Legislature(2017 - 2018)GRUENBERG 120

02/21/2017 03:00 PM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 91 APOC REGISTRATION FEES; LOBBYIST TAX TELECONFERENCED
Heard & Held
+= HB 44 LEGISLATIVE ETHICS: VOTING & CONFLICTS TELECONFERENCED
Heard & Held
+ HCR 1 AMEND UNIFORM RULES: ABSTAIN FROM VOTING TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 91-APOC REGISTRATION FEES; LOBBYIST TAX                                                                       
                                                                                                                                
3:07:00 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS  announced that the first  order of business                                                               
would be HOUSE BILL NO. 91,  "An Act relating to fees for certain                                                               
persons filing  disclosure statements  or other reports  with the                                                               
Alaska  Public   Offices  Commission;   relating  to  a   tax  on                                                               
legislative lobbyists; and providing for an effective date."                                                                    
                                                                                                                                
3:08:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SAM  KITO,  Alaska State  Legislature,  as  prime                                                               
sponsor  of  HB 91,  stated  that  staff is  exploring  alternate                                                               
methods  for collecting  program receipts  for the  Alaska Public                                                               
Offices  Commission  (APOC).   He  suggested  that replacing  the                                                               
"income tax"  in HB 91 with  a "fee" would provide  a more direct                                                               
path  to generating  program receipts.   He  emphasized that  the                                                               
goal is to generate money for  APOC to support its operations, to                                                               
satisfy  the program  receipt authority,  and to  provide savings                                                               
for the State of Alaska.                                                                                                        
                                                                                                                                
3:09:33 PM                                                                                                                    
                                                                                                                                
CRYSTAL KOENEMAN,  Staff, Representative  Sam Kito,  Alaska State                                                               
Legislature, on  behalf of Representative Kito,  prime sponsor of                                                               
HG 91, relayed that staff  is considering a "stair-step" approach                                                               
for generating revenue for APOC:   the lower the contract amount,                                                               
the  fewer the  filings  with  APOC and  the  less  work; as  the                                                               
contract  amount increases,  more  work is  associated with  APOC                                                               
filings.   She stated  that the  new proposal  under HB  91 would                                                               
consist of:   a $350 fee for contracts under  $30,000; a $650 fee                                                               
for contracts between $30,000 and  [$60,000]; and an $850 fee for                                                               
contracts [$60,000]  and over.   She asserted that  the resulting                                                               
revenue under  this proposal is  estimated to be  $259,150, based                                                               
on 2015 and 2016 data provided by  APOC.  She went on to say that                                                               
after  adding  in the  estimated  $106,600  in revenue  generated                                                               
through  the proposed  registration fees  for candidate,  groups,                                                               
and  non-group entities  and  the  proposed financial  disclosure                                                               
fees for  legislators and public  officials, the  total estimated                                                               
revenue is  $365,750.   She maintained that  this amount  is much                                                               
closer  to the  estimated  amount [of  $329,750]  in the  sponsor                                                               
statement.  She  asserted that collection of these  fees into the                                                               
designated  general fund  (DGF) would  reduce the  2018 operating                                                               
budget request by approximately $120,000.                                                                                       
                                                                                                                                
3:11:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked why  a  smaller  contract would  be                                                               
necessarily  less complicated  than a  larger contract,  and what                                                               
would be required  of APOC pertaining to a contract  of less than                                                               
$30,000 compared with a contract of greater than $60,000.                                                                       
                                                                                                                                
REPRESENTATIVE  KITO responded  that one  difference is  the work                                                               
that  the lobbyist  is providing  the client.   He  conceded that                                                               
sometimes contracts  overstate or understate the  amount of work.                                                               
He  explained,  however,  that  under  a  $10,000  contract,  the                                                               
likelihood of extensive billings  for lobbyist activities needing                                                               
reconciliation by APOC, such as  taking clients out to dinner, is                                                               
less than for a $60,000 contract.                                                                                               
                                                                                                                                
REPRESENTATIVE LEDOUX stated  that what she has  observed is that                                                               
the client,  not the lobbyist,  is paying  for the dinners.   She                                                               
added that some lobbyists entertain  clients in their homes.  She                                                               
pointed out that  in neither of these cases do  the expenses show                                                               
up in APOC reports.   Representative LeDoux asked what APOC would                                                               
be looking for with a higher priced client.                                                                                     
                                                                                                                                
3:16:23 PM                                                                                                                    
                                                                                                                                
HEATHER  HEBDON,   Executive  Director,  Alaska   Public  Offices                                                               
Commission (APOC),  responded that her understanding  is that the                                                               
stair-step approach  for fees, which  is being considered  for HB                                                               
91, is  based on the volume  of reports that come  into APOC, and                                                               
that volume  relates to  the amount  of a  contract.   She stated                                                               
that  the  assumption  is  that  larger  contracts  require  more                                                               
reporting.  She explained that  fees are not based necessarily on                                                               
a single registration  fee for a single lobbyist,  since a single                                                               
lobbyist may  have a dozen  different clients.  She  offered that                                                               
the  lobbyists making  more money  would have  more clients  and,                                                               
therefore, would require more reporting.                                                                                        
                                                                                                                                
