ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 10, 2016
3:18 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Shelley Hughes, Vice Chair
Representative Jim Colver
Representative Gabrielle LeDoux
Representative Cathy Tilton
Representative Andy Josephson
Representative Sam Kito
MEMBERS ABSENT
Representative Mike Chenault (alternate)
OTHER LEGISLATORS PRESENT
Representative Dan Ortiz
COMMITTEE CALENDAR
HOUSE BILL NO. 248
"An Act requiring the electronic submission of a tax return or
report with the Department of Revenue; relating to the excise
tax on alcoholic beverages; and providing for an effective
date."
- HEARD & HELD
HOUSE BILL NO. 252
"An Act requiring electronic submission of a tax return or
report with the Department of Revenue; repealing the tax
reduction for local levies for the commercial vessel passenger
excise tax; amending the definition of 'voyage'; and providing
for an effective date."
- HEARD & HELD
HOUSE BILL NO. 194
"An Act repealing and reenacting the Alaska Securities Act,
including provisions relating to exempt securities and
transactions; relating to registration of securities, firms, and
agents that offer or sell securities and investment advice;
relating to administrative, civil, and criminal enforcement
provisions, including restitution and civil penalties for
violations; allowing certain civil penalties to be used for an
investor training fund; establishing increased civil penalties
for harming older Alaskans; retaining provisions concerning
corporations organized under the Alaska Native Claims Settlement
Act; amending Rules 4, 5, 54, 65, and 90, Alaska Rules of Civil
Procedure; and providing for an effective date."
- BILL HEARING CANCELED
HOUSE BILL NO. 263
"An Act relating to reporting of workplace injuries to the
division of labor standards and safety."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 248
SHORT TITLE: ELECTRONIC TAX RETURNS & ALCOHOL TAX
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/19/16 (H) READ THE FIRST TIME - REFERRALS
01/19/16 (H) L&C, FIN
02/10/16 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 252
SHORT TITLE: ELCTRNC TAX RETURNS; VESSEL PASSENGER TAX
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/19/16 (H) READ THE FIRST TIME - REFERRALS
01/19/16 (H) L&C, FIN
02/10/16 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
BRANDON SPANOS, Deputy Director
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Alcoholic Beverage Tax HB248," dated 2/10/16.
CHRIS HLADICK, Commissioner
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
248.
CHRIS HLADICK, Commissioner
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Commercial Passenger Vessel Tax HB252," dated
2/10/16.
CHRIS PELOSO, Assistant Attorney General
Environmental Section
Civil Division (Juneau)
Department of Law
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
252.
KEN ALPER, Director
Tax Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
252.
ACTION NARRATIVE
3:18:48 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:18 p.m. Representatives Olson,
Josephson, Hughes, LeDoux, Tilton, and Kito were present at the
call to order. Representative Colver arrived as the meeting was
in progress. Representative Ortiz also was present.
HB 248-ELECTRONIC TAX RETURNS & ALCOHOL TAX
3:19:17 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 248, "An Act requiring the electronic submission
of a tax return or report with the Department of Revenue;
relating to the excise tax on alcoholic beverages; and providing
for an effective date."
3:20:26 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue, provided a PowerPoint presentation entitled, "Alcoholic
Beverage Tax HB 248," dated 2/10/16. He informed the committee
HB 248 is an act requiring the electronic submission of a tax
return or report with the Department of Revenue (DOR), relating
to the excise tax on alcoholic beverages, and providing for an
effective date [slide 2]. Mr. Spanos said the alcoholic
beverage tax was first imposed in 1933, and the basic structure
has remained unchanged since 1937. The tax is charged and
collected monthly at the wholesale level. The tax rate has
increased along with inflation and with the rates of other
states; the last major change was in 2002, when the tax was
raised to $0.10 per drink by legislation that also created the
Alcohol and Other Drug Treatment & Prevention Authority fund
which is funded by 50 percent of the tax collected. Currently,
revenue is about $40 million per year and $20 million is
deposited to the drug abuse treatment and prevention fund
[slides 3 and 4]. For current tax rates, one drink portion is
considered one ounce of distilled spirits, five ounces of wine,
and twelve ounces of beer, which is taxed about $0.10 per drink,
with the exception of small-rate breweries - by federal
definition - which are taxed $0.35 cents per drink for their
first 60,000 barrels [slide 5].
