Legislature(2017 - 2018)ADAMS ROOM 519
03/27/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation: Commissioner, Department of Revenue: Sheldon Fisher | |
| HB233 | |
| HB303 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 233 | TELECONFERENCED | |
| += | HB 303 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 27, 2018
1:34 p.m.
1:34:26 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Sheldon Fisher, Commissioner, Department of Revenue;
Representative Chris Tuck, Sponsor; Kendra Kloster, Staff,
Representative Chris Tuck; Ken Alper, Director, Tax
Division, Department of Revenue; Marie Marx, Director,
Worker's Compensation, Department of Labor and Workforce
Development; Heidi Drygas, Commissioner, Department of
Labor and Workforce Development; Representative Charisse
Millett.
PRESENT VIA TELECONFERENCE
Susan Foley, President, University of AK Foundation; Doug
Walrath, Northwest Alaska Career and Technical Center;
Tommy Sheridan, Silver Bay Seafoods, Cordova; Karen
Matthias, Council Of Alaska Producers, Anchorage; Bradley
Moran, Dean, College of Fisheries and Ocean Science, UAF,
Fairbanks; Greta Schuerth, Alaska Red Dog Mine, NANA
Regional, Anchorage; Kayla Kade, Self, Anchorage; Debbie
Even, Self, Anchorage; Cynthia Bradley, Self, Anchorage;
Gretchen Cusack, Alaska Integrated Care Actions, Eagle
River; Greg Weaver, Self, Knik.
SUMMARY
HB 233 EDUCATION TAX CREDITS; SUNSET; REPEALS
HB 233 was HEARD and HELD in committee for
further consideration.
HB 303 WORKERS' COMP; REHAB/REEMPLOYMENT
HB 303 was HEARD and HELD in committee for
further consideration.
^CONFIRMATION: COMMISSIONER, DEPARTMENT OF REVENUE: SHELDON
FISHER
1:35:58 PM
SHELDON FISHER, COMMISSIONER, DEPARTMENT OF REVENUE,
currently served as the commissioner designee. He explained
that within the Department of Administration (DOA) the
department looked at how it could save money for the state.
The department was in the process of implementing shared
services. The department also consolidated information
technology services. The department also attempted to
provide resources across the state. One example within the
Division of Motor Vehicles was to streamline things such
that the wait time across the state had improved, on
average by 13 minutes. He visited the topic of the
Department of Revenue (DOR). He expressed concerns about
the fiscal uncertainty in the state. He thought the first
step in that direction was to use a Percent of Market Value
(POMV). He was a strong supporter of a rational POMV plan
however, he understood that a POMV structure was only part
of the fiscal solution and that it would not close the
fiscal gap. He though that state needed to expand its
revenue sources. He believed part of the problem was that
the state was too dependent of. He thought more consistency
was needed for businesses. He hoped to help with making
rational decisions easier.
Representative Wilson wondered whether a tax would rise to
a level that would have a "less negative impact" on
constituents.
Commissioner Fisher understood her question to be related
to whether there was a certain type of tax that would be
preferable, because of the revenue received versus the
impact on the economy.
Representative Wilson responded, "Yes."
Commissioner Fisher stated that he did not have a specific
recommendation. He felt that various taxes had different
characteristics, and impacted different segments of the
economy and populous. He remarked that there could be an
effort to tax non-citizen groups. He noted that there were
some places where the non-resident worker or visitor would
pay a different tax. He remarked that each tax had its
merits and challenges. He stated that he did not come to
the discussion with a recommendation for a preferred tax.
Representative Wilson queried the process. She asked
whether there was a study or information to better inform
the legislature of the impact of all types of taxes. She
felt that she did not always receive the information that
could be justified on the impact of whether or not the
money would slow the economy enough to receive less that
the projection.
1:45:36 PM
Commissioner Fisher shared that there was a special session
that had a bill related to a wage tax. The information from
about that wage tax included contrasting information about
a few different kinds of taxes. He agreed to have further
discussions about providing more information.
Representative Wilson responded that on the flip side, as a
resource based state, she wondered if the administration
had looked at other resources from which to draw,
especially related to the Department of Natural Resources
(DNR).
Commissioner Fisher asked her to rephrase her question.
Representative Wilson noted that there was always a
discussion about how to receive more money from Alaskans,
because Alaska had more resources than any other state. She
remarked that DNR was in charge of the majority of the
state's resources, so she wondered how DOR was coordinating
with that department to utilize resources.
