HOUSE FINANCE COMMITTEE February 5, 2026 5:35 p.m. 5:35:06 PM CALL TO ORDER Co-Chair Foster called the House Finance Committee meeting to order at 5:35 p.m. MEMBERS PRESENT Representative Neal Foster, Co-Chair Representative Andy Josephson, Co-Chair Representative Calvin Schrage, Co-Chair Representative Jamie Allard Representative Jeremy Bynum Representative Alyse Galvin Representative Sara Hannan Representative Nellie Unangiq Jimmie Representative Elexie Moore Representative Will Stapp Representative Frank Tomaszewski MEMBERS ABSENT None ALSO PRESENT Aimee Bushnell, Legislative Liaison, Department of Revenue; Beth Weldon, Mayor, City and Borough of Juneau; Representative DeLena Johnson; Representative Bill Elam. PRESENT VIA TELECONFERENCE Ken Huckeba, Self, Wasilla; Alex Wertheimer, Self, Juneau; Chris Noel, Mayor, Denali Borough, Healy; Mike Milligan, Self, Kodiak; Jila Stuart, Finance Director, Haines Borough, Haines; Bryan Smith, Self, Anchorage; Sam Chanar, Mayor, City of Toksook Bay, Toksook Bay; Elizabeth Bacom, Self, Petersburg; Caroline Storm, Self, Anchorage; Theresa Obermeyer, Self, Anchorage; Rita Trometter, Self, North Pole; Tara Hutchinson, Self, Fairbanks; Kate Veh, Self, Soldotna; Miguel Ramirez, Self, Fairbanks; Sandra West, Self/Member, Kodiak Council, Kodiak; Laura Bonner, Self, Anchorage; Glenda Ledford, Mayor, Wasilla; Randy Griffin, Self, Fairbanks; James Akerelrea, President, Scammon Bay Tribal Council, Scammon Bay; Roberta Murphy, Self, Emmonak; Jacqueline Muehlbauer, Self, Fairbanks; Rozlyn Grady-Wyche, Self, Anchorage; Barbara Haney, Self, North Pole; Rebecca Logan, Self, Anchorage; Rebecca Braun, Self, Juneau; Lori Strickler, Department Manager, City of Bethel; Leon Jaimes, Self, Anchorage; Steven Toms, Self, Birchwood; Jim Hazlett, Self, Wasilla; Doug Goering, Self, Fairbanks. SUMMARY HB 284 TAX COMPACT; SALES TAX; OIL & GAS TAX HB 284 was HEARD and HELD in committee for further consideration. Co-Chair Foster reviewed the meeting agenda. HOUSE BILL NO. 284 "An Act relating to the Multistate Tax Compact; relating to apportionment of income to the state; establishing a state sales and use tax; relating to taxes levied by cities and boroughs; relating to the corporate income tax; authorizing the Department of Revenue to enter into the Streamlined Sales and Use Tax Agreement or substantially similar agreement; relating to the oil and gas production tax; establishing an infrastructure maintenance surcharge on oil; establishing a pipeline corridor maintenance fund; and providing for an effective date." 5:37:02 PM Co-Chair Foster explained there were three major parts of the bill including sales, oil and gas, and corporate income taxes. He planned to limit public testimony to the sales tax portion of the bill in the current meeting. Public testimony would be taken on the other components after the committee had an opportunity to vet the other portions of the bill. Representative Allard remarked that the information put out publicly communicated something different. She remarked that the public had been told they could testify on the entire bill. Co-Chair Foster replied that he would ask individuals to keep their comments limited to the sales tax portion of the bill. He noted that the committee had a robust discussion about the sales tax in the morning and afternoon meetings. He stated that the committee had not yet addressed the other two portions of the bill. There would be an opportunity for public testimony on those portions later on. He noted that the committee would take a break if the committee finished with the listed testifiers. The committee would wait to see if additional callers called in. He provided the call in numbers and email address for public testimony. asked to hear a recap of the sales tax portion of the bill from the Department of Revenue. 5:40:47 PM AIMEE BUSHNELL, LEGISLATIVE LIAISON, DEPARTMENT OF REVENUE, relayed that HB 284 was one part of a larger fiscal plan put forward by the governor for the legislature to consider. The bill had three parts including the sales and use tax, corporate income tax, and oil and gas production tax. She limited her recap to the sales and use tax portion of the bill. The bill would create a seasonal tax of 4 percent from April through September and 2 percent from October through March. The bill would require sellers to collect and remit the tax to the state and the state would administer the tax and remit the proceeds back to the municipalities. The municipalities would need to conform to the state sales tax base and exemptions. Forty-five states currently levied a sales and use tax and at 4 percent Alaska would tie with five other states as the second lowest rate. The intent was to have a very broad base that applied to most consumer goods and services. She explained that it was administratively simpler to start from an assumption of taxability and a broad base allowed for a low rate. The bill listed various exemptions to the sales tax including jet fuel, healthcare services and related items, internet access, sales or construction of real property, and business-to-business transactions. Co-Chair Foster repeated the call in number for the meeting. ^PUBLIC TESTIMONY 5:43:11 PM BETH WELDON, MAYOR, CITY AND BOROUGH OF JUNEAU, thanked the committee for the opportunity to speak. The city appreciated the governor for offering a fiscal plan. She relayed that municipalities like Juneau had been urging the state to address its long-term structural deficit for many years and the governor's proposal was the first plan the city had seen acknowledging the need for new revenue in many years. The community had recently discussed sales tax policy. During the