Legislature(2017 - 2018)BUTROVICH 205

04/19/2018 03:30 PM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 87 CONFLICT OF INTEREST: BD FISHERIES/GAME TELECONFERENCED
<Bill Hearing Canceled>
+ HB 398 CORP TAX:PUBLIC UTILITY INCOME ALLOCATION TELECONFERENCED
Moved HB 398 Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 47 MUNICIPAL PERS CONTRIBUTIONS/INTEREST TELECONFERENCED
Moved HB 47 Out of Committee
+= HCR 19 GOVERNOR: AK NATIVE LANGUAGES EMERGENCY TELECONFERENCED
Moved SCS CSHCR 19(STA) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         April 19, 2018                                                                                         
                           3:32 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Kevin Meyer, Chair                                                                                                      
Senator David Wilson                                                                                                            
Senator Cathy Giessel                                                                                                           
Senator John Coghill                                                                                                            
Senator Dennis Egan                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 398                                                                                                              
"An Act  relating to the  allocation and apportionment  of income                                                               
of a  public utility for  purposes of  the Alaska Net  Income Tax                                                               
Act; and providing for an effective date."                                                                                      
                                                                                                                                
     - MOVED HB 398 OUT OF COMMITTEE                                                                                            
                                                                                                                                
CS FOR HOUSE CONCURRENT RESOLUTION NO. 19(CRA) AM                                                                               
Urging  Governor Bill  Walker to  issue  an administrative  order                                                               
recognizing a linguistic emergency.                                                                                             
                                                                                                                                
     - MOVED SCS CSHCR 19(STA) OUT OF COMMITTEE                                                                                 
                                                                                                                                
HOUSE BILL NO. 47                                                                                                               
"An Act  requiring certain municipalities with  a population that                                                               
decreased  by more  than 25  percent between  2000 and  2010 that                                                               
participate in the defined benefit  retirement plan of the Public                                                               
Employees'  Retirement  System of  Alaska  to  contribute to  the                                                               
system an amount  calculated by applying a rate of  22 percent of                                                               
the  total of  all  base  salaries paid  by  the municipality  to                                                               
employees  of the  municipality  who are  active  members of  the                                                               
system during a payroll period;  authorizing the administrator of                                                               
the  defined benefit  retirement  plan of  the Public  Employees'                                                               
Retirement  System  of Alaska  to  reduce  the rate  of  interest                                                               
payable  by   certain  municipalities  that  are   delinquent  in                                                               
transmitting employee and employer contributions to the                                                                         
retirement plan; and providing for an effective date."                                                                          
                                                                                                                                
     - MOVED HB 47 OUT OF COMMITTEE                                                                                             
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 87(FSH)                                                                                 
"An Act relating to participation in matters before the Board of                                                                
Fisheries and the Board of Game by the members of the respective                                                                
boards."                                                                                                                        
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 398                                                                                                                  
SHORT TITLE: CORP TAX: PUBLIC UTILITY INCOME ALLOCATION                                                                         
SPONSOR(s): FINANCE                                                                                                             
                                                                                                                                
02/23/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/23/18       (H)       FIN                                                                                                    
04/04/18       (H)       FIN AT 1:30 PM ADAMS ROOM 519                                                                          
04/04/18       (H)       Moved HB 398 Out of Committee                                                                          
04/04/18       (H)       MINUTE(FIN)                                                                                            
04/05/18       (H)       FIN RPT 4DP 7NR                                                                                        
04/05/18       (H)       DP: GARA, THOMPSON, SEATON, FOSTER                                                                     
04/05/18       (H)       NR: WILSON, KAWASAKI, GRENN, PRUITT,                                                                   
                         ORTIZ, GUTTENBERG, TILTON                                                                              
04/11/18       (H)       TRANSMITTED TO (S)                                                                                     
04/11/18       (H)       VERSION: HB 398                                                                                        
04/12/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/12/18       (S)       STA, FIN                                                                                               
04/19/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: HCR 19                                                                                                                  
SHORT TITLE: GOVERNOR: AK NATIVE LANGUAGES EMERGENCY                                                                            
SPONSOR(s): ORTIZ                                                                                                               
                                                                                                                                
