Legislature(2001 - 2002)

05/02/2002 04:22 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 267                                                                                                        
     "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."                                                            
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Amendment  #1: This  amendment inserts,  "relating  to a tax  credit                                                            
program  for postsecondary  colleges  of universities;"  on page  1,                                                            
line 1. The amended title of the bill reads as follows.                                                                         
     An  Act relating  to  a tax credit  program  for postsecondary                                                             
     colleges  or universities;  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.                                                                                                         
This  amendment  also  changes  the qualifications   of educational                                                             
facilities  eligible to receive tax-deductible  contributions  in AS                                                            
21.87.070(a),     43.20.014(a),     43.55.019(a),     43.56.018(a),                                                             
43.65.018(a),  43.75.018(a),  and  43.77.045(a),  to  include  those                                                            
accredited by a national accreditation association.                                                                             
Senator Leman moved for adoption.                                                                                               
Co-Chair Kelly objected for an explanation.                                                                                     
Senator Leman commented  this legislation reminded him of a topic he                                                            
discussed with  the late Elmer Rasmuson,  who had expressed  concern                                                            
that  Alaska  statute is  inconsistent  in  governing  tax  credits.                                                            
Senator   Leman  explained   that  tax  credits   are  extended   to                                                            
contributions  made to regionally  accredited institutions  only and                                                            
pointed out that some nationally  accredited institutions operate in                                                            
the  State.  He  relayed  the Alaska  Commission   on Postsecondary                                                             
Education  (ACPE)  determination   that national   accreditation  is                                                            
equivalent to regional accreditation.                                                                                           
Senator Wilken objected  to adoption of the amendment, expressing it                                                            
changes  the intent  of the  tax credit  program.  He explained  the                                                            
current program  includes the University  of Alaska, Alaska  Pacific                                                            
University  and Sheldon  Jackson  College.  If this  amendment  were                                                            
adopted, he observed,  the program would be expanded  to provide tax                                                            
credits to  "church schools", for-profit  schools: including  Career                                                            
Academy  and Charter  College, and  trade schools:  including  truck                                                            
driving schools, massage  therapy schools, cosmetology schools, etc.                                                            
He predicted  this expansion  of the tax  credit program would  have                                                            
"far ranging implications"  and stressed that if this is the intent,                                                            
the matter should  receive further consideration.  He furthered that                                                            
ACPE  has concerns  about  this amendment  and  should  be given  an                                                            
opportunity to speak to those concerns.                                                                                         
Senator Leman  countered, "This  is not a  new idea," noting  he has                                                            
raised the  issue on several occasions  over the past ten  years. He                                                            
added  that the  ACPE has  not  indicated any  concerns  to him.  He                                                            
surmised  if  the   concerns  were  serious,  he  would   have  been                                                            
Co-Chair  Kelly objected to  adoption of  the amendment for  similar                                                            
reasons as those voiced by Senator Wilken.                                                                                      
Senator  Wilken directed  attention to written  testimony  submitted                                                            
for this bill by the ACPE whereby the concerns are detailed.                                                                    
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator  Olson, Senator  Ward, Senator Green, and  Senator                                                            
OPPOSED:  Senator Wilken,  Senator Austerman,  Senator Hoffman,  Co-                                                            
Chair Donley and Co-Chair Kelly                                                                                                 
The motion FAILED (4-5)                                                                                                         
The amendment FAILED to be adopted.                                                                                             
Amendment #2:  This conceptual amendment  reduces the amount  of tax                                                            
credit eligible  for the second $100,000 of contributions,  from 100                                                            
percent to 75 percent.                                                                                                          
Co-Chair  Donley  moved for  adoption  at  the request  of  Co-Chair                                                            
The amendment was ADOPTED without objection.                                                                                    
Amendment #3: This conceptual  amendment changes the language in the                                                            
title of the bill  to specifically reflect the tax  credit structure                                                            
adopted in Amendment #2.                                                                                                        
Co-Chair Donley moved for adoption.                                                                                             
There was no objection and the amendment was ADOPTED.                                                                           
Senator Wilken  relayed "hearsay"  observation of the activities  of                                                            
the  veterans' organizations  to  secure  funding for  services.  He                                                            
noted the  result is  this legislation  to provide  tax credits  for                                                            
private donations. While  he did not oppose this method, he surmised                                                            
the  motive  for  introducing   and  encouraging  passage   of  this                                                            
legislation was political.                                                                                                      
Senator  Ward shared  that the  topic of establishing  an  endowment                                                            
fund was discussed  at his local Veterans of Foreign  Wars (VFW) and                                                            
American Legion chapters.                                                                                                       
Co-Chair  Donley pointed  out the difference  between this  proposed                                                            
endowment fund with others  discussed during the legislative session                                                            
that have been  created entirely with public funds.  He asserted the                                                            
proposed  veterans'  fund  "appears  to have  the  more appropriate                                                             
intent for an  endowment than those other so-called  endowments". He                                                            
remarked he supports this legislation.                                                                                          
Senator Green asked the  potential impact of funds diverted from the                                                            
"State  coffers"  to  the  proposed  veterans'  endowment  fund  and                                                            
whether the amount is unlimited.                                                                                                
Senator Ward replied,  " It is subject to appropriations."  He could                                                            
not  guarantee  the Veterans  Advisory  Council  would  not  request                                                            
additional  funds in the  future, but expressed  that the intent  is                                                            
private contributions and  grants would comprise the majority of the                                                            
Co-Chair Kelly clarified  Senator Green's question was to the impact                                                            
of the tax credit on the State's general fund.                                                                                  
Co-Chair  Donley replied  the  donation amount  eligible  for a  tax                                                            
credit is limited  to $200,000 annually,  which he characterized  as                                                            
the "control" limiting the impact on the general fund.                                                                          
Senator  Green  "moved  Senate   Bill  267  out  of  Committee  with                                                            
individual recommendations and accompanying fiscal notes."                                                                      
There was no  objection and SB 267  (FIN) MOVED from Committee  with                                                            
accompanying  $125,000  fiscal  noted  #1  from  the  Department  of                                                            
Military  and  Veterans  Affairs,  zero  fiscal  note  #2  from  the                                                            
Department  of Revenue  and indeterminate  fiscal  note #3 from  the                                                            
Department of Community and Economic Development.                                                                               

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