Legislature(2021 - 2022)BUTROVICH 205
05/03/2021 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SJR7 | |
| SJR5 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SJR 6 | TELECONFERENCED | |
| += | SJR 5 | TELECONFERENCED | |
| += | SJR 7 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SJR 7-CONST. AM: STATE TAX; VOTER APPROVAL
1:33:42 PM
CHAIR HOLLAND announced the consideration of SENATE JOINT
RESOLUTION NO. 7, Proposing amendments to the Constitution of
the State of Alaska relating to prohibiting the establishment of
a state tax without the approval of the voters of the state; and
relating to the initiative process.
[SJR 7 was previously heard on 4/30/21.]
1:34:12 PM
MIKE BARNHILL, Deputy Commissioner, Department of Revenue,
Juneau, Alaska, offered to answer committee members' questions.
1:34:56 PM
SENATOR KIEHL asked for the vision of democracy contained in
this proposed change to the Alaska Constitution.
MR. BARNHILL answered that SJR 7 would create a constitutional
symmetry between direct democracy and representative democracy
when enacting new taxes.
SENATOR KIEHL suggested SJR 7 would tilt the field against new
taxes rather than providing a consistent philosophy. He asked
what would constitute a new tax under this language since the
term is not defined. For example, he wondered if eliminating a
tax break would be considered a new tax.
1:37:13 PM
MR. BARNHILL said he reviewed how the state defines
constitutional terms. The Alaska Supreme Court first considers
dictionary definitions, then legislative history and the content
of legislative hearings. Therefore, new taxes are ones that the
state does not currently impose. For example, it would be a new
tax if the state imposed a new sales tax, a value-added tax, a
gross-receipt tax, or a personal income tax.
1:37:59 PM
SENATOR KIEHL said the state exempts taxes on natural gas from
Cook Inlet for use in state. He characterized it as a $125
million investment in affordable power for the Anchorage Bowl
and Kenai Peninsula. He asked whether this exemption was removed
by passage of SJR 7 and if it would establish a new tax.
MR. BARNHILL recalled that question from last year. He said Mr.
Milks responded by writing a letter that became part of the
legislative history. He recalled that deleting exemptions does
not constitute a new tax.
1:39:22 PM
WILLIAM MILKS, Senior Assistant Attorney General, Legislation &
Regulations Section, Civil Division, Department of Law, Juneau,
Alaska, acknowledged that Mr. Barnhill just explained how terms
are defined in the Alaska Constitution. He reviewed some recent
Alaska Supreme Court cases that state what the court considers
during its review. First, the court looks to the plain meeting
and purpose of the provision. He explained it is an ordinary,
reasonable, practical understanding of what the words mean.
Ultimately, the voters approve the Alaska Constitution. Second,
the court considers the intent of the framers. Further, the
court looks at the legislative history, and as Mr. Barnhill
mentioned, the court considers the dictionary definition. The
court may consider other uses of the words, he said.
MR. MILKS said SJR 7 is somewhat different than the resolutions
previously proposed. The specific language "establishes a state
tax." He opined that removing an exemption is not establishing a
new tax. However, legislators could always modify the language
in the resolution. Currently, SJR 7 will establish a state tax,
which would mean creating a new tax.
1:41:35 PM
MR. BARNHILL remarked that the letter he referenced by Mr. Milks
was dated April 15, 2019, in response to Senator Hughes's
question. He read:
I stated in hearing testimony the administration's
intent is that changes to deductions, credits, and
exemptions from an existing state tax would not be
considered an increase in the rate of an existing
state tax and thus would not require voter approval.
MR. BARNHILL related that Senator Kiehl's question was whether
that would be construed as a new tax, not an increase in the tax
rate. He offered his view that the response would be the same.
1:42:19 PM
SENATOR KIEHL remarked that removing an exemption from an
existing tax could significantly change what is taxable. He
asked if the corporate income tax that applies only to "C"
corporations was extended to B" or "S" corporations if it would
establish a new tax.
MR. BARNHILL responded that he believes a Colorado case ruled on
the matter. He acknowledged that just because the Colorado
Supreme Court decided one way does not mean the Alaska courts
would decide in the same way. He offered to research precedent
in other states and report back to the committee.
1:43:39 PM
MR. MILKS restated that tools the court would use include a
plain language interpretation, a dictionary definition,
legislative history, constitutional convention history and
discussions in committee. He said there would be a much fuller
record if any dispute arose in court. He stated that he agrees
with Mr. Barnhill's responses.
