Legislature(2017 - 2018)ADAMS ROOM 519
03/27/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation: Commissioner, Department of Revenue: Sheldon Fisher | |
| HB233 | |
| HB303 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 233 | TELECONFERENCED | |
| += | HB 303 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 233
"An Act relating to the insurance tax education
credit, the income tax education credit, the oil or
gas producer education credit, the property tax
education credit, the mining business education
credit, the fisheries business education credit, and
the fisheries resource landing tax education credit;
providing for an effective date by repealing the
effective dates of secs. 3, 5, 7, 10, 14, 16, 18, 21,
23, 25, 28, 30, 32, 35, 37, 39, 42, 44, 46, 49, 51,
53, and 55, ch. 92, SLA 2010, sec. 14, ch. 7, FSSLA
2011, secs. 15, 17, 19, 21, 23, and 25, ch. 74, SLA
2012, sec. 49, ch. 14, SLA 2014, secs. 37, 40, 43, and
46, ch. 15, SLA 2014, and secs. 26 and 31, ch. 61, SLA
2014; providing for an effective date by amending the
effective date of secs. 1, 2, and 21, ch. 61, SLA
2014; and providing for an effective date."
2:25:09 PM
REPRESENTATIVE CHRIS TUCK, SPONSOR, introduced the
PowerPoint presentation, "House Bill 233 Education Tax
Credits" (copy on file). He thanked the committee.
KENDRA KLOSTER, STAFF, REPRESENTATIVE CHRIS TUCK, provided
a history of the Education Tax Credit on slide 2,
"Education Tax Credit":
1987: Education Tax Credit (ETC) established to
encourage private businesses to make charitable
contributions to Alaska educational institutions and
facilities
2010: Credit increased from 50% to 100% on
contributions between $101-$300k; maximum annual
credit expanded from $150k to $5 million (SB236)
2011 and 2014: List of institutions and programs
eligible for donation were expanded; eligibility
varies by tax-type (SB84 and HB278)
2014: ETC sunset established for Dec 2018 as part of
newly
established Indirect Expenditure Report (HB306)
Ms. Kloster reviewed what the bill did on slide 3,
"Education Tax Credit":
HB233 extends the effective date for the repeal of the
education tax credits from December 31, 2018 to
January 1, 2025.
Ensures that the credit that exists in statute today
will be maintained until January 1, 2025, instead of
narrowing in scope and decreasing in value on January
1, 2021.
Ms. Kloster continued to slide 4, "Education Tax Credit":
Today, there are many opportunities to make private
donations to a variety of educational institutions,
facilities and programs
However, there are specific eligibility requirements
for both organizations and tax type
Selection of eligible entities:
Non-profit, public or private accredited Alaska
two-year or four-year colleges
Non-profit elementary or secondary schools and
school districts
State operated vocational education and training
schools
Non-profit regional vocational training centers
Apprenticeship programs
Alaska higher education investment fund
Postsecondary institutions providing dual-credit
courses
Ms. Kloster further discussed the credit on slide 5,
"Education Tax Credit":
Non-transferable, non-refundable credit that a donor
can apply against the following categories of State of
Alaska taxes. The use and deductibility of
contributions varies by tax type:
Corporate Income Tax
Fisheries Business Tax / Fisheries Resource
Landing Tax
Insurance Premium Tax / Title Insurance Premium
Tax
Mining License Tax
Oil and Gas Production Tax
Oil and Gas Property Tax
General Credit Provisions:
50 percent of annual contributions up to $100,000
100 percent of the next $200,000
50 percent of annual contributions beyond
$300,000
Total annual credit per taxpayer, across all tax
types not-to-exceed $5 million
Ms. Kloster detailed why Education Tax Credits are
important on slide 6, "Why Are ETC Important?":
ETC allows a need to be filled directly.
Encourages private industry to partner with education
institutions, creating more opportunity in our state.
Expanding our educational programs to provide more
opportunities for our students.
Training our future workforce for Alaskan jobs.
2:30:12 PM
Ms. Kloster discussed slide 7, "Benefits to Education:
Summary of 2015." She indicated that Mr. Alper was
available to answer any detailed information. The chart
showed what was coming into the state's system. It was
money that the state was seeing going into the education
system.