recent local election voters approved new exemptions for food and utilities. She detailed that the vote demonstrated that residents were paying attention to tax policy and that they valued having the ability to make local decisions in local circumstances. She shared that Juneau had long supported the idea that an income tax was the fairest statewide revenue tool that asked residents to contribute based on the ability to pay. Juneau also understood the political realities facing the legislature. She stated that if a sales tax was the only revenue measure with a path forward, Juneau understood, but it would like to see the legislature protect municipal authority and respect existing decisions made by local voters. Ms. Weldon flagged Juneau's concern about how the state would handle enforcement. Juneau wanted to be part of the solution. She detailed that local governments delivered many of the frontline services Alaskans relied on daily including public safety, roads, utilities, recreation, and more. She stressed that a strong state and local partnership was essential to any state sustainable fiscal framework. The state had needs and Juneau had needs. She stated that Juneau was ready to work with the administration and the legislature to ensure that a revenue package supported state stability and local autonomy. 5:45:41 PM KEN HUCKEBA, SELF, WASILLA (via teleconference), opposed the bill. He stated it was an extremely tone deaf state government that could expand itself into such proportions that much of the legislative work sought new revenue at every turn. He remarked that thousands of oil industry jobs had been lost in the past several months. He explained that people were not being told how the economy was doing fiscally in order to pay for revenue measures. He was a retired energy industry employee and wondered who worried about stability for the people or small businesses who paid the bills. He stressed they had not heard how the workers or retirees would pay for more taxes. He emphasized that a sales tax coupled with a property tax increase put the shrinking working class in indentured servitude for the benefit of a bloated state. He believed outmigration would increase and revenues would fall because of the taxes. He stated that adding jobs would only cause more bloated government. He asked if the tax would be on vehicles used to conduct business, food, transportation for affordable medical services outside Alaska. He implored the committee not to pass the bill. Representative Stapp asked if Mr. Huckeba was aware the proposal was from the executive and not the legislature. Mr. Huckeba responded affirmatively. He was asking the legislature to intervene and not pass the legislation. Co-Chair Foster repeated the call in number for testimony. Representative Allard asked for a repeat of the number. 5:50:15 PM ALEX WERTHEIMER, SELF, JUNEAU (via teleconference), was pleased to see the governor was considering a broad based statewide tax to try to put the state budget on a sustainable path and avert a plunge off the proverbial fiscal cliff. He stated that unfortunately the governor's plan was flawed and contradictory to his statement that Alaskans deserve a stable fiscal system that avoided the boom and bust cycle that came with a budget based on the price of oil. Instead, it proposed a plan for short-term relief through tax revenue and blind faith in the volatile and uncertain revenue streams in the future from in oil and gas extraction. He had several primary concerns about the proposal but he focused his comments on the statewide sales. He stressed that a statewide sales tax was not the right approach. He supported returning to a state income tax. He recalled paying state income tax decades back. He stated it was a very simple process based on a percentage of an individual's federal tax. He elaborated that it was a progressive tax system so that individuals with limited income paid a lower percentage. He stated it would recoup some of the money leaving the state with the large seasonal workforce that did not contribute to the infrastructure and operation of the state. He highlighted that a sales tax would impact low income people the most and would disrupt the current use of sales tax by many municipalities throughout the state to fund local government including the elimination of exemptions crafted by the electorate in those jurisdictions. Additionally, the sunset provision on the new tax was short sighted. He remarked that it had occurred in the past - the state had eliminated the income tax because oil would pay for everything. He stated it was wishful thinking that increases in oil and gas revenue would offset the need for tax revenue, especially when factoring in the elimination of important current revenue such as the corporate income tax. He pointed out that if the state started to see increased revenue from new oil and gas projects, the tax rates could be modified to reflect that, but the taxes should not be eliminated. He thanked the committee for the opportunity to provide testimony. 