Rural tax legislation set for Senate vote

Tax would average what rest of state pays for education

Posted: Thursday, March 02, 2006

State Sen. Con Bunde wants to place a new tax on rural Alaskans, saying politically unorganized parts of the state need to start paying their fair share of education costs.

Rural residents of Alaska, unlike those living in incorporated boroughs or municipalities, don't pay property taxes or other taxes that defray the costs of running state schools. Bunde, R-Anchorage, said a change was needed, even if the perception is that he is attacking rural Alaska.

"Free lunches die hard," Bunde said.

The tax would be on residents living in the 19 politically unorganized regional education assessment areas of the state. Those areas, with mostly Alaska Native populations, are divided using boundaries or sub-boundaries of the regional corporations formed by the Alaska Native Claims Settlement Act.

The tax would be calculated to average what the rest of the state's residents pay for education, Bunde said.

The Department of Revenue puts that at $467.99 per adult. With nearly 20,000 people eligible for the tax, the state would collect about $9.2 million next year, according to the Revenue Department's analysis.

Exempt from the tax would be people older than 65, younger than 21, the poor and disabled veterans.

Bunde's bill is scheduled for a floor vote in the Senate on Friday. Opposing it will be at least one rural legislator.

"I feel it's unfairly targeting rural Alaska," said Sen. Donny Olson, D-Nome.

Olson said Bunde's bill may be considered special or local legislation, in which case it would be unconstitutional.

Olson said he has not heard the possibility of a legal challenge if the bill is passed because he is hoping that cooler heads prevail in the Legislature. He said he planned to propose amendments to the bill on the Senate floor Thursday.

"I don't have any doubts that this will pass the Senate," Olson said. "The question is, will it be a kinder, gentler bill?"

The Senate is controlled by a 12-8 Republican majority.

The money collected by the proposed tax would go to the state. The state Legislature would not be able to dedicate those funds, meaning the money collected from one village wouldn't necessarily go back to that village's school.

The intent is to use the money for educational costs, Bunde said.

The bill is Senate Bill 112.

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