Legislature(2017 - 2018)GRUENBERG 120
02/09/2017 03:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB91 | |
| HB50 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 91 | TELECONFERENCED | |
| *+ | HB 50 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 91-APOC REGISTRATION FEES; LOBBYIST TAX
3:04:21 PM
CHAIR KREISS-TOMKINS announced that the first order of business
would be 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."
3:04:37 PM
REPRESENTATIVE SAM KITO, Alaska State Legislature, presented HB
91, as prime sponsor. He stated that HB 91 would establish a
fee for candidates, groups, and public officials filing
financial reports, as well as a 2.5 percent tax on lobbyists.
REPRESENTATIVE KITO stated that a couple of years ago the Alaska
State Legislature provided additional receipt authority to the
Alaska Public Offices Commission (APOC) and directed it to
increase fees to address budgetary shortfalls. He said that
APOC currently has statutory authority to collect a $250 fee per
lobbyist client. Representative Kito offered that since APOC
has no other way to collect revenue, he looked for a legislative
solution. He mentioned that he worked with the former executive
director of APOC, Paul Dauphinais, to identify a means to
increase program receipts and to increase staffing levels to
accommodate lobbying reporting activities.
REPRESENTATIVE KITO relayed that HB 91 would raise approximately
$425,000 under the proposed 2.5 percent tax and an additional
$100,000 in registration fees. He said that the revenue would
support the $750,000 budget and allow APOC to hire additional
staff in the lobbyist section of the organization. He explained
that the reason HB 91 proposes taxes instead of an additional
fee is that increasing the fee on the lower paying clients would
be inequitable. He maintained that a percentage [of income] tax
would be graduated based on lobbying fees.
REPRESENTATIVE KITO concluded by saying that the goal of the
proposed legislation is to support the activities of APOC: to
ensure campaigns and lobbying activities are adequately
reviewed; to ensure reports are audited in a timely fashion; and
to generate enough resources to protect the public's interest in
reporting lobbying activities, campaign activities, and
financial disclosures.
3:09:29 PM
REPRESENTATIVE KNOPP asked why HB 91 proposes to reduce
registration fees if the goal is to raise revenue. He mentioned
that some of his campaign staff, who had national experience,
considered Alaska's APOC reporting requirements to be among the
most stringent in the country. He asked if there has been
further discussion about APOC reforms.
REPRESENTATIVE KITO responded that the registration fee would be
eliminated in favor of the 2.5 percent tax. He maintained that
this tax would double the amount of revenue from lobbyists to
APOC. He stated that the drafters of HB 91 intentionally
avoided policy discussions about the operations and statutes of
the commission. He added that even though Alaska has some of
the most stringent campaign finance laws in the country, some
Alaskans support them. He emphasized that the intent of HB 91
is to ensure there is receipt authority and resources available
for APOC to do its job.
3:12:00 PM
REPRESENTATIVE BIRCH asked if Representative Kito solicited
comment from anyone in the lobbying community. He said that
looking at the figures, he estimates that lobbyists are spending
about $150,000 per legislator.
REPRESENTATIVE KITO stated that he had several conversations
with members of the lobbying community after introduction of the
bill. He reported there were no serious concerns. He added he
received a few comments from lobbyists who were glad to
participate and help with APOC's fiscal situation. He
emphasized that the revenue would not go into the general fund
but would go toward better oversight and reporting by APOC. He
asserted that when APOC can conduct reviews and audits before
fines accumulate, then lobbyists, campaigns, and the public all
benefit.
3:14:13 PM
REPRESENTATIVE BIRCH asked if the comments were solicited
anonymously.
REPRESENTATIVE KITO answered he did not know if those commenting
wanted anonymity. He maintained written or oral testimony to
the committee is certainly welcome.
REPRESENTATIVE BIRCH commented that the issue could be delicate
and asked what the cost would be for a candidate.
REPRESENTAIVE KITO responded that for candidates and groups, the
registration fee would be $100 and $50 to file financial
disclosures. He relayed a Department of Administration (DOA)
suggestion: for a campaign spanning two years, a single
registration may be more appropriate. He said his staff is
working actively with DOA to identify enhancements to HB 91 that
will not change the intent of the bill.
3:15:53 PM
REPRESENTATIVE LEDOUX stated that there is lobbying and there is
consulting, and since there has been no tax on lobbyists
previously, there would have been no incentive to characterize
one's activities as one or the other. She asked if HB 91 would
include consulting activities. She questioned whether income
from work done outside of the capitol building, which was more
in the category of strategizing, might be labeled consulting and
consequently shielded from HB 91.