5:53:21 PM CHRIS NOEL, MAYOR, DENALI BOROUGH, HEALY (via teleconference), thanked the committee. He echoed Mayor Weldon's remarks acknowledging and appreciating the governor for offering a revenue measure. The Denali Borough understood the state's revenue shortfall and the pressure it created. Alaska needed support for its schools, a capital budget that made a meaningful difference, halting the decline of infrastructure, investments in new needs across the state, and inflation adjusted programs. The borough had long supported a fiscal plan that included new revenue and believed an income tax was the fairest statewide tool because it asked Alaskans to contribute based on their ability to pay. He added it was a tool the state was equipped to use and one that was not available to municipalities. He stressed that a sales tax proposal must not undermine local authority or override decisions local voters already made. He pointed out that sales tax was among the most regressive revenue tools with the burden falling most heavily on low income and vulnerable residents. He stated that it threatened local decision making and voter approved local policy choices. The bill would impose a sales tax when voters in the Denali Borough had not yet approved a local broad based sales tax and in many places it would be a tax on top of already approved local taxes making day to day life more expensive. Additionally, it would preempt local control by risking the subordination of municipal exemptions. He thanked the committee. 5:55:46 PM MIKE MILLIGAN, SELF, KODIAK (via teleconference), spoke in strong opposition to a statewide sales tax. He emphasized that the proposal punished communities that already had sales taxes. Additionally, the proposal set up the state to create another bureaucracy to help manage a statewide sales tax. He shared that he lived in Fairbanks around 1975/1976 and he recalled that the city had over $20 million in extra revenue from the sales tax. He stated that number one rule of any tax was to always tax the other guy. He stated that Alaska allowed foreign multinationals to lose money in a foreign country and bring the losses back to Alaska to deduct them from the obligation they had in Alaska oil taxes. He stressed that there were many reasons to oppose the bill, but the primary reason was that it removed one of the few tools that rural Alaska had to manage alcohol. He believed the tax would create more problems. He underscored that sales taxes should be local and determined by communities. Representative Stapp clarified that that the proposal included a larger constitutionalized Permanent Fund Dividend (PFD). He asked if the testifier wanted to comment. Mr. Milligan traditionally supported a statewide income tax because coastal communities had many people coming in from outside. He agreed with the Hammond philosophy that the PFD was not an entitlement, and it took money away from government to give residents individual control. He looked forward to his PFD, and he thought it was a great program, but he did not see the sales tax as protecting the PFD. He thought giving multinational companies an excuse to launder losses in Alaska as a threat to the PFD. He hoped it would be addressed by the legislature during the current session. Representative Allard asked if the caller would forego the PFD to avoid sales tax. Mr. Milligan responded in the negative. He did not believe the state should get rid of the PFD; it was something that gave citizens power. He did not support anything that would result in the elimination of the PFD. Representative Stapp thought there may be something wrong with the teleconference system as many people listed online were not responding when called upon. Co-Chair Foster called on the next individual listed [there was no response]. 6:03:09 PM AT EASE 6:05:00 PM RECONVENED Co-Chair Foster recognized Representative Bill Elam in the room. He explained that some of the individuals who had called in had dropped off the line. He moved to the next testifier. 6:05:35 PM JILA STUART, FINANCE DIRECTOR, HAINES BOROUGH, HAINES (via teleconference), thanked the committee for the opportunity to testify. She relayed that Mayor Tom Morfitt wanted to testify he was currently chairing the Haines Assembly meeting. She shared that the community was heavily dependent on local sales tax revenues in order to provide services for residents and visitors. Local sales tax currently paid for 30 percent of all general fund services and 45 percent of the community's police protection and public works. She relayed that the past fall residents approved an increase to the current tax rate, which would increase the summer rate to 7 percent. She explained it was done largely in response to increased need in funding for the local school district as state support had decreased in recent years. She stated that as a rural community, residents were already stretched to the maximum paying for fuel, utilities, and groceries. The community understood that the state was experiencing a revenue shortfall, but the governor's proposed plan would greatly inhibit the community's ability to provide services to residents and visitors. Co-Chair Foster relayed there were 18 people online. He listed individuals in the queue. 6:07:57 PM BRYAN SMITH, SELF, ANCHORAGE (via teleconference), was speaking on his own behalf and is a teacher in Anchorage. He understood the need for the state to raise revenue. He highlighted that the situation seen in schools would break several schools and teachers. He did not support a sales tax. He pointed out that it would have regressive impacts around the state, taking more from people with less. He understood the governor's proposal would generate roughly $1 billion per year in additional income. He suggested the state could get roughly the same amount by looking at a couple of lines in the tax code that credited oil companies with roughly $1 billion per year for the past couple of years. He highlighted that the spring 2025 revenue forecast on the Department of Revenue website showed a total of $2.9 billion in FY 22 through FY 24 in producer credits from two statutes: AS 43.55.024(i) and AS 43.55.024(j). If additional revenue was needed after that, he agreed with other callers that an income tax was a fairer way to go, which would capture some of income from seasonal and transient workers. He thanked the committee for its time. Co-Chair Foster reviewed the email address for public testimony. 