Legislature(2001 - 2002)

02/11/2002 03:20 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 229-EDUCATION TAX ON EMPLOYMENT                                                                                            
                                                                                                                                
[Contains discussion pertaining to SB 165, the companion bill.]                                                                 
                                                                                                                                
Number 006                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  announced that  the first  order of  business is                                                               
HOUSE BILL  NO. 229, "An  Act imposing  a tax on  employment; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 021                                                                                                                      
                                                                                                                                
REPRESENTATIVE GARY  STEVENS, Alaska State  Legislature, sponsor,                                                               
introduced HB  229 to  the committee.   He  said this  bill could                                                               
easily be  a part of long-range  fiscal plan.  He  mentioned that                                                               
HB  229 is  the House  companion bill  to Senator  Austerman's SB
165.   He addressed some of  the issues that the  committee might                                                               
be interested  in.   He said,  "This is  a $100-a-year-per-person                                                               
head tax, and as  you may recall ... in 1970 ...  there was a $10                                                               
head tax  at the time,  and it was an  easy enough thing;  it was                                                               
taken out  of your first paycheck."   He said although  HB 229 is                                                               
considerably more,  $100, it can  be taken  out of the  first two                                                               
paychecks  - $50  each  paycheck.   He stated  that  it would  be                                                               
collected by the  employer and remitted to the  state on February                                                               
1.  This  would only apply to  people who are 19  years or older,                                                               
and not the high school student  working part-time.  He said that                                                               
mostly it would affect the people  who are out of high school and                                                               
working full-time.                                                                                                              
                                                                                                                                
REPRESENTATIVE  STEVENS said  that this  would not  apply to  the                                                               
military  because he  doesn't think  there's any  way to  collect                                                               
that.   He stated that  there would  be no exemptions  for income                                                               
levels, nor  for senior citizens or  for people who are  19 years                                                               
or  older.   Out-of-state workers  certainly would  be a  part of                                                               
this.  The  intention is that this would be  used for educational                                                               
funding, but of  course it can't be dedicated.   He said that the                                                               
cost  to collect  this tax  would be  $822,000.   The tax  itself                                                               
would  be estimated  at $38  million a  year, and  the department                                                               
would hire eight people to collect the tax.                                                                                     
                                                                                                                                
Number 063                                                                                                                      
                                                                                                                                
REPRESENTATIVE STEVENS  said HB  229 is  supported by  the school                                                               
board  association, the  Sitka school  district,  and the  Kodiak                                                               
Island Borough, among others.   He concluded his presentation and                                                               
offered to answer any questions that the committee might have.                                                                  
                                                                                                                                
Number 069                                                                                                                      
                                                                                                                                
CHAIR  MURKOWSKI noted  that there  are two  fiscal notes  in the                                                               
packet.   One is from  2001, and the  other is an  updated fiscal                                                               
note as of  February 11, 2002.  She said  that the updated fiscal                                                               
note  indicates  a  lesser  amount  than  Representative  Stevens                                                               
mentioned.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HAYES   asked  Representative  Stevens   why  the                                                               
military is exempted,  and inquired if [a member  of the military                                                               
is]  exempted  if  he/she  holds another  job  in  the  community                                                               
outside of his/her military duties.                                                                                             
                                                                                                                                
REPRESENTATIVE STEVENS said that they  are only exempted from the                                                               
military pay, so any job they  may have in the community would be                                                               
a part of  that.  He apologized for his  early departure from the                                                               
proceedings, but said he had to  leave to chair the House Special                                                               
Committee on Fisheries meeting.                                                                                                 
                                                                                                                                
Number 094                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  asked a member of  Representative Stevens' staff                                                               
if this  would be  applicable to seasonal  employees who  come to                                                               
Alaska, whether  they're working in  Denali Park or working  on a                                                               
processor.   She asked if she  was correct in assuming  that it's                                                               
whatever  the first  two  paychecks of  that  employee would  be;                                                               
whether it's in  January or in July, the payments  would be taken                                                               
from the first two paychecks.                                                                                                   
                                                                                                                                
Number 105                                                                                                                      
                                                                                                                                
DOUGLAS A.  LETCH, Staff to  Representative Gary  Stevens, Alaska                                                               
State Legislature,  said, "That's correct.   ...  The way  we see                                                               
the  bill is  that it  would apply  to the  first two  paychecks,                                                               
whatever time  you start  working during the  course of  ... that                                                               
calendar year."                                                                                                                 
                                                                                                                                
REPRESENTATIVE   MEYER   asked   if   he  is   correct   in   his                                                               
interpretation  that  it  doesn't  matter  how  much  one  makes,                                                               
everybody over 19 years of age pays the $100.                                                                                   
                                                                                                                                
MR. LETCH said that is correct.   He stated that the idea is that                                                               
the tax  would go  to any individual  over the age  of 19  who is                                                               
employed in the state of Alaska, exclusive of the military.                                                                     
                                                                                                                                
REPRESENTATIVE MEYER said, "So in  some ways this is a regressive                                                               
tax, but in other ways it's  a fair tax because everyone pays the                                                               
same amount, but regressive in the  sense that ... if you work at                                                               
Burger King  for minimum wage,  the $100  is going to  impact you                                                               
more than someone  who works somewhere else and makes  a lot more                                                               
money."   He asked if  it would be  easier to just  withdraw $100                                                               
from the  permanent fund dividend  (PFD) instead of  hiring eight                                                               
people  and having  almost $1  million  in costs  to collect  the                                                               
money.  He asked if that option had been discussed.                                                                             
                                                                                                                                
Number 130                                                                                                                      
                                                                                                                                
MR.  LETCH  mentioned  that Representative  Stevens'  office  and                                                               
Senator  Austerman's office  discussed the  issue the  other day.                                                               
He said:                                                                                                                        
                                                                                                                                
     I don't want to put words  in my boss's mouth, but it's                                                                    
     his feeling that by adding  the permanent fund dividend                                                                    
     into   this,   it   creates  yet   another   level   of                                                                    
     bureaucracy.   And his intention  would be to  keep the                                                                    
     bill  simple.   However, if  that  is the  wish of  the                                                                    
     committee, and  if the Senator's  office would  like to                                                                    
     comment on the  PFD issue, I'm sure we'd  be willing to                                                                    
     entertain that conversation as well.                                                                                       
                                                                                                                                
REPRESENTATIVE MEYER  said he  was going  to suggest  taking $100                                                               
out of each  permanent fund dividend, but the  intention was just                                                               
to capture  those age 19 and  over, which would be  a little more                                                               
of an administrative task.                                                                                                      
                                                                                                                                
Number 145                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  noted that the  seasonal employees would  not be                                                               
affected if  $100 is deducted  from the permanent  fund dividend.                                                               
She said, "You're getting the college  kids who are coming up and                                                               
working  in the  parks  or  the folks  that  are  working in  the                                                               
fisheries and the  canneries.  This is a way  that we can capture                                                               
money from those who do come [to Alaska]."                                                                                      
                                                                                                                                
MR. LETCH  said, "That's exactly  how Representative  Stevens was                                                               
looking at it."                                                                                                                 
                                                                                                                                
