Legislature(2015 - 2016)HOUSE FINANCE 519

04/14/2016 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+= HB 81 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
<Bill Hearing Canceled>
+= HB 250 INDIV. INCOME TAX: CREDITS; RETURNS TELECONFERENCED
Heard & Held
+= HB 249 ELECTRONIC TAX RETURNS & MOTOR FUEL TAX TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 194 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Moved CSHB 194(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 14, 2016                                                                                            
                         2:08 p.m.                                                                                              
                                                                                                                                
2:08:25 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Thompson called the House Finance Committee                                                                            
meeting to order at 2:08 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Randall  Hoffbeck,  Commissioner,   Department  of  Revenue;                                                                    
Jerry  Burnett,  Deputy   Commissioner,  Treasury  Division,                                                                    
Department of  Revenue; Brandon S. Spanos,  Deputy Director,                                                                    
Tax Division,  Department of  Revenue; Jane  Pierson, Staff,                                                                    
Representative Steve Thompson.                                                                                                  
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 194    AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                              
                                                                                                                                
          CSHB 194(FIN)  was REPORTED out of  committee with                                                                    
          a "no recommendation"  recommendation and with two                                                                    
          previously  published   zero  fiscal   notes:  FN2                                                                    
          (ADM), FN3 (CED).                                                                                                     
                                                                                                                                
HB 249    ELECTRONIC TAX RETURNS & MOTOR FUEL TAX                                                                               
          HB 249 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 250    INDIV. INCOME TAX: CREDITS; RETURNS                                                                                   
                                                                                                                                
          HB 250 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
Co-Chair Thompson discussed housekeeping.                                                                                       
                                                                                                                                
2:09:17 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 250                                                                                                            
                                                                                                                                
     "An  Act   relating  to  the  taxation   of  income  of                                                                    
     individuals; repealing tax  credits applied against the                                                                    
     tax  on individuals  under the  Alaska  Net Income  Tax                                                                    
     Act; and providing for an effective date."                                                                                 
                                                                                                                                
2:09:41 PM                                                                                                                    
                                                                                                                                
RANDALL  HOFFBECK,  COMMISSIONER,   DEPARTMENT  OF  REVENUE,                                                                    
relayed that  the legislation was  the largest  component of                                                                    
the  New  Revenue  section  of  the  governor's  Sustainable                                                                    
Alaska Plan, and  would generate approximately $200,000,000.                                                                    
He furthered  that the  tax was  based on  6 percent  of the                                                                    
federal  tax liability.  He assured  the committee  that the                                                                    
stat was not proposing to create  its own set of tax tables,                                                                    
or exemptions,  or credits, but  was relying on  the federal                                                                    
tax  system. He  hypothesized  that a  family  of 4,  making                                                                    
$50,000 per year,  would pay approximately $15  in state tax                                                                    
under  the proposal.  He added  that the  first person  that                                                                    
would  pay 1  percent of  their  gross earnings  would be  a                                                                    
single filer, making  $100,000 per year, and  would pay just                                                                    
over $1000 in tax. He believed  that the tax was modest when                                                                    
compared to incomes  taxes in other states. He  said that if                                                                    
the  bill were  passed as  proposed,  the tax  would be  the                                                                    
lowest in the nation.                                                                                                           
                                                                                                                                
2:11:22 PM                                                                                                                    
                                                                                                                                
Representative  Gara  expressed  reluctance to  support  the                                                                    
legislation.   He  supported the  effort in  pushing various                                                                    
revenue proposals,  but wondered why the  state would choose                                                                    
the lowest income tax in the nation.                                                                                            
                                                                                                                                
Commissioner  Hoffbeck  explained   that  the  governor  had                                                                    
thought  that  small,  incremental adjustments  to  existing                                                                    
taxes, in addition  to a small income tax,  would spread the                                                                    
burden across all Alaskans.                                                                                                     
                                                                                                                                
2:12:24 PM                                                                                                                    
                                                                                                                                
Representative Gara wondered  whether the administration had                                                                    
planned on raising the income tax  in the future in order to                                                                    
close the budget gap.                                                                                                           
                                                                                                                                
Commissioner Hoffbeck responded in the negative.                                                                                
                                                                                                                                
