Legislature(2019 - 2020)BELTZ 105 (TSBldg)

04/19/2019 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SJR 3 CONST. AM: MEMBERSHIP OF JUDICIAL COUNCIL TELECONFERENCED
Scheduled but Not Heard
+= SJR 4 CONST. AM: STATE TAX; INTIATIVE TELECONFERENCED
Heard & Held
+= SB 33 ARREST;RELEASE;SENTENCING;PROBATION TELECONFERENCED
Heard & Held
             SJR 4-CONST. AM: STATE TAX; INTIATIVE                                                                          
                                                                                                                                
1:39:10 PM                                                                                                                    
CHAIR HUGHES announced that the  first order of business would be                                                               
SENATE  JOINT  RESOLUTION  NO. 4,  Proposing  amendments  to  the                                                               
Constitution   of   the   State   of   Alaska   prohibiting   the                                                               
establishment  of,  or  increase  to, a  state  tax  without  the                                                               
approval  of  the  voters  of  the state;  and  relating  to  the                                                               
initiative process.                                                                                                             
                                                                                                                                
[Before the committee was CSSJR 4(STA), Version U].                                                                             
                                                                                                                                
CHAIR HUGHES made opening remarks.                                                                                              
                                                                                                                                
1:40:35 PM                                                                                                                    
WILLIAM MILKS,  Attorney, Labor & State  Affairs, Civil Division,                                                               
Department  of Law,  Juneau, stated  that the  Department of  Law                                                               
provided  a memo  to the  committee  dated April  15, 2019,  that                                                               
addresses  certain   issues  raised  by  the   Legislative  Legal                                                               
Services, Legislative Affairs Agency.  The first question relates                                                               
to the administration's  intent related to the  definition of new                                                               
taxes  and  increased  tax  rates.  The  changes  to  deductions,                                                               
exemptions, or  credits from an  existing state tax would  not be                                                               
covered by SJR 4,  so it would not trigger a  vote by the people,                                                               
he said.  The department  has one suggested  change that  will be                                                               
considered by  the committee later,  which would insert  the word                                                               
"nominal" in front of tax rate  to clarify that the intent is not                                                               
to increase the nominal tax rate  or an individual's tax rate. He                                                               
related an example, that if the  number was 10 that changes to it                                                               
would trigger the constitutional amendment.                                                                                     
                                                                                                                                
1:42:33 PM                                                                                                                    
CHAIR  HUGHES related  her understanding  that  an initiative  to                                                               
change  tax credits  or deductions  would effectively  change the                                                               
tax rate, but [SJR 4] would not apply.                                                                                          
                                                                                                                                
MR. MILKS answered that is  correct. He said that questions arose                                                               
regarding various scenarios and how  this provision would work if                                                               
a  bill  created  several  new  taxes as  well  as  a  regulatory                                                               
program.  If a  bill were  to pass  the legislature  that creates                                                               
multiple taxes, each  of the new taxes would be  presented to the                                                               
voters  to consider  separately.  Since  this resolution  focuses                                                               
solely  on taxes,  only the  portion  related to  taxes would  be                                                               
subject to  the provisions of  SJR 4 if  a program was  passed by                                                               
law that created a new tax  or increased an existing tax that had                                                               
regulatory changes.                                                                                                             
                                                                                                                                
MR. MILKS  said another question  that was raised related  to the                                                               
circumstance in which a bill decreased  a tax and a referendum by                                                               
the voters  rejected it. This  would mean the state  would revert                                                               
to an  existing tax.  This circumstance would  not be  covered by                                                               
SJR  4,   which  does   not  speak  to   a  referendum   in  that                                                               
circumstance. Instead, it would speak to  a tax rate or a new tax                                                               
passed by the legislature or by  the voters via an initiative, he                                                               
said.                                                                                                                           
                                                                                                                                