Number 154                                                                                                                      
                                                                                                                                
REPRESENTATIVE CRAWFORD brought  up the issue of  a person having                                                               
multiple jobs.   He said the  record one used to  get was his/her                                                               
paycheck  stub.   He  explained that  one's  next employer  would                                                               
withhold it as well because of  being liable.  The employee would                                                               
then have to apply to get  the money back that he/she had already                                                               
paid before.   He said that a  $100 deduction each time  is a lot                                                               
more substantial,  and to somebody  like an ironworker  who might                                                               
work  for multiple  employers during  the year,  that would  be a                                                               
fairly substantial  amount to withhold  throughout the year.   He                                                               
said,  "I'd just  like to  see  ... a  good way  of proving  that                                                               
you've already paid this tax."                                                                                                  
                                                                                                                                
Number 174                                                                                                                      
                                                                                                                                
MR. LETCH  said [to Representative  Crawford], "I  understand you                                                               
were in a situation  where you had 12 jobs at  one time, and were                                                               
paying that  $10 each  time you  took a  job."   He said  that he                                                               
thinks the ultimate solution may  be something as simple as being                                                               
able  to  show a  paycheck  stub  to  one's  next employer.    He                                                               
mentioned  that there  is  a procedure  for one  to  apply for  a                                                               
refund if  an employer takes an  extra $100 out of  an employee's                                                               
pocket.   He said  that someone  is more likely  to go  after the                                                               
$100 than the $10.                                                                                                              
                                                                                                                                
REPRESENTATIVE  HALCRO   said  that   last  year   the  committee                                                               
discussed that  probably the  most efficient  way to  collect the                                                               
tax might  be to tie  it to the Employment  Security Contribution                                                               
(ESC)  reports that  employers are  responsible for  filing every                                                               
quarter.   He mentioned  that the ESC  report has  the employee's                                                               
name and  social security  number, and  that it  seems to  him it                                                               
would  be a  vehicle to  have  some sort  of a  check-and-balance                                                               
system.  Every  quarter when an employer submits the  ESC, it can                                                               
be reconciled  who has paid and  who hasn't.  He  asked Mr. Letch                                                               
if he  has talked to  the Department of Revenue  about "marrying"                                                               
the school tax fee to the ESC report.                                                                                           
                                                                                                                                
Number 206                                                                                                                      
                                                                                                                                
MR.  LETCH said  that he  would have  to defer  to somebody  from                                                               
Senator Austerman's staff.                                                                                                      
                                                                                                                                
Number 208                                                                                                                      
                                                                                                                                
AN UNIDENTIFIED SPEAKER said, "Yes and no."                                                                                     
                                                                                                                                
CHAIR MURKOWSKI asked, "I think  more information is forthcoming,                                                               
correct?"                                                                                                                       
                                                                                                                                
AN UNIDENTIFIED SPEAKER said, "Sure."                                                                                           
                                                                                                                                
Number 211                                                                                                                      
                                                                                                                                
MR. LETCH  said that after  the hearing  on [HB 229]  last April,                                                               
Senator Austerman's  staff and Representative Stevens'  staff did                                                               
some brainstorming and have looked into  the issue.  He said that                                                               
after the  two offices  talked on  Friday, the  understanding was                                                               
that  they were  still waiting  for some  clarification from  the                                                               
legal department and the revenue department.                                                                                    
                                                                                                                                
CHAIR  MURKOWSKI  told  Mr.  Letch  that if  he  finds  any  more                                                               
information to let the committee know.                                                                                          
                                                                                                                                
Number 220                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG asked  Mr. Letch if he could  go over the                                                               
rationale for exempting those under 19 years of age.                                                                            
                                                                                                                                
MR. LETCH said  the idea behind exempting those under  the age of                                                               
19 is because the graduating age  of most high school students is                                                               
18, so  "we will  be capturing  those people who  are not  in the                                                               
adult workforce as of yet."                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked if a  limitation on the  amount of                                                               
income, for example, $500 or $1,000, was considered.                                                                            
                                                                                                                                
MR.  LETCH   said  that   Representative  Stevens'   and  Senator                                                               
Austerman's offices have  talked about that, and  he believes the                                                               
consensus was to go with  the straight-across-the-board $100 head                                                               
tax on everybody, with no exemptions.                                                                                           
                                                                                                                                
Number 242                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG stated his  appreciation for allowing the                                                               
tax to  be taken  out in  the first  two regular  payroll periods                                                               
after January 1.   He said it's been his  experience that in some                                                               
lower-level,  entry-level  jobs,  sometimes the  employees  don't                                                               
return to  work on the second  or third day because  they perhaps                                                               
found out  that they don't like  the job or they  discovered they                                                               
don't like  to work anymore.   He said, "I  hate to do  this, but                                                               
I'd say  it's an indictment of  the youth of this  country and in                                                               
this state  right now.   I don't think  young people know  how to                                                               
work anymore."                                                                                                                  
                                                                                                                                
Number 254                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG spoke  of  his experience  with his  new                                                               
business this last year in which  many people, after a day or two                                                               
of work, found out what the  job actually entailed and would quit                                                               
or just  stop showing  up to work.   This caused  a good  deal of                                                               
paperwork from the accounting standpoint.   He said that he is in                                                               
agreement with the point that  Representative Halcro raised about                                                               
tying this  to the ESC  or making it  due later than  February 1.                                                               
He said,  "I guess  a concern I  have is ...  that ...  you might                                                               
want  to consider  a provision  to make  it the  second or  third                                                               
payroll period  for new hires or  something."  He said  that this                                                               
is going  to have an  impact on business  activity.  He  asked if                                                               
Representative Stevens' office or  Senator Austerman's office had                                                               
considered what kind of fiscal impact  and burden HB 229 is going                                                               
to have on private business.                                                                                                    
                                                                                                                                
Number 268                                                                                                                      
                                                                                                                                
MR. LETCH offered that he has had  a job for one day, saying that                                                               
he was a  vacuum cleaner salesman and a car  salesman for a short                                                               
time.   He deferred Representative  Rokeberg's question  to Susan                                                               
Hancock from  Senator Austerman's office  to address some  of the                                                               
private issues.   He  said that  later he could  get back  to the                                                               
question on the second or third payroll [deduction].                                                                            
                                                                                                                                
Number 280                                                                                                                      
                                                                                                                                
SUZANNE HANCOCK,  Staff to Senator  Alan Austerman,  Alaska State                                                               
Legislature, testified on  HB 229.  She  said Senator Austerman's                                                               
office  talked  to  several  gentlemen  with  the  Department  of                                                               
Revenue last  year, and they  said that tying the  employment tax                                                               
to the  ESC collection would add  to the expense.   She mentioned                                                               
that they were trying to keep  the fiscal note as low as possible                                                               
by keeping things as simple as possible.                                                                                        
                                                                                                                                
[Representative Rokeberg asked a  question that was indiscernible                                                               
because of background noise.]                                                                                                   
                                                                                                                                
Number 0288                                                                                                                     
                                                                                                                                
MS. HANCOCK replied, "The state."                                                                                               
                                                                                                                                
CHAIR  MURKOWSKI  asked,  "So  did they  indicate  what  ...  the                                                               
additional fiscal note would be, or did they go that far?"                                                                      
                                                                                                                                
MS. HANCOCK replied  in the negative, saying that it  was just at                                                               
that point of discussion and [the  state] just said that it would                                                               
add to the cost of the fiscal note.                                                                                             
                                                                                                                                
