04/19/2018 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB398 | |
| HCR19 | |
| HB398 | |
| HB47 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 87 | TELECONFERENCED | |
| + | HB 398 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 47 | TELECONFERENCED | |
| += | HCR 19 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
April 19, 2018
3:32 p.m.
MEMBERS PRESENT
Senator Kevin Meyer, Chair
Senator David Wilson
Senator Cathy Giessel
Senator John Coghill
Senator Dennis Egan
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 398
"An Act relating to the allocation and apportionment of income
of a public utility for purposes of the Alaska Net Income Tax
Act; and providing for an effective date."
- MOVED HB 398 OUT OF COMMITTEE
CS FOR HOUSE CONCURRENT RESOLUTION NO. 19(CRA) AM
Urging Governor Bill Walker to issue an administrative order
recognizing a linguistic emergency.
- MOVED SCS CSHCR 19(STA) OUT OF COMMITTEE
HOUSE BILL NO. 47
"An Act requiring certain municipalities with a population that
decreased by more than 25 percent between 2000 and 2010 that
participate in the defined benefit retirement plan of the Public
Employees' Retirement System of Alaska to contribute to the
system an amount calculated by applying a rate of 22 percent of
the total of all base salaries paid by the municipality to
employees of the municipality who are active members of the
system during a payroll period; authorizing the administrator of
the defined benefit retirement plan of the Public Employees'
Retirement System of Alaska to reduce the rate of interest
payable by certain municipalities that are delinquent in
transmitting employee and employer contributions to the
retirement plan; and providing for an effective date."
- MOVED HB 47 OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 87(FSH)
"An Act relating to participation in matters before the Board of
Fisheries and the Board of Game by the members of the respective
boards."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 398
SHORT TITLE: CORP TAX: PUBLIC UTILITY INCOME ALLOCATION
SPONSOR(s): FINANCE
02/23/18 (H) READ THE FIRST TIME - REFERRALS
02/23/18 (H) FIN
04/04/18 (H) FIN AT 1:30 PM ADAMS ROOM 519
04/04/18 (H) Moved HB 398 Out of Committee
04/04/18 (H) MINUTE(FIN)
04/05/18 (H) FIN RPT 4DP 7NR
04/05/18 (H) DP: GARA, THOMPSON, SEATON, FOSTER
04/05/18 (H) NR: WILSON, KAWASAKI, GRENN, PRUITT,
ORTIZ, GUTTENBERG, TILTON
04/11/18 (H) TRANSMITTED TO (S)
04/11/18 (H) VERSION: HB 398
04/12/18 (S) READ THE FIRST TIME - REFERRALS
04/12/18 (S) STA, FIN
04/19/18 (S) STA AT 3:30 PM BUTROVICH 205
BILL: HCR 19
SHORT TITLE: GOVERNOR: AK NATIVE LANGUAGES EMERGENCY
SPONSOR(s): ORTIZ
02/16/18 (H) READ THE FIRST TIME - REFERRALS
02/16/18 (H) CRA
03/06/18 (H) CRA AT 8:00 AM BARNES 124
03/06/18 (H) Heard & Held
03/06/18 (H) MINUTE(CRA)
03/08/18 (H) CRA AT 8:00 AM BARNES 124
03/08/18 (H) Moved CSHCR 19(CRA) Out of Committee
03/08/18 (H) MINUTE(CRA)
03/09/18 (H) CRA RPT CS(CRA) 5DP
03/09/18 (H) DP: SADDLER, DRUMMOND, LINCOLN,
RAUSCHER, PARISH
03/19/18 (H) TRANSMITTED TO (S)
03/19/18 (H) VERSION: CSHCR 19(CRA) AM
03/21/18 (S) READ THE FIRST TIME - REFERRALS
03/21/18 (S) CRA, STA
04/03/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/03/18 (S) Heard & Held
04/03/18 (S) MINUTE(CRA)
04/10/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/10/18 (S) Moved CSHCR 19(CRA) AM Out of Committee
04/10/18 (S) MINUTE(CRA)
04/11/18 (S) CRA RPT 3DP
04/11/18 (S) DP: BISHOP, GARDNER, HOFFMAN
04/17/18 (S) STA AT 3:30 PM BUTROVICH 205
04/17/18 (S) Heard & Held
04/17/18 (S) MINUTE(STA)
