Legislature(2017 - 2018)HOUSE FINANCE 519
04/17/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB91 | |
| HB124 | |
| HB25 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 124 | TELECONFERENCED | |
| + | HB 91 | TELECONFERENCED | |
| + | HB 25 | TELECONFERENCED | |
| + | SB 88 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 91
"An Act relating to fees for certain persons filing
disclosure statements or other reports with the Alaska
Public Offices Commission; relating to a tax on
legislative lobbyists; and providing for an effective
date."
1:34:53 PM
REPRESENTATIVE SAM KITO, introduced HB 91. He explained
that the Alaska Public Office Commission (APOC) was granted
increased receipt authority but not the statutory authority
to adjust its fees. The bill provided the statutory
authority, a $50 financial disclosure form filing fee per
legislative or public official, a $100 fee for candidates,
and a fee schedule for lobbyist registrations based on a
contracted amount. The fees added up to approximately $280
thousand of additional receipt authority.
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SAM KITO, read the
sectional analysis:
Section 1: Amends AS 15.13.054. Administrative
registration fee. Adds a new section that requires a
candidate, group, or nongroup entity to pay a $100
registration fee. This does not apply judges,
constitutional convention delegates, exempt municipal
candidates, or nongroup entities with an operating
budget of $250 or less.
Section 2: Amends AS 15.13.390(a). Civil penalty; late
filing of required reports. Includes language
referencing the administrative registration fee.
Section 3: Amends AS 24.45.041(g) Include language
referencing the administrative registration fee and
removes the current $250 registration fee and sets a
fee of $350 for a contract with a value of less than
$30,000; $650 for a contract with a value of between
$30,000 and $60,000; and $850 for a contract with a
value of over $60,000.
Section 4: Amends AS 24.60 to include a new section AS
24.60.238. Administrative registration fee. Requires
legislators, public members or the committee, and
legislative directors filing financial disclosures to
pay an administrative registration fee of $50.
Section 5: Amends 24.60.240. Civil penalty for late
filing. Allows APOC to assess a civil penalty of not
more than $10 a day for failure to pay the
administrative registration fee as levied under
section 4 of the bill.
Section 6: Amends 37.03.146(c). Definition of program
receipts and non-general fund receipts. Add fees
collected by APOC to the list of program receipts.
Section 7: Amends AS 39.50 to include a new section AS
39.50.132 Administrative registration fee. Requires
governors and lieutenant governors filing financial
disclosures to pay an administrative registration fee
of $50.
Section 8: Civil penalty; late filing of required
reports. Allows APOC to assess a civil penalty of not
more than $10 a day for failure to pay the
administrative registration fee as levied under
section 7 of the bill.
Section 10: Establishes a January 1, 2018 effective
date.
1:40:43 PM
Co-Chair Foster noted that Representative Neuman joined the
committee.
Co-Chair Foster asked whether the fees were payable online.
TOM LUCAS, PARALEGAL II, ADMINISTRATION, ALASKA PUBLIC
OFFICES COMMISSION (APOC), responded in the negative and
indicated that the reason was due to a lack of funding.
Currently, payments were mailed or brought to the
commission's office. Co-Chair Foster asked how the
collection system worked. Mr. Lucas answered that a
provision in the legislation required payment on or before
registration.
Representative Kawasaki asked what amount of funding APOC
needed to operate each year. Mr. Lucas was unable to answer
the question due to lost positions caused by the last two
fiscal year's budget cuts. He noted that the commission was
"struggling to hire a data person."
1:44:08 PM
Representative Kito replied that APOC's FY17 budget was
$1.05 million. He detailed that $800 million was general
funds (GF) and $245 thousand in program receipt authority.
However, the current statutory authority for program
receipts was limited to $107 thousand.
Representative Kawasaki asked in regards to APOCs
historical budget, what the highest level of full funding
was. Ms. Koeneman replied that in FY 15 the budget was
approximately $1.3 million GF resulting in actuals of $1.1
million GF and $119 thousand in program receipts.
Representative Kawasaki asked whether the bill impacted
"representational" lobbyists. Representative Kito answered
in the negative and added that a fee was also not charged
to volunteer lobbyists. Representative Kawasaki appreciated
the bracketing for lobbyist fees, which he thought was a
fairer system. He suggested a smaller fee bracket for
lobbyists making a very small fee. He asked whether the
fiscal note reflected the fee brackets. Ms. Koeneman was
aware that APOC was working on a revised fiscal note. She
added that the fiscal note from the Department of Revenue
(DOR) FN 2 (REV) was no longer applicable due to the
changes in the House State Affairs Committee version.
Representative Guttenberg commented that he thought APOC
had suffered from budget cuts. He wondered whether APOC
differentiated between program receipts and fines.