Number 292                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG voiced  his  concern  over this  serious                                                               
matter.     Many   small  businesses   can  only   use  expensive                                                               
professional accounting, at $50 to  $150 an hour, to put together                                                               
their quarterly statements and to  make sure that they're meeting                                                               
their   legal  obligations   to  both   the  state   and  federal                                                               
governments.   He said that  from the  private-sector standpoint,                                                               
it seems  the most opportune time  to file the employment  tax is                                                               
to do  it in conjunction with  other types of filings.   He said,                                                               
"I  don't  see this  as  a  enormous  burden,  but it  could  be,                                                               
depending on the level of  entry-level jobs that a business might                                                               
have."                                                                                                                          
                                                                                                                                
Number 305                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  referred to  the "$700,000  or $800,000"                                                               
fiscal note,  and said it's going  to cost the private  sector in                                                               
Alaska, in  terms of  productivity and  actual hard  costs, maybe                                                               
twice  that  because   of  the  accounting  time   put  into  the                                                               
collection of it.   He said, "When this is  designed, it needs to                                                               
be designed in such a manner  that it minimizes the (indisc.) and                                                               
maximizes this revenue.  Or you may have compliance problems."                                                                  
                                                                                                                                
CHAIR MURKOWSKI asked  Ms. Hancock if she knows  anything about a                                                               
system that was instituted before  that supposedly collected more                                                               
than it cost.                                                                                                                   
                                                                                                                                
Number 317                                                                                                                      
                                                                                                                                
MS. HANCOCK recalled that as  far as records are concerned, there                                                               
is no collective memory except  for people who actually had lived                                                               
in the state at that time.                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI commented that it  seems hard to believe that the                                                               
Department of Revenue had no numbers.                                                                                           
                                                                                                                                
MS. HANCOCK said that as  she recalled, the Department of Revenue                                                               
was not forthcoming with them at the time.                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  asked if there  was anybody from  the Department                                                               
of Revenue who was prepared to answer the question.                                                                             
                                                                                                                                
Number 327                                                                                                                      
                                                                                                                                
NEIL SLOTNICK,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department of  Revenue, testified  on HB  229.   He said  that he                                                               
hasn't done  research on this  subject, but his  understanding is                                                               
that when  there was  a $10 school  tax in the  past, all  of the                                                               
collection effort was  tied to the income tax.   He said that "it                                                               
was piggy-backed with  the income tax, and so we  really had very                                                               
little  extra collection  effort involved  with the  tax at  that                                                               
time."                                                                                                                          
                                                                                                                                
CHAIR MURKOWSKI  asked Mr. Slotnick  to speculate  how collection                                                               
would work if an income tax were reinstituted.                                                                                  
                                                                                                                                
Number 336                                                                                                                      
                                                                                                                                
MR.  SLOTNICK  said  he  thinks   that  there  would  be  a  very                                                               
substantial reduction in the fiscal  note if the structure of the                                                               
tax were  changed from being  collected a  year after the  tax to                                                               
being paid  by the  employee, assuming that  it was  paid through                                                               
the normal  withholding that  the employer  does with  the income                                                               
tax.    He  thinks  that  there  would  probably  still  be  some                                                               
collection and enforcement issues  with the self-employed people,                                                               
nonresidents,   and  people   who  leave   the  state,   but  the                                                               
enforcement  and data-entry  costs would  be "substantially  less                                                               
than what you're seeing here."                                                                                                  
                                                                                                                                
CHAIR  MURKOWSKI asked  how deductions  from  federal income  tax                                                               
were done in the past with the education head tax.                                                                              
                                                                                                                                
MR.  SLOTNICK said  he thinks  back then  it was  deductible from                                                               
federal  income  tax, and  he's  not  really  sure what  the  tax                                                               
treatment would be today.                                                                                                       
                                                                                                                                
CHAIR  MURKOWSKI   asked,  "Have   you  given  some   thought  to                                                               
Representative Halcro's suggestion of tying it to the ESC?"                                                                     
                                                                                                                                
Number 354                                                                                                                      
                                                                                                                                
MR. SLOTNICK said  that he recalls having  discussions about that                                                               
issue last spring  and the reason [the  department] thought there                                                               
might be more cost related to remittance  of the ESC.  The ESC is                                                               
done on a regular basis and not  once a year, so as new employees                                                               
are hired, there would  be a big swing in the  amount of work for                                                               
the  Department  of  Labor  and   Workforce  Development  or  the                                                               
Department of Revenue;  there would be more  returns filtering in                                                               
through the year.  More returns  means more work.  He said, "It's                                                               
the processing of  returns that ties directly to the  size of our                                                               
fiscal note.   ...  And  there's big issues still  out there with                                                               
what do you do about the  self-employed, and what do you do about                                                               
refunds.  ...  Those issues don't go away."                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked Mr. Slotnick if  a mandatory dated                                                               
receipt that  was issued to  an employee  as proof of  payment to                                                               
subsequent employers would work  for this relatively small amount                                                               
of tax.                                                                                                                         
                                                                                                                                
MR.  SLOTNICK asked,  "Work ...  as far  as trying  to avoid  the                                                               
refund problem and subsequent collections?"                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said yes.                                                                                               
                                                                                                                                
Number 374                                                                                                                      
                                                                                                                                
MR. SLOTNICK stated that he believes  there are still going to be                                                               
double collections and refund requests.                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired whether  they could be minimized                                                               
by providing a proof of payment.                                                                                                
                                                                                                                                
MR. SLOTNICK  said he thinks that  there could be a  reduction in                                                               
the number  of refund requests  that [the Department  of Revenue]                                                               
has to process.  He mentioned  that that would be asking for more                                                               
work from the employers.                                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG  interjected, "I  think giving  a receipt                                                               
that that's been  paid ... wouldn't be asking too  much, ... just                                                               
like a ... 1099 form."                                                                                                          
                                                                                                                                
Number 386                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI asked, "Can we just  have it generated as soon as                                                               
... [the application is] received?"                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG said that it  would either be in the form                                                               
or report  that they  give to the  Department of  Revenue anyway.                                                               
He  explained that  then  there  would be  a  triplicate form  or                                                               
something whereby the  employee would get a  copy, the department                                                               
would get  a copy for  the record, and  the employer would  get a                                                               
copy.                                                                                                                           
                                                                                                                                
Number 392                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO inquired whether  the Department of Revenue                                                               
has done  any analysis on what  revenue would be generated  if it                                                               
applied to  all working  Alaskans rather than  just those  age 19                                                               
and older.                                                                                                                      
                                                                                                                                
MR. SLOTNICK said, "Yes.  I was  just shown that figure.  We used                                                               
a multiplier,  and I'm trying  to remember what that  was because                                                               
we  took all  jobs and  multiplied it  by ...  something like  97                                                               
percent ..., and I'm not sure of  that number.  I can get back to                                                               
you,  Representative Halcro.    ...   Perhaps  there  would be  3                                                               
percent more revenue."                                                                                                          
                                                                                                                                
REPRESENTATIVE  HALCRO asked,  "3 percent  more revenue  than the                                                               
$38 million?"                                                                                                                   
                                                                                                                                
MR. SLOTNICK replied in the affirmative.                                                                                        
                                                                                                                                