REPRESENTATIVE KITO said that the APOC statutes have clear
definitions for what constitutes the activity of lobbying,
including the amount of time in direct contact with legislators
and payment for activities that involve influencing legislators.
He asserted that whether one calls oneself a lobbyist or a
consultant, the APOC lobbying definition would still apply and
the category of people required to pay the registration fee
would not change. He added that HB 91 wouldn't change the
definitions for lobbying, only the mechanism for paying the fee.
3:18:28 PM
REPRESENTATIVE LEDOUX asked, "Since this is a tax on only one
professional category, is there any thought that this might run
into First Amendment problems?" She suggested that lobbyists
may "petition" their government, which is considered free
speech. She offered that because free speech is a fundamental
right, it receives the greatest amount of scrutiny by a court.
She asked if there has been any legal analysis of that aspect.
REPRESENTATIVE KITO answered that his staff has had
conversations with Legislative Legal and Research Services
regarding this concern. He said it was less of an issue with
the "lobbying side" of the proposed legislation and more of an
issue with the "campaign side." He offered that with the $100
and $50 fees on the campaign side of the proposed legislation,
the restriction on speech would not be as much of a concern
because campaigns are already paying $100 for the brochure. A
$100 or $50 registration fee does not constitute a barrier to
registration. Lobbyists already pay the $250 fee, so are
already paying to participate in their chosen profession of
lobbying. He said HB 91 would adjust the fee by using a
different mechanism for collecting revenue. He opined that a
2.5 percent tax would not be a barrier to any client hiring a
lobbyist to come to Juneau to lobby.
3:21:12 PM
REPRESENTATIVE WOOL asked how much candidates pay now to run for
office.
REPRESENTATIVE KITO said currently candidates pay the Division
of Elections (DOE) a $30 filing fee. Each candidate pays $100
to have his/her information appear in the election pamphlet.
REPRESENTATIVE WOOL offered that the $100 for the election
pamphlet was not mandatory. He added one could run for office
and not appear in the election pamphlet.
REPRESENTATIVE KITO responded yes, but the $30 filing fee to DOE
is mandatory. He added that the $30 fee would cover DOE
administrative costs, and there are no fees to support APOC
activities.
REPRESENTATIVE WOOL stated that currently it costs a minimum of
$30 to run for office, and HB 91 would increase that cost
fivefold to $150.
REPRESENTATIVE KITO responded that HB 91 would raise the cost by
$100 per candidate. He said that the mandatory fee would
comprise the $100 [APOC registration fee] and the $30 [DOE
filing fee], and the $100 for inclusion in the election pamphlet
would be voluntary. He said the cost for groups would also be
$100. He mentioned there would be a separate fee of $50 for
filing financial disclosures.
REPRESENTATIVE WOOL offered that the total cost would be $180:
a $30 filing fee; a $100 registration fee; and a $50 fee for
filing financial disclosures.
REPRESENTATIVE KITO said correct. He added that an exempt
campaign, one that does not raise money, would not be required
to pay the registration fee.
3:23:53 PM
REPRESENTATIVE WOOL asked if Representative Kito considered
raising the lobbyist registration fee but keeping it a flat fee,
as opposed to charging a percentage of the revenue earned
through lobbying.
REPRESENTATIVE KITO responded yes. He relayed his concern that
if the registration fee was doubled from $250 to $500, it would
create a burden for those clients who are paying lesser amounts
to a lobbyist. He opined that making the fee a percentage of
income allows the clients who pay less in lobbyist fees to incur
less of the expense of APOC's fees.
3:25:57 PM
REPRESENTATIVE BIRCH asked for the number of registered
lobbyists. He offered that there are thresholds for time spent
meeting with legislators for registered lobbyists.
REPRESENTATIVE KITO responded that there are different classes
of lobbyists - representational, volunteer, and those employed
by an organization - and they all count their hours differently.
He said that MS. Hebdon would be able to provide that
information. He said that there are classifications for which
one doesn't have to register, but once one receives compensation
as a lobbyist, one must register oneself as a lobbyist and each
client that one has.
3:27:46 PM
HEATHER HEBDON, Executive Director, Alaska Public Offices
Commission (APOC), said that based on registration receipts, she
estimates there are between 450-500 registered lobbyists per
year. She confirmed for Representative Kreiss-Tomkins that this
number represents lobbyists who receive payment for services.
