Legislature(2017 - 2018)BUTROVICH 205

01/30/2018 03:30 PM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 8 PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS TELECONFERENCED
Moved CSSB 8(STA) Out of Committee
*+ SB 154 PFD CONTRIBUTIONS TO GENERAL FUND TELECONFERENCED
Moved SB 154 Out of Committee
*+ SB 130 VOTER APPROVAL FOR NEW TAXES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
              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.                                                                                           

Document Name Date/Time Subjects
SB - 8 Sponsor Statement.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Version A.PDF SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Sectional Analysis.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Support Letter Native Village of Afognak.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Support Letter Woody Island Tribal Council.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Fiscal Note Updated 2018.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 154 - Sponsor Statement.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Version D.PDF SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Sectional Analysis, ver D.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Invited-Expert Testimony Summary.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Fiscal Note DOA.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Fiscal Note DOR PFD.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 130 Sponsor Statement .pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Version A.PDF SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Legal Memo 11.20.2017.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Letter of Support NFIB.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Fiscal Note DoE.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 154 - PickClickGive Flowchart.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - PickClickGive Program Overview.pdf SSTA 1/30/2018 3:30:00 PM
SB 154