MR. MILKS  said that two  additional issues were raised  that the                                                               
committee  will consider.  One concerned  Article  IX Section  1,                                                               
which  is a  specification related  to the  effective date  of an                                                               
initiative  law. He  said that  initiative laws  become effective                                                               
pursuant to  constitutional provision  in Article XI,  Section 6,                                                               
except   for  subjects   related   to  tax   changes.  In   those                                                               
circumstances SJR 4 would govern,  which means the initiative law                                                               
would  not become  final  law  90 days  later,  but  it would  be                                                               
subject to the process by  which the legislature would review the                                                               
law.                                                                                                                            
                                                                                                                                
1:46:26 PM                                                                                                                    
MR.  MILKS  said that  another  issue  was to  clarify  questions                                                               
related to  the tax  year when  establishing a  new tax.  He said                                                               
that  the  department  suggests  amending SJR  4  to  change  the                                                               
effective  date to  January 1  of  the following  fiscal year  to                                                               
avoid a new tax becoming effective mid-year.                                                                                    
                                                                                                                                
MR. MILKS  related that a question  was raised as to  whether the                                                               
legislature's Uniform  Rules would need  to be modified if  SJR 4                                                               
were to  pass. He said  it is possible, but  he did not  think it                                                               
would impact  SJR 4.  [Uniform Rules] would  not be  addressed in                                                               
SJR 4, he added.                                                                                                                
                                                                                                                                
MR. MILKS said  that the memo outlines  the department's response                                                               
to  technical issues  and further  explanations, reiterating  the                                                               
scope of SJR 4.                                                                                                                 
                                                                                                                                
1:47:35 PM                                                                                                                    
CHAIR  HUGHES noted  that  the memo  from  the Legislative  Legal                                                               
Services,  Emily  Nauman,  legal counsel,  brought  up  important                                                               
issues to  consider. She said that  one of the issues  she raised                                                               
is the effect of SJR 4 on a new group of taxpayers or product.                                                                  
                                                                                                                                
MR. MILKS related  his understanding that SJR 4 would  apply if a                                                               
new tax would be applied to a new product.                                                                                      
                                                                                                                                
CHAIR HUGHES  asked whether SJR 4  would apply to a  new group of                                                               
taxpayers.                                                                                                                      
                                                                                                                                
MR. MILKS answered  that SJR 4 would also apply  to the new group                                                               
of taxpayers.                                                                                                                   
                                                                                                                                
1:49:16 PM                                                                                                                    
SENATOR MICCICHE  related his  understanding Ms.  Nauman believes                                                               
that  SJR 4  is  not an  amendment  [but is  a  revision] to  the                                                               
Constitution of the State of Alaska.                                                                                            
                                                                                                                                
1:49:29 PM                                                                                                                    
EMILY  NAUMAN,  Deputy   Director,  Legislative  Legal  Services,                                                               
Legislative Affairs Agency, Juneau, responded that is correct.                                                                  
                                                                                                                                
SENATOR  MICCICHE  asked  whether  this would  make  a  political                                                               
statement  or  if it  does  not  matter. In  this  case  it is  a                                                               
substantial  shift and  the  power of  taxation  should never  be                                                               
surrendered or  contracted away. He  offered his belief  that the                                                               
legislature would be surrendering  and contracting away the power                                                               
of taxation and  [SJR 4] would result in a  tax being implemented                                                               
sooner. He  said he has  put on the  record that the  only people                                                               
losing  rights  in  SJR  4  are  the  people  of  Alaska  in  the                                                               
initiative process.  He said,  "On a  bumper sticker  this sounds                                                               
like  a really  good idea  for conservatives  that think  they're                                                               
gaining  something  but  the  reality of  it  is  they're  losing                                                               
substantially."                                                                                                                 
                                                                                                                                
