Legislature(1997 - 1998)
01/23/1997 08:03 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 23, 1997
8:03 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Ethan Berkowitz
Representative Fred Dyson
Representative Kim Elton
Representative Mark Hodgins
Representative Al Vezey
MEMBERS ABSENT
Representative Ivan Ivan
COMMITTEE CALENDAR
INTRODUCTION/ORGANIZATION
* HOUSE BILL NO. 21
"An Act establishing the Alaska public broadcasting trust fund as
a trust fund of the state, and providing for its administration;
relating to credits against certain taxes for contributions to the
Alaska public broadcasting trust fund; increasing the amounts that
may be claimed as credits against certain state taxes, and
precluding claims of the contributions as both credits and
deductions against the taxes; and terminating the credits
authorized by this Act at the end of five years; and providing for
an effective date."
- MOVED HB 21 OUT OF COMMITTEE
* HOUSE BILL NO. 20
"An Act relating to dog mushers' contests."
- MOVED HB 20 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 21
SHORT TITLE: TAX CREDIT: GIFTS TO PUBLIC BROADCASTING
SPONSOR(S): REPRESENTATIVE(S) IVAN, Grussendorf
JRN-DATE JRN-PG ACTION
01/13/97 32 (H) PREFILE RELEASED 1/3/97
01/13/97 32 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 33 (H) STATE AFFAIRS, FINANCE
01/23/97 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 20
SHORT TITLE: DOG MUSHING CONTESTS
SPONSOR(S): REPRESENTATIVE(S) IVAN
JRN-DATE JRN-PG ACTION
01/13/97 32 (H) PREFILE RELEASED 1/3/97
01/13/97 32 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 32 (H) STATE AFFAIRS, FINANCE
01/23/97 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
THOMAS W. WRIGHT, Legislative Assistant
to Representative Ivan Ivan
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
Telephone: (907) 465-3882
POSITION STATEMENT: Provided sponsor statement on HB 20 and HB 21.
ALISON ELGEE, Deputy Commissioner
Office of the Commissioner
Department of Administration
P.O. Box 110200
Juneau, Alaska 99811-0200
Telephone: (907) 465-2200
POSITION STATEMENT: Provided testimony on HB 21.
BOB BARTHOLOMEW, Deputy Director
Income and Excise Audit Division; and
Legislative Liaison
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-4773
POSITION STATEMENT: Provided testimony on HB 21.
JON NEWSTROM, Affiliate
Coast Alaska
P.O. Box 22596
Juneau, Alaska 99802
Telephone: (907) 463-6411
POSITION STATEMENT: Provided testimony in support of HB 21.
DENNIS POSHARD, Director
Central Office
Charitable Gaming Division
Department of Revenue
P.O. Box 110440
Juneau, Alaska 99811-0440
Telephone: (907) 465-2229
POSITION STATEMENT: Provided testimony on HB 20.
ACTION NARRATIVE
TAPE 97-1, SIDE A
Number 0001
The House State Affairs Standing Committee was called to order by
Chair Jeannette James at 8:03 a.m. Members present at the call to
order were Representatives James, Berkowitz, Hodgins and Vezey.
Members absent were Dyson, Elton and Ivan.
CHAIR JAMES announced Representative Ivan Ivan was excused from
today's meeting due to an illness.
INTRODUCTION/ORGANIZATION
Number 0070
CHAIR JAMES announced the first order of business was an
introduction and overview of the guidelines of the House State
Affairs Committee meetings. The following guidelines were
explained:
"1. I start the meetings ON TIME, as long as there are four of us
present. So please be here at 8:00 a.m. on Tuesdays and Thursdays,
and 10:00 a.m. whenever we schedule a meeting for Saturday.
"2. If you know you will be absent or late, please inform our
office so I can announce FOR THE RECORD that you are excused.
"3. Please be aware of the microphones on the table in front of
you and keep extraneous noise from interfering with them. These
microphones serve three purposes: the committee secretary
transcribes minutes from tape recordings made through them;
teleconference participants listen as well as speak through them;
and the audio portion of television is covered through them. They
are very sensitive microphones and will magnify whispering, paper
shuffling, and other distracting noises!
