HB 541 - ADVISORY VOTE REGARDING STATE REVENUE CHAIRMAN VEZEY opened HB 541, proposed by the House Finance Committee, for discussion. Seeing no one present from the House Finance Committee, he asked for questions from the committee. Number 369 REPRESENTATIVE JERRY SANDERS asked why the statement "none of the above" was not on the bill, and if it was possible to add it. (REPRESENTATIVE KOTT returned to the meeting at 8:22 a.m.) Number 372 CHAIRMAN VEZEY replied it could be added. If "none of the above" was added, he believed the title would have to be changed. HB 541 was not intended to propose a total solution to the state's fiscal problems. The intent of HB 541 is to ask, if revenues are going to be increased, how should it be done. He noted if "cut spending" was included in the title it would probably be the largest vote getter. (REPRESENTATIVE ULMER entered the meeting at 8:23 a.m.) Number 392 REPRESENTATIVE SANDERS stated he felt if "none of the above" or "cut spending" was put on HB 541 and there was a strong vote, it would give the legislature a lot of credibility in its attempt to cut spending. He added the legislature had not done very much to cut spending in the last few years. Number 397 CHAIRMAN VEZEY stated, from polls he had seen, the public indicates they are very strongly in favor of cutting spending. He recognized the budget cannot be balanced simply by cuts nor strictly by tax increases. The intent of HB 541 is to determine which vehicle, either tax increases or permanent fund dividend reductions, would be preferred to help balance the budget. Number 407 REPRESENTATIVE G. DAVIS expressed the fact that HB 541 is an advisory vote; it leaves open all options. HB 541 does state a tax will be imposed. He related to the difficulty in making cuts and the fluctuations in revenue in the past. He noted the differences in the legislature after each election. He did not believe the "none of the above" section was necessary. He believed people were more concerned about which option the state should take. The question is "when" and "if." He explained, with the dividends the state has been giving money, yet taxing through different fee schedules. Number 433 CHAIRMAN VEZEY stated HB 541 was up to the committee and they could propose amendments. He interpreted REPRESENTATIVE G. DAVIS's remarks as HB 541 being a referendum, recognizing at some time state revenues would have to be increased, noticing the balance of the budget cannot be reached solely by cuts. Number 440 REPRESENTATIVE FRAN ULMER questioned if there had been any thought about indicating in HB 541 as to what levels the changes would have to be at to raise equivalent amounts of money. The public might think of a sales tax being between two-four percent; however, they would not know how high it would have to be to generate the same level of revenues as the permanent fund dividend reductions would. She suggested not putting the information on the ballot itself, but perhaps presenting it in the discussion part included with the ballot. (REPRESENTATIVE KOTT left the meeting at 8:26 a.m.) REPRESENTATIVE G. DAVIS agreed with REPRESENTATIVE ULMER. He believed a key factor of a ballot measure is simplicity; therefore a "findings section" could be included to indicate projected levels over the next ten years. He reflected on what he had seen, in relation to the constitutional budget reserve, in the packet on HB 58 which showed pros and cons. A large feedback response from different groups was likely. A "findings section" to be transmitted publicly, but not on the ballot, would be optimum. Number 487 REPRESENTATIVE ULMER added at local elections usually long descriptions are put on the ballot for either sales tax proposals or bond proposals. She attributed this to the theory that a lot of people who attend the polls may not have had the opportunity to read through the information before hand. She referred to HB 541 as "spare" and felt it may not elicit an appropriate response. Number 498 CHAIRMAN VEZEY pointed out in the late 20s when putting federal income tax in statute was being considered, it was considered that it never exceed 10 percent. At the time, the politicians felt this would scare people from voting on a constitutional amendment to ratify an income tax. Therefore, it was left blank with no ceiling. He noted the present rate of nearly 40 percent. He believed it began at three percent. Number 510 REPRESENTATIVE G. DAVIS questioned if HB 541 did pass, would the Lt. Governor's office put the wording together, or does it read as stated in the bill. CHAIRMAN VEZEY clarified the Lt. Governor's office is supposed to word a ballot proposition in keeping with the statute. He noted HB 541 states the question shall appear substantially in the following form, which he believed would preclude extraneous information. Number 521 REPRESENTATIVE ULMER explained they usually seek for a supporter and an opponent to prepare the pro and con statement. She noted HB 541 was a little different because it listed options. REPRESENTATIVE ULMER suggested a letter of intent from the committee to the Lt. Governor's office asking for a layout of numbers in the background material of the voter's pamphlet. Number 530 CHAIRMAN VEZEY stated he believed the committee was confusing the issue, because HB 541 was not addressing a level of taxation or how much revenues the state is short over its current spending pattern. HB 541 asks which vehicle the public feels is more appropriate for increasing moneys available to the general fund. REPRESENTATIVE ULMER responded she understood. She brought up a situation, whereby a sales tax of 15 percent was necessary to equal revenue generated by a state income tax of two percent, as an example. She believed data regarding the choice of limiting permanent fund earnings should be available to state what kind of limit would equal what percentage of sales tax. REPRESENTATIVE ULMER stated she did not have an amendment to propose. Number 546 CHAIRMAN VEZEY asked the pleasure of the committee. Number 549 REPRESENTATIVE G. DAVIS moved to move HB 541 from committee with individual recommendations. Number 550 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, ULMER, G. DAVIS. OPPOSED: REPRESENTATIVE SANDERS. ABSENT: REPRESENTATIVES KOTT, B. DAVIS, OLBERG. MOTION FAILED (REPRESENTATIVE KOTT returned to the meeting at 8:39 a.m.)