04/19/18 (S) STA AT 3:30 PM BUTROVICH 205
BILL: HB 47
SHORT TITLE: MUNICIPAL PERS CONTRIBUTIONS/INTEREST
SPONSOR(s): FOSTER
01/18/17 (H) PREFILE RELEASED 1/13/17
01/18/17 (H) READ THE FIRST TIME - REFERRALS
01/18/17 (H) CRA, FIN
02/28/17 (H) CRA AT 8:00 AM BARNES 124
02/28/17 (H) Heard & Held
02/28/17 (H) MINUTE(CRA)
03/02/17 (H) CRA AT 8:00 AM BARNES 124
03/02/17 (H) Moved HB 47 Out of Committee
03/02/17 (H) MINUTE(CRA)
03/03/17 (H) CRA RPT 4DP 1NR 1AM
03/03/17 (H) DP: WESTLAKE, DRUMMOND, FANSLER, PARISH
03/03/17 (H) NR: RAUSCHER
03/03/17 (H) AM: SADDLER
04/06/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/06/17 (H) Heard & Held
04/06/17 (H) MINUTE(FIN)
04/13/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/13/17 (H) Moved HB 47 Out of Committee
04/13/17 (H) MINUTE(FIN)
04/14/17 (H) FIN RPT 5DP 6AM
04/14/17 (H) DP: ORTIZ, GUTTENBERG, GARA, SEATON,
FOSTER
04/14/17 (H) AM: WILSON, KAWASAKI, THOMPSON, TILTON,
GRENN, PRUITT
05/15/17 (H) TRANSMITTED TO (S)
05/15/17 (H) VERSION: HB 47
05/16/17 (S) READ THE FIRST TIME - REFERRALS
05/16/17 (S) STA, FIN
04/05/18 (S) STA AT 3:30 PM BUTROVICH 205
04/05/18 (S) Heard & Held
04/05/18 (S) MINUTE(STA)
04/19/18 (S) STA AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
BRODIE ANDERSON, Staff
Representative Foster
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of HB 398.
CHRISTINE MARASIGAN, Staff
Senator Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of the committee
substitute for HCR 19.
REPRESENTATIVE DAN ORTIZ
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HCR 19.
XH'UNEI LANCE TWITCHELL, representing self
Juneau, Alaska
POSITION STATEMENT: Testified in support of HCR 19.
DAVID ROBERT BOXLEY, representing self
Metlakatla, Alaska
POSITION STATEMENT: Testified in support of HCR 19.
PAULETTE MARY MORENO, Grand Vice President
Alaska Native Sisterhood Grand Camp
Juneau, Alaska
POSITION STATEMENT: Testified in support of HCR 19.
BRANDON SPANOS, Deputy Director
Tax Division
Alaska Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding HB 398.
ACTION NARRATIVE
3:32:53 PM
CHAIR KEVIN MEYER called the Senate State Affairs Standing
Committee meeting to order at 3:32 p.m. Present at the call to
order were Senators Wilson, Egan, Coghill, Giessel, and Chair
Meyer.
HB 398-CORP TAX: PUBLIC UTILITY INCOME ALLOCATION
3:34:20 PM
CHAIR MEYER announced the consideration of House Bill 398 (HB
398).
3:34:52 PM
BRODIE ANDERSON, Staff, Representative Foster, Alaska State
Legislature, Juneau, Alaska, provided an overview of HB 398 as
follows:
House Bill 398 addresses foregone revenue and provides
the state with the ability to capture new revenue in
Alaska corporate income tax through the elimination of
the public utility exemption for water's-edge
reporting.
A brief history on how we got this piece of
legislation introduced. Back in 2004, legislation was
passed that required both the Department of Revenue
and Legislative Finance to create a report on indirect
expenditures and the amount of foregone revenue not
captured by the state. The first indirect expenditure
report was submitted in 2015, in that report it
identified a list of indirect expenditures within the
Department of Revenue that should be terminated; then
last year in the FY18 budget process, House Finance
Subcommittee for the Department of Revenue reviewed
these indirect expenditures and recommended that the
House Finance Committee offer legislation that
eliminates these indirect expenditures. House Bill 398
repeals a specific exemption from the recommendations
offered in both of those reports.
