Legislature(2017 - 2018)ADAMS ROOM 519

04/09/2018 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 2:00 pm --
+= HB 233 EDUCATION TAX CREDITS; SUNSET; REPEALS TELECONFERENCED
Moved CSHB 233(FIN) Out of Committee
+ SB 165 COMPREHENSIVE HEALTH INSURANCE FUND TELECONFERENCED
Moved SB 165 Out of Committee
-- Public Testimony --
+ HB 306 PERS/TERS DISTRIBUTIONS TELECONFERENCED
Heard & Held
-- Public Testimony --
+= HB 399 CORP. TAX: REMOVE EXEMPTIONS/CREDITS TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 129 FISH & GAME: OFFENSES;LICENSES;PENALTIES TELECONFERENCED
Moved CSHB 129(FIN) Out of Committee
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."                                                                                
                                                                                                                                
Co-Chair Foster  relayed that the  committee had  last heard                                                                    
HB 233 on  March 27, 2018. At the hearing  the committee had                                                                    
an  introduction of  the bill  and closed  public testimony.                                                                    
The  committee had  2  amendments for  the  bill. He  called                                                                    
Representative  Tuck and  his aide,  Kendra Kloster,  to the                                                                    
table. He provided  the opportunity for the  bill sponsor to                                                                    
make comments.                                                                                                                  
                                                                                                                                
2:46:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHRIS  TUCK, SPONSOR, introduced  himself. He                                                                    
explained that originally, when  he was looking at extending                                                                    
education  tax  credits, he  was  aware  there were  several                                                                    
statutes  involved.  He  had  thought  about  ways  to  make                                                                    
improvements  and to  make things  cleaner when  considering                                                                    
introducing the  legislation. He  continued that  because of                                                                    
the time  restrictions and the expiration  date approaching,                                                                    
he decided  to make it  a clean  bill only extending  it. He                                                                    
might try to work on other items at a future date.                                                                              
                                                                                                                                
Co-Chair  Seaton MOVED  to ADOPT  Amendment 1  30-LS0152\O.1                                                                    
(Nauman, 3/28/18) (copy on file).                                                                                               
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton  thought the amendment  brought up  an issue                                                                    
that  needed  to  be  discussed   in  detail.  There  was  a                                                                    
situation  where  after the  first  $100,000  the state  was                                                                    
giving a 100 percent tax  credit for the following $200,000.                                                                    
It was  essentially allowing someone  that wanted  to donate                                                                    
not to donate  at all. It would direct the  taxes they would                                                                    
pay to the  state to one of the approved  groups by doing it                                                                    
without any additional money coming  from an organization or                                                                    
tax payer.  The amendment was  structured at the  50 percent                                                                    
tax  credit and  would stay  the same  across the  entire $5                                                                    
million range.  He was  aware that  a significant  amount of                                                                    
discussion  would be  necessary.  He thought  the topic  was                                                                    
very important,  especially because  of the  state's current                                                                    
fiscal  situation. He  wanted to  encourage contribution  to                                                                    
educational  institutions. The  question  was  how much  the                                                                    
state wanted to  put into the tax payer's  hands without any                                                                    
additional  skin  in the  game.  He  thought the  issue  was                                                                    
definitely  something to  look at  and discuss.  He did  not                                                                    
think it was currently the  appropriate time. He thought the                                                                    
issue should be dealt with in a separate bill.                                                                                  
                                                                                                                                
Co-Chair Seaton WITHDREW Amendment 1.                                                                                           
                                                                                                                                
Co-Chair  Seaton MOVED  to ADOPT  Amendment 2  30-LS0152\O.5                                                                    
(Nauman, 3/29/18) (copy on file).                                                                                               
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton  moved Conceptual  Amendment 1  to Amendment                                                                    
2:                                                                                                                              
                                                                                                                                
