04/07/1997 02:00 PM Senate CRA

 Number 240                                                                    
                                                                               
                   SB 131 ANNUAL SCHOOL TAX                                  
                                                                               
  CHAIRMAN MACKIE  introduced SB 131 as the next order of business.            
                                                                               
  ROBERT NELSON , staff to Senator Al Adams, who is the prime sponsor          
 of SB 131, explained the legislation imposes a school tax of $25 a            
 year on persons 19 years of age and older, both employed and self-            
 employed, resident and non-residents alike.  The revenue collected            
 from this annual tax would go into the general fund with the intent           
 of the dollars going towards the School Construction Grant Fund and           
 the Major Maintenance Grant Fund.                                             
                                                                               
 Mr. Nelson said there is a definite need for the funding of school            
 maintenance throughout Alaska, and with the state's decline in                
 revenues and budget cut-backs, SB 131 would allow an alternative              
 means of funding for Alaskan schools.                                         
                                                                               
 Mr. Nelson noted that during 1995 the total number of people 19 and           
 older in the work force was about 254,000, and with a $25 per                 
 person annual school tax, the state would stand to raise                      
 approximately $6.3 million in revenue.  Included in these figures             
 are the non-wage earners which comprise about 23 percent of total             
 wage and salary workers in Alaska.  The state could stand to gain             
 approximately $2 million from the passage of SB 131 from non-                 
 resident workers alike.                                                       
                                                                               
 Number 280                                                                    
                                                                               
  DEBORAH VOGT , Deputy Commissioner, Department of Revenue, said the          
 fiscal note prepared by the department is based on the idea that              
 the Department of Revenue would directly enforce the tax against              
 self-employed people, and that the tax would be collected and                 
 remitted to the general fund from employed people by the Department           
 of Labor in conjunction with the unemployment tax.  For that                  
 reason, the Department of Revenue fiscal note only shows $1.5 in              
 income.  The Department of Labor has estimated that the collections           
 it would collect would be about $8.7 million.  She noted the                  
 Department of Labor has estimated there are approximately 350,000             
 employees in the state.                                                       
                                                                               
 Ms. Vogt pointed out that the Long Range Fiscal Planning Commission           
 considered reinstating the school tax as one of the tools for                 
 closing the revenue gap, but it was not adopted as a                          
 recommendation.                                                               
                                                                               
 Number 310                                                                    
                                                                               
  CHAIRMAN MACKIE  inquired when the previous school tax was                   
 eliminated.  SENATOR PHILLIPS  advised that the school tax was                
 repealed in 1980 for the same reason the state income tax was                 
 repealed, which was because the state had a lot of money coming in            
 from oil revenues.                                                            
                                                                               
  SENATOR WILKEN  stated that when running for the Senate, he pledged          
 in his campaign that he wouldn't support any new taxes on Alaska              
 residents so he would be opposing SB 131.                                     
                                                                               
 Number 336                                                                    
                                                                               
 Following brief discussion by committee members,  CHAIRMAN MACKIE             
 stated SB 131 would be held in committee because it didn't appear             
 that there were the votes to move it out.