House eyes sales tax to increase revenue

Posted: Tuesday, April 29, 2003

ANCHORAGE - House Speaker Pete Kott predicts a statewide sales tax proposal will emerge sometime this week in the state Legislature.

Kott, an Eagle River Republican, said such as plan has "a good possibility" of success as lawmakers seek new revenues to reduce the state's budget deficit.

Gov. Frank Murkowski proposed cutting the fiscal gap by reducing education funding and eliminating the longevity bonus program, unpopular measures lawmakers are reluctant to approve.

The House Special Committee on Ways and Means is hammering out a revenue plan for this session. Co-chairman Jim Whitaker, a Fairbanks Republican, said the plan likely will combine a sales tax with other measures such as higher fees and a possible increase in the state gasoline tax.

"My charge from (the House speaker) is to get a package, get it ready and get it through," said Whitaker.

Whitaker wants to include a proposal to change the Alaska Constitution to limit how much the Legislature can spend each year. The exact nature of the limit is being debated, and the idea would have to be approved by voters.

Whitaker also hopes the Legislature will pass a change in rules governing the Alaska Permanent Fund, which could make hundreds of millions of dollars available annually. That, plus a sales tax and user fee package that raised about $250 million a year, could solve the state's budget shortfall, Whitaker said.

A year-round statewide sales tax of 2.5 percent would raise $250 million all by itself, if there were no exemptions for food or other items, according to the Department of Revenue.

House members also could pursue a summer-only sales tax to target tourists and seasonal workers.

The permanent fund change would need a constitutional amendment and a statewide vote, which would take place in 2004.

Whitaker said he is unsure of the support in the House Republican majority for such proposals. He said he and Kott agree something needs to be done soon as the state budget reserve is expected to be gone in two or three years and House leaders want to save some of it as a cushion.

Even in the Senate, which has been passionately anti-tax in recent years, there is a growing call for bringing in money.

Senate Finance Co-chairman Gary Wilken, a Fairbanks Republican, said Senate budget leaders have followed the priorities of the public. They want to deny Murkowski's proposed cuts to local schools, and with the governor's support, give the University of Alaska a $9.5 million increase.

"Now we've got to make sure we've got the money to do it," Wilken said.



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