02/26/2024 06:00 PM House WAYS & MEANS

                 HB 142-STATE SALES AND USE TAX                                                                             
                       HB 156-INCOME TAX                                                                                    
                                                                                                                                
6:07:41 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER announced that the  first order of business would                                                               
be HOUSE BILL NO. 142, "An Act  relating to a state sales and use                                                               
tax;  authorizing the  Department of  Revenue to  enter into  the                                                               
Streamlined Sales  and Use  Tax Agreement;  and providing  for an                                                               
effective date." and HOUSE BILL NO.  156, "An Act relating to the                                                               
taxation of  income of individuals,  partners, shareholders  in S                                                               
corporations, trusts, and estates;  repealing tax credits applied                                                               
against the  tax on individuals  under the Alaska Net  Income Tax                                                               
Act; and providing for an effective date."                                                                                      
                                                                                                                                
6:07:56 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER opened public testimony on HB 142 and HB 156.                                                                   
                                                                                                                                
6:08:29 PM                                                                                                                    
                                                                                                                                
PATRICK RACE, representing  self, gave a brief  history of Ernest                                                               
Gruening, Alaska's  territorial governor in 1939,  and Gruening's                                                               
efforts  to establish  a revenue  system from  taxes rather  than                                                               
depending on revenue from resources  that allow outside interests                                                               
to control lawmakers.  He  said history shows the essentiality of                                                               
taxes.  He opined that Alaskans should reinstate an income tax.                                                                 
                                                                                                                                
6:10:51 PM                                                                                                                    
                                                                                                                                
KRISTEEN  F. PETERSON,  representing self,  said she  supports an                                                               
income tax.   She  recalled paying  income tax  when she  was 14.                                                               
She indicated that she would like  everyone to be paying it, with                                                               
any  exceptions  decided  by  the legislature.    She  urged  the                                                               
committee to "get it done this year."                                                                                           
                                                                                                                                
6:12:52 PM                                                                                                                    
                                                                                                                                
CINDY  GILDER,  representing self,  testified  in  support of  an                                                               
income tax, stating that a  broad-based income tax is the fairest                                                               
and would ensure needed services are paid for.                                                                                  
                                                                                                                                
MARY ODDEN,  representing self, shared  she and her  husband paid                                                               
an income  tax and school tax  when they first came  to Alaska in                                                               
the '70s and thought  it "a good thing to do."   She opined it is                                                               
fairer  than a  sales tax.   She  warned against  looking to  the                                                               
permanent  fund to  cover state  expenses.   She spoke  about the                                                               
negative effects of  an unstable income for Alaska.   She allowed                                                               
there could be discussion regarding  the proposed $200,000 income                                                               
level, and  she spoke  about making a  ceiling and  a progressive                                                               
tax -  whatever is  necessary.  She  encouraged the  committee to                                                               
support HB 156.                                                                                                                 
                                                                                                                                
6:16:08 PM                                                                                                                    
                                                                                                                                
ALEX WERTHEIMER, representing self,  stated support for an income                                                               
tax as part of  a long-term fiscal plan for Alaska.   He said the                                                               
income  tax is  more equitable  than  is a  statewide sales  tax,                                                               
which  would disproportionally  affect  lower income  households.                                                               
He noted other states require income  tax paid and are doing well                                                               
economically.   Notwithstanding that, he  said he does  not think                                                               
the 2 percent flat  tax on higher income is "the way  to go."  He                                                               
mentioned  a plan  from the  Walker  Administration where  people                                                               
would pay  a small  percentage of  their federal  tax assessment,                                                               
and  the state  would receive  revenue from  non-resident workers                                                               
who benefit from the infrastructure  and services that make their                                                               
jobs possible.                                                                                                                  
                                                                                                                                