02/16/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/18       (H)       CRA                                                                                                    
03/06/18       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/06/18       (H)       Heard & Held                                                                                           
03/06/18       (H)       MINUTE(CRA)                                                                                            
03/08/18       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/08/18       (H)       Moved CSHCR 19(CRA) Out of Committee                                                                   
03/08/18       (H)       MINUTE(CRA)                                                                                            
03/09/18       (H)       CRA RPT CS(CRA) 5DP                                                                                    
03/09/18       (H)       DP:    SADDLER,    DRUMMOND,    LINCOLN,                                                               
                        RAUSCHER, PARISH                                                                                        
03/19/18       (H)       TRANSMITTED TO (S)                                                                                     
03/19/18       (H)       VERSION: CSHCR 19(CRA) AM                                                                              
03/21/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/18       (S)       CRA, STA                                                                                               
04/03/18       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
04/03/18       (S)       Heard & Held                                                                                           
04/03/18       (S)       MINUTE(CRA)                                                                                            
04/10/18       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
04/10/18       (S)       Moved CSHCR 19(CRA) AM Out of Committee                                                                
04/10/18       (S)       MINUTE(CRA)                                                                                            
04/11/18       (S)       CRA RPT 3DP                                                                                            
04/11/18       (S)       DP: BISHOP, GARDNER, HOFFMAN                                                                           
04/17/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
04/17/18       (S)       Heard & Held                                                                                           
04/17/18       (S)       MINUTE(STA)                                                                                            
04/19/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: HB 47                                                                                                                   
SHORT TITLE: MUNICIPAL PERS CONTRIBUTIONS/INTEREST                                                                              
SPONSOR(s): FOSTER                                                                                                              
                                                                                                                                
01/18/17       (H)       PREFILE RELEASED 1/13/17                                                                               
01/18/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/17       (H)       CRA, FIN                                                                                               
02/28/17       (H)       CRA AT 8:00 AM BARNES 124                                                                              
02/28/17       (H)       Heard & Held                                                                                           
02/28/17       (H)       MINUTE(CRA)                                                                                            
03/02/17       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/02/17       (H)       Moved HB 47 Out of Committee                                                                           
03/02/17       (H)       MINUTE(CRA)                                                                                            
03/03/17       (H)       CRA RPT 4DP 1NR 1AM                                                                                    
03/03/17       (H)       DP: WESTLAKE, DRUMMOND, FANSLER, PARISH                                                                
03/03/17       (H)       NR: RAUSCHER                                                                                           
03/03/17       (H)       AM: SADDLER                                                                                            
04/06/17       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/06/17       (H)       Heard & Held                                                                                           
04/06/17       (H)       MINUTE(FIN)                                                                                            
04/13/17       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/13/17       (H)       Moved HB 47 Out of Committee                                                                           
04/13/17       (H)       MINUTE(FIN)                                                                                            
04/14/17       (H)       FIN RPT 5DP 6AM                                                                                        
04/14/17       (H)       DP: ORTIZ, GUTTENBERG, GARA, SEATON,                                                                   
                         FOSTER                                                                                                 
04/14/17       (H)       AM: WILSON, KAWASAKI, THOMPSON, TILTON,                                                                
                         GRENN, PRUITT                                                                                          
05/15/17       (H)       TRANSMITTED TO (S)                                                                                     
05/15/17       (H)       VERSION: HB 47                                                                                         
05/16/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
05/16/17       (S)       STA, FIN                                                                                               
04/05/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
04/05/18       (S)       Heard & Held                                                                                           
04/05/18       (S)       MINUTE(STA)                                                                                            
04/19/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BRODIE ANDERSON, Staff                                                                                                          
Representative Foster                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of HB 398.                                                                           
                                                                                                                                
CHRISTINE MARASIGAN, Staff                                                                                                      
Senator Meyer                                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of the committee                                                                     
substitute for HCR 19.                                                                                                          
                                                                                                                                
REPRESENTATIVE DAN ORTIZ                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of HCR 19.                                                                                        
                                                                                                                                
XH'UNEI LANCE TWITCHELL, representing self                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HCR 19.                                                                           
                                                                                                                                
DAVID ROBERT BOXLEY, representing self                                                                                          
Metlakatla, Alaska                                                                                                              
POSITION STATEMENT: Testified in support of HCR 19.                                                                           
                                                                                                                                
PAULETTE MARY MORENO, Grand Vice President                                                                                      
Alaska Native Sisterhood Grand Camp                                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HCR 19.                                                                           
                                                                                                                                