REPRESENTATIVE BIRCH referred to Section 9 on page 4 of HB 91
and noted that the proposed new section of statute, AS
43.98.020, specifies an income tax, not a fee. He expressed his
concern that most boards and commissions operate on a fee basis,
and this would be Alaska's only income tax. He suggested that
charging $500 per lobbyist would get APOC the needed revenue.
REPRESENTATIVE KITO replied that the 500 registered "actions"
are actually 500 registered clients. He added that since
lobbyists have multiple clients, the lobbyists would be paying
that fee multiple times. He conjectured that there are not 500
individual registered lobbyists. He conceded that the tax does
single out lobbying, just as a tax on mining activities or
fishing activities singles out those industries to raise
revenue.
3:30:51 PM
CHAIR KREISS-TOMKINS requested clarification of the 450-500
statistic. He asked if that number refers to a discrete number
of clients who have retained lobbyists or to the number of
individuals receiving payment for lobbying services.
MS. HEBDON clarified that there are 450-500 registrations for
lobbyist clients. She reiterated that it is not the number of
lobbyists, since lobbyists often have more than one client.
CHAIR KREISS-TOMKINS asked how many professional lobbyists were
registered with APOC.
MS. HEBDON responded that she did not know, but would provide
that information to the committee.
3:31:51 PM
REPRESENTATIVE BIRCH said he is trying to get an idea of how
many lobbyists would be contributing to the 2.5 percent tax and
what the fee per lobbyist would have to be in order to yield the
quarter of a million dollars needed to support APOC activities.
REPRESENTATIVE KITO said that was one of the options his staff
looked at. He offered the example of a lobbyist with 10 clients
- one of those clients paying $10,000 for lobbying services and
another paying $60,000. He attested that if the lobbyist pays
$500 in registration fees for each of those clients, then the
amount of money paid is not commensurate with the amount of
money received from each client. He said the lobbyist, in that
example, would be taking a greater portion out of the smaller
client's payment than the larger client's payment to cover APOC
activities.
3:33:12 PM
REPRESENTATIVE LEDOUX asked why not make the tax a sales tax
rather than an income tax. She offered that "income" - referred
to in HB 91 - appears to be net income. She suggested it would
be simpler to tax the gross income, rather than the net income.
REPRESENTATIVE KITO replied that each client pays the lobbyist
the contract amount to do the work. He added that the lobbyist
takes his/her expenses out of that contract amount. He stated
that the contract amount, or gross payment, would be subject to
the tax under HB 91. He offered that taxing net income would be
a much more complicated method of collecting revenue, because
expenses would have to be identified and the net profit assessed
for each client.
REPRESENTATIVE LEDOUX read from Section 9, subsection (a) of HB
91, which would require payment of "a tax of 2.5 percent of the
person's income earned from lobbying activities". She suggested
that the language should instead read "2.5 percent of the fee
earned from each client". She offered that "fee" suggests the
amount after expenses were deducted and may be what
Representative Kito intended.
3:36:46 PM
CRYSTAL KOENEMAN, Staff, Representative Sam Kito, Alaska State
Legislature, on behalf of Representative Kito, prime sponsor of
HB 91, clarified that "income," in Section 9 of HB 91, does
refer to the fee, or gross amount, paid by the client to the
lobbyist.
3:37:32 PM
KEN ALPER, Director, Tax Division, Department of Revenue (DOR),
said that he interprets "income earned from lobbying" as being
broad enough to include the gross income. He mentioned that
some lobbyists are earning fees and some are salaried employees.
He suggested that if Section 9 of HB 91 were to be reworded, it
should include the employee lobbyists as well as contract
lobbyists.
REPRESENTATIVE LEDOUX asked if "2.5 percent of the person's
income" in HB 91 means "2.5 percent of the fees earned, before
deductions." She suggested that this interpretation would
differ from the federal income tax code's definition of income.
MR. ALPER responded that there is gross income, and there is
taxable income after deductions. He said although it is not
altogether clear, if he were writing regulations based on HB 91
as currently written, he would interpret it as being gross
income.
CHAIR KREISS-TOMKINS asked what the intent of the bill was in
the phrase cited.
REPRESENTATIVE KITO replied that the intent was to capture 2.5
percent of the gross client fee, and that was the direction
given to Legislative Legal and Research Services in drafting the
proposed legislation. He mentioned that he has been in contact
with Ms. Hebdon regarding employee or other non-group entities
that could be included in HB 91.