CHAIR HUGHES  suggested that one  of the amendments  will address                                                               
his  concern a  bit. She  said that  the Senate  Finance Standing                                                               
Committee could  also consider  the matter. She  said that  SJR 4                                                               
would  really just  move up  the timeline  instead of  having the                                                               
two-year delay in place with an initiative.                                                                                     
                                                                                                                                
1:51:16 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  1,  work  order  31-                                                               
GS1070\U.2, Nauman, 4/5/19.                                                                                                     
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
     TO:  CSSJR 4(STA)                                                                                                          
                                                                                                                                
     Page 1, line 3, following "state;":                                                                                      
         Insert "relating to effective dates of laws;"                                                                        
                                                                                                                                
     Page 1, following line 4:                                                                                                  
          Insert a new bill section to read:                                                                                    
       "* Section 1. Article II, sec. 18, Constitution of                                                                   
     the State of Alaska, is amended to read:                                                                                   
          Section 18. Effective Date. Laws passed by the                                                                      
     legislature   become   effective  ninety   days   after                                                                    
     enactment. The legislature may,  by concurrence of two-                                                                    
     thirds  of the  membership of  each house,  provide for                                                                    
     another effective date. This  section does not apply to                                                                
     a law  establishing a state  tax or increasing  a state                                                                
     tax under Section 1(b) of Article IX."                                                                                 
                                                                                                                                
     Page 1, line 5:                                                                                                            
          Delete "Section 1"                                                                                                  
          Insert "Sec. 2"                                                                                                     
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 1, line 11:                                                                                                           
          Delete "Notwithstanding Section 18 of Article II,                                                                     
     a"                                                                                                                         
          Insert "A"                                                                                                            
                                                                                                                                
     Page 2, lines 2 - 3:                                                                                                       
          Delete "the later of ninety days after"                                                                               
          Insert "January 1 of the fiscal year following                                                                        
     the fiscal year in which"                                                                                                  
                                                                                                                                
     Page 2, lines 3 - 4:                                                                                                       
          Delete "or an effective date provided for by                                                                          
      concurrence of two-thirds of the membership of each                                                                       
     house"                                                                                                                     
                                                                                                                                
     Page 2, line 12:                                                                                                           
          Delete "ninety days after approval"                                                                                   
          Insert "January 1 of the fiscal year following                                                                        
         the fiscal year in which the initiated law is                                                                          
     approved"                                                                                                                  
                                                                                                                                
SENATOR MICCICHE objected for discussion purposes.                                                                              
                                                                                                                                
1:51:34 PM                                                                                                                    
MR.  WHITT explained  that Amendment  1 speaks  to the  issue the                                                               
Department of  Law raised and  would address concerns  related to                                                               
the effective date.  Amendment 1 would add a line  to Article II,                                                               
sec.  18 of  the Constitution  of the  State of  Alaska to  read,                                                               
"This section  does not apply to  a law establishing a  state tax                                                               
or increasing a  state tax under Section 1(b) of  Article IX." It                                                               
would also change  the effective date to January 1  of the fiscal                                                               
year  following the  statewide voter  [initiative]. He  explained                                                               
the timeline,  that following a November  statewide election when                                                               
the legislature reconvenes  in January, it would  make a decision                                                               
regarding the [initiated law]. Thus,  the effective date would be                                                               
the following January  1. In response to Chair  Hughes, he agreed                                                               
it  related to  a voter  initiative. He  said this  would provide                                                               
nearly  a  year  for  the   administration  to  take  actions  to                                                               
administer the new tax.                                                                                                         
                                                                                                                                
1:53:15 PM                                                                                                                    
SENATOR  KIEHL said  Amendment  1 is  cleaner  than the  original                                                               
draft.  He  related  a  scenario  with  seasonal  activities  and                                                               
industries that occur in the  winter. However, January 1 falls in                                                               
the middle of  the season. He asked whether  any provision exists                                                               
for  the legislature  or voters  to adjust  to a  different start                                                               
date.                                                                                                                           
                                                                                                                                
