Legislature(2023 - 2024)ADAMS 519

04/22/2024 09:00 AM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= HB 116 RESTORATIVE JUSTICE ACCT APPROPRIATIONS TELECONFERENCED
Moved CSHB 116(STA) Out of Committee
+= HB 144 REPEAL EDUCATION TAX CREDITS SUNSET TELECONFERENCED
Moved HB 144 Out of Committee
+ HB 45 PFD CONTRIBUTIONS TO GENERAL FUND AND PF TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 22, 2024                                                                                            
                         9:03 a.m.                                                                                              
                                                                                                                                
9:03:15 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Edgmon called the House Finance Committee meeting                                                                      
to order at 9:03 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bryce Edgmon, Co-Chair                                                                                           
Representative DeLena Johnson, Co-Chair                                                                                         
Representative Julie Coulombe                                                                                                   
Representative Mike Cronk                                                                                                       
Representative Alyse Galvin                                                                                                     
Representative Sara Hannan                                                                                                      
Representative Andy Josephson                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Will Stapp                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Frank Tomaszewski                                                                                                
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Julie  Coulombe, Sponsor;  Brodie Anderson,                                                                      
Staff, Representative  Neal Foster; Edra  Morledge, Staff,                                                                      
Representative  Julie   Coulombe;   Representative  Justin                                                                      
Ruffridge,  Sponsor;  Bud  Sexton,  Staff,   Representative                                                                     
Justin Ruffridge; Representative Mike Prax, Sponsor; Riley                                                                      
Nye, Staff, Representative Mike Prax.                                                                                           
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Michael  Williams, Acting  Deputy Director,  Tax Division,                                                                      
Department of Revenue.                                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 45     PFD CONTRIBUTIONS TO GENERAL FUND AND PF                                                                              
                                                                                                                                
          HB 45 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
HB 116    RESTORATIVE JUSTICE ACCT APPROPRIATIONS                                                                               
                                                                                                                                
          CSHB 116(STA) was REPORTED out of committee with                                                                      
          eight  "do  pass"  recommendations and  one  "no                                                                      
          recommendation" recommendation and with  one new                                                                      
          indeterminate fiscal note from the House Finance                                                                      
          Committee for the Department of Public Safety and                                                                     
          one new indeterminate fiscal note from the House                                                                      
          Finance   Committee  for   the   Department   of                                                                      
          Corrections.                                                                                                          
                                                                                                                                
HB 144    REPEAL EDUCATION TAX CREDITS SUNSET                                                                                   
                                                                                                                                
          HB 144 was  REPORTED out of  committee with four                                                                      
          "do    pass"    recommendations,    three    "no                                                                      
          recommendation" recommendations, and two "amend"                                                                      
          recommendations and with  one new  fiscal impact                                                                      
          note from the Department of  Revenue and one new                                                                      
          zero  note  from  the  Department  of  Commerce,                                                                      
          Community and Economic Development.                                                                                   
                                                                                                                                
Co-Chair Edgmon reviewed the meeting agenda.                                                                                    
                                                                                                                                
HOUSE BILL NO. 116                                                                                                            
                                                                                                                                
     "An   Act  relating   to   appropriations  from   the                                                                      
     restorative justice account."                                                                                              
                                                                                                                                
9:04:58 AM                                                                                                                    
                                                                                                                                
Co-Chair Edgmon asked the bill  sponsor to provide a brief                                                                      
recap on the legislation.                                                                                                       
                                                                                                                                
REPRESENTATIVE JULIE COULOMBE, SPONSOR, explained that the                                                                      
bill reorganized the percentages of  the funds that passed                                                                      
through  the Restorative  Justice Account  that  fund non-                                                                      
profit  organizations  through  the  Council  on  Domestic                                                                      
Violence  and  Sexual  Assault  (CDVSA) for  services  for                                                                      
victims and domestic violence and sexual assault programs.                                                                      
The legislation changed the  share of the funds, reversing                                                                      
the share for CDVSA in the Department of Corrections (DOC).                                                                     
                                                                                                                                
Co-Chair Edgmon  asked staff  to provide  a review  of the                                                                      
fiscal notes.                                                                                                                   
                                                                                                                                