6:10:35 PM SAM CHANAR, MAYOR, CITY OF TOKSOOK BAY, TOKSOOK BAY (via teleconference), thanked the committee for the opportunity to testify. He opposed the bill and the sales and use tax. He shared that Toksook Bay was municipalities that joined the Alaska Remote Sellers Sales Tax Commission (ARSSTC) in 2019. He shared that Toksook Bay received sales tax revenue in monthly deposits from ARSSTC. He shared that if the community continued to receive late community assistance program payments beyond the month of July, he feared that the community would not receive monthly sales tax revenue in a timely manner if the bill passed. Representative Jimmie thanked Mayor Chanar for his testimony. She asked what the city used local sales tax for. She asked what other needs the city had that exceeded the sales tax revenue. Mr. Chanar responded that the community's sales tax income was 19 percent of its revenue. The income paid for four departments including administration and finance, city council, public works, and public safety. He explained that the community's expenses exceeded the administrative income and sales tax revenue was used to offset costs for street lights and more. Representative Jimmie asked if the local sales tax was enough to pay for a fire department in Toksook Bay. Mr. Chanar responded that the sales tax income was not enough to pay for the services Toksook Bay provided. The sales tax rate had not changed since the time of its implementation. Representative Jimmie asked how fires were dealt with in the community. Mr. Chanar answered that the community's fire equipment was outdated. He explained it was necessary to be near the fire hydrant system. Representative Jimmie clarified that Toksook had a fire hose but it was rarely used. She remarked that there was no fire department in the rural area. She explained that people responded to fires with five gallon buckets to throw water on the flames. Mr. Chanar agreed. Co-Chair Schrage thought he heard Mayor Chanar state that the community did not receive timely community assistance payments. He stated it was the first time he had heard that payments were not going out in a timely fashion. He asked for comment from Mayor Chanar. Mr. Chanar replied that he testified the prior session in support of HB 133 (payment of contracts) because the community had received community assistance payments in September for FY 22, August for FY 23, October for FY 24 and FY 25, and September for FY 26. 6:17:54 PM ELIZABETH BACOM, SELF, PETERSBURG (via teleconference), testified against a statewide sales tax. She detailed that a statewide sales tax was not good for Alaskans who were already struggling to pay for groceries, utilities, childcare, rent, and a number of other things. She stated that a so called temporary sales tax would disproportionately impact low income residents as well as local businesses. She reported that the proposal would turn Petersburg into a 10 percent sales tax community. Additionally, some communities were already using local sales tax revenue to provide services like roads, fire, police, libraries, and many other things that kept citizens safe and lives enriched. She stated that a state sales tax would be an additional and unnecessary burden for residents and communities. She supported a fair and reasonable income tax structure specifically targeted to fund education. She detailed that it would not impact low income residents and it would address the dollars earned in Alaska that also left Alaska. She implored the committee to keep Alaska on a sustainable path. She thanked the committee. 6:19:39 PM CAROLINE STORM, SELF, ANCHORAGE (via teleconference), supported analyzing options for new revenues, but based on an Institute of Social and Economic Research (ISER) presentation of the fiscal options in front of the legislature, she did not support a sales tax because it was so regressive. She stated it was especially regressive without exemptions for unprepared food, formula, diapers, menstrual products, basic first aid, etcetera. She stated the legislature could consider other revenue options including online sales tax, the repeal of SB 21 [oil tax legislation passed in 2013], and closing the S corporation income tax loophole. She asked the committee to continue to analyze revenue measures that were the least regressive. 6:21:23 PM THERESA OBERMEYER, SELF, ANCHORAGE (via teleconference), supported an online sales tax and closing the S corporation loophole. She represented 14 people in her family and could not support any new taxes in Alaska. She read that the state would have to hire 67 new employees to implement a sales tax. She thought it was ridiculous. She did not support the idea because it would mean handing out money on one hand and taking in money on the other. She thought it was nonsensical. She hoped the legislature would not support any new sales taxes. She found it comical that the governor was introducing a big fiscal plan at the end of his term that went through 2031. She thought he should have been trying to pass a fiscal plan when he was first elected and reelected. She thanked the committee. 