MR.  WHITT  surmised  that  provisions  would  be  in  place  for                                                               
agencies and  businesses to gear up  to implement a new  tax that                                                               
would begin on January 1 and  run through December 31. This would                                                               
not be the first time a new tax was implemented.                                                                                
                                                                                                                                
CHAIR  HUGHES  added that  she  thought  this reflects  a  fairly                                                               
typical January 1 to December 31 timeframe.                                                                                     
                                                                                                                                
1:55:25 PM                                                                                                                    
MIKE BARNHILL, Policy Director,  Office of Management and Budget,                                                               
Office of  the Governor,  Juneau, stated  that Amendment  1 would                                                               
establish the  effective date  on January 1.  For example,  a new                                                               
Heli-ski company  whose season begins  on October 1 would  be tax                                                               
free   for  three   months.   He  did   not   envision  any   tax                                                               
administrative  issues, but  rather that  the division  would use                                                               
its standard practice to implement the new tax.                                                                                 
                                                                                                                                
1:56:01 PM                                                                                                                    
SENATOR KIEHL said  he was hoping for more. He  asked for further                                                               
clarification on the  mechanics of Amendment 1.  He recalled that                                                               
the legislature has sometimes  implemented retroactive changes to                                                               
the tax code.  He further recalled that the  Alaska Supreme Court                                                               
has said "that retroactivity is  not an effective date." He asked                                                               
whether it would be available under the language in Amendment 1.                                                                
                                                                                                                                
MR. BARNHILL deferred to the Department of Law.                                                                                 
                                                                                                                                
CHAIR HUGHES  offered to  follow up with  the department  on that                                                               
specific question.                                                                                                              
                                                                                                                                
1:57:00 PM                                                                                                                    
SENATOR MICCICHE said  that Amendment 1 would  make it impossible                                                               
for  the legislature  to respond  to  a substantial  drop in  the                                                               
price of oil.  He said that assuming the legislature  puts a full                                                               
dividend  in the  Constitution of  the  State of  Alaska, an  "x"                                                               
amount of revenue flows in, but  the state is not always going to                                                               
have $17  billion in  the earnings  reserve account  (ERA). There                                                               
may not  be anything in  the CBR [Constitutional  Budget Reserve]                                                               
or the ERA.  In order to keep the state  operating, the state may                                                               
need to implement  a tax one day. He emphasized  that he does not                                                               
currently  support implementing  a  tax.  However, this  language                                                               
makes  it so  the legislature  is always  in session  because the                                                               
approval process would take a  year. Even if the legislature held                                                               
a  special session,  the  tax would  not  become effective  until                                                               
January 1 of the following year, he said.                                                                                       
                                                                                                                                
SENATOR  MICCICHE  said Amendment  1  would  create a  completely                                                               
unmanageable financial  situation and there  is a reason  why the                                                               
legislature retains taxing power. Although  the state has not had                                                               
to do  so for generations,  one day  the legislature may  need to                                                               
[implement  taxes]  in order  to  provide  basic services  people                                                               
cannot afford to  do on their own, such as  troopers and schools.                                                               
Extending the date would mean  waiting to see if something passes                                                               
on November  2 and  managing it  if it  doesn't. That  would mean                                                               
holding  a   special  session,  immediately  holding   a  special                                                               
election, and waiting  until the following year  for a correction                                                               
on the next January 1. Although  it sounds good, he did not think                                                               
this has been adequately thought through.                                                                                       
                                                                                                                                
1:59:39 PM                                                                                                                    
CHAIR  HUGHES pointed  out  that he  is  speaking more  generally                                                               
about the  resolution, but  Amendment 1 and  the trigger  date is                                                               
before  the committee.  She pointed  out that  Colorado has  done                                                               
this. If  the legislature were  to pass  a tax, it  would require                                                               
public  education   and  a  mutual  agreement   that  taxes  were                                                               
necessary to continue to provide services.                                                                                      
                                                                                                                                
