Crime bill looks certain, taxes less so as special session grinds on

  • Alaska state Reps. George Rauscher, R-Wasilla, left, and House Majority Leader Chris Tuck, D-Anchorage, right, talk before the House floor session on the first day of a new special legislative session on Oct. 23 in Juneau. (Photo/Becky Bohrer/AP)

The Legislature is grinding its way through the second week of its special session — the fourth for 2017 — and it now seems clear that public anger over a spike in theft and petty crime has boiled over and diverted legislators from Gov. Bill Walker’s original purpose the session, which was to pass a new revenue measure aimed at easing the state’s deficit.

Lawmakers gaveled in to the special session Oct. 23 but quickly became preoccupied with Senate Bill 54, a bill addressing problems in SB 91, a criminal justice reform bill passed in 2016.

So far little attention is being paid to the revenue proposal, an annual “payroll” tax proposed by the governor. The tax bills are HB 4001 in the House and SB 4001 in the Senate.

Given the mood of the public it seems certain that some form of SB 54 will pass but prospects for the tax bill are uncertain, and even doubtful. The House Finance Committee held one hearing on the bill Oct. 26 but a second hearing planned for Oct. 27 was canceled. The Senate has held no hearings on its version of the bill.

Sources in the House, asking not to be identified, said the Finance Committee is ready to take up the governor’s bill but won’t do so until the Senate signals a willingness to consider it. So far Senate leaders have not said when or if they will take up the bill.

Walker’s proposal would impose an annual tax generally linked to income but with a “cap” on the tax of $2,200, or whatever is twice the amount of the previous year’s Permanent Fund Dividend, for top wage earners. The tax would be less for Alaskans with lower incomes and would also tax nonresidents’ income.

On the crime legislation, a push developed early for outright repeal of SB 91 among some conservative legislators, who were prompted by constituents angry about the petty crime wave, but voices of moderation are now weighing in supporting the limited fixes in SB 54, which mainly toughen penalties for minor crimes that were softened in SB 91.

The governor and Attorney General Jahna Lindemuth support that approach.

Parts of SB 91 enhance drug treatment and post-release counseling for inmates, which are measures aimed at preventing a return to crime and, eventually, to prison.

“SB 91 has only been law for a little over one year; indeed, some elements have not even been put into effect,” the Alaska Regional Coalition, a group of rural Alaska nonprofits, told legislative leaders in an Oct. 27 letter. “SB 91 unjustly bears the brunt of public frustration about the recent uptick in crime. This is not to minimize the righteous fear and anger of victims. There are other obvious significant factors at play in our communities, not least of which are a statewide economic recession and a surge in use of and addiction to prescription and illicit opioids.”

The group urged lawmakers to show restraint in making changes in the law but also to fund the treatment and inmate reentry parts of SB 91, as well as provide more resources for public safety, behavioral health and the state’s legal and correctional systems.

Business groups, who originally raised the concerns over the easing of penalties for minor crimes like shoplifting, also now support the limited fix.

“We have reviewed the version (of SB 54) passed by the House Judiciary Committee and believe it should be adopted by the Legislature. We believe the changes in SB 54 will help deter misdemeanor crime and provide enforcement agencies the tools to help reduce criminal activity,” wrote Denny DeWitt, the state director of the National Federation of Independent Business, in a letter to legislators.

“While SB 54 may not resolve all concerns with SB 91, it is important to, at least, take this modest step now.”

SB 54 passed the Senate last year and was moved out of the House Judiciary Committee on Oct. 26 with amendments added. The House Finance Committee, which now holds the bill, held public hearings on Oct. 30.

In hearings held Oct. 31 by the committee, Lindemuth told the legislators that budget cuts have limited the ability of state prosecutors to deal with the surge in misdemeanors and petty crimes.

The Law Department’s general fund appropriations have dropped from $73 million in fiscal year 2012 to just more than $50 million in fiscal year 2017, Lindemuth said in her presentation to the committee.

The number of attorneys in the state’s Criminal Law Division has dropped from 128 to 106 between fiscal years 2014 and 2017, the attorney general said.

“Our capacity to prosecute misdemeanors is down 33 percent since 2014,” she said.

The Law Department has had to husband resources to deal with major crime, Lindemuth said. Capacity to handle felony prosecution is down only 3 percent, as an illustration of that, but this is at the expense of resources for petty crime.

On the fiscal side, the governor’s wage tax is aimed at raising between $300 million and $325 million in new revenue, which would be only a small dent in a the current fiscal year deficit estimated at $2.5 billion.

“We are proposing a payroll tax of 1.5 percent of wages earned by Alaskans and non-resident workers, capped at $2,200 or twice the previous year’s Permanent Fund Dividend amount, whichever is higher,” Revenue Commissioner Sheldon Fisher said in a recent briefing.

In comparison, a personal income tax bill, HB 115, passed by the House earlier this year but rejected in the Senate, would have brought in more than $600 million in new annual revenues.

Although it is not technically before the special session, a bill to use some of the annual Permanent Fund earnings has passed both the House and Senate in different forms, but no final version has been reconciled between the bodies. If passed it would bring about $2 billion a year of new revenue to the treasury.

All of this, combined with the state’s traditional revenues from oil and other tax sources, still wouldn’t be enough to eliminate the deficit between revenues and spending, which total $4.4 billion this year in undesignated general fund expenditures.

New budget cuts will be considered for the remaining deficit, but the governor argues that massive cuts have already been made in recent years and state agencies are now at bare bones levels.

“We have cut more than 44 percent from state spending over the last four years while drawing $14 billion from savings,” Walker said in previous statements. “With the downturn in oil prices, it’s clear that we must find a new source of revenue to pay for troopers, teachers, transportation and other essential services. We must end the uncertainty for a heathy state economy.”

Tim Bradner is co-publisher of Alaska Legislative Digest and a contributor to the Journal of Commerce. He can be reached at [email protected].

11/01/2017 - 10:42am