Number 402                                                                                                                      
                                                                                                                                
REPRESENTATIVE   KOTT    expressed   the   same    concern   that                                                               
Representative  Rokeberg  voiced  earlier   with  the  number  of                                                               
workers who  move from job to  job.  He said,  "Somehow we've got                                                               
to provide  some kind of  mechanism so they're not  always paying                                                               
$50 every time they work a day.   He used a "pool of dishwashers"                                                               
as an example of a group  of workers in the service industry that                                                               
keep  moving from  restaurant to  restaurant.   He  said that  it                                                               
could be  an accounting nightmare  because they work one  day and                                                               
make   $60.     After   paying   the   FICA  [Federal   Insurance                                                               
Contributions Act] contribution, they have  $52 left, and then to                                                               
take $50  from the  remainder would leave  the employee  with $2.                                                               
He asked what effect this  proposal would have on the active-duty                                                               
military, both in and out of state.                                                                                             
                                                                                                                                
Number 413                                                                                                                      
                                                                                                                                
MR.  SLOTNICK  said he  believed  that  under the  Soldiers'  and                                                               
Sailors' Civil Relief Act [of  1940], [the Department of Revenue]                                                               
cannot tax military pay.                                                                                                        
                                                                                                                                
REPRESENTATIVE KOTT  mentioned that  it's his  understanding that                                                               
some states  impose an income tax  on those numbers if  [a member                                                               
of the  military] becomes a resident  of the state that  has that                                                               
income tax.                                                                                                                     
                                                                                                                                
MR. SLOTNICK  said that  may be  correct and  that he  will check                                                               
with his tax technicians and  report back to Representative Kott.                                                               
He  mentioned that  in the  income  tax legislation  he has  been                                                               
working on,  there's always a  provision to exempt those  who are                                                               
eligible for  exemptions under the  Soldiers' and  Sailors' Civil                                                               
Relief Act.  He said that may be only for nonresident military.                                                                 
                                                                                                                                
REPRESENTATIVE KOTT said,  "That probably is correct.   I seem to                                                               
recall ...  talking to some of  my friends who had  an income tax                                                               
imposed upon  them as they lived  in a certain state  that had an                                                               
income tax.   ...  So I  think there's a combination,  but I'd be                                                               
curious to see what effect we might have on that."                                                                              
                                                                                                                                
Number 427                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI stated  that the fiscal note  from the department                                                               
does  provide that  the bill  as it  is written  would appear  to                                                               
apply to  U.S. military  personnel on active  duty in  the state,                                                               
but who retain a legal residence in another state.                                                                              
                                                                                                                                
REPRESENTATIVE KOTT asked if it would be imposed.                                                                               
                                                                                                                                
CHAIR MURKOWSKI said it appears to  apply [to those] who retain a                                                               
legal residence in  another state.  So those  who claim residence                                                               
[in Alaska] would have to pay.                                                                                                  
                                                                                                                                
Number 433                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO  pointed out  that the department  notes in                                                               
its analysis  that "the Soldiers'  and Sailors' Civil  Relief Act                                                               
may preclude us from doing that."  He asked if this was correct.                                                                
                                                                                                                                
MR. SLOTNICK  answered, "From charging nonresidents  ... who have                                                               
income here  in this state.   ...  There  is no provision  in the                                                               
Act to provide for that."                                                                                                       
                                                                                                                                
Number 438                                                                                                                      
                                                                                                                                
REPRESENTATIVE  KOTT asked  if  this in  any  way affects  Alaska                                                               
residents who are currently employed in another state.                                                                          
                                                                                                                                
MR. SLOTNICK  replied that he doesn't  think so, as he  reads the                                                               
bill.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  KOTT asked  if there  is  any way  to catch  them                                                               
because there are a large number  of Alaska residents who work in                                                               
other  states.   He  referred  to the  large  number of  military                                                               
members who  are out of  state; both  they and their  spouses are                                                               
residents of  the state.   He  said, "So  the spouse  is working,                                                               
non-allowable absence; they're eligible for  the PFD and not able                                                               
to get anything  from the spouse's working in  another state, but                                                               
is in  fact an Alaskan  resident."   He mentioned that  there are                                                               
also members in the airline industry  who reside out of the state                                                               
but  are  not eligible  for  a  PFD  because  they're not  on  an                                                               
allowable absence.                                                                                                              
                                                                                                                                
Number 453                                                                                                                      
                                                                                                                                
MR. SLOTNICK  explained that the  state can impose an  income tax                                                               
on its  residents, which would  include income earned  outside of                                                               
the state.  He  said that when a state does that,  it has to give                                                               
a  credit to  the individual  for any  tax that  individual might                                                               
have to pay  in the state where  the income was earned.   He said                                                               
he's not  sure how that would  work with a head  tax because it's                                                               
not comparable to  income taxes in other states  where the income                                                               
was earned.                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  thought that  it would  be problematic.   He                                                               
said,  "Absent  some  other  mechanism  that  there  could  be  a                                                               
deduction from, there's  no way to sweep in these  folks that are                                                               
out of state,  ... not to mention the number  of college students                                                               
who live out of state ...  working part-time."  He asked if there                                                               
has been  any kind of  review of what  effect this would  have on                                                               
the  short-term positions  that  generally don't  pay very  much,                                                               
such as election workers who work one  day and are paid $100.  He                                                               
voiced  his  concern about  deducting  $50  right off  their  pay                                                               
because it's  a paid volunteer  position and  it may be  the only                                                               
thing they do.                                                                                                                  
                                                                                                                                
Number 474                                                                                                                      
                                                                                                                                
MR. LETCH said that discussion has not been brought up.                                                                         
                                                                                                                                
CHAIR MURKOWSKI asked  Senator Austerman if he  wished to address                                                               
this issue.                                                                                                                     
                                                                                                                                
SENATOR  ALAN AUSTERMAN,  Alaska  State  Legislature, said,  "No.                                                               
He's correct.  We have not had that discussion."                                                                                
                                                                                                                                
Number 479                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  Mr.  Slotnick if  there are  head                                                               
taxes  in  other states  that  [the  state]  might look  at  [to]                                                               
collect  the  federal  taxation   on  the  assessments  to  other                                                               
citizens in other states.                                                                                                       
                                                                                                                                
MR. SLOTNICK said  although that research has not  been done yet,                                                               
he would offer to look into the subject.                                                                                        
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  that might  give [the  state] some                                                               
clue  about how  the imposition  of such  a tax  would relate  to                                                               
private tax issues.   He mentioned that Alabama still  has a poll                                                               
tax.                                                                                                                            
                                                                                                                                
MR. SLOTNICK  said he would  get back to  Representative Rokeberg                                                               
on that subject.                                                                                                                
                                                                                                                                
Number 489                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO  suggested there  needs to  be a  change to                                                               
incorporate those  workers under the age  of 19 also.   He argued                                                               
that even a  working minor is still responsible  for paying union                                                               
dues and  monthly fees, with  no exemptions.   He said,  "I think                                                               
that  this tax  is something  justifiable  to take  out of  their                                                               
paycheck,  especially  given  the  fact  that  education  is  the                                                               
biggest expense we have in this state."                                                                                         
                                                                                                                                
Number 501                                                                                                                      
                                                                                                                                
REPRESENTATIVE KOTT  asked Representative Halcro if  he wishes to                                                               
sweep in the seven-year-old who delivers newspapers also.                                                                       
                                                                                                                                
REPRESENTATIVE  HALCRO  said,  "If  they  get  a  check  from  an                                                               
employer, I would say yes."                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI said, "You're tough."                                                                                           
                                                                                                                                