"4. Your committee packet on each bill will be available at noon
the day prior to its scheduled hearing in the file cabinet in this
committee room.
"5. Generally, this will be the order of business on each bill,
subject to change by the Chair:
"Testimony by the bill sponsor, followed by questions from the
committee.
"Testimony by the Administration followed by questions from the
committee.
"Testimony from the public (including teleconferenced testimony)
followed by questions from the committee.
"Committee discussion of the bill, followed by voting on whether to
move the bill from committee if appropriate.
"If we do vote to move a bill out, PLEASE REMEMBER TO SIGN THE
COMMITTEE RECOMMENDATION SHEET.
"6. When we have disposed of a particular bill, PLEASE leave the
notebook on the committee table to be re-used for a new bill. If
you want to keep the information, remove it from the notebook
first. We have a limited number of notebooks!
"7. If you have any questions or concerns, please feel free to
contact me or my committee aide, Barbara Cotting.
"I am looking forward to a great session working with each of you."
Number 0288
CHAIR JAMES announced for the record the arrival of Representatives
Kim Elton and Fred Dyson.
CHAIR JAMES further explained it was important to remain objective
and respectful during the debate amongst the committee members.
HB 21 - TAX CREDIT: GIFTS TO PUBLIC BROADCASTING
Number 0607
The next order of business to come before the House State Affairs
Standing Committee was HB 21, "An Act establishing the Alaska
public broadcasting trust fund as a trust fund of the state, and
providing for its administration; relating to credits against
certain taxes for contributions to the Alaska public broadcasting
trust fund; increasing the amounts that may be claimed as credits
against certain state taxes, and precluding claims of the
contributions as both credits and deductions against the taxes; and
terminating the credits authorized by this Act at the end of five
years; and providing for an effective date."
CHAIR JAMES called on Thomas W. Wright, Legislative Assistant to
Representative Ivan Ivan, to present the sponsor statement.
THOMAS W. WRIGHT, Legislative Assistant to Representative Ivan
Ivan, Alaska State Legislature, explained HB 21 provided an
alternative funding source and lessened the general fund demand for
public broadcasting. Mr. Wright read the following sponsor
statement into the record:
"This bill provides a tax credit for cash contributions made to a
trust fund for public broadcasting which is established in this
legislation. The credit to the public broadcasting trust fund is
limited to 50% of $300,000. The tax credit would be applied
against a taxpayer's liability under the following tax types: the
insurance premium tax (AS 21.09.210), tax on title insurance
premiums (AS 21.66.110), corporation income (AS 43.20), oil and gas
production (AS 43.55), oil and gas property (AS 43.56) and mining
license (AS 43.65). The credit claimed under one of the tax types
may not be claimed under another tax type and may not be deducted
against a tax imposed under the titles of the tax types previously
listed."
MR. WRIGHT lastly commented the bill had a sunset date of December
31, 2002. He announced he would be happy to answer any questions
from the committee members, and explained members of the
administration were here to answer any questions concerning the
bill as well.
Number 0739
REPRESENTATIVE ETHAN BERKOWITZ asked Mr. Wright if there was a
reason why HB 21 was limited to the mentioned tax types?
Number 0749
MR. WRIGHT replied it was limited to those tax types because they
were the only ones in statute right now. He explained there were
fishery taxes and fishery landing taxes, however, they were shared
with municipalities using a 50/50 split. This split created
confusion, therefore, they were left from the bill.
Number 0794
REPRESENTATIVE BERKOWITZ stated he was personally concerned about
the fishery taxes. He further asked Mr. Wright what level of
revenues generated were expected for public broadcasting as a
result of this bill?
Number 0807
MR. WRIGHT replied, according to the Department of Revenue,
$650,000 to $1,300,000 would be generated. That was a rough
estimate, however.
Number 0820
REPRESENTATIVE BERKOWITZ asked Mr. Wright, if the estimated
generated funds mentioned were a total figure, or an annual figure?