MR. BARNHILL said,  "Just briefly, Madam Chair,  and with respect                                                               
to Senator Micciche, I think  there's a difference between making                                                               
the enactment  of new  tax or  an increase in  the tax  rate more                                                               
difficult, which this certainly  does, and impossible, which this                                                               
does not."                                                                                                                      
                                                                                                                                
CHAIR HUGHES asked whether he maintained his objection.                                                                         
                                                                                                                                
2:01:14 PM                                                                                                                    
At-ease.                                                                                                                        
                                                                                                                                
2:06:42 PM                                                                                                                    
CHAIR HUGHES reconvened the meeting.                                                                                            
                                                                                                                                
2:06:47 PM                                                                                                                    
SENATOR MICCICHE made a motion  to adopt Conceptual Amendment [1]                                                               
to Amendment 1, on page 2 to delete lines 4-6.                                                                                  
                                                                                                                                
CHAIR  HUGHES,  referring  the  language on  page  2,  asked  for                                                               
clarification from  Mr. Whitt. She  asked if the  committee would                                                               
like  the possibility  of concurrence  of  two-thirds as  another                                                               
option, if  it should "delete"  the word "delete" or  whether all                                                               
of lines 4-6 in the amendment should be deleted.                                                                                
                                                                                                                                
MR. WHITT responded that either language would have the same                                                                    
effect.                                                                                                                         
                                                                                                                                
CHAIR HUGHES acknowledged that the language is in the                                                                           
resolution.                                                                                                                     
                                                                                                                                
2:07:35 PM                                                                                                                    
There being no objection, the Conceptual Amendment [1] to                                                                       
Amendment 1 was adopted.                                                                                                        
                                                                                                                                
CHAIR HUGHES said that Amendment 1, as amended, was before the                                                                  
committee.                                                                                                                      
                                                                                                                                
SENATOR MICCICHE removed his objection.                                                                                         
                                                                                                                                
There being no further objections Amendment 1, as amended, was                                                                  
adopted.                                                                                                                        
                                                                                                                                
2:07:56 PM                                                                                                                    
CHAIR HUGHES moved to adopt Amendment 2, work order 31-                                                                         
GS1070\U.3, Nauman, 4/10/19.                                                                                                    
                                                                                                                                
                          AMENDMENT 2                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
     TO:  CSSJR 4(STA)                                                                                                          
                                                                                                                                
     Page 2, lines 7 - 14:                                                                                                      
          Delete all material and insert:                                                                                       
          "(c)  Unless rejected by the legislature under                                                                        
     this subsection,  a law enacted  by voters  through the                                                                    
     initiative process under Article  XI that establishes a                                                                    
     tax  or increases  the rate  of an  existing tax  takes                                                                    
     effect  January 1  of  the fiscal  year  following  the                                                                    
     fiscal year in which the  law is enacted by voters. The                                                                    
     legislature shall  have sixty days of  the next regular                                                                    
     session beginning  after the initiative election,  or a                                                                    
     full  session if  of shorter  duration,  to reject  the                                                                    
     initiated law.  The law must be  rejected by resolution                                                                    
     concurred  in by  a majority  of the  members in  joint                                                                    
     session. If the legislature  rejects the initiated law,                                                                    
     the initiated law does not take effect."                                                                                   
                                                                                                                                
SENATOR MICCICHE objected for discussion purposes.                                                                              
                                                                                                                                