3:40:57 PM
REPRESENTATIVE BIRCH referred to the section titled, "Revenue
Estimate," on page 2 of the fiscal note prepared by DOR. He
cited the approximately $17 million average total fees paid to
lobbyists for the three-year period, 2013-2015, and the
estimated $425,000 annual revenue that would be generated by the
2.5 percent tax. He asked why the estimated revenue listed in
the HB 91 sponsor statement, which is $244,150, differs from
that on the bill analysis.
REPRESENTATIVE KITO responded that the sponsor statement was
based on information from prior years and the fiscal note
reflects more recent information.
MS. KOENEMAN responded that the fiscal note was prepared by DOR.
She maintained that the initial estimates were based on prior
conversations with Mr. Dauphinais, the former executive director
of APOC, at the time staff began working on the proposed
legislation. She asserted that after HB 91 was introduced, DOR
was able to make estimates based on "official" numbers. She
relayed that the sponsor statement will be updated to reflect
the estimates in the fiscal note.
REPRESENTATIVE BIRCH asked about APOC's use of the excess
revenue.
MS. KOENEMAN responded that the intent of the legislation is to
offset some of the general fund revenue currently provided to
APOC, thus, making it more self-sustaining. She offered that
any additional revenue that would make APOC self-sufficient
would be good for the State of Alaska.
REPRESENTATIVE BIRCH expressed his concern with the large amount
of money that would go to APOC and said he still supports an
increased fee over a percent tax.
3:44:43 PM
MR. ALPER commented that he has a conflict of interest in regard
to HB 91, as he is a public official and would be subject to the
$50 registration fee proposed under HB 91. He stated that the
fiscal note drafted by DOR was specific to the tax impact of
Section 9 of the proposed legislation. He offered that since
the tax would replace the existing $250 administration fee, the
net fiscal impact would not be a positive $425,000. He added
that perhaps Ms. Hebdon or Ms. Koeneman could speak to the total
value of the reduction of funds due to the elimination of the
$250 per client administration fee. He attested that he does
not know the source of the data in the original sponsor
statement. He asserted that when preparing the fiscal note, he
used APOC's lobbying reports and its database of billings by
companies to the lobbyists. He said he arrived at the $16-17
million figure through that data.
CHAIR KREISS-TOMKINS requested that a reconciliation of the two
amounts be done before the next hearing of HB 91.
3:46:28 PM
REPRESENTATIVE JOHNSON asked if consideration of HB 91, which
would levy an income tax on a special group of people, is
premature in light of the anticipated introduction of a larger
income tax bill.
REPRESENTATIVE KITO responded that the purpose of the revenue
raised through HB 91 is to support APOC. He opined that a
general income tax would go into the general fund and would not
be designated to specific components of state government. He
reiterated that his goal in introducing HB 91 was: to allow
APOC to take advantage of the receipt authority that the
legislature had granted it; to provide additional revenue to
replace a position in Juneau that was lost to budget cuts; and
to make the reporting and auditing of lobbying activities more
transparent and efficient.
3:48:28 PM
REPRESENTATIVE JOHNSON asked if the fee would be prorated for a
lobbyist who did not perform lobbying activities all months of
the year but was employed in another job.
REPRESENTATIVE KITO claimed that APOC currently requests that a
lobbyist who is an employee of an organization identify the
amount of salary he/she receives for lobbying activities.
3:49:44 PM
REPRESENTATIVE WOOL asked if the $250 fee is per lobbyist and
not per client.
REPRESENTATIVE KITO answered no, the current $250 registration
fee is per client represented by a lobbyist.
REPRESENTATIVE WOOL commented that midwives pay $4,000 for a
license. He offered that lobbyists are passing the fees onto
their clients. He restated Representative Kito's concern that a
flat rate fee is inequitable among clients charging very
different amounts. He mentioned that he is also interested in
finding out how many lobbyists are registered in Alaska.
3:51:13 PM
CHAIR KREISS-TOMKINS asked Ms. Hebdon to provide his office the
number of individual professional lobbyists registered with
APOC.
3:51:35 PM
REPRESENTATIVE LEDOUX offered that there would be no requirement
for the revenue generated through HB 91 to be designated for
APOC.
REPRESENTATIVE KITO responded that technically that is correct
except the candidate fees proposed under HB 91 would go directly
to APOC. He added that it would be more of a challenge to
ensure the income tax was designated for APOC.
[HB 91 was held over.]