CHAIR OLSON asked how many breweries in Alaska produce over
60,000 barrels of beer.
MR. SPANOS pointed out that the tax applies also to breweries
importing into Alaska; however, none of the breweries in Alaska
produce enough to meet the federal definition for the full tax,
nor do many that import beer into the state [slide 5]. He
further explained that small-brewery beer is taxed at $0.35
cents for the first 60,000 barrels, distilled spirits are taxed
at $12.80, and the proposed bill would double the existing
taxes. The bill also includes an electronic filing requirement,
and a change to the minimum bond requirement [slide 6].
CHAIR OLSON asked whether DOR must take action on bonds
occasionally.
MR. SPANOS said he is not aware of action taken on a bond in
recent history, but to get a license from the tax division, a
bond is necessary.
3:25:37 PM
REPRESENTATIVE LEDOUX asked what the bond protects against.
MR. SPANOS responded that the bond is to protect the state in
case there is a default on taxes due. He returned to the
presentation, noting that Alaska's alcohol taxes are among the
highest in the country, however, many states with lower tax
rates on alcohol collect sales taxes, and others have state-
owned stores with hidden taxes and fees, and unknown revenue to
the state. The proposed bill would raise Alaska's tax to the
highest for wine, spirits, and beer [slide 7]. In response to
Representative LeDoux, he said spirits are hard liquor. The
department estimates that doubling the tax rate would nearly
double collections, and double the amount designated for the
Alcohol and Other Drug Treatment & Prevention Authority fund.
REPRESENTATIVE HUGHES has heard that raising taxes would reduce
the consumption of alcohol, but pointed out that DOR is
estimating that the same amount would be consumed. She asked
whether the tax increase in 2002 affected consumption habits.
MR. SPANOS said DOR has not done an analysis. He said, "It
seems that in the past, we've seen a dip initially, over that
first year, and it does eventually come back up. But again,
we've not done an analysis of that." The estimates were based
on the fall 2015 forecast, which did not account for changes in
alcohol demand or potential stockpiling [slide 8].
3:29:24 PM
REPRESENTATIVE HUGHES asked whether the amount diverted to the
Alcohol and Other Drug Treatment & Prevention Authority fund is
a statutory designation.
3:29:44 PM
MR. SPANOS confirmed that the 50 percent amount is established
in statute for the special fund. In a manner similar to the
other tax proposals from the administration, to implement HB
248, DOR must update its Tax Revenue Management System (TRMS)
and its Revenue Online (ROL) component in order to manage the
new tax rates, and update forms. These changes would be paid
for by an implementation cost of $50,000, and there are no
additional costs to administer the tax program [slide 9]. Mr.
Spanos advised that the alcohol tax fits into the
administration's plan to close the budget gap by providing
$40,000 in new revenue [slides 10 and 11]. Impacts of HB 248
are that alcohol would be slightly more expensive, which could
decrease consumption, and there could be stockpiling, although
DOR does not anticipate much of an effect overall [slide 12].
REPRESENTATIVE LEDOUX questioned how the administration could
forecast a decrease in consumption but at the same time forecast
double the amount of revenue.
3:32:20 PM
CHRIS HLADICK, Commissioner, Department of Commerce, Community &
Economic Development, speaking from his experience as a city
manager, said there may be a slight decrease initially, but the
rate of consumption would return to normal levels.
3:32:59 PM
MR. SPANOS directed attention to the sectional analysis for HB
248 [slides 13 and 14]:
· Section 1 adds a $25 or 1 percent tax penalty for failure
to file electronically unless an exemption is issued by DOR
· Section 2 requires electronic submission of tax returns,
license applications, and other documents submitted to DOR;
this changes the general tax statutes, AS 43.05, and would
apply to all tax types administered by the department;
provides a process to request an exemption if a taxpayer
does not have the technological capability to do so
· Section 3 changes the per-gallon tax rate for the three
major categories of alcoholic beverages
· Section 4 changes the per-gallon tax rate for the first
60,000 barrels sold in the state from small craft breweries
that meet the federal definition of a small brewer
· Section 5 changes statutes describing tax filing so that
taxpayers must submit their statements electronically
· Section 6 changes the surety bond requirement
· Section 7 clarifies the effective date
· Section 8 is transitional language allowing for regulations
· Section 9 is the effective date for Section 8
· Section 10 is the effective date for the rest of the bill
3:35:11 PM
REPRESENTATIVE JOSEPHSON has been told the consumer would pay
more than the estimated $0.10 per drink, because there are
additional costs that the bar owner or wholesaler would pass to
the consumer.