2:08:02 PM                                                                                                                    
MR. WHITT explained  Amendment 2, would replace  language on page                                                               
2,  lines 7-14.  Senator  Micciche raised  the  concern that  the                                                               
resolution  would  be  removing  power  from  the  people.  After                                                               
discussions  with   the  Department  of  Law,   the  language  in                                                               
Amendment 2 mirrors Article III  of the Constitution of the State                                                               
of Alaska under  executive powers. The current language  in SJR 4                                                               
states  that  the legislature  must,  by  resolution, approve  an                                                               
initiative  with a  majority vote.  If  it does  not approve  the                                                               
initiative, the  initiative would die, he  added. Under Amendment                                                               
2, by resolution, the legislature  would reject an initiative [by                                                               
a majority  vote]; otherwise  the initiative  would automatically                                                               
become law.  This process  is similar to  an executive  order, he                                                               
said.                                                                                                                           
                                                                                                                                
CHAIR HUGHES  pointed out that  if the legislature  does nothing,                                                               
the initiative would  also become law. Amendment  2 would require                                                               
the legislature  to go on  record, after the people  have weighed                                                               
in [by  passing an initiative].  She envisioned that it  would be                                                               
more demanding for  the legislature to go on record  to oppose [a                                                               
vote] by the people.                                                                                                            
                                                                                                                                
2:09:55 PM                                                                                                                    
SENATOR MICCICHE  clarified that  [Amendment 2] does  not replace                                                               
that right,  that the  public has lost  the right  to initiative.                                                               
The current constitutional language  provides the legislature the                                                               
right  to tax,  but  the people  can remove  the  tax through  an                                                               
initiative process or a referendum  process. The people also have                                                               
the right to create a law  by initiative and the legislature must                                                               
honor  that law  for  two  years. After  two  years,  it is  more                                                               
difficult to  change the law  because people remember  they voted                                                               
to  create  it.   All  Amendment  2  does  is   to  document  how                                                               
[legislators] voted  when [the legislature] takes  away the right                                                               
to initiative for two years.                                                                                                    
                                                                                                                                
CHAIR  HUGHES agreed  that it  documents  the vote,  but it  also                                                               
makes it  a higher bar  and more difficult [for  the legislature]                                                               
to overturn  the law  since the people  passed it  by initiative.                                                               
She said that  legislators might be hesitant to go  against a law                                                               
the people have asked for [via  the initiative vote]. The way the                                                               
resolution currently reads,  one would never really  know who was                                                               
in agreement  or who was  not in agreement. She  characterized it                                                               
as "somewhere in between."                                                                                                      
                                                                                                                                
2:11:26 PM                                                                                                                    
SENATOR KIEHL  offered his belief  that Amendment 2 would  make a                                                               
smaller  reduction   in  the  people's   authority  to   pass  an                                                               
initiative, but it would still be a reduction.                                                                                  
                                                                                                                                
CHAIR  HUGHES  asked whether  he  would  agree  it was  a  slight                                                               
improvement.                                                                                                                    
                                                                                                                                
SENATOR KIEHL indicated it was a small one.                                                                                     
                                                                                                                                
SENATOR MICCICHE removed his objection.                                                                                         
                                                                                                                                
There being no further objection, Amendment 2 was adopted.                                                                      
                                                                                                                                
2:12:25 PM                                                                                                                    
CHAIR HUGHES moved to adopt Amendment 3, work order 31-                                                                         
GS1070\U.4, Nauman, 4/16/19.                                                                                                    
                                                                                                                                
                          AMENDMENT 3                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
     TO:  CSSJR 4(STA)                                                                                                          
                                                                                                                                
     Page 1, line 12, following "the":                                                                                          
          Insert "nominal"                                                                                                      
                                                                                                                                
     Page 2, line 8, following "the":                                                                                           
          Insert "nominal"                                                                                                      
                                                                                                                                
SENATOR MICCICHE objected for discussion purposes.                                                                              
                                                                                                                                
2:12:35 PM                                                                                                                    
MR. WHITT  reviewed Amendment 3,  which would  specify "nominal."                                                               
He  said the  language on  page  1, line  12 would  read, "?  the                                                               
nominal  rate of  an  existing state  tax ?."  He  said that  the                                                               
Department of Law described it as cleanup language per its memo.                                                                
                                                                                                                                