1:45:07 PM
SENATOR KIEHL asked how user fees would fall within the
framework of establishing a new tax. He wondered if user fees
would be treated differently and, if so, does it matter whether
the fees cover more than the program cost.
MR. BARNHILL said the distinction between user fees and taxes is
the subject of many tax cases in the Lower 48. However, the
administration does not intend user fees to apply. He said a
user fee is a charge assessed by a state agency to defray the
cost of providing a specific service to the public, such as a
driver's license. He said that a new user fee established to
provide a service such as a driver's license would not require
voter approval.
He pointed out that Senator Kiehl asked a more difficult
question: what if the user fees recover more than the cost of
providing the particular service. He related his understanding
that the Colorado Supreme Court precedent addresses that issue.
The same caveat would apply since it is not an Alaska Supreme
Court decision. He said he was not sure it would be helpful to
predict what the court would do. However, the administration
intends not to characterize or interpret user fees established
to defray the cost of providing a particular service as a tax
requiring voter approval.
1:47:50 PM
SENATOR HUGHES related that if the voters establish a new tax
through an initiative process, the legislature must meet to
approve or reject it in joint session. If the legislature chose
not to meet, whether the initiative would be considered
rejected. If so, that decision could be made by a single
presiding officer refusing to meet in joint session. She
referred to subsection (c) on page 2, lines 6 - 13, which read:
(c) A law enacted by the voters through the initiative
process under Article XI that establishes a state tax
shall not take effect unless the legislature, by
resolution, approves the initiated law by a majority
vote in joint session before the adjournment of the
next regular session occurring after the lieutenant
governor certifies the election returns. If approved
by the legislature, the initiated law becomes
effective ninety days after approval. If the
legislature fails to approve the initiated law before
the adjournment of the regular session, the initiated
law is rejected and does not take effect.
1:49:01 PM
SENATOR HUGHES asked if one leader could cause the initiative to
fail. She wondered if she was reading something into this.
MR. BARNHILL responded that he terms that as "a pocket form of
veto." This language requires approval by a majority vote,
failing that it would not take effect. However, there does not
appear to be any prohibition against a pocket veto.
1:49:58 PM
MR. MILKS referred to page 2, lines 11-13 of SJR 7, which read:
If the legislature fails to approve the initiated law
before the adjournment of the regular session, the
initiated law is rejected and does not take effect.
MR. MILKS said this means the law is rejected if the legislature
fails to act. The language is currently clear on the failure to
act, he said. In terms of the question about the authority of a
single presiding officer, the legislature's rules of procedure
are the Uniform Rules, which the legislature could change.
1:51:04 PM
SENATOR MYERS recalled a recent Alaska Supreme Court decision
related to the legislature not holding a joint session to
confirm governor appointees to boards and commissions. He
suggested the legislature should consider changing this
language. The legislature could approve appointees by resolution
in the normal legislative process for passing legislation rather
than in joint session. He acknowledged that legislators would
not be on record if a presiding officer could theoretically slow
the joint session down or block it.
MR. MILKS responded that it is a policy call for the legislature
to consider.
SENATOR HUGHES offered her view that passing a resolution would
open it up for multiple chairs to block the resolution.
1:54:24 PM
SENATOR MYERS recalled at the last hearing Senator Kiehl asked
what SJR 7 would fix. He offered his view that SJR 7 does not
attempt to fix policy or process, but rather it would address a
lack of trust. He argued that the legislature does not hold the
trust of the people. For one thing, two-thirds of the
legislature changed in the last few elections. The referendum to
repeal Senate Bill 21 was used to uphold Alaska's taxes on oil
companies. He acknowledged that the initiative or referendum
process is lengthy and often expensive. SJR 7 attempts to
address voter distrust by allowing the voters to have the last
say on any new taxes the legislature proposes. Without this
final say, the legislature would have an incentive to tax the
people least able to protest since it takes time, effort and
funding to organize an initiative. He suggested that placing it
on the ballot is a change for the better.
SENATOR HUGHES commented that the initiative and referendum
process is already available to those wishing to initiate or
repeal a tax. However, it would constrain the legislature
because voters could reverse a tax passed by the legislature.
The legislature can repeal a tax passed by initiative after a
two-year delay. She viewed SJR 7 as affecting legislative
actions more than voter initiatives.
1:58:37 PM
SENATOR HUGHES asked if the last legislature narrowed the
process to broad-based taxes.
MR. BARNHILL recalled that the prior legislative committee held
discussions but did not narrow the resolution.
[SJR 7 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 5 Legal memo.pdf |
SJUD 5/3/2021 1:30:00 PM |
SJR 5 |