6:23:47 PM RITA TROMETTER, SELF, NORTH POLE (via teleconference), understood the government would like to increase income to the state as it was unable to maintain a workable budget by making cuts. She hoped that Alaskan residents would be exempt from a seasonal sales tax. She stated that having a tax in the winter at a reduced rate on necessities such as food, oil, gasoline, and medical supplies was not helpful. She thought that exempting WIC and food stamps was not treating people equally. She did not know how it helped a working person trying to make ends meet. She stated that the bill taxed items and vehicles purchased out of state when they were brought to Alaska. She asked if it meant that someone who purchased a vehicle several years ago and was still making payments would be subject to the tax if they registered it in Alaska. She asked what the tax would be on a used vehicle. She pointed out that for years people talked about leaving the state because they could not afford to live in Alaska. She highlighted that the bill would make it more unaffordable. She referenced the people in Interior Alaska who had experienced an extremely cold December and were now having to pay for the utility bills. She suggested the elimination of property taxes if a sales tax were to pass. She asked the committee to vote against the bill as written. Representative Stapp thanked Ms. Trometter for calling and communicated that he was opposed to the bill. 6:26:29 PM TARA HUTCHINSON, SELF, FAIRBANKS (via teleconference), stated that she opposed the proposed budget. She remarked that the governor would be remembered for failing Alaskan children by not supporting education funding, selling out Alaskans to big business and oil and gas companies, for wasteful spending on frivolous lawsuits that did not benefit Alaskans. She did not believe he should be allowed to further burden Alaskan families. She supported passing legislation that had been previously vetoed by the governor including appropriately taxing S corporations and oil and gas companies, she supported reining in AIDEA expenditures by passing more congressional oversight of its activities. She stated that after those things passed, she would support an income tax that would include income from some of the highest earners she had worked with who lived out of state and worked on the North Slope or in hard rock mines. She referenced that a committee member had asked a testifier if they would support the bill if it provided a bigger PFD. She stated that everyone loved a larger PFD, but she pointed out that the dollars were taxed by the federal government and a majority of the state's resource dollars would then be going to the federal government. She thanked the committee for the opportunity to testify. 6:29:04 PM KATE VEH, SELF, SOLDOTNA (via teleconference), opposed the tax. She would like to see things like alcohol being taxed because they were unhealthy. She thought it was time to tax the rich. She stated that the legislature needed to start looking into an income tax. Representative Allard asked if Ms. Veh had said to tax the rich. Ms. Veh responded affirmatively. 6:30:11 PM MIGUEL RAMIREZ, SELF, FAIRBANKS (via teleconference), stated that the governor had been pushed into offering the bill because the legislature had not been smart with the state's money since 2013. He did not believe a future legislature would honor the sunset on the tax proposed in the bill. He remarked that once the legislature saw billions coming in, spending tended to increase. He referenced earlier testimony that a vehicle purchased out of state would be taxed when it was brought to Alaska. He asked why Alaskans should be told by the state government how and when to spend their money and get punished for spending their hard earned dollars. He remarked that Alaskans were contributing to the state by living in the state. He did not think the PFD funds should have ever been used to run state government. Additionally, he did not think federal pandemic funds should have been sued to run state government. He suggested that if the governors of Texas and Florida succeeded in eliminating property taxes, Alaska would see outmigration. He noticed that when Representative Stapp asked questions of commissioners, he could never get a straight answer. He did not know where he stood on the bill. He knew that outmigration needed to be stopped. He suggested getting rid of vacant positions or moving session back on the road system. He thanked the committee. Representative Stapp thanked Mr. Ramirez for calling in. 6:33:48 PM SANDRA WEST, SELF/MEMBER, KODIAK COUNCIL, KODIAK (via teleconference), thanked the committee. She understood the state revenue shortfall. She supported broad based revenue and she believed an income tax was the fairest statewide tool because it asked Alaskans to contribute based on their ability to pay. She stressed that the bill would increase the tax burden on residents on top of local taxes approved by voters. An additional sales tax would mean additional cost for food and shelter. The burden of the sales tax would fall on low income and the most vulnerable residents. 6:35:43 PM Representative Allard asked if Ms. West would agree to a flat income tax percentage for everyone regardless of their income. Ms. West was not familiar enough to say yes or no. Representative Allard provided a scenario where she was personally taxed 3 percent. She asked if Ms. West would also be willing to be taxed at the same rate of 3 percent. Ms. West responded affirmatively. 