Legislature(2017 - 2018)SENATE FINANCE 532
02/20/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB8 | |
| SB154 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 8 | TELECONFERENCED | |
| + | SB 154 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 154
"An Act relating to contributions from permanent fund
dividends to the general fund."
9:30:10 AM
SENATOR DAVID WILSON, SPONSOR, discussed the bill. He
voiced that if enacted, Senate Bill 154 would allow
Alaskans applying for a Permanent Fund Dividend (PFD) to
donate all or a portion of their PFD directly to the
state's General Fund (GF). He related that he had heard
from many Alaskans who said they would not mind giving
"their fair share" to the State of Alaska. This bill would
create a process where Alaskans could donate their PFDs to
the State General Fund using the Click.Pick.Give program.
He indicated that the donations would be tax exempt and
exempt from the annual fee and the 7 percent administrative
fee. He furthered that a provision in the bill allowed for
children in state custody to hold the donations in a trust
until the child turns 18 years of age.
GARY ZEPP, STAFF, SENATOR DAVID WILSON, discussed the
Sectional Analysis for the bill:
Section 1: Amends AS 43.23.62(a) by adding "to the
general fund" and "the general fund" to allow a
contribution from the electronic Alaska permanent fund
dividend to the state general fund.
Section 2: Amends AS 43.23.062(b) to add "the general
fund" to the list of organizations, community
foundations, or charitable organizations eligible to
be added to the contributions list.
Section 3: Amends AS 43.23.062(m) by adding "general
fund or to the" to the list of organizations that do
not have a coordination fee withheld.
Mr. Zepp noted that the DOR fiscal note covered all the
cost associated with the bill, which was why the donations
were exempted from fees.
9:34:59 AM
Co-Chair MacKinnon OPENED public testimony.
ANGELA COX, VICE PRESIDENT OF EXTERNAL AFFAIRS, RASMUSSEN
FOUNDATION, ANCHORAGE (via teleconference), testified in
opposition to the bill. She explained that the foundation
spearheaded and funded the implementation of the
Click.Pick.Give program in 2007 in support of the state's
nonprofit sector. The program had raised $20 million since
its exemption. The foundation felt that the bill was not
aligned with the "intent of the true spirit" of the
program. She stressed that the program was never intended
to fund state government. She believed the contributions
should be subject to the administrative and application
fees if the bill was enacted.
Co-Chair Hoffman asked if Ms. Cox's position represented a
formal action from the board. Ms. Cox replied that no
formal action was taken but the members "weighed in" on the
matter.
9:37:51 AM
LAURIE WOLF, PRESIDENT, FORAKER GROUP, ANCHORAGE (via
teleconference), testified in opposition to the bill. She
conveyed that the group was grateful over the success of
the program and the charitable spirit of Alaskans. She
noted the group supported efforts to enhance the program to
better serve nonprofits in pursuit of their mission. The
group was concerned that the bill was inconsistent with the
original intent of the PFD charitable contributions program
and she pointed to the eligibility criteria. The state's GF
was not a charitable purpose. She believed the
contributions should be subject to the administrative fee
if the bill was enacted. The fee exemption would
unfavorably add to the burden of the charitable
organizations who participated in the program and was a
matter of fairness. She maintained that the bill posed a
clear policy call to the legislature whether the program
should remain true to its original intent. She offered to
read the eligibility criteria of the program.
9:41:54 AM
RANDY GRIFFIN, SELF, FAIRBANKS (via teleconference),
testified in support of the legislation. He stated that he
had given his dividend to the state for the last three
years. He believed that there was a variety of ways to
administer the program. He indicated that he had endorsed
the PFD check and mailed it to DOR with a list of things he
wanted done and requested a receipt. He encouraged people
to donate to the state.
9:43:15 AM
WILLIAM HARRINGTON, SELF, SPENARD (via teleconference),
spoke in support of the bill. He reported that he had heard
many people endorse taxation and wanted to contribute to
government but doubted that many people ever had. He
characterized the 7 percent administrative fee as "greedy"
and "disgusting."
9:44:43 AM
Co-Chair MacKinnon CLOSED public testimony.
Senator von Imhof wondered whether federal taxes would be
assessed on the PFD amount if it was donated to the GF.
SARA RACE, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, stated that she was not a tax expert
but surmised that the PFD amount would be taxed as income
at the federal level. However, if donated the contribution
could be an itemized deduction. Senator von Imhof suggested
that it depended on an individual's tax status whether it
was a tax deduction. Ms. Race believed that the statement
was correct.
Co-Chair MacKinnon thought that Ms. Race had communicated
that the PFD was considered as income for federal taxes but
could be a deduction if applicable to the individual.
GLENN GUSTAFSON, ASSISTANT ATTORNEY GENERAL, ANCHORAGE (via
teleconference), answered in the affirmative and confirmed
the statement. He referenced the testifier from Fairbanks,
who had to declare the PFD as income but take a deduction
as a charitable contribution.