REPRESENTATIVE HALCRO  mentioned that he delivered  newspapers as                                                               
a boy too.                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  offered that his first  job was sweeping                                                               
out the Boy  Scout headquarters when he was 13  years old and got                                                               
nailed with the school tax.  He said he wasn't happy about that.                                                                
                                                                                                                                
Number 509                                                                                                                      
                                                                                                                                
SENATOR AUSTERMAN  said that this  tax was introduced  based upon                                                               
the  premise that  it would  be  part of  a package  in the  end.                                                               
Obviously, this type of a tax  on a stand-alone basis is probably                                                               
more expensive to  tax and more expensive for  the business owner                                                               
than [the state  would] want to bear.  He  offered that this type                                                               
of a tax works well with an income tax.  He said:                                                                               
                                                                                                                                
     When we had it before, that's  how you handled it.  You                                                                    
     went back  to your income  tax at  the end of  the year                                                                    
     when you filed your state  income tax, or you submitted                                                                    
     a copy  of all your receipts  if you paid four  or five                                                                    
     different times because you had  four or five different                                                                    
     jobs.  You were able to  deduct that off of your income                                                                    
     tax.   That was a part  of the process ...   [The] same                                                                    
     ... applied, then,  at the same time  with your federal                                                                    
     tax.   It  just became  part of  ... the  tax structure                                                                    
     that you  were able to  deduct off your  federal income                                                                    
     tax.   So  I  think the  overpayment  issue ...  really                                                                    
     might hit you  hard while you're doing it,  but you end                                                                    
     up in the end being able to use that to come back.                                                                         
                                                                                                                                
SENATOR  AUSTERMAN addressed  the issue  of exemptions,  and said                                                               
that the permanent fund dividend is  a prime example of why there                                                               
shouldn't be any exemptions within this program.  He continued:                                                                 
                                                                                                                                
     We didn't  want Pandora's box  opened.  We  didn't want                                                                    
     to  get in  the same  situation  we [are  in] with  the                                                                    
     permanent fund.  ...  There's  a page and a half to two                                                                    
     pages of  exemptions within the permanent  fund process                                                                    
     as you go through.  We  didn't think that ... on a $100                                                                    
     tax it was necessary to have those type of exemptions.                                                                     
                                                                                                                                
     In  reference  to  Representative  Rokeberg's  concerns                                                                    
     about  the  one-day  worker, ...  that's  a  very  good                                                                    
     question.   I think ... we  need an answer to  that and                                                                    
     how you  address that,  whether it  comes out  of their                                                                    
     second paycheck or  whether, however you do  it so that                                                                    
     they  actually are  hired for  more than  ... the  day.                                                                    
     18- or 19-year-olds - ...  that was an arbitrary number                                                                    
     that  we  picked.    We  thought  about  the  newspaper                                                                    
     carriers,  we thought  about the  babysitters, and  the                                                                    
     rest of  this stuff - how  you got to a  position where                                                                    
     you actually ... were hitting  people you really didn't                                                                    
     want  to  hit.   So  we  actually  set  it at  ...  19.                                                                    
     Originally we had talked about  ... 18, but we moved it                                                                    
     to 19.   And  with that,  I would  hope you  would move                                                                    
     this on  to [the  House Finance Standing  Committee] at                                                                    
     some point in  time so that it is actually  part of the                                                                    
     overall package that is there for discussion.                                                                              
                                                                                                                                
Number 537                                                                                                                      
                                                                                                                                
REPRESENTATIVE KOTT  offered conceptual Amendment 1,  relating to                                                               
the effective date on page 2, line  16.  He said that he thinks a                                                               
big  part  of   the  problem  with  this   stand-alone  piece  of                                                               
legislation is that  this Act takes effect on passage  of a state                                                               
income tax,  but no sooner  than January 1,  2003.  He  said that                                                               
without  an  income  tax,  it  becomes  somewhat  problematic  in                                                               
applying it or reducing the tax burden.  He said:                                                                               
                                                                                                                                
     I'm not  sure sales tax  would generate the  income tax                                                                    
     form that  you would need.   Paying a sales tax,  ... I                                                                    
     don't  think   there's  any  reporting  to   the  state                                                                    
     government.                                                                                                                
                                                                                                                                
Number 551                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  objected to  Amendment 1, and  said that                                                               
it  presupposes that  there will  be  state income  tax before  a                                                               
sales tax.   He said,  "We don't know at  this time what  type of                                                               
taxation  and  the general  nature  will  be [of]  the  (indisc.)                                                               
introduced in the state effectively."                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG withdrew his objection.                                                                                 
                                                                                                                                
Number 558                                                                                                                      
                                                                                                                                
CHAIR  MURKOWSKI noted  that without  any objection,  Amendment 1                                                               
was adopted.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  mentioned  that  Representative  Halcro                                                               
"wanted to do the 'under 19' one."                                                                                              
                                                                                                                                
REPRESENTATIVE  HALCRO stated  that  he doesn't  know how  that's                                                               
possible now  because if it's based  on the passage of  an income                                                               
tax, there's no  7-year-old paperboy who's going to  be filing an                                                               
income tax  return.   He mentioned  that it  kind of  defeats the                                                               
purpose because those  under 18 don't have to file  an income tax                                                               
return.                                                                                                                         
                                                                                                                                
Number 564                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG mentioned the PFD.                                                                                      
                                                                                                                                
REPRESENTATIVE  HALCRO   said,  "Certainly   Senator  Austerman's                                                               
comment about the babysitter is  one that I hadn't thought about,                                                               
and I think he has some merit to that."                                                                                         
                                                                                                                                
Number 567                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved to  adopt conceptual  Amendment 2,                                                               
on page  1, line 9,  to delete 'February  1' and add  'March 31'.                                                               
He said he thinks that is the deadline date for the ESC.                                                                        
                                                                                                                                
CHAIR MURKOWSKI asked Mr. Slotnick if he knew the deadline date.                                                                
                                                                                                                                
MR. SLOTNICK said no.                                                                                                           
                                                                                                                                
Number 573                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said, "It closes out on the 31st."                                                                      
                                                                                                                                
CHAIR MURKOWSKI asked if it is due then.                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG said,  "No, I don't want to  make them do                                                               
the same day as...."                                                                                                            
                                                                                                                                
Number 576                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HALCRO objected  for the  purpose of  discussion.                                                               
He said  he would  read this bill  to say the  tax shall  be paid                                                               
before  March 31  of the  calendar  year following  the year  for                                                               
which it is  imposed.  If an employer hires  somebody on March 1,                                                               
2002,  the taxes  do not  need to  be submitted  until March  31,                                                               
2003.  He said, "So you're going  to allow an employer to hold on                                                               
to this  tax revenue for  13 months before  you submit it  to the                                                               
state.  I think you set yourself up for some...."                                                                               
                                                                                                                                
REPRESENTATIVE  ROKEBERG  said,  "That's  the way  they  have  it                                                               
written.   Don't blame me for  that.  Actually, I'm  extending it                                                               
out, and ... the date's got to be [on] April 15."                                                                               
                                                                                                                                
REPRESENTATIVE HALCRO said he thinks that's "too much ... time."                                                                
                                                                                                                                
CHAIR MURKOWSKI asked for some  clarification from the sponsor on                                                               
this issue.   She said,  "As I read it,  as well, you  can't have                                                               
your employer holding on to these funds for 13 months."                                                                         
                                                                                                                                
