Council holds worksession on legislative issues
As of April 20 the first session of the 30th Alaska Legislature enters its 93rd day. While in Juneau the House and Senate seem to be headed toward tense negotiations over key bills, including a state income tax, the Homer City Council continued work sessions to keep tabs on the Legislature. At a meeting on Tuesday, with council member Shelly Erickson absent, the council and Mayor Bryan Zak held an informal meeting to discuss key issues.
The council also looked at drafts of two resolutions taking stands on legislative issues. At its 6 p.m. Monday meeting in the Cowles Council Chambers, the council will consider these two resolutions:
• A resolution opposing sections of House Bill 132 and Senate Bill 14, bills that would loosen regulations for “transportation network companies” such as Uber and Lyft. The council resolution opposes a section prohibiting municipalities from regulating transportation network companies and their drivers.
• A resolution supporting House Bill 177, an act relating to responses to and control of aquatic invasive species and that establishes an invasive species response fund.
As of press time, neither city council resolution had been numbered, but both had been introduced on the preliminary agenda.
City Manager Katie Koester told the council that in conversations with the staff of Rep. Paul Seaton, R-Homer, it looks like the Legislature will meet up to its constitutionally allowed 120 days, and probably vote to extend the session another 10 days. Most of the Legislative action ahead will be conference committees, where senators and representatives meet to resolve differences in bills.
“You know they’re in that end game,” Koester said.
In a phone interview on Wednesday, Seaton didn’t say how long he expected the session to continue.
“It’s doing it right and not doing it quick. These are the biggest issues that have been actually faced up to in the Legislature in a long, long time,” he said.
Seaton referred to the biggest issue remaining on the Legislature’s punch list: funding its budget and resolving a looming fiscal crisis.
“Whenever our budget looks bad, we can look to the state and find comfort in that — until you realize everything rolls downhill,” Koester said.
The bipartisan and nonpartisan House Majority, which includes Seaton, has acted on what Seaton calls “the four pillars of our comprehensive, sustainable fiscal plan.” Those are:
• HB 111, oil and gas tax and credit reform;
• The House version of SB 26, creating a structured draw from the Alaska Permanent Fund;
• HB 115, what the House calls the Education Funding Act, that creates a progressive state income tax with an increasing percentage tax based on income, and
• “Smart budget cuts,” as Seaton calls it.
All the fiscal plans have gone to the Senate. The House and Senate will meet in a conference committee to work out differences between SB 26. That bill allocates a higher percentage of Permanent Fund earnings to the general fund to pay for state government.
However, the House put in a clause in its version of SB 26 that includes passage of a broad based tax and oil and gas tax credit reforms. If the two bodies don’t agree, SB 26 doesn’t go into effect, Seaton said.
The House proposed Permanent Fund restructuring would give Alaskans a dividend of $1,250 while the Senate version, SB 26, has a $1,000 dividend. The House raises more money with HB 115, an income tax that directs about $687 million in anticipated revenues to public education. In effect, the House bill’s higher dividend gives more money to lower-income Alaskans.
District 31 has its share of low- and middle-income Alaskans, Seaton noted. The income tax also collects a projected $80 million to $100 million from nonresident workers who commute to Alaska but don’t have full-time residency. Those workers would be allowed to deduct Alaska income taxes if they pay income taxes in their home states.
As a progressive tax, HB 115 also collects a higher rate based on income, including from the 605 people who earn more than $1 million in Alaska. The income tax is based on adjusted gross income — line 37 on the federal tax form — and gives each Alaskan a $4,000 deduction.
For example, a married couple with two children earning $40,000 or less would pay no state income tax. A married couple with two children earning $50,000 would pay $483. A tax calculator where people can run various scenarios is on the Alaska House Majority’s page at akhouse.org.
“People can see it’s not a very onerous tax,” Seaton said.
He said it’s the fourth lowest income tax in the nation. The other three states with lower income taxes also have state sales taxes — and don’t get a Permanent Fund dividend.
Seaton said the Senate proposes to balance the budget by making more cuts.
“The Senate just wants to cut the budget and send the economy down into a spiral of recession,” he said. “Some in the Senate have been saying the income tax will hurt the economy, so they’d (the Senate) rather doubly hurt the economy through budget cuts.”
Still in flux is the operating budget. In his April 17 newsletter, Seaton said the House and Senate versions haven’t gone to conference committee yet in hopes the Legislature can get bicameral agreement. Scheduling conference committees also ramps up the pace, with scheduling hearings five days in advance to 24 hours.
As for the Uber or transportation network companies bill, Seaton said that amendments will be introduced to the House bill allowing municipalities to opt out and still regulate taxi or transportation companies.
Michael Armstrong can be reached at firstname.lastname@example.org.