Legislature(2007 - 2008)HOUSE FINANCE 519

04/03/2007 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 92 JURISDICTION OF OMBUDSMAN TELECONFERENCED
Moved Out of Committee
+ HB 166 CONTRIBUTIONS FROM PERM. FUND DIVIDENDS TELECONFERENCED
Moved CSHB 166(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 198 SENIOR PAYMENT PROGRAM TELECONFERENCED
Moved CSHB 198(FIN) Out of Committee
+= HB 61 TAX CREDIT FOR CONTRIBUTIONS TO VOC ED TELECONFERENCED
Moved CSHB 61(FIN) Out of Committee
HOUSE BILL NO. 166                                                                                                            
                                                                                                                                
     "An Act  relating to  contributions from permanent  fund                                                                   
     dividends   to   community   foundations,   to   certain                                                                   
     educational   organizations,   and  to   certain   other                                                                   
     charitable organizations  that provide a  positive youth                                                                   
     development program,  workforce development, aid  to the                                                                   
     arts,  or aid and  services to  the elderly,  low-income                                                                   
     individuals,   individuals   in  emergency   situations,                                                                   
     disabled   individuals,  or   individuals  with   mental                                                                   
     illness; and providing for an effective date."                                                                             
                                                                                                                                
Representative  Thomas  spoke in  support  of  HB 166,  which                                                                   
would attempt  to increase private philanthropy  in Alaska by                                                                   
giving people  an option of donating  a portion of  their PFD                                                                   
to their  favorite charity.   Alaskans  who make $100,000  or                                                                   
more,  rank  among  the  lowest  in  the  nation  as  far  as                                                                   
percentage of  income donated to charities.   The legislation                                                                   
allows  a PFD  check  off, which  should  allow charities  to                                                                   
benefit.                                                                                                                        
                                                                                                                                
Representative Thomas related  that HB 166 also requires that                                                                   
the charity meet  certain criteria before it can  be place on                                                                   
the list.  The Rasmuson Foundation  has pledged to fully fund                                                                   
the administrative  costs of the program for  the first three                                                                   
years of  the program, creating  a zero fiscal impact  on the                                                                   
state in these crucial beginning  years.  He pointed out that                                                                   
the bill would sunset in 2010.                                                                                                  
                                                                                                                                
Representative  Thomas  noted  that  they  have  had  several                                                                   
requests for  charities to  be included on  the list.   There                                                                   
are approximately 5,000 non-profit charities.                                                                                   
                                                                                                                                
Representative  Thomas urged  the committee  to support  this                                                                   
bill.                                                                                                                           
                                                                                                                                
3:10:35 PM                                                                                                                    
                                                                                                                                
ROSEMARY   HAGEVIG,  CATHOLIC   COMMUNITY  SERVICES,   stated                                                                   
support for last  year's version of the bill, as  well as for                                                                   
the current  legislation.  She thanked  Representative Thomas                                                                   
and the  Rasmuson Foundation.   She reported that  addressing                                                                   
the  needs  of  the  needy in  our  population  is  a  shared                                                                   
responsibility, not only by the  agencies and government, but                                                                   
also  by society  as  a  whole.   The  bill would  provide  a                                                                   
convenient way for the general population to help.                                                                              
                                                                                                                                
3:12:13 PM                                                                                                                    
                                                                                                                                
BRENDA  HEWITT, UNITED  WAY, SOUTHEAST  ALSAKA, testified  in                                                                   
favor of the bill.  She pointed out the zero fiscal note.                                                                       
                                                                                                                                
JEFF CLARKE,  VICE PRESIDENT, RASMUSON FOUNDATION,  testified                                                                   
in support of the legislation.                                                                                                  
                                                                                                                                
Representative  Hawker asked  if  the commitment  is for  the                                                                   
Rasmuson Foundation  to underwrite  the first three  years of                                                                   
the program.  Mr. Clarke said yes.                                                                                              
                                                                                                                                
Co-Chair Meyer  asked if it is  the same legislation  as last                                                                   
year.   Mr. Clarke  replied that  it is  the same except  the                                                                   
eligibility   for   participating  organizations   has   been                                                                   
broadened.                                                                                                                      
                                                                                                                                
Vice Chair  Stoltze wondered  about anticipated  costs.   Mr.                                                                   
Clarke  asked which  costs he  is referring  to.  Vice  Chair                                                                   
Stoltze  wanted  information  about  continuing  costs  after                                                                   
three  years.   Mr.  Clarke  said  he  could not  answer  the                                                                   
question at this time.                                                                                                          
                                                                                                                                