Commissioner Fisher responded that administration. had
spent time considering the tax policy of the various
sectors. He stated that there was probably less time taken
to examine the economic development strategy for those
sectors, and agreed to further examine that strategy.
Representative Wilson responded, "That would be a nice
change. Thank you."
Vice-Chair Gara recalled a memo from Ken Alper, Director,
Tax Division, Department of Revenue, that said that that
the state received no production taxes on the average new
fields at prices below $73 per barrel. He queried comment
on that assertion.
Commissioner Fisher replied that he was not familiar with
the referenced memo, and had not deeply examined the issue.
He believed that the correct next step for the state was to
broaden the tax base. He felt that the question about
revisiting the current oil and gas tax regime was a
frequent question. He stated that his goal was to pursue a
process where the question was addressed in a manner that
would be fair to both the state and the oil companies; and
could provide a sense of confidence to both entities, and
provide a long-term solution.
Vice-Chair Gara remarked that for new oil in the average
North Slope field paid no production tax at prices below
$73 per barrel. He remarked that there would be new oil in
Alaska National Wildlife Refuge (ANWR), and the state would
receive no production tax on oil below $73 per barrel for
seven years. He asked whether that was a reasonable tax
policy.
Commissioner Fisher replied that he had not deeply examined
the issue, so he was uncomfortable providing a statement.
He would rather pursue a process to examine the entire
regime in a thoughtful way that would result in a regime
that was fair and sustainable for the state and industry.
1:51:38 PM
Vice-Chair Gara would provide Commissioner Fisher the memo.
He remarked that the two most unstable oil taxes were the
ones that were too high and the ones that were too low. He
felt that the current tax regime was too low, so it was
unstable. He recalled a study that stated that by reducing
the capital budget by $300 million, the state would lose
approximately 4500 jobs.
Commissioner Fisher responded that it was his
understanding.
Vice-Chair Gara asserted that one of the impacts of
declaring no new taxes might be the continued job losses
from budget cuts and budget reductions.
Commissioner Fisher replied that the administration had
supported a more sustainable capital budget. He stated that
the governor's budget was a multi-year budget that was
intended to address deferred maintenance. He remarked that
choosing deferred maintenance was because it impacted every
community, so it would be broadly distributed across the
state. He noted that it did not increase the "footprint" of
the state, instead it was maintaining the current assets.
He noted that, unlike some mega projects, deferred
maintenance was often performed by local businesses. He
remarked that the proposal was supported by a broad based
tax. He felt that it was an important opportunity for the
state to expand its economic base.
Vice-Chair Gara had additional questions but would wait.
1:54:27 PM
Representative Grenn requested involvement in the genesis
of the idea an process related to the creation of the oil
tax bonding bill.
Commissioner Fisher replied that he agreed to provide the
governor with a set of alternatives that might be able to
address the concern about the taxes. He felt that the
governor wanted to find a solution that provided certainty
to the industry, so they could receive their payment in a
timely fashion and go back to work. He remarked that there
were various resources and expertise in determining
financial instruments and the ways to pay off the debt. He
remarked that there was initially a hope to provide
multiple solutions, but it was concluded that the only
prudent solution was the proposal. He noted that the other
considered funds had associated concerns. He remarked that
it was a fairly large "chunk" of money, so it was too large
a percentage of the overall fund to satisfy the prudent
investment rule.
1:57:15 PM
Representative Kawasaki complimented the commissioner on
his efforts regarding shared services. He posed the
question about whether it was the year to purchase a snow
machine or a new washer and dryer. He asked for his
feedback regarding the size of the state operating budget.
Commissioner Fisher replied that he liked to put the budget
into categories: formula programs; life and health safety;
education; and the other departments. He shared that people
often thought about government in terms of the departments.
He remarked that there was an idea that there was much
opportunity to continue to reduce costs. He stated that
most of those departments, on a UGF basis, had cuts from
between 30 percent and 40 percent; and a combination of UGF
and DGF basis was closer to a cut of 25 percent. He felt
that there was always an opportunity for improvement and
efficiency, but felt that the declining department budget
provided a declining opportunity for improvement. He
remarked that DOR had various groups within the department.
He felt that, for example, cutting the tax division would
result in a loss of revenue. He remarked that the Permanent
Fund Division was working toward more online filings, so
there was an opportunity to save money. He stressed that
improvements usually required cost to the state. He
remarked that there was a sense among Alaskans to devote
more attention to health and safety. He felt that Alaskans
wanted to see a better outcome for the money spent on
education, and remarked that there was not a strong desire
to decrease education funding. He felt that there was an
opportunity for some interesting strategies around health
care. He encouraged the legislature to examine how to
improve health care costs.
