Legislature(2001 - 2002)
04/23/2002 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 371 - ALASKA VETERANS' MEM.ENDOWMENT FUND CHAIR COGHILL announced that the final order of business would be HOUSE BILL NO. 371, "An Act establishing the Alaska veterans' memorial endowment fund and providing for credits against certain taxes for contributions to that fund; relating to other tax credits for certain contributions; and providing for an effective date." Number 1355 CAROL CARROLL, Director, Central Office, Administrative Services Division, Department of Military & Veterans Affairs, came forward to present HB 371. She explained that HB 371 creates the Veterans' Memorial Endowment Fund by setting up a tax credit similar to tax credits already in statute. A taxpayer may take advantage of donating to an endowment fund for veterans' memorials up to $150,000 the first year. The fund would be used to maintain existing veterans' memorials or construct new ones. The Department of Revenue would determine how much money was available for appropriation by the legislature each year. That money would come to the Department of Military & Veterans Affairs, which in turn would grant it to appropriate organizations to maintain the monuments around the state. REPRESENTATIVE JAMES wanted to know who is getting the tax credit. MS. CARROLL answered that it's for corporate taxpayers. There are several taxes that would be available for the credit: insurance premium tax, title insurance premium tax, Alaska net income tax, oil and gas production tax, oil and gas exploration tax, fisheries business tax, or mining license. REPRESENTATIVE JAMES commented that she liked the idea of a veterans' memorial but said she hoped the money could come from other sources, perhaps through private donations, rather than through tax credits. Number 1109 MS. CARROLL pointed out that individuals could donate to this, but there wouldn't be a tax credit. She said with the addition of this tax credit, the limitations that are set in statute for those other tax credits are aggregated and the tax credit in those is limited to a certain amount. Number 0969 REPRESENTATIVE STEVENS commented that it is a great idea. He asked Ms. Carroll if people could donate to a particular community or specific site. MS. CARROLL answered that she didn't know. She said she thought that if money was stipulated, the granting process would attempt to honor those requests. However, there is nothing in statute to bind that. Number 0827 REPRESENTATIVE FATE expressed concern about the cost to the state. MS. CARROLL said she believes that the education foundation tax credit is built in the same manner as this, but she deferred to the Department of Revenue. Number 0732 BRETT FRIED, Economist, Tax Division, Department of Revenue, explained that this credit mirrors the structure of the education credit exactly. REPRESENTATIVE JAMES asked how much the education endowment fund gets every year and if it is spent as part of the budget process or is not touchable because it's an endowment. MR. FRIED answered that the education credit is not set up as an endowment. He explained that if corporations contribute $200,000, they would get $150,000 credit off their corporate income tax. The corporation specifies what accredited institution receives the credit. REPRESENTATIVE JAMES said she was conflicted about giving the Department of Revenue an accounting function for these various charities and special interests. There is a cost to that. She asked Mr. Fried if he thought this was the function of the Department of Revenue and if it was a basic responsibility of the department to handle these kinds of things. MR. FRIED replied that the Department of Revenue does manage a lot of different funds. He doesn't work on that; he's in the tax division. Number 0445 JOHN JENKS, Chief Investment Officer, Treasury Division, Department of Revenue, explained that the department has organized itself so it can manage these types of endowments fairly efficiently through the investment and accounting process. It would be more difficult if the funds were dedicated to specific places. REPRESENTATIVE JAMES asked if Mr. Jenks thought that was the government's responsibility. MR. JENKS said that when the department can help people accomplish laudable goals efficiently - and this legislation does have that - it makes a lot of sense. The department wouldn't support something if it couldn't do it efficiently. REPRESENTATIVE JAMES said that Alaska is in a position now such that there aren't enough taxes to cover the basic government, and she wondered why some of those taxes should be given away so that more people pay. MR. JENKS said he had misunderstood her question before, but he is not in a position to make the value judgment about whether the tax credit is a good idea or not. He spoke only to the efficiency of the program. Number 0140 REPRESENTATIVE STEVENS asked why there isn't a dedicated fund. It seems like a good idea for this. He asked Mr. Jenks what the problems would be of a dedicated fund for the department. MR. JENKS said that the dedicated fund is a constitutional issue. There could be a problem for the department in managing the records if funds were specified for certain monuments or places. TAPE 02-45, SIDE A Number 0015 REPRESENTATIVE STEVENS commented that he understood the problem for the department but thought there would be some substantial donations given if people knew it would be going to a particular monument. MS. CARROLL told Representative Stevens that she believes that could be done through the grant process. If a letter accompanied a specific request, the letter could certainly be forwarded to the department, and it would be considered during the granting process. REPRESENTATIVE JAMES said she is excited about having a veterans' memorial endowment fund in the state, but she just isn't convinced that this is the way she'd like to do it. Number 0369 CHAIR COGHILL agreed with Representative James. He asked Ms. Carroll how many memorial sites are in the state now, and how they are funded. MS. CARROLL answered that there are 78 across the state. She said some of the projects are funded by state appropriations. The upkeep now is from donations, which haven't been very much money in the past. She estimated that about $250,000 in the fund would result in about $12,000 a year, and that would be enough to maintain the monuments and maybe have some left over to go toward a new memorial. CHAIR COGHILL asked about the involvement of some of the veterans' groups. MS. CARROLL explained that they would be part of the group to help determine where the money would be granted. REPRESENTATIVE JAMES said she could support it if just the endowment were created without the tax money going in it. Number 0600 CHAIR COGHILL wondered if there was a way to facilitate through the service organizations rather than to create something that would draw away from the service organization. MS. CARROLL indicated that that has not been part of the conversations on this bill. She commented that the Department of Revenue has the ability to invest in a much larger amount than a small service organization, and it has the staff and professionalism to do that. She said as long as it doesn't cost the department in lost efficiency, then that is the best bet for getting the most earnings out of whatever it gets. She hasn't talked with the service organizations. She doesn't know if they have an investments person. MS. CARROLL told the committee that there already have been donations of $125,000 from private individuals toward this. That money is being held. She mentioned that this idea of this bill came forward from some veterans' groups. Number 0952 REPRESENTATIVE JAMES commented that government is growing because the people are asking it to. She is here to protect those who don't want the government to be so big. Whether something is government's responsibility is something that needs to be looked at carefully. CHAIR COGHILL expressed concern about the plethora of funds with dedicated titles and reiterated his concern to make sure that the service organizations are not diminished. Number 1161 CHAIR COGHILL announced that HB 371 would be held over.