Ms. Kloster moved to slide 8, "Benefits to Education:
Summary of CY 2017 - Alaska Education Credits."
Ms. Kloster reviewed the industry investment in education
on slide 9, "Industry Investment in Education":
In 2000, members of the At-Sea Processors Association
began making private contributions to support student
fellowships and to fund sustainable oceans and
fisheries research
Association members established the Ted Stevens
Professorship of Marine Policy
UA and the At-Sea Processors created the Pollock
Conservation Cooperative Research Center (PCCRC)
within the College of Fisheries and Ocean Sciences at
UAF
The PCCRC has put over $20 million into marine
research and education since 2000, the largest single
contributor to marine research at the University of
Alaska.
The work done over the years has had an impact far
beyond what the University could have accomplished
alone.
Participating companies have included Trident,
American, Starbound, Glacier Fish, Arctic Storm, and
the Coastal Villages Region Fund
Representative Wilson asked about the donations and whether
they had to be made to Alaska nonprofits and Alaska
schools. She also looked at page 9, and wondered whether
the student fellowships were required for Alaskans.
Ms. Kloster responded that they must go to programs within
Alaska, and benefitted Alaskans. She shared that the
private industry would give the donation to the educational
program or university; and that entity would put it toward
their tax.
Representative Ortiz returned to slide 2. He wondered if it
included the ability to make contributions to private
Alaska education institutions.
Ms. Kloster pointed to the document in the packet that
listed all of the organizations that received a tax credit,
and felt that it would help to explain the eligibility.
Co-Chair Seaton referred to page 7 and wondered what the
$2.26 million was directed toward under "Corporate Income
Tax."
Ms. Kloster responded that the "other" might refer to the
nonprofits, and deferred to Mr. Alper for more information.
2:35:02 PM
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
stated that the graph was page 2 of a three-year report. He
stated that DOR provided a cover letter, a table, and a
detailed list of recipients. He stated that the list of
recipients contained the list of the so-called "other."
That "other" list consisted of the various nonprofits,
watershed partnerships, and anything that would be eligible
to receive the tax credit donations that were not either a
university or vocational program. He stressed that the
education tax credits was a rich area of legislative
involvement. The list of eligible entities had evolved
dramatically over the year. He noted that there were
several boutique line items, which were added for various
reasons. He stressed that the list was not the donors,
rather it was the recipients who received the donations. He
shared that those who made the donations were tax payers of
some sort, but that information was confidential.
2:37:04 PM
AT EASE
2:37:20 PM
RECONVENED
Representative Guttenberg asked why Alaska Business Weekly
and Granit Construction were eligible.
Mr. Alper replied that it did not necessarily mean the two
entities were eligible, it was not a refundable tax credit.
He detailed that when a company made a donation, DOR did
not know about it until the tax was paid and it went
through the department's review process. He guessed it was
a job training or apprenticeship program. He noted that
Senator Click Bishop had taken an interest in the type of
program over the years.
Representative Guttenberg looked forward to the follow up.
Representative Tilton asked if the entities were all
Alaska-based.
Mr. Alper answered that the statutory language stated that
there must me an entity in Alaska. He guessed the
Smithsonian had a research project in Alaska, but the
recipient was the home office in the Smithsonian.
2:40:17 PM
Representative Ortiz queried the amount of discussion
regarding the allowance of public funds to go to private
institutions, and the annual amount that went to private
institutions.
Mr. Alper responded that it would be in the other category,
but could not report the actual amount by recipient. He
stated that the section was subsection 1, and believed that
it was the original language from the 1980s. He did not
know whether it had evolved over the years to include the
reference to public or private entities. He stated that
there had been a dozen or more amendments over a thirty-
year period
Ms. Kloster added that on slide 4 showed a list of eligible
entities.
2:45:00 PM
SUSAN FOLEY, PRESIDENT, UNIVERSITY OF AK FOUNDATION (via
teleconference), thanked members for their service. The
University of Alaska and the University of Alaska
Foundation strongly supported HB 233. The programs that
received contributions were not directed or established by
industry. Regarding research opportunities, often times
research opportunities reached beyond the scope of the
donor program. She invited questions.