2:03:29 PM
Representative Guttenberg complimented Commissioner Fisher
for his efforts within the Division of Motor Vehicles. He
wondered whether other efficiencies had been implemented or
considered for the rural areas of the state.
Commissioner Fisher suggested that the state had tried to
improve efficiencies. He agreed that there was room for
improvements in some areas. He remarked that the DOA had
gone through a process of streamlining the leasing of
property. He noted that there was a substantial reduction
of the time to turn around a lease.
2:09:09 PM
Representative Guttenberg noted that there was a feeling
that the sense was "behind the curve on the technology",
and delivering broadband. He was waiting for a vision to be
outlined, other than putting more effort into fixing
computers and printers. He remarked that the state had an
antiquated telecommunication infrastructure. He felt that
the issue was about moving the state into tomorrow. He
remarked that the state had not responded adequately.
Commissioner Fisher wondered whether the antiquated remark
referred to the network of the state government or the
telecommunication infrastructure of Alaska.
Representative Guttenberg responded that he was referring
to both systems separately and together.
Commissioner Fisher responded that he felt that the state
government's network was not severely antiquated. He shared
that there was a rebuilding recently of the core network.
He remarked that the effort was done without a capital
appropriation, because the cost savings were structured
within the project. The vender provided a financing
instrument to purchase the equipment. He understood that
the state network was not "cutting edge", but felt that it
was not an antiquated system. There were efforts to ensure
that the system was functional and up-to-date. He
understood that the system within the state as a whole was
struggling to delivering adequate broadband services to all
the communities. He remarked that the large challenge was
the middle mile. He noted that the last mile was the weak
link in most jurisdictions, but in Alaska it was the middle
mile. He noted that much of rural America had highly
dispersed populations, so it was difficult to deliver the
last mile. He remarked that Alaska had villages that were
relatively densely population in a location, but was a
large distance from the next village. Therefore, there were
not broad rural communities like the rest of the country.
He shared that there was a broadband task force, and a
number of people from the industry had conversations on the
subject. He remarked that there was a high amount of money,
in the excess of $1 billion to build and improve the middle
mile network. He shared that there was a question about
whether there was a better way to use the money currently
spent on telecommunications.
Co-Chair Foster indicated Co-Chair Seaton comments would be
the last.
Co-Chair Seaton wanted to further discuss oil taxes. He
mentioned worldwide consulting.
2:18:14 PM
Commissioner Fisher guessed that noted that there was a
range within the averages of different jurisdictions with
different cost structures, and the division of the share
depending on the cost structure. The right solution was to
broaden the state's tax structure. He believed that the
state budget would require additional revenue.
Co-Chair Seaton wondered whether there was an appropriate
level in the tax credits, and whether there was a desire to
have the current deficits with the tax amount.
Commissioner Fisher was not prepared to answer the
question. He would want to engage in another level of
analysis before he commented on the regime.
2:22:48 PM
AT EASE
2:23:22 PM
RECONVENED
Co-Chair Foster recommended that Commissioner Fisher name
be forwarded to the full body for confirmation. There being
NO OBJECTION, it was so ordered.
2:23:54 PM
AT EASE
2:24:38 PM
RECONVENED
HOUSE BILL NO. 233
"An Act relating to the insurance tax education
credit, the income tax education credit, the oil or
gas producer education credit, the property tax
education credit, the mining business education
credit, the fisheries business education credit, and
the fisheries resource landing tax education credit;
providing for an effective date by repealing the
effective dates of secs. 3, 5, 7, 10, 14, 16, 18, 21,
23, 25, 28, 30, 32, 35, 37, 39, 42, 44, 46, 49, 51,
53, and 55, ch. 92, SLA 2010, sec. 14, ch. 7, FSSLA
2011, secs. 15, 17, 19, 21, 23, and 25, ch. 74, SLA
2012, sec. 49, ch. 14, SLA 2014, secs. 37, 40, 43, and
46, ch. 15, SLA 2014, and secs. 26 and 31, ch. 61, SLA
2014; providing for an effective date by amending the
effective date of secs. 1, 2, and 21, ch. 61, SLA
2014; and providing for an effective date."
2:25:09 PM
REPRESENTATIVE CHRIS TUCK, SPONSOR, introduced the
PowerPoint presentation, "House Bill 233 Education Tax
Credits" (copy on file). He thanked the committee.