6:17:37 PM                                                                                                                    
                                                                                                                                
PAULA DAVIS, representing  self, testified in support  of HB 156.                                                               
She said  she would  like to see  Alaska's income  tax reinstated                                                               
because oil revenue  is diminishing, Alaskans should  pay for the                                                               
services they  get, sales tax hits  the poor more than  the rich,                                                               
the 2  percent for those making  more than $200,000 is  fair, the                                                               
$20  is fair,  and she  does not  like to  be bribed  by a  large                                                               
permanent fund  dividend (PFD).   She opined that those  who live                                                               
out of state  and work on the North Slope  two weeks on/two weeks                                                               
off should pay into the state's  system.  She said, "We'd hate to                                                               
be  running out  of  money  just because  we  don't  want to  tax                                                               
ourselves."                                                                                                                     
                                                                                                                                
6:19:21 PM                                                                                                                    
                                                                                                                                
MARGIE GOODRICH,  representing self,  testified in support  of an                                                               
income tax.   A lifelong Alaskan, she recalled  the former income                                                               
tax being  stopped and stated  support for having an  income tax.                                                               
She  added that  she  thinks  it should  be  [based on]  $100,000                                                               
rather  than  $200,000, and  she  echoed  that those  with  lower                                                               
income could not  afford to pay as much tax  as those with higher                                                               
income.   She said  those from  out of state  who work  in Alaska                                                               
should contribute  to the  state's economy.   She added  that she                                                               
thinks an income tax would  help to improve the state's education                                                               
system, which has declined over the years.                                                                                      
                                                                                                                                
6:22:10 PM                                                                                                                    
                                                                                                                                
LORI PICKETT, representing self, testified  in support of HB 156.                                                               
She  stated  her  belief  that  implementing  an  income  tax  is                                                               
imperative  to  the wellbeing  of  Alaska.    She called  HB  156                                                               
reasonable and said  every wage earner has "buy-in."   She talked                                                               
about the  benefits of  a state  income tax  to provide  a stable                                                               
source   of   revenue   for   essential   public   services   and                                                               
infrastructure, enhance economic  stability and attract business,                                                               
cultivate a skilled workforce, and support education.                                                                           
                                                                                                                                
6:24:30 PM                                                                                                                    
                                                                                                                                
PAUL SEATON, representing self, stated  his support of HB 156 and                                                               
said  revenue   is  needed  to  balance   the  state's  essential                                                               
expenditures.  He offered his  understanding that [HB 156] is the                                                               
first  real consideration  [of  an income  tax]  since the  House                                                               
passed what would  have been the fourth-lowest income  tax in the                                                               
nation, as  part of  a long-term  fiscal plan back  in 2015.   He                                                               
said  he  is pleased  HB  156  proposes a  2  percent  tax on  S-                                                               
corporations because those that are  involved in oil are avoiding                                                               
the corporate income tax.                                                                                                       
                                                                                                                                
6:26:05 PM                                                                                                                    
                                                                                                                                
JOEL  SALVINO,   representing  self,  emphasized   his  four-year                                                               
residency in Alaska  and being 33 and in the  prime earning years                                                               
of  life.   He  talked  about  his  family, business,  farm,  and                                                               
choices for being in Alaska.   He repeatedly emphasized the aging                                                               
membership  of  the  legislature  and questioned  why  they  have                                                               
reaped success  only to  "pull the ladder  out" from  behind them                                                               
for the next  generation.  He urged the committee  not to "burden                                                               
us with new taxes that you  never faced."  He emphasized his hard                                                               
work  and opined  that taxing  his income  is "stealing  the most                                                               
valuable  resource  in the  world."    He requested  a  line-item                                                               
budget showing the need for more money.                                                                                         
                                                                                                                                
6:29:10 PM                                                                                                                    
                                                                                                                                
KEVIN BANKS, representing  self, testified in support  of HB 156.                                                               
He observed  that a single-source  revenue from the  oil industry                                                               
is  problematic, in  that  citizens of  Alaska  have enjoyed  the                                                               
services  of  government without  participating  in  it and  have                                                               
acquired a sense  of entitlement to the services  provided by the                                                               
state,  such as  roads  and  education.   He  posited that  "that                                                               
contribution"  [of income  tax] would  give Alaskans  a stake  in                                                               
what  is happening  in government.   He  said he  would favor  an                                                               
income tax over a sales  tax for reasons many previous testifiers                                                               
have already  stated; a sales  tax "has no consideration  for the                                                               
situation faced by  an individual taxpayer."  He  remarked on the                                                               
irony that while  HB 156 proposes an income tax,  another bill on                                                               
the docket proposes to reduce corporate income taxes.                                                                           
                                                                                                                                