MR. SPANOS suggested that the industry should respond to that
question.
REPRESENTATIVE JOSEPHSON asked whether the percentage of revenue
directed to the Alcohol and Other Drug Treatment & Prevention
Authority fund is an exception to the prohibition on designated
funds.
MR. SPANOS answered that the fund is a special fund subject to
appropriation.
REPRESENTATIVE JOSEPHSON posited that if the legislature imposed
an increase of $10 million, would the administration seek the
additional $30 million from another source.
MR. SPANOS stated the intent of the administration is to balance
the budget, but he could not directly address what would happen
in that situation.
3:37:13 PM
REPRESENTATIVE KITO questioned at what point the tax is assessed
or paid.
MR. SPANOS explained that the tax is placed at the wholesale
level, thus if alcohol is imported to a warehouse, and the
warehouse owner holds the license, the warehouse owner is the
taxpayer; when the liquor is sold to the bar owner, the tax is
paid. He characterized the tax as "a true excise tax meaning
the tax is hidden up the chain." An exception would be that
when liquor is shipped directly to a retail store, the store
owner is the taxpayer.
REPRESENTATIVE KITO asked how a wholesaler proves the tax has
been assessed and paid.
MR. SPANOS said that licensees have self-reporting requirements,
and all importers of alcohol are licensed with DOR, which
investigates and verifies purchases and reporting.
REPRESENTATIVE KITO asked whether the electronic reporting
requirements in HB 248 - and other legislation - have been
implemented or are brand new to taxpayers.
MR. SPANOS said corporate income taxpayers must file
electronically if required to do so for federal purposes. The
ROL system is in use, but this is a new requirement.
REPRESENTATIVE LEDOUX referred to the 50 percent payment
designated for the Alcohol and Other Drug Treatment & Prevention
Authority fund, and asked whether the payment to this fund can
be confirmed.
3:40:32 PM
MR. SPANOS expressed his understanding that the funds have been
appropriated every year; however, he will verify.
REPRESENTATIVE LEDOUX questioned whether the tax increase will
result in $40 million to the general fund (GF) and $20 million
to the Alcohol and Other Drug Treatment & Prevention Authority
fund.
MR. SPANOS said initially $40 million goes to GF, and from that
$20 million would be appropriated to the special fund.
REPRESENTATIVE HUGHES observed that if HB 248 passes,
individuals may choose to order liquor online. She asked
whether the administration completed an analysis on the
potential impact of online purchases of alcohol to small local
businesses and to jobs.
MR. SPANOS said DOR did not.
CHAIR OLSON opined that shipping wine is very expensive, and
liquor cannot be mailed, thus outside purchases would not affect
businesses.
REPRESENTATIVE HUGHES questioned why there was no analysis on
the potential economic impact of this and other revenue bills;
furthermore, she asked whether DOR considered that in rural
areas, the increased cost might encourage black market activity.
MR. SPANOS acknowledged that black market activity is always a
concern; he restated that the focus of the tax bills is to close
the budget gap, and their impact on revenue. He pointed out
that the funds directed to the Alcohol and Other Drug Treatment
& Prevention Authority fund is used to assist with "those types
of activities."
3:44:46 PM
REPRESENTATIVE HUGHES said she was troubled that there is a
focus on how to pay for government, without concern for
residents and their communities. She reviewed the changes to
taxes to small breweries and noted that breweries in her area
could grow and expand, but the tax would stop growth.
MR. SPANOS said he would confirm the production numbers of all
of the breweries in Alaska and the tax rates thereof.
REPRESENTATIVE JOSEPHSON returned attention to the increase in
funding to the Alcohol and Other Drug Treatment & Prevention
Authority fund and asked whether the increase would be offset
from another category such as behavioral health, or the Mental
Health Trust Authority.
MR. SPANOS said he will inquire.
CHAIR OLSON stated that HB 248 would impact constituents who may
be unaware of its consequences; in a manner similar to tobacco
taxes, the bill seeks to increase the cost to those who buy a
product from an industry that has "significant problems," but is
not illegal. He predicted there would be a response to the bill
if it passes.
