Sponsor Statment for CS for HB 433 (L&C)

By Representative Norman Rokeberg

CSHB 433 (L&C), An Act establishing a tax credit for taxpayers engaged in a trade or business who employ certain persons who are state residents, is a fairly straight-forward proposal. Taxpayers (i.e., businesses operating in Alaska) who employ Alaskan residents who meet certain requirements are eligible to apply for a $500 tax credit, with a cap of $75,000 per taxpayer.

In order for an employee to qualify for this tax credit, the employee must be a resident of the state, physically present in the state for at least one year with the intent to remain, a graduate of or had been a student at a qualifying postsecondary educational institution located in the state, and employed after December 31, 1998. In order to be a "qualifying postsecondary educational institution", the facility must be one which received, during the time period the employee attended, state funds, grants, or other aid (not including student loans, grants or scholarships).

Alaska has always had a problem in keeping Alaskans employed. According to the Nonresidents Working in Alaska – 1996 report by the Alaska Department of Labor: (1) Nonresident employees (74,761 employees) earned nearly $902 million in 1996; (2) During this same time period between 19,100 and 30,000 Alaskans were unemployed; (3)The multiplier effect of dollar turnover indicates that this $902 million should generate an additional $540 to $720 million in Alaska as result of spending and respending these dollars.

The mining industry lead the pack in dollar amounts paid to nonresidents during 1996 ($192 million) while the seafood processing industry had the largest number and largest percent of nonresident workers (75.1% of all workers). HB 433 is introduced as an incentive to encourage employers to employ Alaskans.

ED2:4/23/98

Sponsor Statement for HB 433

By Representative Norman Rokeberg

House Bill 433, An Act establishing a tax credit for taxpayers engaged in a trade or business who employ certain persons who are state residents, is a fairly straight-forward proposal. Taxpayers (i.e., businesses operating in Alaska) who employ Alaskan residents who meet certain requirements are eligible for a $1,000 tax credit.

In order for an employee to qualify for this tax credit, the employee must be a resident of the state, physically present in the state for at least one year with the intent to remain, a graduate of or has been a student at a qualifying postsecondary educational institution located in the state, and employed after December 31, 1998. In order to be a "qualifying postsecondary educational institution", the facility must be one which received, during the time period the employee attended, state funds, grants, or other aid (not including student loans, grants or scholarships).

Alaska has always had a problem in keeping Alaskans employed. Nonresident employees earned nearly $866 million in 1994, a $20 million increase over 1993. The oil industry leads the pack in dollar amounts paid to nonresidents during 1994 ($159.6 million) while the seafood processing industry had the largest number and largest percent of nonresident workers (77% of all workers). During that same time period that these nonresidents were employed, anywhere from 18,000 to 29,000 Alaskan residents were unemployed. HB 433 is introduced as an incentive to get employers to employ Alaskans.

In December of 1997, 26,500 Alaskans were unemployed.

ED1: 3/6/98