A plan by Gov. Frank Murkowski to increase the state's business license fee from $25 to $200 a year was met with skepticism by some Republican lawmakers Wednesday.
The fee is collected every two years, raising the amount paid from $50 to $400.
Edgar Blatchford, commissioner for the Department of Community and Economic Development, said the fee increase would generate about $8.5 million for the state general fund, which is used to pay for state services.
In Wednesday's House Labor and Commerce Committee hearing, Republican Reps. Tom Anderson and Norm Rokeberg, both of Anchorage, introduced amendments that would institute a graduated approach to the increase.
Anderson's amendment, approved by the committee, would create a graduated fee increase based on the number of people employed by the business. The fee would increase to $50 for businesses with fewer than six employees, $100 for those with six to 25 workers and $200 for businesses with more than 25 employees.
This approach could be problematic, though, according to Rick Urion, director of occupational licensing for the Department of Community and Economic Development.
Urion noted about 90 percent of the businesses in Alaska employ four or fewer people. About 6,600 businesses have licenses, Urion said.
Rokeberg's graduated approach, which was not acted on, would base the fee on a company's gross receipts for the year. Businesses with receipts totaling less than $25,000 would pay $25, those between $25,000 and $100,000 would pay $75, between $100,000 and $200,000 would pay $100, and more than $200,000 would pay $200.
Urion, however, said such an approach would be impossible to enforce, since earnings reports are proprietary information.
Blatchford defended Murkowski's proposal, noting the license fee has not been increased since 1949.
In addition to adding money to the general fund for schools, road maintenance and other essential state services, Blatchford said part of the revenue generated by the hike would go to his department to help promote Alaska business.
"We provide economic information important to business success in all business industries here in Alaska," he said.
But Keith Montgomery, a carpenter from Anchorage and sole proprietor of his own part-time business, testified in the committee that the fee increase would force him to drop his license and go underground.
Montgomery said his wife also holds a business license for a small child-care center she runs out of their home. The increase for the Montgomerys would go from $100 every two years to $800.
"House Bill 162 - the labor tax, what I call it - it's taxing working people. It's for me one big shot at one time. Do I go back and not be legit and start working under the table," he said. "Yes I would be willing to pay an increase, but $200 a year is quite an increase for both my wife and I."
No final action was taken at Wednesday's hearing. Department officials were told to rethink the measure and consider alternatives before returning to the panel.
Timothy Inklebarger can be reached at email@example.com