KENDRA KLOSTER, STAFF, REPRESENTATIVE CHRIS TUCK, provided
a history of the Education Tax Credit on slide 2,
"Education Tax Credit":
1987: Education Tax Credit (ETC) established to
encourage private businesses to make charitable
contributions to Alaska educational institutions and
facilities
2010: Credit increased from 50% to 100% on
contributions between $101-$300k; maximum annual
credit expanded from $150k to $5 million (SB236)
2011 and 2014: List of institutions and programs
eligible for donation were expanded; eligibility
varies by tax-type (SB84 and HB278)
2014: ETC sunset established for Dec 2018 as part of
newly
established Indirect Expenditure Report (HB306)
Ms. Kloster reviewed what the bill did on slide 3,
"Education Tax Credit":
HB233 extends the effective date for the repeal of the
education tax credits from December 31, 2018 to
January 1, 2025.
Ensures that the credit that exists in statute today
will be maintained until January 1, 2025, instead of
narrowing in scope and decreasing in value on January
1, 2021.
Ms. Kloster continued to slide 4, "Education Tax Credit":
Today, there are many opportunities to make private
donations to a variety of educational institutions,
facilities and programs
However, there are specific eligibility requirements
for both organizations and tax type
Selection of eligible entities:
Non-profit, public or private accredited Alaska
two-year or four-year colleges
Non-profit elementary or secondary schools and
school districts
State operated vocational education and training
schools
Non-profit regional vocational training centers
Apprenticeship programs
Alaska higher education investment fund
Postsecondary institutions providing dual-credit
courses
Ms. Kloster further discussed the credit on slide 5,
"Education Tax Credit":
Non-transferable, non-refundable credit that a donor
can apply against the following categories of State of
Alaska taxes. The use and deductibility of
contributions varies by tax type:
Corporate Income Tax
Fisheries Business Tax / Fisheries Resource
Landing Tax
Insurance Premium Tax / Title Insurance Premium
Tax
Mining License Tax
Oil and Gas Production Tax
Oil and Gas Property Tax
General Credit Provisions:
50 percent of annual contributions up to $100,000
100 percent of the next $200,000
50 percent of annual contributions beyond
$300,000
Total annual credit per taxpayer, across all tax
types not-to-exceed $5 million
Ms. Kloster detailed why Education Tax Credits are
important on slide 6, "Why Are ETC Important?":
ETC allows a need to be filled directly.
Encourages private industry to partner with education
institutions, creating more opportunity in our state.
Expanding our educational programs to provide more
opportunities for our students.
Training our future workforce for Alaskan jobs.
2:30:12 PM
Ms. Kloster discussed slide 7, "Benefits to Education:
Summary of 2015." She indicated that Mr. Alper was
available to answer any detailed information. The chart
showed what was coming into the state's system. It was
money that the state was seeing going into the education
system.
Ms. Kloster moved to slide 8, "Benefits to Education:
Summary of CY 2017 - Alaska Education Credits."
Ms. Kloster reviewed the industry investment in education
on slide 9, "Industry Investment in Education":
In 2000, members of the At-Sea Processors Association
began making private contributions to support student
fellowships and to fund sustainable oceans and
fisheries research
Association members established the Ted Stevens
Professorship of Marine Policy
UA and the At-Sea Processors created the Pollock
Conservation Cooperative Research Center (PCCRC)
within the College of Fisheries and Ocean Sciences at
UAF
The PCCRC has put over $20 million into marine
research and education since 2000, the largest single
contributor to marine research at the University of
Alaska.
The work done over the years has had an impact far
beyond what the University could have accomplished
alone.
Participating companies have included Trident,
American, Starbound, Glacier Fish, Arctic Storm, and
the Coastal Villages Region Fund
Representative Wilson asked about the donations and whether
they had to be made to Alaska nonprofits and Alaska
schools. She also looked at page 9, and wondered whether
the student fellowships were required for Alaskans.
Ms. Kloster responded that they must go to programs within
Alaska, and benefitted Alaskans. She shared that the
private industry would give the donation to the educational
program or university; and that entity would put it toward
their tax.
Representative Ortiz returned to slide 2. He wondered if it
included the ability to make contributions to private
Alaska education institutions.
Ms. Kloster pointed to the document in the packet that
listed all of the organizations that received a tax credit,
and felt that it would help to explain the eligibility.
Co-Chair Seaton referred to page 7 and wondered what the
$2.26 million was directed toward under "Corporate Income
Tax."
Ms. Kloster responded that the "other" might refer to the
nonprofits, and deferred to Mr. Alper for more information.