SENATOR MICCICHE  said he was  not positive that it  resolves the                                                               
issue. For example, a 35 percent  base tax rate on oil taxes also                                                               
has a $5 per  barrel tax. One might say that the  35 percent is a                                                               
nominal rate. However,  it is not the nominal rate  because it is                                                               
inherently a part  of the tax that results in  a nominal outcome.                                                               
While  he understands  the argument,  it  would be  very easy  to                                                               
challenge in  court since taxes are  not a base rate.  They are a                                                               
function  of exclusions,  deductions, and  other levers  that are                                                               
designed  for a  specific  outcome, he  said.  In this  instance,                                                               
nominal is not what  one would think it is. He  said that it just                                                               
means if the state decides it  is "nominal" and the people decide                                                               
it is  not, it would go  to a vote of  the people. He said  it is                                                               
not a huge deal to him, but it is something to think about.                                                                     
                                                                                                                                
CHAIR  HUGHES  suggested  that   the  record  would  reflect  the                                                               
committee's  intent  and  that   the  committee's  discussion  is                                                               
related  to  the 35  percent  and  not  the deductions  or  other                                                               
things.  She  asked Mr.  Barnhill  if  "nominal  tax rate"  is  a                                                               
standard term  used to refer  to the base  rate and that  it does                                                               
not include other calculations that occur above the line.                                                                       
                                                                                                                                
2:15:28 PM                                                                                                                    
MR. BARNHILL said that  he did not know if it  was a standard tax                                                               
term. He said  that the record could reflect that  the 35 percent                                                               
rate in the state's production  tax statutes is the nominal rate.                                                               
In  order to  trigger  [SJR  4,] the  legislature  would need  to                                                               
change the nominal rate from 35 percent to some another number.                                                                 
                                                                                                                                
CHAIR HUGHES suggested the committee  adopt [Amendment 3] and ask                                                               
the Senate Finance  Standing Committee to determine if  this is a                                                               
standard tax term that could be relied upon.                                                                                    
                                                                                                                                
MR. BARNHILL offered to research it.                                                                                            
                                                                                                                                
2:16:17 PM                                                                                                                    
SENATOR  KIEHL  said  that  it  is a  fairly  standard  term.  He                                                               
acknowledged that  Senator Micciche is  correct. He said  he does                                                               
not think  this provision would  be triggered if  the legislature                                                               
passed a  law to apply  a credit of minus  $5 on every  barrel of                                                               
oil. Although it  is not the nominal rate, it  raises the taxable                                                               
value for  tax purposes by $5  and collects 35 percent,  he said.                                                               
The legislature  could change the  nominal rate and  what Senator                                                               
Micciche said  was "spot on," he  said. He characterized it  as a                                                               
can of worms that is wriggling and hard to grab.                                                                                
                                                                                                                                
MR. BARNHILL responded that Amendment  3 tries to provide clarity                                                               
for future  cases that  are litigated. He  said that  broad terms                                                               
are used  in constitutional language and  it leaves it up  to the                                                               
courts to ultimately decide.                                                                                                    
                                                                                                                                
SENATOR  MICCICHE said  the legislature  has been  known to  find                                                               
"work arounds."  He acknowledged  that it  is popular  to require                                                               
voter approval  but adding  "nominal" creates  a work  around. He                                                               
brought up  the $5 per  barrel tax  example to illustrate  it. He                                                               
said the  legislature could  find another way  to change  the tax                                                               
rate  without voter  approval. He  understood Amendment  3 is  an                                                               
attempt to achieve clarity, but it may work the other way.                                                                      
                                                                                                                                