Number 584                                                                                                                      
                                                                                                                                
SENATOR AUSTERMAN mentioned that last  year in the Senate Finance                                                               
Committee  there  was  a  lot of  discussion  about  changing  to                                                               
quarterly  payments to  the  state.   Part  of those  discussions                                                               
dealt with when quarterly payments  were due on a normal business                                                               
basis, and whether  that fits.  He stated that  he hasn't had the                                                               
chance to research  the topic because he hasn't been  able to get                                                               
another hearing [in the Senate Finance Committee].                                                                              
                                                                                                                                
REPRESENTATIVE  ROKEBERG  explained  that normally  the  ESC  tax                                                               
would be 30 days after the end of the quarter.                                                                                  
                                                                                                                                
SENATOR AUSTERMAN said, "Yes."                                                                                                  
                                                                                                                                
TAPE 02-16, SIDE B                                                                                                              
Number 590                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG   amended  conceptual  Amendment   2  to                                                               
include, "shall be paid quarterly  on the dates now currently ...                                                               
following  30  days  after  the  due date  of  ESC  taxes".    He                                                               
explained that the taxes will be collected and paid quarterly.                                                                  
                                                                                                                                
SENATOR AUSTERMAN said, "Our discussion  was to make it as simple                                                               
as  possible ...  so that  we don't  have duplication  of any  of                                                               
the..."                                                                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG  said, "Right,  so  they  would be  paid                                                               
quarterly."                                                                                                                     
                                                                                                                                
Number 583                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO  said, "So, basically, what  you're looking                                                               
for is ... 'shall be paid ... the first quarter'..."                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG   interjected,  "No.  'Should   be  paid                                                               
quarterly'."   He mentioned that  he doesn't know what  the dates                                                               
are but is referring to the dates that the ESC taxes are due.                                                                   
                                                                                                                                
REPRESENTATIVE  HALCRO offered  that  maybe  the language  should                                                               
read  something  like, "Shall  be  paid  quarterly following  the                                                               
quarter  for  which  it  ...  is imposed,  shall  be  paid  every                                                               
quarter."                                                                                                                       
                                                                                                                                
CHAIR MURKOWSKI asked if that  means the employers will be paying                                                               
in quarterly.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HALCRO replied  that they  would, along  the same                                                               
timeline as they file the ESC.                                                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG  offered  that   this  is  a  conceptual                                                               
amendment and the drafter can figure out the specific language.                                                                 
                                                                                                                                
Number 574                                                                                                                      
                                                                                                                                
SENATOR AUSTERMAN said that since  "you've tied the income tax to                                                               
it, ...  maybe you could  tie a payment  for your income  tax why                                                               
the business is..."                                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG interjected, "No income tax, buddy."                                                                    
                                                                                                                                
CHAIR  MURKOWSKI mentioned  that she  isn't sure  what conceptual                                                               
Amendment 2 is yet.                                                                                                             
                                                                                                                                
REPRESENTATIVE  ROKEBERG explained  that  conceptual Amendment  2                                                               
is, "Shall  be paid quarterly at  the same date due  that the ESC                                                               
taxes are  due."  He said  that 30 days after  every quarter, [an                                                               
employer] submits to  the state the amount  collected during that                                                               
quarter.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  HALCRO  mentioned  that he  thinks  the  language                                                               
should just be adopted.                                                                                                         
                                                                                                                                
Number 564                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI confirmed what conceptual Amendment 2 states.                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG  interjected and said, "Or  we could make                                                               
it April 30.  We could go through the whole litany here."                                                                       
                                                                                                                                
Number 559                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  asked if there  was any objection  to conceptual                                                               
Amendment 2.                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT asked if this  would increase the fiscal note                                                               
because the department  will have to account for  this money four                                                               
times a year versus once.                                                                                                       
                                                                                                                                
REPRESENTATIVE HALCRO  said, "That's why  you have ESC on  such a                                                               
short leash  - 30  days past  the quarter -  is because  we don't                                                               
want business out  there holding on to tax revenues  for a year."                                                               
He  asked what  would happen  if a  business went  bankrupt.   He                                                               
offered that it  just hurts the system further down  the line and                                                               
there  is  certainly  a  good  reason  why  some  businesses  and                                                               
corporations are  on a short  leash.   He said that  depending on                                                               
how big  a business  or corporation's  payroll is,  some deposits                                                               
for the ESC or federal income  tax need to be deposited within 72                                                               
hours  of paying  the employees.   He  said that  he thinks  it's                                                               
better to keep [HB 229] on a short leash.                                                                                       
                                                                                                                                
Number 548                                                                                                                      
                                                                                                                                
REPRESENTATIVE CRAWFORD  said that  in the  iron-working industry                                                               
there are a lot of contractors who  come up from out of state and                                                               
hire 50 to 60 ironworkers through  the summer, and then leave the                                                               
state and  never come  back.   He mentioned  that there  are also                                                               
lots of  fly-by-night contractors that  come into the  market and                                                               
then leave and never come back  under that name again.  He stated                                                               
his  support  for a  short  lease,  instead of  having  employers                                                               
holding the tax funds for up to 13 months.                                                                                      
                                                                                                                                
Number 540                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO offered  an example of an  employer who has                                                               
already takes $100 out of  an employee's paycheck and the company                                                               
then leaves the state.  The  employee therefore has no proof that                                                               
he/she has  paid the $100 tax  because the employer has  taken it                                                               
without submitting it.                                                                                                          
                                                                                                                                
Number 534                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI, hearing no objection  to conceptual Amendment 2,                                                               
announced  that  it  had  been  adopted  with  "very  conceptual"                                                               
language at this point.                                                                                                         
                                                                                                                                
Number 530                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved to  adopt conceptual  Amendment 3,                                                               
page  1, line  13, to  add "and  $650 of  income" after  "of each                                                               
calendar year."  He explained that  the idea is that the employee                                                               
would also have  to have earned at least $650  before the payment                                                               
is due.                                                                                                                         
                                                                                                                                
CHAIR  MURKOWSKI objected  for the  purpose of  discussion.   She                                                               
asked, "What  happens if  you have a  dish-washer who  never does                                                               
earn $650?"                                                                                                                     
                                                                                                                                
Number 518                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG answered,  "He skated.   It  would be  a                                                               
cumulative effect."                                                                                                             
                                                                                                                                
CHAIR  MURKOWSKI  verified  that  it   would  be  the  first  two                                                               
paychecks and after the employee has earned $650.                                                                               
                                                                                                                                
SENATOR AUSTERMAN  offered that this would  increase the workload                                                               
on the businesses.  He said:                                                                                                    
                                                                                                                                
     If it's just an automatic thing  and then at the end of                                                                    
     the year, if  they haven't made 'x'  amount of dollars,                                                                    
     maybe you  want to put a  level on the tail  end, or if                                                                    
     you have to file  an income tax.  ...   Once you try to                                                                    
     make the  employer make  the determination  whether the                                                                    
     gentleman has made $650 cumulatively  over ... a series                                                                    
     of jobs  -- I  assume that  all employees  must receive                                                                    
     stub; it  should state  right on  there.   ...   If [an                                                                    
     employee]  can provide  that employer  with a  paycheck                                                                    
     stub showing $100 worth, then  it ... shouldn't have to                                                                    
     withdraw it anymore.                                                                                                       
                                                                                                                                