Number 0827
MR. WRIGHT replied, "Annual."
Number 0835
REPRESENTATIVE KIM ELTON wondered if the tax credits could be
stacked. He asked Mr. Wright if one tax credit could exclude
another?
Number 0866
MR. WRIGHT replied, "Yes." It was possible to stack a tax credit,
according to the Department of Revenue.
Number 0898
ALISON ELGEE, Deputy Commissioner, Office of the Commissioner,
Department of Administration, was the next person to testify before
the House State Affairs Standing Committee. She stated the
Administration supported HB 21. She explained the money generated
from the bill would go to the trust. Therefore, the principle of
the trust would be maintained. The Administration would only spend
the earnings on the trust. The bill specified what the trust
income could be used for by the Administration. She cited
inflation proofing as an example. She further explained for
clarification that $1,000,000 that went into the trust would
generate only $50,000 as an expenditure, for example. Therefore,
the bill would not be an immediate solution to the financing
problems for the public broadcasting system.
Number 0975
REPRESENTATIVE MARK HODGINS asked Ms. Elgee what the time schedule
would be for more money to be available?
Number 0982
MS. ELGEE replied the department would hope to see the fund build
over the next five years as the tax credits were in place. She
explained the funds potential was based on current corporate
contributions to the public broadcasting system statewide. The
larger the fund the larger the income account. The present general
fund support for grants to public broadcasting was close to $4
million.
Number 1029
REPRESENTATIVE HODGINS asked Ms. Elgee what would be the
department's target for a level of funds?
Number 1036
MS. ELGEE repled she could not answer Representative Hodgins'
question. She stated a concerted fund raising effort would be
needed to realize the benefits of the trust, however.
Number 1053
REPRESENTATIVE ELTON asked Ms. Elgee if the trust fund would harm
other fund raising efforts?
Number 1079
MS. ELGEE replied that was a concern of the department. However,
many of the corporate sponsorships that the current stations
received were for underwriting. The administration would hope that
that funding would continue. The contributions that the bill
required were specifically for the trust that would be managed by
the commission.
Number 1096
REPRESENTATIVE ELTON asked Ms. Elgee, how much would it cost to
underwrite a program such as the fish report?
Number 1111
MS. ELGEE replied she did not know. However, there were
individuals in the audience that could answer that question.
Number 1127
REPRESENTATIVE AL VEZEY stated he found Section 2 of the bill
confusing. He asked for clarification.
CHAIR JAMES called on Bob Bartholomew, Department of Revenue, to
answer Representative Vezey's question.
BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division;
and Legislative Liaison, Department of Revenue, explained Section
2 amended the insurance premium tax. Currently, there was an
education credit for 50 percent of the first $100,000, and 100
percent of the second $100,000. The new language on line 25, page
2, for the public broadcasting trust fund was 50 percent of the
first $300,000. Therefore, if a corporation gave $10,000, it would
receive a 50 percent credit, for example.
Number 1229
REPRESENTATIVE VEZEY asked Mr. Bartholomew if subsection (i) (a) on
page 2, referred to public broadcasting?
MR. BARTHOLOMEW replied only subparagraph (2) on page 2, referred
to public broadcasting. Subparagraph (1) on page 2, referred to
higher education.
Number 1261
REPRESENTATIVE VEZEY asked if there was a minimum?
MR. BARTHOLOMEW responded there was not a minimum. He gave the
example of a $10,000 contribution to illustrate it would be subject
to the same 50 percent credit as a larger contribution would be.
Number 1292
JOHN NEWSTROM, Affiliate, Coast Alaska, was the next person to
testify before the House State Affairs Standing Committee. He
explained his organization supported HB 21 because it provided
another form of fund raising for the public broadcasting system
using a non-governmental source. The fish report he explained
would cost about $2,000 to $5,000 per year to answer Representative
Elton's question. It depended on the production cost, however. He
further explained that a contribution to the trust did not trigger
an announcement on public broadcasting compared to a direct
contribution to the programming mandated by federal law. There was
the possibility of announcing that the funding came from the trust
fund and list the contributors, however. He was concerned because
they were different types of announcements and it would be up to
the discretion of whoever distributed the money from the trust. He
reiterated HB 21 created another tool for public broadcasting to
raise money that would push the industry forward. He alleged
between $30 million to $50 million would keep public broadcasting
off state money and maintain its programming statewide.