2:35:02 PM
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
stated that the graph was page 2 of a three-year report. He
stated that DOR provided a cover letter, a table, and a
detailed list of recipients. He stated that the list of
recipients contained the list of the so-called "other."
That "other" list consisted of the various nonprofits,
watershed partnerships, and anything that would be eligible
to receive the tax credit donations that were not either a
university or vocational program. He stressed that the
education tax credits was a rich area of legislative
involvement. The list of eligible entities had evolved
dramatically over the year. He noted that there were
several boutique line items, which were added for various
reasons. He stressed that the list was not the donors,
rather it was the recipients who received the donations. He
shared that those who made the donations were tax payers of
some sort, but that information was confidential.
2:37:04 PM
AT EASE
2:37:20 PM
RECONVENED
Representative Guttenberg asked why Alaska Business Weekly
and Granit Construction were eligible.
Mr. Alper replied that it did not necessarily mean the two
entities were eligible, it was not a refundable tax credit.
He detailed that when a company made a donation, DOR did
not know about it until the tax was paid and it went
through the department's review process. He guessed it was
a job training or apprenticeship program. He noted that
Senator Click Bishop had taken an interest in the type of
program over the years.
Representative Guttenberg looked forward to the follow up.
Representative Tilton asked if the entities were all
Alaska-based.
Mr. Alper answered that the statutory language stated that
there must me an entity in Alaska. He guessed the
Smithsonian had a research project in Alaska, but the
recipient was the home office in the Smithsonian.
2:40:17 PM
Representative Ortiz queried the amount of discussion
regarding the allowance of public funds to go to private
institutions, and the annual amount that went to private
institutions.
Mr. Alper responded that it would be in the other category,
but could not report the actual amount by recipient. He
stated that the section was subsection 1, and believed that
it was the original language from the 1980s. He did not
know whether it had evolved over the years to include the
reference to public or private entities. He stated that
there had been a dozen or more amendments over a thirty-
year period
Ms. Kloster added that on slide 4 showed a list of eligible
entities.
2:45:00 PM
SUSAN FOLEY, PRESIDENT, UNIVERSITY OF AK FOUNDATION (via
teleconference), thanked members for their service. The
University of Alaska and the University of Alaska
Foundation strongly supported HB 233. The programs that
received contributions were not directed or established by
industry. Regarding research opportunities, often times
research opportunities reached beyond the scope of the
donor program. She invited questions.
Co-Chair Seaton wondered whether the tax credit for sports
tournament should continue.
Ms. Foley responded in the affirmative.
2:50:06 PM
DOUG WALRATH, NORTHWEST ALASKA CAREER AND TECHNINCAL CENTER
(via teleconference), spoke in support of the bill. He
stated that the loss of federal funding, with the
elimination of earmarked appropriations and the
constriction of stage UGF had made the education tax credit
increasingly important to the technical center operations
and programming. The tax credit contributions accounted for
on-third of its annual operating budget. He stated that
since 2009 it had actively pursued industry partnership.
2:53:20 PM
TOMMY SHERIDAN, SILVER BAY SEAFOODS, CORDOVA (via
teleconference), reported that Silver Bay Seafoods strongly
supported the bill. He read a prepared statement:
Silver Bay Seafoods, LLC (Silver Bay, or SBS) is
writing to support Alaska House Bill 233, "An Act
relating to the insurance tax education credit, the
income tax education credit, the oil or gas producer
education credit, the property tax education credit,
the mining business education credit, the fisheries
business education credit, and the fisheries resource
landing tax education credit."
SBS is a vertically integrated, primarily fishermen-
owned processor of frozen salmon, herring, and other
seafoods products for both domestic and export
markets. Silver Bay began in 2007 as a single salmon
processing facility in Sitka, Alaska, and has since
grown into one of the largest seafoods companies in
Alaska. Silver Bay has state of the art, high volume
processing and freezing facilities throughout Alaska,
currently operating in Sitka, Craig, Valdez, Naknek
and Metlakatla. SBS is dependent upon a large and
diverse workforce, the likes of which can and do
receive their training through the University of
Alaska Southeast's (UAS) School of Career Education,
which includes the following programs of relevance to
Silver Bay's operations: Construction Technology,
Diesel Technology, Welding, and Fisheries
Technology.
