Legislature(2023 - 2024)DAVIS 106
04/11/2023 06:00 PM House WAYS & MEANS
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| Audio | Topic |
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| Start | |
| Overview: Long Term Fiscal Plan | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
April 11, 2023
6:17 p.m.
MEMBERS PRESENT
Representative Ben Carpenter, Chair
Representative Tom McKay
Representative Kevin McCabe
Representative Cliff Groh
Representative Jamie Allard
Representative Cathy Tilton
MEMBERS ABSENT
Representative Andrew Gray
COMMITTEE CALENDAR
OVERVIEW: LONG TERM FISCAL PLAN
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXEI PAINTER, Director
Legislative Finance Division
Juneau, Alaska
POSITION STATEMENT: Gave the "Long Term Fiscal Plan" overview.
ACTION NARRATIVE
6:17:14 PM
CHAIR BEN CARPENTER called the House Special Committee on Ways
and Means meeting to order at 8:05 a.m. Representatives McKay,
McCabe, Groh, and Carpenter were present at the call to order.
Representatives Tilton and Allard arrived as the meeting was in
progress.
^OVERVIEW: LONG TERM FISCAL PLAN
OVERVIEW: LONG TERM FISCAL PLAN
6:17:50 PM
CHAIR CARPENTER announced that the only order of business would
be the "Long Term Fiscal Plan" overview.
6:18:21 PM
ALEXEI PAINTER, Director, Legislative Finance Division, began
the "Long Tern Fiscal Plan" overview, which highlighted three
fiscal scenarios that the Alaska State Legislature could face in
the coming fiscal years. He explained each individual scenario
in depth and emphasized the legislative framework that would
have to be in place for each scenario to occur.
6:27:29 PM
CHAIR CARPENTER shared his understanding that the increase in
size and scope of the Alaska State Government would outpace the
annual increase in revenue and asked if each of the fiscal
scenarios were modeled off of that understanding.
MR. PAINTER confirmed that was correct.
6:29:14 PM
REPRESENTATIVE MCCABE asked Mr. Painter if the Legislative
Finance Division has created any models to outline the impacts
of the projected economic growth of the fiscal scenarios posed
before the committee.
MR. PAINTER responded that the Legislative Finance Division has
not created any models regarding the impacts of any economic
growth in Alaska.
6:31:08 PM
REPRESENTATIVE CARPENTER asked whether the overview's scenarios
take into account any of the recent changes in Alaska's fiscal
practices. He asked whether the state's revenue sources would
remain unchanged.
MR. PAINTER answered that the overview before the committee does
not propose any changes to current state revenue structure.
6:33:29 PM
MR. PAINTER resumed the overview on the third of the three
fiscal scenarios and explained both the legislative and
financial framework that would have to be in place for the third
financial scenario to occur.
6:36:16 PM
REPRESENTATIVE CARPENTER asked whether the proposals to increase
sales tax and cut corporate income tax were based on an
assumption of a 1- to 1.5-percent annual increase in revenue.
MR. PAINTER replied that the corporate income tax is directly
tied to oil prices instead of revenue needs.
6:37:58 PM
REPRESENTATIVE MCCABE asked how Alaska's rate of sales tax is
calculated.
MR. PAINTER explained that Alaska's income and sales tax model
is not public information.
6:40:45 PM
REPRESENTATIVE MCKAY asked if the first of the three proposed
fiscal scenarios mentioned a tax on oil production in Alaska.
MR. PAINTER explained that none of the three proposed fiscal
scenarios specifically mentioned a tax on oil production in
Alaska.
REPRESENTATIVE MCKAY suggested that the Willow Project be
included in one of the proposed fiscal scenarios.
MR. PAINTER explained that the reason the Willow Project wasn't
included in the scenarios was due to the uncertain nature of its
revenue.
6:45:41 PM
REPRESENTATIVE GROH suggested a series of numbers in a
theoretical fiscal scenario to Mr. Painter and asked how that
theoretical scenario would set up Alaska's revenue portfolio.
MR. PAINTER replied that the specific numbers given by
Representative Groh in his theoretical scenario would create a
surplus in fiscal year 2024 (FY 24) and a deficit in FY 25 and
26 due to a decline in revenue from oil and gas royalties.
REPRESENTATIVE GROH asked Mr. Painter to explain the difference
between the statutory and "50/50" method of determining the
annual payout of the Alaska permanent fund dividend (PFD).
MR. PAINTER explained that the statutory net-income method of
determining the PFD's annual payout has already been considered
for FY 25-27. He said that the statutory net-income method of
determining the PFD's annual payout is an inherently more
volatile method of determining its annual payout.
6:53:10 PM
CHAIR CARPENTER opined that it is difficult to determine which
method of determining the annual PFD payout will be most
consistent.
MR. PAINTER responded that there is no clear way to determine
which method might be more consistent than another.
REPRESENTATIVE GROH asked if it could be true that a tax on oil
and gas properties is less volatile than taxes that are based
off of oil and gas income.
MR. PAINTER replied that Representative Groh's understanding was
correct and explained the four tax categories that apply to oil
and gas production in Alaska: petroleum property tax, royalty
tax, production tax, and corporate income tax. He highlighted
that the least volatile tax of those four categories was the
petroleum property tax.
6:57:30 PM
REPRESENTATIVE GROH asked whether broad-base taxes are less
volatile than a tax on oil production.
MR. PAINTER confirmed that is correct.
6:59:55 PM
REPRESENTATIVE MCCABE speculated how a progressive income tax
might impact both those who would be most affected by a
progressive income tax and Alaska's revenue portfolio. He
opined that it "doesn't pencil out" to instate an income tax in
Alaska.
7:01:32 PM
MR. PAINTER responded by explaining the difference between and
the history of the proposals of both a progressive income tax
and a flat tax. He said that in 2015, the Legislative Finance
Division created a model of distributional options of tax income
that highlighted how current or proposed taxes might affect
Alaskans. He emphasized that any tax that affects things other
than people is always going to look better on a distributional
analysis.
REPRESENTATIVE CARPENTER opined that people who have a higher
net worth would be more obviously highlighted in any sort of
distributional analysis of any proposed tax policies.
MR. PAINTER said that it is difficult to model different tax
policies in a single model and shared his agreement that it
would be helpful to create a model for different tax policies.
REPRESENTATIVE GROH asked whether income tax rates could be
altered to accommodate for different revenue needs.
MR. PAINTER answered that income tax rates could be altered
however is needed, though it would have varying impacts on
different industries throughout Alaska. He added that the
majority of other states have both an income tax and a flat tax.
7:07:47 PM
REPRESENTATIVE CARPENTER thanked Mr. Painter for his
presentation and set Monday, April 15, 2024, as the amendment
deadline for HJR 7, HB 110, HJR 2, and HB 38.
7:08:59 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
7:09 p.m.
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