MR.  BARNHILL  responded that  the  administration  is trying  to                                                               
strike a balance, so everything  does not need voter approval and                                                               
to create a  dividing line. Some things will  need voter approval                                                               
and others  will not, and  some gray  areas will occur,  he said.                                                               
Adding  words like  "nominal" may  help reduce  the ambiguity  in                                                               
certain cases,  and if so,  the committee  should do so.  He said                                                               
the record should be clear  that the administration is not trying                                                               
to  amend the  Constitution of  the  State of  Alaska by  sending                                                               
every tax  fee, deduction, or  question to the people  [for voter                                                               
approval]. [Under  Amendment 3],  some things will  require voter                                                               
approval, such as an increase in  the "nominal" rate of tax or to                                                               
create a new tax. However,  certain things will not require voter                                                               
approval, such  as fees,  deductions, or  implied changes  to the                                                               
rate  of tax  that do  not change  the nominal  rate of  existing                                                               
state tax.                                                                                                                      
                                                                                                                                
2:20:26 PM                                                                                                                    
SENATOR  REINBOLD  [via   teleconference]  said  she  appreciated                                                               
hearing the discussion.                                                                                                         
                                                                                                                                
2:20:39 PM                                                                                                                    
SENATOR MICCICHE  said he opposes the  legislature telling people                                                               
it is doing  something that it is not really  doing. For example,                                                               
the Constitution  of the  State of Alaska  has a  spending limit.                                                               
The  minutes   reflect  that  the  legislature   put  into  place                                                               
something that sounded  like a spending limit, yet it  was a "big                                                               
joke," and  the legislature  knew it  was not  going to  have any                                                               
effect on spending.                                                                                                             
                                                                                                                                
He  acknowledged  that  this may  be  uncomfortable  to  discuss.                                                               
However, he views Amendment 3 as  a work around and people should                                                               
understand that  there are not  any corporate taxes,  fish taxes,                                                               
fuel  taxes, or  marijuana taxes  in place  that the  legislature                                                               
cannot  find a  work around.  He  said that  the committee  could                                                               
create  a "purer"  approach, or  it could  make the  process more                                                               
flexible, which might bring out creativity by the legislature.                                                                  
                                                                                                                                
2:21:52 PM                                                                                                                    
SENATOR MICCICHE withdrew his objection.                                                                                        
                                                                                                                                
There being no further objection, Amendment 3 was adopted.                                                                      
                                                                                                                                
2:22:10 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  4,  work  order  31-                                                               
GS1070/U.5, Nauman, 4/16/19.                                                                                                    
                                                                                                                                
                          AMENDMENT 4                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
     TO:  CSSJR 4(STA)                                                                                                          
                                                                                                                                
     Page 2, line 19:                                                                                                           
          Delete "Section 1"                                                                                                
          Insert "Section 1(c)"                                                                                             
                                                                                                                                
SENATOR MICCICHE objected for discussion purposes.                                                                              
                                                                                                                                
2:22:21 PM                                                                                                                    
MR. WHITT explained Amendment 4 is  a "carve out" for Article IX,                                                               
Section  1(c),  which  relates to  the  enactment  provisions  in                                                               
Amendment 2.  Thus, except  as provided in  Section 2  of Article                                                               
IX, the enactment would follow  the provisions in Section 1(c) of                                                               
SJR 3.                                                                                                                          
                                                                                                                                
2:23:05 PM                                                                                                                    
SENATOR MICCICHE removed his objection.                                                                                         
                                                                                                                                
There being no further objections, Amendment 4 was adopted.                                                                     
                                                                                                                                
[SJR 4 was held in committee.]                                                                                                  

Document Name Date/Time Subjects
SJR 3 - Sponsor Statement.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SJR 3
SJR 3 Version A.PDF SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SJR 3
SJR3 Fiscal Note.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 3
SJR4 Transmittal Letter.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4
SJR4 Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4
SJR4 Explanation of Changes Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4
CSSB 33(JUD) Version U.pdf SJUD 4/19/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SB 33
CSSB33 Explanation of Changes from Version M to U.pdf SJUD 4/19/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SB 33