SB 130-VOTER APPROVAL FOR NEW TAXES  4:12:49 PM CHAIR MEYER announced the consideration of SB 130. He disclosed that he is the sponsor of the bill. 4:13:18 PM CHRISTINE MARASIGAN, Staff, Senator Meyer, Alaska State Legislature, Juneau, Alaska, said the intent of SB 130 is to require a vote of the people before a broad-based-individual- income tax or statewide sales tax takes effect. MS. MARASIGAN disclosed that there are four sections in the bill and provided an analysis as follows: Section 1  The section would be amended to include tax levied under AS 43.98.020. The section makes a vote on taxes subject to the same rules and limitations as ballot propositions when it comes to contributions. Section 2  Would amend AS 15.15.030 to direct the Division of Elections' director to place a question on the election ballot; this is essentially the kind of language used when requiring an advisory vote. Section 3 Amends AS 15.80.010(33) to include taxes; in that section there are a series of definitions and there are about 45 definitions in that section that the word "taxes" is included under questions. Section 4 Adds a new section to AS 43.98 to include Article 1A, which is the language requiring any bill that the legislature passes levying a broad-based individual income tax or statewide sales tax or both to be ratified by the people, and it specifies the statewide election ballot in which the question on the bill levying the tax is asked either a yes or no question; essentially, it just requires that the legislation that you would pass to levy a tax has to include the instructions that requires the vote of the people upon passage, so that would be written into whatever vehicle used to tax. MS. MARASIGAN summarized that SB 130 would put into statute that any legislation levying a broad-based tax be ratified by a vote of the people. 4:16:09 PM She said Emily Nauman, legal drafter for the bill from Legislative Legal Services, will address the committee. He noted that Ms. Nauman also wrote a memo that explained why the legislation is unconstitutional. She pointed out that while Ms. Nauman raised the case for the legislation to be unconstitutional, there are many ways that governments have weighted the opinion of its people on taxes. She revealed that the Anchorage municipality uses an advisory vote on any tax increases, or the proposition process that may alter or do away with a tax. She said according to a very cursory survey by Legislative Research, Californians have voted on 10 statewide sales-tax-related ballot measures since 1932: 4 defeated and 6 approved. Colorado has the Taxpayer Bill of Rights (TABOR); they wrote that into their state constitution in 1992 and it had a simple premise, if lawmakers want to raise taxes or issue a debt, they need to ask the voters for permission. She pointed out that Washington state voters have been asked on 11 separate occasions to adopt a state personal income tax or corporate income tax, but the first vote in 1932 was the only one that was successful. MS. MARASIGAN noted that not all taxes are voted down. She disclosed that 22 states approved ballot measures in the November 8 election that would provide more than $201 billion in funding extension and new revenue for state and local transportation projects. She opined that the November 8 vote for funding ballot measures indicates that there is an appetite for voting in taxes that people want to see, particularly for transportation and roads. 4:18:15 PM MS. MARASIGAN explained that the intention is to explore the idea that the vote of the people should take place to enact new income or sales taxes. She noted that voters are being asked to approve budget timelines, spending caps, and per diem funding spending. She asserted that having the Legislature consult the people who "foot the bill" makes sense. SENATOR EGAN asked why the committee is looking at the bill that Legislative Legal Services is saying is unconstitutional. CHAIR MEYER replied that Senator Egan's question is a good question and noted that Legislative Legal Services will address the committee during the meeting. SENATOR GIESSEL asked Senator Egan to verify that Juneau votes on sales taxes every five years. She recalled that Juneau's citizens voted on a 1.5 percent sales tax. SENATOR EGAN concurred with Senator Giessel and specified that the tax is a little above 1.5 percent. He detailed that Juneau has a permanent tax and citizens vote whether to extend the sales tax. CHAIR MEYER noted that Alaska's citizens vote on bonds all of the time. He asked Ms. Nauman from Legislative Legal Services to address the committee and comment on her memo concerning the bill. 4:21:01 PM EMILY NAUMAN, Attorney, Legislative Legal Services, Legislative Affairs Agency, Juneau, Alaska, confirmed that she believes SB 130 is very likely if not certainly going to be found unconstitutional by the Alaska Supreme Court. She referenced previous discussions about other types of jurisdictions, other states and some of Alaska's municipalities; however, she pointed out that they all have different voting rules. MS. NAUMAN specified that her concern with SB 130 is that a state law is being enacted under the provision of Alaska's constitution that binds the Legislature to act and pass bills in a certain way. She stated that one of her main concerns, although not in the constitution outright, is that the U.S. Supreme Court has found for anytime that a legislature attempts to bind a future legislature; in other words, SB 130 has the effect of putting a requirement on all subsequent legislatures for any tax that they want to pass. MS. NAUMAN said Legislative Legal Services also has a concern under the constitution, Article IX, Section 1, that the power of taxation cannot be delegated; this is generally recognized