Representative Gara  spoke to the  equitability of  the tax.                                                                    
He suggested  that the wealthy  lived off of  capital gains,                                                                    
which had  a federal tax  of 15  percent. He said  that many                                                                    
Alaskans paid 29 percent in  income tax. He thought that the                                                                    
bill  would mean  that  those living  foo  of capital  gains                                                                    
would pay less than a 1 percent tax on their income.                                                                            
                                                                                                                                
Commissioner Hoffbeck replied that it was a possibility.                                                                        
                                                                                                                                
Representative Gara  suggested that  a very  wealthy person,                                                                    
living on capital  gains, would pay a lower tax  rate than a                                                                    
person who "worked for a living".                                                                                               
                                                                                                                                
Commissioner  Hoffbeck  thought   that  the  assessment  was                                                                    
broad.  He admitted  that there  were provisions  within the                                                                    
federal  tax structure  that  provided  for certain  capital                                                                    
gains  benefits.  He  said  that  many  states  had  special                                                                    
capital gains taxes  to address the issue. He  said that the                                                                    
tax  was  meant to  be  as  simple and  noncontroversial  as                                                                    
possible.                                                                                                                       
                                                                                                                                
2:14:33 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler expressed  concerns that  the tax  would                                                                    
increase over time.                                                                                                             
                                                                                                                                
Commissioner Hoffbeck noted  that the state used  to have an                                                                    
income tax, which  was repealed and replaced by  oil and gas                                                                    
revenue. He  believed that protections  lay in  the totality                                                                    
of the  governor's proposed  fiscal package,  as well  as in                                                                    
spending  caps initiated  by the  legislature. He  said that                                                                    
provisions could be created that  would make it difficult to                                                                    
increase the tax.                                                                                                               
                                                                                                                                
2:16:06 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler   opined  that  spending   increases  in                                                                    
government could lead to an increase in the income tax.                                                                         
                                                                                                                                
Commissioner Hoffbeck replied that  raising of the tax would                                                                    
be at the discretion of the legislature.                                                                                        
                                                                                                                                
2:17:05 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  asked  whether   there  would  be  a                                                                    
specific line on  the federal tax return  to accommodate the                                                                    
payment of the income tax.                                                                                                      
                                                                                                                                
Commissioner  Hoffbeck  replied  that  the tax  would  be  6                                                                    
percent of the "total tax  liability" line on federal filing                                                                    
documents. He  added that  there would  be a  few provisions                                                                    
that would  impact some,  but the  majority of  people would                                                                    
multiply  their  federal  tax  liability  by  6  percent  to                                                                    
determine their personal income tax.                                                                                            
                                                                                                                                
Representative  Wilson  asked  whether  the  department  had                                                                    
performed an  analysis on the  personal income tax  versus a                                                                    
sales tax.                                                                                                                      
                                                                                                                                
Commissioner   Hoffbeck   responded  that   the   government                                                                    
expenditure  that supported  a sales  tax or  an income  tax                                                                    
were not  materially different.  He noted  that it  cost the                                                                    
same thing  to administer  a 6 percent  sales tax  versus 15                                                                    
percent. He felt that by having  a low tax rate, the cost of                                                                    
the  administration   of  the   tax  was  higher,   but  the                                                                    
difference  in administrative  cost between  the income  tax                                                                    
and the sales tax was minimal.                                                                                                  
                                                                                                                                
Representative Wilson wondered  why the administration chose                                                                    
to implement  a small  income tax,  coupled with  motor fuel                                                                    
and fish taxes, rather than one large income tax.                                                                               
                                                                                                                                
Commissioner  Hoffbeck  reiterated  that the  governor  felt                                                                    
that rather  than have one  tax bear the entire  burden, the                                                                    
burden  should  be  spread across  multiple  layers  of  the                                                                    
state's economy.                                                                                                                
                                                                                                                                
2:20:13 PM                                                                                                                    
                                                                                                                                
Representative Wilson requested  assurances that budget cuts                                                                    
and taxes  would be spread  equally across the  residents of                                                                    
Alaska.                                                                                                                         
                                                                                                                                
Commissioner Hoffbeck  did not have an  analysis that showed                                                                    
how each  group in the state  would be affected. He  did not                                                                    
believe  that   a  system  could   be  created   that  would                                                                    
absolutely spread the burden equally across the board.                                                                          
                                                                                                                                
Representative  Wilson   was  glad  that  all   taxes  being                                                                    
discussed at  the same time.  She feared that  raising taxes                                                                    
could result in people moving out of state.                                                                                     
                                                                                                                                