3:17:59 PM                                                                                                                    
                                                                                                                                
JERRY   BURNETT,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF  REVENUE, brought  attention  to  a                                                                   
couple of issues.  The biggest  concern is the possibility of                                                                   
not  being  able  to  implement  the program  by  the  FY  08                                                                   
dividend season  due to technical  problems.   The department                                                                   
does  not want  to  have a  problem with  incorrectly  paying                                                                   
dividends due to  this legislation.  He suggested  having the                                                                   
legislation take effect  for the FY 09 dividend  season.  The                                                                   
second  issue  is  that the  legislation  allows  for  dollar                                                                   
amount  payments   as  well  as   percentage  amounts.     He                                                                   
maintained   that  there   are  problems   with  allowing   a                                                                   
percentage amount.                                                                                                              
                                                                                                                                
3:20:31 PM                                                                                                                    
                                                                                                                                
Mr. Burnett  addressed the fiscal  note by the  Department of                                                                   
Revenue  for  $320,300.    It   assumes  that  the  Rasmussen                                                                   
Foundation would  pay the costs of program  implementation of                                                                   
$45,000  in FY  07, and  about $91,000  a year  the next  two                                                                   
years.  The bill  has a sunset date of 2010.   On-going costs                                                                   
beyond the three  years would be expected to be  picked up as                                                                   
administrative   costs   against  the   charities   receiving                                                                   
contributions.   If the bill  moves, refinements can  be made                                                                   
to the fiscal note in the future.                                                                                               
                                                                                                                                
Representative  Gara asked  if the bill,  as written,  allows                                                                   
for  passing future  costs,  beyond three  years,  on to  the                                                                   
charities.  Mr.  Burnett replied that there is  a sunset, and                                                                   
it also  does not  allow PFD  funds to  pay for the  program.                                                                   
Representative  Gara  asked if  the  bill continues,  if  the                                                                   
administrative  charge  would go  to the  individual  agency.                                                                   
Mr. Burnett  thought the  bill did not  have a provision  for                                                                   
that at this point.                                                                                                             
                                                                                                                                
Representative Gara suggested  reminding people how much they                                                                   
gave each year  to promote further giving.   Mr. Burnett said                                                                   
that a  1099 would  have information  as to  where the  money                                                                   
went.   Mr. Burnett  thought the  suggestion was feasible  as                                                                   
part of the program.                                                                                                            
                                                                                                                                
3:24:34 PM                                                                                                                    
                                                                                                                                
Representative Hawker  asked about limiting the  mechanism to                                                                   
fixed dollar  amounts rather than  percentages.   He wondered                                                                   
where that  idea came from.   Mr. Burnett thought it  came up                                                                   
in  State Affairs.   Representative  Hawker  agreed with  the                                                                   
idea.                                                                                                                           
                                                                                                                                
Vice Chair Stoltze  asked why "for profit"  organizations are                                                                   
not  included.   Mr. Burnett  reported  that that  discussion                                                                   
also took place  in State Affairs.  He said that  is a policy                                                                   
decision, not the Department of Revenue's call.                                                                                 
                                                                                                                                
Representative  Crawford asked what  happens if one  does not                                                                   
itemize on  income tax.   He wondered  how this  contribution                                                                   
would be treated.  Mr. Burnett  said it would be allowable as                                                                   
a deduction and would not show up as income.                                                                                    
                                                                                                                                
3:28:43 PM                                                                                                                    
                                                                                                                                
Representative  Thomas MOVED  to  ADOPT Conceptual  Amendment                                                                   
#1,  on page  1, line  12,  add "more"  after  "$100 or"  and                                                                   
delete  all   reference  to  percentages.     Co-Chair  Meyer                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
Representative  Gara  asked for  clarification  regarding  if                                                                   
more than $100 could be donated.   Representative Thomas said                                                                   
yes.                                                                                                                            
                                                                                                                                
Co-Chair Meyer WITHDREW his OBJECTION.                                                                                          
                                                                                                                                
Representative Hawker OBJECTED.   He thought "or more" should                                                                   
be further defined.                                                                                                             
                                                                                                                                
Representative Gara suggested  "any amount up to the value of                                                                   
the dividend."                                                                                                                  
                                                                                                                                