BRODIE   ANDERSON,  STAFF,  REPRESENTATIVE   NEAL  FOSTER,                                                                      
provided a  review of  two House  Finance Committee fiscal                                                                      
notes. He  began with the  DOC fiscal  note, OMB component                                                                      
number  2952. The  policy discussed  in the  bill switched                                                                      
percentages coming  from the  Restorative Justice Account.                                                                      
The  fiscal notes  reflected the  policy in  the  bill. He                                                                      
discussed fund  sources and noted  the Restorative Justice                                                                      
Fund had  a decrement of $7  million for the  FY 25 budget                                                                      
(the amount available) and would be appropriated in FY 25.                                                                      
There was a fund  source swap to UGF for the corresponding                                                                      
equal amount,  and in  the outgoing  years the  funds were                                                                      
indeterminate.  The  fiscal  note   assumed  a  3  percent                                                                      
allocation to  DOC.  He pointed  out  that the  UGF FY  25                                                                      
appropriation replaced the  restorative justice funds, and                                                                      
also allowed the department time  to transition to a lower                                                                      
allocation of restorative justice funds in outgoing years.                                                                      
                                                                                                                                
9:09:10 AM                                                                                                                    
                                                                                                                                
Mr. Anderson reviewed OMB component number 521 for CDVSA in                                                                     
the Department of  Public Safety (DPS). The note reflected                                                                      
an increase  of $7.5  million transferred from DOC  to the                                                                      
Restorative Justice  Funds. He noted  that the  grants and                                                                      
benefits line  showed the same amount  available. The bill                                                                      
allocated 79 percent to CDVSA and victims.                                                                                      
                                                                                                                                
9:10:20 AM                                                                                                                    
                                                                                                                                
Representative Josephson  observed that  the  fiscal notes                                                                      
would get a stamp if  the bill was moved out of committee.                                                                      
He  noted that  the  funds  in question  were  not in  the                                                                      
operating budget but asked if the funds would be considered                                                                     
by the Conference Committee and would effectively be in the                                                                     
budget.                                                                                                                         
                                                                                                                                
Mr. Anderson answered affirmatively and explained that the                                                                      
fiscal notes would replace the previous fiscal notes in the                                                                     
packets.  The  Conference  Committee  would  consider  and                                                                      
negotiate a fiscal note package. Conference Committee would                                                                     
have  the  ability   to  reconcile  the  operating  budget                                                                      
components, but  after  conference committee  approval the                                                                      
bill would enforce whatever funding had been allocated for                                                                      
FY 25.                                                                                                                          
                                                                                                                                
Co-Chair Johnson asked  if there were two  or three fiscal                                                                      
notes.                                                                                                                          
                                                                                                                                
Mr. Anderson replied that there were two fiscal notes.                                                                          
                                                                                                                                
Co-Chair Johnson asked if the fiscal notes were a decrement                                                                     
to DOC.                                                                                                                         
                                                                                                                                
Mr. Anderson replied that DOC  would be held harmless with                                                                      
no cuts  visible for FY 25.  There was a  fund source swap                                                                      
between the Restorative Justice  Fund and the undesignated                                                                      
general funds (UGF).  In outgoing years, there  was no UGF                                                                      
designated in FY  26 through FY 30.  He explained that the                                                                      
DOC fiscal note  would only fund FY  25, and in  FY 26 DOC                                                                      
would be required to request an increment in future years.                                                                      
The  $7.5  million would  not  enter  the  base budget  in                                                                      
perpetuity until requested the following year.                                                                                  
                                                                                                                                
Co-Chair  Johnson stated  her understanding  that at  some                                                                      
point  incarcerated individuals' Permanent  Fund Dividends                                                                      
(PFDs) were garnished to go to the fund. She recalled that                                                                      
the fund was renamed as a restorative justice account, and                                                                      
most  of the  funding went  to offset  the cost  of having                                                                      
people  incarcerated. She did  not  want the  situation to                                                                      
happen again and noted that the fund was originally set up                                                                      
to  offset the cost  of incarceration rather  than benefit                                                                      
prisoners. She  wanted  to ensure  that there  was  a name                                                                      
change and  they were  now taking a  large portion  of the                                                                      
account. She thought it was a significant fiscal load.                                                                          
                                                                                                                                
9:16:08 AM                                                                                                                    
                                                                                                                                
Representative  Coulombe   relayed  that   the   fund  was                                                                      
established in 1988. In 2018 there was a policy change, and                                                                     
it  was  determined that  more  funding  would go  towards                                                                      
victims instead  of offsetting DOC  costs. The percentages                                                                      
laid out at the time still favored DOC, and she thought the                                                                     
bill was  another step to fulfill  the policy changes that                                                                      
happened in 2018  to restore victims. She mentioned people                                                                      
sharing concerns that victims were not getting restitution                                                                      
or  restoration, and  the  bill was  one  vehicle to  help                                                                      
stabilize  efforts  for  victims. She  mentioned  that  in                                                                      
statute CDVSA  was required  to put  together a prevention                                                                      
program, but  it  did not  have the  money to  do  so. The                                                                      
funding would aid  the agency with doing more preventative                                                                      
education programs. She added that the  House had put $3.7                                                                      
million in the budget for CDVSA and thought that the amount                                                                     
would be balanced.                                                                                                              
                                                                                                                                