     In line 2 of the amendment insert the words "as they"                                                                      
     after "delete" and before "appear"                                                                                         
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair  Seaton  explained   that  when  Legislative  Legal                                                                    
Services drafted  the amendment, they  did not take  out all                                                                    
of the words that needed to be removed.                                                                                         
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There  being NO  OBJECTION,  it was  so ordered.  Conceptual                                                                    
Amendment 1 to Amendment 2 was ADOPTED.                                                                                         
                                                                                                                                
Co-Chair  Seaton explained  Amendment 2.  The amendment  was                                                                    
eliminating one  of the criteria  for a tax credit  for cash                                                                    
contributions; an annual  intercollegiate sports tournament.                                                                    
The  item occurs  in several  places with  several different                                                                    
taxes.  The  words being  deleted  would  be "or  an  annual                                                                    
intercollegiate sports tournament."                                                                                             
                                                                                                                                
Representative Kawasaki  commented on the way  the amendment                                                                    
read. He was  wondering if the word "by"  should be replaced                                                                    
with "of" [Line 19 of the amendment].                                                                                           
                                                                                                                                
2:52:11 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:53:25 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster invited Mr. Spanos to comment.                                                                                  
                                                                                                                                
2:53:39 PM                                                                                                                    
                                                                                                                                
BRANDON   S.   SPANOS,   DEPUTY  DIRECTOR,   TAX   DIVISION,                                                                    
DEPARTMENT  OF   REVENUE,  responded   that  the   "by"  was                                                                    
referring  back  to  subsection   (a)  where  it  read  "for                                                                    
contributions  accepted." It  would be  "by the  non-profit,                                                                    
public or  private, Alaska  two-year or  four-year college."                                                                    
It was  not referring  back to the  facility, but  the funds                                                                    
that were received by the organization.                                                                                         
                                                                                                                                
Representative Grenn assumed that  the item was in reference                                                                    
to the  Great Alaska  Shootout which  no longer  existed. He                                                                    
asked  if there  were  other  annual intercollegiate  sports                                                                    
tournaments that had received  funds through this particular                                                                    
tax credit.  Mr. Spanos responded  that he was not  aware of                                                                    
any. Representative  Grenn relayed  that he was  looking for                                                                    
any unintended consequences of the removal.                                                                                     
                                                                                                                                
Representative Pruitt  asked about  other sports  that might                                                                    
potentially  put   on  a  tournament.  With   adopting  this                                                                    
amendment there  would no longer  be the ability  for people                                                                    
to  utilize  the  tax  credit  to  support  other  potential                                                                    
tournaments. He noted  a number of sports that  might have a                                                                    
tournament  in the  future. Mr.  Spanos indicated,  based on                                                                    
the plain language, that was how he would interpret it.                                                                         
                                                                                                                                
Representative Pruitt  suggested that if Alaska  was to host                                                                    
a regional  final, donors would  not be able to  utilize the                                                                    
education tax credit. Mr. Spanos  replied that a corporation                                                                    
would no longer be able to receive a tax credit.                                                                                
                                                                                                                                
Representative  Pruitt  did  not  see harm  in  leaving  the                                                                    
credit available. He  did not believe getting rid  of it was                                                                    
needed.                                                                                                                         
                                                                                                                                
Co-Chair Seaton clarified that the  tax credit was meant for                                                                    
an  annual event  rather than  a onetime  credit. He  argued                                                                    
that the tax  credit should be concentrated  on pre-K, K-12,                                                                    
and University education. It was not a sports credit.                                                                           
                                                                                                                                
2:57:48 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt  MOVED   Conceptual  Amendment  2  to                                                                    
Amendment 2.                                                                                                                    
                                                                                                                                
     Delete only the word "annual"                                                                                              
                                                                                                                                
Representative Kawasaki OBJECTED.                                                                                               
                                                                                                                                
