End of Session Report on 2018 Alaska Legislature

Small business came out unscathed

Report to the membership from NFIB State Director Denny DeWitt

The 2018 session of the 30th Alaska Legislature adjourned May 12 on its 117th day. Lawmakers blew past the 90-day statutory limit but did not stay for the full 121-day constitutional limit. There is high hope of no special sessions this year.

Quick Takeaways (details below):

NFIB helps defeat a proposal for a state income tax
NFIB input on workers’ compensation bill sought by a legislative committee
State to draw on Permanent Fund Earnings Reserve
Small, independent oil producers to finally get paid
NFIB succeeds in helping kill bills boosting business taxes
NFIB opposition letters and policies read on the floor of the House

Taxes

Several attempts were made to increase state revenues by boosting taxes on small business, but none succeeded.

Gov. Bill Walker gave a major push for a new state income tax. His vehicle, House Bill 115, passed the House along caucus lines on a 22-17 vote. Rep. Charisse Millett, a fierce opponent of the tax, posted NFIB’s Key Vote message asking for a “No” vote on her office door for all to see. She and Reps. Dan Saddler, Lance Pruitt, and Tammie Wilson lead the opposition in committees and on the House Floor. The Senate, led by Senate President Pete Kelly, voted the measure down, 4 Ayes to 15 Nays, and continued to block attempts to institute an income tax.

House Bill 60 and Senate Bill 25, by the governor, would have raised the gas tax from 8 cents to 15 cents. Neither bill moved out of the house of origin. NFIB fought against both.

House Bill 146, by Rep. Matt Claman, would have established an income tax by calling it an education tax. NFIB opposed this tax bill and wrote that adding an emotion-evoking name does not change the fact that it is an income tax. The bill died in the House Finance Committee.

House Bill 36, by Rep. Les Gara, would have established an income tax on businesses, including sole proprietorships, LLCs, partnerships, and S corporations. NFIB actively opposed it and succeeded in holding it in its first committee of referral.

House Bill 281 and Senate Bill 139, by the governor, would have established a tax on wages and earnings of the self-employed. NFIB lobbied extensively against both, and neither bill received a hearing in its committee of origin.

Senator Bill 78, by Sen. Click Bishop, was an interesting approach to new revenue. It proposed allowing individuals to designate a portion of their Permanent Fund Dividend to a lottery. The profit from the lottery would go to fund education. NFIB took no position but followed the bill closely to ensure there was no mandate or tax added to the proposal. While SB 78 died in the House Rules Committee, all the language was amended into HB 213 which passed the legislature on the final night and is on its way to to the governor.

Workers’ Compensation

Efforts to reform the state’s workers’ compensation program saw much activity this year. Fortunately, none of the cost increasing bills passed the Legislature. NFIB was successful in working on language to define an independent contractor for purposes of the workers’ compensation program.

House Bill 38 by Rep. Andy Josephson would have provided a workers’ compensation death benefit to non-dependent parents or the estate of a worker killed on the job, would have extended child benefit to five years beyond the age of majority, would have increased the benefit level for dependent parents, would have increased the base value for permanent partial disabilities, and would have added a Consumer Price Index adjuster. The House passed the bill 21-18. Rep. Dan Saddler led the opposition on the House Floor referencing NFIB opposition. The bill died in the Senate after it was heard in the Senate Finance Committee and held with no action.

House Bill 79, introduced at the request of Gov. Bill Walker, was designed to make the workers’ compensation administrative and legal functions more efficient and less costly. It also included a definition of an independent contractor for purposes of workers’ compensation. NFIB helped design amendments to and supported the independent contractor language but shared reservations with other business groups about penalty language and several other procedural issues. It was amended in the Senate Finance Committee to simply include moving to electronic filing and payments, protecting independent contractors from being classified as employees for purposes of workers’ compensation. It also established a legislative worker’s compensation working group to work on new legislation for consideration during the next legislative session.

Senate Bill 112, by Sen. Cathy Giessel, was an omnibus workers’ compensation reform bill, including limitations on attorney fees, reform of the rehabilitation and return to work process, and it contained the NFIB supported language protecting independent contractors. It moved to the Senate Finance Committee too late in the session to be fully considered. NFIB supported this effort and expects that it will be proposed again in the 2019 legislative session.

Several other workers’ compensation bills were introduced but did not pass the legislature. Those bills would have terminated the Workers’ Compensation Appeals Board, allowed collectively bargained agreements to supersede parts of the workers’ compensation law, and dealt with benefits for rehabilitation and reemployment.

Unemployment Benefits

House Bill 142, by Rep. Chris Tuck, would have increased the unemployment benefit from $370 a week to $510 a week and thus would have increased the UI Tax to support the boost. The measure also would have added annual changes in the Consumer Price Index to the benefit. It passed the House on a 22-16 vote. Rep. Dan Saddler led the opposition on the House floor. The Senate Labor & Commerce Committee eliminated the annual CPI adjustment, reduced the benefit increase to $434 a week, and increased the level of income to be eligible from $2,500 to $3,000 in the base period of employment. The bill finally died in the Senate Finance Committee.