6:36:41 PM LAURA BONNER, SELF, ANCHORAGE (via teleconference), did not support a regressive sales tax that would hurt families. She did not support a proposal to reduce corporate income tax to zero after five years. She stated it would put the burden on everyday Alaskans. She pointed out that many communities had existing sales taxes to pay for local services. She was opposed to the 50/50 PFD proposal, which she did not believe was sustainable. She believed the fiscal policy document from the Alaska Municipal League made more sense than the governor's bill. She did not support joining the multistate compact. She stated that the passage of SB 21 in 2013 had cost the state way too much. She highlighted that production had not increased but Alaska was receiving about one-third of the revenue it received prior to the passage of the bill. There were other ways to increase revenue such as the online internet tax. She stated that an income tax would be easier to administer than the tax proposed in the governor's bill. She was adamantly opposed to the bill. She hoped the legislature could come up with a better plan. 6:38:57 PM GLENDA LEDFORD, MAYOR, WASILLA (via teleconference), thanked the committee for the opportunity to testify. She stated that local governments understood the state's revenue shortfall and pressures it created. Local governments had long supported broad based revenue and an income tax was the fairest statewide tool because it asked Alaskans to contribute based on the ability to pay. She stated that if a sales tax was the only proposal, it must not undermine local authority or override decisions made by local voters. She stated that the bill would increase the total tax burden on Alaskans and in many places it would do so on top of local taxes voters had already approved, making life more expensive. Costs would increase on groceries, diapers, heating fuel, and more. She stated that a sales tax was among the most regressive revenue tools with the burden falling on low income and vulnerable residents. Additionally, it threatened local decision making and local voter-approved policy choices. Community sales taxes included things that voters approved to make the system workable locally. The bill did not clearly protect those choices. Representative Moore thanked Mayor Ledford for calling. 6:41:33 PM RANDY GRIFFIN, SELF, FAIRBANKS (via teleconference), spoke against the sales tax because it would destroy the honesty and purity of the PFD that had always been provided after essential services were paid for. He noted there were some things that were more important than the PFD such as public safety, courts, and snow removal. He noted there may be some things that were not more important than the PFD. He recognized that it was a wonderful thing, but he believed any state that could afford to hand out free money had no money problem. He noted Alaska was the only state that provided a PFD. He suggested that if the state had a sales tax or income tax it would change the PFD into a public assistance payment. He pointed out that a dividend generally meant there was surplus money (e.g., a profitable business that paid its shareholders a dividend). He did not want the PFD to change into welfare. Currently, there was no shame in taking the PFD, he did not support an income transfer where money was sucked out of the pockets of Alaskans just to give it to other people in Alaska. He remarked that many of the individuals were not working or were drug abusers. He stated there was nothing wrong with a public assistance payment going to needy people who had no other way to get back on their feet. He believed the lack of a sales or income tax served as a barrier to increased government spending. He stated that the government spent plenty of money and it would get more money as the Permanent Fund grew in the future. He did not support an income or sales tax. 6:44:24 PM JAMES AKERELREA, PRESIDENT, SCAMMON BAY TRIBAL COUNCIL, SCAMMON BAY (via teleconference), spoke in opposition to the proposed sales tax because it placed the burden on the people in rural Alaska. He highlighted that everything cost more in rural Alaska before tax was even factored in. He stressed that freight, barges, and planes cost substantial money. He stated that goods already cost two to four times the cost on the road system. He explained that sales tax would stack on top of the cost. The region was also paying the cost to bring fuel to its villages at about $40,000 per year. He explained that residents would be faced with paying the tax or going without goods. He relayed that the money people made in villages was not disposable income. He underscored that many rural households relied on seasonal work, subsistence, and fixed income. Representative Jimmie thanked Mr. Akerelrea for calling in and providing a good perspective of how the bill would impact rural Alaska. Co-Chair Foster thanked Mr. Akerelrea for calling. 6:47:03 PM ROBERTA MURPHY, SELF, EMMONAK (via teleconference), spoke in opposition to the bill. She is the tribal administrator for Chuloonawick Native Village and her office received numerous donation requests for assistance with food and utilities. She shared that the city government depended on local taxes. She detailed that in the past six months a case of Top Ramen increased from $20 to $25. She stressed that residents in rural Alaska were already suffering because of the prices. She was not on public assistance and she was barely making it due to the cost of living in the community. She shared that oil cost $9.67 per gallon and her grocery bill was $700 every two weeks. They were already trying to make their money stretch and the bill asked them to stretch even more. She thought there should be other sources to find the money. She relayed that the majority of Emmonak residents lived off food stamps and heating assistance. There were some people who did not qualify for any of the public assistance. She noted that if a person's snow machine broke down they had to order parts and it was shipped on the one cargo that charged $78 for 23 pounds of freight. She elaborated that snow machines were used for subsistence. She shared that Emmonak had a cannery that had employed residents, but it had closed. She was opposed to the tax. Representative Jimmie thanked Ms. Murphy for her hard testimony. She asked what the existing sales tax in Emmonak was. Ms. Murphy answered that the current sales tax was 3 percent. There had been a vote on increasing the rate to 4 percent, but it had failed. Representative Jimmie asked if Ms. Murphy would support keeping the tax on large corporations instead of making it smaller. Ms. Murphy replied affirmatively. 