Legislature(2003 - 2004)
01/28/2004 07:00 AM House W&M
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
January 28, 2004
7:00 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Chair
Representative Vic Kohring
Representative Dan Ogg
Representative Norman Rokeberg
Representative Ralph Samuels
Representative Peggy Wilson
Representative Max Gruenberg
Representative Carl Moses
MEMBERS ABSENT
Representative Bruce Weyhrauch, Vice Chair
COMMITTEE CALENDAR
HOUSE BILL NO. 236
"An Act imposing a tax on employment; and providing for an
effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 236
SHORT TITLE: EMPLOYMENT TAX FOR EDUCATION
SPONSOR(S): REPRESENTATIVE(S) WILSON
04/02/03 (H) READ THE FIRST TIME - REFERRALS
04/02/03 (H) W&M, FIN
04/10/03 (H) W&M AT 7:00 AM HOUSE FINANCE 519
04/10/03 (H) -- Meeting Canceled --
04/16/03 (H) W&M AT 7:00 AM HOUSE FINANCE 519
04/16/03 (H) Heard & Held/Subcommittee assigned
04/16/03 (H) MINUTE(W&M)
01/28/04 (H) W&M AT 7:00 AM HOUSE FINANCE 519
WITNESS REGISTER
DON RULIEN
Alaska Society of Certified Public Accountants
Anchorage, Alaska
POSITION STATEMENT: Answered questions about HB 236.
STEVEN PORTER, Deputy Commissioner
Office of the Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 236.
CHUCK HARLAMERT
Juneau Section Chief
Tax Division of Administrative Services
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 236.
PATRICK OWEN
Juneau, Alaska
POSITION STATEMENT: Testified in favor of HB 236.
KEVIN RITCHIE
Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Spoke in favor of HB 236.
ACTION NARRATIVE
TAPE 04-4, SIDE A
[About 40 seconds of blank tape at the beginning of side A]
Number 0001
CHAIR MIKE HAWKER called the House Special Committee on Ways and
Means meeting to order at 7:00 a.m. Representatives Hawker,
Samuels, Kohring, Gruenberg, Moses, and Ogg were present at the
call to order. Representatives Rokeberg and Wilson arrived as
the meeting was in progress.
HB 236-EMPLOYMENT TAX FOR EDUCATION
CHAIR HAWKER announced that the only order of business would be
HOUSE BILL NO. 236, "An Act imposing a tax on employment; and
providing for an effective date." He noted that Version D had
been worked on during the interim and that today's proposed
committee substitute (CS) is Version H. He also announced that
there was a quorum present.
Number 0152
REPRESENTATIVE SAMUELS moved to adopt HB CS236, Version 23-
LS0921\H, Kurtz, 4/14/03, as the working document. There being
no objection, Version H was before the committee.
CHAIR HAWKER said the concept behind this revenue bill is to tax
employees, ages 19 and older, $100. He welcomed Representative
Wilson, the sponsor of the bill, who arrived at the hearing. He
said it could raise $40 million a year and is a very popular
idea around the state. He said the bill was still a concept and
needed technical work from the professional [revenue] community.
Chair Hawker welcomed the teleconference witnesses and
Representative Rokeberg, who arrived at the hearing.
CHAIR HAWKER asked Don Rulien if he had seen Version H of the
bill.
Number 0662
DON RULIEN, Alaska Society of Certified Public Accountants,
noting that he's head of that society, said he had Version H in
front of him.
Number 0711
STEVEN PORTER, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, said the bill would need to be modified
to reflect the January 1, 2005, effective date, to prescribe a
calendar year tax period. The Department of Revenue (DOR)
estimates that this program could generate $39 million in
revenue for a full fiscal year starting in 2006, he said. He
said there would be a substantial number of returns, both from
businesses and from private individuals. He noted that DOR
would have to increase staff by 13 full-time employees and 10
temporary workers, initially, and then adjust to 12 full-time
employees and 10 temporary workers. He also said that there
would need to be $680,000 in capital for a large-scale imaging
and data capture system to accommodate the [additional] data.