BRANDON SPANOS, Deputy Director                                                                                                 
Tax Division                                                                                                                    
Alaska Department of Revenue                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions regarding HB 398.                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:32:53 PM                                                                                                                    
CHAIR  KEVIN  MEYER  called the  Senate  State  Affairs  Standing                                                             
Committee meeting  to order at 3:32  p.m. Present at the  call to                                                               
order  were Senators  Wilson, Egan,  Coghill, Giessel,  and Chair                                                               
Meyer.                                                                                                                          
                                                                                                                                
       HB 398-CORP TAX: PUBLIC UTILITY INCOME ALLOCATION                                                                    
                                                                                                                                
3:34:20 PM                                                                                                                    
CHAIR MEYER announced the consideration of House Bill 398 (HB                                                                   
398).                                                                                                                           
                                                                                                                                
3:34:52 PM                                                                                                                    
BRODIE ANDERSON, Staff, Representative Foster, Alaska State                                                                     
Legislature, Juneau, Alaska, provided an overview of HB 398 as                                                                  
follows:                                                                                                                        
                                                                                                                                
     House Bill 398 addresses  foregone revenue and provides                                                                    
     the state  with the ability  to capture new  revenue in                                                                    
     Alaska corporate income tax  through the elimination of                                                                    
     the   public   utility   exemption   for   water's-edge                                                                    
     reporting.                                                                                                                 
                                                                                                                                
     A  brief   history  on  how   we  got  this   piece  of                                                                    
     legislation introduced.  Back in 2004,  legislation was                                                                    
     passed  that required  both the  Department of  Revenue                                                                    
     and Legislative Finance to create  a report on indirect                                                                    
     expenditures  and the  amount of  foregone revenue  not                                                                    
     captured by  the state. The first  indirect expenditure                                                                    
     report  was  submitted  in  2015,  in  that  report  it                                                                    
     identified a  list of indirect expenditures  within the                                                                    
     Department of  Revenue that should be  terminated; then                                                                    
     last  year in  the FY18  budget process,  House Finance                                                                    
     Subcommittee  for the  Department  of Revenue  reviewed                                                                    
     these  indirect expenditures  and recommended  that the                                                                    
     House   Finance   Committee  offer   legislation   that                                                                    
     eliminates these indirect  expenditures. House Bill 398                                                                    
     repeals a  specific exemption from  the recommendations                                                                    
     offered in both of those reports.                                                                                          
                                                                                                                                
     The indirect expenditure repealed  in House Bill 398 is                                                                    
     the public  utility exemption and  it was  selected for                                                                    
     the following  reason: It did not  meet the legislation                                                                    
     intent and it  was felt that it provided  a loophole by                                                                    
     allowing  multi-state corporations  operating a  public                                                                    
     utility in Alaska to  choose their apportionment method                                                                    
     that  is  complementary  to providing  the  lowest  tax                                                                    
     liability possible for the corporation.                                                                                    
                                                                                                                                
     Typically,  multi-state  corporations use  three-factor                                                                    
     formula  for  apportionment,  this formula  uses  three                                                                    
     fractions  represented  by   ratios  of  the  company's                                                                    
     property, payroll  and sales  within the  taxing state,                                                                    
     this one being Alaska,  to their total property payroll                                                                    
     and  sales within  the United  States or  water's edge.                                                                    
     The three  ratios are multiplied together  to produce a                                                                    
     percentage of the company's total  taxable income to be                                                                    
     allocated  to  the  taxing  state,  Alaska;  this  only                                                                    
     applies to  all non-oil-and-gas corporations,  for oil-                                                                    
     and-gas corporations  we use  a formula based  on their                                                                    
     Alaskan profits and their worldwide profits.                                                                               
                                                                                                                                
     The Department  of Revenue  cannot indicate  the amount                                                                    
     of  potential new  revenue captured  because the  small                                                                    
     amount of  taxpayers utilizing the exemption,  they are                                                                    
     required to keep that  tax information confidential due                                                                    
     to  the  size of  the  tax  pool, they  have  indicated                                                                    
     though that  there will be  new revenue if  this passes                                                                    
     according to  their fiscal note provided  to members in                                                                    
     their packet.                                                                                                              
                                                                                                                                
3:37:51 PM                                                                                                                    
CHAIR MEYER asked Mr. Anderson to review the sectional analysis                                                                 
for HB 398.                                                                                                                     
                                                                                                                                
