NFIB/Alaska End-of-Session Report

Date: June 12, 2017

Protection of independent contractors highlights victories for small business

NFIB/Alaska State Director Denny DeWitt reports from Juneau on the small-business agenda at the 2017 end of the first regular session of The Alaska State Legislature.

The first session of the 30th Alaska State Legislature began January 17, 2017. The Senate, comprised of 14 Republicans and six Democrats, basically reflected the Senate in the 29th Legislature. The House, however, changed dramatically with a Democratic majority replacing the Republican majority.

The Legislature’s rules provide that bills are alive through the first and second sessions of the 30th Legislature. Although final action on many bills still remains to be seen next year, NFIB/Alaska made an impact on three in particular.

NFIB Victory: Independent Contractors Protected

NFIB succeeded in protecting independent contractors from an all-out assault from the state Department of Labor in the form of House Bill 79, which would have required small businesses to cover many independent contractors and consultants with workers’ compensation insurance.

Although the bill only covered workers’ compensation insurance, NFIB worried it would become a model for all other government-mandated employee standards. In a letter to the state Department of Labor and Workforce, NFIB detailed criteria that offered a more reasonable guide on what the department sought “without forcing independent contractors to surrender their freedom and become employees.”

Additionally, NFIB worked with Reps. Lora Reinbold and Matt Claman to develop more suitable language for HB 79. NFIB Leadership Councilmember Chris Nettles spent many hours testifying on the bill. The NFIB-revised bill will be taken up by the House Finance Committee in January.

NFIB Victory: Deceptive Income Tax Defeated

Sold as an education head tax, Senate Bill 12, by Sen. Click Bishop, was, in effect, a state income tax by another name. It would have established a head tax on all employees. NFIB succeeded in persuading Senator Bishop to set aside SB 12.

NFIB Victory: Won Change on Legislative Hypocrisy on Health-Care Bills

There were several insurance mandates introduced this year, fortunately, none passed. But at least with one, NFIB did succeed in getting legislators to address the hypocrisy they too often show, and the anger it engenders, when making laws.

House Bill 25 and Senate Bill 53 both would call on health insurers to provide 12 months of contraceptive coverage, except for state employees. NFIB made its opposition to both bills well known, basing it primarily on the additional costs the mandate would impose on small businesses. But it was even more vociferous in calling out the hypocrisy of lawmakers excluding state employees to avoid those costs. In the end, NFIB won inclusion of state employees while still remaining opposed to both bills.

NFIB continues its opposition to every insurance mandate because they inhibit small businesses’ ability to provide insurance tailored to the needs of their employees. Additionally, mandates create an unfair burden on small businesses, as larger businesses with federal ERISA plans get to avoid complying with state mandates.

In a letter to Rep. Jason Grenn, opposing another insurance mandate, NFIB elaborated on the cost of mandates and the high annoyance with excluding state employees.

NFIB Challenges in 2018

Restoring Petty Theft Penalties

Senate Bill 54 was introduced to correct problems caused by last year’s crime reform bill. The most significant part for small businesses is re-codifying the ability to address fourth-degree theft with potential jail time rather than just a citation. While there was general support for NFIB’s reform proposal, there were other issues that became controversial, and as a result, the bill was held in the House State Affairs Committee.

Reducing Workers’ Compensation Premiums

There were several bills dealing with workers’ compensation. None passed this year but will be a focus next year. Sen. Cathy Giessel introduced Senate Bill 112 on behalf of the business community. It will be the bill the Senate will work with. NFIB will continue to work to find changes to reduce premiums while protecting those truly injured on the job.

Passing Veteran Hiring Preferences

House Bill 2, by Rep. Chris Tuck, would allow private employers to offer a veteran’s preference in hiring. Because of the many anti-discrimination laws, the only way a private employer can offer a preference to veterans is if the state passes a permissive law that complies with federal law. The bill has passed the House and will be heard in the Senate when it returns in January 2018. NFIB supports this bill.

Fighting Reinstitution the State Income Tax

With the state in need of revenues, or in need of controlling its costs better, and each party having control of one chamber of the Legislature, it was expected the House and Senate would be at loggerheads, especially over the institution of a state income tax.

The House fiscal plan included:

  • a personal income tax
  • an increase in oil taxes
  • use of the Permanent Fund Earnings Reserve
  • and modest budget reductions.

The Senate plan included:

  • use of the Permanent Fund Earnings Reserve
  • significant reductions in the size and scope of government
  • and no income tax.

The House took an all-or-nothing approach in its dealings with the Senate. The lack of movement on either side lead the Legislature to blow past the statutory 90-day session limit, then past the 121-day constitutional limit, and into special sessions.

NFIB Alaska worked hard opposing House Bill 115, the personal income tax introduced by the House majority, as it would cause additional damage to an economy still in a recession. NFIB made the point that the approach used in HB 115 embodied the basic unfairness toward small businesses that are not C-Corporations embedded in the existing federal tax code.

Also opposed by NFIB were House Bill 36, by Rep. Les Gara, that proposed an income tax on sole proprietors, partnerships, LLCs and S-corporations; and House Bill 142, by Rep. Matt Claman, that would have created an income tax called an education tax.

Only HB 115 passed its house of origin, but the other two are available for consideration in the next session.

[Tile photo courtesy of The Alaska State Legislature website.]

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