REPRESENTATIVE GRUENBERG referred to page 2, paragraph 1 [of the
fiscal note from the Department of Revenue], which read in part,
"... and include authority for the Department to provide
taxpayer incentives for use of electronic filing or other cost
saving technology." He asked what kinds of incentives could be
applied, and if they could be applied to other revenue raising.
Number 0906
CHUCK HARLAMERT, Juneau Section Chief, Tax Division, Department
of Revenue (DOR), replied that, at present, the largest tax
program is the corporate income tax, with 12,000 taxpayers, and
that the cost-benefits of investing in technology aren't there.
He said [DOR] envisions a provision that grants authority,
within limits, to establish incentives to taxpayers and
preparers to use the technology that is adopted.
REPRESENTATIVE GRUENBERG asked if DOR had any specific
incentives in mind.
MR. HARLAMERT replied in the negative.
REPRESENTATIVE GRUENBERG said he would like to pursue this idea
in other areas as well, for example, in child support
collection.
MR. PORTER explained that Department of Revenue, within the
Permanent Fund [Dividend Division], Child Support Enforcement
Division, and Tax Division, is trying to move forward with
incentives. He cited as examples, an on-line system and an
electronic card system, with appropriate incentives, depending
on the type of public [targeted]. He said DOR was trying to be
creative.
Number 1136
REPRESENTATIVE WILSON, sponsor of the bill, said the committee
has spent time talking about trying to make it easier for
employers and the state to work with the bill. The letter from
the National Payroll Reporting Consortium, Inc. (NPRC) suggests
changes in the bill, from their standpoint, for employers, she
said, and asked Mr. Porter if he had seen the letter.
MR. PORTER replied that he had not seen the letter.
REPRESENTATIVE WILSON suggested the committee go over the letter
together.
CHAIR HAWKER stated that his intent was to address those issues
in discussion with Don Rulien.
CHAIR HAWKER called attention to HB 236, Version H, page 1, line
6, and questioned the words "19 years of age or older". He said
that it does not address persons who turn 19 later on in the
year, and that on page 2, line 14, it does require the person to
be 19 years of age for the entire tax year.
CHAIR HAWKER asked if there might be problems about the tax
"kicking in" only after the person has made $1,000.
Number 1450
MR. RULIEN said there would be a problem with transient
employees who would be difficult for an employer to track. A
better plan would be to make collection similar to [the
Employment Security Contribution for state unemployment] where
the amount is withheld. At the end of the year a form is filed
for a refund, if too much was withheld, or there were multiple
employers and an overpayment was made. [The bill as written]
puts a larger burden on the employer. He also agreed with the
need to move the date on the bill to a calendar year, because
payroll is based on the calendar year. He said that would make
it easier to follow the law.
CHAIR HAWKER agreed. He said creating dual fiscal year-ends for
single employers, with a payroll year-end that is at odds with
the federal tax-reporting year-end, would create a second level
of reporting.
Number 1610
MR. RULIEN referred to page 2, lines 3-5, and said [a return]
had to be [filed] by the 15th day of the month, which is not a
requirement in reporting now. He said it would be much easier
to follow the same rules that exist today.
CHAIR HAWKER said the current reporting form in Alaska is the
ESC form, and there is a long list of regulations on timing and
reporting. He asked if it would be a viable alternative for the
employer to use the same reporting, forms, and dates, to the
state.
MR. RULIEN replied he thought it would be an excellent
alternative. He said there could simply be a new column on the
Employment Security Contribution (ESC) report, and also on the
employee application for a refund report, which is on an annual
basis. He said payroll employees are very used to the form and
it would be easy to do. The form would need more lines because
there would be more requirements for reporting individual
employees, specifically for the $100 "payroll tax." He said
that employment security only has one ceiling, but this tax
would have a ceiling of $100 with a $1,000 floor. He said he
did not think there should be a $1,000 floor, because that would
add another unnecessary step before [figuring] the withholding.
CHAIR HAWKER asked if anyone from DOR could discuss the ESC
reporting system.