2:22:00 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg mentioned  the  balancing of  the                                                                    
burden  on  Alaskans.  He  asked  Commissioner  Hoffbeck  to                                                                    
comment on some of the  criticism from the public related to                                                                    
the proposed taxes and Permanent Fund reductions.                                                                               
                                                                                                                                
Commissioner  Hoffbeck  replied   that  dividend  check  was                                                                    
defined  by a  formula.  He contended  that  the income  tax                                                                    
would be the lowest in  the nation, and that dividends would                                                                    
still be paid.                                                                                                                  
                                                                                                                                
2:24:10 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg mentioned  the legislature working                                                                    
on a  bill on tax credits.  He wondered whether it  was fair                                                                    
to pay  out tax  credits to the  oil industry,  while taxing                                                                    
Alaskans and capping the dividend.                                                                                              
                                                                                                                                
Commissioner  Hoffbeck responded  that under  the governor's                                                                    
plan  the   credit  liability  would   be  rolled   back  by                                                                    
$400,000,000. He  mentioned the  governor's efforts  to make                                                                    
sure the  public was aware of  how the oil tax  credits were                                                                    
being used. He  spoke of the rhetoric  concerning the public                                                                    
concern  about the  credits, but  asserted that  the credits                                                                    
were substantially less than in the past.                                                                                       
                                                                                                                                
2:26:07 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  asked   whether  the  amount  of                                                                    
credits  currently  in place  justified  the  return to  the                                                                    
state.                                                                                                                          
                                                                                                                                
Representative Wilson noted a point of order.                                                                                   
Co-Chair Thompson requested that  conversation be limited to                                                                    
the subjects contained in HB 250.                                                                                               
                                                                                                                                
Representative Guttenberg thought that  the credit issue was                                                                    
germane to the discussion  about balancing the fiscal burden                                                                    
on the people of the state.                                                                                                     
                                                                                                                                
2:26:55 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson referred to  an analysis of the governor's                                                                    
plan by Gunnar Knapp.                                                                                                           
                                                                                                                                
Commissioner  Hoffbeck noted  that Mr.  Knapp's presentation                                                                    
did not get into the specifics of the oil and gas tax.                                                                          
                                                                                                                                
Co-Chair Thompson said that the  analysis covered the income                                                                    
tax and the different components of the governor's plan.                                                                        
                                                                                                                                
Commissioner Hoffbeck agreed.                                                                                                   
                                                                                                                                
Vice-Chair  Saddler understood  that the  administration had                                                                    
contracted with  economists to assess the  impact of cutting                                                                    
state  jobs to  the  economy. He  wondered whether  specific                                                                    
modeling on the income tax had been done.                                                                                       
                                                                                                                                
Commissioner Hoffbeck stated that  Mr. Knapp had included an                                                                    
analysis on broad based taxes in his presentation.                                                                              
                                                                                                                                
2:28:41 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler  asked   whether  the  presentation  had                                                                    
included analysis on an income tax.                                                                                             
                                                                                                                                
Commissioner   Hoffbeck  clarified   that  there   were  two                                                                    
different version of an income  tax that had been modeled in                                                                    
the presentation.                                                                                                               
                                                                                                                                
Vice-Chair Saddler  requested clarification  as to  the type                                                                    
of taxes assessed in the presentation.                                                                                          
                                                                                                                                
Commissioner Hoffbeck  clarified that  Mr. Knapp  had looked                                                                    
at a flat rate income tax,  and a progressive income tax, as                                                                    
well as a sales tax.                                                                                                            
                                                                                                                                
2:29:27 PM                                                                                                                    
                                                                                                                                
JERRY  BURNETT,  DEPUTY   COMMISSIONER,  TREASURY  DIVISION,                                                                    
DEPARTMENT OF  REVENUE, interjected that Mr.  Knapp referred                                                                    
to both an analysis of sales  tax with few exclusions, and a                                                                    
sales tax with multiple exclusions.                                                                                             
                                                                                                                                
Co-Chair Thompson clarified that income tax was the topic.                                                                      
                                                                                                                                
Vice-Chair  Saddler was  confused  about  what had  actually                                                                    
been modeled. He remarked about the  effects of a cut in the                                                                    
dividend  would  hurt the  poor,  and  an income  tax  would                                                                    
affect the  rich. He  said that he  expected to  see further                                                                    
analysis of the proposed income and sales taxes.                                                                                
                                                                                                                                