Representative Galvin thanked  Representative Coulombe for                                                                      
finding some way  to ensure victims were better supported.                                                                      
She understood  the original intent  of the fund  may have                                                                      
been  different than  the  current  use,  but thought  the                                                                      
legislature needed to  find some common  ground to support                                                                      
victims.  She  supported the  bill.  She  asked about  the                                                                      
funding. She observed that the act was effective on July 1,                                                                     
2024. She understood the fund  was filled with PFD dollars                                                                      
that happened in October. She asked if FY 24 dollars would                                                                      
be rolled into the fund first.                                                                                                  
                                                                                                                                
EDRA  MORLEDGE,   STAFF,  REPRESENTATIVE  JULIE  COULOMBE,                                                                      
confirmed that the funds were from the PFD in 2023.                                                                             
                                                                                                                                
Co-Chair  Edgmon  understood  that   the  PFD  funds  were                                                                      
dispersed  in the  year  after the  calendar  year of  the                                                                      
dividend.                                                                                                                       
                                                                                                                                
Representative Ortiz  supported  the  bill.  He wanted  to                                                                      
clearly understand the fiscal implications. He asked if the                                                                     
intent of the  bill would direct more funding resources to                                                                      
victims in the first year of its enactment. He asked if the                                                                     
money would be replaced with General Fund money, and there                                                                      
would not be any immediate impact on DOC.                                                                                       
                                                                                                                                
Mr. Anderson replied affirmatively. The  DOC would be held                                                                      
harmless for FY 25.                                                                                                             
                                                                                                                                
Co-Chair Edgmon  noted there  were  no amendments  for the                                                                      
bill.                                                                                                                           
                                                                                                                                
Co-Chair  Johnson MOVED  to  REPORT CSHB  116(STA) out  of                                                                      
committee   with   individual   recommendations  and   the                                                                      
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, CSHB 116(STA) was REPORTED out of                                                                     
committee with eight "do pass" recommendations and one "no                                                                      
recommendation"   recommendation   and   with    one   new                                                                      
indeterminate fiscal note from the House Finance Committee                                                                      
for  the   Department  of   Public  Safety  and   one  new                                                                      
indeterminate fiscal note from the House Finance Committee                                                                      
for the Department of Corrections.                                                                                              
                                                                                                                                
9:22:38 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:23:45 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 144                                                                                                            
                                                                                                                                
     "An  Act  relating  to  education  tax  credits;  and                                                                      
     providing for  an  effective  date  by  repealing the                                                                      
     effective date  of secs. 1,  2, and  21, ch.  61, SLA                                                                      
     2014."                                                                                                                     
                                                                                                                                
9:23:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JUSTIN RUFFRIDGE, SPONSOR, relayed that the                                                                      
bill would repeal the sunset on the education tax credits.                                                                      
He   explained  that   under  the   tax   credit  program,                                                                      
organizations could give funds to  educational institutions                                                                     
and  receive  a tax  credit.  The  program  had been  well                                                                      
utilized since the late  1980s. He supported repealing the                                                                      
sunset to continue the successful program.                                                                                      
                                                                                                                                
BUD  SEXTON, STAFF,  REPRESENTATIVE JUSTIN  RUFFRIDGE, was                                                                      
available for questions.                                                                                                        
                                                                                                                                
Co-Chair  Johnson  commented that  she  liked  sunsets  in                                                                      
general. She  thought there  was likely  a reason  to have                                                                      
sunsets in order to  bring eyes on the issue periodically.                                                                      
She wanted to  get a sense of  why the sponsor thought the                                                                      
status was different or what had changed from the original                                                                      
intent.                                                                                                                         
                                                                                                                                
Representative Ruffridge saw there was  a need for sunsets                                                                      
in periodic language for  a new bill.  He pointed out that                                                                      
the  program had  been in  place for  almost 40  years. He                                                                      
believed there  was  a lack  of  stability that  came with                                                                      
bringing something forward for sunset extension and having                                                                      
it change. He noted that every time the program had been up                                                                     
for sunset there had  been alterations of the structure of                                                                      
the program, which he thought could lead to confusion.  He                                                                      
supported  the bill  for  the  purposes  of  stability and                                                                      
mentioned subsequent slight changes to the program which he                                                                     
thought added to instability.                                                                                                   
                                                                                                                                