Number 1900
MR. HARLAMERT said all of the data that was required in the
proposed tax could be done on the ESC report except for how it
would be coordinated with a federally funded program. He said
there was concern about how to spread the costs between the
larger federal program and the state program. He said it was
probable that the allocated costs to the state of the federal
program would be higher than the costs [of a state program]
standing alone. He said it was a tradeoff between employer
convenience and the greater expense to the state.
REPRESENTATIVE GRUENBERG asked, if there was not a $1,000
minimum, how many more people and how much more revenue over $39
million would be brought in.
MR. HARLAMERT replied he did not know, but he could get a hold
of the figures.
REPRESENTATIVE ROKEBERG asked for clarification about how the
state would be burdened by the use of the ESC reporting method.
Number 2200
MR. HARLAMERT explained that the ESC report is the federally
funded unemployment tax collected by the Department of Labor (&
Workforce Development (DLWD). He said the DLWD system is
elaborate and intended to cover the process of collecting
premiums and awarding benefits. Many states use the same
technology, he said. The DLWD system is more expensive and
larger-scale than what DOR uses. He does not know the costs DOR
would have to allocate to the [proposed] tax program. He
guessed that it would be more than the marginal costs of adding
the tax program to the DLWD system.
REPRESENTATIVE ROKEBERG said the ESC form to collect the
unemployment tax from the employers and employees of the state
follows the format of a software program developed by the
federal government and the DLWD. He asked Mr. Harlamert if he
was suggesting that it might be more expensive to reprogram the
software and [redo the] form to accommodate this new tax than to
have a discrete, stand-alone form.
Number 2400
MR. HARLAMERT replied it would not. He said he assumed that the
[new tax] would be handled along with the ESC form in the [DLWD]
system. He said the DOR has not explored capturing the data
through [DLWD's] system.
CHAIR HAWKER said only general revenue would be collected, and
adding another column to a form already in place seems logical.
MR. RULIEN spoke about compensation and said that only those who
are earning W-2 wages are required to file and have ESC
withheld, and also to pay in ESC. He said one of the problems
is there are a lot of unreported wages: partnership earnings,
limited liability company earnings, and self-employed earnings.
A problem with ESC is that it matches [state] forms to the
federal unemployment tax forms, and this new tax encompasses a
greater portion of wages that are not reported on ESC or under
federal unemployment tax, he said. He wondered if DOR had
considered these issues.
Number 2713
REPRESENTATIVE GRUENBERG suggested on page 1, line 7, that the
term "compensation" be changed to "income". He said then all
types of income, as defined by the Internal Revenue Code (IRC),
could be included. He wondered how much additional tax would be
generated.
MR. RULIEN said the term should not be called "income" because
interest, dividends, and the permanent fund [dividend] would be
included. He suggested "earned income" or "self-employment
taxable income", which would be subject to Social Security and
Medicare [withholding].
MR. HARLAMERT said DOR has not reviewed the tax to go beyond the
term "earned income". He said there are 425,000 taxpayers in
the state and there would be a substantial increase in the
number of people that receive the permanent fund [dividend], but
who don't have earned income.
MR. RULIEN said most professional associations are either
limited liability companies, partnerships, or sole
proprietorships. They are a source of a huge amount of revenue
[not considered] because they are not required to file returns
with the state.
Number 2922
REPRESENTATIVE WILSON asked Mr. Rulien to restate his rewording
ideas.
MR. RULIEN said he was trying to come up with the right word for
"earned income" because he thinks it is not the intent of the
tax to include interest or dividends. He suggested "self-
employment earnings", which are subject to the Social Security
and Medicare rules under the IRC. He wondered if self-
employment earnings, as defined by the IRC, could also be
included.
Number 3030
CHAIR HAWKER said there seemed to be three categories. The
first one was "W-2 reportable earnings," which are wages and
compensations from an employee-employer relationship. The
second one was compensation reportable, or "1099 reportable
income for the purposes of services."
MR. RULIEN suggested that the second category could be called
"non-employee compensation."
CHAIR HAWKER agreed and said the third category could be called,
from a partnership standpoint, "reportable on form [Schedule K-
1] to an individual."