Commissioner  Hoffbeck stated  that all  of the  information                                                                    
was in the report.                                                                                                              
                                                                                                                                
2:30:43 PM                                                                                                                    
                                                                                                                                
Representative Gara  surmised that  the dividend  could drop                                                                    
to  $400,  under the  governor's  proposal,  which for  some                                                                    
Alaskans  was   20  percent  of  their   yearly  income.  He                                                                    
questioned  the  fairness  of  the  proposed  dividend  cut,                                                                    
compared to the proposed income tax.                                                                                            
                                                                                                                                
Commissioner Hoffbeck  stated that the wealthiest  people of                                                                    
the state  would be  paying in the  highest tax  bracket, or                                                                    
3.87 percent, under  the income tax. He did  not agreed with                                                                    
Representative Gara's  statement that the  wealthiest people                                                                    
would only be paying a 1  percent tax. He continued that the                                                                    
reduction in  the size of  the dividend will have  a greater                                                                    
impact on  lower income  families. He  admitted that  it was                                                                    
not a  perfect balance,  but was  crafted to  be as  fair as                                                                    
possible across the board.                                                                                                      
                                                                                                                                
Co-Chair Thompson  asked whether  the lowest  income earners                                                                    
in the state would pay income taxes.                                                                                            
                                                                                                                                
Commissioner Hoffbeck replied in the negative.                                                                                  
                                                                                                                                
2:33:57 PM                                                                                                                    
                                                                                                                                
Representative  Gara argued  that the  cuts and  taxes would                                                                    
not  be  balanced until  a  fair  oil  tax credit  bill  was                                                                    
crafted.  He contended  that the  federal capital  gains tax                                                                    
would be less than 1 percent for the very rich.                                                                                 
                                                                                                                                
Commissioner  Hoffbeck  confirmed  that   6  percent  of  15                                                                    
percent was less than 1 percent.                                                                                                
                                                                                                                                
Representative   Kawasaki  referred   to  a   Rasmussen  and                                                                    
Institute  for Tax  and Economic  Policy  report that  noted                                                                    
that  the Permanent  Fund proposal  was regressive,  and the                                                                    
income tax  proposal was progressive, and  asked whether the                                                                    
low income  tax proposed  meant that the  poor would  be hit                                                                    
hardest by the governor's plan.                                                                                                 
                                                                                                                                
Commissioner   Hoffbeck  replied   that  the   report  being                                                                    
referred to  had assumed a  $2000 dividend. He  reminded the                                                                    
committee  the formula  used to  determine the  dividend had                                                                    
been structured 30  years ago, and that any  plans for using                                                                    
the  earnings  reserve  required   a  restructuring  of  the                                                                    
formula. He  said that the  restructured formula  would have                                                                    
an  impact  on  the  size   of  the  dividend,  and  smaller                                                                    
dividends would  impact low income families  greater because                                                                    
it was a  larger portion of their overall  income. He argued                                                                    
that the  same amount  was being  taken from  each Alaskan's                                                                    
dividend.  He   asserted  that  the  income   tax  would  be                                                                    
progressive  in  an  attempt   to  balance  the  burden.  He                                                                    
stressed  that  the proposals  were  necessary  in order  to                                                                    
address the budget deficit. He  corrected that income tax to                                                                    
the wealthy would be 2.38, and not 3.87.                                                                                        
                                                                                                                                
2:38:13 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki spoke to  the progressive element of                                                                    
the  proposal.  He  indicated that  people  counted  on  the                                                                    
dividend as income.  He asked whether the  governor had done                                                                    
other modeling with higher income tax rates.                                                                                    
                                                                                                                                
Commissioner   Hoffbeck   responded  that   originally   the                                                                    
governor looked  at 15 percent  of the federal tax  rate. He                                                                    
reminded the committee  that the dividend for  2013 had been                                                                    
less than $1000.                                                                                                                
                                                                                                                                
2:39:59 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler thought "fair"  was a subjective term. He                                                                    
wondered  whether there  were people  in  Alaska who  earned                                                                    
their living through investment income.                                                                                         
                                                                                                                                
Commissioner  Hoffbeck  said  that   he  could  provide  the                                                                    
information at a later date.                                                                                                    
                                                                                                                                
2:41:26 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  felt that  the different  taxes would                                                                    
affect  different  groups  in   various  ways.  He  wondered                                                                    
whether an  analysis had  been done  in order  to understand                                                                    
the impacts on various demographics statewide.                                                                                  
                                                                                                                                