MR. ANDERSON reviewed the sectional analysis as follows:                                                                        
                                                                                                                                
     Section 1                                                                                                              
     Adds  a new  section, AS  43.20.146, which  removes the                                                                    
     exemption  of  the  multistate  public  utilities  from                                                                    
     water's-edge reporting  from within the  Multistate Tax                                                                    
     Compact.                                                                                                                   
                                                                                                                                
     Section 2 & Section 3                                                                                                  
     Are uncodified  law dealing  with the  applicability of                                                                    
     the  effective date  and  transition  language for  the                                                                    
     regulations that would  be drafted not to  be in effect                                                                    
     until January 1, 2019.                                                                                                     
                                                                                                                                
     Section 4                                                                                                              
       The effective date which applies to Section 1 and                                                                        
     Section 2 of the bill is January 1, 2019.                                                                                  
                                                                                                                                
3:39:03 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
[CHAIR MEYER set HB 398 aside until later in the meeting.]                                                                      
                                                                                                                                
       HCR 19-GOVERNOR: ALASKA NATIVE LANGUAGES EMERGENCY                                                                   
                                                                                                                                
3:40:24 PM                                                                                                                    
CHAIR  MEYER  announced  the consideration  of  House  Concurrent                                                               
Resolution 19 (HCR 19).                                                                                                         
                                                                                                                                
3:42:05 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
3:42:51 PM                                                                                                                    
CHAIR MEYER called the committee back to order.                                                                                 
                                                                                                                                
3:42:55 PM                                                                                                                    
SENATOR GIESSEL  moved to adopt  the Senate  committee substitute                                                               
(CS) for CSHCR 19, version 30-LS1402\T, as the working document.                                                                
                                                                                                                                
3:43:08 PM                                                                                                                    
CHAIR MEYER  announced hearing  no objection,  the Senate  CS was                                                               
before  the committee.  He  asked Ms.  Marasigan  to explain  the                                                               
changes.                                                                                                                        
                                                                                                                                
3:43:18 PM                                                                                                                    
CHRISTINE   MARASIGAN,  Staff,   Senator   Meyer,  Alaska   State                                                               
Legislature, Juneau,  Alaska, provided the following  overview of                                                               
the Senate CS for CSHJR 19:                                                                                                     
                                                                                                                                
     After the meeting on Tuesday,  I consulted with Senator                                                                    
     Coghill's   office,  Senator   Giessel's  office,   and                                                                    
     Representative Ortiz's staff  and the following changes                                                                    
     were made:  On page 1,  line 2 and  on page 2,  line 24                                                                    
     the following  language was added: the  urgent need for                                                                    
     language revitalization efforts.                                                                                           
                                                                                                                                
CHAIR MEYER  noted that he meant  to object to hear  the changes.                                                               
He asked if there were other changes in the bill.                                                                               
                                                                                                                                
MS. MARASIGAN answered  no, just at the beginning and  end of the                                                               
bill.                                                                                                                           
                                                                                                                                
3:44:25 PM                                                                                                                    
CHAIR MEYER removed  his objection and announced  that the Senate                                                               
CS was before the committee.  He asked Representative Ortiz if he                                                               
was satisfied with the changes.                                                                                                 
                                                                                                                                
3:44:52 PM                                                                                                                    
REPRESENTATIVE  DAN  ORTIZ,  Alaska  State  Legislature,  Juneau,                                                               
Alaska, sponsor of HCR 19, replied as follows:                                                                                  
                                                                                                                                
     I'm not going to oppose the  CS that was put before you                                                                    
     for HCR 19; with that  said, language loss is a serious                                                                    
     problem in the communities  I represent and beyond. The                                                                    
     district I  represent is home  to three of  the state's                                                                    
     Native  languages: Tlingit,  Haida, and  Tsimshian; two                                                                    
     of  these languages,  Haida  and  Tsimshian have  fewer                                                                    
     than 10 fluent speakers left  in the state, Tlingit has                                                                    
     less  than  100  speakers.   We  recognize  the  people                                                                    
     carrying the  languages and thank  them for  their hard                                                                    
     work.  If  the  CS  brings  us  to  a  step  closer  to                                                                    
     revitalizing these languages, then  I fully support the                                                                    
     CS.                                                                                                                        
                                                                                                                                