Crime

Crime became a big issue in the Legislature. Last year, NFIB was able to get the dollar lever for felony crimes back down to $750 along with several other major corrections to Senate Bill 91, the major crime reform bill of 2016. This year, the Legislature, in House Bill 312, granted judges more flexibility to hold offenders while awaiting trial and the ability to consider out-of-state charges when making pre-trial release decisions.

Shopping Bag Fee

House Bill 264, by Representative Josephson, began as a bill that would have charged customers 20 cents for every plastic and paper shopping bag. It required retailers to provide recycling for customers and included many other difficult administrative requirements. NFIB opposed the original bill. After many hearings, it was amended to simply prohibit the use of the type of plastic bags used in grocery stores. It died in the House Rules Committee.

Mandatory Insurance Coverage

House Bill 25, by Representative Claman, would have mandated payment for 12-months prescriptions of contraceptives. It passed the House but was not heard in the Senate. NFIB opposes all insurance mandates because coverage decisions should be left to the employer considering the needs of their employees, not one-size-fits-all approaches. Rep. Dan Saddler led the opposition to mandates, echoing the NFIB-opposition statement, and Rep. Tammie Wilson read from the NFIB opposition position paper. The interesting part of this bill was that, for the first time in memory, an insurance mandate included state and municipal insurance plans as well. The Senate version, SB 53 by Sen. Berta Gardner, did not move out of the Senate Health & Social Services Committee.

Salmon

House Bill 199, by Rep. Louise Stutes, began as a copy of the “Save our Salmon” initiative that sought to classify all water in Alaska as salmon habitat. The regulatory process would have shut down resource extraction in Alaska, limited development of new roads, and hampered any economic development. It was amended several times but was unsuccessful in resolving the concerns of NFIB and the development community. It was never able to pass out of its first committee.

Military and Veteran Issues

House Bill 3, by Representative Tuck, extended employment reinstatement to National Guard members who are activated for service in another state. It was amended to provide an exemption for employers whose circumstances have changed making employment impossible or if the employment would present a hardship on the employer. NFIB supported the final version of the bill.

House Bill 2, by Representative Tuck, allows private employers to offer veteran preferences in hiring. Without state authorizing legislation it would violate the federal civil rights laws. NFIB supported this legislation that is permissive giving employers the option to offer a veteran’s preference if they want.

State Spending Limit

Senate Bill 196, by the Senate Finance Committee, would have established a state-spending limit. NFIB supported this proposal. It moved through the Senate on a 13-0 vote. It moved through House committees to the House Finance Committee where it died.

Other Bills

NFIB opposed House Bill 30 mandating sick leave and House Bill 45 raising the minimum wage to $15. Both bills were sponsored by Rep. Geran Tarr and both died in their first committee of referral.

Senate Bill 63, by Senator Micciche, prohibits smoking in workplaces, including businesses. It prohibits retribution against an employee who reports violations of the act.

Other State Issues of Note

There were several major issues addressed this year. One was the use of the Earnings Reserve of the Permanent Fund to finance general government services. The draw on the Earnings Reserve was limited to 5.25 percent for the next three years then 5 percent thereafter. Another major issue was the bonding of the state’s obligation to pay oil development credits to small independent producers. Under the program, the state will pay them 90 percent of what the state owes them, which is far better than the almost nothing they were getting the past two years. This will stave off several potential bankruptcies and get exploration moving again.

Were You in the Know?

For every week during the 2018 session of The Alaska State Legislature, State Director Denny DeWitt filed a report on the progress of legislation helpful or harmful for small businesses. Below are his reports for 2018 leading up to this one. DeWitt will once again file weekly reports on 2019 activities, which you can read on this webpage, www.nfib.com/alaska.

May 4 Report—May 16 Constitutional Deadline for Adjournment Approaching

April 27 Report—Bills on 24-Hour Notice, as Lawmakers Eye Adjournment

April 20 Report—As Legislature Winds Down, NFIB Vigilant for Last-Minute Amendments

April 13 Report—Legislators Seek NFIB Guidance on Workers’ Compensation Bill

April 6 Report—NFIB Digs in for Fight on Four Bills

March 30 Report—House Still Struggling with State Budget

March 23 Report—Capitol Consumed by State Operation Budget

March 16 Report—House Members Look to NFB for Position on Workers’ Comp. Measure

March 9 Report—Flus, Vacancy Slow Legislative Work

March 2 Report—NFIB Opposed Appointment to Workers’ Comp. Board Bounced

February 23 Report—NFIB-Crafted Language in Workers’ Compensation Bill

February 16 Report—NFIB Members Succeed in Delaying UI Tax Increase