REPRESENTATIVE LEDOUX asked if a  lobbyist with one client paying                                                               
$61,000 is likely  to have less reports than a  lobbyist with one                                                               
client paying $10,000.                                                                                                          
                                                                                                                                
MS. HEBDON replied  no, that is not her understanding.   She said                                                               
that the  amounts referenced  by the  three contract  ranges, are                                                               
not based  on the individual  lobbyist, but rather on  the amount                                                               
that  the  lobbyist is  making  from  lobbying activities.    She                                                               
conceded  that a  single lobbyist  could have  one client  paying                                                               
$60,000, but  the expectation is  that the single  lobbyist makes                                                               
$60,000  with ten  clients, and  there are  separate reports  for                                                               
each of the ten clients.                                                                                                        
                                                                                                                                
REPRESENTATIVE  LEDOUX   suggested  that   Representative  Kito's                                                               
intention  is  that  under  HB  91 every  lobbyist  would  pay  a                                                               
registration  fee,  and if  the  contract  amount for  any  given                                                               
client is more than $60,000,  the registration fee would be $850.                                                               
She  added  that  if  the  contract were  $10,000  or  less,  the                                                               
registration fee  would be $350.   She expressed her  belief that                                                               
the  fee was  not intended  to be  based on  "the entire  book of                                                               
clients" for a lobbyist.                                                                                                        
                                                                                                                                
3:20:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO responded  that the  fees for  lobbyists are                                                               
currently assessed  at $250 per client.   He explained that  if a                                                               
lobbyist has multiple clients, then  he/she pays that fee on each                                                               
client.   He  added  that  if a  client  contracts with  multiple                                                               
lobbyists, each  lobbyist is  paying a  fee on  that client.   He                                                               
stated that the  goal for restructuring APOC fees  is to generate                                                               
enough revenue for APOC to be able to fulfill its duties.                                                                       
                                                                                                                                
REPRESENTATIVE LEDOUX  conceded that a client  paying $60,000 for                                                               
lobbying  services can  more afford  the $850  fee than  a client                                                               
paying $10,000  for lobbying  services.  She  stated that  she is                                                               
not sure that  the $60,000 client necessarily  engenders more for                                                               
any lobbyist than does the $10,000 client.                                                                                      
                                                                                                                                
CHAIR KREISS-TOMKINS  suggested that  assigning fees in  this way                                                               
is comparable  to the  Alaska Court  System assessing  court fees                                                               
based on  the size of a  tort claim, even though  a smaller claim                                                               
may  require more  in court  services than  a larger  claim.   He                                                               
offered that the size  of a claim or contract is  used as a blunt                                                               
metric for assessing a fee.                                                                                                     
                                                                                                                                
3:22:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH referred  to the  sponsor statement,  which                                                               
estimates   revenue  of   $60,000  through   the  $50   financial                                                               
disclosure filing fees.  He  asked if besides the 60 legislators,                                                               
there  were  1,100  other   people  submitting  annual  financial                                                               
disclosure forms.                                                                                                               
                                                                                                                                
MS. HEBDON said  that AS 24.60.200 requires  a significant number                                                               
of  people   to  file  financial  disclosure   statements.    She                                                               
mentioned  that   the  five-year   average  of   public  official                                                               
financial disclosures (POFDs) received  by APOC was approximately                                                               
1,300  per year.   She  said that  number includes  those in  the                                                               
executive  branch and  governor's office,  members of  boards and                                                               
commissions, and  legislators.   She added that  municipal filers                                                               
in  communities with  populations  greater than  15,000, who  are                                                               
subject  to APOC's  electronic reporting  requirements, are  also                                                               
included  in the  five-year annual  average.   She expressed  her                                                               
desire for more  clarification in Section 4, on page  3 of HB 91,                                                               
to better  define the  group of  filers from  whom APOC  would be                                                               
collecting fees.                                                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH asked  how much effort is  required for APOC                                                               
to manage the financial disclosure filings.                                                                                     
                                                                                                                                
MS.  HEBDON replied  that the  majority of  APOC's budget  is for                                                               
personnel.   She said the  online filing system alone  requires a                                                               
fulltime analyst programmer.  She  mentioned that direct services                                                               
to the public  consume most of APOC personnel's  time - answering                                                               
phone calls,  answering emails, assisting filers  with the online                                                               
filing system,  and auditing reports.   She added  that currently                                                               
APOC is  statutorily required to  audit every report  coming into                                                               
the office, but it doesn't have the staff to do so.                                                                             
                                                                                                                                
3:26:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  asked for confirmation  that instead  of the                                                               
income tax  specified in  the original  bill or  the flat  fee of                                                               
$250 currently in statute, the new  version of HB 91 will include                                                               
a fee  on a sliding  scale that is  progressive - the  higher the                                                               
value of the contract, the higher the fee.                                                                                      
                                                                                                                                
