Legislature(2021 - 2022)ADAMS 519
03/15/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB322 | |
| HB158 | |
| HB395 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 322 | TELECONFERENCED | |
| += | HB 395 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 158 | TELECONFERENCED | |
HOUSE BILL NO. 158
"An Act relating to contributions from permanent fund
dividends to the general fund."
1:36:42 PM
REPRESENTATIVE MIKE PRAX introduced HB 158 and explained
that it instructed the Permanent Fund Dividend (PFD)
Division of the Department of Revenue (DOR) to include a
check box on the electronic PFD application. The intention
of the box was to make it easier for individuals who wished
to return their PFD check to the general fund. He added
that the check box worked the same as the check box for the
Pick.Click.Give. program.
1:37:37 PM
Representative Rasmussen appreciated the legislation. She
had mentioned the idea in the prior legislature and was
excited to see Alaskans participate in the program.
Vice-Chair Ortiz asked the Representative Prax if he had
detected any opposition from others who had benefited
through the Pick.Click.Give. option.
Representative Prax responded that he had heard rumors of
opposition but had received no formal opposition.
1:39:00 PM
Representative Wool wondered if people making the donation
would still have to pay taxes on the funding.
Representative Prax responded that there was no change in
the tax status even if it was donated back to the state. It
would be considered a charitable contribution. He relayed
that Legislative Legal Services determined that
contributing a PFD check back to the state was handled the
same as a charitable contribution.
Representative Wool wondered about the funding
ramifications of the donations for the agencies that would
receive them.
Representative Prax reiterated that the PFD check would
return to the general fund if a person opted into the
program. There was no instruction to send funding to
specific agencies. The money would go back to the general
fund and the legislature would appropriate it as normal.
1:42:00 PM
Representative Thompson MOVED to ADOPT Amendment 1, 32-
LS0746\A.4, Nauman, 3/1/22 (copy on file):
Page 1, line 1 :
Delete the second occurrence of "fund"
Insert "and permanent funds"
Page 1, line 4:
Delete "fund"
Insert "and permanent funds"
Page 1, line 7, following the first and second
occurrences of "fund":
Insert "or the principal of the permanent fund"
Page 1, line 14, following "fund":
Insert "or the principal of the permanent fund"
Co-Chair Merrick OBJECTED for discussion.
Representative Thompson reviewed the amendment. The
amendment provided an additional option for donating the
money to the corpus of the permanent fund rather than the
general fund.
1:43:22 PM
Vice-Chair Ortiz thought the amendment was favorable. He
asked if the amendment would require additional personnel.
Representative Thompson noted that there would have to be
some technology changes, but it would not add costs.
1:44:10 PM
Representative Carpenter asked if there was a process for
accepting funds into the corpus.
1:44:53 PM
COREY BIGELOW, OPERATIONS MANAGER, PERMANENT FUND DIVIDEND
DIVISION, DEPARTMENT OF REVENUE (via teleconference), asked
Representative Carpenter to restate his question.
Representative Carpenter rephrased and asked whether the
division had a way to regularly receive returned PFD checks
and incorporate the monies back into the corpus of the
fund. He asked if this could be achieved as is or if the
system needed a technical upgrade.
Mr. Bigelow replied that he could not answer the question
for the PFD corporation, but that the PFD division needed
to do some additional work in order to send those funds to
the Alaska Permanent Fund Corporation (APFC).
Representative Carpenter asked if there was anything that
would prevent the corporation from being able to accept the
funds.
Mr. Bigelow thought that there was nothing preventing the
corporation from setting up a mechanism to accept the
funds.
1:47:02 PM
Representative Prax relayed there would not be any written
checks and that the process would be done electronically.
Representative Wool noted that the possibility of receiving
a tax deduction for a charitable donation had been
mentioned earlier. He thought some sort of donation receipt
would be required.
Representative Prax expected that the program would be
designed to trigger a donation receipt when a person made
the decision to donate. The division would send a receipt
for a contribution, and it would be mechanically simple. He
was unsure whether the division was authorized to accept a
personal check. He thought that currently, anyone was
permitted to write a check to the general fund and did not
think anything would change.
1:49:42 PM
Representative Carpenter asked if Representative Wool was
suggesting that the check going to the state general fund
or permanent fund would be considered a tax deduction as a
qualified charitable donation.
Representative Prax agreed that that was his understanding.
Co-Chair Merrick asked Mr. Bigelow to comment on whether
the division was able to provide documentation for the
donation of a person's PFD to the corpus or to the general
fund.
Mr. Bigelow believed the division would have to come up
with a procedure since it was not something that was done
regularly. He did not foresee that being a problem.
Co-Chair Merrick asked whether an organization currently
had to provide a receipt if a person made a donation
through the Pick.Click.Give. program.
Mr. Bigelow believed that there was something in statute
that required that the PFD division provide that
information. He noted that he had to check the statute to
confirm. Applicants were provided with additional
information on 1099 tax forms as well.
Co-Chair Merrick noted that she was trying to get someone
from Legislative Legal Services online.
Representative Johnson provided a personal example of a
misunderstanding regarding her PFD check. She was required
to provide additional documentation to the division, and
the division provided documentation back to her. The state
already was making other deposits into the corpus of the
permanent fund. She opined that it did not seem
complicated.
1:53:08 PM
AT EASE
1:58:03 PM
RECONVENED
Co-Chair Merrick indicated that Emily Nauman with
Legislative Legal Service was online for questions.