Commissioner  Hoffbeck  said that  he  could  not provide  a                                                                    
detailed  analysis on  how the  plan  would affect  specific                                                                    
individuals in the state.                                                                                                       
                                                                                                                                
Representative Edgmon  prophesized that an income  tax would                                                                    
not pass  during the  current year. He  said that  people in                                                                    
his district preferred  and income tax over a  sales tax and                                                                    
were  concerned about  the regressive  nature of  a dividend                                                                    
cap.                                                                                                                            
                                                                                                                                
                                                                                                                                
Commissioner Hoffbeck  asserted that the  administration had                                                                    
spent  the past  interim conducting  conversations with  the                                                                    
public  in order  to educate  the people  on the  issues. He                                                                    
relayed that  Alaskans understood  the need for  new revenue                                                                    
in closing  the $4  billion deficit  gap. He  contended that                                                                    
issue  of  generating  new revenue  would  come  before  the                                                                    
legislature  year-after-year until  the problem  was solved,                                                                    
and warned that during that  time, the state's savings would                                                                    
be depleted.                                                                                                                    
                                                                                                                                
2:46:50 PM                                                                                                                    
                                                                                                                                
Representative   Munoz   understood    that   trust   income                                                                    
distributions  to non-residents  would  be  taxed under  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Commissioner  Hoffbeck  replied  that  the  issue  had  been                                                                    
brought to the attention of  the administration, and that an                                                                    
amendment would  be happily considered; the  state would not                                                                    
benefit from  taxing the  trusts. He said  that there  was a                                                                    
strong argument for exemption.                                                                                                  
                                                                                                                                
Representative   Munoz   understood  that   business   would                                                                    
immediately go to  other states if Alaska  implemented a tax                                                                    
on the income from the trusts.                                                                                                  
                                                                                                                                
2:48:08 PM                                                                                                                    
                                                                                                                                
Representative Munoz whether Alaska  would be the only state                                                                    
that  structured  its income  tax  as  a percentage  of  the                                                                    
federal tax  liability, and  not as  a percentage  of actual                                                                    
income.                                                                                                                         
                                                                                                                                
Commissioner Hoffbeck  confirmed that Alaska would  be using                                                                    
the federal tax structure.                                                                                                      
                                                                                                                                
2:49:18 PM                                                                                                                    
                                                                                                                                
Representative  Munoz  asked  whether  structuring  the  tax                                                                    
under   the   federal   tax    structure   could   cause   a                                                                    
constitutional conflict.                                                                                                        
                                                                                                                                
Commissioner Hoffbeck indicated  that the administration was                                                                    
aware of the potential conflict.                                                                                                
                                                                                                                                
2:49:54 PM                                                                                                                    
                                                                                                                                
Representative  Gara   queried  the  rate  of   the  state's                                                                    
previous income tax.                                                                                                            
                                                                                                                                
Commissioner Hoffbeck deferred the question to Mr. Spanos.                                                                      
                                                                                                                                
2:50:28 PM                                                                                                                    
                                                                                                                                
BRANDON   S.   SPANOS,   DEPUTY  DIRECTOR,   TAX   DIVISION,                                                                    
DEPARTMENT OF REVENUE, informed  the committee that in 1975,                                                                    
Alaska decoupled  from the federal income  tax liability and                                                                    
had an autonomous  tax bracket, which ranged from  3 to 14.5                                                                    
percent of federal taxable income.                                                                                              
                                                                                                                                
Representative   Gara   commented    that   the   rate   was                                                                    
substantially  higher   in  the  70's.  He   asked  why  the                                                                    
administration  would  choose  a plan  that  benefitted  the                                                                    
state's most wealthy residents,  while penalizing low income                                                                    
earners.                                                                                                                        
                                                                                                                                
Commissioner Hoffbeck  reiterated that the  governor thought                                                                    
his plan was a balanced plan.                                                                                                   
                                                                                                                                
2:52:48 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg thought  that the commissioner was                                                                    
internally  tweaking  the  bill  in respect  to  trusts  and                                                                    
federal obligations. He requested  an explanation of changes                                                                    
to provide a current analysis of the legislation.                                                                               
                                                                                                                                
2:53:46 PM                                                                                                                    
Vice-Chair Saddler asked whether  the state income tax could                                                                    
be deducted from the federal income tax, or vice versa.                                                                         
                                                                                                                                
