04/28/2001 10:22 AM Senate FIN

                                                                                                                                
     SENATE BILL NO. 165                                                                                                        
     "An Act imposing a tax on employment; and providing for an                                                                 
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
SENATOR  AUSTERMAN stated  that SB 165  would impose  a tax  of $100                                                            
dollars a year on each  employed individual ages 19 years and older,                                                            
and  would include  self-employed  persons.    Under the  bill,  the                                                            
employer  would deduct  $50 dollars  from the  employee's salary  on                                                            
each of  their first  two regular  payrolls after  January 1  of the                                                            
calendar year.   A provision would be added to prevent  the tax from                                                            
being taken out more than  one time when the employee provides proof                                                            
to their  new employer  that the tax  has been  satisfied.   The tax                                                            
would  be  deposited   into  the  State's  general  fund,   however,                                                            
accounted  for separately.   The amounts  would be appropriated  for                                                            
education  only.   Senator Austerman  reiterated  that education  is                                                            
under funded.                                                                                                                   
                                                                                                                                
Co-Chair  Kelly responded that  he liked the  concept, as it  had no                                                            
provisions for income.                                                                                                          
                                                                                                                                
Senator  Austerman noted  that there had  been recommendations  that                                                            
the tax be taken from the  Permanent Fund Dividend.  He acknowledged                                                            
that there are a number  of ideas floating around as to when and how                                                            
to tap that $100 dollars.                                                                                                       
                                                                                                                                
Senator Hoffman opposed  a check being taken from the Permanent Fund                                                            
Dividend as there  are many people working in the  State that do not                                                            
collect the dividend.                                                                                                           
                                                                                                                                
Senator  Leman commented  that the  Permanent Fund  check off  would                                                            
work to help  reduce the cost of an  administration fee collection.                                                             
He agreed that  the law should extend beyond those  that collect the                                                            
dividend.                                                                                                                       
                                                                                                                                
Senator  Ward  asked  if  there  had  been  consideration  given  to                                                            
privatizing the action and perhaps using a head tax.                                                                            
                                                                                                                                
Senator Austerman replied that had not been considered.                                                                         
                                                                                                                                
Senator Ward supported  the State placing a constitutional  spending                                                            
limit  before the  voters.   He  inquired how  the  amount had  been                                                            
determined.                                                                                                                     
                                                                                                                                
Senator Austerman  replied that the  number had been "picked  out of                                                            
the air" with consideration to Senator Wilkins's SB 1.                                                                          
                                                                                                                                
Senator  Wilken mentioned  that each  year his  office undertakes  a                                                            
survey  to 10,000 constituents.    Five percent  of the people,  who                                                            
responded, thought  that a $200 school tax was favorable.   He noted                                                            
that he had an  amendment, pending arrival, and asked  that the bill                                                            
be held  until that time.   He suggested that  the bill might  focus                                                            
effort on equal treatment for education throughout the State.                                                                   
Co-Chair  Kelly thought the  bill would help  to organize Alaska  to                                                            
pay part of the way for education.                                                                                              
                                                                                                                                
Senator Wilken  interjected that perhaps  the State should  ask $100                                                            
dollars  for  organized  Alaska and  $400  dollars  for unorganized                                                             
Alaska.  He  pointed out that there  is statutory ability  to charge                                                            
each area differently.                                                                                                          
                                                                                                                                
Senator Hoffman  claimed that would not be fair and  that he assumed                                                            
that the amendment  would not achieve what Senator  Wilken intended.                                                            
                                                                                                                                
Senator Wilken  stated that he wanted to address those  that are not                                                            
paying for their share of the education costs.                                                                                  
                                                                                                                                
Senator  Olson  commented  that he  would  not support  the  concept                                                            
proposed by Senator Wilken.                                                                                                     
                                                                                                                                
Co-Chair Kelly  interjected that in his district,  an education tax,                                                            
is the only tax that is supported.                                                                                              
                                                                                                                                
Co-Chair Donley agreed,  however, pointed out that a $100 dollar tax                                                            
would only address five percent of the fiscal gap.                                                                              
                                                                                                                                
Co-Chair Kelly agreed with Co-Chair Donley.                                                                                     
                                                                                                                                
Senator Austerman stated  that the legislation was not introduced to                                                            
solve  the fiscal  gap, but  instead to  create  a discussion  point                                                            
regarding education funding.   He added that the entire issue on the                                                            
education  gap  would take  much  more  than  the proposed  bill  to                                                            
address.                                                                                                                        
                                                                                                                                
Senator Wilken  reiterated  that a Permanent  Fund check off  in the                                                            
Rural Education Attendance Areas (REAA) could work.                                                                             
                                                                                                                                
Co-Chair  Kelly noted  that SB 165  would be HELD  in Committee  for                                                            
further consideration.                                                                                                          
                                                                                                                                
                                                                                                                                
AT EASE 10:50 AM/10:55 AM