Co-Chair Seaton wondered whether the tax credit for sports
tournament should continue.
Ms. Foley responded in the affirmative.
2:50:06 PM
DOUG WALRATH, NORTHWEST ALASKA CAREER AND TECHNINCAL CENTER
(via teleconference), spoke in support of the bill. He
stated that the loss of federal funding, with the
elimination of earmarked appropriations and the
constriction of stage UGF had made the education tax credit
increasingly important to the technical center operations
and programming. The tax credit contributions accounted for
on-third of its annual operating budget. He stated that
since 2009 it had actively pursued industry partnership.
2:53:20 PM
TOMMY SHERIDAN, SILVER BAY SEAFOODS, CORDOVA (via
teleconference), reported that Silver Bay Seafoods strongly
supported the bill. He read a prepared statement:
Silver Bay Seafoods, LLC (Silver Bay, or SBS) is
writing to support Alaska House Bill 233, "An Act
relating to the insurance tax education credit, the
income tax education credit, the oil or gas producer
education credit, the property tax education credit,
the mining business education credit, the fisheries
business education credit, and the fisheries resource
landing tax education credit."
SBS is a vertically integrated, primarily fishermen-
owned processor of frozen salmon, herring, and other
seafoods products for both domestic and export
markets. Silver Bay began in 2007 as a single salmon
processing facility in Sitka, Alaska, and has since
grown into one of the largest seafoods companies in
Alaska. Silver Bay has state of the art, high volume
processing and freezing facilities throughout Alaska,
currently operating in Sitka, Craig, Valdez, Naknek
and Metlakatla. SBS is dependent upon a large and
diverse workforce, the likes of which can and do
receive their training through the University of
Alaska Southeast's (UAS) School of Career Education,
which includes the following programs of relevance to
Silver Bay's operations: Construction Technology,
Diesel Technology, Welding, and Fisheries
Technology.
With regards to the lattermost program, industry
funding made possible through education credits have
resulted in increased training opportunities for
Alaskan youth. For example, in fall of 2017 36 Alaskan
high school students took UAS courses, thanks to
financial assistance from the At-Sea Processors
Association (APA) and Goldbelt Inc. APA previously
assisted with a pilot UAS program in spring 2017,
allowing 13 high school students to complete four
credits of college coursework. Goldbelt Inc. has
worked to engage Juneau-based Alaska Native students
in the sciences, beginning with a summer 2017
oceanography learning experience and culminating with
22 students taking an iPad-based Introduction to
Oceanography class for University of Alaska General
Education credit. Altogether, in 2017 APA and Goldbelt
Inc. helped over 50 high school students take on
university-level coursework all over the state, from
Kodiak, Juneau, and Sitka to Unalaska, Galena, and
Petersburg.
I personally benefitted from similar financial
assistance several years ago as a student in UAS's
Fisheries Technology Program. With financial
assistance made possible by donations from Icicle
Seafoods, I completed an Undergraduate Certificate in
Fisheries Technology before going on to complete
graduate-level programs at Oregon State University.
Extension of the education tax credit program through
House Bill 233 will continue to promote private
investment in Alaskan higher education, which is
essential to ensuring that Alaskans learn the skills
needed to sustain and grow Alaska's commercial fishing
industry. Our thanks to you for sponsoring this
important bill.
2:56:44 PM
KAREN MATTHIAS, COUNCIL OF ALASKA PRODUCERS, ANCHORAGE (via
teleconference), read a prepared statement:
The Council of Alaska Producers (CAP) is writing to
support Senate Bill 116, "An Act relating to the
insurance tax education credit, the income tax
education credit, the oil or gas producer education
credit, the property tax education credit, the mining
business education credit, the fisheries business
education credit, and the fisheries resource landing
tax education credit."
CAP is a non-profit trade association formed in 1992
to represent the interests of large metal mines and
mine developmental projects in Alaska. CAP informs
members on legislative and regulatory issues, supports
and advances the mining industry, educates members,
the media
and the general public on mining related issues, and
promotes economic opportunity and environmentally
sound mining practices.