Commissioner  Hoffbeck   replied  that  any  tax   that  was                                                                    
deductible against  the federal income tax  would by default                                                                    
become deductible  against the state tax.  Additionally, the                                                                    
state income  tax would be  a deduction against  the federal                                                                    
income tax.                                                                                                                     
                                                                                                                                
Vice-Chair Saddler  clarified that the filer  had to itemize                                                                    
in order to get the deductions.                                                                                                 
                                                                                                                                
Commissioner Hoffbeck agreed.                                                                                                   
                                                                                                                                
Vice-Chair   Saddler   queried    the   income   limit   for                                                                    
itemization.                                                                                                                    
                                                                                                                                
Commissioner Hoffbeck did not have an answer.                                                                                   
                                                                                                                                
Mr.  Spanos spoke  to the  standard deduction  for necessary                                                                    
itemization. He said for  individuals the standard deduction                                                                    
was $6300,  and for a  married couple filing jointly  it was                                                                    
$12,600.                                                                                                                        
                                                                                                                                
HB  250  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 194                                                                                                            
                                                                                                                                
     "An Act repealing and  reenacting the Alaska Securities                                                                    
     Act,   including   provisions    relating   to   exempt                                                                    
     securities and  transactions; relating  to registration                                                                    
     of  securities, firms,  and agents  that offer  or sell                                                                    
     securities   and   investment   advice;   relating   to                                                                    
     administrative,   civil,   and   criminal   enforcement                                                                    
     provisions, including  restitution and  civil penalties                                                                    
     for violations; allowing certain  civil penalties to be                                                                    
     used  for  an   investor  training  fund;  establishing                                                                    
     increased civil  penalties for harming  older Alaskans;                                                                    
     retaining provisions  concerning corporations organized                                                                    
     under   the  Alaska   Native  Claims   Settlement  Act;                                                                    
     amending Rules  4, 5, 54,  65, and 90, Alaska  Rules of                                                                    
     Civil Procedure; and providing for an effective date."                                                                     
                                                                                                                                
2:55:46 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson  announced his intention to  move the bill                                                                    
out of committee.                                                                                                               
                                                                                                                                
Vice-Chair  Saddler MOVED  to ADOPT  the proposed  committee                                                                    
substitute  for  HB  194, Work  Draft  (29-GH1060\S).  There                                                                    
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
2:56:23 PM                                                                                                                    
                                                                                                                                
JANE   PIERSON,   STAFF,  REPRESENTATIVE   STEVE   THOMPSON,                                                                    
testified that the change from version  I to version S was a                                                                    
higher standard for  violations of the chapter;  it has been                                                                    
moved from  "knowingly" to  "intentionally". She  noted that                                                                    
the  changes were  reflected on  Page 13,  line 2;  Page 88,                                                                    
line 26; Page 89, line 2; Page 89, line 12.                                                                                     
                                                                                                                                
Co-Chair Thompson solicited questions from the committee.                                                                       
                                                                                                                                
2:57:11 PM                                                                                                                    
                                                                                                                                
Representative  Wilson appreciated  all of  the work  on the                                                                    
current draft of the legislation.                                                                                               
                                                                                                                                
2:57:37 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler reviewed  the  fiscal  notes, both  were                                                                    
zero, with no additional positions.                                                                                             
                                                                                                                                
2:58:20 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler  MOVED to  REPORT CSHB  194 (FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB  194(FIN) was  REPORTED  out of  committee  with a  "no                                                                    
recommendation"  recommendation  and   with  two  previously                                                                    
published zero fiscal notes: FN2 (ADM), FN3 (CED).                                                                              
                                                                                                                                
2:58:46 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:04:22 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
3:04:27 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 249                                                                                                            
                                                                                                                                
     "An Act  requiring the electronic  submission of  a tax                                                                    
     return  or  report  with  the  Department  of  Revenue;                                                                    
     relating to  the motor fuel  tax; and providing  for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
Vice-Chair Saddler MOVED to ADOPT the proposed committee                                                                        
substitute for HB 249 (FIN), Work Draft (29-GH2912\G).                                                                          
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Ms. Pierson stated that the legislation was a combination                                                                       
of the fisheries taxes, the mining taxes, and the motor                                                                         
fuel taxes. She read from the sectional analysis:                                                                               
                                                                                                                                
