Another plan to cap state finances emerges

Posted: Sunday, February 24, 2002

JUNEAU (AP) -- Alaska doesn't have an income or sales tax, but there's a plan in the House to rein in both.

Rep. Eric Croft, D-Anchorage, is sponsoring a measure to place a ceiling on any proposed income or sales tax proposal that the Legislature may enact.

House Joint Resolution 36 would impose a 5 percent cap on state sales tax and hold an income tax to 5 percent of a person's federal adjusted gross income.

The measure would have to be approved by the Legislature to be on the November ballot for voters to decide.

''My main purpose is to assure people that a tax that started at a reasonable rate didn't grow unreasonably. It says I am not going into your pockets any deeper than this amount,'' Croft said.

New taxes have been a major theme of this legislative session as lawmakers consider ways to close a state budget deficit.

Debate has been spurred on by a bi-partisan Fiscal Policy Caucus made up of mostly House members who met over the summer to tackle the problem

Alaska's budget is expected to have a $865 million shortfall this year that is projected to grow to $1.1 billion by next year.

The Fiscal Policy Caucus has been pushing lawmakers to devise a plan this year that would close the state's so-called ''fiscal gap.''

Gov. Tony Knowles proposed an income tax of 20 percent of a person's federal tax bill as part of an overall plan involving alcohol and cruise ships taxes to raise $400 million.

Rep. Bill Hudson, R-Juneau, is proposing a 1 percent income tax that would rise to 2.25 percent of adjusted gross income after the first year.

Both of these plans would be within the proposed cap, Croft said. He said the cap is similar to a property tax cap that Anchorage operates under.

The measure went before the House Judiciary Committee on Friday. Committee Chairman Norman Rokeberg, R-Anchorage, said he plans to approve the measure and send it to the House Finance Committee. But it won't go unscathed.

''I'll endeavor to do some surgery on it to make it more representative of what I believe to be (needed for) the majority of the people of Alaska,'' Rokeberg said. ''I think the cap is too high.''

Rokeberg would not say at what percent the cap should be imposed, but said it should be ''substantially reduced.

Rokeberg also said he favors a plan that allows taxpayers to include their federally allowed deductions.

But Senate Republicans have so far spurned any talk of new taxes and have instead insisted that the Legislature put before voters a constitutional amendment to cap government spending.

The Senate Finance Committee has a plan to impose a 2 percent cap on state spending that could rise to 4 percent with a three-fourths vote of the Legislature.

Senate Joint Resolution 23 would generally hold the growth in state spending to between $66 million to $71 million annually with a simple majority vote of the Legislature.

Croft said he wants the Legislature to debate the merits of a tax cap and a spending restriction. But he said Alaskans want a tax cap more than they want a spending cap.

''If they had to choose between a cap on government expenditures or a cap on how much government takes from them, they would take the latter,'' Croft said.

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