Number 1488
CHAIR JAMES stated $50 million in an endowment would be $25 million
less taxes collected by the state. She explained she supported HB
21, but she was concerned about the net benefit to public
broadcasting versus the net reduction in the general fund income.
This caused her some distress.
Number 1542
MR. NEWSTROM replied he understood the concerns of Representative
James. It was important, however, to understand that public
broadcasting was not looking for a replacement for state funds now,
but rather for a supplement. It was understood that if the
earnings of the trust fund were at a certain level, the general
fund allocation would be reduced by the corresponding amount.
Furthermore, the issue of the tax credit and how it affected the
general fund was an interesting policy question. He stated he
would be happy to work with anyone that was interested in further
examining that issue.
Number 1608
REPRESENTATIVE FRED DYSON asked Mr. Newstrom why the language in
the bill required the money to go into an endowment rather than a
direct annual contribution?
Number 1619
MR. NEWSTROM stated there was interest expressed to allow a tax
credit for direct annual contributions. A direct annual
contribution, however, was very short sighted. A fund on the other
hand created a future of stability and security.
Number 1671
REPRESENTATIVE DYSON stated it was a painless contribution. The
money otherwise that would have gone to the state coffers for taxes
would go to the trust.
Number 1691
MR. NEWSTROM replied it was 50 percent painless.
Number 1725
CHAIR JAMES stated the figures right now were only estimates.
There was no way to determine exactly how much money would be
contributed. She expressed her support for the public broadcasting
system and was not opposed to having "people pay for what they
play." She was concerned, however, about the money that would be
taken from the general fund as a result of the tax credits. She
supported moving the bill forward in the committee process,
nevertheless.
Number 1874
REPRESENTATIVE DYSON expressed his support of the public
broadcasting system. He stated the founding father of the United
States really only wanted a government that the people were able to
pay for. He was concerned about establishing an independent
funding source that was not sensitive to the willingness of the
people to pay for what they wanted. That was the best control the
citizens had, he commented.
Number 1953
REPRESENTATIVE BERKOWITZ stated he respected the "slippery slope"
argument of Representative Dyson. It was important, however, to
respect the discretion of the companies and the people of the state
to make their own donations. Therefore, any measure that allowed
a choice was good for business and for the state.
Number 1983
REPRESENTATIVE ELTON explained the other side of Representative
Dyson's argument was that the bill empowered a tax payer. The only
tax payers right now were the corporate citizens, and the bill
allowed the corporate citizens to direct their spending. The bill
was, therefore, an empowering method. He further commented that it
was difficult to predict the future level of contributions. The
bill did have a sunset date which allowed for further review in the
future.
Number 2052
REPRESENTATIVE DYSON replied that once the contributions were made
to the foundation, the corporate control was gone. The control
resided with the commissioners and not the contributors.
Number 2100
REPRESENTATIVE HODGINS stated his only concern was that the
legislature would have to contribute to the general fund the amount
that the general government increased. He supported the bill, but
reiterated his concern of fewer dollars going into the general
fund.
Number 2141
CHAIR JAMES explained the legislature established the tax credit
and rates that the corporations contributed to the state. She
called it an "end-run" around the public process. She believed
that this was the first endowment established of many worthy causes
yet to come forward. The Alaska State Constitution did not allow
for a dedicated fund without an amendment, but it did allow for an
endowment which circumvented the legislature. She wondered in the
future what would be left for the legislature.
Number 2244
REPRESENTATIVE BERKOWITZ stated there had been a call for a smaller
and smarter government. This was one way to reach that goal.