9:28:40 AM                                                                                                                    
                                                                                                                                
Representative Galvin highlighted  a list in  the members                                                                       
packets with frequently asked questions (copy on file). She                                                                     
referenced a  recent legal ruling [related  to funding for                                                                      
correspondence programs]  that seemed  to take  out pretty                                                                      
significant pieces  of  statute related  to  correspondence                                                                     
funding. She stated the tax credit program listed nonprofit                                                                     
agencies.  She  knew  there  could  be  private  nonprofit                                                                      
programs that were religious, and  thought the last ruling                                                                      
was related to anything related to  religious institutions.                                                                     
She asked for clarification.                                                                                                    
                                                                                                                                
Representative Ruffridge replied that the  ruling made the                                                                      
previous week had nothing to do with the program. He wanted                                                                     
to be  careful not to conflate a  situation that was ruled                                                                      
unconstitutional because it took some big steps forward to                                                                      
say  that public  money could be  used  in some  cases for                                                                      
private or religious instruction. He mentioned the statute                                                                      
that was  ultimately ruled  against, which he  thought had                                                                      
some  incongruencies. The  ruling  had  to  do with  state                                                                      
dollars that were  appropriated. He stated that if  any of                                                                      
the members  donated funding  to their church,  they would                                                                      
apply for a tax credit. He emphasized that a tax credit was                                                                     
not the same as a legislative body appropriating funds for                                                                      
a  specific purpose and  then being  granted a  credit. He                                                                      
thought the U.S. and state tax codes showed the difference.                                                                     
He reiterated  the issue was  very separate. He emphasized                                                                      
that the  topic at hand  was a donation  made with private                                                                      
dollars.                                                                                                                        
                                                                                                                                
Co-Chair Edgmon clarified that the  money went through the                                                                      
normal appropriation process.  He asked  about a technical                                                                      
training school.                                                                                                                
                                                                                                                                
Representative Ruffridge replied, "No." He explained there                                                                      
would be a reduction in revenue to the state in the dollar                                                                      
amounts that the  state was allowing an entity  to not pay                                                                      
tax for.                                                                                                                        
                                                                                                                                
Co-Chair Edgmon asked if the proceeds went directly to the                                                                      
beneficiary.                                                                                                                    
                                                                                                                                
Representative Ruffridge explained that if a person owned a                                                                     
company, and the company donated directly to an institution                                                                     
of  the persons   choice, the  person would  apply  to the                                                                      
Department of Revenue (DOR) to receive a tax credit.                                                                            
                                                                                                                                
9:34:50 AM                                                                                                                    
                                                                                                                                
Representative Galvin received some emails from individuals                                                                     
who were  concerned, and she appreciated the  explanations.                                                                     
She  considered  corporations  that  paid   taxes  to  DOR                                                                      
including mining license tax, fisheries,  oil and gas, and                                                                      
maybe  one or  two others.  She understood  that companies                                                                      
could chose instead to  make a partial donation. She noted                                                                      
there were  limits on  the donation  and she  believed the                                                                      
House  had  passed legislation  raising  the limit  to  $3                                                                      
million. She  stated that corporations  could submit proof                                                                      
they had donated to any number of organizations to receive                                                                      
a  lower  tax  bill. She  asked  for  verification it  was                                                                      
considered a tax credit.                                                                                                        
                                                                                                                                
Representative Ruffridge replied affirmatively.                                                                                 
                                                                                                                                
Representative Galvin stated  that her constituents wanted                                                                      
to understand  that it meant  less revenue to  the general                                                                      
fund, but  it also meant  that organizations were directly                                                                      
supported through private entities.                                                                                             
                                                                                                                                
Representative Ruffridge responded affirmatively.                                                                               
                                                                                                                                
Representative Josephson stated that he did not believe the                                                                     
question  was  so  simple.  Generally speaking,  when  the                                                                      
audience was  over 18,  the courts  had less  anxiety. For                                                                      
example, the Alaska Bible College was more acceptable than                                                                      
Lumen Christi [Catholic High  School] in Anchorage. He did                                                                      
not know of any problem with lifting the sunset, but he did                                                                     
not believe the legal question was so clear.                                                                                    
                                                                                                                                
9:38:06 AM                                                                                                                    
                                                                                                                                
Co-Chair  Edgmon  thought  the  line  of  questioning  and                                                                      
commentary was good. He asked Representative Ruffridge for                                                                      
closing remarks.                                                                                                                
                                                                                                                                
Representative Ruffridge  appreciated  the  opportunity to                                                                      
present the bill. He  was happy to talk  about some of the                                                                      
questions offline. He stated that the program had been well                                                                     
supported and had existed for  many years without any such                                                                      
challenges. He believed continuing the  program was in the                                                                      
best interest of the state and education programs supported                                                                     
by the  program including the University  of Alaska, which                                                                      
received a large benefit from the program.                                                                                      
                                                                                                                                
