Legislature(2005 - 2006)HOUSE FINANCE 519

04/18/2006 10:00 AM FINANCE

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Postponed>
Moved CSHB 426(FIN) Out of Committee
Heard & Held
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
11:53:39 AM                                                                                                                   
HOUSE BILL NO. 496                                                                                                            
     An  Act relating  to contributions  from permanent  fund                                                                   
     dividends  to certain educational  organizations  and to                                                                   
     certain   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.                                                                                                            
LOUIE  FLORA, STAFF,  REPRESENTATIVE  PAUL SEATON,  explained                                                                   
that  the   bill  would  create   a  funding   mechanism  for                                                                   
charitable organizations  in Alaska  with a check-off  on the                                                                   
electronic  Permanent Fund  Dividend  (PFD) application  form                                                                   
that would allow  them to donate a portion of  their check to                                                                   
an eligible  organization, a  community foundation,  a campus                                                                   
of the University of Alaska or vocational training program.                                                                     
To qualify  for the program,  a charitable organization  must                                                                   
provide  a  positive youth  development  programs,  workforce                                                                   
development,  aid to  the arts,  or aid and  services to  the                                                                   
elderly,  low-income  individuals   and/or  individuals  with                                                                   
mental illness.                                                                                                                 
HB  496   includes  further   eligibility  requirements   for                                                                   
charitable  organizations to ensure  that the  organizational                                                                   
fit within  the sideboards  of the program.   To  qualify, an                                                                   
organization must:                                                                                                              
   · Apply for inclusion on the contribution list for the                                                                       
     current  dividend  year   before  September  1   of  the                                                                   
     qualifying year                                                                                                            
   · Have been exempt from taxation under 26 USC 501 ©(3)                                                                       
     for the two calendar years preceding the year the                                                                          
     application is filled                                                                                                      
   · Be directed by a voluntary board or local advisory                                                                         
     board, whose members are all residents of the State of                                                                     
     Alaska and provide a qualifying service                                                                                    
   · Receive the lesser of $100,000 or 5% of its total                                                                          
     annual receipts from contributions                                                                                         
   · Provide a financial audit for the preceding fiscal year                                                                    
     if its annual budget exceeds $250,000                                                                                      
   · Not make grants or contributions to an organization                                                                        
     that is exempt from taxation under 15 USC 501©(4) or                                                                       
Mr. Flora  continued, HB 496  defines a community  foundation                                                                   
and stipulates that  they may make no more than  10% of their                                                                   
income from grants  to ©(4)(6) organizations.   That provides                                                                   
community  foundations with  flexibility in  grant making  to                                                                   
such organizations as a chamber  of commerce; it promotes the                                                                   
continued  growth  of  the  local  community  foundations  in                                                                   
Alaska.  The program has a sunset  date of 2009.  The funding                                                                   
required to enact the pilot program  will be provided through                                                                   
an agreement with the Rasmuson Foundation.                                                                                      
11:58:53 AM                                                                                                                   
Representative  Weyhrauch asked why  it was limited  to those                                                                   
that file  electronically.  Mr.  Flora replied it was  a cost                                                                   
11:59:33 AM                                                                                                                   
SHARON BARTON, DIRECTOR, PERMANENT  FUND DIVISION, DEPARTMENT                                                                   
OF REVENUE,  pointed out that  a Senate sponsor  to simplify,                                                                   
on the  behalf of  the Permanent  Fund Division had  inserted                                                                   
Representative  Weyhrauch inquired  the percentage  that file                                                                   
electronically.     Ms.  Barton  responded  that   55%  filed                                                                   
electronically for  the FY06 dividend.   She agreed  that the                                                                   
note will  increase if  paper applications  are included  and                                                                   
the costs have not been calculated.                                                                                             
12:01:14 PM                                                                                                                   
Representative  Weyhrauch  asked  the anticipated  number  of                                                                   
pages.  Ms.  Barton replied the Division hasn't  "scoped that                                                                   
out yet".  The Senate sponsor requested a sort function.                                                                        
Representative  Weyhrauch asked how  the chosen options  were                                                                   
picked.   Ms. Barton  responded those  were proposals  by the                                                                   
sponsor; the Division was not consulted.                                                                                        
Representative  Weyhrauch  worried  about  problems  for  the                                                                   
public in  determining the amount  to donate;  he recommended                                                                   
adding percentages  of the actual check.  Ms.  Barton thought                                                                   
that would be more complicated on the administrative side.                                                                      
Representative  Weyhrauch  asked the  intent  of the  section                                                                   
