Defeat of state income tax and protection of independent contractors highlights accomplishment for small business
The 30th Alaska State Legislature adjourned May 12, 2018, with some accomplishments for small business.
Quick Takeaways From 2018 (2017 victories 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
Defeated Proposal for new State Income Tax and Increases in Other 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.
Succeeded in Protecting Independent Contractors for Purposes of 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.
Killed Bill Boosting 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.
Gave Judges More Flexibility in Felony Theft Cases
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.
Stopped 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.
Prevented Mandatory Insurance Coverage for Contraceptives
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.
Prevented Harm to Salmon Industry
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.
Secured Help for Veterans
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.
Defeated Minimum-Wage Proposal
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.
From the 2017 half
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.
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.
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.
[Tile photo courtesy of The Alaska State Legislature website.]