Walker hopes to win over skeptical lawmakers on tax proposal

Walker hopes to win over skeptical lawmakers on tax proposal

JUNEAU — As Alaska lawmakers prepare for their fourth special session of the year, Gov. Bill Walker says he wouldn’t have gone through the hassle and expense of calling it if he didn’t expect legislators to pass the bills on his agenda.

But Walker faces an uphill battle in selling skeptical senators on his proposal to implement a new tax on wages to help address a multibillion-dollar budget deficit that has persisted amid low oil prices.

Over the past two years, proposals to raise taxes or adopt new ones have largely stalled, with lawmakers at odds over how best to tackle the deficit and settling for using savings to help cover state costs.

The House, whose majority coalition is composed largely of Democrats, passed an income tax earlier this year, but the Republican-led Senate voted it down. Members argued the tax was unnecessary and ill-advised for a sluggish economy.

Senate President Pete Kelly, a Fairbanks Republican, said little has changed.

“There’s not a lot of chance that we’re going to be very enthusiastic about taking money out of that economy when it’s still bad,” he said.

Walker, who is politically unaffiliated, sees new revenue from taxes as key to a plan for fiscal stability and to rebuilding confidence with Alaskans and with rating agencies that have cited legislative gridlock in lowering the state’s once-sterling credit rating.

Walker is proposing a 1.5 percent tax on wages and self-employment income that would be capped at the higher of either $2,200 or double the amount of the prior year’s Alaska Permanent Fund Dividend, the annual checks Alaska residents receive from the state’s oil-wealth fund. At full implementation, the tax would generate about $320 million annually, according to the Revenue Department.

Neither the House nor the Senate has embraced the idea, suggesting it could be a compromise that leaves neither side getting everything they want, Walker said.

While Walker and lawmakers generally agree earnings from the Alaska Permanent Fund will be needed to help fill the deficit and make the largest dent in it, he didn’t include it on the agenda. He noted the House coalition previously indicated a desire to tackle taxes before going to permanent fund earnings. Moving one issue at a time is an attempt to avoid the gridlock that snarled previous sessions, he said.

House Speaker Bryce Edgmon, a Dillingham Democrat, said what Walker has proposed is a starting point for discussions.

The major issues for this year’s prior special sessions were the budget and ending a state program of providing cashable tax credits on the oil-rich North Slope, which the oil and gas industry said amounted to a tax increase for companies.

The total cost for the first three special sessions topped $1.2 million, according to the Legislative Affairs Agency.

When lawmakers convene in special session Monday, Walker also is asking them to look at revisions to a criminal justice overhaul passed last year amid a public outcry over crime.

Critics of the overhaul say it goes too easy on criminals – with some insisting it should be repealed. But others caution against a rush to judgment, saying the state is facing an opioid epidemic, and budget cuts have affected prosecutors and law enforcement.

Senate Finance Committee Co-Chair Anna MacKinnon said there’s a desire to respond to the public’s concerns. If criminals believe they can get away with “bad things, then they need to be held accountable and it needs to be harsh,” she said.

But the Eagle River Republican said there also was a reason lawmakers took steps to overhaul the criminal justice system, which has high rates of recidivism.

Walker hopes to win over skeptical lawmakers on tax proposal

More in News

Peter Segall / Juneau Empire
Members of the Alaska House of Representatives on Saturday rejected the budget bill passed by the Senate earlier in the week. The bill will now go to a bicameral committee for negotiations, but the end of the legislative session is Wednesday.
House votes down Senate’s budget as end of session nears

State budget now goes to negotiating committee

Peter Segall / Juneau Empire
Candidate for Alaska’s lone seat in the U.S. House of Representatives Tara Sweeney, a Republican, was in Juneau on Monday and sat down with the Empire for an interview. Sweeney said the three main pillars of her campaign are the economy, jobs and healthy communities.
Sweeney cites experience in run for Congress

GOP candidate touts her history of government-related work

One tree stands in front of the Kenai Post Office on Thursday, May 12, 2022, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai taking down hazard beetle trees

The city hopes to leverage grant funds for most of the work

Former Alaska governor and current congressional hopeful Sarah Palin speaks with attendees at a meet-and-greet event outside of Ginger’s Restaurant on Saturday, May 14, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Palin brings congressional bid to Soldotna

The former governor took time Saturday to sign autographs and take pictures with attendees

In this October 2019 photo, Zac Watt, beertender for Forbidden Peak Brewery, pours a beer during the grand opening for the Auke Bay business in October 2019. On Sunday, the Alaska House of Representatives OK’d a major update to the state’s alcohol laws. (Ben Hohenstatt / Juneau Empire File)
Graphic by Ashlyn O'Hara
Borough, school district finalizing $65M bond package

Efforts to fund maintenance and repairs at school district facilities have been years in the making

Peter Segall / Juneau Empire
Members of the House Majority Coalition spent most of Friday, May 13, 2022, in caucus meetings at the Alaska State Capitol, discussing how to proceed with a large budget bill some have called irresponsible. With a thin majority in the House of Representatives, there’s a possibility the budget could pass.
State budget work stretches into weekend

Sessions have been delayed and canceled since Wednesday

Peter Segall / Juneau Empire
Alaskans for Better Government members La quen náay Liz Medicine Crow, Richard Chalyee Éesh Peterson and ‘Wáahlaal Gidáak Barbara Blake embrace on the floor of the Alaska State Senate following the passage of House Bill 123, a bill to formally recognize the state’s 229 federally recognized tribes.
Tribal recognition bill clears Senate, nears finish line

Senators say recognition of tribes was overdue

The Alaska Division of Forestry’s White Mountain crew responds to a fire burning near Milepost 46.5 of the Sterling Highway on Tuesday, May 10, 2022, near Cooper Landing, Alaska. (Photo courtesy Cooper Landing Emergency Services)
Officials encourage residents to firewise homes

The central peninsula has already had its first reported fires of the season

Most Read