6:53:10 PM JACQUELINE MUEHLBAUER, SELF, FAIRBANKS (via teleconference), opposed the bill. She stated that the bill was hard on local governments, harder on lower income Alaskans, and those in higher income brackets. She shared that she just paid a $1,200 oil bill for heat due to record low temperatures. She suggested taxing oil companies instead of implementing a sales tax. She stated it was appalling how much oil companies got out of Alaska's resources. She emphasized that oil companies should be paying the state in order for Alaska to have the best schools and roads in the country. There was no reason not to tax oil companies. She supported an income tax and pointed out that most other states had one. She stated that they could not keep believing in the PFD; it was necessary to start thinking about how the future would look, which would mean taxes. She did not support eliminating the corporate tax. She stated that the companies could afford to pay taxes to Alaska, improve the state, and make a profit. She stressed that the legislature had a duty to Alaskans, not corporations. Representative Stapp thanked Ms. Muehlbauer for calling. 6:55:50 PM ROZLYN GRADY-WYCHE, SELF, ANCHORAGE (via teleconference), shared that she is a resident of Mountain View, which she characterized as one of the most diverse and disenfranchised neighborhoods in Anchorage. She stressed that Alaska needed real sustainable revenue and it was imperative to choose the least regressive path forward. She opposed a statewide sales tax. She supported restoring oil taxes and a progressive income taxes. She opposed eliminating corporate taxes. She emphasized that sales taxes did not hit corporations first, they hit families. Sales taxes raised the price of groceries, diapers, gas, and school supplies and forced working people to choose between food, rent, medicine, and keeping the lights on, while large companies continue to receive tax breaks. She underscored that it was not fiscal responsibility; it was shifted the burden downward. She stressed that families were already stretched beyond stretch. She detailed that elders were already choosing between prescriptions and groceries, and parents were already juggling multiple jobs in order to survive. She emphasized that a sales tax harmed communities like hers. She shared that as a new small business owner, she knew that sales taxes were passed directly to customers. Ms. Grady-Wyche shared that as a parent of five she felt every increase at the register and as an educator she saw the consequences of underfunding every day. She detailed that there were fewer supports, overcrowded classrooms, and burdened staff. She supported a progressive income tax that protected low income families, scaled with ability to pay, and included nonresident workers. She stated it was necessary to stop pretending that corporate income taxes created prosperity. She continued to discuss reasons for her opposition to the bill. She stressed that Alaska should not be forced to choose between a PFD and a functioning state. She reiterated the items she supported and opposed. She stated that no legislators complained about receiving a $30,000 raise, but when every day Alaskans were asked to contribute through a fair system suddenly it was controversial. She underscored the need to choose the least regressive path. 6:59:32 PM BARBARA HANEY, SELF, NORTH POLE (via teleconference), thought looking at a statewide sales tax was appropriate. She believed the state would be much better off with a sales tax than an income tax. She remarked that the wealthy always found ways to avoid income taxes, but it was difficult to avoid a sales tax. She stated that poor individuals on welfare would not pay sales taxes. She remarked that a 3 to 4 percent tax equated to a nickel and people would not work hard to avoid paying that amount. However, she found it problematic that the bill did not contain a local government carveout. Representative Galvin remarked that there was a momentary shutdown of the audio system. She communicated to Ms. Haney that her voice mattered, and the committee members were all listening. She thanked the testifier for calling in. 7:02:23 PM REBECCA LOGAN, SELF, ANCHORAGE (via teleconference), asked the legislature to follow the rule the legislature put in place for the public. She stated that the hearing had been noticed as an opportunity for the public to testify on the entire HB 284. She thought many people were surprised the testimony was limited to the sales tax portion of the bill. She stated that individuals had hung up when they found out they could not testify on the other portions of the bill. She added that testifiers were being allowed to speak to other items besides the sales tax. She thought the committee did not give the public the opportunity to testify. Co-Chair Foster clarified that the committee ran out of time earlier in the day to take up the other two sections of the bill including oil tax and corporate income tax. The committee would come back to those portions of the bill the following week and there would be an opportunity to testify after that time. Representative Bynum asked if the testifier had anything specific to share. Ms. Logan replied that she did not. She thought it was disrespectful to businesspeople