Legislature(2017 - 2018)CAPITOL 106

03/27/2017 08:00 AM EDUCATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 102 LIMITED TEACHER CERTIFICATES; LANGUAGES TELECONFERENCED
Moved CSHB 102(EDC) Out of Committee
-- Public Testimony --
+= HB 52 PRE-ELEMENTARY SCHOOL PROGRAMS/PLANS TELECONFERENCED
Heard & Held
-- Public Testimony --
+= HB 146 SCHOOL TAX; PFD PAYMENT FOR SCHOOL TAX TELECONFERENCED
Moved SSHB 146 Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
         HB 146-SCHOOL TAX; PFD PAYMENT FOR SCHOOL TAX                                                                      
                                                                                                                                
8:38:58 AM                                                                                                                    
                                                                                                                                
CHAIR DRUMMOND announced  that the final order  of business would                                                               
be SPONSOR SUBSTITUTE FOR HOUSE BILL  NO. 146, "An Act imposing a                                                               
school tax  on certain income of  residents, part-year residents,                                                               
and nonresidents;  relating to a  payment against the  school tax                                                               
from the permanent fund dividend  disbursement; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
8:39:23 AM                                                                                                                    
                                                                                                                                
CHAIR DRUMMOND opened public testimony.                                                                                         
                                                                                                                                
8:39:39 AM                                                                                                                    
                                                                                                                                
ALLEN MCCARTY, Spokesperson,  Citizens Alliance Protecting School                                                               
Lands,  informed  the   committee  Citizens  Alliance  Protecting                                                               
School  Lands  is  a statewide  organization  formed  to  protect                                                               
school lands and  school funds.  He said the  proposed bill would                                                               
attack the 5 percent per year  trust fund.  Mr. McCarty expressed                                                               
his understanding  that the school  fund is  a trust, and  is not                                                               
state money,  but is school money.   Each year the  earnings from                                                               
the  trust are  deposited into  the general  fund.   The earnings                                                               
have reduced  from $24 million per  year to $10 million  per year                                                               
due to poor  investments by the Department of Revenue  (DOR).  He                                                               
cautioned that  at the end of  the bill the language  of the bill                                                               
would attack  the trust fund  and in 26  years the fund  that has                                                               
been building since 1915 will be totally gone.                                                                                  
                                                                                                                                
8:41:51 AM                                                                                                                    
                                                                                                                                
OWEN PHILLIPS,  Staff, Representative  Matt Claman,  Alaska State                                                               
Legislature, said  he is unware of  a 5 percent decrease  [in the                                                               
school fund].   He further  clarified that the bill  would garner                                                               
approximately   $500  million   through  taxes   that  would   be                                                               
designated to "the school fund and  then, as I understand it, the                                                               
leftover would just  stay in undesignated funds  and be allocated                                                               
elsewhere."                                                                                                                     
                                                                                                                                
CHAIR  DRUMMOND  asked whether  the  school  tax funds  would  be                                                               
"somehow distinguished."                                                                                                        
                                                                                                                                
MR. PHILLIPS said  DOR would have authority  to adopt regulations                                                               
for management of the funds.                                                                                                    
                                                                                                                                
8:43:39 AM                                                                                                                    
                                                                                                                                
CHAIR  DRUMMOND,  after ascertaining  no  one  further wished  to                                                               
testify, closed public testimony.  She remarked:                                                                                
                                                                                                                                
     This bill,  SSHB 146, has  a lot  of working parts.   I                                                                    
     believe that  with our current fiscal  reality, we need                                                                    
     to  keep our  options  open.   I  feel  there are  some                                                                    
     things in  this bill that  need to be clarified,  but I                                                                    
     think I  want to let  [the House Finance  Committee] do                                                                    
     that.   I don't want to  hold this bill up  here, so we                                                                    
     can  give them  time to  fully  vet this  bill in  that                                                                    
     committee.  ... I  know  I  would like  to  see a  more                                                                    
     progressive  tax scale,  but  I am  not  sure how  that                                                                    
     would  look.   I'm not  sure  how I  feel about  taxing                                                                    
     children who only receive a  PFD as income, even though                                                                    
     they would  benefit from this  tax.  But  those issues,                                                                    
     to me, are  less about education policy  and more about                                                                    
     finance, so  I would like  to move this bill  out today                                                                    
     with  the understanding  that in  its  current form,  I                                                                    
     would not necessarily  vote for this bill  on the House                                                                    
     floor.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  PARISH opined  the  bill levies  a  tax on  every                                                               
Alaskan  and  urged   for  a  mechanism  to   draw  revenue  from                                                               
nonresidents  and  working  adults   earning  income  from  other                                                               
sources.   He  agreed the  education  committee is  not the  best                                                               
committee to address the [financial aspects] of the bill.                                                                       
                                                                                                                                
REPRESENTATIVE TALERICO  directed attention  to the bill  on page                                                               
2, lines 4-13, which read:                                                                                                      
                                                                                                                                
     (b)  For a taxpayer whose adjusted gross income is                                                                         
           (1)  less than $20,000, the tax is $100 a year;                                                                      
           (2)  $20,000 or more,  but less than $40,000, the                                                                    
     tax is $250 a year;                                                                                                        
          (3)  $40,000  or more, but less  than $50,000, the                                                                    
     tax is $500 a year;                                                                                                        
          (4)  $50,000  or more, but less  than $75,000, the                                                                    
     tax is $750 a year;                                                                                                        
           (5)   $75,000  or more,  but less  than $100,000,                                                                    
     the tax is $1,000 a year;                                                                                                  
           (6)   $100,000 or  more, but less  than $150,000,                                                                    
     the tax is $2,500 a year;                                                                                                  
           (7)   $150,000 or  more, but less  than $200,000,                                                                    
     the tax is $5,000 a year;                                                                                                  
          (8)   $200,000  or more,  but less  than $250,000,                                                                    
     the tax is $6,500 a year;                                                                                                  
          (9)  $250,000 or more, the tax is $8,500 a year.                                                                      
                                                                                                                                
REPRESENTATIVE  TALERICO related  the  rates  for adjusted  gross                                                               
income  are  much higher  than  the  previous school  tax;  also,                                                               
aspects of  the maximum  income limit,  the steps  between income                                                               
limits, and  part-time income are  questionable.  He  pointed out                                                               
the bill assesses a tax  on year-around Alaska residents who live                                                               
below the poverty  level.  Representative Talerico  said he could                                                               
not support the bill.                                                                                                           
                                                                                                                                
8:48:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ  stated support  for the  overall intent                                                               
of the  bill, which  is to  find a way  to fund  public education                                                               
based on one's income.  She  said progressivity in a revenue plan                                                               
is appropriate  at both  ends of the  income scale,  however, she                                                               
expressed her  concerns about the  structure of the bill  and its                                                               
disproportionate impact  on lower-income taxpayers,  with maximum                                                               
tax  [relief   for]  higher-income  taxpayers.     Representative                                                               
Spohnholz  said she  would reluctantly  support  moving the  bill                                                               
from committee.                                                                                                                 
                                                                                                                                
8:51:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH moved  to report SSHB 146  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE TALERICO objected.                                                                                               
                                                                                                                                
8:51:47 AM                                                                                                                    
                                                                                                                                
A roll  call vote  was taken.   Representatives  Parish, Fansler,                                                               
Spohnholz,   and   Drummond  voted   in   favor   of  SSHB   146.                                                               
Representatives Kopp  and Talerico voted against  it.  Therefore,                                                               
SSHB  146  was  reported  out of  the  House  Education  Standing                                                               
Committee by a vote of 4-2.                                                                                                     

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