Representative Hannan asked if there  was a companion bill                                                                      
in the Senate.                                                                                                                  
                                                                                                                                
Representative Ruffridge  replied affirmatively.  He noted                                                                      
that it was proof of  the point he had made earlier in the                                                                      
meeting. He explained that the  Senate had made changes to                                                                      
some of the dollar amounts and he found it more significant                                                                     
than a simple sunset repeal.                                                                                                    
                                                                                                                                
Mr. Sexton  added that the  Senate version was not  a true                                                                      
companion  bill.  He  detailed  that  the  Senate  version                                                                      
extended the sunset and HB 144 was a  repeal. Additionally,                                                                     
the Senate version increased the amount of deduction levels                                                                     
and the cap.  The current bill kept the  levels as is. The                                                                      
current amounts were established in 2018  under HB 223 and                                                                      
lowered the deduction amount to the current level of about                                                                      
50 percent with a $1  million cap. In light of the state's                                                                      
fiscal situation, HB 144 proposed keeping the levels as is                                                                      
to make sure the impact was reasonable and balanced.                                                                            
                                                                                                                                
9:41:14 AM                                                                                                                    
                                                                                                                                
Representative Hannan asked what the recommended extension                                                                      
was in the sunset audit.                                                                                                        
                                                                                                                                
Mr. Sexton replied that he did not recall specifically. He                                                                      
believed  the  recommendation  was   a  four  or  six-year                                                                      
extension. He  noted there  was a  representative from the                                                                      
University present who could likely answer the question.                                                                        
                                                                                                                                
Representative Hannan asked about the Senate companion and                                                                      
the Legislative Audit  recommendation. She wondered if the                                                                      
recommendation was to remove a sunset or perpetuate one at                                                                      
some length of time.                                                                                                            
                                                                                                                                
Co-Chair Edgmon replied that  it was fair to  say that the                                                                      
audit did not recommend continuing in perpetuity. He shared                                                                     
that an  audit recommendation for  continuing something in                                                                      
perpetuity was  the  exception rather  than  the rule.  He                                                                      
shared Representative Ruffridge's line of thinking in terms                                                                     
of extending the bill. He considered the time, effort, and                                                                      
costs involved. He stated there was an ability to audit the                                                                     
programs and make  subsequent changes without having to go                                                                      
through  the  whole reauthorization  of  a  program, which                                                                      
became a rote exercise.                                                                                                         
                                                                                                                                
9:42:46 AM                                                                                                                    
                                                                                                                                
Representative Hannan was not interested in holding up the                                                                      
bill. She  continued to have  an interest making  sure the                                                                      
legislature  revisited  bills  going  forward;  therefore,                                                                      
completely  suspending  the   sunset  had  her   a  little                                                                      
concerned.  However,  she  was   very  supportive  of  the                                                                      
underlying premise  of the  bill.  She was  satisfied with                                                                      
having raised the questions.                                                                                                    
                                                                                                                                
Co-Chair Edgmon  thanked the  bill  sponsor. He  asked the                                                                      
Department of Commerce, Community and Economic Development                                                                      
(DCCED) to review the fiscal notes.                                                                                             
                                                                                                                                
9:43:58 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:45:37 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Edgmon noted that in the absence of DCCED, Brodie                                                                      
Anderson would review the fiscal note.                                                                                          
                                                                                                                                
BRODIE   ANDERSON,  STAFF,  REPRESENTATIVE   NEAL  FOSTER,                                                                      
reviewed the  DCCED fiscal note OMB  component number 354.                                                                      
The fiscal note showed no significant changes on the first                                                                      
page. He explained that the Division of Insurance submitted                                                                     
the fiscal  note because the  insurance premium tax  was a                                                                      
collectable tax paid by insurance companies. He elaborated                                                                      
that the education tax credits would be eligible to be used                                                                     
against any  sort of  liability a company incurred  in its                                                                      
insurance  premium tax.  He  noted  that  the Division  of                                                                      
Insurance  had  seen  a  sharp  decline in  credits  being                                                                      
claimed. The last paragraph of the  analysis [on page 2 of                                                                      
the  fiscal note]  included a  breakdown about  the amount                                                                      
claimed against education tax credits.                                                                                          
                                                                                                                                
Co-Chair Johnson asked if the fiscal note was zero because                                                                      
DCCED  did not  administer a  grant as  the  payments went                                                                      
directly to institutions.                                                                                                       
                                                                                                                                
Mr. Anderson responded that tax credits were managed by DOR                                                                     
under the Tax  Division and DOR would  provide a review of                                                                      
its fiscal  note. He  explained that fiscal notes  did not                                                                      
always reflect lost revenue, but there could potentially be                                                                     
lost  revenue from  the  tax credit  amount  being claimed                                                                      
against the  liability of  the  insurance premium  tax. He                                                                      
relayed that DCCED  anticipated no loss in  revenue due to                                                                      
the repeal.                                                                                                                     
                                                                                                                                