MS. KOENEMAN confirmed  that the fee would be on  a sliding scale                                                               
based on [lobbyist] income [from] the client.                                                                                   
                                                                                                                                
REPRESENTATIVE WOOL offered  that the [new proposed]  fee was per                                                               
contract, whereas  the previous 2.5  percent tax would  have been                                                               
on the lobbyist's gross amount derived from all the contracts.                                                                  
                                                                                                                                
REPRESENTATIVE  KITO responded  that the  mechanism for  applying                                                               
the tax  versus the fee  would be the same.   He stated  that the                                                               
2.5  percent tax  for each  lobbyist would  have applied  to each                                                               
lobbyist  contract.   He went  on  to say  that this  would be  a                                                               
change from  a tax to a  fee.  He said  that the fee is  set at a                                                               
sliding scale, not  a percentage; for all of  those below $30,000                                                               
is  one fee,  between $30,000  and  $60,000 is  another fee,  and                                                               
above $60,000 is another fee.                                                                                                   
                                                                                                                                
3:27:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP noted  APOC's  reduction  in revenue,  from                                                               
$1,300,000  in  2015  to  $866,000  in  2016,  and  reduction  in                                                               
fulltime staff, from 12 positions  authorized in fiscal year 2017                                                               
(FY 17) to  8 positions shown in the  current organization chart.                                                               
He  asked if  APOC is  currently operating  with eight  full-time                                                               
employees.                                                                                                                      
                                                                                                                                
MS.  HEBDON  responded that  APOC  currently  has eight  position                                                               
control numbers  (PCNs), and the analyst  programmer position and                                                               
one other position are currently vacant.                                                                                        
                                                                                                                                
REPRESENTATIVE  KNOPP  asked if  those  two  positions have  been                                                               
vacant for some time.                                                                                                           
                                                                                                                                
MS. HEBDON replied yes.  She  said that when the former executive                                                               
director left, she became the  executive director and has not yet                                                               
recruited for her former position.                                                                                              
                                                                                                                                
REPRESENTATIVE  KITO  confirmed  in  response  to  Representative                                                               
Knopp  that the  legislature authorized  receipt authority  up to                                                               
$240,000, but  by statute  the only fee  that could  be collected                                                               
was $250 per client per lobbyist, which raised about $106,000.                                                                  
                                                                                                                                
3:30:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP referred  to the  document, titled  "Multi-                                                               
year Allocation Totals with Funding  - Operating Budget - FY 2017                                                               
Conf Committee Structure," included  in the committee packet, and                                                               
asked if the amounts shown  in the budget were amounts authorized                                                               
but not necessarily received by APOC for operations.                                                                            
                                                                                                                                
MS. KOENEMAN  referred to the  column, titled "FY 16  Actual," to                                                               
point  out  that the  legislature  had  appropriated $758,500  in                                                               
unrestricted  general funds  (UGF),  but APOC  was  only able  to                                                               
utilize  $107,500, because  that  was the  limit  of its  receipt                                                               
authority.   She then  referred to the  amounts listed  under the                                                               
column, titled "FY  16 Final," and pointed out  that $240,000 was                                                               
appropriated  by  the  legislature,  but  it  turned  out  to  be                                                               
"hollow"  authority  because  APOC  did not  have  the  statutory                                                               
authority to collect fees up to  that amount.  She added that the                                                               
legislature  thought   it  was  giving  APOC   additional  funds;                                                               
however,  the revenue  generated by  APOC fees  was substantially                                                               
lower than the amount authorized.                                                                                               
                                                                                                                                
REPRESENTATIVE  KNOPP asked  if the  legislature was  giving APOC                                                               
authority to spend an amount that it was not able to collect.                                                                   
                                                                                                                                
MS. KOENEMAN replied, "Basically, yes."                                                                                         
                                                                                                                                
REPRESENTATIVE KNOPP  referred to  the $242,600 listed  under the                                                               
column, titled "FY  17 Auth," and asked if APOC  would be able to                                                               
collect this amount only if HB 91 passed.                                                                                       
                                                                                                                                
MS. KOENEMAN  confirmed that APOC  would not be able  to generate                                                               
$242,600  in   funds,  but   only  the   approximately  $107,000,                                                               
depending  on the  number of  filers.   She  reiterated that  the                                                               
intent of HB 91 is to  raise the statutory fee authority allowing                                                               
APOC to collect more revenue.                                                                                                   
                                                                                                                                
3:33:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP  commented  that with  the  possibility  of                                                               
filing  fees, he  believes that  people appointed  to boards  and                                                               
commissions should be  exempt from APOC filing.   He relayed that                                                               
there are  about 360 people  who fall into these  categories, and                                                               
they  are not  necessarily  compensated.   He  asserted that  the                                                               
exemption would alleviate APOC of some of its workload.                                                                         
                                                                                                                                
CHAIR   KREISS-TOMKINS    offered   that   the    Department   of                                                               
Administration Finance Subcommittee  was considering reducing the                                                               
number of public officials who are required to file POFDs.                                                                      
                                                                                                                                
[HB 91 was held over.]                                                                                                          

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