The indirect expenditure repealed in House Bill 398 is
the public utility exemption and it was selected for
the following reason: It did not meet the legislation
intent and it was felt that it provided a loophole by
allowing multi-state corporations operating a public
utility in Alaska to choose their apportionment method
that is complementary to providing the lowest tax
liability possible for the corporation.
Typically, multi-state corporations use three-factor
formula for apportionment, this formula uses three
fractions represented by ratios of the company's
property, payroll and sales within the taxing state,
this one being Alaska, to their total property payroll
and sales within the United States or water's edge.
The three ratios are multiplied together to produce a
percentage of the company's total taxable income to be
allocated to the taxing state, Alaska; this only
applies to all non-oil-and-gas corporations, for oil-
and-gas corporations we use a formula based on their
Alaskan profits and their worldwide profits.
The Department of Revenue cannot indicate the amount
of potential new revenue captured because the small
amount of taxpayers utilizing the exemption, they are
required to keep that tax information confidential due
to the size of the tax pool, they have indicated
though that there will be new revenue if this passes
according to their fiscal note provided to members in
their packet.
3:37:51 PM
CHAIR MEYER asked Mr. Anderson to review the sectional analysis
for HB 398.
MR. ANDERSON reviewed the sectional analysis as follows:
Section 1
Adds a new section, AS 43.20.146, which removes the
exemption of the multistate public utilities from
water's-edge reporting from within the Multistate Tax
Compact.
Section 2 & Section 3
Are uncodified law dealing with the applicability of
the effective date and transition language for the
regulations that would be drafted not to be in effect
until January 1, 2019.
Section 4
The effective date which applies to Section 1 and
Section 2 of the bill is January 1, 2019.
3:39:03 PM
At ease.
[CHAIR MEYER set HB 398 aside until later in the meeting.]
HCR 19-GOVERNOR: ALASKA NATIVE LANGUAGES EMERGENCY
3:40:24 PM
CHAIR MEYER announced the consideration of House Concurrent
Resolution 19 (HCR 19).
3:42:05 PM
At ease.
3:42:51 PM
CHAIR MEYER called the committee back to order.
3:42:55 PM
SENATOR GIESSEL moved to adopt the Senate committee substitute
(CS) for CSHCR 19, version 30-LS1402\T, as the working document.
3:43:08 PM
CHAIR MEYER announced hearing no objection, the Senate CS was
before the committee. He asked Ms. Marasigan to explain the
changes.
3:43:18 PM
CHRISTINE MARASIGAN, Staff, Senator Meyer, Alaska State
Legislature, Juneau, Alaska, provided the following overview of
the Senate CS for CSHJR 19:
After the meeting on Tuesday, I consulted with Senator
Coghill's office, Senator Giessel's office, and
Representative Ortiz's staff and the following changes
were made: On page 1, line 2 and on page 2, line 24
the following language was added: the urgent need for
language revitalization efforts.
CHAIR MEYER noted that he meant to object to hear the changes.
He asked if there were other changes in the bill.
MS. MARASIGAN answered no, just at the beginning and end of the
bill.
3:44:25 PM
CHAIR MEYER removed his objection and announced that the Senate
CS was before the committee. He asked Representative Ortiz if he
was satisfied with the changes.
3:44:52 PM
REPRESENTATIVE DAN ORTIZ, Alaska State Legislature, Juneau,
Alaska, sponsor of HCR 19, replied as follows:
I'm not going to oppose the CS that was put before you
for HCR 19; with that said, language loss is a serious
problem in the communities I represent and beyond. The
district I represent is home to three of the state's
Native languages: Tlingit, Haida, and Tsimshian; two
of these languages, Haida and Tsimshian have fewer
than 10 fluent speakers left in the state, Tlingit has
less than 100 speakers. We recognize the people
carrying the languages and thank them for their hard
work. If the CS brings us to a step closer to
revitalizing these languages, then I fully support the
CS.
3:46:18 PM
CHAIR MEYER announced that the committee will hear invited
testimony. He noted that the testifiers were chosen on behalf of
the individuals attending the committee meeting.