With regards to the lattermost program, industry
funding made possible through education credits have
resulted in increased training opportunities for
Alaskan youth. For example, in fall of 2017 36 Alaskan
high school students took UAS courses, thanks to
financial assistance from the At-Sea Processors
Association (APA) and Goldbelt Inc. APA previously
assisted with a pilot UAS program in spring 2017,
allowing 13 high school students to complete four
credits of college coursework. Goldbelt Inc. has
worked to engage Juneau-based Alaska Native students
in the sciences, beginning with a summer 2017
oceanography learning experience and culminating with
22 students taking an iPad-based Introduction to
Oceanography class for University of Alaska General
Education credit. Altogether, in 2017 APA and Goldbelt
Inc. helped over 50 high school students take on
university-level coursework all over the state, from
Kodiak, Juneau, and Sitka to Unalaska, Galena, and
Petersburg.
I personally benefitted from similar financial
assistance several years ago as a student in UAS's
Fisheries Technology Program. With financial
assistance made possible by donations from Icicle
Seafoods, I completed an Undergraduate Certificate in
Fisheries Technology before going on to complete
graduate-level programs at Oregon State University.
Extension of the education tax credit program through
House Bill 233 will continue to promote private
investment in Alaskan higher education, which is
essential to ensuring that Alaskans learn the skills
needed to sustain and grow Alaska's commercial fishing
industry. Our thanks to you for sponsoring this
important bill.
2:56:44 PM
KAREN MATTHIAS, COUNCIL OF ALASKA PRODUCERS, ANCHORAGE (via
teleconference), read a prepared statement:
The Council of Alaska Producers (CAP) is writing to
support Senate Bill 116, "An Act relating to the
insurance tax education credit, the income tax
education credit, the oil or gas producer education
credit, the property tax education credit, the mining
business education credit, the fisheries business
education credit, and the fisheries resource landing
tax education credit."
CAP is a non-profit trade association formed in 1992
to represent the interests of large metal mines and
mine developmental projects in Alaska. CAP informs
members on legislative and regulatory issues, supports
and advances the mining industry, educates members,
the media
and the general public on mining related issues, and
promotes economic opportunity and environmentally
sound mining practices.
CAP's members have welcomed the opportunity to partner
with the State of Alaska and provide funding directly
to Alaska's higher education projects and programs
that support and enhance the mining industry. Between
2011 and 2017, mining companies in Alaska education
tax credit program to invest $19.6 million in programs
such as:
.notdef UAF Mining Engineering research endowment
.notdef UAF Mining Engineering scholarship fund
.notdef UAA Geology Scholarships
.notdef Mining and Petroleum Training Services (MAPTS),
UAF Cooperative Extension Services, Anchorage,
Soldotna, Juneau
.notdef UAS Pathways to Mining
.notdef UAA Institute of Social and Economic Research
.notdef Northwest Arctic Borough School District
.notdef Angoon High School Vocational Technical program
MAPTS and the Pathways program provide educational
opportunities and training that lead directly to good
jobs in the industry. The importance of these
educational and training programs is underscored by a
survey of Alaska's mining workforce which revealed
that there is considerable aging of skilled employees;
for example, 47.1 percent of mechanics, 51.1 percent
of mining materials engineers and 65.4 percent of
mining machine operators are 45 years of age or older.
Faced with the challenges of attrition and aging
within the current workforce, and competition from the
global mining industry, the mining industry embarked
on a workforce development planning process which
resulted in the Alaska Mining Workforce Development
Plan.
SB116 extends the education tax credit program so it
will continue to promote private investment in higher
education in our state, an essential component of
realizing the objective of ensuring that Alaskans
learn the skills needed to sustain and grow Alaska's
mining industry.
Thank you for sponsoring this bill. We hope that it
will be scheduled soon for a hearing in the
Labor and Commerce Committee.
2:59:32 PM
BRADLEY MORAN, DEAN, COLLEGE OF FISHERIES AND OCEAN
SCIENCE, UAF, FAIRBANKS (via teleconference), spoke in
support of the legislation. He noted that his college had
utilized the education tax credit for nearly twenty years
with great benefit with over $25 million in support for
research, scholarship, fellowships, and outreach funding.
He thanked the legislators who had worked to continue the
program for the benefit of the university and the state.
Vice-Chair Gara asked if his school was a non-profit.
Mr. Moran responded in the affirmative.
Vice-Chair Gara asked if contributions to the university
treated as nonprofit contributions.
Mr. Moran replied that the contributions went through the
University Foundation.
Vice-Chair Gara noted that a company would get a federal
tax deduction for donating. He wondered whether the same
amount of money would not come in, even without the smaller
state tax credit.
Mr. Moran replied that he was not an expert in the tax
laws. He stated that through the tax credit, it allowed for
the corporations to invest in the college.
Representative Thompson queried the amount of leveraged
federal grant money.