3:31:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer asked for Mr. Burnett's  opinion.  Mr. Burnett                                                                   
thought it  should be  in clear  increments, the simpler  the                                                                   
better, up  to the value of the  dividend.  He said  he could                                                                   
live with the conceptual amendment.                                                                                             
                                                                                                                                
Representative  Hawker  restated   that  the  intent  of  the                                                                   
conceptual amendment  is to provide  a fixed increment  up to                                                                   
the amount of the dividend.    The sponsor and the department                                                                   
can work together to determine the appropriate increment.                                                                       
                                                                                                                                
Representative  Hawker   WITHDREW  his  OBJECTION   to  adopt                                                                   
Conceptual Amendment #1.                                                                                                        
                                                                                                                                
Representative  Kelly  suggested  having  a  minimum  amount.                                                                   
Representative    Thomas   said    $25   is   the    minimum.                                                                   
Representative  Kelly asked  what happens  if a  mathematical                                                                   
mistake is made.                                                                                                                
                                                                                                                                
Representative  Hawker noted that  the $25 floor  was already                                                                   
fixed in statute.   There are specific provisions  already in                                                                   
the bill to address mathematical mistakes.                                                                                      
                                                                                                                                
There  being NO  further OBJECTION,  Conceptual Amendment  #1                                                                   
was adopted.                                                                                                                    
                                                                                                                                
3:35:06 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer MOVED  to ADOPT  Conceptual  Amendment #2  to                                                                   
change the date to begin in FY 09.                                                                                              
                                                                                                                                
Representative   Thomas  OBJECTED.     He  argued   that  the                                                                   
legislation should begin as soon as possible.                                                                                   
                                                                                                                                
Mr.  Burnett   reiterated  that  there  are   some  technical                                                                   
concerns  with  implementing  the  bill due  to  the  ongoing                                                                   
rewrite of  the PFD system.   This bill cannot  take priority                                                                   
over  getting an  online application  that works.   He  noted                                                                   
that the department is working  with the Rasmussen Foundation                                                                   
to make the bill work.                                                                                                          
                                                                                                                                
Representative  Thomas   requested  to  be  updated   on  the                                                                   
problems at the  Department of Revenue.  Mr.  Burnett related                                                                   
that PFD  problems in the  past have  nothing to do  with the                                                                   
technical rewrite problems of  the online application system.                                                                   
He  described  a  capital  project  regarding  rewriting  the                                                                   
system.                                                                                                                         
                                                                                                                                
3:39:35 PM                                                                                                                    
                                                                                                                                
Representative Hawker shared the  anxieties of the department                                                                   
over putting  the bill into  action.  He suggested  extending                                                                   
the date.                                                                                                                       
                                                                                                                                
Representative Thomas suggested  adding some intent language.                                                                   
                                                                                                                                
Representative   Hawker  suggested   withdrawing   Conceptual                                                                   
Amendment #2.                                                                                                                   
                                                                                                                                
Co-Chair Meyer WITHDREW Conceptual Amendment #2.                                                                                
                                                                                                                                
3:41:38 PM                                                                                                                    
                                                                                                                                
Representative  Hawker MOVED  to  ADOPT Conceptual  Amendment                                                                   
#3:                                                                                                                             
                                                                                                                                
     "It  is   the  intent  of   the  legislature   that  the                                                                   
     department  does  its absolute  best  to accomplish  the                                                                   
     requirements   of  the  bill   for  the  2008   dividend                                                                   
     distribution.  However, the  legislature recognizes that                                                                   
     if  there are  insurmountable  technical impediments  to                                                                   
     achieving that  date that the effective  (applicability)                                                                   
     dates would shift back one  year: 2009, 2010, and 2011."                                                                   
                                                                                                                                
     (In the  event that the  applicability date  is shifted,                                                                   
     the sunset date should also be shifted.)                                                                                   
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
3:43:06 PM                                                                                                                    
                                                                                                                                
Representative Foster thanked the Rasmuson Foundation for                                                                       
their contributions.                                                                                                            
                                                                                                                                
Representative Foster MOVED to REPORT CSHB 166 (FIN), as                                                                        
amended, out of Committee, with individual recommendations                                                                      
and the accompanying fiscal note.                                                                                               
                                                                                                                                
CSHB 166 (FIN) was reported out of Committee with a "do                                                                         
pass" recommendation and with a new fiscal note by the                                                                          
Department of Revenue.                                                                                                          
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                

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