MR. RULIEN said the categories were correct.
Number 3143
REPRESENTATIVE ROKEBERG asked for clarification on the [ESC]
reporting and wondered if it was a quarterly report.
MR. RULIEN said it was quarterly.
REPRESENTATIVE ROKEBERG asked if there were any monthly reports
to the DOR or DLWD.
MR. HARLAMERT replied that there were no monthly reports
relative to compensation.
REPRESENTATIVE ROKEBERG asked if there were monthly reports
required by the Internal Revenue Service.
CHAIR HAWKER answered there were payments [due] but not reports.
REPRESENTATIVE ROKEBERG said there were requirements written in
the bill for monthly reports, which would be an additional
burden [on the employer]. He said he was concerned with the
fiscal [impact] on the private sector. He said that the
structuring of the reporting mechanism was important. He talked
about the form and the three choices: line item only on the ESC
report, a stand-alone report, or a combination report.
Number 3448
CHAIR HAWKER suggested there might be a fourth option and asked
if there were any federal reporting requirements, monthly or
quarterly, that already provided enough information so that they
could be used by employers.
MR. RULIEN answered that the ESC requirements are much more
detailed than the federal requirements and include social
security requirements.
REPRESENTATIVE ROKEBERG, speaking from personal experience as a
self-employed person, said he was concerned about not adding a
burden to those who are self-employed. He suggested a special
requirement to file yearly income, if cash flow on tax revenue
receipts is an issue. The timing of the reporting would be
important, he said.
CHAIR HAWKER asked Mr. Rulien to explain the consistency of the
reporting requirements for the W-2, 1099, and K-1 [federal
forms].
MR. RULIEN explained that the W-2 and 1099 [forms] are due out
to the employees by January 31 and are then required to be filed
with the Internal Revenue Service (IRS) by February 28.
[Limited liability companies], which have a K-1 partnership, and
sole proprietors, which don't have K-1 partnerships, but [file]
a Schedule C, which is part of the individual tax return, all
have a file due date on October 15 under "extensions of the
following year."
CHAIR HAWKER added, "That is [true] if, and only if, they are
calendar-year taxpayers." He asked Mr. Rulien to explain any
variations [of due dates].
MR. RULIEN explained that the due date is the 15th day of the
10th month at the end of the taxable year, which could vary. He
suggested considering gross income rather than net income on a
quarterly basis.
Number 3837
REPRESENTATIVE OGG spoke about the 1099 form and the fishing
industry's not having to file on a quarterly basis. He
explained that they file on a yearly basis if 90 percent of
their income is from fishing. He said the fishing industry is
the largest employer in the state and must be considered. He
said there were many crewmembers who only work three months, and
there would be no way of knowing what their income was until the
following year.
MR. RULIEN said the burden should be on the employer or owner of
the fishing vessel who pays the fishermen, or this large source
of revenue would be lost.
Number 3950
REPRESENTATIVE OGG said a burden is created on the owner of the
fishing business because quarterly reporting is currently not
required.
MR. RULIEN agreed.
CHAIR HAWKER spoke about the federal ES form as a trigger, and
questioned if the tax should be on the employee or employer.
REPRESENTATIVE WILSON said that decision should be made early
on. She said care must be taken not to put the extra burdens of
time and expense on small business employers.
REPRESENTATIVE OGG said his intent was not to let fishermen
escape the tax, but to explain the difference in the nature of
the employer-employee relationship in the fishing industry. He
said it was a contractual relationship based on the percentage
of the income.
CHAIR HAWKER asked if earnings from a fishing enterprise, the
net [income] of the individual, was a 1099-reportable item.
MR. RULIEN said that was correct, but the IRS has given the
fishing industry an exemption, saying the owner of the fishing
business does not have to treat the fishermen they are paying a
percentage to as employees, so he/she is allowed to [file] a
1099. He said the burden needs to be put on the employer to
withhold the tax from the fisherman in order to collect the tax.
