02/14/1996 09:10 AM Senate FIN

                                                                               
       HOUSE BILL NO. 269                                                      
       "An Act relating  to credits against certain  taxes for                 
       contributions to  certain public educational  radio and                 
       television networks  and stations and to endowments for                 
  public    educational  radio  and  television networks;  and                 
  providing for  an effective date."                                           
                                                                               
  Tom Wright, staff to Representative Ivan was invited to join                 
  the committee and  offered this testimony regarding  HB 269.                 
  Referred to work draft numbered  9-LS0937\Z.  Changes in  CS                 
  title reflect the  removal of those sections  addressing the                 
  fisheries taxes from  the CS.  Sections  2, 4, 6, 8,  and 10                 
  would  reduce  the amount  of the  tax  credit for  the next                 
  $300,000 in contributions from  100% to 90%.   Also included                 
  is a  change in the sunset  date from December  31, 2000, to                 
  December 31,  2001.  Sections 3, 5, 7,  9 and 11 the changes                 
  in  these  sections  reflect  the  amended  portion  of  the                 
  sections where the  contribution for  the next $300,000  has                 
  been  reduced  from 100%  to 90%.    Credits may  not exceed                 
  $320,000  through  December 31,  2001.   The  amount  in the                 
  version passed by  the House  totaled $350,000.   In the  CS                 
  previously before  you sections  12 through  16 establishing                 
  credits for fisheries taxes were deleted.   The section that                 
  allowed tax credits for shared revenues in the fish taxes by                 
  both the state  and municipalities  was also deleted.  Final                 
  change was in  the effective  date in section  13 which  was                 
  changed from January  1, 1966 to  January 1, 1997.   Advised                 
  co-chairman Halford that this would  require a resolution on                 
  a title change and a new fiscal note.                                        
                                                                               
  Co-chairman Halford  noted that  the fiscal  notes are  two-                 
  sided;   one   being  a   savings   in  the   Department  of                 
  Administration and  the  other  is  a revenue  loss  in  the                 
  Department  of Revenue.   No conclusion has  been reached at                 
  this time.   Requested document  showing existing University                 
  credit system, the proposed changes in the original bill and                 
  the  proposed  changes  in  the  CS  so questions  on  first                 
  $100,000,  the  next  "X"  amount,  the percentage  and  the                 
  limitation  on  the  overall   percentage  of  business   or                 
  corporations  tax  return  can  be focused  on.    Then  the                 
  negative  revenue  fiscal  note  can  be balanced  with  the                 
  beneficial fiscal note in the administration fiscal note.                    
                                                                               
                                                                               
  Tom Wright indicated  that a fiscal  note was received  from                 
  the Department of Revenue based on the present CS.                           
                                                                               
  Co-chairman   Frank   voiced   concern  over   institutional                 
  advertising on a  public broadcasting  station.  Tom  Wright                 
  said  that  Public   Broadcasting  Commission  could  better                 
  address  the  concerns.    Senator  Sharp also  voiced  same                 
  concerns.  Would also like to see, whenever any publicity is                 
  given on a donation resulting from legislation, a disclaimer                 
  in the  news  article  stating these  funds  are  an  actual                 
  reduction of this  corporation's tax liability to  the State                 
  of Alaska.   Co-chairman Frank  and Senator Sharp  discussed                 
  the fact that the public is deceived on this matter.                         
                                                                               
  Senator Phillips  deals with  the subcommittee that  handles                 
  public television and  noted that if public  television were                 
  eliminated  then  there  would be  a  balance  regarding the                 
  current  State  share general  fund  dollars.    Co-chairman                 
  Halford  advised  that  the latest  fiscal  note  reads $2.6                 
  million per year.  Co-chairman Frank discussed   question of                 
  distribution  of  our  public treasury.    Money  for public                 
  broadcasting has  been appropriated in a lump  sum basis and                 
  it  has  been doled  out in  a  fair fashion  throughout the                 
  State.  Concern  for smaller stations in  outlying areas and                 
  that  this  may be  the only  communication system  in rural                 
  Alaska.  Senator Phillips responded as to division  of funds                 
  between public radio and public television.  Senator Halford                 
  cautioned  the  effect  of  cuts   on  smaller  area  public                 
  broadcasting  stations and  possible options  that  could be                 
  explored.                                                                    
                                                                               
  Tom  Wright  informed the  committee  there is  a non-profit                 
  public  broadcast  endowment   trust  benefiting  the  small                 
  stations.  It  represents all  public broadcast stations  at                 
  this time and can be donated  to by anyone in order to  help                 
  the small stations out.                                                      
                                                                               
  Senator Zharoff voiced concern about advertising also.                       
                                                                               
  Bob Jenkins, Executive Director,  Alaska Public Broadcasting                 
  Commission was invited to  join the committee.  He  said the                 
  Alaska  Public Broadcasting  Commission fully  supports this                 
  bill  and  is  consistent with  long-term  planning  that is                 
  ongoing.   Federal grant  of $954,000  funded the  satellite                 
  interconnection.    Several  regional  radio  networks  have                 
  formed consortiums to share facilities.  Advised co-chairman                 
  Frank that public broadcasting  stations are restricted from                 
  accepting  advertising.    Explained function  of  endowment                 
  trust.  Co-chairman Halford felt there would be less concern                 
  about the taxpayer choices  if it were going through  a more                 
  public system rather than a trust.  Mr. Jenkins advised that                 
  the two are  interrelated and  interdependent.  Pointed  out                 
  the sunset provision and  its primary benefit may be  in the                 
  five-year  period  to  fuel  a  trust  that  works  off  the                 
                                                                               
                                                                               
  endowment principal.                                                         
                                                                               
  Bob  Bartholomew,  Deputy  Director,  Income  &  Excise  Tax                 
  Division was  invited to  join the  committee and  explained                 
  that no more  than a $320,000  credit could be taken  across                 
  all the  taxes.  There is  a limit of $320,000  covering all                 
  the taxes.  Explained attempt to  estimate the increase that                 
  would  happen  both  on education  institution  side  of the                 
  credit or the  public broadcasting and the  current estimate                 
  of what the total potential loss in revenue is.  The maximum                 
  contribution would be limited to $400,000 and $320,000 would                 
  be credited against state  taxes.  Tax liability   cannot be                 
  reduced below  fifty percent.    Multiple corporations  must                 
  file  under  parent  corporation and  the  parent  takes the                 
  credit.  A  quick overview was  given.  Voiced concern  over                 
  the  intent  of  credit and  noted  that  the department  is                 
  willing  to discuss  the  problems.   In  answer to  Senator                 
  Zharoff's  question advised that the fiscal note is based on                 
  current legislation.  It is not a high figure when the trend                 
  over the  past few years  is looked at.   Tried to  strike a                 
  balance  between  the  old and  new  corporations  and their                 
  contributions.                                                               
                                                                               
  (tape changed to SFC-96, #25, Side 1                                         
                                                                               
  Co-chairman Halford questioned regarding maximum exposure on                 
  large corporations  and difficulties  faced  by the  smaller                 
  corporations and the combination of credits.                                 
                                                                               
  Bill held before the committee awaiting  further information                 
  from the Department of Administration.                                       
                                                                               
  ADJOURNMENT                                                                  
                                                                               
                                                                               
  The meeting was adjourned at approximately 10:41 A.M.