     Alaska Commercial Fisheries Entry Commission                                                                           
                                                                                                                                
     Section 1: Amends AS 16.43.160  (c) - Removes the $3000                                                                    
                cap for entry permits and interim use                                                                           
          permits in entry into Alaska Commercial                                                                               
                Fisheries                                                                                                       
                                                                                                                                
     Royalty Payments for Mining                                                                                            
                                                                                                                                
     Section 2: Amends AS 27.30.030  (a) -eliminates the use                                                                    
                of credits for royalty payment                                                                                  
                                                                                                                                
    Section 3: Conforming language to re-numeration in                                                                          
                section 2                                                                                                       
                                                                                                                                
     Section 4: Amends AS 27.30.40 - Removes royalty                                                                            
                payment period from credits that be carried                                                                     
                forward                                                                                                         
                                                                                                                                
     Section 5: Amends AS 27.30.050 - Removes royalty                                                                           
                payment periods from the limit of                                                                               
                applications of credits                                                                                         
                                                                                                                                
     Electronic Filing                                                                                                      
                                                                                                                              
     Section 6: Adds new  section, AS 43.05.045 - Electronic                                                                    
                filing reporting, provides a 5 year                                                                             
                exemption                                                                                                       
                                                                                                                                
    Section 7: Adds new section, AS 43.05.220 - penalty                                                                         
                for failure to comply with electronic                                                                           
                filing                                                                                                          
                                                                                                                                
                                                                                                                                
     Section 8: Amends AS 43.31.111 - changes notification                                                                      
                of death for tax filings                                                                                        
                                                                                                                                
     Motor Fuel Tax                                                                                                         
                                                                                                                                
     Section 9: Amends AS 43.40.010 (a) motor fuel tax on                                                                     
                fuel sold or transferred                                                                                      
          Motor Fuel - changes the tax rate to 16                                                                             
                cents from 8 cents                                                                                              
                Aviation Gasoline - changes the tax rate to                                                                   
                7 cents from 4.7 cents                                                                                          
          Watercraft Motor Fuel - changes the tax                                                                             
                rate to 10 cents from 5 cents                                                                                   
                Aviation Fuel - changes the tax rate to 6.5                                                                   
                from 3.2 cents                                                                                                  
                                                                                                                                
     Section 10: Amends AS 43.40.010 (b) motor fuel tax on                                                                    
                 fuel consumed by user                                                                                        
          Motor Fuel - changes the tax rate to 16                                                                             
                 cents from 8 cents                                                                                             
                 Aviation Gasoline - changes the tax rate                                                                     
                 to 7 cents from 4.7 cents                                                                                      
          Watercraft Motor Fuel - changes the tax                                                                             
                 rate to 10 cents from 5 cents                                                                                  
          Aviation Fuel - changes the tax rate to                                                                             
                 6.5 from 3.2 cents                                                                                             
                                                                                                                                
     Section 11: Amends AS 43.40.030 (a) - changes the non-                                                                     
           highway use refund to 12 cents from 6                                                                                
                 cents                                                                                                          
                                                                                                                                
     Alcohol Tax                                                                                                            
                                                                                                                                
     Section 12: Amends AS 43.60.020 (a) - changes filing                                                                       
                 requirements for filing reports                                                                                
                                                                                                                                
     Mining Tax                                                                                                             
                                                                                                                                
     Section 13: Amends AS 43.65.101 (a) - changes tax                                                                          
                 exempt for new production to 3 years from                                                                      
                 3.5 years                                                                                                      
                                                                                                                                
     Section 14: Amends AS 43.65.010 (c) - License tax                                                                          
                 rates on net income                                                                                            
                 Changes the tax rate for taxpayers, excess                                                                     
           over $100,000 to 8 cents from 7 cents                                                                                
                                                                                                                                
     Section 15: Amends AS 43.65.020 (d) - changes filing                                                                       
                 requirements for filing tax returns                                                                            
     Section 16: Amends AS 43.65.030 - Changes mining                                                                           
                 application fees and renewals to $50 and                                                                       
          changes date for filing to January 1st                                                                                
                 from May 1st of each license year                                                                              
                                                                                                                                
     Fish Business Tax                                                                                                      
                                                                                                                                
     Section 17: Amends AS 43.75.015 (a) - Fisheries                                                                          
                 Business License Tax                                                                                         
                 Salmon Canned Shore-based Business -                                                                         
                 changes tax rate to 5 percent from 4                                                                           
                 percent                                                                                                        
          Salmon Processed Shore-based Business -                                                                             
                 changes tax rate to 4 percent from 3                                                                           
                 percent                                                                                                        
                 Floating Business - changes tax rate to 6                                                                    
                 percent from 5 percent                                                                                         
                                                                                                                                