Representative Kito replied that currently the only program
receipts available were the lobbying registration fees of
$250 and were used for the commission's work. The penalties
that were assessed by APOC were deposited into the GF and
were not used to support the commission. Representative
Guttenberg asked whether the additional fees in the bill
were program receipts. Representative Kito responded in the
affirmative. Representative Guttenberg asked whether the
program receipts resulting from the bill would cover the
additional administrative costs or were more available to
cover other APOC functions. Representative Kito responded
that the legislation allowed for a slightly higher receipt
authority in anticipation of the same budget. He indicated
that the objective was for APOC to eventually hire another
person with policy experience to address lobbying issues.
He wanted the commission to ultimately strengthen their
mission.
1:50:24 PM
Vice-Chair Gara asked what proportion of the fess were
generated from lobbying and what proportion from other
fees. Representative Kito was uncertain of the exact
percentages but relayed that a much higher portion was
received from lobbying and a much smaller portion from
candidate and financial disclosure fees.
Ms. Koeneman shared that an updated fiscal note from APOC
was not available. However, she confirmed that the previous
fiscal note reported that APOC expected to receive $15
thousand from candidates, $18 thousand from groups, $3
thousand from entities, $67.6 thousand from public
officials, and $3 thousand from legislators totaling
$106,600. The figure did not included the $120 thousand
from lobbying. Vice-Chair Gara had received complaints from
school board members and "public officials from smaller
governmental entities" that they had to comply with the
same reporting requirements as legislators. He queried
whether the entities were subject to the fees. Ms. Koeneman
responded in the affirmative. She offered that she
completed a historical review of the genesis of APOC. The
commission was established via a citizens' initiative in
1974 and was upheld by a court decision, which determined
that the citizens had the right to know whether a conflict
of interest existed with any elected official, "no matter
how great or small" the position. Vice-Chair Gara asked
whether the financial disclosures included information
regarding sources of income and investments. Ms. Koeneman
responded in the affirmative.
Vice-Chair Gara commented that the reporting requirement
became more stringent after the 2006 legislative corruption
issue. He did not agree with charging school board members
for financial disclosure reporting. Representative Kito
responded that the fees were a legislative policy call. He
elaborated that some of the financial disclosures were
reviewed and reported on and he wanted the reporting
supported by fees. Currently, the Division of Elections
charged a $30 registration fee for its administrative
costs. Campaigns and candidates were currently not charged
an APOC fee.
1:54:54 PM
Representative Neuman asked whether APOC was planning to
hire additional personnel in the future. Mr. Lucas answered
that APOC was currently seeking an individual to fill an IT
position. Representative Neuman asked whether the position
was funded but unfilled. Mr. Lucas replied in the
affirmative.
Representative Neuman referred to FN 2 (REV) and noted that
DOR would have to alter its tax management system to
accommodate the fee collection and wondered how it would
integrate into the department's existing tax collection
system. He wondered whether HB 91 created additional
administrative costs for the department. Representative
Kito recounted that the State Affairs Committee discovered
complications with implementing a tax instead of a fee. In
response, the committee substitute removed the tax
component, which eliminated the need for DOR's fiscal note
and a forthcoming updated APOC fiscal note would reflect
the change from a tax to a fee. Representative Neuman asked
whether the APOC fee collection could be integrated into
DOR's tax system. Representative Kito relayed that another
issue identified with a tax was the inability to designate
the revenue to APOC. He preferred to leave the tax
component out of the bill due to the difficulties of
administering a dedicated tax and ensuring APOC's receipt
authority from the fee revenue.
1:59:25 PM
Co-Chair Seaton had a question on page 1, line 11 of the
bill and read the following:
…a candidate shall pay an administrative fee of $100
to the commission when the candidate files the name
and address of the candidate's campaign treasurer
under AS 15.13.060(c).
Co-Chair Seaton assumed that the fee was in addition to the
fee charged by the Division of Elections. Representative
Kito responded in the affirmative.
Co-Chair Seaton asked whether the fee applied if the
candidate was acting as her own campaign treasurer. Ms.
Koeneman responded that all candidates were required to
register with APOC and pay the fee regardless if a
candidate was acting as their own treasurer. Co-Chair
Seaton wondered whether the provision was written
adequately to ensure that a candidate acting as his own
treasurer was required to pay the fee. Ms. Koeneman
responded that AS 15.13.060 (a) required the candidate or
group to designate a campaign treasurer.
Co-Chair Seaton referred to page 3, Section 4 and read the
following:
A person required to report under this chapter shall
pay an administrative registration fee of $50 to the
Alaska Public Offices Commission each year in which a
report is due.
Co-Chair Seaton queried whether the fee included the
candidate. He cited page 3, line 26 [27 through 29] as
follows:
… a public official or former public official required
to file a report under AS 39.50.020 shall pay the
commission an annual administrative registration fee
of $50 each year in which a report is due.
Co-Chair Seaton wanted to ensure that candidates and public
officials were both covered under the bill. Representative
Kito answered that the bill contained two separate
provisions: candidates were required to register and pay
the $100 fee and public officials were required to file a
financial disclosure form costing $50. Co-Chair Seaton
asked whether the $50 fee in section 4 was an additional
fee. Representative Kito responded in the negative. The
section addressed a different group of filers other than
candidates or elected officials.
2:03:32 PM
Representative Wilson asked whether the fees collected were
deposited into a specific designated fund. Representative
Kito replied that the fees were designated program receipts
which enabled APOC to receive and expend the funds.
Ms. Koeneman interjected that the fees were deposited into
fund code 1005 program receipts.
Representative Wilson wondered whether program receipts
were able to be spent as needed without legislative
appropriation. Representative Kito explained that the
legislature authorized the receipt and expenditure for
program receipts via the fund source code on a line item in
the appropriation bill. Representative Wilson asked whether
the sponsor intended to back out undesignated general funds
(UGF) and replace them with the additional fees or the fees
were in addition to UGF. Ms. Koeneman replied that the
intent was to offset a portion of APOC UGF. She furthered
that the amount depended on the level of funding
appropriated by the legislature. Ms. Koeneman detailed that
any amount collected in fees that were above the level of
funding APOC needed to function could replace UGF with
program receipts.
2:06:24 PM
Representative Kito added that the legislature appropriated
GF and an amount for program receipt authority. The
legislation enabled APOC to increase its ability to collect
the higher amount of program receipts in order to meet its
budget obligations. Representative Wilson provided a
hypothetical scenario where APOC collected a higher amount
in fees than the amount authorized by the legislature. She
deduced that APOC could not expend the amount above what
was authorized. Representative Kito answered that APOC
could expend the additional fee revenue through a request
for authorization approved by the Legislative Budget and
Audit Committee. Representative Wilson asked what the fee
schedule was for state and municipal candidates.
Representative Kito indicated that the bill contained
separate provisions for state and municipal candidates. The
state candidates were required to pay a $30 fee for the
Division of Elections and an additional $100 fee for APOC.
Candidates were not required to file a financial disclosure
form; only elected officials were mandated to file the $50
fee for financial disclosures. He noted that aside from the
APOC and Division of Elections fee, a municipal candidate
was required to file an APOC financial disclosure form that
carried the $50 filing fee in some municipalities where the
disclosure was mandated by law.
2:09:15 PM
Representative Grenn thought APOC provided a low income
exemption for the candidates filing fee and asked whether
the bill covered the exemption. Ms. Koeneman answered in
the affirmative and elucidated that the legislation did not
remove or alter the exemption.
Representative Pruitt asked about the fiscal notes and
whether they were current. Ms. Koeneman relayed that a
revised APOC fiscal note was forthcoming and the DOR fiscal
note would be zeroed out. Representative Pruitt spoke to
the difficulties for some public officials especially for
certain boards and commissions that had a difficult time
finding members. He asked about the sponsor's thoughts on
every public official paying the $100 fee. Representative
Kito corrected that the applicable fee would be the $50
financial disclosure fee. He acknowledged that although the
legislature was trying to protect the public from "undue
outside interests," on "low level boards" financial
disclosures and conflicts of interest "might not be as
pertinent." He reported that the issue was discussed in the
previous committee and they were unable to determine a way
to equitably identify what public officials could be waived
from the filing fees. The process to separate out certain
public officials became "unbelievably cumbersome."
Representative Pruitt asked whether the fee would hinder
the ability of boards and commissions to find members.
Representative Kito believed that the requirement for
financial disclosure was more of an obstacle than the fee.
He opined that once the individual committed to the
requirement for financial disclosure the $50 fee was a
negligible determinate. Representative Pruitt relayed that
APOC was not able to collect fees online. He wondered how
the inability to pay APOC fees online would affect
potential filers. Representative Kito was concerned with
the issue and wanted to address the issue with APOC. He
felt online filing was preferred.
2:14:32 PM
Representative Pruitt questioned the potential for all
people to be able to run for office with a fee of $100. He
wondered what impact the fee would have on people's ability
to run for office. Representative Kito thought
Representative Pruitt brought up a fair point and revealed
that the issue was discussed in a previous committee. He
explained that a candidate who planned to raise less than
$5 thousand were exempted from the APOC fees. He believed
that the APOC fees were nominal, once a candidate reached
the $5 thousand threshold and was still raising more
campaign funds. Representative Pruitt asked whether the
APOC fees could be paid with campaign funds. Representative
Kito responded in the affirmative and added that the fees
were "an eligible campaign expense." Representative Pruitt
inquired about the lobbyist's fees and the number of
lobbyists in each of the listed fee brackets in the bill.
