Politics

Alaska House moves tax bills toward floor vote

JUNEAU — Gov. Bill Walker's tax proposals Thursday took a big step forward in the House, though the bills still face substantial opposition and a time crunch with just three days left in the legislative session.

The House Finance Committee took public testimony on Walker's proposed personal income tax, with co-chair Steve Thompson, R-Fairbanks, saying he wanted to advance the legislation to the floor for a vote.

The committee also introduced a minibus tax package — not quite an omnibus — that rolls three of Walker's seven other tax proposals into one.

House Bill 249, which started Thursday as a doubling of the state's existing gas tax, was merged with proposed tax increases on mining and commercial fishing, which together would generate $65 million, according to a preliminary estimate by Walker's administration.

That number is less than 2 percent of the state's $4 billion deficit, which Walker hopes to fill primarily with revenue from a restructured Permanent Fund.

But the Walker administration has advocated for the taxes on resource extraction and consumption, as well as the income tax, as a way to spread the impact of his budget-balancing measures, since cuts to the Permanent Fund dividend would take a larger share of the income of lower-income Alaskans.

The income tax would raise about $200 million.

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But it faced skepticism from members of the House Republican-led majority at a finance committee hearing Thursday. The day before, Rep. Cathy Munoz, R-Juneau and a finance committee member, said she expected the legislation to fail.

"We might get an income tax vote. They might move that bill out to the floor in the next day or two," she said in an interview. "But I don't think it will pass."

Even Democrats, who have pushed for progressive tax measures over the past several months, were hesitant to offer their endorsement of the income tax Thursday. Rep. Chris Tuck, the minority leader, said Walker couldn't rely on votes from all 13 members of the Democratic caucus.

And the income tax proposal faces even less enthusiasm in the Senate, where one Republican leader, Pete Kelly of Fairbanks, has said he's not interested in getting into the "tax business."

HB 249, with the three other taxes, appears to face better odds. Thompson, the finance committee co-chair whose office drafted the version of the legislation released Thursday, said he thought it stood a "fair chance" of passing the House.

"In this building, we all knew we have to do something," he said.

The minibus legislation leaves out three other tax increases proposed by Walker on tobacco, alcohol, and cruise ship passengers, which Thompson said was because of "pushback."

Bar and restaurant owners have objected to increasing the state's already high tax rates on alcohol, for example. Thompson said his legislation was a "good place to start the conversation."

There's no companion legislation yet in the Senate, however, where Walker's fishing and mining taxes are still stuck in their first of two committees.

Sen. Anna MacKinnon, R-Eagle River and co-chair of the Senate Finance Committee, said she's "willing to hear anything."

But there isn't support for an income tax in her chamber, she said. And she added that Walker had likely hindered his own legislative priorities with his announcement Thursday that he'd veto a purchase of the Legislature's Anchorage office building if lawmakers proposed it.

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com

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