as a legislative power. She explained that her concern of leaving it up to the people whether to enact a tax is a delegation of the Legislature's power to tax and is a direct contradiction to Article IX, Section 1. She added that another concern is about using the proposed structure for initiatives and referendums, something that is a little more of a "muddy issue." She pointed out that the state's constitution contemplates an initiative and referendum as the two sorts of methods to bring a binding vote to the people about something that is going to become law or a law that is repealed. She detailed that the initiative and the referendum are really fleshed out in the state's constitution; however, the state constitution does not really have any space for the kind of vote that originates from the Legislature. She said her final concern is about the actual enactment. She pointed out that there are several sections in the constitution that talk about how and when a law or bill becomes a law; specifically, Article II, Sections 14, and 16-18. She opined that there are going to be some timing issues related to enactment; for instance, normally when a bill becomes law is 90 days after approval by the governor or a veto is overwritten by the Legislature, and that language is in the constitution. She summarized as follows: If we pass a tax bill that becomes law, but is delayed in effect, that sort of structure really isn't contemplated in the constitution and I have some concerns about how that would be integrated as well. 4:24:41 PM CHAIR MEYER asked how Colorado was able to get around the issue with the U.S. Supreme Court. MS. NAUMAN replied that Colorado passed a constitutional amendment. She explained that the state through the constitution can make the Legislature comply with whatever requirements they would like. She pointed out that one way to make SB 130 legal would be to rephrase it as a constitutional amendment. She conceded that there are limitations or extra steps that are required before a constitutional amendment resolution can pass; however, she noted that she would not have a problem with putting the requirement in the constitution for a vote of the people before a broad-based individual income tax or statewide sales tax takes effect. CHAIR MEYER asked if there would be a problem with an advisory vote. MS. NAUMAN replied that advisory votes are non-binding; however, she said she would still worry about the structure regarding how the Legislature would get the advisory vote on the ballot, but the issues could be worked out. She said one idea is to have an advisory vote that requires the vote to take place before a tax bill's effective date; however, that language would have to be inserted into every single tax bill that passed. 4:26:52 PM SENATOR EGAN pointed out that if a future legislature must pass a tax, they could ignore or change the proposed legislation. He asked Chair Meyer why he did not consider proposing a constitutional amendment. CHAIR MEYER concurred with Senator Egan and noted that he may consider the option. He explained that his intent was to bring the bill before the committee to address concerns. He said his intent is not to move SB 130 out of committee until revisions are made and the legislation meets Legislative Legal Services' standards. SENATOR GIESSEL noted that Ms. Nauman cited Article IX regarding voter approval of tax and specified as follows: The power of taxation shall never be surrendered; this power shall not be suspended or contracted away, except as provided in this article. SENATOR GIESSEL asked to verify that if SB 130 is changed to an advisory vote that Article IX, Section 1 would have to be repealed. 4:28:41 PM MS. NAUMAN answered no. She explained that the reason is an advisory vote has no effect. She said the issue in front of the committee is SB 130 would have the effect of leaving whether a tax is enacted or not that was made by the people's vote rather than by the Legislature. She summarized that because an advisory vote has no effect, the advisory vote only informs the Legislature and the Legislature would still be enacting the tax. SENATOR GIESSEL asked if Article IX, Section 1 in the state constitution would have to be repealed if the bill was amended to constitutionally allow citizens to determine taxation. MS. NAUMAN answered no due to the language that said, "Except as provided in this article." She believed that a constitutional amendment would be placed into Article IX. CHAIR MEYER asked her to verify that a referendum to repeal an income or sales tax passed by the legislative body is okay. MS. NAUMAN answered correct. She explained that the state constitution has the structure and place for a referendum and that is the reason why a referendum is constitutional as opposed to the structure SB 130 is exploring. CHAIR MEYER asked a representative from the Alaska Division of Elections to address the committee and inquired if the division has any input or concerns about the bill. 4:32:04 PM BRIAN JACKSON, Elections Program Manager, Alaska Division of Elections, Juneau, Alaska, replied that SB 130 is straight forward with the understanding that the division will have to reanalyze the bill after it is reworked. He pointed out that the legislation would place a question to the voters on a ballot that would also force the division to put the information into the official election pamphlet whereby the division would require enough time to obtain information for translation into Alaska Native languages. SENATOR WILSON asked if there would be an additional cost between an advisory vote versus going to the general voting process. MR. JACKSON replied that he did not know. 4:34:25 PM CHAIR MEYER closed public testimony. 4:34:33 PM CHAIR MEYER held SB 130 in committee.