04/15/2024 06:00 PM House WAYS & MEANS

            HB 109-REDUCE CORP. NET INCOME TAX RATE                                                                         
                                                                                                                                
6:04:11 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER announced that the  first order of business would                                                               
be HOUSE BILL NO. 109, "An  Act reducing the corporate net income                                                               
tax rate; and providing for an effective date."                                                                                 
                                                                                                                                
6:04:20 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER  moved to  adopt Amendment 1  to HB  109, labeled                                                               
33-LS0376\A.1, Nauman, 3/30/24, which read as follows:                                                                          
                                                                                                                                
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REPRESENTATIVE MCCABE objected for the purpose of discussion.                                                                   
                                                                                                                                
CHAIR CARPENTER  spoke to Amendment  1.   He said it  changes the                                                               
date of  applicability and the  effective date.  He  explained it                                                               
is a technical change; the bill  was brought forward in 2023, and                                                               
Amendment 1 would update it.                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE removed  his  objection.   There being  no                                                               
further objection, Amendment 1 was adopted.                                                                                     
                                                                                                                                
6:05:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GROH expressed appreciation  for the work that the                                                               
committee is doing  to address the state's deficit.   He reviewed                                                               
that HB  109, as  amended, would reduce  the state's  revenues by                                                               
$128 million.   He opined that without any  proposals to increase                                                               
revenue, the  proposed legislation is  "irresponsible, misguided,                                                               
and  shortsighted."     He   named  public   services,  including                                                               
education, transportation,  and public safety as  those essential                                                               
services needed by  Alaskans.  He said HB 109,  as amended, would                                                               
go in a  direction opposite to the recommendations  of the Fiscal                                                               
Policy Working  Group, as well  as "the direction  recommended by                                                               
...  essentially  every other  expert  that  has looked  at  this                                                               
problem of  what we  need," which  includes revenues,  a spending                                                               
cap,   further   protection   of    the   permanent   fund,   and                                                               
constitutionalization of  the permanent fund dividend  (PFD).  He                                                               
spoke  about  the  recommendation of  the  aforementioned  Fiscal                                                               
Policy  Working   Group  and  about  raising   the  base  student                                                               
allocation  (BSA).   He  brought  up  other legislation  that  he                                                               
indicated  would  have  better addressed  the  state's  financial                                                               
situation.   He concluded  that HB 109,  as amended,  is "exactly                                                               
the wrong way to go," and  he stated he would vote against moving                                                               
the bill out of committee.                                                                                                      
                                                                                                                                
6:12:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE posited  that  [that which  was listed  by                                                               
Representative Groh]  is "a whole lot  to put on a  two-page bill                                                               
that deals  with corporate  tax rate."   He spoke  about deciding                                                               
what  to  charge  corporations  based  on  which  decision  would                                                               
benefit  the state  most.    He talked  about  the resiliency  of                                                               
having more  corporations charged  $50 a piece,  maintaining that                                                               
that is  better than  just having  one corporation  at $100.   He                                                               
said Alaska is the third-highest  in the nation [in taxes charged                                                               
corporations], which  he indicated  means it is  "the third-worst                                                               
place to  ... open  up a  business."   He countered  the argument                                                               
that  leaving  the  number  of   businesses  as  is  rather  than                                                               
[incentivizing more  to do business  in the state by  taxing them                                                               
at a lower rate] is nonsensical.   Not doing so will increase the                                                               
outmigration that has been an issue  for a decade, he warned.  He                                                               
concluded by emphasizing his support of HB 109, as amended.                                                                     
                                                                                                                                
6:14:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRAY stated  he  would not  support the  proposed                                                               
legislation.  He included in  his comments  his appreciation that                                                               
Chair Carpenter is  "a patient, fair, and kind  chair" who allows                                                               
for  disagreement.   He opined  that the  state cannot  afford to                                                               
lose $300 million  in revenue and reiterated that he  would be "a                                                               
no vote."                                                                                                                       
                                                                                                                                
6:15:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCKAY  expressed his take  on HB 109,  as amended,                                                               
is that  if it  would promote additional  gas production  in Cook                                                               
Inlet, he  would support  it.   He said the  state needs  all the                                                               
socio-economic, positive benefits that would result from that.                                                                  
                                                                                                                                
6:15:54 PM                                                                                                                    
                                                                                                                                
CHAIR   CARPENTER  said   he  appreciates   the  opposition   and                                                               
recognized  that  some  prevailing thoughts  in  the  legislature                                                               
support an  increase in taxes  and/or taking money from  the PFD.                                                               
He said he respectfully disagrees.   He said stimulating economic                                                               
activity and creating jobs through  that activity is what matters                                                               
to Alaskans - "more outside  this building than it matters inside                                                               
this building."   He said he  does not concur with  the statement                                                               
that every  expert agrees that  income taxes must remain  high in                                                               
order for governments  to be funded or that  corporate income tax                                                               
reductions  are not  good for  economic growth.   Conversely,  he                                                               
said  the evidence  is clear  that reducing  taxes on  businesses                                                               
results  in economic  growth.    He said  the  topic of  economic                                                               
stimulation  is  something  the legislature  needs  to  consider,                                                               
which  is why  he  thinks it  is  important to  move  HB 109,  as                                                               
amended, out  of committee  so that the  rest of  the legislative                                                               
body can consider  it among other plans that  are being proposed.                                                               
He said  while he  did his  best to  adhere to  "a fair  model of                                                               
reform"  in   response  to  the   Fiscal  Policy   Working  Group                                                               
recommendations, he is not limited  to those recommendations.  He                                                               
stated,  "I   feel  that  a   tax  restructuring  -   a  spending                                                               
restructuring  - that  includes  tax  cuts in  one  area and  new                                                               
sources of revenue  in a different area is fully  in keeping with                                                               
recommendations that want to see  economic activity."  He advised                                                               
that HB 109, as amended, could be part of an overall solution.                                                                  
                                                                                                                                
6:18:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE moved to report  HB 109, as amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
6:18:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GROH objected.                                                                                                   
                                                                                                                                
6:18:49 PM                                                                                                                    
                                                                                                                                
A  roll call  vote  was taken.    Representatives McKay,  McCabe,                                                               
Tilton, Allard,  and Carpenter  voted in favor  of the  motion to                                                               
report  HB 109,  as  amended, out  of  committee with  individual                                                               
recommendations    and    the    accompanying    fiscal    notes.                                                               
Representatives Groh and Gray voted  against it.  Therefore, CSHB
(W&M) was reported out of  the House Special Committee on Ways                                                               
and Means by a vote of 5-2.                                                                                                     
                                                                                                                                
6:19:29 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
6:19:53 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER  noted that  with passage  of CSHB  109(W&M), the                                                               
committee would give Legislative  Legal Services the authority to                                                               
make any necessary technical and conforming changes.