Number 4350
CHAIR HAWKER said Mr. Rulien brings out two critical technical
issues. He said the 1099 form is strictly a federal form and is
not copied to the state. He asked if the people reporting
earnings on a 1099 are required to file quarterly estimated
payments.
MR. RULIEN said that was correct.
CHAIR HAWKER asked if this applied to an employee in any
situation when receiving a 1099.
MR. RULIEN said this does not apply to fishermen because they
earn [90] percent of their earnings from fishing and have until
March 1 of the following year to pay taxes without a penalty.
CHAIR HAWKER said fishermen do not have to make the ESC
payments.
Number 4457
REPRESENTATIVE OGG said he would be concerned if the state
designated the owner of a fishing business as an employer
because that might trigger worker's compensation issues which
are not presently in effect.
REPRESENTATIVE WILSON asked if it would be legal to collect [the
tax] if the [federal government] says the relationship is not an
employee-employer relationship.
Number 4600
REPRESENTATIVE ROKEBERG again spoke as a longtime self-employed
person. He said he was interested in hearing more about the IRS
exception for fishers in Alaska. He said the issues between
self-employment and independent contractor relationships are
spoken to in the law, in IRS regulations, and in [state]
statutes to a degree, and in terms of practice and regulations.
He said there were safe-harbor tests and other accounting tests
to yield differentials between the two relationships. He said
he did not see clarification as a major problem.
TAPE 04-4, SIDE B
Number 4627
REPRESENTATIVE ROKEBERG said the bigger problems are the timing
in the reporting requirements and how the tax relates to small
businesses. He said another problem is whether the tax should
be on employers and not employees. Typically, the burden of
collection is on the employers, but the tax still [should]
remain with the individual, and he said this should be clearly
stated.
CHAIR HAWKER said there were other circumstances such as the
non-employee compensation arrangement, "1099 folks," where the
federal statute recognizes the necessity for the payer to
withhold "backup withholding." In such cases, the money is
taken before it reaches the person being paid, without violating
the separation of the employer-employee relationship.
Number 4444
CHAIR HAWKER referred to page 1, lines 6 and 7, "receives
compensation greater than $1,000 in the state." He asked
Representative Wilson if the intent was to tax the $1,000 just
earned, or does it mean the next $100 after $1,000 has been
earned.
REPRESENTATIVE WILSON said it was a good question and the intent
was not to take an entire paycheck, and the amount was simply a
starting point.
CHAIR HAWKER agreed with Representative Wilson that the bill was
a work in progress. He asked Mr. Rulien to speak about the
$1,000 floor issue.
Number 4254
MR. RULIEN said the wording of the bill puts the burden on the
employee to show the employer that he/she has already earned
$1,000 at "ABC" company. He said he likes the ES rules whereby
the employer withholds [the tax] no matter how many times the
employee has worked, and then, at the end of the year, the
employee can request a refund if he/she has overpaid the $100,
by attaching the W-2 [form] to show the over withholding.
CHAIR HAWKER said that was how it currently worked today as a
refund on a single check, after application at the end of the
year.
Number 4130
MR. RULIEN suggested the tax be [stated] as a 10 percent tax not
to exceed $100, collected in the first month, in most cases. He
said he was looking for an easier way to report for employees
and the payroll department.
CHAIR HAWKER said when computers came along it caused problems
with standardized reporting, and if the tax is not simplified,
wage earners would have to be entered separately into the
program with their own wage-base table.
MR. RULIEN said a 10 percent tax not to exceed $100 would be
simpler.
CHAIR HAWKER said he was thinking of a $20-per-paycheck
withholding, until $100 is reached, but then thought of the
problem of persons who have not had their liabilities withheld
by the time they cease employment.
MR. RULIEN agreed with Representative Wilson's concern not to
take a person's whole paycheck, and said $20 might be a lot of
money to some people.
Number 3813
REPRESENTATIVE GRUENBERG spoke about his district, which
includes Mountain View and Russian Jack, where there is a highly
transient population and people change jobs frequently. He said
if each job withholds $100 from [these people's] paycheck, it
would be a real imposition. He said a burden would be put on
them if they had to wait until the end of the year and apply for
a refund. He suggested a mechanism whereby the first employer
could give them a card that shows [the tax has been taken out],
so that when they go to the next employer they can show [the
card]. He said the tax would be a real imposition on people who
can ill afford it. He asked Representative Wilson to comment on
this issue.
REPRESENTATIVE GRUENBERG asked if the term "compensation" on
[page 1], line 7, has an established legal meaning.
MR. RULIEN said "compensation" means a W-2 earner.
REPRESENTATIVE GRUENBERG asked if the term was in the field of
taxation.
Number 3557
MR. RULIEN answered that it was both in the field of accounting
and in taxation. He said it would be more readily understood as
"W-2 earner", because partnership earnings are not
"compensation". They are not reported as W-2 earnings and are
exempt. He said the wording [in the bill] needs to be changed
to encompass all professional earnings, self-employed earnings,
and everything else.
REPRESENTATIVE GRUENBERG said he noticed "compensation" was
defined in the bill.
CHAIR HAWKER remarked that a truly distinct definition of what
is subject to taxation is needed, and he suggested the committee
refer to IRC and state statute, where the definition has been
clearly delineated, litigated, and ruled on by various courts.
REPRESENTATIVE GRUENBERG said he assumed the term "personal
services" on [page 1], line 9, similarly, has a well-defined
definition.
MR.RULIEN said he understands that $100 is much larger to some
people than to others, especially transient workers who would
have many withholdings. He noted that on page 2, line 19, the
burden is on the employers. If they do not withhold properly,
then they have to pay the tax, he added. He wondered about the
correct definition of proper disclosure by the employee. He
quoted [from lines 21-22], the employer can demonstrate that the
employer relied on proof provided by the employee", and asked
what the proof was.
REPRESENTATIVE GRUENBERG suggested the DOR be given the
authority to prescribe these details; for example, the type of
proof required.
Number 3254
REPRESENTATIVE WILSON said the NPRC letter says, "... the state
should adopt the federal income tax definitions of 'employer'
and 'employee' for the purposes of consistency and
administrative convenience," when it comes to the compensation
definition. She asked if it would make things easier if the
committee followed those suggestions.
MR. RULIEN gave an example of a limited liability company with
employees that are partners who get wages, and said he does not
want [the tax] to miss out on an untapped source, such as this
company, by using the employer-employee definition.
Number 3126
REPRESENTATIVE ROKEBERG agreed uniform definitions need to be
adopted. He said he disagreed with Representative Gruenberg's
idea to cede the rule-making authority to work [on the bill] to
the DOR. He said he was concerned about public policy-making
issues and that the language in the statutes is almost
unintelligible to the average citizen. He said people need to
be able to look at the face of the bill and understand it, and
the committee needs to do a better job of clarifying the law to
the public.
Number 3000
REPRESENTATIVE OGG agreed with the 10 percent idea. He also
agreed the tax could be a problem for the [multiple job]
employee. He said that for people who do not make $1,000 a
month, a fair amount of income would be taken as tax in the
first month. He suggested an accommodation for those
situations.
CHAIR HAWKER proposed changes to the effective date of the bill
and suggested Representative Wilson meet with the committee aide
and DOR to work on a committee substitute.
REPRESENTATIVE ROKEBERG echoed previous comments about the
impacts [of the tax] on multiple employment situations, which
are very common for various reasons. He suggested not charging
the tax until a $3,000 threshold [of income] is reached. He
spoke in favor of a year-end reconciliation with a W-2 form.
CHAIR HAWKER said in the process of drafting laws, sometimes the
realities and practicalities are overlooked.
REPRESENTATIVE ROKEBERG wondered why the age was set at 19 and
older and did not include workers 16-18 years old.
REPRESENTATIVE WILSON said the committee was concerned about the
16-year-old babysitter and those kids "nickel and diming it."
She said more work would be done on this issue.
REPRESENTATIVE GRUENBERG asked if there was a law to draft
legislation in plain English.
