State of Alaska
Fiscal Note
Bill Version: CSHB 264(CRA)
2018 Legislative Session
Fiscal Note Number: 1
(H) Publish Date: 2/23/2018
Identifier: HB 264 DOR-TAX-1-28-18 Department: Department of Revenue
Title: SHOPPING BAG FEES & RECYCLING Appropriation: Taxation and Treasury
Sponsor: JOSEPHSON Allocation: Tax Division
Requester: House Community & Regional Affairs OMB Component Number: 2476
Expenditures/Revenues
Note: Amounts do not include inflation unless otherwise noted below. (Thousands of Dollars)
Included in
FY2019 Governor's
Appropriation FY2019 Out-Year Cost Estimates
Requested Request
OPERATING EXPENDITURES FY 2019 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024
Personal Services 172.0 172.0 172.0 172.0 172.0 172.0
Travel 10.0 10.0 10.0 10.0 10.0 10.0
Services 40.0 40.0 40.0 40.0 40.0 40.0
Commodities
Capital Outlay
Grants & Benefits
Miscellaneous
Total Operating 222.0 0.0 222.0 222.0 222.0 222.0 222.0
Fund Source (Operating Only)
1004 Gen Fund (UGF) 222.0 222.0 222.0 222.0 222.0 222.0
Total 222.0 0.0 222.0 222.0 222.0 222.0 222.0
Positions
Full-time 2.0 2.0 2.0 2.0 2.0 2.0
Part-time
Temporary
Change in Revenues
1250 UGF Rev (UGF) 1,650.0 3,300.0 3,300.0 3,300.0 3,300.0 3,300.0
Total 1,650.0 0.0 3,300.0 3,300.0 3,300.0 3,300.0 3,300.0
Estimated SUPPLEMENTAL (FY2018) cost: 0.0 (separate supplemental appropriation required)
(discuss reasons and fund source(s) in analysis section)
Estimated CAPITAL (FY2019) cost: 500.0 (separate capital appropriation required)
(discuss reasons and fund source(s) in analysis section)
ASSOCIATED REGULATIONS
Does the bill direct, or will the bill result in, regulation changes adopted by your agency? Yes
If yes, by what date are the regulations to be adopted, amended or repealed? 01/01/19
Why this fiscal note differs from previous version/comments:
Initial version
Prepared By: Brandon Spanos, Deputy Director Phone: (907)269-6736
Division: Tax Division Date: 01/26/2018 05:00 PM
Approved By: Ken Alper, Director Date: 01/27/18
Agency: Tax Division
Printed 2/23/2018 Page 1 of 2 Control Code: WMyqf
 CSHB 264(CRA) - Fiscal Note 1
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. 0
2018 LEGISLATIVE SESSION
Analysis
Bill Analysis
The bill establishes a fee of $0.20 for each disposable shopping bag provided by a retailer, with reduction for any
municipal levy. The fee would apply to any bag that is not "reusable" with a minimum lifetime of 75 uses. The fee would
be itemized and listed as a line item on the sales receipt. The bill also requires retailers that provide disposable shopping
bags to also provide a bag recycling location at the entrance to their store. The fee would be collected by the retailer. The
retailer would remit 75% of the fee to the state and would retain 25% of the fee to help cover costs associated with
recycling disposable bags. The fee would be effective January 1, 2019.
Revenue Estimate
Revenue from this bill is uncertain, as we do not have an accurate estimate of the fee base in Alaska, how consumer
behavior will change in response to the fee, or the extent to which municipalities will impose their own fees.
One jurisdiction with a similarly structured fee to this bill is Montgomery County, MD which has a $0.05 per bag fee
applied to all retail establishments. In FY 2015, that fee was applied to 61.6 million qualifying bags for a county with just
over 1 million people. Scaling this consumption to Alaska's population would yield a revenue estimate of $6.5 million;
however since our fee would be 4 times as high we believe this is an unrealistic revenue number because of the increased
likelihood individuals will stop using disposable bags due to the higher fee in Alaska. Our revenue estimate assumes that
Alaska consumption is half of Montgomery County's as a result of the higher fee, generating about $3.3 million per year
after deducting the retailer's 25 percent of the fee. This is before adjusting for any municipal levies. However, because of
the ability for municipalities to claim this revenue with zero net fiscal impact, we expect that many municipalities will add
a similar tax or fee, which could dramatically reduce state revenue from what is reflected in our estimate. Depending on
how businesses and consumers respond to the fee, and the extent to which municipalities enact offsetting levies, revenue
could be significantly higher or lower than our estimate.
Implementation Cost
This bill would create a new tax type to be administered by the Tax Division. According to the 2012 Economic Census,
there are 2,508 retail trade establishments in the state, 983 full and limitedservice restaurants and eating establishments
and 390 dry cleaning or laundry establishments. We anticipate that some of these establishments will not offer disposable
shopping bags and therefore will not collect and remit the disposable shopping bag fee. If there are 3,000 taxpayers
submitting returns, this would amount to 12,000 quarterly tax returns filed per year. This would be the secondlargest tax
type in Alaska in terms of number of returns filed (behind corporate income tax). After a period of time, it is possible that
some establishments will stop offering disposable shopping bags entirely, reducing the number of taxpayers and quarterly
returns.
We recently completed implementation of the Tax Revenue Management System (TRMS), which created an integrated
online tax application used by both taxpayers and administrators for the 25 tax types currently administered by the
Division. We expect to engage FAST enterprises, the TRMS contractor, to build a disposable shopping bag fee module into
TRMS. This will require the mobilization of at least one additional FAST contractor to Alaska to develop the new module,
and is the majority of the estimated cost within the $500.0 capital request.
The Department would need to adopt regulations to implement this new fee, and the Division would plan to carry out a
public outreach program in the second half of 2018. The cost for regulations and outreach will be paid from the capital
request.
Ongoing costs for tax return processing, examination and audit will include two new employees, an auditor and tax
technician. The Tax Division's fiscal note for a similar bill in 2008 stated it would require 5 new positions to administer.
However, because of efficiencies gained through implementation of our TRMS system, we anticipate that we will be able
(Revised 9/26/17 OMB/LFD) Page 2 of 2
HB 264 DOR-TAX-1-28-18 Page 2 of 2 Control Code: WMyqf


Statutes affected:
HB0264A, AM HB 264, introduced 01/16/2018: 04.16.120, 43.99.010, 46.06.145
HB0264B, AM CSHB 264(CRA), introduced 02/23/2018: 04.16.120, 43.99.010, 46.06.145
HB0264C, AM CSHB 264(L&C), introduced 04/09/2018: