Dunleavy's office claims it never drafted tax bill. Here is the bill it drafted.
Gov. Mike Dunleavy’s spokesman claims the Dunleavy administration never drafted anything even close to Senate Bill 113, the bill that could generate $25 million to $65 million from Outside corporations doing business in Alaska online.
“The Dunleavy administration has never officially proposed the new tax measure contained in Sen. Wielechowski’s bill, and it never drafted a bill even remotely like it,” said Jeff Turner, who has spent years claiming to not know this or that about Dunleavy.
“It was an idea floated by a former commissioner during the Fiscal Policy Working Group hearings,” he said.
Turner made these remarks to the Alaska Beacon.
Dunleavy’s office is now claiming that Wielechowski is lying about the bill, but there is conclusive evidence that the lie is from Dunleavy’s office.
The Dunleavy administration drafted a bill that was nearly identical to SB 113, Wielechowski’s bill, which the state House approved Wednesday on a 26-14 vote.
It now goes to the governor, who may well veto it, adding to the giant Dunleavy deficit.
Wielechowski said he was handed a copy of the draft bill directly by the governor in 2023. The 28-page bill, marked confidential, is a highly technical document. Wielechowski said he does not like being called a liar.
Wielechowski also said that Dunleavy had asked him two years ago to introduce bills to close the Hilcorp loophole, because Hilcorp would not provide its North Slope gas, and to reduce oil tax credits.
The Dunleavy administration examined all of these ideas in detail in 2021.
Regarding the change in taxes on digitized businesses, Wielechowski said he took the Dunleavy draft and forwarded it to legislative attorneys who made minor revisions. The bill did not pass in 2023 or 2024.
The new version is Senate Bill 113, which is up for a vote in the state House today. The text is not identical to the Dunleavy-drafted bill, but the purpose is identical.
At two hearings in August 2021, former Commissioner Lucinda Mahoney said the tax on digital businesses was one of several revenue measures that Dunleavy had pledged to support if the Legislature took the lead and enacted them.
She followed that up with a 9-page letter on October 1, 2021 to legislators in which Mahoney gave many specifics about why the administration supported the idea.
“DOR’s proposal is to update Alaska’s existing Corporate Income Tax by creating a modified apportionment methodology for highly digitized businesses in an effort to better reflect the way these types of businesses generate taxable income,” she said.
Here is a memo that Wielechowski sent to legislators about the bill and how it would work.
“In 2023, the Senate Rules Committee introduced SB 122 after the Dunleavy administration provided me with a copy of a work draft of this legislation. The Senate Finance Committee held three hearings on that bill and Senate Finance Committee staff conducted a thorough review of this legislation,” Wielechowski wrote.
“While the bill that the Senate Rules Committee originally introduced in 2023 was based exactly on the administration’s draft legislation, SB 113 contains an amendment to the definition of highly digitized business made by the Senate Finance Committee during its consideration of SB 122. This change excludes telecommunications utilities from the definition of highly digitized businesses,” he said.
“The groundwork laid by the 32nd and 33rd Legislatures, and the care that the administration took in preparing the work draft that would become SB 113, enabled SB 113 to move through the Senate committee process, Senate floor, and the House Finance Committee without any further amendments,” he said.
He said the bill “will not raise taxes on Alaska businesses and removes a disincentive for opening highly digitized businesses, data centers, or server farms in Alaska.”
This bill would not fix the state’s fiscal mess, but it is a small step. Many more steps are needed, but lots of legislators and the governor are held captive by idiotic campaign promises and the refusal to face reality.
With oil prices in a dive, the state will be facing a big deficit in the fiscal year that starts in July. The political connection needs to be made between the refusal to institute taxes and raise taxes with the shrinkage of the dividend and support for state services.
Republican opponents to the bill include many Republicans who claim they want a bigger dividend, while blocking any tax increase and failing to offer any real plan to cut spending.
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