3:46:18 PM                                                                                                                    
CHAIR  MEYER  announced  that the  committee  will  hear  invited                                                               
testimony. He noted that the  testifiers were chosen on behalf of                                                               
the individuals attending the committee meeting.                                                                                
                                                                                                                                
3:46:50 PM                                                                                                                    
XH'UNEI  LANCE  TWITCHELL,   representing  self,  Juneau  Alaska,                                                               
testified  in support  of HCR  19. He  disclosed that  he is  the                                                               
Assistant  Professor-Alaska Native  Languages for  the University                                                               
of Alaska Southeast. He disclosed  that he speaks and teaches the                                                               
Tlingit language.  He said  he has  spent a  good portion  of his                                                               
life  studying the  root causes  of language  death in  Alaska as                                                               
well as  effective measures of language  revitalization. He noted                                                               
that Sarah Dybdahl,  Director for the Central  Council of Tlingit                                                               
& Haida Indian  Tribes of Alaska's Cultural  Heritage & Education                                                               
program,  suggested  in October  to  the  Alaska Native  Language                                                               
Preservation  and Advisory  Council that  the governor  declare a                                                               
state of emergency for native  languages. He asserted that Alaska                                                               
natives  that work  on Alaska  native languages  daily understand                                                               
what is  going on. He  said he  has seen Alaska  native languages                                                               
creep closer and closer to language death.                                                                                      
                                                                                                                                
He recounted  the historical decline  in Alaska  Native speakers.                                                               
He  said  he   questioned  the  use  of   "urgency"  rather  than                                                               
"emergency" in the resolution. He continued as follows:                                                                         
                                                                                                                                
     We are asking you to move this forward. If changing a                                                                      
     word and saying, "Well, it's not quite an emergency,"                                                                      
     if that's your stance, then that is fine.                                                                                  
                                                                                                                                
MR.  TWITCHELL  said  there  was  no need  to  debate  and  asked                                                               
legislators to, "talk to them."                                                                                                 
                                                                                                                                
3:55:09 PM                                                                                                                    
CHAIR   MEYER  commented   that  committee   members  were   very                                                               
respectful in what  the testifiers were hoping to do.  He said he                                                               
guessed that the bill would move out of committee.                                                                              
                                                                                                                                
3:56:27 PM                                                                                                                    
DAVID  ROBERT  BOXLEY,  representing  self,  Metlakatla,  Alaska,                                                               
testified in support of HCR 19.  He revealed that he was 36 years                                                               
old and  when he was born  there were 150 fluent  speakers of his                                                               
language  in  his  village  and currently  there  were  5  fluent                                                               
speakers. He  said the  efforts to revive  his language  has been                                                               
met with  modern-world problems that  are not of  Alaska natives'                                                               
choosing. He noted  that he is part of  a non-profit organization                                                               
in Metlakatla to  revive the Tsimshian language.  He continued as                                                               
follows:                                                                                                                        
                                                                                                                                
     Whether we  argue about  the semantics  of a  couple of                                                                    
     words  at  this moment  is  not  going to  benefit  our                                                                    
     hopes, but  I do  want to reiterate  that if  there was                                                                    
     ever a reason  to call something an  emergency, I can't                                                                    
     think of a better reason.                                                                                                  
                                                                                                                                
4:00:11 PM                                                                                                                    
PAULETTE  MARY  MORENO,  Grand   Vice  President,  Alaska  Native                                                               
Sisterhood Grand  Camp, Juneau,  Alaska, testified in  support of                                                               
HCR 19.  She emphasized that  words are important and  asked that                                                               
the resolution  be passed because Alaska  natives have everything                                                               
to lose.                                                                                                                        
                                                                                                                                
4:05:07 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
4:08:02 PM                                                                                                                    
CHAIR MEYER called the committee to order.                                                                                      
                                                                                                                                
4:09:08 PM                                                                                                                    
SENATOR GIESSEL  moved to report  SCS CSHCR 19(STA),  version 30-                                                               
LS1402\T  from  committee  with  individual  recommendations  and                                                               
attached zero fiscal note.                                                                                                      
                                                                                                                                
4:09:22 PM                                                                                                                    
CHAIR  MEYER  announced  that  being   no  objection  the  motion                                                               
carried.                                                                                                                        
                                                                                                                                
4:09:29 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
       HB 398-CORP TAX: PUBLIC UTILITY INCOME ALLOCATION                                                                    
                                                                                                                                
4:14:13 PM                                                                                                                    
CHAIR MEYER called the committee  back to order. He announced the                                                               
committee's continuation of the hearing on HB 398.                                                                              
                                                                                                                                