Mr. Moran responded that in FY 17, the college brought in
approximately $43 million in federal research dollars. He
furthered that a large portion of that money was the
operation of the research vessels operated in the
university.
Representative Thompson asked if it was a 50/50 match, or
whether there was more leverage.
Mr. Moran responded that it was not a 50/50 match.
Co-Chair Foster OPENED Public Testimony
3:04:49 PM
GRETA SCHUERTH, ALASKA RED DOG MINE, NANA REGIONAL,
ANCHORAGE (via teleconference), spoke in favor of the
legislation. She stated that multiple Nana subsidiaries
provided support services to the mine operations providing
many jobs to the Nana shareholders and other Alaskans.
Representative Wilson asked how many Alaskans were able to
get education assistance.
Ms. Schuerth agreed to provide that information.
Co-Chair Foster CLOSED Public Testimony.
Co-Chair Foster indicated amendments were due in his office
by Thursday at 5:00 PM.
HB 233 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 303
"An Act relating to workers' compensation benefits for
the rehabilitation and reemployment of injured
employees."
3:10:34 PM
Representative Wilson MOVED to ADOPT proposed committee
substitute for HB 303, Work Draft (30-GH2709\J, Wallace
3/16/18). There being NO OBJECTION, it was so ordered.
3:12:11 PM
MARIE MARX, DIRECTOR, WORKER'S COMPENSATION, DEPARTMENT OF
LABOR AND WORKFORCE DEVELOPMENT, there was only one change.
It inserted language that the one-year time limit on
benefits paid before parties agreed to a training plan.
3:13:32 PM
HEIDI DRYGAS, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, introduced herself and indicated
that Ms. Marx would review the presentation.
Ms. Marx introduced the PowerPoint presentation:
"Workers' Compensation Reemployment Benefits: HB303,House F
inance Committee March 22, 2018" (copy on file).
Ms. Marx slide 2: "What is Worker's Compensation?"
A system of insurance that protects workers and employ
ers from some of the losses caused by on-the-job accide
nts and job-related illnesses.
Ms. Marx slide 3: "The Grand Bargain."
An employer provides prompt, necessary medical and
wage loss benefits to an injured worker for a work
related injury.
In exchange, the injured worker receives limited
benefits and gives up the right to sue the employer.
Ms. Marx slide 4: "Mission."
To ensure the quick, efficient, fair and predictable
delivery of indemnity, medical, and vocational
rehabilitation benefits to injured workers at a reason
able cost to employers
Ms. Marx slide 5: "Benefits Provided."
?Medical Care
?Indemnity (Wage Loss) Benefits
?Death Benefits
?Reemployment (Retraining) Benefits
Ms. Marx reviewed slide 6: "Reemployment Benefits."
Intended to return an injured worker to work when the
worker cannot return to the job of injury or to jobs
for which the worker has relevant training or experien
ce.
Ms. Marx moved to slide 11: "Alaska Reemployment Benefits
Flow Chart: Current Law." She stressed that the bill did
not address instances where an injured worker returned to
work and received medical care. The retraining benefits
were related to situations where an injured worker was off
work for at least 90 consecutive days, and a doctor opined
that they could not return to their job of injury or other
relevant jobs.
3:15:23 PM
Ms. Marx explained that the bill was introduced because of
current challenges. She reviewed a list of challenges on
slide 7: "Current Challenges." She read the slide:
?Mandatory reemployment benefits eligibility
evaluations
?Maximum plan cost of $13,300
?Retraining plans focus on quickest return to work
option,
regardless of worker's interest in that vocational
goal
?Declining pool of rehabilitation specialists
?No rehabilitation specialist fee schedule
Ms. Marx reviewed the benefits of HB 303 on slide 8: "HB
303." She read the slide:
?Improves the delivery of reemployment benefits to
injured workers
?Provides eligible employees with more choices in
reemployment goals and plans
?Encourages injured employees' early return to work
?Helps employers control costs
3:17:55 PM
Representative Guttenberg queried the number of individuals
who were hurt on the job and not eligible.
Ms. Marx explained that one of the provisions of the bill
would no longer permit an injured worker to settle
reemployment benefits with their employer. She stated that
the following slides showed the statistics about the policy
call.
Ms. Marx pointed to slide 9: "Reemployment Benefits
Eligibility Statistics FY 17."
?564injured workers were referred for a reemployment
benefits eligibility evaluation
?148injured workers were determined eligible
for reemployment benefits
?14injured workers completed reemployment plans
Ms. Marx turned to slide 10: "Reemployment Benefits
Settlement Statistics FY 17."