CHAIR HAWKER spoke about the implementation date's needing work
because the current retroactive date was not going to work. He
asked for opinions on an effectiveness clause whereby the bill
would become effective any January 1, when January 1 follows a
state fiscal year-end June 30, and when the balance in the
constitutional budget reserve is less than $1.5 billion. Once
the tax is imposed, it would cease to be in effect any December
31, following a fiscal year-end when the CBR is in excess of
$2.5 billion.
Number 2125
REPRESENTATIVE ROKEBERG said the idea was a great trigger
mechanism as it related to the CBR. He brought up the idea of a
"reverse trigger mechanism."
Number 1908
REPRESENTATIVE GRUENBERG said the bill would affect all of the
"little wage earners," and the people should be able to
understand the bill.
CHAIR HAWKER said his intent was directed at the "little wage
earners." He thanked Mr. Rulien for his participation.
Number 1638
PATRICK OWEN testified in favor of HB 236 and said it was long
overdue. He said if it had been in place last year, the
problems of education funding in rural areas would be solved.
He said the future leaders of [Alaska] need to be educated
properly. He said he would like to see the state income tax
back again.
REPRESENTATIVE ROKEBERG said Mr. Owen's testimony brought up a
very interesting point the committee should recognize. In the
past there had been, concurrently, the state tax as well as the
"head" tax. He said he thought the rationale behind having two
taxes at the same time was to make sure the transient workforce,
the lower-income workforce, and youth labor, which were under
the threshold of the income tax, would pay the "head" tax.
MR. OWEN said it was a shame the oil companies were bringing
their own people to take jobs and were taking jobs away from
Alaskans. He said the companies are making big money that goes
back down south and Alaska does not benefit from it.
Unemployment compensation is paid out [down south], he added.
He said the tax was one way that money could stay in Alaska. He
said he would like to see the money generated by this tax go
into an education fund, instead of the general fund.
Number 1305
REPRESENTATIVE OGG said he appreciated Mr. Owen's comments. He
asked Mr. Owen's opinion if the choice had to be made between
education funding and funding Medicaid.
MR. OWEN replied that both programs are viable.
REPRESENTATIVE OGG said it was a question that would have to be
asked, eventually, in the committee.
Number 1113
KEVIN RITCHIE, Executive Director, Alaska Municipal League
(AML), said the goal of AML is to work with [the legislature] to
adopt a long-range fiscal plan including implementation of
reasonable taxes and user fees to provide a stable base for
funding. He said he would like to be able to bring this tax to
communities as part of a package.
Number 1020
REPRESENTATIVE GRUENBERG spoke about the [Alaska Conference of
Mayors' "vote of no confidence"] resolution and said:
With all due seriousness, the mission of the
legislature, and this body, and the Conference of
Mayors, is to deal with the fiscal crisis and
resolutions, and messages like that are really
counterproductive and don't foster the relationship we
need to have if we are going to work together to solve
the problem.
He said he was only speaking on behalf of himself and asked Mr.
Ritchie to carry that message back.
MR. RITCHIE thanked him and said he would.
REPRESENTATIVE ROKEBERG echoed Representative Gruenberg's
sentiments. He said certain people coming [to the legislature]
from various communities with hat in hand looking for a handout
probably will not be welcome in certain offices in this
building. He asked Mr. Ritchie if the mayors are part of AML.
MR. RITCHIE replied the [Alaska Conference of Mayors] and AML
are separate organizations.
REPRESENTATIVE WILSON said it has been frustrating and difficult
for [members of the committee], and the committee would also
like to see progress on the fiscal plan.
CHAIR HAWKER agreed, personally, with the previous speakers and
discussed the committee's past efforts [to work on a fiscal
plan]. He asked Mr. Ritchie to carry back a message of
disappointment to the mayors.
MR. RITCHIE said AML and the Alaska Conference of Mayors have a
joint platform to support "a strong goal of working with the
legislature to work with the public to see the value of a long-
range fiscal plan and some of the measures needed to get there."
Both organizations support the POMV concept, and will work to
carry that discussion to the public.
[HB 236 was held over]
Number 0507
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
8:31 a.m.
| Document Name | Date/Time | Subjects |
|---|