03/07/2024 03:00 PM House STATE AFFAIRS

           HB 245-DIR DEPOSIT PFD IN INVESTMENT ACCT                                                                        
                                                                                                                                
3:26:16 PM                                                                                                                    
                                                                                                                                
CHAIR SHAW  announced that  the next order  of business  would be                                                               
HOUSE  BILL NO.  245, "An  Act relating  to depositing  permanent                                                               
fund  dividends into  investment accounts;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
3:26:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CARRICK moved  to adopt  Amendment 1  to HB  245,                                                               
labeled 33-LS1136\A.1, Nauman, 3/1/24, which read:                                                                              
                                                                                                                                
     Page 1, line 13, following "section.":                                                                                     
          Insert "The application form must notify the                                                                          
        applicant that the applicant assumes the risk of                                                                        
     investments made under this section."                                                                                      
                                                                                                                                
3:26:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WRIGHT objected for the purpose of discussion.                                                                   
                                                                                                                                
3:26:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CARRICK explained  that Amendment  1 attempts  to                                                               
preserve  the state  from  liability or  risk  if permanent  fund                                                               
dividend (PFD) applicants choose  bad investments.  The amendment                                                               
includes   a   disclosure   that  the   applicant   assumes   the                                                               
responsibility of the investment selections they make.                                                                          
                                                                                                                                
3:28:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WRIGHT asked to hear from the bill sponsor.                                                                      
                                                                                                                                
3:28:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAN SADDLER, Alaska  State Legislature, stated his                                                               
support of Amendment  1 as a "friendly" amendment.   He explained                                                               
that anyone with  an investment account needs  to understand that                                                               
investing carries some risk.   By making abundantly clear through                                                               
a disclosure  that the  recipients of PFDs  who elect  to deposit                                                               
PFD   money   into   a   personal   investment   account   assume                                                               
responsibility for  the risk,  the state  is not  responsible for                                                               
any lost  money.  This  amendment would not incur  any additional                                                               
expense.                                                                                                                        
                                                                                                                                
3:30:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ALLARD asked  if Amendment 1 to HB  245 would have                                                               
any unintended consequences.                                                                                                    
                                                                                                                                
GENEVIEVE  WOJTUSIK,  Director,  Central Office,  Permanent  Fund                                                               
Dividend  Division,  Department  of Revenue,  answered  that  the                                                               
division is  neutral on the amendment.   It would not  create any                                                               
fiscal  impact.   The amendment  would create  a pop-up  box that                                                               
informs the  applicant that risk  is assumed by the  applicant if                                                               
they choose to invest their PFD.                                                                                                
                                                                                                                                
3:31:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STORY  asked about  tax and  deferred compensation                                                               
and asked if an amendment to  the amendment would be necessary to                                                               
include information about how investment accounts are taxed.                                                                    
                                                                                                                                
3:31:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER stated  it is not his  intent to interpose                                                               
the state into an individual's tax obligations.                                                                                 
                                                                                                                                
MS. WOJTUSIK  added that the  division is mandated by  statute to                                                               
provide  a  1099  by  January  31   of  each  year  for  PFD  tax                                                               
implications.                                                                                                                   
                                                                                                                                
3:32:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  C.  JOHNSON  asked  about failing  to  provide  a                                                               
social security number resulting in  taxes being withheld from an                                                               
applicant's PFD.                                                                                                                
                                                                                                                                
MS. WOJTUSIK  informed the committee  that there is a  24 percent                                                               
withholding fee  for incorrect  social security  numbers inputted                                                               
in the  PFD application.   The division sends warning  letters to                                                               
applicants about the fee.  The  fee is withdrawn when the correct                                                               
social security number is provided up  to the payout date.  After                                                               
the payout  date, if the  applicant wishes to amend  their social                                                               
security  number  on  their  application,  the  internal  revenue                                                               
service (IRS) must be consulted.                                                                                                
                                                                                                                                
REPRESENTATIVE C.  JOHNSON asked  when if  an applicant  chose to                                                               
deposit  their PFD  into a  tax-free entity  such as  a municipal                                                               
bond would the tax be withheld  and if there may be a possibility                                                               
of double-taxing.                                                                                                               
                                                                                                                                
MS. WOJTUSIK responded that  Representative C. Johnson's question                                                               
should be asked to the IRS  or a tax professional.  She clarified                                                               
that the bill only creates an  additional box for an applicant to                                                               
select for  an investment account.   The applicant can  work with                                                               
their own tax professional.                                                                                                     
                                                                                                                                
REPRESENTATIVE C. JOHNSON commented  that he didn't want Alaskans                                                               
to  pay  a  double  tax.    He  sought  clarification  about  tax                                                               
situations.                                                                                                                     
                                                                                                                                
3:35:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER stated  it is not his  intention to expose                                                               
Alaskans to double taxation on the PFD.                                                                                         
                                                                                                                                
3:35:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WRIGHT removed  his  objection.   There being  no                                                               
further objection, Amendment 1 to HB 245 was adopted.                                                                           
                                                                                                                                
3:35:36 PM                                                                                                                    
                                                                                                                                
CHAIR  SHAW   opened  public   testimony  on   HB  245.     After                                                               
ascertaining  that no  one wished  to testify,  he closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
3:35:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER provided wrap-up  comments and requested a                                                               
conceptual  amendment.   He explained  that  the current  program                                                               
system  the  department  utilizes   for  PFDs  would  require  an                                                               
additional  $100,000   to  divide  an  applicant's   PFD  between                                                               
accounts, and  he suggested language  to omit the  possibility of                                                               
partial PFD  deposits into different accounts,  thus resulting in                                                               
the preferred zero fiscal note.                                                                                                 
                                                                                                                                
3:37:33 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:37 p.m. to 3:41 p.m.                                                                       
                                                                                                                                
3:41:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARPENTER  moved to  adopt Conceptual  Amendment 1                                                               
to  HB 245  on page  1, line  7, to  delete "all  or part  of the                                                               
amount of".  He authorized  Legislative Legal Affairs to make any                                                               
conforming  changes   necessary.    There  being   no  objection,                                                               
Conceptual Amendment 1 to HB 245 was adopted.                                                                                   
                                                                                                                                
3:41:59 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
3:42:28 PM                                                                                                                    
                                                                                                                                
CHAIR  SHAW   opened  public   testimony  on   HB  245.     After                                                               
ascertaining there  was no one  who wished to testify,  he closed                                                               
public testimony.                                                                                                               
                                                                                                                                
3:42:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER thanked  the committee  for adopting  the                                                               
amendments, which will improve the bill.                                                                                        
                                                                                                                                
3:42:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WRIGHT  moved to report  HB 245, as  amended, from                                                               
House   State   Affairs   Standing  Committee   with   individual                                                               
recommendations and attached  zero fiscal notes.   There being no                                                               
objection CSHB (STA) moved from committee.