Legislature(2017 - 2018)GRUENBERG 120
02/14/2017 03:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB91 | |
| HB3 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 91 | TELECONFERENCED | |
| + | HB 3 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 91-APOC REGISTRATION FEES; LOBBYIST TAX
3:03:18 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."
CHAIR KREISS-TOMKINS opened public testimony on HB 91. After
ascertaining that there was no one who wished to testify, he
closed public testimony.
3:04:29 PM
REPRESENTATIVE SAM KITO, Alaska State Legislature, as prime
sponsor of HB 91, expressed his concern that it is not clear
that revenue generated from the lobbyist tax proposed in HB 91
would directly benefit the Alaska Public Offices Commission
(APOC). He mentioned that staff is working on changes to the
bill to rectify this issue and make other improvements.
3:05:51 PM
CRYSTAL KOENEMAN, Staff, Representative Sam Kito, Alaska State
Legislature, on behalf of Representative Kito, prime sponsor of
HB 91, referred to discussions in the House State Affairs
Standing Committee meeting of 02/09/17 regarding raising revenue
for APOC to offset general fund dollars and doing so through a
tax or a fee. She mentioned that amendments to HB 91 are
forthcoming to respond to concerns expressed in the hearing.
MS. KOENEMAN referred to Section 1 of HB 91, which states that a
candidate, group, or nongroup entity is required to file reports
with APOC. She said that in response to a request from APOC,
staff will add "persons" to that section to broaden the intent
to include additional groups such as labor unions, corporations,
and other individuals. She stated that a candidate's
registration fee would be for the full election cycle instead of
just 12 months. She also noted the addition of language
specifying the civil penalties for non-payment of filer
registration fees, which was inadvertently left out of one
section of HB 91.
3:08:40 PM
REPRESENTATIVE BIRCH expressed that he doesn't support an income
tax, but wouldn't oppose a flat rate, whether it be per lobbyist
or per client. He opined that the flat fee is more manageable,
and it is fair and equitable.
3:09:52 PM
REPRESENTATIVE WOOL asked for the number of lobbyists.
3:10:24 PM
HEATHER HEBDON, Executive Director, Alaska Public Offices
Commission (APOC), responded that the five-year average number
of registered lobbyists is approximately 132.
3:11:02 PM
REPRESENTATIVE TUCK referred to the addition of "persons" to
Section 1 of HB 91 and said that "persons" is one of the reasons
we have Citizens United. He added that the courts haven't
differentiated between natural beings and artificial beings;
therefore, corporations have First Amendment rights and the
ability to use their general funds for unlimited contributions.
REPRESENTATIVE TUCK offered that the burden of overseeing the
finances of lobbyists with larger revenue streams is greater
than for the smaller groups, so it makes sense to have a fee
structure based on revenue.
3:12:25 PM
REPRESENTATIVE BIRCH cited the information on page 2 of the
Department of Revenue's (DOR's) fiscal note: the average total
fees paid to lobbyists were about $17 million and a 2.5 percent
tax would generate about $425,000 in annual revenue. He asked
for an explanation of the discrepancy between the amounts of
anticipated revenue - $425,000 listed on the DOR fiscal note and
$244,000 listed on the sponsor statement. He offered that 130
lobbyists, each paying a $2,000 fee, would generate an amount
like that proposed.
REPRESENTATIVE KITO explained that the sponsor statement was
based on APOC information from a year and a half ago and DOR
used current information. He stated that the DOR estimate of
$425,000 does not acknowledge the removal of the existing
lobbying fee proposed by HB 91, which amounts to about $106,000.
He said deducting $106,000 from $425,000 yields about $380,000.
He promised a revised sponsor statement with the committee
substitute (CS).
3:14:37 PM
REPRESENTATIVE KNOPP offered that besides passing legislation to
raise revenue, it is the responsibility of legislators to
examine how departments conduct their business and then consider
modifications. He asserted that the legislative body has not
had that discussion, nor has it taken a balanced approach to the
budget process. He suggested that APOC fees and reporting
requirements discourage candidates and appointees of boards and
commissions from seeking public office.