3:49:22 PM
REPRESENTATIVE LEDOUX questioned whether the change to the
amount of the required bond intends to give DOR discretion with
respect to individuals who apply for a bond.
MR. SPANOS said currently DOR analyzes the estimated tax prior
to approving a bond, and the bond is usually double the amount
of the estimated tax amount, with a minimum of $25,000; however,
the removal of the minimum bond value allows DOR to accept a
smaller bond amount for a business with an expected tax amount
of $5,000, for example.
REPRESENTATIVE LEDOUX said, "But it doesn't say that the upper
amount, is like, 25 or 50, or something like that, it just gives
you total discretion."
MR. SPANOS responded that under the current statute, DOR has
total discretion to increase the amount to cover the estimated
tax. In further response to Representative LeDoux, he said he
would review the language in the regulations.
REPRESENTATIVE LEDOUX said, "So, you're telling me that if we
have a statute that says ... 'of $25,000', that by regulation
you can make it [$50,000] or [$100,000] or [$150,000]? That's
kind of perplexing to me."
3:52:17 PM
COMMISSIONER HLADICK said this provision in the bill addresses
doing away with the $25,000 minimum requirement, so the state
has the ability to charge a small businessman less.
REPRESENTATIVE LEDOUX asked, under the current law, if the state
has the discretion to raise the amount, why it does not have the
discretion to lower the amount.
MR. SPANOS said he will review the regulations.
REPRESENTATIVE HUGHES asked how many wholesalers - distributers
with a warehouse - would be affected, since the bars and liquor
stores would not be affected.
MR. SPANOS explained that the bill would address small wineries
that are producing wine and must get a tax bond, as well as
specialty importers. He agreed there are only a few large
warehouses, which are the main taxpayers.
[HB 248 was held over.]
3:54:32 PM
The committee took an at ease from 3:54 p.m. to 3:56 p.m.
HB 252-ELCTRNC TAX RETURNS; VESSEL PASSENGER TAX
3:56:35 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 252, "An Act requiring electronic submission of a
tax return or report with the Department of Revenue; repealing
the tax reduction for local levies for the commercial vessel
passenger excise tax; amending the definition of 'voyage'; and
providing for an effective date."
3:56:59 PM
CHRIS HLADICK, Commissioner, Department of Commerce, Community &
Economic Development, provided a PowerPoint presentation
entitled, "Commercial Passenger Vessel Tax HB252," dated
2/10/16. Commissioner Hladick informed the committee HB 252 is
an act requiring electronic submission of a tax return,
repealing the tax reduction for local levies for the commercial
vessel passenger excise tax, amending the definition of
'voyage,' and providing an effective date [slide 2]. He noted
the cruise ship head tax was created by the [Alaska Cruise Ship
Tax Initiative, Measure 2, approved 8/22/06 (cruise ship
initiative)], and major changes to it made in 2010 were: tax
reduced from $46 to $34.50 per passenger; increased number of
ports that can receive $5 per passenger sharing; credit for
municipal port fees added; tax restricted to voyages that were
in Alaska waters for at least 72 hours [slide 3]. He further
explained the proposed bill repeals credit for local head taxes
of $8 in Juneau and $7 in Ketchikan, amends the definition of
'voyage' thereby restoring the tax to all trips greater than 72
hours, and requires electronic filing, including an exemption
process [slide 4]. The Department of Revenue (DOR) estimates
increasing the commercial passenger vessel tax will raise an
additional $16.6 million per year, of which $14.8 million would
be kept by the state, and $1.8 million would go to
municipalities. The increase in municipal share is largely due
to the change to the 72-hour rule [slide 5]. The assumptions
behind the revenue estimates are as follows: 900,000 total
passengers before the tax change; 12 percent increase due to the
repeal of the 72-hour rule; $34.50 per passenger, for a total of
$34.5 million; 3.5 ports per voyage receive $5 municipal share;
and the number of voyages and passengers would stay roughly
constant [slide 6]. In a similar manner to the other tax
initiatives, DOR must update the Tax Revenue Management System
(TRMS), the Revenue Online (ROL) filing, and create the tax
return forms. There is a one-time implementation cost of
$100,000 to recreate the tax forms, and reprogram and test the
tax system, and there are no additional costs to administer the
tax program [slide 7]. Slides 8 and 9 illustrated the fiscal
year 2016 (FY16) budget, and the revenue from tourism adding $15
million to total reductions and new revenue. The impact of the
cruise ship tax proposal would be that voyages are slightly more
expensive for the passengers and/or companies [slide 10].