Number 2254
REPRESENTATIVE ELTON said he disagreed with Chair James that the
legislature would loose a certain amount of control. He cited the
children's trust whereby the legislature did not relinquish its
control but rather exercised its control. The bill did not bind a
future legislature from taking action. He agreed that over time
there would be a lot of causes that would want an endowment type of
funding source. He reiterated, however, that the legislature would
be exercising its control.
Number 2338
CHAIR JAMES stated it was a trend that she was cautious about.
There were unintended consequences that could not been seen right
now.
CHAIR JAMES asked the committee members for a motion to move the
bill forward.
Number 2399
REPRESENTATIVE HODGINS moved that HB 21 move from the House State
Affairs Standing Committee with individual recommendations and
attached fiscal note(s).
REPRESENTATIVE VEZEY objected. A roll call vote was taken.
Representatives James, Berkowitz, Elton and Hodgins voted in favor
of moving the bill. Representatives Dyson and Vezey voted against
moving the bill. House Bill 21 was so moved from the House State
Affairs Standing Committee.
HB 20 - DOG MUSHING CONTESTS
TAPE 97-1, SIDE B
Number 0001
The next order of business to come before the House State Affairs
Standing Committee was HB 20, "An Act relating to dog mushers'
contests."
CHAIR JAMES called on Thomas W. Wright, Legislative Assistant to
Representative Ivan Ivan, to present the sponsor statement.
Number 0023
MR. WRIGHT, Legislative Assistant to Representative Ivan Ivan,
Alaska State Capitol, read the following sponsor statement into the
record:
"House Bill 20 would authorize dog mushers' associations, which run
races recognized by the Division of Charitable Gaming, to conduct
statewide games of change. The division recognizes those
associations which have been in existence for at least three years,
have at least 25 Alaskan members and be a not for profit
organization. Prizes may be awarded for the closest guesses of at
least three elements of uncertainty about a sled dog race that
cannot be determined before the start of the race. The intent is
to provide a mechanism to assist race organizing committees to
become financially self-sufficient.
"High profile protests from animal rights activists have caused
important corporate sponsors to withdraw financial support. House
Bill 20 would create a sweepstakes similar to that currently being
used by the Iditarod Race Committee and, hopefully, allow sled dog
races which do not have strong financial backing to continue.
"House Bill 20 will allow contestants to purchase raffle tickets on
which the contestant would guess the checkpoints and finish line
arrival times, the temperature when the a particular team crosses
the finish line, total number of dogs that finish the race, etc.
The dog mushers' association will administer the mushers' contests
in conjunction with state regulatory authority."
MR. WRIGHT announced Dennis Poshard, Department of Revenue, was
present to answer any questions from the committee members
regarding the logistics of the bill, and he would be available to
answer any questions directly related to the bill.
Number 0100
REPRESENTATIVE ELTON asked Mr. Wright if a similar bill was passed
last year?
Number 0109
MR. WRIGHT replied a similar bill was passed out of the House State
Affairs Standing Committee last year. It was, however, stopped in
the House Finance Committee.
Number 0130
REPRESENTATIVE BERKOWITZ wondered if the list of organizations
provided to the committee members was exhaustive.
MR. WRIGHT replied it was a list of organizations that were
recognized by the Charitable Gaming Division of the Department of
Revenue.
REPRESENTATIVE BERKOWITZ asked Mr. Wright if it was required that
dog mushing organizations register with the Charitable Gaming
Division?
MR. WRIGHT deferred the question to Dennis Poshard, Department of
Revenue.
Number 0161
DENNIS POSHARD, Director, Central Office, Charitable Gaming
Division, Department of Revenue, replied, "Yes." He explained any
organization that wanted to conduct a charitable gaming activity
was required to apply for a permit with the division.
Number 0177
CHAIR JAMES explained the list provided to the committee members
were the organizations that already had a raffle permit with the
division.
Number 0187
REPRESENTATIVE BERKOWITZ asked Mr. Poshard if a race and bet with
a neighbor, for example, fell under the preview of the bill?
Number 0192
MR. POSHARD responded it would only fall under the preview of the
division if it was a large race. It did not preclude a person from
getting together with neighbors for a poker game, for example.