9:48:44 AM
Senator Micciche thought that if a person gave the entire
dividend through the program, a person would have a greater
deduction than if the check was sent and subsequently
contributed to the state. Mr. Gustafson confused Senator
Micciche's question with a deduction regarding the 7
percent administrative fee and how it impacted an
individual's deduction. He concluded that there would be no
net effect of contributing the PFD and additional taxes
were not owed.
Co-Chair MacKinnon asked if Mr. Gustafson was a tax
attorney. Mr. Gustafson specified that he was an
accountant, and not a tax attorney. Co-Chair MacKinnon
thought it was important to ensure the information was
accurate on the public's behalf.
Senator Micciche clarified that if an individual denied the
check as a contribution back to GF, then there was no
income to report. He added that charitable contributions
were worth a proportion of the contribution as a deduction.
Co-Chair MacKinnon stated that currently, there was a
process at the PFD Division by which residents could
withdraw the application, so a check was not received. She
noted that the way Mr. Griffin contributed was complex and
noted the tax effect would impact individuals in different
ways. She informed the committee that everyone else's
dividend would proportionately increase by the total amount
of everyone who chose to withdraw their application and
forego a dividend. She noted that approximately 700,000
Alaskans applied for a dividend out of a population
735,000. She asked Ms. Race whether she was correct.
9:53:03 AM
Ms. Race answered in the affirmative. She commented that
once the dividend was paid out, it became taxable income.
Co-Chair MacKinnon asked whether the PFD was reported as
income on the form 1099 from the state. Ms. Race answered
in the affirmative. She assumed that the testifier from
Fairbanks received a 1099 and wanted a receipt for tax
reporting.
Senator von Imhof wondered what "accounting mechanism was
triggered for the filer" by applying for the PFD and then
checking the box to donate it to the GF. Ms. Race
reiterated that in the scenario provided an individual that
applied for the PFD would still receive a 1099. The 1099
would include a breakdown of distribution, which would
include the donation to the GF. She added that an
individual applicant could be subject to other
garnishments, which would be paid before the donation to
the state.
9:55:24 AM
Co-Chair Hoffman thought that the problem with not applying
for the dividend did not benefit the state, but rather
benefitted the other recipients since it did not go back to
the GF, but rather made each dividend larger.
Senator Micciche thought it would be beneficial for
individuals to be able to donate a dividend to the state
without having a tax liability. He communicated that he was
a donor to the Pick.Click.Give, and a board member to a
"couple" of nonprofits that benefit from the program. He
thought it appeared that there were concerns about
competition regarding the bills proposed use of the
program. He understood the concern among the Rasmussen
Foundation and Foraker Group. He believed that the program
was a good mechanism to employ for ideas like the one in SB
154. He hoped the committee and organizations could find a
way for the appropriate use of the program without
complicating the "good ideas" presented during the meeting.
Senator Olson thought his constituents would find it
peculiar that an individual would apply for a dividend and
then surrender it to the state. He asked how many
individuals had done so. Ms. Race relayed that only a
handful of individuals had contacted the division. She
indicated that when the request was made a staff member
provided instructions that the person must endorse the
check and send it to DOR with a directive to deposit it to
the GF.
9:58:54 AM
Co-Chair MacKinnon directed attention to the DOR fiscal
note, FN2 (REV).
Ms. Race addressed the fiscal impact note. She indicated
that the bill was associated with costs in FY 19 and in
ensuing years. She read from the analysis on page 2:
Currently, funds collected through the coordination
fee and the application fee are used for
administrative costs. AS 43.23.062(e) states that "the
department may not use money from the dividend fund
for administrative costs incurred in implementing this
section, even if it has been appropriated for costs of
administering the dividend program." For that reason,
financial costs will be associated with this bill
because no fees will be collected to cover the
administrative costs.
Ms. Race stated that because all other organizations were
philanthropic, and the proposed state program was not, the
department would administer the program instead of the
Alaska Community Foundation. The cost was for programming
time, application processing, financial reporting, and
general administration of the program.
Senator Micciche asked if Ms. Race had an opinion on the
matter. He thought that it would be beneficial to employ
the same 7 percent administrative fee versus a fiscal note.
Ms. Race replied that a 7 percent coordination fee would be
one way to reduce ongoing costs for the bill.
10:01:36 AM
Senator Wilson thought many people had different opinions
as to what government was. He listed the many government
services the state provided. He envisioned the program to
work similarly to the Pick.Click.Give program with a one
click option to contribute to the state.
SB 154 was HEARD and HELD in committee for further
consideration.
Co-Chair MacKinnon asked for amendments to be turned in to
her office by 5:00 p.m. on the following Thursday. She
stated that her office would work with the department to
modify the fiscal note.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 8 Sectional Analysis.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 8 Summary of Changes.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 8 Sponsor Statement.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 8 support letters.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 154 pick click give flow chart.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 154 Pick Click Give Program overview.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 154 Sectional Analysis, ver D.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 154 Sponsor Statement.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 8 - Opposition Bishop.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |