Legislature(1993 - 1994)
03/12/1994 10:05 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 225 INSURANCE TAX CREDIT:GIFTS TO COLLEGES
An Act relating to credits against certain insurance
taxes for contributions to certain educational
institutions; and providing for an effective date.
Co-chair Pearce directed that SB 225 be brought on for
discussion and referenced the Senate HESS Committee
Substitute for the bill. Senator Kerttula, sponsor of the
legislation, noted that private institutions statewide
relieve a substantial taxpayer burden. He explained that
the proposed bill would extend tax credits for contributions
to private educational institutions to the insurance
industry.
CAROL CARROLL, aide to Senator Kerttula, reiterated that SB
225 would extend an existing tax credit to title companies
and insurance companies. Those entities were left out of
prior legislation providing for the credit because they do
not pay corporate income tax. They do, however, pay a tax
on their premiums. Since tax provisions relating to
premiums were not amended when tax credit legislation was
passed, insurance companies are unable to avail themselves
of the credit. SB 225 would allow them to do so. It limits
the credit to 50% of the first $100.0 and 100% of the second
$100.0. Credit is further limited to 50% if the total tax
liability is less than $150.0. In 1993, the Dept. of
Revenue provided $533.0 in tax credits to qualifying
corporations that donated to educational institutions.
AL ALVAREZ, Vice President, University Relations, Alaska
Pacific University, came before committee urging support for
the bill. He reiterated that insurance companies were
inadvertently not included in earlier legislation allowing
for the tax credit because they pay taxes under a separate
section of the tax code. The tax credit has provided a
significant amount toward long-term financial health of
Alaska Pacific. Added revenue from the insurance industry
would be most beneficial.
Senator Kelly asked how receipts from tax credits are
budgeted by the University of Alaska. Co-chair Frank voiced
his understanding they would be included in the budget under
"other . . . receipts."
Discussion of donations to the University of Alaska
followed. Carol Carroll referenced a University position
paper indicating that the University raised "close to $12
million over the past two years."
Senator Kerttula attested to differences in the cost of
course offerings between the University and Alaska Pacific,
and spoke to need for continued private sector comparison as
a means of measuring University of Alaska performance.
In response to a question from Senator Kelly, Mr. Alvarez
advised that Alaska Pacific received "close to $900.0" from
existing tax credits. He further advised that momentum
generated by the credit creates a springboard for other
gifts.
Senator Sharp asked how many non-profit, public/private two
or four-year accredited schools in Alaska would qualify for
the credit, besides the University and Alaska Pacific.
Senator Kerttula noted Sheldon Jackson. The credit is
presently limited to those three institutions.
Co-chair Frank inquired concerning the number of
corporations receiving the credit. Mr. Alvarez advised of
five gifts--three from the oil industry and two from other
sources. Alaska Pacific has twice that number of prospects
in terms of companies that are "ready to give."
LARRY MEYERS, Director, Income and Excise Tax Division,
Dept. of Revenue, next came before committee. Co-chair
Frank renewed questions concerning the number of taxpayers
involved in the credit. Mr. Meyers explained that, for FY
93, the department received $142 million from oil and gas
corporations and other potentially eligible corporations.
When oil and gas tax payments are deducted, approximately
$25 million remains. He said he would provide figures on
corporate involvement.
Senator Sharp voiced concern that should an individual
income tax be reinstated in the future, individuals will be
treated much differently than corporations in terms of tax
credits for gifts to educational institutions.
JOHN TALLY, Financial Examiner, Division of Insurance, Dept.
of Commerce and Economic Development, briefly came before
committee. He explained that 1,200 to 1,400 insurance
companies pay premium taxes. Co-chair Frank pointed to the
($900.0) fiscal note from the department and voiced his
understanding that if universities are aggressive in seeking
contributions, the note could be substantially higher. Mr.
Tally concurred. Co-chair Frank asked for a breakdown of
premium tax payments made by insurance companies. He voiced
support for Universities but noted need to understand the
potential for draining the treasury. Mr. Tally agreed to
provide the information.
Senator Sharp inquired regarding expenditures from
foundations. Co-chair Frank voiced his understanding that
moneys expended by the University of Alaska would flow
through the budget process. Senator Kelly stressed need for
accountability of those moneys. Co-chair Frank attested to
his understanding that the earlier mentioned $12 million
went into a fund, and only the interest therefrom is
expendable. Co-chair Pearce asked if contributions
resulting in tax credits are required to accrue to the
University of Alaska foundation. Both Senator Kerttula and
Carol Carroll advised that they did not know. No
representatives of the University were present to speak to
the issue. Senator Kelly again stressed need to know how
the money is accounted for by the University.
Senator Kerttula MOVED that CSSB 225 (HESS) pass from
committee with individual recommendations. He told members
he would procure the information sought by Senator Kelly and
provide it prior to floor action on the bill. Co-chair
Frank pointed to the University position paper indicating
that the majority of the funds would accrue to endowments to
provide benefits to student "far into the future." No
objection having been raised, CSSB 225 (HESS) was REPORTED
OUT of committee with a zero fiscal note from the Dept. of
Revenue and a note from the Dept. of Commerce and Economic
Development showing revenue reductions of ($900.0). Co-
chairs Pearce and Frank and Senators Kelly, Kerttula, and
Rieger signed the committee report with a "do pass"
recommendation. Senators Jacko and Sharp signed "no rec."
| Document Name | Date/Time | Subjects |
|---|