Representative  Pruitt   explained  his  amendment   to  the                                                                    
amendment.  He   believed  that   sports  were  a   part  of                                                                    
education.  He   suggested  that  the   National  Collegiate                                                                    
Athletic  Association  (NCAA)   consistently  promoted  that                                                                    
their  athletes did  very well  in  school and  moved on  to                                                                    
become  very successful.  He spoke  of Olympic  athletes and                                                                    
the discipline  they learned  and applied  in many  areas of                                                                    
their  lives. He  felt that  sports were  important, and  it                                                                    
would  be an  opportunity  for people  to  support an  event                                                                    
where they showcased student athletes.                                                                                          
                                                                                                                                
Vice-Chair Gara  spoke to his  objection. He  suggested that                                                                    
with this tax  credit the legislature did not  get to direct                                                                    
where  the funds  went. The  state gave  up $6.8  million in                                                                    
revenue per  year. He  understood the  benefits but  did not                                                                    
believe they had  been sorted out. For example,  if a person                                                                    
donated to  any collegiate  sports event at  the university,                                                                    
they  could  donate through  the  non-profit  which was  tax                                                                    
deductible  at  the  federal level  already.  A  person  was                                                                    
likely  receiving  a 25  percent  tax  deduction, which  was                                                                    
similar to a  credit of their federal  taxes. Certainly, the                                                                    
university could go to Exxon  or GCI and request a donation.                                                                    
He was unsure if a state tax  credit on top of a federal tax                                                                    
credit made  much of a  difference. He agreed  with Co-Chair                                                                    
Seaton that the  bill got amended when the state  had a huge                                                                    
amount  of money.  Currently,  the state  had  a deficit  of                                                                    
roughly $2.5 billion. He would  rather rely on a federal tax                                                                    
bonus  that a  donor received  by being  able to  deduct the                                                                    
costs from their  federal taxes. He noted  the importance of                                                                    
ranking things. He was not willing to forego state revenue.                                                                     
                                                                                                                                
Representative  Guttenberg  objected  to the  amendment.  He                                                                    
thought  there were  many bragging  rights that  accompanied                                                                    
sponsorship. Corporations  and individuals  participated for                                                                    
a  variety of  reasons. He  thought the  cream of  having an                                                                    
additional tax deduction was beyond the pale.                                                                                   
                                                                                                                                
3:02:55 PM                                                                                                                    
                                                                                                                                
Representative Thompson  asked for Representative  Pruitt to                                                                    
repeat the  conceptual amendment. Co-Chair  Foster responded                                                                    
that the amendment to the  amendment removed the annual part                                                                    
of the language.                                                                                                                
                                                                                                                                
Representative   Pruitt   explained  that   the   conceptual                                                                    
amendment would  leave the  language "or  an intercollegiate                                                                    
sports tournament"  in the various  places in the  bill. The                                                                    
only  portion  being  removed was  the  word,  "annual."  He                                                                    
thought the  first two  lines would have  to be  removed. It                                                                    
would allow  for donations to  a collegiate  tournament like                                                                    
the Great Alaska Shootout.                                                                                                      
                                                                                                                                
Representative  Thompson  thought  that  even  if  the  word                                                                    
"annual" was left  in, the bill was still  being altered, He                                                                    
spoke of several intercollegiate  tournaments. He thought it                                                                    
would  be beneficial  to the  state if  there could  be more                                                                    
intercollegiate  tournaments  and  suggested  the  amendment                                                                    
might  clarify things.  Representative  Pruitt's intent  was                                                                    
that  even  something that  was  held  annually but  not  in                                                                    
Alaska would be able to participate in the tax credit.                                                                          
                                                                                                                                
Co-Chair Seaton indicated that  the amendment was broadening                                                                    
the tax deductions  and making it so that  more general fund                                                                    
revenue  could  be  diverted  from  being  received  in  the                                                                    
general  fund. The  donor could  receive a  100 percent  tax                                                                    
credit with donations between $100,000  - $300,000. It would                                                                    
be diverting money that otherwise  would go into the general                                                                    
fund.  He  did  not  believe  the  state  was  in  a  fiscal                                                                    
situation  to  be broadening  tax  credits.  He opposed  the                                                                    
conceptual amendment.  It not  only gutted  the restrictions                                                                    
but expanded where tax credits applied.                                                                                         
                                                                                                                                
Representative  Wilson suggested  that  by  taking the  word                                                                    
"annual"  out, it  would mean  that the  committee would  be                                                                    
deleting  "or  an  intercollegiate sports  tournament".  The                                                                    
word annual would  be left in the bill. She  did not believe                                                                    
that was the intent of the maker of the amendment.                                                                              
                                                                                                                                
3:07:36 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt  explained  that  in  the  conceptual                                                                    
amendment  the   brackets  were   placed  around   the  word                                                                    
"annual",  rather  than where  they  were  currently in  the                                                                    
amendment.   Representative   Wilson  commented   that   the                                                                    
amendment made more sense.                                                                                                      
                                                                                                                                
Representative  Kawasaki   cautioned  that   the  conceptual                                                                    
amendment would  broaden the tax  credit. He was  unaware of                                                                    
the fiscal impact but thought it  could be high. He would be                                                                    
opposing it.                                                                                                                    
                                                                                                                                
Representative Kawasaki MAINTAINED his OBJECTION.                                                                               
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Pruitt, Thompson, Tilton, Grenn                                                                                       
OPPOSED:  Wilson,   Gara,   Guttenberg,   Kawasaki,   Ortiz,                                                                    
Foster, Seaton                                                                                                                  
                                                                                                                                
The MOTION  to adopt Conceptual  Amendment 2 to  Amendment 2                                                                    
FAILED (4/7).                                                                                                                   
                                                                                                                                
Representative Pruitt did  not have a problem  with an event                                                                    
such as  the Great Alaska Shootout  or the Top of  the World                                                                    
Classic tournament returning. He did  not see a problem with                                                                    
leaving the  language in  the bill. He  thought it  would be                                                                    
great to  have the credit  available. He continued  to speak                                                                    
in favor of leaving the language in statute.                                                                                    
                                                                                                                                
3:11:17 PM                                                                                                                    
                                                                                                                                
Representative  Thompson  commented  that the  Great  Alaska                                                                    
Shootout and  the Top  of the  World Classic  tournament had                                                                    
millions  of dollars'  worth of  impact  on communities.  He                                                                    
thought   the  option   should   remain   open  for   future                                                                    
utilization.                                                                                                                    
                                                                                                                                
Vice-Chair  Gara was  a big  supporter of  the Great  Alaska                                                                    
Shootout  and  the Top  of  the  World Classic  tournaments.                                                                    
Businesses could  still be approached with  the incentive of                                                                    
a  25  percent tax  deduction  off  their federal  corporate                                                                    
taxes if  they contributed.  He posed the  questions whether                                                                    
the tax  credit really  did anything  and whether  the state                                                                    
could afford it.  He wondered about where the  issue fell on                                                                    
everyone's  priority  list. He  did  not  believe it  was  a                                                                    
priority.  He  appreciated  the   efforts  of  the  American                                                                    
Legion.   They  had   been  working   diligently  to   bring                                                                    
tournaments back.                                                                                                               
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
Representative Pruitt OBJECTED.                                                                                                 
                                                                                                                                
Representative Pruitt  reiterated that there was  no harm in                                                                    
leaving the language in place. He  thought it was a means of                                                                    
encouragement and  celebration. He  did not think  the state                                                                    
was   losing   anything,   as  there   were   currently   no                                                                    
tournaments.                                                                                                                    
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Wilson,   Gara,   Guttenberg,  Kawasaki,   Seaton,                                                                    
Foster                                                                                                                          
OPPOSED: Pruitt, Thompson, Tilton, Grenn, Ortiz                                                                                 
                                                                                                                                
The MOTION to adopt Amendment 2 as amended PASSED (6/5).                                                                        
                                                                                                                                
