Members of the Senate Finance Committee have said they want to avoid a broad-based income tax this year, but some cost-cutting bills introduced by the committee Monday could indirectly raise taxes on Alaskans.
On Day 70 of the legislative session, the committee introduced four pieces of legislation — one of which cuts revenue sharing in half, and others that increase the amount municipalities pay into the Public Employees Retirement System (PERS) and the Teachers Retirement System (TRS).
“We’re just asking everyone to pitch in, it’s going to be tough. We’re all gonna feel the pinch. We’ve all got to take our responsibility in this $4.1 billion budget gap,” said Senator Peter Micciche at a press conference before the introduction of the bills Monday.
Kathie Wasserman, executive director of the Alaska Municipal League (AML), which represents more than 164 cities and boroughs statewide, said the Senate majority is only shifting the burden onto local taxpayers, their own constituents.
“They gave away a debt to us, and that is not shrinking government,” Wasserman said. “This will cost municipalities at least $8.5 million in additional costs every year, and there has to be somewhere to go to get those.”
Wasserman said AML had anticipated cuts to revenue sharing, but not the extra costs on PERS and TRS.
“The only way municipalities have to make money is through raising taxes or raising fees,” Wasserman said. “So the legislature says they don’t want to tax, they don’t want to put this burden on the taxpayer. But yet, they seem to be okay with us putting that burden on the taxpayer.”
Wasserman estimates the change in PERS funding, under Senate bill 209, will cost the municipality of Anchorage $13 million over the next 22 years. But worse off, she said, are the communities that don’t have a tax base.
“These municipalities, some of them are already underwater due to PERS costs, they’ve got huge debts. They will never be able to pay them back, never,” Wasserman said. “When a small community with no tax base owes $7-800,000 to the state of Alaska because of PERS costs… doing this, well you’re just adding to a bill that they can’t pay anyway. So what’s the point? ”
Wasserman said if Senate Bill 209 passes, it could mean the end of some of those communities.
“The physical location of them will not go away, but their government may,” she said. “And if that’s something that the legislature thinks is okay, then they need to have a discussion about that.”
SB 209, along with TRS-related Senate Bill 207, community-revenue sharing Senate Bill 210 and Senate Bill 208, with changes to the Alaska Performance Scholarship Program, were referred to a single committee — the Senate Finance Committee. That’s the same committee that wrote the bills. Senate minority leader, Berta Gardner moved to have the measures evaluated by additional committees, but the majority voted against it, citing the need to work quickly through them.
“The financial issues of the state are so extremely stark that I think it’s important for these to be laid out in financial circumstances,” said Senate majority leader John Coghill, who said it would be nice to have a 121-day session.
Gardner shot back, “If that’s an argument that time doesn’t allow us to follow our own rules in vetting bills in each appropriate committee, why don’t we simply refer all bills to finance and be done with all the other committees and just say, ‘We can do it in 30 days? The argument is to build public process, confidence, and have a full vetting of every proposal that goes through this body.”
All four bills will be taken up in the Senate Finance Committee on Tuesday at 1 p.m.