9:49:05 AM                                                                                                                    
                                                                                                                                
Co-Chair Edgmon asked if the  bill sponsor or staff wanted                                                                      
to elaborate.                                                                                                                   
                                                                                                                                
Mr. Sexton  replied that it  was a tax  credit program and                                                                      
there  were not  any payments  going out  to  entities. He                                                                      
explained  that the  donations were  going  to educational                                                                      
institutions and as such, the donation was able to receive                                                                      
a  tax  credit  through  the  program. The  result  was  a                                                                      
reduction in revenue to  the state. For example,  in FY 23                                                                      
total contributions  were just over  $5.4 million  and the                                                                      
credits claimed  (under the current  50 percent threshold)                                                                      
were about  $2.7 million, resulting in loss  of revenue to                                                                      
the state in that amount.                                                                                                       
                                                                                                                                
Representative Galvin appreciated that the bill was simple                                                                      
and only pertained to the sunset cap. She remarked that the                                                                     
Senate version had  a different sunset date.  Additionally,                                                                     
the House  had passed HB  89 pertaining  to childcare. She                                                                      
elaborated that HB 89 also  changed the dollar cap that an                                                                      
entity   could   put   into   educational  and   childcare                                                                      
organizations. She noted that if  the Senate passed HB 89,                                                                      
the  cap  would  change.  She  highlighted  that  if  that                                                                      
occurred, the fiscal notes for  HB 144 would be different.                                                                      
She clarified she  was not suggesting not  passing HB 144.                                                                      
She   was   merely  highlighting   it   could  potentially                                                                      
significantly change the fiscal note.  She stated that the                                                                      
current bill would not result in changes to the fiscal note                                                                     
because it  did not make any  other changes to  the cap on                                                                      
what an entity could use to defer their own tax bill, which                                                                     
would be direct revenue to DOR.                                                                                                 
                                                                                                                                
Mr. Anderson believed Mr.  Williams with DOR was available                                                                      
online to review the second fiscal note.                                                                                        
                                                                                                                                
9:53:22 AM                                                                                                                    
                                                                                                                                
MICHAEL  WILLIAMS, ACTING  DEPUTY DIRECTOR,  TAX DIVISION,                                                                      
DEPARTMENT OF  REVENUE (via  teleconference), reviewed the                                                                      
DOR fiscal  note, OMB component number  2476. He explained                                                                      
that  the education  credit  was a  credit  for qualifying                                                                      
contributions  to   Alaska  universities   and  accredited                                                                      
nonprofit  Alaska  two-year   or  four-year  colleges  for                                                                      
facilities, direct  instruction, research, and educational                                                                      
support   purposes   direct   instruction,  research   and                                                                      
educational  support  purposes;  donations   to  a  school                                                                      
district or a  state-operated technical and training school                                                                   
for vocational education courses, programs and facilities;                                                                      
and  donations  for  Alaska  Native  cultural or  heritage                                                                      
programs  for  public school  staff  and  students, and  a                                                                      
facility in the state that qualifies as a coastal ecosystem                                                                     
learning center under the Coastal American Partnership. He                                                                      
relayed that the credit was available to be claimed against                                                                     
insurance premiums,  tax,  title insurance  premiums, tax,                                                                      
corporate income tax, oil and  gas production tax, oil and                                                                      
gas property  tax, mining license  tax, fisheries business                                                                      
tax, and fishery resource landing  tax. The credit for any                                                                      
one taxpayer  could not exceed $1  million annually across                                                                      
all tax types. The credit was currently scheduled to sunset                                                                     
on  January 1,  2025.  The  bill would  repeal  the sunset                                                                      
provision.                                                                                                                      
                                                                                                                                
Mr. Williams continued to review  the DOR fiscal note. The                                                                      
change  in  revenues  reported in  the  fiscal  note  only                                                                      
included eligible  tax programs  administered by  DOR. The                                                                      
bill's  fiscal impact  was  from  eliminating the  current                                                                      
repeal provisions  beyond 2025. He  noted that  January 1,                                                                      
2025,  was  halfway  into  FY  25; therefore,  it  was  an                                                                      
estimated $1.5 million  fiscal impact. Based on historical                                                                      
credit claims, the outyears showed $3.1 million annually in                                                                     
foregone  revenue   for  contributions  claimed   for  the                                                                      
education  tax  credit.  There  was  no  implementation or                                                                      
administrative cost for DOR  other than absorbing it under                                                                      
current operating expenses. There was no grant process; the                                                                     
contributions went directly from  a private corporation to                                                                      
the eligible programs listed in statute.                                                                                        
                                                                                                                                