involving  the Certified  Public Accountant  (CPA) if  assets                                                                   
exceed $250 thousand dollars.   Mr. Flora explained that they                                                                   
had  been  working  from the  Senate  State  Affairs  version                                                                   
including that criterion.  He offered to research it.                                                                           
Representative  Weyhrauch  pointed  out  in  Section  D,  the                                                                   
deduction  of administrative  costs,  asking if  there was  a                                                                   
need for  a fiscal note.   Ms. Barton replied that  Section D                                                                   
had been envisioned for a time  after the agent was involved,                                                                   
the program would  need to stand-alone.  She  understood that                                                                   
was  the intent  and that  there would  be no  administrative                                                                   
fees deducted  from the  charitable donations.   The  sponsor                                                                   
and the Rasmuson Foundation established the arrangement.                                                                        
12:07:29 PM                                                                                                                   
Representative Weyhrauch asked  if the fiscal note considered                                                                   
the hearing process.   Ms. Barton did not know  the number of                                                                   
hearings that might  be encountered.  She thought  costs were                                                                   
included for one or two hearings.                                                                                               
Representative   Weyhrauch   referenced   the   list-included                                                                   
recipients;  he thought  that  the  aid to  the  arts was  an                                                                   
unusual  placement.   Mr.  Flora  understood  that the  human                                                                   
services   matching   grants   had   been   decreasing;   the                                                                   
legislation appears  to be a way  to boost funding  for those                                                                   
organizations.  He was not certain about that inclusion.                                                                        
12:10:24 PM                                                                                                                   
Representative Holm  asked if all funding would  come through                                                                   
the  Rasmuson  Foundation.   Mr.  Flora understood  that  was                                                                   
12:11:02 PM                                                                                                                   
DIANE  KAPLAN, PRESIDENT,  RASMUSON  FOUNDATION, stated  that                                                                   
the foundation is  prepared to cover the costs  for the first                                                                   
three years.   In the interest  of promoting  philanthropy in                                                                   
Alaska, the  Foundation is willing  to cover those  costs for                                                                   
that time.                                                                                                                      
12:11:53 PM                                                                                                                   
Representative   Holm  appreciated   the   interest  of   the                                                                   
Foundation.   He voiced  concern that  the legislation  would                                                                   
really accomplish  anything except  bringing a  "false-hope",                                                                   
resting on the dividend program.                                                                                                
Ms. Kaplan pointed  out that they had looked  at other states                                                                   
that offered  a similar donation  credit on taxes;  there are                                                                   
about 25-30 states that allow  individuals do it.  In Alaska,                                                                   
individual  giving is far  below what  is occurring  in other                                                                   
states.    Alaska ranks  49   or  50  in  charitable  giving.                                                                   
There  is  a lot  of  capacity  to  give  in this  State  and                                                                   
sometimes  the   citizens  need  more  encouragement.     The                                                                   
anticipated estimate is $3-$5 million dollars.                                                                                  
Representative Holm  pointed out the  high cost of  living in                                                                   
12:15:30 PM                                                                                                                   
Representative Weyhrauch stated  there was no intent to limit                                                                   
it to  the Rasmuson  Foundation.  Ms.  Kaplan noted  that the                                                                   
Foundation has no intent of being a recipient.                                                                                  
12:16:17 PM                                                                                                                   
Representative  Joule  commented   on  the  foundation  grant                                                                   
awards and asked if it would influence  other community grant                                                                   
programs.  Ms.  Kaplan replied that most grant  reviews, look                                                                   
at the  amount of local support.   She hoped  the legislation                                                                   
would provide  a tool to get  other members in  the community                                                                   
to help leverage money.                                                                                                         
Representative Joule  asked if there would be a  way to track                                                                   
the contributions  at the local level.  Ms.  Kaplan responded                                                                   
that  any organization  that  holds  a designation  from  the                                                                   
Internal Revenue Service (IRS) would be eligible.                                                                               
12:20:11 PM                                                                                                                   
PUBLIC TESTIMONY CLOSED                                                                                                       
Representative  Weyhrauch MOVED to  ADOPT Amendment #1.   Co-                                                                   
Chair Chenault OBJECTED.                                                                                                        
Representative  Weyhrauch noted  that the amendment  consists                                                                   
of  three  parts.   He  offered  to speak  with  the  sponsor                                                                   
regarding the amendment.                                                                                                        
12:22:18 PM                                                                                                                   
Representative  Kelly voiced  concern  with the  legislation,                                                                   
however,   thanked   the  Rasmuson   Foundation   for   their                                                                   
HB 496 was HELD in Committee for further consideration.                                                                         

Document Name Date/Time Subjects