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House committee passes sales tax, sends to joint committee

Posted: Tuesday, May 13, 2003

JUNEAU (AP) A co-chairman of the powerful House Finance Committee says the odds are in favor of the Legislature enacting a sales tax this session.

Rep. John Harris, a Republican from Valdez, said he once figured there was a 50-50 chance of such a move. But faced with the prospects of finding another $200 million to balance state spending, and with the session's end barely more than a week away, those odds are considerably better.

Harris said the Legislature faces a looming deadline to balance the fiscal 2004 budget with new revenues and cuts in spending.

Gov. Frank Murkowski had called on lawmakers to cut about $55 million from state spending and draw no more than $400 million from the Constitutional Budget Reserve.

The state's reserve account which the Legislature uses to balance the state budget has about $1.9 billion left and is expected to run out in two to three years depending on oil prices.

Once the reserve account is gone, the Legislature will have few choices in balancing its books. The state's financial advisers have also warned that the fate of the state's reserve account could affect future bond ratings.

You don't have to be a rocket scientist to figure it out,'' Harris said. You run out of the CBR in the next two years, where are you going to get money to cover it?''

The House Ways and Means Committee approved a bill on Monday that would impose a year-round 3 percent sales tax for the first time in Alaska.

After working through the weekend, the committee shelved an idea of a 2 percent seasonal sales tax that doubles during the summer tourism season.

Murkowski favored a seasonal sales tax because it would have captured revenues from visitors. On Monday, the governor said the year-round tax is not what he wanted, but he will take it.

The measure would raise more than $300 million in its first full year.

I've been giving it a lot of thought and I am inclined to support it even though, as it's made up, it's not my choice,'' Murkowski told reporters on Monday.

The House Ways and Means Committee voted 6-3 to move it out of committee. Reps. Max Gruenberg, D-Anchorage; Carl Moses, D-Unalaska; and Vic Kohring, R-Wasilla; voted against it.

Gruenberg said the measure should be put off for this year to allow the public to consider what is being proposed.

Rep. Peggy Wilson, a Republican from Wrangell, which already has a 7 percent sales tax, voted to move the bill out of committee but also objected to it. Wilson said she will propose her own legislation to impose an income tax in Alaska.

Both Murkowski and leading Republican legislators have already expressed opposition to an income tax.

The sales tax measure is on a fast track in the Legislature. A Senate version of the bill was introduced on Monday and both measures will go before a special joint House and Senate finance committees.

With less than 10 days remaining in the legislative session, Harris predicted the bill would go to a floor vote soon.

Support for the measure has been more tenuous in the Senate, where Republicans hold a 12-8 majority. Two Republicans there have already expressed opposition to the measure, which means it would not pass without Democrat support.

Senate President Gene Therriault, R-North Pole, said Monday that it is unclear whether the measure has the votes to pass.



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