Number 506                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG explained that  the reason why he offered                                                               
conceptual Amendment 3  is to have a minimum  impact on business.                                                               
He said,  "So I  would disagree  with the  Senator's assessment."                                                               
The  intention is  to avoid  having  to make  any withdrawal  and                                                               
payment  for  that  worker  who doesn't  meet  the  first  week's                                                               
payroll.   He  offered  that  until an  employee  has shown  that                                                               
he/she  is going  to be  there for  a while,  then the  deduction                                                               
could  be  made.    He  said   that  the  $650  is  derived  from                                                               
calculating  the presumed  minimum wage,  which would  be $300  a                                                               
week.   He said, "And  then adding a small,  $25-a-week surcharge                                                               
on to  that, which one  might take to  be half  of the CPI."   He                                                               
explained that  this would  mean that an  employee would  have to                                                               
stick to  a job  at least a  week or two  before he/she  would be                                                               
subject to the withholding.  He  offered that he thinks this will                                                               
save businesses money.                                                                                                          
                                                                                                                                
Number 493                                                                                                                      
                                                                                                                                
CHAIR    MURKOWSKI   offered    that   she    understands   where                                                               
Representative Rokeberg is and doesn't  know that she necessarily                                                               
disagrees.  She  stated her concern with how this  would fit with                                                               
the  wording as  it is  now,  because "we're  stating that  we're                                                               
going to  make the deductions  on each  of the first  two regular                                                               
payrolls period, and now if you never get to that ... point...."                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG said it should be on the first $650.                                                                    
                                                                                                                                
CHAIR   MURKOWSKI   mentioned   that    it   sounds   as   though                                                               
Representative  Rokeberg   is  saying   it  shouldn't   make  any                                                               
difference whether it's the first  paycheck or the fifth; he just                                                               
wants to make sure the employee [will stay at the job].                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  it  should be  the first  paycheck                                                               
after the  first $650 is made,  to make sure it's  collected.  He                                                               
said, "If  we could make  a conceptual amendment there,  again, I                                                               
think that  the $650 as a  minimum amount before an  employer has                                                               
the obligation to  make the deduction -- leave it  to the drafter                                                               
on how we really want to fit it in there."                                                                                      
                                                                                                                                
CHAIR MURKOWSKI asked, "So you wouldn't have it split up, then?"                                                                
                                                                                                                                
Number 480                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said:                                                                                                   
                                                                                                                                
     I think  you could have  it split up, too,  ... because                                                                    
     you  could have  a minimum  wage earner,  or [an]  even                                                                    
     less  than 40-hour-week  earner,  with  a pretty  small                                                                    
     paycheck.   I  wouldn't  change that.    And after  the                                                                    
     first of January, I would  just make another criterion.                                                                    
     All things being  equal there, that $650  ... [must be]                                                                    
     earned  before the  rest of  those provisions  kick in.                                                                    
     ...   It's  for that  purpose  to avoid  ... having  to                                                                    
     assess or  deduct from the  person that works a  day or                                                                    
     two and then  doesn't show up:  ...  the six-hour used-                                                                    
     car salesman.                                                                                                              
                                                                                                                                
Number 472                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO offered that maybe  this needs to be talked                                                               
through  a  little  more,  because  Senator  Austerman  raised  a                                                               
concern about the impact on business.  He said:                                                                                 
                                                                                                                                
     Let's face it,  if somebody shows up for  work one day,                                                                    
     Monday,  they come  and work  eight hours  and make  60                                                                    
     bucks and then don't show up  the next day,  ...  you'd                                                                    
     basically  deduct  the  50  bucks from  the  60.    And                                                                    
     there's got  to be some  way to reconcile  that because                                                                    
     obviously if  he quits,  either he's  got to  come back                                                                    
     three  days later  and  get a  paycheck,  as state  law                                                                    
     allows him to,  or the person's not going  to show back                                                                    
     up and collect his day's  wages.  Regardless, you still                                                                    
     have the ability to deduct  that $50 from ... the day's                                                                    
     pay.   ...   There's got  to be  some kind  of separate                                                                    
     accounting method where  you'd have to --  I don't know                                                                    
     ... if you'd prorate that.                                                                                                 
                                                                                                                                
Number 458                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG  offered  that  it is  a  judgment  call                                                               
because it would cause some  more accounting problems.  He stated                                                               
that it's  the lesser  of the evils.   He said  that "it  has the                                                               
beauty of allowing you to go back  to your under-18.  ...  So all                                                               
the other  casual laborers, small  jobs for baby-sitters  and the                                                               
lawn-mowers basically are exempt and.."                                                                                         
                                                                                                                                
Number 453                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI said  that they're not exempt.   She offered that                                                               
as a  baby-sitter she'd  certainly earned more  than $650  over a                                                               
summer.   She  said,  "In terms  of keeping  track  of that  $650                                                               
amount, by  the end  of the  year your  16-year-old granddaughter                                                               
could be making that."                                                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG said, "No, she's  fired before that.  ...                                                               
No more trips to Tasty Freeze."                                                                                                 
                                                                                                                                
Number 438                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  said that  the committee  is getting  too bogged                                                               
down with  it and that she  was going to maintain  her objection.                                                               
She then called  for a roll call vote on  conceptual Amendment 3,                                                               
which  is,  "You're  going  to  have  two  deductions  from  your                                                               
paycheck, but you  have to have established that  you have earned                                                               
a minimum of $650."                                                                                                             
                                                                                                                                
A roll call vote was  taken.  Representatives Rokeberg and Halcro                                                               
voted  for conceptual  Amendment  3.   Representatives  Crawford,                                                               
Meyer,  Kott, and  Murkowski voted  against it.   [Representative                                                               
Hayes was absent.]   Therefore, conceptual Amendment  3 failed by                                                               
a vote of 2-4.                                                                                                                  
                                                                                                                                
Number 427                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG said,  "I do  think we  need in  page 2,                                                               
[lines  5-8]  ...  [a]   record-of-withholding  provision."    He                                                               
explained that if the employee  can furnish a subsequent employer                                                               
with  a proof  of payment,  then that  employer is  relieved from                                                               
making the deduction.                                                                                                           
                                                                                                                                
REPRESENTATIVE  HALCRO asked  Representative Rokeberg  to restate                                                               
his concern.                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG restated the aforementioned.                                                                            
                                                                                                                                
Number 417                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  said, "There is  reference ...  under collection                                                               
of tax, [beginning  on] page 1, line 15, 'A  deduction of the tax                                                               
may not be  made in the salary or other  compensation of a person                                                               
who provides proof to the employer  that the tax imposed under AS                                                               
43.45.011 has been paid.'"                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said, "Well, then, it's already there."                                                                 
                                                                                                                                
Number 410                                                                                                                      
                                                                                                                                
CHAIR  MURKOWSKI  asked  if   Representative  Rokeberg  was  then                                                               
withdrawing his amendment.                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said yes.                                                                                               
                                                                                                                                
