that a separate endowment would not be
needed. He recommended a similar plan, as used by the State
of New Mexico. Traditionally, Alaska has spelled out fund
sources. Mr. Hogan did not believe that the "style" of
appropriation would need to be changed.
Representative Hudson agreed with the comments made by Mr.
Hogan suggesting that the dividend is Alaska's "rainy day"
account.
DON WESTLUND, KETCHIKAN, spoke in support for an increased
gas tax. Mr. Westlund proposed that the State adopt both a
resident and non-resident income tax. He testified in
support of using the income of the permanent fund. He added
support of providing the current dividend to only those that
currently receive it and then it be discontinued with the
person either no longer resides in Alaska or dies.
BRIAN LYNCH, PETERSBURG, testified in opposition to
additional sales taxes. Mr. Lynch advised that sales taxes
are regressive and that they are not deductible on federal
income taxes.
LARRY MESHKIN, MAT-SU, suggested further budget cuts,
suggesting an additional 12% cut in spending in the State's
operating budget.
JIM WATENPAUGH, MAT-SU, spoke against new taxes. He
acknowledged that the gap must be addressed. He voiced his
support for a State sales tax.
LINDA REYNOLDS reiterated comments made by Mr. Watenpaugh.
She questioned the cost associated with the administration
of "programs". Ms. Reynolds spoke to the serious recession
occurring within Alaska. Ms. Reynolds voiced support for
cutting the budget except to necessary services. She
stressed that the people of the State want serious budget
cuts. Ms. Reynolds testified against implementing a
statewide income tax and urged responsible Legislative
spending. Ms. Reynolds emphasized her opposition to using
the income of the permanent fund.
LATONNIE BARLOW, WRANGELL, testified in opposition to any
State sales taxation. She testified in favor of a statewide
income tax.
TAPE HFC 02 - 60, Side B
CHARLES DAVIS, HOMER, testified in favor of a statewide
income tax. He recommended that the price for the State's
resources should be increased in order that the State makes
more money.
CARL BENSON, FAIRBANKS, stressed that Alaska is now faced
with state level decisions. He testified in favor of
implementing a statewide income tax and in support for an
increased tax to gas. Mr. Benson voiced support of using
the income from the permanent fund. He voiced strong
opposition to a statewide sales tax.
HENRY COLE, FAIRBANKS, indicated his support for a statewide
income tax. Mr. Cole voiced opposition to a statewide
sales tax.
RICHARD SNYDER, ANCHORAGE, testified in favor of a statewide
income tax and opposition to using a State sales tax.
DAVID PAPERMAN, ANCHORAGE, testified in favor of a statewide
income tax. Mr. Paperman voiced his opposition to reducing
the State dividend. He commented on the need for continued
public safety and voiced opposition to any cuts to that type
service.
EUGENE KULAWIK, ANCHORAGE, testified in support of using the
income from the permanent fund. Mr. Kulawik testified in
favor of implementation of a statewide income tax.
ARTHUR CURTIS, ANCHORAGE, testified in favor of a statewide
income tax. He thought that would be the most simple and
fair way to increase revenue for the State and that people
of Alaska have an obligation to pay those taxes. Mr. Curtis
noted his support for using the income from the permanent
fund.
JOHN BLAINE, ANCHORAGE, testified in favor of a statewide
income tax. She added her support for using the income of
the permanent fund.
JANELL PRIVETT, WRANGELL, voiced support whatever fiscal
plan the Legislature determines. She noted support for
using the income of the permanent fund and capping the
dividend. She maintained that the dividend is a "gift".
She added that it is essential that education be fully
funded.
DIXIE HOOD, JUNEAU, voiced opposition to HB 303 and to
implementation of a State sales tax. She stressed that it
would not be fair to implement a sales tax statewide. Ms.
Hood voiced support for a statewide income tax and of an
increased gas tax. Ms. Hood voiced support for an increased
alcohol tax. She added her support for using the income
from the permanent fund. She urged that the Legislature
demonstrate leadership in providing a good fiscal policy.
She pointed out that broad based taxes are supported
statewide.
DON ETHERIDGE, AFL-CIO, JUNEAU, noted his support for
implementing a statewide income tax.
MARILYN MENISH-MEUCCI, PETERSBURG, testified in support of
using the income of the permanent fund. She noted her
support for a statewide income tax. She recommended that a
fund be established for education from the Permanent Fund
money. Ms. Meucci recommended that the State consider
discontinuing property tax reduction for seniors and voiced
strong opposition to a State sales tax.
RECESS: 3:15 P.M.
RECONVENE: 6:15 P.M.
TAPE HFC 02 - 61, Side A
DOUG MILLARD, MAT-SU, voiced support for a State sales tax.
Mr. Millard voiced support for limitations to be put on
State spending. He testified against implementing a
statewide income tax.
TED CREMER, MAT-SU, voiced support for a State sales tax.
ANDY HARRINGTON, FAIRBANKS, voiced support for a State sales
tax. He commented that there is a benefit in collecting
taxes from tourists. Mr. Harrington testified in favor of
implementing a statewide income tax.
PAT SWEETSIR, FAIRBANKS, voiced concerns about the cuts to
the mental health budget and the cuts to the Village Public
Safety Officer (VPSO) budget cuts.
GAIL IGO, ANCHORAGE, testified in support of revenue
generating measures. She voiced her concern about the
education system statewide.
MAXINE RADER, ANCHORAGE, testified in favor of a statewide
income tax. She added her opposition to using the income of
the permanent fund and testified against implementing a
statewide income tax.
DENNY WEATHERS, CORDOVA, recommended further cutting the
Legislature's funding. He added his support in moving the
Legislature to Anchorage. He thought that would save costs.
Mr. Weathers spoke against taxation of any kind.
TOM BOUTIN, JUNEAU, testified in support of a State income
tax. [Copy of testimony on file].
BARBARA MILLER, MAT-SU, voiced support for further budget
cuts. She noted her support for a State sales tax and
statewide property taxes.
WILLIAM MILLER, MAT-SU, spoke in support of further budget
cuts. He noted his support for a State sales tax but noted
his support for food and medicine exemptions. Mr. Miller
testified against implementing a statewide income tax.
RECESSED: 6:35 P.M.
RECONVENED: 6:44 P.M.
HARRY EATON, KENAI, testified in support of revenue
measures. Mr. Eaton testified against implementing a
statewide income tax. He stressed that less than one third
of Alaskans would carry the burden of the income tax.
JOHN MALTAS, ANCHORAGE, testified in support of revenue
measures. Mr. Maltas voiced his support of a statewide
income tax.
RECESSED: 6:48 P.M.
RECONVENED: 7:02 P.M.
PAT MARLEY, MAT-SU, Spoke in opposition of any new taxes.
JERRY MCDONNELL, ANCHORAGE, testified in favor of a
statewide income tax. Mr. McDonnell mentioned that if there
is a statewide sales tax that there should be exemptions for
food.
PATRICK CLARK, ANCHORAGE, spoke in opposition of any new
taxes and recommended that there be further budget cuts.
JULIE CLARK, ANCHORAGE, urged that there be further budget
cuts.
RECESSED: 7:08 P.M.
RECONVENED: 7:13 P.M.
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