That was considered a social activity.
Number 0232
CHAIR JAMES commented this statute continued to be revisited. The
statute listed the contests that were covered and to add a new
contest legislation was necessary.
Number 0264
MR. WRIGHT explained when the bill was introduced last session it
was intended only for Iditarod qualifying races. However, there
was such support from the other dog mushing races that it was
decided to include them as well.
Number 0296
REPRESENTATIVE ELTON asked Mr. Poshard to explain the controls
surrounding the proceeds generated from a raffle, for example?
Number 0311
MR. POSHARD replied a dog mushing association would first have to
meet certain qualifications to receive a permit. It was the
responsibility of the association to file on an annual basis a
financial statement that listed the gross income from the activity,
the prizes awarded, any expenses associated with that activity, the
net profits, and how the profits were used. There was a statutory
requirement that the association had to spend the profits within
one year of earning them. The division checked the reports for
accuracy and conducted audits when necessary.
Number 0367
REPRESENTATIVE ELTON asked Mr. Poshard if the filings made by the
associations were open to the public?
Number 0373
MR. POSHARD replied, "Yes." The Department of Law ruled any filing
reports were considered public information.
Number 0401
REPRESENTATIVE ELTON stated he was concerned that the department
would not have the additional resources to conduct more audits
because staff was recently lost.
Number 0420
MR. POSHARD replied the division received approximately 1,100
reports each year. A substantial portion of those reports were not
complicated to audit, however. The remaining reports were
primarily from pull tabs and bingo activities requiring more
concentrated audit efforts. He reiterated the division did not
conduct an audit on every charitable organization that received a
permit. An order of priority was established of those associations
that the division deemed necessary to audit. The bill addressed
only dog mushing associations of which most already filed a
financial statement with the division. He did not anticipate an
increase in paperwork for the division as a result of the bill.
Number 0517
REPRESENTATIVE ELTON asked Mr. Poshard if the proceeds could only
be used in the same way that the proceeds for pull tabs could be
used?
Number 0530
MR. POSHARD replied, "That's correct." He explained there was a
statutory requirement that limited the use of net proceeds for
every activity that a permit had been issued.
Number 0553
REPRESENTATIVE VEZEY asked for clarification regarding the
definition of an "element of chance."
Number 0580
MR. POSHARD replied the elements of uncertainty were determined by
the association conducting the activity. The bill only required
three elements of chance. He cited it could be the total number of
dogs to cross the finish line, the winning time, or the time of the
last place musher, as examples. It could be anything, as long as,
three were chosen to determine the winner. Of the three chosen,
one would have to be the primary determinant while the remaining
two would be the secondary and tertiary determinants. The
secondary and tertiary determinants would be used only when
necessary to determine a winner.
Number 0710
REPRESENTATIVE VEZEY asked Mr. Poshard if "time" was one or two
elements of chance?
Number 0715
MR. POSHARD replied, "One."
Number 0717
REPRESENTATIVE VEZEY stated other testimony indicated time was two
elements of chance - hour and minute. He reiterated the elements
of chance were vague. He was not sure if it would make any
difference, however.
Number 0750
CHAIR JAMES called for a motion to pass the bill from the
committee.
Number 0766
REPRESENTATIVE DYSON moved that HB 20 move from the committee with
individual recommendations and attached fiscal note(s).
Number 0772
REPRESENTATIVE ELTON objected. He stated he would vote no on this
bill because he was concerned about placing a value on the activity
of dog mushing over youth baseball, for example. There was a
limited amount of money available. He had a difficult time
understanding that a dog mushing association could be considered a
charitable organization.
There was no further discussion so a roll call vote was taken.
Representatives James, Berkowitz, Dyson, Hodgins and Vezey voted in
favor of the motion. Representative Elton voted against the
motion. House Bill 20 was so moved from the House State Affairs
Standing Committee.
ADJOURNMENT
Number 0875
CHAIR JAMES adjourned the House State Affairs Standing Committee
meeting at 9:12 a.m.
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