HOUSE STATE AFFAIRS STANDING COMMITTEE January 21, 1993 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chair Representative Pete Kott, Vice Chair Representative Harley Olberg Representative Jerry Sanders Representative Gary Davis Representative Fran Ulmer MEMBERS ABSENT Representative Bettye Davis (excused) OTHER HOUSE MEMBERS PRESENT Representative Terry Martin Representative Gail Phillips COMMITTEE CALENDAR *HJR 11: Proposing an amendment to the Constitution of the State of Alaska relating to repeal of regulations by the legislature. HELD IN COMMITTEE FOR FURTHER CONSIDERATION HJR 1: Proposing amendments to the Constitution of the State of Alaska authorizing the use of the initiative to amend the Constitution of the State of Alaska by approval of two-thirds of the votes cast on the proposed amendment. HELD IN COMMITTEE FOR FURTHER CONSIDERATION HJR 8: Proposing amendments to the Constitution of the State of Alaska authorizing the use of the initiative to amend the Constitution of the State of Alaska NOT HEARD HJR 9: Proposing an amendment to the Constitution of the State of Alaska prohibiting the imposition of state personal income taxation, state ad valorem taxation on real property, or state retail sales taxation without the approval of the voters of the state. HELD IN COMMITTEE FOR FURTHER CONSIDERATION (* first public hearing) WITNESS REGISTER Sandy Nusbaum, Legislative Aide to Representative Gail Phillips State Capitol, Room 216 Juneau, AK 99811-1182 465-3718 Position Statement: Explained the history of proposing an amendment to the Constitution Representative Gail Phillips State Capitol, Room 216 Juneau, AK 99811-1182 465-3718 Position Statement: Prime Sponsor of HJR 11 & HJR 1 Representative Terry Martin State Capitol, Room 411 Juneau, AK 99811-1182 465-3783 Position Statement: Supported HJR 1; Prime Sponsor of HJR 9 PREVIOUS ACTION BILL: HJR 11 SHORT TITLE: REPEAL OF REGULATIONS BY LEGISLATURE BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) PHILLIPS,Brice TITLE: Proposing an amendment to the Constitution of the State of Alaska relating to repeal of regulations by the legislature. JRN-DATE JRN-PG ACTION 01/11/93 24 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 24 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/21/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HJR 1 SHORT TITLE: USE OF INITIATIVE TO AMEND CONSTITUTION BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) PHILLIPS,Bunde TITLE: Proposing amendments to the Constitution of the State of Alaska authorizing the use of the initiative to amend the Constitution of the State of Alaska by approval of two-thirds of the votes cast on the proposed amendment. JRN-DATE JRN-PG ACTION 01/04/93 21 (H) PREFILE RELEASED 01/11/93 21 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 21 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/19/93 (H) STA AT 08:00 AM CAPITOL 102 01/21/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HJR 8 SHORT TITLE: USE OF INITIATIVE TO AMEND CONSTITUTION BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MARTIN,Kott,Green,Olberg TITLE: Proposing amendments to the Constitution of the State of Alaska authorizing the use of the initiative to amend the Constitution of the State of Alaska. JRN-DATE JRN-PG ACTION 01/04/93 23 (H) PREFILE RELEASED 01/11/93 23 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 23 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/12/93 49 (H) COSPONSOR(S): OLBERG 01/19/93 (H) STA AT 08:00 AM CAPITOL 102 01/21/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HJR 9 SHORT TITLE: VOTER APPROVAL FOR NEW TAXES BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MARTIN TITLE: Proposing an amendment to the Constitution of the State of Alaska prohibiting the imposition of state personal income taxation, state ad valorem taxation on real property, or state retail sales taxation without the approval of the voters of the state. JRN-DATE JRN-PG ACTION 01/04/93 23 (H) PREFILE RELEASED 01/11/93 23 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 23 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/19/93 (H) STA AT 08:00 AM CAPITOL 102 01/21/93 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 93-3, SIDE A Number 000 The second meeting of the House State