Legislature(2007 - 2008)CAPITOL 120
04/08/2008 04:00 PM House RULES
| Audio | Topic |
|---|---|
| Start | |
| HJR41 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| * | HJR 41 | ||
ALASKA STATE LEGISLATURE
HOUSE RULES STANDING COMMITTEE
April 8, 2008
4:06 p.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Anna Fairclough
Representative Craig Johnson
Representative Ralph Samuels
Representative Beth Kerttula
MEMBERS ABSENT
Representative John Harris
Representative David Guttenberg
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 41
Urging the United States Congress to repeal sec. 511 of P.L.
109-222 (Tax Increase Prevention and Reconciliation Act of
2005).
- MOVED CSHJR 41(RLS) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HJR 41
SHORT TITLE: REPEAL OF SEC. 511 OF P.L. 109-222
SPONSOR(s): RULES
04/07/08 (H) READ THE FIRST TIME - REFERRALS
04/07/08 (H) RLS
04/08/08 (H) RLS AT 4:00 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE MAX GRUENBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HJR 41.
KIM GARNERO, Director
Division of Finance
Department of Administration;
Member, National Association of State Auditors, Comptrollers and
Treasurers (NASACT)
Juneau, Alaska
POSITION STATEMENT: During hearing of HJR 41, testified that
the Department of Administration is opposed to [Section 511 of
the Act].
ACTION NARRATIVE
CHAIR JOHN COGHILL called the House Rules Standing Committee
meeting to order at 4:06:11 PM. Representatives Coghill,
Fairclough, Johnson, Samuels, and Kerttula were present at the
call to order.
HJR 41-REPEAL OF SEC. 511 OF P.L. 109-222
4:06:21 PM
CHAIR COGHILL announced that the only order of business would be
HOUSE JOINT RESOLUTION NO. 41, Urging the United States Congress
to repeal sec. 511 of P.L. 109-222 (Tax Increase Prevention and
Reconciliation Act of 2005).
4:07:13 PM
REPRESENTATIVE SAMUELS moved to adopt Version 25-LS1643\M,
Bullock, 4/8/08, as the working document. There being no
objection, Version M was before the committee.
4:07:36 PM
REPRESENTATIVE MAX GRUENBERG, Alaska State Legislature, speaking
as the sponsor of HJR 41, explained that the difference between
Version A and M is that the language on page 3, lines 15-16, of
Version M was inadvertently left out of Version A. The
legislation, he related, is the result of correspondence from
the Fairbanks North Star Borough. As mentioned on the House
Floor today, the Tax Increase Prevention and Reconciliation Act
of 2005 contains Section 511, which was designed to collect
taxes owed by governmental contractors. Apparently, only about
30 percent of the money owed by governmental contractors makes
it to the federal treasury. Therefore, HJR 41 is designed to
encourage the payment by withholding it at the source. This
resolution only deals with local and state governments that pay
over $100 million annually on goods and services. As of January
1, 2011, the Act would require [local and state governments] to
withhold 3 percent of payments to nearly all vendors and
contractors for federal income tax purposes. He noted that
there are some exceptions. The problem, he opined, is that
virtually all the material given to the joint congressional
conference committee was in regard to the benefit to the federal
treasury and the unfairness when people escape taxes merely by
not paying them. There was little if any recognition of the
problems that [Section 511 of the Act] would create for local
and state governments. Although Congress was informed that
there would be significant problems for local governments, it
wasn't recognized by the Joint Tax Committee or the
congressional conference committee. However, since that time
Congress has been informed that this provision will be extremely
expensive and difficult to enforce, which has resulted in the
introduction of congressional legislation, SB 777 and H.R. 1023.
4:12:14 PM
KIM GARNERO, Director, Division of Finance, Department of
Administration; Member, National Association of State Auditors,
Comptrollers and Treasurers (NASACT), related that NASACT has
been actively working in Washington, D.C., to repeal [Section
511]. In fact, NASACT passed a resolution in 2006 to work
toward a fair and equitable approach in implementing [the
aforementioned Act], including seeking a repeal. Most states
face the same situation as Alaska in that they can't do
withholding on vendor payments due to the state's existing 23-
year-old accounting system. Ms. Garnero said that the
[division] is looking for relief prior to 2011.
4:13:16 PM
CHAIR COGHILL inquired as to the cost of ramping up the state's
accounting system should HJR 41 pass.
MS. GARNERO said that although she hasn't analyzed the impact to
the state accounting system, she was sure that it would be at
least a year-long project and would require at least a half of a
position to deal with reconciliation.
CHAIR COGHILL related his understanding that NASACT has a
resolution opposing [Section 511 of the Act].
MS. GARNERO interjected that the Department of Administration is
totally opposed to [Section 511 of the Act]. In further
response to Chair Coghill, Ms. Garnero explained that DOA is
poised to work with the congressional delegation, but the end of
session flurry has postponed that. A letter has been drafted
for Commissioner Krietzer's signature, she mentioned.
CHAIR COGHILL surmised then that HJR 41 could move forward with
the aforementioned letter.
MS. GARNERO replied yes.
4:15:10 PM
REPRESENTATIVE JOHNSON inquired as to how many communities would
be involved.
MS. GARNERO specified that [Section 511 of the Act] would apply
to any government that spends over $100 million on goods and
services, a category in which Fairbanks and Anchorage and large
school districts would likely fit into.
4:15:48 PM
REPRESENTATIVE GRUENBERG pointed out that the committee packet
should include information specifying that the Fairbanks North
Star Borough, the Fairbanks School District, the Anchorage
School District, and the Municipality of Anchorage would all be
impacted by [Section 511 of the Act]. Furthermore, the
committee packet should include letters of support for the
repeal of Section 511 from all of the aforementioned entities.
He further said that the committee packet should also include a
letter urging the repeal of Section 511 of the Tax Increase
Prevention and Reconciliation Act of 2005 from Commissioner
Krietzer, DOA.
4:16:30 PM
REPRESENTATIVE SAMUELS moved to report Version 25-LS1643\M,
Bullock, 4/8/08, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHJR 41(RLS) was reported from the House Rules
Standing Committee.
4:16:47 PM
ADJOURNMENT
There being no further business before the committee, the House
Rules Standing Committee meeting was adjourned at 4:16:49 PM.
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