Commissioner Hladick began the sectional analysis [slides 11 and
12]:
· Section 1 adds a $25 or 1 percent tax penalty for failure
to file electronically
· Section 2 requires electronic submission of tax returns,
license applications, and other documents submitted to DOR;
changes all tax statutes and applies to all tax types
administered by DOR; provides a process to request an
exemption if a taxpayer does not have the technological
capability to file online
· Section 3 amends the definition of voyage to mean any trip
or itinerary lasting more than 72 hours
· Section 4 repeals current law which allows for a tax
reduction in the amount of certain local levies - this is
the most important section of the bill
· Section 5 adds transitional language allowing for
regulations
· Section 6 is the immediate effective date for the
transitional regulatory language
· Section 7 sets the effective date
4:01:28 PM
REPRESENTATIVE LEDOUX recalled that when head taxes were first
addressed by a previous legislature there was a question about
the constitutionality of head taxes.
COMMISSIONER HLADICK deferred to the Department of Law.
4:02:12 PM
CHRIS PELOSO, Assistant Attorney General, Environmental Section,
Civil Division (Juneau), Department of Law, in response to
Representative LeDoux, informed the committee that in 2009 there
was a lawsuit filed by the Alaska Cruise Association (ACA)
following the establishment of the original head tax by the
cruise ship initiative. In 2010, the lawsuit was dropped
because there was a settlement agreement between the state and
ACA that the state would lower the tax rate from $46 to
[$34.50], and provide an exemption to municipalities. Mr.
Peloso opined that if the state makes further changes, the
settlement agreement is still valid because the settlement is
related to legislative action taken in 2010. However, he
cautioned that ACA may revisit its stance which was based on "an
obscure constitutional provision called the Duty of Tonnage -
the tonnage clause. Without endorsing their argument, their
argument was that any fee ... any tax collected by the state
that doesn't go towards docks or other ship expenses is
unconstitutional."
REPRESENTATIVE LEDOUX questioned whether the debate was related
to interstate commerce laws.
MR. PELOSO stated that the tonnage clause is in Article 1,
Section 10 of the U.S. Constitution, and there are also
interstate commerce issues. He advised that the issues raised
in 2009 would be the same whether the head tax is $46 or
[$34.50].
REPRESENTATIVE LEDOUX surmised that if the state raises the tax
and nullifies the settlement, the state may win [a new lawsuit]
and collect more tax, or may lose and get no tax.
MR. PELOSO agreed with that result if the tax were held
unconstitutional, however, he could not speak to whether the
cruise industry would revisit a lawsuit, or to a court ruling in
this regard.
4:05:51 PM
REPRESENTATIVE LEDOUX observed that the state entered into a
settlement agreement and asked whether that creates a problem
with legally raising the tax.
MR. PELOSO informed the committee that a court case does not
affect legislative actions. All of the provisions of the
settlement agreement have been fulfilled, thus HB 252 would not
be in violation of the settlement agreement. In further
response to Representative LeDoux, he advised that the cruise
association dropped its lawsuit with prejudice, although there
are potentially ways it could start a new lawsuit, and he could
not speak for the cruise association.
4:07:34 PM
KEN ALPER, Director, Tax Division, Department of Revenue,
advised that the possibility of the state losing a lawsuit and
being held to a retroactive liability are somewhat limited. He
pointed out that during the years 2007-2010, the state was
receiving about $25 million per year from the head tax, and the
funds were defined in a section of the capital budget for
projects expressly for dock and harbor projects, as related to
the tonnage clause. Since enactment of the legislation in 2010,
the state receives about $2 million per year after the reduced
tax and increased municipal sharing, and the money is easily
identified as supporting dock and harbor projects.
4:08:40 PM
REPRESENTATIVE HUGHES directed attention to slide 10, and urged
for the administration to think about the proposal's impact to
the people of Alaska. She remarked:
My understanding was back after the initiative that
the number of passengers did go down by 15, 20
percent, there were fewer ships coming into our ports
and you might think that just impacted Southeast, but
it actually impacted up in my area ... it impacted the
whole state and it particularly impacted small
business.