Affairs Committee was called to order at 8:00 a.m. on January 21, 1993, by Chairman Al Vezey. Members present were Representatives Kott, Olberg, Sanders, G. Davis, Ulmer, representing a quorum. Representative B. Davis was absent. Representative Martin and Phillips were also present. HJR 11: REPEAL OF REGULATIONS BY LEGISLATIVE CONSTITUTIONAL AMEND CHAIRMAN AL VEZEY read the title of HJR 11. He invited the sponsor of the legislation to testify before the committee. Number 051 REPRESENTATIVE GAIL PHILLIPS, Prime Sponsor of HJR 11, read information regarding the purpose of HJR 11 and the history of legislation in Alaska for repealing regulations. Number 129 REPRESENTATIVE GARY DAVIS asked for research of why voters haven't passed this before. Number 142 SANDY NUSBAUM, LEGISLATIVE AIDE TO REPRESENTATIVE GAIL PHILLIPS, explained in detail the history of proposing an amendment to the Constitution of the state of Alaska relating to repeal of regulations by the legislature. She said that the 16th Legislature introduced legislation, sponsored by Senator Jack Coghill, to repeal regulations. She also discussed ballot measures. Number 213 REPRESENTATIVE TERRY MARTIN spoke on constitutional amendments that have gone to public vote. CHAIRMAN VEZEY summarized Representative Martin's testimony. Number 294 REPRESENTATIVE G. DAVIS asked to move HJR 11 out of committee. Number 300 CHAIRMAN VEZEY reminded the committee that HJR 11 would be held until Saturday's teleconference (January 23), for public testimony. The committee then addressed HJR 1. HJR 1: USE OF INITIATIVE TO AMEND CONSTITUTION Number 306 CHAIRMAN VEZEY read the title of HJR 1 and explained its similarities to HJR 8. HJR 1: Proposing amendments to the Constitution of the State of Alaska authorizing the use of the initiative to amend the Constitution of the State of Alaska by approval of two-thirds of the votes cast on the proposed amendment. HJR 8: Proposing amendments to the Constitution of the State of Alaska authorizing the use of the initiative to amend the Constitution of the State of Alaska Number 320 REPRESENTATIVE MARTIN, Prime Sponsor of HJR 1, made references to the Alaska Blue Book and Reaching for a Star by Joe Becket, as well as the National Conference of State Legislatures (NCSL) report on states that have the initiative. Number 424 CHAIRMAN VEZEY spoke on the length of time the initiative process has been in effect for these states. Number 426 REPRESENTATIVE MARTIN discussed the history of the initiative process. He stated that the cost of a convention to change the Constitution had raised a problem for the public. Such cost was blown out of proportion, he believed, and stated that the American Bar supported the initiative process due to it being a successful element of democracy. Number 479 REPRESENTATIVE HARLEY OLBERG supported the initiative process. He said he doesn't fear the people. His main concern was how the initiative could impact the Permanent Fund. Number 489 REPRESENTATIVE FRAN ULMER said that, with the initiative process, the public could vote a large check to themselves and dissolve the Permanent Fund. She noted the huge turnover in population and a get rich quick, take what you can attitude that could take advantage of the initiative process. She objected to HJR 1 for this reason. REPRESENTATIVE OLBERG supported HJR 1 in principle yet was concerned about how it might impact the Permanent Fund. Number 514 REPRESENTATIVE MARTIN stated that the topic of raiding the Permanent Fund was only used to try to put a damper on HJR 1. The Capitol move was another issue used, he added, and explained the difficulty for voters to utilize the initiative process. He believed a democracy gave power back to the people. Number 567 CHAIRMAN VEZEY clarified HJR 1 called for two-thirds of voters and HJR 8 was a simple majority. Number 586 REPRESENTATIVE MARTIN challenged Representative Ulmer regarding her statement that the Anchorage population controlled the rest of the state. He stated that a super majority of two-thirds was not necessary. It should be a rule of simple majority, he added. Number 634 REPRESENTATIVE ULMER stated the facts of a transient Anchorage population was second hand from the Division of Elections and that she would try to get the information in writing. She shared her concern that the State Constitution must withstand time and that allowing a change in the Constitution by the initiative process enabled a majority to control the structure. TAPE 93-3, SIDE B Number 000 CHAIRMAN VEZEY asked if there was any information the committee wanted to request. Number 015 REPRESENTATIVE ULMER asked for a list of the states that have an initiative process to amend their Constitution. Number 024 CHAIRMAN VEZEY stated that he thought the information could be found in the Alaska Blue Book which would show the forms of government in the various states. Number 032 REPRESENTATIVE MARTIN offered to get the list from the NCSL. He stated the Legislature was failing to change the Constitution when needed, and that the Constitution was a contract of the people. Number 091 REPRESENTATIVE PETE KOTT stated that since 1787 the initiative process had come a long way; people were not ignorant; and, that the public should have freedom to utilize the initiative process. Political science through the education process had raised the level of governmental education and understanding. He believed this question was not based on the intelligence level of the public, but that the real question was if fifty percent or two-thirds should be used for deciding voter involvement in the initiative process. He stated the government would not be more dominated by interest groups because of this process, and he wanted to let people take part. Number 132 REPRESENTATIVE MARTIN stated two-thirds was too heavy a number and discussed why. There being no further discussion on HJR 1, CHAIRMAN VEZEY RECESSED the meeting at 8:51 a.m. CHAIRMAN VEZEY RECONVENED the meeting at 9:01 a.m. HJR 9: PROHIBITS TAXATION WITHOUT APPROVAL OF VOTER Number 168 CHAIRMAN VEZEY announced that HJR 1 and HJR 8 would be held over for teleconference. He then brought up HJR 9 and read the title. He asked the sponsor, Representative Martin, to discuss HJR 9. Number 186 REPRESENTATIVE MARTIN, Prime Sponsor of HJR 9, gave "The 1992 Case Alaskan State Income Tax" handout to the committee. He also made statements regarding the longevity bonus and permanent dividend cash give away, and discussed examples of taxes that are on some items and not on others. Number 314 CHAIRMAN VEZEY commented on taxes for groups of people such as tax on fish for fisherman. Number 341 REPRESENTATIVE MARTIN discussed taxes on resources and industries. Number 370 CHAIRMAN VEZEY asked if Fairbanks was the only community that required voters to agree to a tax. REPRESENTATIVE MARTIN stated that the city of Juneau votes on their municipal taxes too. Number 391 REPRESENTATIVE KOTT discussed income tax. REPRESENTATIVE MARTIN stated that five states did not have an income tax but instead had property and sales tax, and that most states were trying to dissolve income tax. He also said there needed to be better management of resources in Alaska. REPRESENTATIVE KOTT requested clarification that no states voted themselves a tax on income or sales. REPRESENTATIVE MARTIN said yes on sales tax but no on income tax. Number 452 REPRESENTATIVE ULMER spoke on the need for income tax and her concern for industry and essential government services. Number 508 REPRESENTATIVE MARTIN discussed his opposition to the Permanent Dividend Fund give away since oil was not a renewable resource, but the money it generated was renewable and a percent should be used for government. He believed government should not tax working people to take care of non-working people. Number 570 REPRESENTATIVE G. DAVIS stated that give aways drew people to Alaska and that no taxes would also draw people. Number 575 REPRESENTATIVE MARTIN stated that give aways drew non- working people who did not pay income tax, while not having income tax would draw working people. Number 592 REPRESENTATIVE KOTT suggested an amendment for voters to vote on an income tax. Number 602 REPRESENTATIVE G. DAVIS discussed votes. Number 611 REPRESENTATIVE KOTT expressed his lack of support for any tax increase. TAPE 93-4, SIDE A Number 000 REPRESENTATIVE KOTT believed the Permanent Fund income was sufficient to support government. ADJOURNMENT Number 051 CHAIRMAN VEZEY made committee announcements and adjourned the meeting at 9:37 a.m.