Vice-Chair Gara reported that the  fiscal note continued the                                                                    
estimated  cost in  lost  revenue for  the  tax credits.  He                                                                    
relayed that for half of  FY 19, by continuing, lost revenue                                                                    
would be  $3.42 million. In  the out years it  was estimated                                                                    
to continue  at its current  level, $6.84 million  per year,                                                                    
of tax credits the state did not receive in revenue.                                                                            
                                                                                                                                
Co-Chair Foster  asked if the  bill sponsor had  any closing                                                                    
comments. Representative  Tuck remarked that there  had been                                                                    
a good dialog and thanked the committee.                                                                                        
                                                                                                                                
Co-Chair  Seaton  MOVED to  report  CSHB  233 (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative  Wilson  asked  whether   there  would  be  a                                                                    
forthcoming  fiscal note  or a  previously published  fiscal                                                                    
note.  Co-Chair Seaton  responded that  it was  a previously                                                                    
published fiscal note.                                                                                                          
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSHB 233 (FIN)  was REPORTED out of committee  with four "do                                                                    
pass"    recommendations,    three    "no    recommendation"                                                                    
recommendations, and four  "amend" recommendations, and with                                                                    
one previously published fiscal impact note: FN1 (REV).                                                                         
                                                                                                                                
3:16:58 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:18:24 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB 233 Northrim AK Education Tax Credits Legislation Letter.pdf HFIN 4/9/2018 1:30:00 PM
HB 233
SB 165 Additional Documents CMS Letter Approving Alaska's State Innovation Waiver 4.3.18.pdf HFIN 4/9/2018 1:30:00 PM
SB 165
SB165 Additional Documents ACHI Fund 4.3.18.pdf HFIN 4/9/2018 1:30:00 PM
SB 165
SB165 Sectional Analysis ver A 4.3.18.pdf HFIN 4/9/2018 1:30:00 PM
SB 165
SB165 Sponsor Statement 4.3.18.pdf HFIN 4/9/2018 1:30:00 PM
SB 165
SB165 Supporting Document - Alaska Commission on Aging 4.3.18.pdf HFIN 4/9/2018 1:30:00 PM
SB 165
01.23.18 Speaker Edgmon Transmittal Letter PERS & TRS.PDF HFIN 4/9/2018 1:30:00 PM
HB 306
HB 306 Sectional Analysis.pdf HFIN 4/9/2018 1:30:00 PM
HB 306
HB 399 Additional Documents - Federal Codes, 26 USC Sections 21 to 54AA.PDF HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Additional Documents - Indirect Expenditure Report Federal Credits.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Additional Documents - Indirect Expenditure Report Stranded Gas.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Additional Documents - Indirect Expenditure Report Foreign Royalty.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Additional Documents - Indirect Expenditure Report Reduced Rate Capital Gains.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Additional Documents CIT Sector Report FY 2017 3.26.18.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Additional Documents DOR Letter 3.26.18.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Sponsor Statement 3.26.18.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 Sectional Sectional Analysis ver O 3.26.18.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 233 - Amendment #2.pdf HFIN 4/9/2018 1:30:00 PM
HB 233
HB 233 - Amendment #1.pdf HFIN 4/9/2018 1:30:00 PM
HB 233
HB 129 - Amendment #3.pdf HFIN 4/9/2018 1:30:00 PM
HB 129
HB 399 - AOGA Comments - 4.9.2018.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 399 RDC letter opposing HB 399.pdf HFIN 4/9/2018 1:30:00 PM
HB 399
HB 233 2018 03 29 UAF CFOS ETC HB 233.pdf HFIN 4/9/2018 1:30:00 PM
HB 233
HB233 SB116 PWSSC support.pdf HFIN 4/9/2018 1:30:00 PM
HB 233
SB 116
HB 233 Support Letter Sitnasuak 2018 (005).pdf HFIN 4/9/2018 1:30:00 PM
HB 233
HB 233 Support.pdf HFIN 4/9/2018 1:30:00 PM
HB 233