Legislature(2003 - 2004)
05/08/2003 01:36 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CSHB 194(L&C)-REGIONAL DEVELOPMENT ORG TAX CREDIT
CHAIR BUNDE announced CSHB 194(L&C) to be up for consideration.
REPRESENTATIVE TOM ANDERSON, sponsor, said HB 194 is the result
of a partnership between the business development community and
corporate Alaska and creates a tax credit of up to $10,000 to a
corporation that donates to an Alaska regional development
organization (ARDOR). This credit, when combined with various
existing tax credits, may not exceed $150,000 and that will not
change. This bill provides alternative recipients for donations.
There are 13 ARDORs throughout the state, the biggest being the
Anchorage Economic Development Corporation (AEDC).
REPRESENTATIVE ANDERSON said a (committee substitute) CS was
requested by the Division of Tax to clarify the definition of a
regional development organization to definitively limit the
credit to ARDORS. Another CS was introduced to remove the sunset
provision.
MR. LARRY CRAWFORD, President, Anchorage Economic Development
Corporation, supported CSHB 194(L&C). He thought it would help
AEDC build a stronger relationship with local businesses. He
noted the AEDC board passed a resolution supporting this bill as
well.
CHAIR BUNDE said he would set the bill aside until the new
information could be copied.
CSHB 194(L&C)-REGIONAL DEVELOPMENT ORG TAX CREDIT
CHAIR BUNDE announced CSHB 194(L&C) to be back before the
committee and that the committee was considering version Q.
MS. HEATHER BEATY, staff to Representative Anderson, said
Representative Anderson would be available soon.
MR. MARK GRABER, Audit Manager, Tax Division, said the amendment
adds confusion for the following reason:
The contributions contemplated under this statute do
not cover memberships and sponsorships; they would be
contributions that would provide a direct business
benefit to the corporation. Alaska adopted the
Internal Revenue Code and in that is section 170 that
allows the deduction to a charitable organization.
ARDORS are not charitable organizations, therefore we
don't need a reference to section 170 and a deduction
in any event would not be allowed for a contribution
because the contribution would provide no direct
benefit to the corporation and therefore would not be
an ordinary and necessary business expense.
CHAIR BUNDE said he was confused and that he thought Mr. Graber
asked for the amendment.
MR. GRABER said that was correct and that the division doesn't
need the current section (b)(2) in the previous version. The
amendment is to delete lines 28 and 29.
SENATOR DAVIS moved to adopt amendment 1. There were no
objections and it was adopted.
MR. JAMES ARMSTRONG, Municipality of Anchorage, supported HB
194.
SENATOR SEEKINS said he thought the state is funding an ARDOR
when a person decides to contribute to an ARDOR instead of
paying a $10,000 tax bill, because that person gets a credit for
it.
CHAIR BUNDE said he thought a zero fiscal note was submitted
because existing legislation allows that to occur. Any time a
tax credit is allowed, it costs the state something.
SENATOR SEEKINS said he wanted to clarify that regional
development corporations are state funded organizations with no
state control.
MR. ARMSTRONG said he could see his point.
MR. EDWARD LAMB, CEO, Alaska Regional Hospital, said the state
needs to do everything it can to encourage organizations to
contribute to the ARDORS whose efforts go out to bring new
businesses into the state.
SENATOR SEEKINS moved to pass SCS CSHB 194(L&C), version Q, from
committee with attached fiscal notes and individual
recommendations. SENATORS DAVIS, STEVENS, SEEKINS, FRENCH and
BUNDE voted yea and the motion carried.
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