He asked how many lobbyists in the lower brackets were
required to pay the APOC fees. Representative Kito answered
that the fee was based on the "client value" or contract
amount. He explained that if the lobbyist had 10 clients
the contracts might vary from $10 thousand to $60 thousand
or more. The fees had been split up in order to minimize
the costs for clients paying a lower lobbying contract as
opposed to the clients paying the higher lobbying
contracts. He indicated that changing the fees were in
recognition that clients who could pay more for a lobbying
contract could pay a higher registration fee for its
lobbyist.
2:19:29 PM
Representative Pruitt thanked Representative Kito for the
clarification. He asked for the definition of
"Representational Lobbyist." Representative Kito explained
that a representational lobbyist was a lobbyist who lobbied
on behalf of an organization without receiving any payment
for services, including per diem and lodging.
Representative Pruitt wondered how the APOC fees applied to
lobbyists who received a salary from and worked for the
organization she represented. Representative Kito
communicated that the employee lobbyist had to report how
much of their salary was attributed to lobbying and the fee
was calculated on the amount.
Representative Pruitt asked whether the language in HB 91
covered the employee salary situation and what the amount
the fees were based on. Ms. Koeneman related that currently
the lobbyist reported their entire salary but the bill
required that the lobbyist would have to determine how much
of the lobbyists salary was related to lobbying services.
The registration fee was based on the amount of salary
related to lobbying.
Representative Pruitt restated his concern about the term
"Lobbying Contract" covering the situation described.
Representative Kito stated he would confirm with
Legislative Legal Services that the language matched the
intent of the provision.
2:23:21 PM
Representative Kawasaki queried whether a lobbyist with two
$10 thousand contracts would pay the $350 registration fee
for each $10 thousand contract. Representative Kito
responded in the affirmative. Representative Kawasaki
wondered whether a lobbyist would ask for a contract fee of
$59,999 in order to save $200 for the higher fee.
Representative Kito deduced that the fee would be up to
negotiations between the client and lobbyist.
Representative Kawasaki remembered that members of the
planning commission in the Fairbanks North Star Borough
were required to fill out a financial disclosure. He asked
whether the intent of the sponsor was for municipal
planning commission members to pay the $100 registration
fee. Representative Kito relayed that they would not pay
the $100 registration fee required of candidates but would
pay the $50 fee for the financial disclosure form. He added
that the previous committee discussed the burden for public
officials serving voluntarily but could not find a fair way
to exempt them. The members determined that the $50 fee was
nominal and that actually filling out the financial
disclosure was "a higher hurdle." Representative Kawasaki
assumed that lobbyists were not supportive of the bill.
Representative Kito replied that he heard "very little
opposition" but was aware of some who were opposed to the
bill.
Ms. Koeneman interjected that some lobbyists acknowledged
the state's financial situation and were "willing to pay
their fair share" to keep APOC in operation.
Representative Wilson cited page 3, lines 1 through 5 of
the bill relating to the fee schedule. She provided a
hypothetical scenario where the client divided the contract
into two $30 thousand contracts and offered the second one
at a later date in order to save money in fees. She
wondered whether the language applied to the scenario since
the bill provision was by contract and not client.
Representative Kito responded that the scenario was
possible under the bill. He did not anticipate the scenario
in actual practice. Representative Wilson opined that the
scenario was likely to occur due to cost savings.
Vice-Chair Gara thought that APOC required lobbyists to
report their annual income from lobbying. He asked whether
an alternative fee schedule could be based on lobbyists'
yearly income to quell the concern over split contracts.
Representative Kito relayed that the original bill based
fees on yearly compensation therefore; the fees were
considered a tax. He delineated that a tax became
problematic for reasons previously discussed. Revenue
collection based on compensation might be realized in the
future through inception of a statewide income tax.
2:29:26 PM
Vice-Chair Gara was "struggling with charging someone" for
financial disclosures. Representative Kito reminded the
committee that someone running an exempt campaign - $5000
or less - was excused from paying a registration fee. The
sponsor felt that the fee was nominal in support of APOC's
function. Vice-Chair Gara asked whether all of the
Political Action Committees (PACS) were required to pay.
Representative Kito responded that anyone required to
register would pay the same fees. Vice-Chair Gara wanted to
see additional fees towards PACs or other groups that
contributed "soft money." He stated that 65 percent of all
soft money was spent for negative campaign adds.
Representative Kito thought a "carve out" for certain
groups created "constitutional equitability issues."
2:31:35 PM
Co-Chair Foster OPENED Public Testimony.
Co-Chair Foster CLOSED Public Testimony.
Co-Chair Foster reported that amendments were due by 5:00
p.m. on Wednesday, April 19, 2017.
HB 91 was HEARD and HELD in committee for further
consideration.