6:31:41 PM                                                                                                                    
                                                                                                                                
KATHY MORGAN, representing self, testified  in support of HB 156.                                                               
She opined  that Alaska  needs to  come up  with more  revenue to                                                               
support state services; it cannot  continue spending more than it                                                               
earns  and cutting  state services  more than  they have  already                                                               
been cut.   She said she  does not think the  proposed income tax                                                               
under HB  156 goes  far enough; she  suggested taxing  all income                                                               
over $100,000  earned in  Alaska and  increasing the  annual head                                                               
tax to  $200 per earner.   She talked about being  retired and in                                                               
the past  paying a  state income  tax and  a state  disaster tax.                                                               
She proffered that for many Alaskans  the head tax would be "more                                                               
than balanced by the PFD" and  would help the permanent fund from                                                               
being depleted by  state government.  She said  a statewide sales                                                               
tax would  create disproportionate effects on  Alaskans, while an                                                               
income  tax would  impose more  of the  burden on  those who  can                                                               
afford it.                                                                                                                      
                                                                                                                                
6:35:11 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER,  after ascertaining  there was  no one  else who                                                               
wished to testify, closed public testimony on HB 142 and HB 156.                                                                
                                                                                                                                
                       HB 156-INCOME TAX                                                                                    
                                                                                                                                
7:02:39 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER announced that the  final order of business would                                                               
be  HOUSE BILL  NO.  156, "An  Act relating  to  the taxation  of                                                               
income of individuals, partners,  shareholders in S corporations,                                                               
trusts, and  estates; repealing tax  credits applied  against the                                                               
tax  on individuals  under the  Alaska  Net Income  Tax Act;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
CHAIR CARPENTER announced there  were no amendments submitted for                                                               
HB 156.  He invited the bill sponsor to speak.                                                                                  
                                                                                                                                
7:03:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ALYSE  GALVIN,  Alaska State  Legislature,  prime                                                               
sponsor of HB 156, stated she  is grateful for the opportunity to                                                               
put another option  on the table as the  legislature thinks about                                                               
broad-based revenue.  Every state in  the nation has some form of                                                               
broad-based  revenue, which  is  a policy  decision.   While  the                                                               
state historically  has been  able to  be without  [income] taxes                                                               
for  many  years, it  is  responsible  to  consider it  now,  not                                                               
because it is needed today but  because soon there will be a need                                                               
and putting anything in place takes  12-18 months.  She urged the                                                               
committee to seriously consider the bill.                                                                                       
                                                                                                                                
7:04:30 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER related  that no amendments have  been offered to                                                               
HB 156  and that  perhaps the timeline  for amendments  should be                                                               
extended to 2/28/24.                                                                                                            
                                                                                                                                
REPRESENTATIVE GROH noted he is a  co-sponsor of the bill and has                                                               
no amendments.                                                                                                                  
                                                                                                                                
CHAIR CARPENTER stated  he will not extend the  deadline since it                                                               
appears there are no requests for amendments.                                                                                   
                                                                                                                                
7:05:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH began  a  motion  to report  HB  156 out  of                                                               
committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE ALLARD voiced an objection.                                                                                      
                                                                                                                                
CHAIR  CARPENTER   pointed  out  that  motions   must  be  worded                                                               
specifically and asked Representative McCabe for a motion.                                                                      
                                                                                                                                
7:05:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE  moved to  report HB  156 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE MCKAY objected.                                                                                                  
                                                                                                                                
7:05:56 PM                                                                                                                    
                                                                                                                                
A  roll call  vote was  taken.   Representatives Gray,  Groh, and                                                               
Carpenter voted  in favor of the  motion to report HB  156 out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.  Representatives McKay,  McCabe, Tilton, and Allard                                                               
voted against it.  Therefore, by a  vote of 3-4, HB 156 failed to                                                               
be  reported out  of  the  House Special  Committee  on Ways  and                                                               
Means.