State senator proposes tax to help pay for school maintenance

State Sen. Click Bishop remembers his first paycheck as a teenager in Fairbanks in the early 1970s. His boss explained the $10 deduction for the state’s so-called school head tax.

“That pays for your education,” the boss told his young employee.

“I’ve never forgotten that,” said Bishop.

The Legislature in 1980 abolished the small education tax, along with Alaska’s personal income tax and a tax on business gross receipts. The state was getting rich from oil and a majority of lawmakers saw little need for taxes.

Bishop, now in his 11th year in the Senate, is making his fourth attempt to bring back the education tax — with some changes.

The $10 tax raised about $2.5 million a year.

Senate Bill 132 would set the tax at $30 on every wage earner or self-employed person in Alaska — non-residents, too — and would raise an estimated $14 million a year from the higher tax rate and larger workforce than 40 years ago.

The legislation also proposes a new name: Educational Facilities Maintenance and Construction Tax. The intent is that the Legislature could appropriate the money to help with a long list of major repairs and school construction needs across the state.

The Department of Education’s major maintenance priority list currently totals $280 million for 96 projects statewide. Lawmakers can appropriate money each year toward the list, but the needs far outpace the funding.

“We’ve got to get ahead of that curve,” Bishop told the Senate Education Committee on May 1, when Senate Bill 132 received its first hearing.

The bill moved out of the Education Committee and is waiting for a hearing in Senate Finance. The measure likely will hold over for the 2024 Legislature in the two-year legislative cycle.

“New revenues are needed to be part of any conversation about Alaska’s (budget) deficit, Bishop said at the Education Committee hearing. “This bill will hopefully go the first step” toward directing more money toward school facilities.

There are more than 700 municipally owned school facilities across the state, Nils Andreassen, executive director of the Alaska Municipal League, told the committee.

Unfortunately, “more and more districts” are not even bothering to apply for a spot on the Department of Education list because of the cost of preparing a building condition survey and the low probability of receiving funding, he said. “The return on investment is so little.”

Wrangell is spending almost $300,000 for an engineers report on its school buildings in hopes of getting on the state priority list for funding next year. The borough and school district are seeking $6.5 million in state funding to go along with $3.5 million approved by Wrangell voters last year to repair the community’s decades-old school buildings.

Though this is Bishop’s fourth try at bringing back the tax, others have come before him. His bill this year is the 15th attempt to restore the tax, he told the Education Committee — seven times sponsored by Democratic legislators, seven times by Republicans, and once by then-Gov. Wally Hickel. The tax had been around since 1919 before it ended after 60 years, Bishop said.

An added benefit to raising money destined for school repairs would be collecting something from non-residents working in the state, said the senator, a lifelong Alaskan active in union-sponsored job training programs and commissioner at the state Department of Labor from 2006 to 2012.

In his sponsor statement for the bill, Bishop cited state and federal statistics that show tens of thousands of non-residents work in Alaska each year, earning an estimated $2.7 billion in 2021.

 

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