Legislature(2001 - 2002)

04/23/2002 08:05 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                         

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