3:46:50 PM
XH'UNEI LANCE TWITCHELL, representing self, Juneau Alaska,
testified in support of HCR 19. He disclosed that he is the
Assistant Professor-Alaska Native Languages for the University
of Alaska Southeast. He disclosed that he speaks and teaches the
Tlingit language. He said he has spent a good portion of his
life studying the root causes of language death in Alaska as
well as effective measures of language revitalization. He noted
that Sarah Dybdahl, Director for the Central Council of Tlingit
& Haida Indian Tribes of Alaska's Cultural Heritage & Education
program, suggested in October to the Alaska Native Language
Preservation and Advisory Council that the governor declare a
state of emergency for native languages. He asserted that Alaska
natives that work on Alaska native languages daily understand
what is going on. He said he has seen Alaska native languages
creep closer and closer to language death.
He recounted the historical decline in Alaska Native speakers.
He said he questioned the use of "urgency" rather than
"emergency" in the resolution. He continued as follows:
We are asking you to move this forward. If changing a
word and saying, "Well, it's not quite an emergency,"
if that's your stance, then that is fine.
MR. TWITCHELL said there was no need to debate and asked
legislators to, "talk to them."
3:55:09 PM
CHAIR MEYER commented that committee members were very
respectful in what the testifiers were hoping to do. He said he
guessed that the bill would move out of committee.
3:56:27 PM
DAVID ROBERT BOXLEY, representing self, Metlakatla, Alaska,
testified in support of HCR 19. He revealed that he was 36 years
old and when he was born there were 150 fluent speakers of his
language in his village and currently there were 5 fluent
speakers. He said the efforts to revive his language has been
met with modern-world problems that are not of Alaska natives'
choosing. He noted that he is part of a non-profit organization
in Metlakatla to revive the Tsimshian language. He continued as
follows:
Whether we argue about the semantics of a couple of
words at this moment is not going to benefit our
hopes, but I do want to reiterate that if there was
ever a reason to call something an emergency, I can't
think of a better reason.
4:00:11 PM
PAULETTE MARY MORENO, Grand Vice President, Alaska Native
Sisterhood Grand Camp, Juneau, Alaska, testified in support of
HCR 19. She emphasized that words are important and asked that
the resolution be passed because Alaska natives have everything
to lose.
4:05:07 PM
At ease.
4:08:02 PM
CHAIR MEYER called the committee to order.
4:09:08 PM
SENATOR GIESSEL moved to report SCS CSHCR 19(STA), version 30-
LS1402\T from committee with individual recommendations and
attached zero fiscal note.
4:09:22 PM
CHAIR MEYER announced that being no objection the motion
carried.
4:09:29 PM
At ease.
HB 398-CORP TAX: PUBLIC UTILITY INCOME ALLOCATION
4:14:13 PM
CHAIR MEYER called the committee back to order. He announced the
committee's continuation of the hearing on HB 398.
SENATOR WILSON asked if there is opposition to the bill.
MR. ANDERSON replied that the bill has not received opposition.
He confirmed from previous hearings in the House Finance
Committee that the bill will not affect the state's nonprofit-
public utilities, strictly multi-state corporations that have a
public utility within Alaska's boundaries. He detailed that
approximately one to five corporations might be impacted.
CHAIR MEYER asked if the corporations that will be adversely
impacted know that HB 398 was working through the process.
MR. ANDERSON replied that he has contacted specific lobbyists
that have contracts within some of the multi-state corporations
to figure out whether they would be impacted and what type of
opposition might come against HB 398. He disclosed that he has
not received opposition notification from the corporations.
4:17:46 PM
BRANDON SPANOS, Deputy Director, Tax Division, Alaska Department
of Revenue, Anchorage, Alaska, confirmed that he has spoken with
specific taxpayers on the legislation's impact. He assumed that
those impacted the most know about HB 398.
CHAIR MEYER said he was concerned that the corporations
currently receiving the tax exemption will pass the added cost
from the legislation on to Alaskan. He asked if the Regulator
Commission of Alaska (RCA) has oversite.
MR. SPANOS explained that the RCA does not regulate all
utilities. He pointed out that telecommunications used to be
regulated, but currently falls under that utility definition.
