Budgets, taxes, and other addictions

May 24, 2017

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If it seems quiet this week in legislative news, that’s because the focus is on negotiations taking place in conference committees on several of the items on Gov. Bill Walker’s call for special session.

Conference committees are where legislators hammer out differences between the versions of bills passed by the House and Senate. Here is the list so far:

HB 57 – Operating Budget

HB 59 – Mental Health Budget

SB 26 – Permanent Fund restructuring (use of earnings to pay for government, and set amount for dividends)

HB 111 – Oil tax credits, was changed by the Senate to end the program altogether, and this will need to be worked out in conference committee.

HB 60 or SB 25 – Motor fuel tax, still undergoing committee work.

HB 159 or SB 79 Opioid legislation, HB 159 passed the House on May 22 and now returns to the Senate.

Income tax? – The governor has asked for a broad-based tax on his call for Special Session, but has not offered one.

On Tuesday, the House Democrat-led leadership appointed Reps. Geran Tarr and Andy Josephson, both Anchorage Democrats, to represent the majority on the HB 111 conference committee. The Republican House minority will be represented by Rep. Dave Talerico of Healy.

Senate President Pete Kelly is expected to appoint three Senate members to the HB 111 conference committee but the committee isn’t expected to meet until after Memorial Day weekend.

ANOTHER TAX COMING? Gov. Walker insisted it’s either an income tax or an income tax. His first tax, offered last year, would have raised $200 million a year, but would have required hiring up to 60 new revenue officers. His latest tax, HB 115, would have garnished closer to $700 million from wage earners. The fiscal note for funding tax collectors on that bill, which involves a complicated system of tax brackets, is unclear as it was voted down by the Senate.

Walker, for two years, has pursued an income tax, but has met with resistance. But this year there was a hitch — he didn’t offer an income tax under his own name. Not even for Special Session.

After all, that’s what Rep. Paul Seaton of Homer is for.

Walker also predicted, through Revenue Commissioner Randy Hoffbeck, that pipeline throughput oil will drop 12 percent next year. Yes, those were bad numbers, he admitted…”stale numbers.”

Then Commissioner Hoffbeck mysteriously found a spare $111 million in an oil production estimate. No word on where or how he found it, but that’s about half of what Walker’s first income tax bill would have provided.

Walker told Alaskans it’s math — workers need an income tax because of “the math.”

We did the math: 34 legislators are on record as disagreeing with the governor on income taxes. That 56 percent of legislators is on track with the Alaska Chamber of Commerce poll that found 58 percent of Alaskans feel the same way.

Is an income tax dead? In the infamous words of Rep. Gabrielle LeDoux, “If the Senate thinks they’re going to get out of here with just a POMV [Permanent Fund restructure], they’ve got another think coming.”

But in the infamous words of Sen. President Pete Kelly: “The only thing standing between Alaskans and an income tax is the Alaska Senate.”

ADDICTED TO TAXES? Alaska is one of seven states without an income tax. Connecticut started its income tax at 4 percent, but converted to six brackets of 3% to 6.7%. Now, the Nutmeg State has a bigger budget gap than ever, with the worst fiscal shape in the nation. Add to that this problem: The wealthy people are leaving. Will they raise taxes again? Alaskans should take heed.