REPRESENTATIVE KNOPP referred to the sponsor statement, which
states that APOC's budget was reduced from $1.3 million in
fiscal year 2015 (FY 15) to $866,000 in FY 16. He asserted that
the reduced amount occurred only in that one year. He referred
to the APOC funding document in the committee packet, titled
"Multi-year Allocation Totals with Funding - Operating Budget -
FY 2017 Conf Committee Structure," and noted funding for 2017 at
$1.033 million, with $1,050 million in the FY 18 governor's
budget. He reiterated his belief that the legislature needs to
have discussions about conducting business and a balanced
approach to the budget, not just for APOC but for all the
state's agencies and departments. He asked if those discussions
have taken place.
REPRESENTATIVE KITO asserted that APOC's budget was reduced and
the agency is struggling to meet its statutory obligations. He
said that the legislature authorized additional program receipts
- the $1,033 million figure on the document - which represents
what the legislature considered to be the appropriate level of
funding for APOC. He went on to say that his primary motivation
for introducing HB 91 is to create a mechanism for APOC to
collect receipts more than $106,000 and up to the $240,000
authorized by the legislature. His secondary motivation, he
said, is to increase APOC staff in Juneau to provide adequate
oversight of lobbying activities.
3:18:21 PM
REPRESENTATIVE KNOPP expressed his concern that there would be
additional oversight requirements for APOC and fees would
escalate.
REPRESENTATIVE KITO responded that APOC operated at a stable
staffing level before reductions put pressure on its ability to
do some of the audits. He mentioned that he did not foresee
uncontrolled growth for the organization. He said that the
legislature would continue to review the APOC budget and assess
APOC's performance annually through the Department of
Administration (DOA). He added that the legislature may audit
the agency to determine if it is performing the statutorily
designated functions. He emphasized the importance of allowing
APOC to collect revenue up to the receipt authority amount and
the need for additional support to perform its lobbying
oversight activities.
3:20:15 PM
CHAIR KREISS-TOMKINS asked what oversight activities APOC has
been unable to fulfill.
REPRESENTATIVE KITO replied that his understanding is there is a
need to hire a professional who can understand and interpret
statute and provide advice to lobbyists filing reports.
Currently there is just a clerk performing those duties.
3:21:11 PM
REPRESENTATIVE JOHNSON asked if Representative Kito anticipated
that taxes on other professions would be "imbedded" in statute.
She expressed her concern with maintaining simplicity regarding
taxes in state law.
REPRESENTATIVE KITO responded that the lobbying profession
regulated under APOC is a unique function and is not related to
other professions that are regulated under the Department of
Commerce, Community & Economic Development (DCCED). He said
that the professions performing licensing activities and
investigations under DCCED are already required to "pay their
own way," and the fees are adjusted every other year for those
professions. All the activities associated with the boards are
paid for by the licensees and registrants. He said that APOC
has been supported by general fund revenue and the $250 per
client fee, which has generated a little over $100,000
historically. He asserted that nothing requires that APOC
operations are supported entirely by the professions that they
regulate. He offered that such a requirement would greatly
increase APOC fees. He maintained that HB 91 was proposed to
raise revenue just to the level of program receipts authorized
by the legislature and to provide for better oversight in the
lobbying office. He speculated that requiring the professions
regulated by APOC to pay their own way would result in much
higher fees than those proposed in HB 91.
3:24:17 PM
REPRESENTATIVE WOOL cited the financial disclosure reporting fee
of $50 in HB 91 and asked what the current fee was for financial
disclosure.
REPRESENTATIVE KITO responded that there is not currently a fee
for financial disclosure reporting.
REPRESENTATIVE WOOL asked what the current candidate fee was for
filing with APOC.
REPRESENTATIVE KITO replied that there is currently not an APOC
candidate fee. The $100 filing fee in HB 91 would be a new fee.
REPRESENTATIVE WOOL suggested that other professional groups
with similar membership size are self-funded, and fees include
investigations; whereas, APOC's expenses are higher because
investigations are ongoing. He offered that investigations
involving the other boards are performed as needed.