Co-Chair  Edgmon  referenced that  the  bill  sponsor  had                                                                      
indicated  that the  bulk  of  the  receipts went  to  the                                                                      
University [of Alaska].  He asked Mr.  Williams to provide                                                                      
further detail on the subject.                                                                                                  
                                                                                                                                
Mr. Williams answered that the calendar year 2023 education                                                                     
credits were $5.4 million and of that $3.4 million went to                                                                      
the University of Alaska system, just under $1 million went                                                                     
to Alaska Pacific  University, about $750,000 went to K-12                                                                      
schools,    school    districts,    vocational   technical                                                                      
institutions, and roughly $300,000  went to other eligible                                                                      
organizations like the Alaska Native Heritage Program. The                                                                      
$5.4 million in contributions translated to $2.7 million in                                                                     
tax credits.                                                                                                                    
                                                                                                                                
9:57:17 AM                                                                                                                    
                                                                                                                                
Representative Josephson  provided  an  example of  seeing                                                                      
large contributions from  Conoco to  the Alaska Performing                                                                      
Arts Center in  Anchorage. He asked if those contributions                                                                      
were associated with a different type of tax credit.                                                                            
                                                                                                                                
Mr.  Williams  replied that  he  was  not  aware that  the                                                                      
donation in Representative Josephson's example was eligible                                                                     
for a credit. He explained that it  was not on the list of                                                                      
eligible contributions under current statute.                                                                                   
                                                                                                                                
Co-Chair Johnson observed that a contribution could be for                                                                      
equipment or  housing [in  addition to other  things]. She                                                                      
asked  if an  entity had  to  take the  contributions. She                                                                      
wondered who evaluated the donations. She used the donation                                                                     
of a white elephant piece of property as an example.                                                                            
                                                                                                                                
Mr. Williams responded that contributions of equipment had                                                                      
to  meet the  same standard  as a  charitable contribution                                                                      
under  the   internal  revenue   code.  He   relayed  that                                                                      
contributions of equipment  or land over  a certain dollar                                                                      
amount required an  official appraisal to substantiate the                                                                      
value of the contribution.                                                                                                      
                                                                                                                                
Co-Chair Johnson asked who did the appraisal.                                                                                   
                                                                                                                                
Mr. Williams answered that there was certain documentation                                                                      
the donor  was required to maintain. He  detailed that if,                                                                      
during its  audit, DOR looked at  a piece  of equipment or                                                                      
land  contributed,  DOR  would  request the  valuation  to                                                                      
substantiate the value of the donation.                                                                                         
                                                                                                                                
9:59:28 AM                                                                                                                    
                                                                                                                                
Co-Chair Edgmon thanked the presenters.                                                                                         
                                                                                                                                
Co-Chair Johnson MOVED  to REPORT HB 144  out of committee                                                                      
with individual recommendations and the accompanying fiscal                                                                     
notes.                                                                                                                          
                                                                                                                                
There  being NO  OBJECTION,  HB 144  was  REPORTED out  of                                                                      
committee with  four "do pass"  recommendations, three "no                                                                      
recommendation"   recommendations,    and    two   "amend"                                                                      
recommendations and with  one new fiscal  impact note from                                                                      
the Department of  Revenue and one new zero  note from the                                                                      
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
HOUSE BILL NO. 45                                                                                                             
                                                                                                                                
     "An Act relating to contributions from permanent fund                                                                      
     dividends to the general and permanent funds."                                                                             
                                                                                                                                
10:00:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MIKE  PRAX, SPONSOR, thanked  the committee                                                                      
for hearing the  bill. He provided an  introduction of the                                                                      
bill with prepared remarks:                                                                                                     
                                                                                                                                
     House Bill 45 would add a button to the electronic PFD                                                                     
     application process  to give  Alaskans the  choice of                                                                      
     donating all  or  a portion  of their  Permanent Fund                                                                      
     Dividend  directly  to   the  state's  general  fund.                                                                      
     Participants can donate in increments of 10 percent up                                                                     
     to the full amount of the PFD. Currently, in order to                                                                      
     return your PFD to the state, Alaskans must apply for                                                                      
     the dividend, receive  their dividend, and  return it                                                                      
     through the  U.S.  mail. Passage  of  this bill  will                                                                      
     greatly facilitate Alaskan's ability  to donate their                                                                      
     PFD to the state's general fund.                                                                                           
                                                                                                                                
