Financial proposals make no headway

Compromise sales tax plan considered, but no action taken

Posted: Monday, April 29, 2002

House lawmakers and Gov. Tony Knowles were unable to break the impasse over tax proposals aimed at the state's deficit during a weekend meeting.

Democrats don't have support to back a GOP sales tax plan and it's unclear how a compromise income tax would fare before majority Republicans, lawmakers said.

But Knowles said the group of 12 House members will continue to work to find a solution to begin closing a deficit expected to reach $963 million next year.

"I think we're building the basis for bipartisan support of a plan that will significantly reduce the fiscal gap," Knowles said. "But clearly there's got to be leadership on both sides that are supportive."

House Speaker Brian Porter and Rep. Eldon Mulder, both Anchorage Republicans, did not attend the Saturday meeting. An aide to Porter said he was ill. Mulder, co-chairman of the House Finance Committee, could not be reached for comment.

Knowles began meeting with lawmakers last week after the two sides reached a dead end on competing tax plans.

House members have been at odds over several revenue-raising proposals aimed at a chronic budget shortfall.

Earlier, the House rejected an income tax proposal supported by Democrats and some moderate Republicans. A GOP plan to impose a 3 percent statewide sales tax has been unable to win the necessary 15 Republicans to bring it to the floor.

A compromise income tax proposal offered by Rep. John Davies, a Fairbanks Democrat, spurred negotiations.

The latest income tax proposal would raise at least $185 million and require anyone who files a federal income tax return to pay a state tax. But it would take a lower percentage of income from wealthy Alaskans than from the low- and middle-class.

Many Republicans had argued previous income tax proposals unfairly penalized the rich and exempted many Alaskans.

Rep. Jim Whitaker, a Fairbanks Republican, said the Davies plan has received favorable comments from other Republicans. But it's unclear how many lawmakers would back the plan.

"I know there is seemingly significant support for it, whether or not there is enough support to have it go to the floor and pass I don't know," said Whitaker.

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