CHAIR MEYER remarked that he questioned Mr. Sponos' response. He
said he believed that the RCA does have regulatory oversite and
noted that he had dealt with a bill that addressed the topic.
MR. SPANOS admitted that he was not an expert in the regulation
field.
4:20:04 PM
CHAIR MEYER pointed out that HB 398 has a zero fiscal note. He
asked if the hope is the state will get some money back.
MR. ANDERSON answered yes. He explained that the fiscal note
reflects an increase of some sort due to the potential change in
tax liability for corporations utilizing the exemption.
CHAIR MEYER noted that Mr. Anderson mentioned that the normal
process is a three-step process and the affected corporations do
not have to meet the three-step process.
MR. ANDERSON answered correct. He detailed as follows:
Back when we first wrote the Alaska Corporate Tax
Code, banking organizations, financial organizations
and public utilities, multi-state corporations, were
exempt. In the '80s, Alaska removed financial
organizations but at that point no public utility was
utilizing this exemption so when the Department of
Revenue removed the exemption, it did not come under
the radar that public utilities had an exemption.
So, we fast forward until I believe the document from
the Department of Revenue said about 10 to 15 years
ago, public utilities or at least a couple started to
utilize the exemption and that's why they felt that
they needed a statutory change rather than a
regulatory change to get rid of this exemption and
that's with water's-edge reporting for calculating all
other multi-state corporations use water's-edge
reporting where you compare, you create the formula
for your Alaska sales, payroll and property against
your U.S. or water's-edge sales, payroll and property,
and then out of that the percentage is calculated for
you Alaska tax liability; that formula, that
percentage is exempt for public utilities that are
multi-state corporations because of the exemption and
as long as it is in line with what Department of
Revenue agrees with, they can calculate their own
apportionment.
4:22:22 PM
CHAIR MEYER opened and closed public testimony.
4:22:48 PM
SENATOR GIESSEL moved to report HB 398, version 30-LS1231\D from
committee with individual recommendations and attached zero
fiscal note.
4:23:01 PM
CHAIR MEYER announced that being no objection, the motion
carried.
4:23:04 PM
At ease.
HB 47-MUNICIPAL PERS CONTRIBUTIONS/INTEREST
4:25:20 PM
CHAIR MEYER called the committee back to order and announced the
consideration of House Bill 47 (HB 47). He noted that the bill
has an updated fiscal note.
4:26:41 PM
PAUL LABOLLE, Staff, Representative Foster, Alaska State
Legislature, Juneau, Alaska, announced his availability to
address questions regarding the updated fiscal note for HB 47.
CHAIR MEYER said the Senate Finance Committee will address the
bill's fiscal note. He explained that the Senate State Affairs
Committee is more concerned from a policy standpoint and a
legitimate policy question was previously brought up. He
remarked that there may be concern that a precedent will be set;
however, he conceded that the sponsor of HB 47 and Mr. Labolle
presented a good case.
4:27:53 PM
SENATOR GIESSEL moved to report HB 47, version 30-LS0281\A from
committee with individual recommendations and attached fiscal
note.
4:28:03 PM
CHAIR MEYER announced that there being no objection, the motion
carried.
4:28:08 PM
At ease.
4:28:36 PM
CHAIR MEYER called the committee back to order.
4:29:37 PM
There being no further business to come before the committee,
Chair Meyer adjourned the Senate State Affairs Standing
Committee at 4:29 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 398 Sponsor Statement 4.3.18.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 398 Version D.PDF |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 398 Sectional Analysis v.D 4.3.18.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 398 Additional Documents - Legislative Legal Services Memo 1.9.2018.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 398 Additional Documents - Dept. of Revenue Letter of Explanation 4.3.18.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 398 Additional Documents - 2015 Indirect Expenditure Report-Public Utility Exemption.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 398 Fiscal Note.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 398 |
| HB 47 Fiscal Note OMB 2866.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 47 |
| HB 47 Actuarial Letter Conduent 4.5.2018.pdf |
SSTA 4/19/2018 3:30:00 PM |
HB 47 |
| ANLPAC2018 Report to the Governor and Legislature.pdf |
SSTA 4/19/2018 3:30:00 PM |
HCR 19 |
| HCR 19 Version T.pdf |
SSTA 4/19/2018 3:30:00 PM |
HCR 19 |