SENATOR WILSON asked if there is opposition to the bill.                                                                        
                                                                                                                                
MR. ANDERSON replied  that the bill has  not received opposition.                                                               
He  confirmed  from  previous  hearings   in  the  House  Finance                                                               
Committee that  the bill will  not affect the  state's nonprofit-                                                               
public utilities,  strictly multi-state corporations that  have a                                                               
public  utility  within  Alaska's boundaries.  He  detailed  that                                                               
approximately one to five corporations might be impacted.                                                                       
                                                                                                                                
CHAIR  MEYER asked  if the  corporations that  will be  adversely                                                               
impacted know that HB 398 was working through the process.                                                                      
                                                                                                                                
MR.  ANDERSON replied  that he  has contacted  specific lobbyists                                                               
that have  contracts within some of  the multi-state corporations                                                               
to figure  out whether they  would be  impacted and what  type of                                                               
opposition might  come against HB  398. He disclosed that  he has                                                               
not received opposition notification from the corporations.                                                                     
                                                                                                                                
4:17:46 PM                                                                                                                    
BRANDON SPANOS, Deputy Director,  Tax Division, Alaska Department                                                               
of Revenue, Anchorage, Alaska, confirmed  that he has spoken with                                                               
specific taxpayers  on the legislation's impact.  He assumed that                                                               
those impacted the most know about HB 398.                                                                                      
                                                                                                                                
CHAIR  MEYER   said  he  was  concerned   that  the  corporations                                                               
currently receiving  the tax exemption  will pass the  added cost                                                               
from the  legislation on  to Alaskan. He  asked if  the Regulator                                                               
Commission of Alaska (RCA) has oversite.                                                                                        
                                                                                                                                
MR.  SPANOS  explained  that  the   RCA  does  not  regulate  all                                                               
utilities.  He pointed  out that  telecommunications  used to  be                                                               
regulated, but currently falls under that utility definition.                                                                   
                                                                                                                                
CHAIR MEYER remarked that he  questioned Mr. Sponos' response. He                                                               
said he believed  that the RCA does have  regulatory oversite and                                                               
noted that he had dealt with a bill that addressed the topic.                                                                   
                                                                                                                                
MR. SPANOS admitted  that he was not an expert  in the regulation                                                               
field.                                                                                                                          
                                                                                                                                
4:20:04 PM                                                                                                                    
CHAIR MEYER  pointed out that HB  398 has a zero  fiscal note. He                                                               
asked if the hope is the state will get some money back.                                                                        
                                                                                                                                
MR.  ANDERSON answered  yes. He  explained that  the fiscal  note                                                               
reflects an increase of some sort  due to the potential change in                                                               
tax liability for corporations utilizing the exemption.                                                                         
                                                                                                                                
CHAIR MEYER  noted that  Mr. Anderson  mentioned that  the normal                                                               
process is a three-step process  and the affected corporations do                                                               
not have to meet the three-step process.                                                                                        
                                                                                                                                
MR. ANDERSON answered correct. He detailed as follows:                                                                          
                                                                                                                                
     Back  when  we first  wrote  the  Alaska Corporate  Tax                                                                    
     Code,  banking  organizations, financial  organizations                                                                    
     and  public utilities,  multi-state corporations,  were                                                                    
     exempt.   In  the   '80s,   Alaska  removed   financial                                                                    
     organizations but  at that point no  public utility was                                                                    
     utilizing  this exemption  so  when  the Department  of                                                                    
     Revenue removed  the exemption, it  did not  come under                                                                    
     the radar that public utilities had an exemption.                                                                          
                                                                                                                                
     So, we fast  forward until I believe  the document from                                                                    
     the Department  of Revenue  said about  10 to  15 years                                                                    
     ago, public utilities  or at least a  couple started to                                                                    
     utilize  the exemption  and that's  why they  felt that                                                                    
     they   needed  a   statutory  change   rather  than   a                                                                    
     regulatory  change to  get rid  of  this exemption  and                                                                    
     that's with water's-edge  reporting for calculating all                                                                    
     other   multi-state   corporations   use   water's-edge                                                                    
     reporting  where you  compare, you  create the  formula                                                                    
     for  your Alaska  sales, payroll  and property  against                                                                    
     your U.S. or water's-edge  sales, payroll and property,                                                                    
     and then out  of that the percentage  is calculated for                                                                    
     you   Alaska   tax   liability;  that   formula,   that                                                                    
     percentage  is exempt  for  public  utilities that  are                                                                    
     multi-state corporations  because of the  exemption and                                                                    
     as  long as  it  is  in line  with  what Department  of                                                                    
     Revenue  agrees  with,  they can  calculate  their  own                                                                    
     apportionment.                                                                                                             
                                                                                                                                