Number 405                                                                                                                      
                                                                                                                                
DAVE  JONES, Director  of Finance,  Kodiak Island  Borough School                                                               
District, testified via teleconference in  support of HB 229.  He                                                               
mentioned  that  he  was testifying  mostly  as  a  non-taxpaying                                                               
father of three students in Kodiak,  and a little as the Director                                                               
of Finance  for the  Kodiak Island Borough  School District.   He                                                               
explained that  he is  a non-taxpayer  because although  there is                                                               
property tax and  sales tax in Kodiak, after  his family receives                                                               
their PFDs  in October, those  checks more  than make up  for the                                                               
taxes paid.   He said, "I get  paid to live in Alaska."   He said                                                               
that  he is  frustrated  because  he can  see  the  needs in  his                                                               
children's schools,  and there's  no system in  place for  him to                                                               
pay for his fair share of  their education.  He offered that it's                                                               
difficult for  him when he  deposits money  in the bank  from the                                                               
PFD that  was originally  intended to pay  for the  services they                                                               
are lacking.   He said that  he supports HB 229  because "it hits                                                               
the seasonal fishermen  from Oregon that goes back  to Oregon and                                                               
pays an income tax in Oregon on the wages he earned in Alaska."                                                                 
                                                                                                                                
Number 386                                                                                                                      
                                                                                                                                
MR. JONES offered  that this tax should be  collected on November                                                               
1  after  people  have  received  their  PFDs  to  eliminate  the                                                               
hardship argument.   He said  that if the committee  doesn't like                                                               
that mechanism,  then there should  be an  income tax or  a sales                                                               
tax   because  both   hit  the   seasonal  employees   previously                                                               
mentioned.   He said, "You  don't like  either of those,  take my                                                               
permanent  fund."   He  said  that the  vast  majority of  states                                                               
[have]  income tax  and sales  tax, and  it's the  cost of  doing                                                               
business in those states.   He said there has not  been a cost of                                                               
doing business  in Alaska for  years, and "the  individuals [need                                                               
to] start paying for the cost  of doing business in Alaska.  It's                                                               
been  a nice  vacation,  20  years, but  it's  time people  start                                                               
paying."                                                                                                                        
                                                                                                                                
Number 383                                                                                                                      
                                                                                                                                
MR. JONES said that  he would "put a little of  my finance hat on                                                               
now."  He told members:                                                                                                         
                                                                                                                                
     It's essential that we ...  tackle [a] long-term fiscal                                                                    
     plan  now.   ...   We must  multiply and  diversify the                                                                    
     revenue streams as  soon as possible.   I feel strongly                                                                    
     that if we wait and  use the CBR [Constitutional Budget                                                                    
     Reserve]  ... we're  just  putting  off something  that                                                                    
     needs to be  done.  Instead, let's capture  the CBR and                                                                    
     use it  as a revenue  source.  ...   In the  long term,                                                                    
     it's  more of  a funding  solution, as  opposed to  one                                                                    
     year of not having to face the problem again.  ...                                                                         
                                                                                                                                
     The state fiscal  plan right now: if we  were a private                                                                    
     enterprise  and we  walked into  a  bank to  ask for  a                                                                    
     loan, how  long do you think  that we would be  able to                                                                    
     sit  in that  chair  before they  opened  the door  and                                                                    
     asked us to politely leave?   It's time that we get our                                                                    
     house in  order, and we  need to do that  this session.                                                                    
     I've heard  people talk about  ... the State  of Alaska                                                                    
     is a  ... train engine  that's headed for the  ... edge                                                                    
     of the cliff.  ...  I  think that's a wrong analogy.  I                                                                    
     think that ... through the  lack of our fiscal plan ...                                                                    
     the  infrastructure  (indisc.)  reduced  to  the  point                                                                    
     where that  engine no longer  speeding toward  the edge                                                                    
     of that  cliff.   In fact, we're  breaking down.   It's                                                                    
     about ready  to stop at the  edge of the cliff,  and if                                                                    
     we don't do  something on a long-term  fiscal plan, the                                                                    
     engineer is going to climb  out of that train, and he's                                                                    
     going to look  around.  And the only  choice he's going                                                                    
     to have is to jump off the edge of that cliff.                                                                             
                                                                                                                                
     I'm urging  you, this is  one of  the ways that  we ...                                                                    
     diversify the revenue stream, and  it's one of the ways                                                                    
     that we  start paving the way  that we need to,  in the                                                                    
     State of  Alaska, so we  don't get up against  the wall                                                                    
     and not have solutions that we  need to deal with.  You                                                                    
     guys  are the  leaders of  the  State of  Alaska.   I'm                                                                    
     asking you that  you take that leadership  role and you                                                                    
     pass this ... and you  provide the funding that we need                                                                    
     to educate  the kids in  Alaska in an  adequate manner.                                                                    
     Thank you for the opportunity to speak today.                                                                              
                                                                                                                                
Number 354                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  that  Mr. Jones  had an  excellent                                                               
comment regarding  the "out-of-state fishermen that  come up here                                                               
and rape,  pillage, and loot  our resources."   He said  that one                                                               
tax the  fiscal policy  caucus didn't  pick up was  a tax  on the                                                               
square footage of  nets.  So every boat fishing  in the state had                                                               
to pay a tax  on the square footage of its net.   He said, "Those                                                               
guys are making a killing up  here and we're not getting a bloody                                                               
nickel out of them."                                                                                                            
                                                                                                                                
Number 343                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG alluded  to page 2, lines  9-15, and said                                                               
he thinks  this bill is  unconstitutional to dedicate funds.   He                                                               
asked,  "Why  does it  say  education?    That's  a fraud."    He                                                               
mentioned the general  fund (GF), [in which the  tax collected by                                                               
the bill is to be deposited.]                                                                                                   
                                                                                                                                
Number 331                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HALCRO referred  to the  Department of  Labor and                                                               
Workforce  Development's annual  report that  shows in  2001 that                                                               
Alaska is down  to about 17.5 and a half  percent of out-of-state                                                               
workers,  the lowest  percentage of  out-of-state workers  in the                                                               
workforce since  1988.  He said  the state has been  doing a good                                                               
job with Alaska-hire, and there has  been a radical shift in out-                                                               
of-state workers.   They are  no longer oil field  workers making                                                               
$100,000  a year.   They  are  college kids  serving burgers  and                                                               
brews.  He mentioned that "when  we talk about tapping the income                                                               
generated by out-of-state workers, we  need to remember those are                                                               
(a) college  kids, and (b) they're  not making a whole  heck of a                                                               
lot of money."  He said he  thinks the [wages are] a little under                                                               
$13,000 per  year.  He  offered that they  are not going  to fund                                                               
state government on the [out-of-state workers'] paychecks.                                                                      
                                                                                                                                
Number 320                                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  stated that  she had seen  the same  report, and                                                               
although those numbers are good for  now, Alaska is going to have                                                               
some major  construction projects in  the future.  She  said, "If                                                               
you  believe what  the AGC  [Associated General  Contractors] and                                                               
the folks in the trades are telling  us, we are not going to have                                                               
the skilled workers  to do what has  to be done on  some of these                                                               
projects."   She  offered that  if the  economy in  the Lower  48                                                               
remains in the  slump that it's in, Alaska may  be seeing another                                                               
influx of out-of-state workers.  She  said that she thinks HB 229                                                               
is one way to get some small contribution from them.                                                                            
                                                                                                                                
Number 309                                                                                                                      
                                                                                                                                
REPRESENTATIVE KOTT moved to table HB 229.                                                                                      
                                                                                                                                
[An objection was stated.]                                                                                                      
                                                                                                                                
A roll  call vote  was taken.   Representatives Meyer,  Kott, and                                                               
Rokeberg  voted to  table  HB 229.    Representatives Halcro  and                                                               
Murkowski voted against it.   [Representatives Crawford and Hayes                                                               
were absent.]  Therefore, HB 229 was tabled by a vote of 3-2.                                                                   

Document Name Date/Time Subjects