to make the change. Co-Chair Foster clarified that individuals could submit written testimony as well. 7:05:08 PM REBECCA BRAUN, SELF, JUNEAU (via teleconference), thanked the committee for the opportunity to testify. She shared that her high school science teacher had sign above his door that said "TANSTAAFL," which stood for there ain't no such thing as a free lunch. She stated that in her view it was not possible to have good schools, safe communities, and plowed roads without money. She appreciated the revenue conversation, but she did not support the governor's approach. She opposed reducing corporate income taxes, which shifted more of the burden onto Alaskans. She did not support a state sales tax, which disproportionately impacted low and middle income families, was hard on communities relying on local sales taxes, was very hard on rural Alaska where the cost of goods was already high. She stated that income taxes could be designed to protect low and middle income Alaskans and would be deductible from federal taxes. She highlighted that an income tax would ensure Alaska received a contribution from the 24 percent of the workforce that lived out of state. The state had the tools to solve its revenue problem by closing the S corp tax loophole and taxing out of state corporations doing online business in Alaska. She pointed out that Alaska had the lowest individual tax burden in the nation and she believed it could sustain a modest progressive income tax. She emphasized the need for the leadership and courage that would generate the revenue to enable the state to thrive. She thanked the committee. 7:07:09 PM Co-Chair Foster recognized Representative DeLena Johnson in the room. 7:07:34 PM LORI STRICKLER, DEPARTMENT MANAGER, CITY OF BETHEL (via teleconference), spoke against the bill. She stated that the cost of living in Bethel and other rural Alaska communities was already higher than what many people could afford. She stated that the tax would disproportionately impact people living in rural areas and would make life unaffordable. The rising cost of living was already forcing people to leave the region. She suggested that the state should be working to prevent outmigration and make it easier for people to live, work, and thrive in rural Alaskan communities. She understood the state was facing a budget crisis; however, a regressive tax was not the solution and would not help Alaska at large. She asked the committee not to support the proposal. She thanked the committee for its time. Representative Jimmie thanked Ms. Strickler for her testimony. Quyanna. 7:08:55 PM LEON JAIMES, SELF, ANCHORAGE (via teleconference), opposed a sales tax under the bill, which he believed would disproportionately hurt lower income individuals and rural Alaskans. He used Wasilla's local sales tax as an example and highlighted it had exemptions for childcare and daycare services, medical supplies, postage, shipping, and shipping supplies. He noted that all of the items were uniquely more common in Alaska and were not exempted from the proposed sales tax. He pointed out that goods and energy costs in rural Alaska were already substantially higher and the proposal did not exempt those things. He urged the committee to oppose the proposal. Co-Chair Foster noted that the committee would come back in 15 minutes 7:10:36 PM AT EASE 7:28:10 PM RECONVENED Co-Chair Foster noted there were three additional callers online. 7:28:42 PM STEVEN TOMS, SELF, BIRCHWOOD (via teleconference), wanted to see oil tax go back to a previous system. He remarked that a couple of administrations cut the oil tax and as a result the legislature was dipping into the Permanent Fund to pay for services that the oil tax should be paying for. He wanted the legislature to leave the Permanent Fund alone. He determined that a sales tax was unnecessary if the previous oil tax was reinstated. 7:30:43 PM JIM HAZLETT, SELF, WASILLA (via teleconference), stated that a sales tax was not a bad idea if it was charged to nonresidents, not residents. He remarked that it was working in other towns in Alaska seasonally. He asked why a sales tax was being considered at all when there were many workers coming to Alaska to make money on the North Slope and who then left the state. He stated that the individuals did not pay income tax [to the state]. He thought the individuals should pay an income tax. He thought the legislature needed to draw the needed money from somewhere besides the Permanent Fund and General Fund. 7:32:18 PM DOUG GOERING, SELF, FAIRBANKS (via teleconference), highlighted that sales tax was regressive and would hit rural communities much harder than urban communities. He stated that an income tax would be less regressive. He pointed out that an income tax or a state sales tax would require a new state bureaucracy to implement. He highlighted that at the same time, the state funded the Permanent Fund [Dividend] Division, which meant there would be one state agency handing money out and another state agency collecting money. He would rather have the PFD distributed in a progressive way, which would not harm low and medium income individuals. He reasoned it would not be a regressive tax, and it would not bleed money out of the state in the form of federal income taxes. He remarked that 25 to 30 percent of each PFD check was sent to the federal government. He thanked the committee. Representative Stapp thanked Mr. Goering for calling. Co-Chair Foster thanked all of the testifiers for calling. HB 284 was HEARD and HELD in committee for further consideration. Co-Chair Foster reviewed the schedule for the following day. ADJOURNMENT 7:35:38 PM The meeting was adjourned at 7:35 p.m.