REPRESENTATIVE KITO responded that he does not believe APOC's
oversight of regulation or licensing functions is comparable to
the Division of Corporations, Business, and Professional
Licensing (CBPL). He stated that there are two components to
APOC activity: one is oversight of the 132 lobbyists
representing the 400-plus clients accessing the legislature; and
the other is oversight of the group of candidates running for
political office. He said that for oversight of all the
registered candidates and groups, the estimated revenue is less
than $20,000. He attested that APOC would not have enough money
for candidate review and would still need general funds. He
offered that through HB 91, there would be an opportunity to
generate funds from professional lobbying to pay for the
oversight of their reporting requirements.
3:27:45 PM
CHAIR KREISS-TOMKINS opened public testimony on HB 91.
3:28:21 PM
PAM GOODE testified that she opposes HB 91. She expressed her
belief that APOC should be downsized, as it has a very bad
reputation among anyone running for office. She opined that
APOC discourages "good" people from running for office. She
mentioned that when APOC was formed in 1976, there were no
computers, and now it is in violation of Article I, Section 22.
She asserted that APOC requests information that is not even
required by the IRS and publishes it on the Internet. She
opined that "the reason APOC is overloaded is because they do
petty things." She mentioned that APOC has wasted her time on
very simple matters, and it audits filings that are less than
$100. She offered that instead of looking for ways to fund
agencies, the legislature should look at ways "to release them
of the pettiness." She asserted that APOC is supposed to be
"going after the bad guys" and not deterring people from
participating. She opined that people running for office and
commissioners "won't step up" because of what is required from
APOC. She mentioned that her husband warned her against running
for office because of what APOC is doing. She relayed that she
let APOC "violate" her privacy so that she could "do the right
thing" and run for office.
3:31:14 PM
CHAIR KREISS-TOMKINS closed public testimony on HB 91.
3:31:34 PM
REPRESENTATIVE JOSEPHSON commented that his experience with APOC
has not been unfavorable, nor did he think the commission's
requirements unreasonable. He expressed his alarm over the
level of funding for APOC in the budget that was before him last
March [2016] and said he appreciated that some of the money was
restored. He opined that it would be impossible for the agency
to perform its work successfully with that [reduced] level of
funding.
REPRESENTATIVE JOSEPHSON cited the U.S. District Court decision
of 2016 upholding the constitutionality of Alaska's $500 annual
personal campaign contribution limit, which has now been
appealed. He mentioned that the presence of money in campaigns
is only going to increase and "soft" money is growing every
election cycle. He stated the importance of information to the
public. He suggested that there be a waiver system for
candidate filing fees in the case of a plea of poverty. He
contended that in such a case, the money could not be raised
prior to filing. He expressed the need for creative funding and
for a fiscal plan.
3:34:17 PM
REPRESENTATIVE BIRCH stated that $17 million in average annual
fees paid to lobbyists comes to $266,000 per legislator. He
asked for the number of lobbyist clients.
MS. HEBDON answered that there are 480 clients, and APOC raises
about $120,000 per year through the $250 per client registration
fee.
REPRESENTATIVE BIRCH asked if the client pays the $250 fee.
MS. HEBDON responded that lobbyists pay the $250 for each of
their clients.
REPRESENTATIVE BIRCH asked if lobbyists pay an additional fee.
MS. HEBDON responded no.
3:36:24 PM
REPRESENTATIVE WOOL asked if "$250 per client per lobbyist"
means that if a client hires four lobbyists, then four times
$250 is paid.
MS. HEBDON responded that is correct.
REPRESENTATIVE WOOL asked if HB 91 and a state income tax
together would result in the "double taxing" of lobbyists.
REPRESENTATIVE KITO conceded that to be one of the complications
of two taxes. He stated that the gross receipts that would be
taxed at 2.5 percent would be independent of the income a
lobbyist claims on his tax form, which is subject to income
adjustments. He asserted that a forthcoming CS will address the
issue of the 2.5 percent income tax in HB 91 to avoid the
perception of double taxation.
[HB 91 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB003 ver D 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |
| HB003 Sponsor Statement 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |
| HB003 Memo of Changes 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |
| HB003 Fiscal Note DOLWD 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |
| HB003 Fiscal Note MVA 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |
| HB003 Supporting Document-Letter Dept of Defense 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |
| HB003 Supporting Document-Dept of Defense One Pager 2.7.17.pdf |
HSTA 2/14/2017 3:00:00 PM |
HB 3 |