4:22:22 PM                                                                                                                    
CHAIR MEYER opened and closed public testimony.                                                                                 
                                                                                                                                
4:22:48 PM                                                                                                                    
SENATOR GIESSEL moved to report  HB 398, version 30-LS1231\D from                                                               
committee  with  individual  recommendations  and  attached  zero                                                               
fiscal note.                                                                                                                    
                                                                                                                                
4:23:01 PM                                                                                                                    
CHAIR  MEYER  announced  that  being  no  objection,  the  motion                                                               
carried.                                                                                                                        
                                                                                                                                
4:23:04 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
          HB 47-MUNICIPAL PERS CONTRIBUTIONS/INTEREST                                                                       
                                                                                                                                
4:25:20 PM                                                                                                                    
CHAIR MEYER called the committee  back to order and announced the                                                               
consideration of  House Bill 47 (HB  47). He noted that  the bill                                                               
has an updated fiscal note.                                                                                                     
                                                                                                                                
4:26:41 PM                                                                                                                    
PAUL   LABOLLE,  Staff,   Representative  Foster,   Alaska  State                                                               
Legislature,  Juneau,  Alaska,   announced  his  availability  to                                                               
address questions regarding the updated fiscal note for HB 47.                                                                  
                                                                                                                                
CHAIR MEYER  said the Senate  Finance Committee will  address the                                                               
bill's fiscal  note. He explained  that the Senate  State Affairs                                                               
Committee  is  more concerned  from  a  policy standpoint  and  a                                                               
legitimate  policy   question  was  previously  brought   up.  He                                                               
remarked that there may be concern  that a precedent will be set;                                                               
however, he  conceded that the sponsor  of HB 47 and  Mr. Labolle                                                               
presented a good case.                                                                                                          
                                                                                                                                
4:27:53 PM                                                                                                                    
SENATOR GIESSEL moved to report HB 47, version 30-LS0281\A from                                                                 
committee with individual recommendations and attached fiscal                                                                   
note.                                                                                                                           
                                                                                                                                
4:28:03 PM                                                                                                                    
CHAIR MEYER announced that there being no objection, the motion                                                                 
carried.                                                                                                                        
                                                                                                                                
4:28:08 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
4:28:36 PM                                                                                                                    
CHAIR MEYER called the committee back to order.                                                                                 
                                                                                                                                
4:29:37 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Meyer adjourned the Senate State Affairs Standing                                                                         
Committee at 4:29 p.m.                                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB 398 Sponsor Statement 4.3.18.pdf SSTA 4/19/2018 3:30:00 PM
HB 398
HB 398 Version D.PDF SSTA 4/19/2018 3:30:00 PM
HB 398
HB 398 Sectional Analysis v.D 4.3.18.pdf SSTA 4/19/2018 3:30:00 PM
HB 398
HB 398 Additional Documents - Legislative Legal Services Memo 1.9.2018.pdf SSTA 4/19/2018 3:30:00 PM
HB 398
HB 398 Additional Documents - Dept. of Revenue Letter of Explanation 4.3.18.pdf SSTA 4/19/2018 3:30:00 PM
HB 398
HB 398 Additional Documents - 2015 Indirect Expenditure Report-Public Utility Exemption.pdf SSTA 4/19/2018 3:30:00 PM
HB 398
HB 398 Fiscal Note.pdf SSTA 4/19/2018 3:30:00 PM
HB 398
HB 47 Fiscal Note OMB 2866.pdf SSTA 4/19/2018 3:30:00 PM
HB 47
HB 47 Actuarial Letter Conduent 4.5.2018.pdf SSTA 4/19/2018 3:30:00 PM
HB 47
ANLPAC2018 Report to the Governor and Legislature.pdf SSTA 4/19/2018 3:30:00 PM
HCR 19
HCR 19 Version T.pdf SSTA 4/19/2018 3:30:00 PM
HCR 19