Representative Prax relayed that a previous version of the                                                                      
                             nd                                                                                                 
bill was introduced in  the 32  Legislature as  HB 158 and                                                                      
was amended in  the House and had  22 cosponsors. The bill                                                                      
was reintroduced during the current legislature in the form                                                                     
previously  passed  by  the  House  Finance Committee.  He                                                                      
explained that the House  Ways and Means Committee amended                                                                      
HB 45  by making  some minor  changes that would  make the                                                                      
implementation of  the bill  go  more smoothly.  He stated                                                                      
there were numerous reasons why a person may choose to give                                                                     
some or  all of their  PFD back to the  state and Alaskans                                                                      
deserved to have  the option for doing so  in a simple and                                                                      
efficient manner.  He stated  that the bill  would provide                                                                      
that option.                                                                                                                    
                                                                                                                                
Co-Chair  Edgmon asked  if  the  sponsor's  staff had  any                                                                      
comments.                                                                                                                       
                                                                                                                                
RILEY NYE,  STAFF, REPRESENTATIVE MIKE  PRAX, reviewed the                                                                      
sectional explanation of changes (copy on file):                                                                                
                                                                                                                                
     Section 1                                                                                                                  
                                                                                                                                
     This was added in version B and is a new section that                                                                      
     amends AS 43.23.55 for the purpose of establishing the                                                                     
     following priority order for contributions under:                                                                          
     1. AS 43.23.130 (Education Raffle)                                                                                         
     2. AS 43.23.230 (Pick Click Give)                                                                                          
     3. AS 43.23.135 (AK General Fund Donation)                                                                                 
                                                                                                                                
     Section 2                                                                                                                  
                                                                                                                                
     This was section 1  in version A of  this bill and it                                                                      
     was  renumbered to  be  section 2  of  this committee                                                                      
     substitute version B.                                                                                                      
                                                                                                                                
     The following words  were Deleted  in this transition                                                                      
     from version A  to B--- "A  contribution to the state                                                                      
     general fund or  the principal of  the permanent fund                                                                      
     may be $25  or more, in increments of $25,  up to the                                                                      
     total amount of the  permanent fund dividend that the                                                                      
     applicant is entitled to receive."                                                                                         
                                                                                                                                
     On Page 3, lines 18-20 Insert---"A contribution to the                                                                     
     state general fund or  the principal of the permanent                                                                      
     fund may be 10  percent of the amount of the dividend                                                                      
     or more, in increments of 10 percent, up to the total                                                                      
     amount  of  the  permanent  fund  dividend  that  the                                                                      
     applicant is entitled to receive."                                                                                         
                                                                                                                                
     Also  in  this  section,  the  following  words  were                                                                      
     deleted,  "The  electronic  application must  include                                                                      
     notice that seven percent of the money contributed to                                                                      
     the  state  general  fund or  the  principal  of  the                                                                      
     permanent fund will be  used for administrative costs                                                                      
     incurred  in implementing  this  subsection and  that                                                                      
     money from the dividend fund will not be used for that                                                                     
     purpose."                                                                                                                  
                                                                                                                                
     On  Page  3, lines  26-28  the  following words  were                                                                      
     inserted,  "Money  from  a  contribution  under  this                                                                      
     subsection or from the dividend fund  may not be used                                                                      
     for administrative costs incurred in implementing this                                                                     
     subsection."                                                                                                               
                                                                                                                                
10:05:07 AM                                                                                                                   
                                                                                                                                
Co-Chair Edgmon thanked Representative Prax for the                                                                             
presentation.                                                                                                                   
                                                                                                                                
Representative Prax asked members to provide questions or                                                                       
suggested amendments to him ahead of time in order to                                                                           
expedite the hearing process.                                                                                                   
                                                                                                                                
HB 45 was HEARD and HELD in committee for further                                                                               
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Edgmon reviewed the schedule for the following                                                                         
meeting.                                                                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:05:53 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:05 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB 45 Sponsor Statement Version B.pdf HFIN 4/22/2024 9:00:00 AM
HB 45
HB 45 Sectional Analysis Version B.pdf HFIN 4/22/2024 9:00:00 AM
HB 45
HB 45 Explanation of Changes Version A to B.pdf HFIN 4/22/2024 9:00:00 AM
HB 45
HB045 Additional Document--Pick.Click.Give chart 5.16.23.pdf HFIN 4/22/2024 9:00:00 AM
HB 45
HB045 Public Testimony Rec'd by 5.16.23.pdf HFIN 4/22/2024 9:00:00 AM
HB 45
HB 116.FiscalNote. HFIN.DOC.4.19.pdf HFIN 4/22/2024 9:00:00 AM
HB 116
HB 116.FiscalNote. HFIN.DPS.VS.CDVSA.4.19.pdf HFIN 4/22/2024 9:00:00 AM
HB 116