164injured workers settled reemployment benefits
48 of those injured workers settled reemployment
benefits before an eligibility determination was made
80 of those injured workers settled reemployment
benefits before completing a retraining plan
36 of those injured workers settled reemployment
benefits after being found ineligible for benefit
3:22:00 PM
Representative Guttenberg asked about the change. He wanted
to understand that instead of the money going to the
individual it would go to the school. He noted that much of
the controversy was that the injured worker needed money to
pay their mortgages. The person took the benefit money but
did not use the money for its intended use. .
Ms. Marx explained that it allowed an injury worker to
receive the benefit.
Representative Guttenberg wanted to confirm that the lump
sum would not be paid to an individual.
3:26:08 PM
Co-Chair Foster OPENED Public Testimony.
3:26:59 PM
KAYLA KADE, SELF, ANCHORAGE (via teleconference), was a
vocational rehabilitation specialist. She did not agree
with some of the current regulations in place. She did not
agree with paying an individual lump sum.
3:31:04 PM
DEBBIE EVEN, SELF, ANCHORAGE (via teleconference), spoke in
opposition of the bill. She disagreed with the provision
that did not allow for a lump sum to be distributed.
Representative Wilson asked if Ms. Even would getting a sum
of money plus help with schooling.
Ms. Evan decided to settle with Worker's Compensation
because of the time frame.
3:33:05 PM
CYNTHIA BRADLEY, SELF, ANCHORAGE (via teleconference),
opposed the legislation. She was injured on the job at the
end of 2011. She settled her claim. She disagreed with the
statistic provided by the department. She received a lump
sum settlement. She indicated she had been making $50 per
hour at the job where she was injured. She was trained for
a job where she only made $18.
3:37:25 PM
GRETCHEN CUSACK, ALASKA INTEGRATED CARE ACTIONS, EAGLE
RIVER (via teleconference), opposed HB 303. She relayed
that there were many misconceptions. She provided some of
her background and was well-versed in the field. She
appreciated a couple of the changes.
Co-Chair Foster encouraged additional testimony.
3:44:22 PM
Representative Wilson asked how much it took for a worker
to have a plan made up and to follow through to succession.
Ms. Cusack thought it would be difficult to say because of
several factors. Plans could range from $3000 to $20,000. A
person needed to be medically stable. She asked the
committee to be aware of the complexity of each case.
3:46:05 PM
Representative Guttenberg asked whether all rehabilitation
specialists were the same. He asked how to set the rates.
He wondered if it was by plan or qualifications.
Commissioner Drygas responded that the specialists were
required to have master's degrees. She stated that the
department could receive different reports from different
specialists.
Ms. Marx responded that one of the things the system
struggles with was that a specialist might not meet the
statutory requirement. Ultimately both would reach plans
within the statutory requirements.
Representative Guttenberg wondered whether the payment was
because of the billed appointments.
Ms. Marx responded in the affirmative.
3:50:50 PM
GREG WEAVER, SELF, KNIK (via teleconference), indicated he
had been an injured worker. He provided a background of his
injury. He spoke about a huge black hole in Worker's
Compensation. He provided details about his experience. He
continued to provide information about is personal
experience. He wanted people in Alaska that were injured on
the job to be treated fairly.
Co-Chair Foster CLOSED Public Testimony.
Co-Chair Foster relayed that amendments were due by Friday,
March 30, 2018 at 5:00 PM.
Representative Wilson wondered whether there could be a
delay in the amendment deadline, because she did not fully
understand the legislation.
Co-Chair Foster relayed that he would hold off on the
amendment deadline.
Commissioner Drygas thanked those that testified on the
bill and indicated that it was difficult to find a balance.
She wanted to see workers back in the workforce rather than
drawing on public assistance.
Co-Chair Foster reviewed the agenda for the following
meeting.
HB 303 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
4:01:18 PM
The meeting was adjourned at 4:01 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 233 Education Tax Credit Support Letter Sitnasuak 2018.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Additional Documents - DOR Education Tax Credit Report CY2017. 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Additional Documents - FY2012-FY2016 Education Tax Credits 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Sectional Analysis.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Sponsor Statement 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB233 Supporting Documents - Support Letters 2.28.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB 303 Letters of opposition 3.23.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 303 |
| HB233 Edu Tax Credit Presentation 3.26.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |
| HB 303 - Letter of Opposition - 3.27.18.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 303 |
| 3.18 NANA Teck HB 233 Testimony.pdf |
HFIN 3/27/2018 1:30:00 PM |
HB 233 |