Income, sales taxes added to booze tax bill

Posted: Thursday, February 07, 2002

JUNEAU (AP) -- An alcohol tax increase bill unexpectedly turned into an income and sales tax bill Wednesday in the House Finance Committee.

Then the whole package was put on hold until an unspecified time in the future.

The Finance Committee was scheduled to take up a bill to raise alcohol excise taxes by a dime a drink when Rep. Con Bunde, R-Anchorage, surprised his colleagues by proposing to add income and sales taxes to the measure.

Bunde said he couldn't support raising the alcohol tax unless it was part of a larger package that would raise enough money to begin filling the state's budget hole.

''We can't simply focus on piecemeal (measures) and singling out one industry over another,'' Bunde said.

State officials estimate the state may need to pull close to $2 billion this year and next year from the Constitutional Budget Reserve, a state savings account. They estimate that fund will be drained by 2004.

A Fiscal Policy Caucus, made up mostly of Democrats and moderate Republicans, has advocated a comprehensive fiscal plan to fill that gap that would include sales and income taxes as well as other measures.

A leader of that caucus, Rep. Bill Hudson, R-Juneau, initially protested Bunde's amendment to the alcohol tax bill, saying it would doom the bill.

After huddling privately with other members of the Fiscal Policy Caucus, though, Hudson joined six other committee members in supporting the amendment. It puts a comprehensive tax package in front of the Finance Committee, Hudson said.

''I view this as an essential part of a final fiscal plan,'' he said.

Bunde said rough calculations indicate the proposed 3 percent personal income tax would raise $270 million, the 3 percent sales tax would raise up to $300 million and the 1 percent increase in corporate income taxes would raise $32 million. The alcohol tax increase would raise about $30 million.

The two Finance Committee co-chairmen, Bill Williams, R-Ketchikan, and Eldon Mulder, R-Anchorage, voted against the amendment. Also voting no were Reps. John Harris, R-Valdez, and Richard Foster, D-Nome.

Williams argued income tax and sales tax bills are awaiting hearings in the House State Affairs Committee and bringing them up in the Finance Committee first would short-circuit the process.

''There are people in this building that need to be brought along with this,'' Williams said. ''We need everyone to have ownership in this fiscal plan.''

State Affairs Committee Chairman John Coghill, R-North Pole, had said earlier in the day that he would consider not moving tax bills from his committee until the Legislature has a serious discussion about cutting spending.

By incorporating the tax proposals in a bill that's already in the Finance Committee, those voting for the amendment effectively removed the potential roadblock of Coghill's committee.

Bunde said he told Coghill before the meeting what he planned to do.

''He said he didn't know whether to pray for me or curse me,'' Bunde said.

Coghill did not return a phone call Wednesday afternoon.

Bunde was himself surprised his amendment was accepted.

''I didn't really anticipate there would be the enthusiasm for it that there was,'' he said.

After voting for the amendment, Rep. Carl Moses, D-Unalaska, proposed tabling the whole bill, saying all the elements needed more discussion before leaving the committee.

''It's quite obvious that we've created a monster here now,'' Moses said.

Committee members voted 10-1 to table the measure.

Any member of the committee can bring the bill up again if a majority of committee members agree.

That means the measure conceivably could come up again without the consent of either of the co-chairmen, who normally set the agenda of the committee.

But Bunde said he doesn't anticipate that happening. ''If we're going to have something constructive pass the Legislature this year, all the legislators have to have an opportunity to be involved in the process,'' Bunde said. ''If you try to railroad something through, I think you might win the battle but lose the war.''

Mulder said he still expects the State Affairs Committee will hold hearings on tax bills and send them on to Finance. He said he intends for the Finance Committee to discuss a full range of revenue-raising measures over the next month.

Bunde said he believes a fiscal plan needs to include the tax measures now included in House Bill 225, along with a cruise ship head tax, some use of Permanent Fund earnings and a limit on spending.

He'd vote against the bill on the floor if a spending limit wasn't part of the overall package, Bunde said. Sen. Dave Donley, R-Anchorage, has proposed a constitutional amendment to limit state spending.

Rep. Lisa Murkowski, R-Anchorage, who sponsored the alcohol tax bill, said she had mixed feelings about the committee's action Wednesday.

She's sorry her bill was delayed, but she doesn't believe the amendments will ultimately kill it, she said. And as a member of the Fiscal Policy Caucus, she's glad a serious discussion has started on a comprehensive fiscal plan.



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