REPRESENTATIVE HUGHES expressed her disappointment at the lack
of analysis on the proposal's impact to communities, and then
asked whether the money can only be used for ports and harbors
or can be deposited to the general fund (GF).
MR. ALPER explained that the lawsuit was never resolved, thus
restrictions on the use of the funds are unknown; however, the
state intends to use the money to pay for tourism-related
expenditures, and could be targeted "towards things that would
meet any sort of theoretical constitutional restriction on the
use of the funds."
REPRESENTATIVE HUGHES said there are strict federal requirements
on the use of the funds. She asked, "What is being paid out of
the general fund right now for those, those kind of things, my
understanding it's, there's not, money coming out of the general
fund for, being paid for those kind of things, and so now we're
going to be doing things that we might not otherwise be doing."
MR. ALPER explained that the state does not spend as much from
the capital budget on grants to municipalities for dock and
harbor projects as in prior years. He acknowledged that the
state does spend money in support of tourism marketing, and in
support of DCCED tourism activities.
REPRESENTATIVE HUGHES expressed her concern that it is unknown
whether these funds can be put in GF and used in a way to help
close the budget gap. She requested additional specific
information in this regard.
4:12:11 PM
COMMISSIONER HLADICK agreed with Representative Hughes' request
for additional information because as the city manager of
Unalaska, he received grants for its harbor from the Department
of Transportation & Public Facilities.
CHAIR OLSON asked whether HB 248 or HB 252 are included in the
Institute of Social and Economic Research (ISER), University of
Alaska Anchorage, study of economic impact.
MR. ALPER said yes, the ISER request for proposal (RFP)
contained "the suite of possible revenue measures that we put
together over the summer."
CHAIR OLSON asked when the ISER report would be received.
MR. ALPER responded that either an executive summary or a first
draft is due [2/15/16]. In further response to Chair Olson, he
said the executive summary would be a summary of impacts and a
table of key data.
4:14:06 PM
REPRESENTATIVE JOSEPHSON noted the "totally valid" comments
about the impacts of the governor's plan on industry and on
citizens, and pointed out that cuts also have tremendous impact,
such as those to the University of Alaska, which has lost 500
employees. He returned to the settlement agreement between the
cruise ship industry and the state, and observed that if the
settlement was with prejudice, there could not be a retroactive
rescission of the settlement agreement.
MR. PELOSO agreed; however, another party that was not part of
the lawsuit could file a similar lawsuit based on the original
argument.
REPRESENTATIVE JOSEPHSON asked what taxes were received by
municipal and state governments prior to 2010, and after 2010.
MR. ALPER stated that at the time the state was receiving the
$46 head tax - approximately from 2007 through 2010 - the state
received $15 million to $20 million per year. He offered to
document a complete history thereof. One of the changes in the
2010 amendment increased the number of ports that could receive
the "shared $5" which totaled $15.5 million in the operating
budget last year. He stressed that the important difference is
to the portion that is kept by the state, which was made by the
legislative change that reduced the tax to $34.50 and created
the offset. For example, in 2008, a cruise ship passenger paid
$61: $46 to the state, $8 to Juneau, and $7 to Ketchikan. The
tax cut to $34.50, less the Juneau and Ketchikan taxes, meant
the state is now receiving $19.50. Almost all of the reduction
of $26.50 per passenger came out of the state's portion of the
tax.
4:18:19 PM
REPRESENTATIVE LEDOUX inquired as to how much municipalities
receive each year through this tax.
MR. ALPER offered to provide a report which shows each
municipality that receive $5 per taxable passenger. He recalled
that the total for the current year is $15.5 million, and the
amount each municipality receives is disparate because the
amount is based on the number of each municipality's visitors.
In response to Chair Olson, he said he would provide a 5-year
history of payments.
REPRESENTATIVE LEDOUX posited that if the state incorrectly
assumes that the cruise ship industry would not bring a
successful lawsuit, the result would impact not only the state
but each community as well.
MR. PELOSO stated that is impossible to say what the
repercussions of a lawsuit would be; however, a court may decide
the tax is acceptable as long as the state ensures that the
money goes to municipalities.
REPRESENTATIVE HUGHES asked how much the head tax would affect
fares on tourists from California or Washington.
MR. ALPER said he was unsure about docking fees and head taxes
outside of the state's jurisdiction, or how they are collected
by the industry.
[HB 252 was held over.]
4:21:45 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:21 p.m.