1:58:15 PM
Representative Rasmussen asked Ms. Nauman to comment on the
bill regarding donating to the corpus of the permanent
fund. She wondered whether it was classified as a donation
to a government entity considering the money would be
reinvested and redistributed as a dividend rather than for
the purpose of the government.
EMILY NAUMAN, DEPUTY DIRECTOR, LEGISLATIVE LEGAL SERVICES,
ALASKA STATE LEGISLATURE, believed that a donation made by
an individual would be taxed the same as a donation back to
the general fund. It would be taxable but also would be
deductible if an individual chose to itemize their
deductions.
1:59:31 PM
Representative Rasmussen asked if Alaskans would know that
the donation was considered deductible.
Ms. Nauman felt comfortable with her assessment that the
tax would be the same.
Co-Chair Merrick asked if the State of Alaska was
considered a non-profit organization.
Ms. Nauman indicated that government entities were slightly
different than non-profit organizations with tax-deductible
donations. For the purposes of federal revenue taxes, a
donation to the state government would be considered as a
donation to a different type of entity.
Co-Chair Merrick asked for confirmation that the donation
would still be considered tax deductible.
Ms. Nauman clarified that a donation to the state
government would still be considered tax deductible.
Representative Josephson asked if there was something in
the [federal Tax Cuts and Jobs Act] congressional action of
2019 that made tax deductions to non-profits less
advantageous to donors.
Ms. Nauman responded that there were many changes made in
the Tax Cuts and Jobs Act that changed the structure of the
process of filing individual income taxes. She explained
that fewer people were itemizing their standard deductions
in their taxes under this act.
Representative Wool shared his understanding that the tax
law prevented the deduction of state taxes from federal
taxes. He wondered whether state taxes being non-deductible
meant giving money back to the general fund. He questioned
how it was different than a charitable contribution, and if
a state income tax would be considered tax deductible.
Ms. Nauman indicated that under the current federal tax
laws, a donation to the general fund or permanent fund as
proposed in Amendment 1 would be deductible. If a state
were to implement an income tax, it would depend on state
laws to determine whether similar donation activity would
be deductible.
Representative Wool pondered if a person lived in Alaska or
any state with a state [income] tax, was it still
deductible from an individual's federal taxes.
Ms. Nauman indicated it was her understanding that state
and local taxes were deductible and itemized in the same
way as donations. If a person were to take the standard
deductions, their state taxes might not be separately
deductible from federal taxes. She prefaced that everyone
filed their individual income taxes differently, and the
decision to itemize or not itemize certain expenditures was
at the discretion of the individual.
Co-Chair Merrick reminded the committee that Ms. Nauman was
not an accountant or tax preparer, but an attorney.
Co-Chair Merrick WITHDREW her OBJECTION to Amendment 1.
There being NO further OBJECTION, Amendment 1 was ADOPTED.
2:04:52 PM
Representative Wool commented that he was conflicted with
the bill. The bill enabled Alaskans to donate their PFDs
back to the state. He wondered how many people would choose
to give the money back to the state. He assumed that most
people who went through the trouble of applying for the PFD
would keep the check. He thought the idea of the bill was
good but that it was used in an argument that he did not
support.
Co-Chair Merrick noted that the bill allowed people to make
donations in $25 increments.
Representative Rasmussen appreciated the bill because it
gave people more choices. She appreciated Representative
Thompson's amendment. She would be supporting the bill.
2:08:30 PM
Representative Edgmon commented that the concept was
interesting. He noted it was unlikely that people would
donate back to the government. He hoped he was wrong.
Representative Prax stated that he could not estimate what
people's response would be. He noted that people were
applying for the dividend during the same time period the
legislature was deliberating the budget, and that people
based their donation decisions off those deliberations. He
thought part of the problem was that the state was losing
revenue. He expected that quite a few more people would
donate back to the state.
Co-Chair Merrick thought that with 20 co-sponsors there
might be 20 more donations.
Representative Edgmon thought the bill would be de minimis.
However, if it gave Alaskans purpose and had minimal
associated costs, he would support the bill.
Co-Chair Merrick indicated the cost to the bill was about
$43,600 to implement the proposed changes.
Representative Josephson stated that the fiscal note was
concerning. He thought that the bill was benign and did not
solve any of the state's fiscal problems. He did not
understand why someone would make a donation to the general
fund when Pick.Click.Give. allowed for specified donations.
He remarked that he would never make such a donation. He
did not think there was harm in the bill, but did not know
what the benefit would be either.
2:13:27 PM
Representative Carpenter had a dissenting opinion. He had
heard from many people that state programs were more
important than the PFD. The bill would allow for people to
apply their PFD checks towards state programs instead of
keeping the checks for themselves. He hoped that people who
reached out to the legislature and stated this opinion
would have a way to "put their money where their mouth is."
Representative Wool thought the bill would prove to be a
test of psychology. He hoped the experiment would be worth
the cost and suggested a sunset.
Co-Chair Foster MOVED to report CSHB 158(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 158(FIN) was REPORTED out of committee with five "do
pass" recommendations and with six "no recommendation"
recommendations and with one previously published
indeterminate fiscal note: FN1 (REV).
2:16:00 PM
AT EASE
2:18:29 PM
RECONVENED
Co-Chair Merrick called the meeting back to order.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 158 Amendment 1 Thompson 030822.pdf |
HFIN 3/15/2022 1:30:00 PM |
HB 158 |
| HFIN HB158 DOR response 03.25.22.pdf |
HFIN 3/15/2022 1:30:00 PM |
HB 158 |