     Section 18: Amends AS 43.75.015 (b) Developing                                                                           
          Commercial Species - Fisheries Business                                                                             
                 License Tax                                                                                                  
          Developing Commercial Species Fisheries                                                                             
                 Shore-based Business- changes tax rate to                                                                    
                 4 percent from 1 percent                                                                                       
          Developing Commercial Species Fisheries                                                                             
                 Floating Business - changes tax rate to 4                                                                    
                 percent from 1 percent                                                                                         
                                                                                                                                
     Section 19: Amends AS 43.75.015 (d) Direct Marketing                                                                     
                 Developing Commercial Species - Fisheries                                                                    
                 Business License Tax                                                                                         
                 Developing Commercial Species Fisheries -                                                                    
                 changes tax rate to 4 percent from 1                                                                           
                 percent                                                                                                        
                 Commercial Fish Species - changes tax rate                                                                   
                 to 4 percent from 3 percent                                                                                    
                                                                                                                                
     Section 20: Amends 43.75.030 (b) - changes filing                                                                          
                 requirements for filing tax returns                                                                            
                                                                                                                                
    Section 21: Amends AS 43.75.130 (a) - 1 percent of                                                                          
                 tax revenue is deposited in general fund                                                                       
                 the remaining balance is divided by                                                                            
                 formula for local municipalities and                                                                           
                 governments as currently in statute                                                                            
                                                                                                                                
     Fish Resource Landing Tax                                                                                              
                                                                                                                              
     Section 22: Amends AS 43.77.010 -Fish Landing Tax                                                                        
                 Developing commercial fish species -                                                                           
                 changes tax rate to 4 percent from 1                                                                           
                 percent                                                                                                        
                 All other fish species - changes tax rate                                                                      
                 to 4 percent from 3 percent                                                                                    
                                                                                                                                
    Section 23: Amends AS 43.77.060 (a) - 1 percent of                                                                          
                 tax revenue is deposited in general fund                                                                       
                 the remaining balance is divided by                                                                            
                 formula for local municipalities and                                                                           
                 governments as currently in statute                                                                            
                                                                                                                                
     Section 24: Amends AS43.77.060 (b) - 1 percent of tax                                                                      
                 revenue is deposited in general fund the                                                                       
          remaining balance is divided by formula                                                                               
                 for local municipalities and governments                                                                       
                 as currently in statute                                                                                        
                                                                                                                                
     Uncodified Law                                                                                                         
                                                                                                                                
     Section 25: Establishes Mining Tax Working Group                                                                           
                                                                                                                                
     Section 26: Applicability for all statutes                                                                                 
                 referenced                                                                                                     
                                                                                                                                
     Section 27: Transitional provision to accommodate                                                                          
                 regulations                                                                                                    
                                                                                                                                
    Section 28: Established an immediate effective date                                                                         
                 for Section 27                                                                                                 
                                                                                                                                
     Section 29: Establishes an effective date of July 1,                                                                       
                 2016 for Section 1-26                                                                                          
                                                                                                                                
3:13:16 PM                                                                                                                    
                                                                                                                                
HB 249 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
Co-Chair Thompson reviewed the agenda for the day. He                                                                           
relayed that amendments for HB 245, HB 249, and HB 250 were                                                                     
due to his office by 5:00 pm Friday, April 15, 2016.                                                                            
                                                                                                                                
Co-Chair Thompson recessed the meeting to the Call of the                                                                       
Chair. [Secretary Note: the meeting never reconvened.]                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:14:03 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:14 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB 249 CS WORKDRAFT vG.pdf HFIN 4/14/2016 1:30:00 PM
HB 249
HB 249 CFEC Letter.pdf HFIN 4/14/2016 1:30:00 PM
HB 249
HB 249 CFEC vessels affected by removal of fee cap.pdf HFIN 4/14/2016 1:30:00 PM
HB 249
HB 249 CFEC 16.02.19 Gho memo on fee ceiling.pdf HFIN 4/14/2016 1:30:00 PM
HB 249
HB 249 CFEC Letter.pdf HFIN 4/14/2016 1:30:00 PM
HB 249
HB 249 Sectional FIN.pdf HFIN 4/14/2016 1:30:00 PM
HB 249