CAP's members have welcomed the opportunity to partner
with the State of Alaska and provide funding directly
to Alaska's higher education projects and programs
that support and enhance the mining industry. Between
2011 and 2017, mining companies in Alaska education
tax credit program to invest $19.6 million in programs
such as:
.notdef UAF Mining Engineering research endowment
.notdef UAF Mining Engineering scholarship fund
.notdef UAA Geology Scholarships
.notdef Mining and Petroleum Training Services (MAPTS),
UAF Cooperative Extension Services, Anchorage,
Soldotna, Juneau
.notdef UAS Pathways to Mining
.notdef UAA Institute of Social and Economic Research
.notdef Northwest Arctic Borough School District
.notdef Angoon High School Vocational Technical program
MAPTS and the Pathways program provide educational
opportunities and training that lead directly to good
jobs in the industry. The importance of these
educational and training programs is underscored by a
survey of Alaska's mining workforce which revealed
that there is considerable aging of skilled employees;
for example, 47.1 percent of mechanics, 51.1 percent
of mining materials engineers and 65.4 percent of
mining machine operators are 45 years of age or older.
Faced with the challenges of attrition and aging
within the current workforce, and competition from the
global mining industry, the mining industry embarked
on a workforce development planning process which
resulted in the Alaska Mining Workforce Development
Plan.
SB116 extends the education tax credit program so it
will continue to promote private investment in higher
education in our state, an essential component of
realizing the objective of ensuring that Alaskans
learn the skills needed to sustain and grow Alaska's
mining industry.
Thank you for sponsoring this bill. We hope that it
will be scheduled soon for a hearing in the
Labor and Commerce Committee.
2:59:32 PM
BRADLEY MORAN, DEAN, COLLEGE OF FISHERIES AND OCEAN
SCIENCE, UAF, FAIRBANKS (via teleconference), spoke in
support of the legislation. He noted that his college had
utilized the education tax credit for nearly twenty years
with great benefit with over $25 million in support for
research, scholarship, fellowships, and outreach funding.
He thanked the legislators who had worked to continue the
program for the benefit of the university and the state.
Vice-Chair Gara asked if his school was a non-profit.
Mr. Moran responded in the affirmative.
Vice-Chair Gara asked if contributions to the university
treated as nonprofit contributions.
Mr. Moran replied that the contributions went through the
University Foundation.
Vice-Chair Gara noted that a company would get a federal
tax deduction for donating. He wondered whether the same
amount of money would not come in, even without the smaller
state tax credit.
Mr. Moran replied that he was not an expert in the tax
laws. He stated that through the tax credit, it allowed for
the corporations to invest in the college.
Representative Thompson queried the amount of leveraged
federal grant money.
Mr. Moran responded that in FY 17, the college brought in
approximately $43 million in federal research dollars. He
furthered that a large portion of that money was the
operation of the research vessels operated in the
university.
Representative Thompson asked if it was a 50/50 match, or
whether there was more leverage.
Mr. Moran responded that it was not a 50/50 match.
Co-Chair Foster OPENED Public Testimony
3:04:49 PM
GRETA SCHUERTH, ALASKA RED DOG MINE, NANA REGIONAL,
ANCHORAGE (via teleconference), spoke in favor of the
legislation. She stated that multiple Nana subsidiaries
provided support services to the mine operations providing
many jobs to the Nana shareholders and other Alaskans.
Representative Wilson asked how many Alaskans were able to
get education assistance.
Ms. Schuerth agreed to provide that information.
Co-Chair Foster CLOSED Public Testimony.
Co-Chair Foster indicated amendments were due in his office
by Thursday at 5:00 PM.
HB 233 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 233 Education Tax Credit Support Letter Sitnasuak 2018.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Additional Documents - DOR Education Tax Credit Report CY2017. 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Additional Documents - FY2012-FY2016 Education Tax Credits 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Sectional Analysis.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Sponsor Statement 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Supporting Documents - Support Letters 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB 303 Letters of opposition 3.23.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 303 |
| HB233 Edu Tax Credit Presentation 3.26.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB 303 - Letter of Opposition - 3.27.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 303 |
| 3.18 NANA Teck HB 233 Testimony.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |