Legislature(2001 - 2002)
04/23/2002 08:05 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
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 23, 2002
8:05 a.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Jeannette James
Representative Hugh Fate
Representative Gary Stevens
Representative Peggy Wilson
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 38
Proposing amendments to the Constitution of the State of Alaska
relating to information regarding proposed expenditures.
- MOVED SJR 38 OUT OF COMMITTEE
HOUSE BILL NO. 517
"An Act relating to the disposition of surplus and obsolete
state property."
- MOVED CSHB 517(STA) OUT OF COMMITTEE
HOUSE BILL NO. 493
"An Act relating to assignments of permanent fund dividends; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 371
"An Act establishing the Alaska veterans' memorial endowment
fund and providing for credits against certain taxes for
contributions to that fund; relating to other tax credits for
certain contributions; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: SJR 38
SHORT TITLE:CONST AM: PRIORITY OF EXPENDITURES
SPONSOR(S): SENATOR(S) KELLY
Jrn-Date Jrn-Page Action
02/19/02 2226 (S) READ THE FIRST TIME -
REFERRALS
02/19/02 2226 (S) STA, JUD, FIN
02/26/02 (S) STA AT 3:30 PM BELTZ 211
02/26/02 (S) Moved SJR 38 Out of Committee
02/26/02 (S) MINUTE(STA)
02/27/02 2318 (S) STA RPT 3DP 1NR
02/27/02 2318 (S) DP: THERRIAULT, HALFORD,
PHILLIPS;
02/27/02 2318 (S) NR: STEVENS
02/27/02 2318 (S) FN1: (GOV)
03/18/02 (S) JUD AT 1:30 PM BELTZ 211
03/18/02 (S) Moved Out of Committee
03/18/02 (S) MINUTE(JUD)
03/20/02 2472 (S) JUD RPT 3DP 1NR
03/20/02 2472 (S) DP: TAYLOR, COWDERY,
THERRIAULT;
03/20/02 2472 (S) NR: ELLIS
03/20/02 2472 (S) FN1: (GOV)
03/22/02 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/22/02 (S) Moved Out of Committee
03/22/02 (S) MINUTE(FIN)
03/22/02 2501 (S) COSPONSOR(S): DONLEY, LEMAN
03/22/02 2496 (S) FIN RPT 5DP 4NR
03/22/02 2496 (S) DP: DONLEY, KELLY, GREEN,
WARD, LEMAN;
03/22/02 2496 (S) NR: AUSTERMAN, HOFFMAN,
OLSON, WILKEN
03/22/02 2496 (S) FN1: (GOV)
03/26/02 (S) RLS AT 11:00 AM FAHRENKAMP
203
03/26/02 (S) MINUTE(RLS)
03/28/02 2559 (S) ADVANCED TO THIRD READING FLD
Y14 N3 E3
03/28/02 2556 (S) RULES TO CALENDAR 1OR 3/28/02
03/28/02 2559 (S) READ THE SECOND TIME
03/28/02 2560 (S) ADVANCED TO THIRD READING 4/2
CALENDAR
04/02/02 2592 (S) READ THE THIRD TIME SJR 38
04/02/02 2592 (S) HELD IN THIRD READING TO 4/8
CALENDAR
04/08/02 2664 (S) ELTON NOTICE OF
RECONSIDERATION
04/08/02 2663 (S) BEFORE THE SENATE IN THIRD
READING
04/08/02 2664 (S) PASSED Y14 N5 E1
04/09/02 2692 (S) RECONSIDERATION NOT TAKEN UP
04/09/02 2693 (S) TRANSMITTED TO (H)
04/09/02 2693 (S) VERSION: SJR 38
04/10/02 2861 (H) READ THE FIRST TIME -
REFERRALS
04/10/02 2861 (H) STA, JUD, FIN
04/16/02 (H) STA AT 8:00 AM CAPITOL 102
04/16/02 (H) Scheduled But Not Heard --
Recessed to Thurs. 4/18/02 --
04/18/02 (H) STA AT 8:00 AM CAPITOL 102
04/18/02 (H) Heard & Held
04/18/02 (H) MINUTE(STA)
04/23/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 517
SHORT TITLE:SURPLUS/OBSOLETE STATE PROPERTY
SPONSOR(S): COMMUNITY & REGIONAL AFFAIRS
Jrn-Date Jrn-Page Action
04/12/02 2906 (H) READ THE FIRST TIME -
REFERRALS
04/12/02 2906 (H) STA
04/23/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 493
SHORT TITLE:O.K. TO ASSIGN PFD TO NONPROFIT CORP
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI
Jrn-Date Jrn-Page Action
02/19/02 2320 (H) READ THE FIRST TIME -
REFERRALS
02/19/02 2320 (H) STA
02/19/02 2320 (H) REFERRED TO STATE AFFAIRS
02/22/02 2370 (H) COSPONSOR(S): GUESS
02/27/02 2419 (H) COSPONSOR(S): KOTT, HAYES,
SCALZI
03/01/02 2450 (H) COSPONSOR(S): HALCRO
03/15/02 2564 (H) COSPONSOR(S): CROFT
04/10/02 2872 (H) COSPONSOR(S): DYSON
04/23/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 371
SHORT TITLE:ALASKA VETERANS' MEM.ENDOWMENT FUND
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
02/01/02 2119 (H) READ THE FIRST TIME -
REFERRALS
02/01/02 2119 (H) MLV, STA, FIN
02/01/02 2119 (H) FN1: INDETERMINATE(CED)
02/01/02 2119 (H) FN2: INDETERMINATE(REV)
02/01/02 2119 (H) FN3: (MVA)
02/01/02 2119 (H) GOVERNOR'S TRANSMITTAL LETTER
03/05/02 (H) MLV AT 3:00 PM CAPITOL 124
03/05/02 (H) Heard & Held
03/05/02 (H) MINUTE(MLV)
03/14/02 (H) MLV AT 3:00 PM CAPITOL 124
03/14/02 (H) Scheduled But Not Heard
03/26/02 (H) MLV AT 3:00 PM CAPITOL 124
03/26/02 (H) Scheduled But Not Heard
04/04/02 (H) MLV AT 3:00 PM CAPITOL 124
04/04/02 (H) Moved Out of Committee
04/04/02 (H) MINUTE(MLV)
04/05/02 2815 (H) MLV RPT 3DP 2NR
04/05/02 2815 (H) DP: GREEN, HAYES, CHENAULT;
04/05/02 2815 (H) NR: KOTT, MURKOWSKI
04/05/02 2815 (H) FN1: INDETERMINATE(CED)
04/05/02 2815 (H) FN2: INDETERMINATE(REV)
04/05/02 2815 (H) FN3: (MVA)
04/23/02 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
WENDY HALL, Staff
to Senator Pete Kelly
Alaska State Legislature
Capitol Building, Room 518
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions on SJR 38 on behalf of
the sponsor.
BILL LAWRENCE, Staff
to Representative Carl Morgan
Alaska State Legislature
Capitol Building, Room 434
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 517 on behalf of the House
Community & Regional Affairs Committee, sponsor.
CHRISTINE PARCE, Director
Division of General Services
Department of Administration
PO Box 110210
Juneau, Alaska 99811-0210
POSITION STATEMENT: Testified on HB 517 and answered questions.
NANCY SLAGLE, Director
Division of Administrative Services
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
POSITION STATEMENT: Testified on HB 517.
ROBIN PHILLIPS, Staff
to Representative Lisa Murkowski
Alaska State Legislature
Capitol Building, Room 408
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 493 on behalf of the sponsor.
NANCI JONES, Director
Permanent Fund Dividend Division
Department of Revenue
PO Box 110460
Juneau, Alaska 99811-0460
POSITION STATEMENT: Testified on HB 493.
TED GIANOUTSOS
PO Box 142115
Anchorage, Alaska 99514
POSITION STATEMENT: Testified in support of HB 493.
CAROL CARROLL, Director
Central Office
Administrative Services Division
Department of Military & Veterans Affairs
400 Willoughby Avenue, Suite 500
Juneau, Alaska 99811
POSITION STATEMENT: Presented HB 371 and answered questions.
BRETT FRIED, Economist
Tax Division
Department of Revenue
PO Box 110420
Juneau, Alaska 99811-0420
POSITION STATEMENT: Answered questions on HB 371.
JOHN JENKS, Chief Investment Officer
Treasury Division
Department of Revenue
PO Box 110405
Juneau, Alaska 99811-0405
POSITION STATEMENT: Answered questions on HB 371.
ACTION NARRATIVE
TAPE 02-44, SIDE A
Number 0001
CHAIR JOHN COGHILL called the House State Affairs Standing
Committee meeting to order at 8:05 a.m. Representatives
Coghill, Fate, Stevens, Wilson, Crawford, and Hayes were present
at the call to order. Representative James arrived as the
meeting was in progress.
SJR 38 - CONST AM: PRIORITY OF EXPENDITURES
Number 0030
CHAIR COGHILL announced that the first order of business would
be SENATE JOINT RESOLUTION NO. 38, Proposing amendments to the
Constitution of the State of Alaska relating to information
regarding proposed expenditures.
Number 0186
REPRESENTATIVE HAYES acknowledged that he missed the testimony
on this bill at the last meeting and wanted some information as
to the point of SJR 38, since there had been some previous
legislation on this subject.
Number 0309
WENDY HALL, Staff to Senator Pete Kelly, Alaska State
Legislature, explained that the reason that Senator Kelly is
interested in amending the constitution is to ensure that a
prioritized budget stays this way and isn't overturned by
statute. She explained that this resolution only adds the word
"prioritized" to what is in the constitution already. She said
her office feels that it would be best if the departments
analyzed which services are more needed when the budget needs to
be cut.
Number 0435
REPRESENTATIVE HAYES said he assumed that her office felt that
the executive staff does not already go through the budget
before the legislature sees it.
MS. HALL answered that this idea came from Governor Knowles when
he was the mayor of Anchorage.
Number 0544
CHAIR COGHILL told Representative Hayes that the "second
article" gives the legislature the opportunity to have a joint
resolution that would request a priority budget after the
December deadline. This resolution gives the legislature a
communication tool that it doesn't have now.
Number 0605
REPRESENTATIVE STEVENS commented that the constitution is a
living document, but that doesn't mean it shouldn't be changed.
He noted that the legislature is not making this change; it is
submitting it to the people for a vote. He expressed support
for SJR 38.
REPRESENTATIVE FATE told Representative Hayes that missions and
measures don't really call for prioritization. This year the
agencies and departments were asked to prioritize, and they
neglected to or chose not to. The prioritization helps when
things need to be cut. He expressed support for SJR 38.
Number 0753
REPRESENTATIVE JAMES commented that there are pros and cons to
this. She reiterated comments from the last meeting about how
she thought her business experience could make a difference in
the budget process. She said there is some argument that a
priority budget would be a good idea and agreed that the
administration should do a priority budget.
Number 1186
REPRESENTATIVE HAYES made a motion to adopt the following
conceptual amendment:
Page 1, line 6, following "a", add "biennial";
following "for the", delete "next fiscal year" and add
"two fiscal years"
Page 1, line 14, following "a", add "biennial"
REPRESENTATIVE JAMES objected. She said she thinks the state
needs to work in this direction, but she isn't willing to put
that on the ballot and then be stuck with it next year. There
are year-to-year changes in Alaska, and she is not convinced the
state is ready to go to a biennial budget. She noted that she
is not ready to mandate it.
Number 1390
REPRESENTATIVE FATE commented that this amendment will change
the title.
CHAIR COGHILL noted that Representative Hayes did say conceptual
amendment, so that could include the title amendment.
Number 1459
REPRESENTATIVE WILSON acknowledged that a biennial budget is a
good way to go. However, she indicated that it would not be a
wise decision for Alaska at this time, because there isn't a
steady flow of revenue to base it on.
CHAIR COGHILL agreed with Representative Wilson and spoke
against the amendment.
Number 1601
REPRESENTATIVE CRAWFORD expressed support for a biennial budget.
REPRESENTATIVE JAMES cautioned the committee because this change
might constitute a revision and might not be proper. She said
that a biennial budget could be done as an amendment in the
future but not as part of this process. She said she is in
favor of a biennial budget if all the necessary ingredients are
in place.
REPRESENTATIVE HAYES concluded with his reasons for the
amendment, which ultimately would save the state money. He said
that a biennial prioritized budget would reduce costs to the
state because the legislature wouldn't have to meet as often.
There would be more accountability and credibility in a biennial
budget set forth for each department. The incoming governor
would be able to see what the two-year vision in the budget is
for the state. Right now the legislature is just budgeting one
year at a time and hasn't any vision where the state is going.
He also commented that it isn't really known if this bill is a
revision issue or not.
Number 1900
A roll call vote was taken. Representatives Crawford, Hayes,
and Stevens voted for Amendment 1. Representatives Fate, James,
Wilson, and Coghill voted against it. Therefore, Amendment 1
failed by a vote of 3-4.
Number 1935
REPRESENTATIVE JAMES moved to report SJR 38 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE HAYES objected to reiterate his concerns. He
then removed his objection.
Number 2020
CHAIR COGHILL asked if there were further objections. There
being none, SJR 38 moved from the House State Affairs Standing
Committee.
The committee took an at-ease from 8:33 a.m. to 8:34 a.m.
HB 517 - SURPLUS/OBSOLETE STATE PROPERTY
Number 2043
CHAIR COGHILL announced that the next order of business would be
HOUSE BILL NO. 517, "An Act relating to the disposition of
surplus and obsolete state property." [He actually announced
HB 493 but took up HB 517].]
Number 2060
BILL LAWRENCE, Staff to Representative Carl Morgan, Alaska State
Legislature, presented HB 517 on behalf of the House Community &
Regional Affairs Committee, sponsor, which Representative Morgan
co-chairs. He explained that HB 517 fixes a problem dealing
with surplus property. Specifically, it was written to address
surplus fax machines. Recently a situation occurred when the
House Community and Regional Affairs Standing Committee and the
House Resources Standing Committee received faxes from an
advocacy group on a bill before them at the time.
Unfortunately, the faxes were identified as coming from a state
agency.
MR. LAWRENCE indicated that this caused quite a stir and a fair
amount of investigative work on the part of the state agency.
It was finally determined that neither the state agency nor any
state employee was involved in this. The state agency had sent
the machine to state surplus sometime before, but the electronic
signature on top of the fax copies had not been removed.
MR. LAWRENCE informed the committee that committee staff had
discussions with staff from Legislative Legal and Research
Services and determined it was in the best interest of the state
to ensure these fax headers were removed before they were sent
to surplus. He had checked with between 15 and 20 procurement
officers in state agencies and found out that none of them had a
policy to remove the fax header before the machine was
"surplused." They all agreed it was a good idea.
MR. LAWRENCE noted three good reasons for removing the fax
headers. The first reason protects the state. State
departments and/or employees will not get blamed for faxes they
didn't send. The second reason helps prevent fraud. It should
prevent a party from intentionally faxing material identified as
being from the State of Alaska.
Number 2211
MR. LAWRENCE pointed out that the Federal Telephone Consumer
Protection Act specifically requires:
It shall be unlawful for any person within the United
States to use a computer or other electronic device to
send any message via a telephone facsimile machine
unless such message clearly contains, in a margin at
the top or bottom of each transmitted page or on the
first page of the transmission, the date and time it's
sent and an identification of the business, or other
entity, or individual sending the message and the
telephone number of the sending machine or of such
business, other entity, or individual.
MR. LAWRENCE said the third reason protects the buyer of surplus
property. It prevents a buyer from inadvertently violating a
federal law - at least from the aspect of the state identifier's
removal. Somebody could go back in and put a false identifier
on it, but that is a federal violation. He noted that when most
equipment is surplused, the manuals are not included, so it may
be difficult for a private individual or organization to remove
the fax header.
Number 2320
REPRESENTATIVE JAMES said that she thought there should be a
requirement for the manuals to be included with surplused
equipment.
MR. LAWRENCE agreed that that was reasonable.
REPRESENTATIVE JAMES asked what the penalty would be if this
wasn't done.
MR. LAWRENCE answered that wasn't addressed.
Number 2493
CHRISTINE PARCE, Director, Division of General Services,
Department of Administration, came forward to testify and answer
questions. She expressed support for taking the electronic
documents out before the property is surplused. There is an
administrative procedure for doing that, but she acknowledged it
sometimes gets missed. Because of the recent incident, that
process is being reemphasized to the departments.
MS. PARCE told the members that all the documentation is removed
from the C [hard] drive of some equipment. The tags are kept on
the pieces of equipment, so surplus can identify them. She
explained that the tag tracks from when the equipment was first
purchased to its disposal. When a citizen buys the property and
someone reports to the department that someone has a piece of
equipment at home, the department can track that sticker and
know that the person bought it at surplus. She said that the
department would not support removing the sticker tag in the
department before the piece of equipment gets sent to surplus.
Number 2630
REPRESENTATIVE FATE asked about the manuals with the equipment.
MS. PARCE said the trouble with manuals for computers and fax
machines is the equipment may come with a manual, but the manual
is rarely used. Most departments have information technology
[IT] groups that manage the computers, servers, and networks;
there aren't stand-alone computers as such. The applications
are installed on the servers and accessed that way. It's not
like at home where someone would have the manual right there to
figure out how to use the system. She explained that some of
the manuals cost about $65 each, so manuals aren't purchased
with everything. There is a server manual and then the IT
people are trained. The manuals don't stay with the equipment,
and she doesn't know how they would be gathered together to send
out. The people buying the used equipment need to buy the
manual to learn how to use it, she commented.
Number 2730
REPRESENTATIVE STEVENS asked for clarification on the permanent
and temporary identifying marks referred to on the fiscal note.
MS. PARCE replied that it would be expensive for the state to
remove those tags. If they were removed at a department's
property office before it comes to surplus, some kind of
temporary tag would have to be put on it for surplus to know
where it came from for the control records. The permanent tag
would have to be removed and recorded, and then a temporary tag
would be affixed and recorded, so when surplus got it, it would
know what it was and where it came from. If the Department of
Administration had to remove the permanent stickers and replace
them with temporary stickers, it would have to hire staff
because there is barely enough staff now to do what needs to be
done.
REPRESENTATIVE JAMES asked Ms. Parce about a solution to the
manual issue.
Number 2910
MS. PARCE commented that for the department to provide a manual
would be labor-intensive.
TAPE 02-44, SIDE B
Number 2960
MS. PARCE noted that most people who buy the equipment know how
to use it.
REPRESENTATIVE JAMES asked if legislation was needed to make the
department remove the state identifying information.
MS. PARCE answered no. There are administrative procedures in
place for property control. Those procedures are disseminated
from the Division of General Services through the department
property officers, and it is their responsibility to remove
every internal document or identifier that says it's coming from
the state. This incident that occurred recently suggested that
there was a failure in that procedure. She has instructed her
property manager in Anchorage to remind property officers of
their responsibility to do this. That notice will be sent out
about every 30 days.
Number 2835
MR. LAWRENCE reiterated that he called between 15 and 20
property officers and was told that the state did not have, and
never had, a written policy on the removal of the fax header.
MR. LAWRENCE pointed out that AS 39.25.150 speaks to the penalty
under: "(15) the establishment of disciplinary measures, which
may include disciplinary suspension without pay".
CHAIR COGHILL made a motion to adopt the following as
Amendment 1:
Page 1, lines 9-10, delete all material.
There being no objection, Amendment 1 was adopted.
Number 2665
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation & Public Facilities, came forward
to testify. She referred to Amendment 1 and recommended that
the Department of Transportation & Public Facilities be taken
out of the first paragraph of the bill because the remaining
part doesn't relate to the state equipment fleet.
Number 2613
REPRESENTATIVE JAMES made a motion to adopt the following as
Amendment 2:
Page 1, line 6, following "section", delete "or before
the Department of Transportation and Public Facilities
disposes of equipment from the state equipment fleet
under AS 36.30.005(b), the state agency or the
Department of Transportation and Public Facilities".
There being no objection, Amendment 2 was adopted.
Number 2544
REPRESENTATIVE JAMES moved to report HB 517, as amended, out of
committee with individual recommendations and the accompanying
zero fiscal notes. There being no objection, CSHB 517(STA) was
reported out of the House State Affairs Standing Committee.
HB 493 - O.K. TO ASSIGN PFD TO NONPROFIT CORP
Number 2494
CHAIR COGHILL announced that the next order of business would be
HOUSE BILL NO. 493, "An Act relating to assignments of permanent
fund dividends; and providing for an effective date."
Number 2480
ROBIN PHILLIPS, Staff to Representative Lisa Murkowski, Alaska
State Legislature, presented HB 493 on behalf of Representative
Murkowski, sponsor. She told the committee that at the request
of a former constituent, Representative Murkowski introduced
HB 493, the Good Neighbor Act, which allows for a permanent fund
dividend (PFD) to be assigned to an organization that qualifies
for nonprofit status, or is exempt from federal taxation.
Currently, permanent fund dividends may be assigned to a
federal, state, or municipal government agency, or to a court.
These grassroots constituents have been updating the members of
both bodies regularly requesting support and cosponsorship of
HB 493. House Bill 493 promotes the spirit of charitable giving
by Alaskans, and she urged the committee's support.
Number 2435
REPRESENTATIVE JAMES noted that people can and do donate their
entire permanent fund dividends to charities, but this bill
would require the Permanent Fund Dividend Division to handle
that. She said she didn't know if paying $18.5 million the
first year, and $37 million every year after that, for the
division to handle that was a good idea. She commented that she
didn't know if the state needs to get in the business of
handling people's charities for them. She said she didn't
really support this bill.
Number 2209
REPRESENTATIVE CRAWFORD asked, if the PFD was assigned before it
was received, whether it would be a true tax donation. It would
seem that there would be a financial incentive to assign the
dividend before it was received. He asked for clarification.
MS. PHILLIPS replied that she believes that the person would
still be responsible for taxes.
REPRESENTATIVE JAMES explained that the PFD is income, and taxes
would have to be paid. It wouldn't matter what someone did
after that.
Number 2131
REPRESENTATIVE CRAWFORD asked if there is a way to assign the
PFD before it is received as income.
REPRESENTATIVE JAMES answered that there isn't unless a piece of
legislation is passed.
Number 2088
NANCI JONES, Director, Permanent Fund Dividend Division,
Department of Revenue, came forward to testify. She referred to
the fiscal note and added that the path of least resistance for
the division would be if the donation was an assignment, meaning
that the donor would have the responsibility to fill out the
form. Presently, the assignment form is used by people to pay
debts voluntarily, which is different from the garnishment
system. She went over the numbers on the fiscal note. She also
noted that the effective date would be pushed back from 2003 to
2004.
Number 1979
REPRESENTATIVE FATE asked what the motive was behind this piece
of legislation.
MS. PHILLIPS answered that constituents Ted and Francoise
Gianoutsos had wanted to assign their PFDs to the Seward SeaLife
Center and were unable to give the check directly to the center;
they had to give it to the City of Seward to be passed on to the
center. They asked for this legislation and requested that it
be similar to the college savings plan whereby someone could
"check off" the PFD check to a registered 26 U.S.C. 501(c)(3)
[Internal Revenue Code] charity.
Number 1890
TED GIANOUTSOS testified via teleconference. He explained that
his and his wife's motivation was initially to assign their PFDs
to the Alaska SeaLife Center in Seward. When they found that
they could not do that directly, some of the board of the Alaska
SeaLife Center recommended that they give it to the City of
Seward. Once they realized they could be a benefit to the
state, they asked their representatives to introduce legislation
that would allow Alaskans to assign their PFD rights to any
Alaskan nonprofit for the common good. They feel strongly that
it is in the interest of Alaska to encourage and facilitate
gift-assignment philanthropy to any Alaskan 501(c)(3) charity.
MR. GIANOUTSOS noted that they had been aware of the cost to the
state of this legislation. He said they suggested a fee, such
as the $2 assignment fee, so there is no cost to the state. The
cost of the administration is borne by the donor.
Number 1600
REPRESENTATIVE JAMES commented that Mr. Gianoutsos could achieve
the same thing by just writing a check without asking the state
and the City of Seward to implement the donation.
MR. GIANOUTSOS answered that there isn't any facilitating or
encouraging of permanent fund gift philanthropy for others in
the state if they don't know about it. On the PFD application
there are four pages encouraging people to give to the College
Savings Plan, and he wondered why there couldn't be something
there to facilitate and encourage gift-assignment philanthropy
and deduct the cost of the program from the donor.
CHAIR COGHILL noted that this bill includes any nonprofit, not
just those in Alaska, and that is an issue for him.
Number 1483
REPRESENTATIVE WILSON commented that this might have some merit
somewhere along the line, but right now when there isn't enough
money in the budget to pay for the services of the state, she
said she wouldn't like to see some of the money spent to do
this, when a person could just write a check.
CHAIR COGHILL announced that HB 493 would be held over, and that
he would ask the sponsor some more questions.
HB 371 - ALASKA VETERANS' MEM.ENDOWMENT FUND
CHAIR COGHILL announced that the final order of business would
be HOUSE BILL NO. 371, "An Act establishing the Alaska veterans'
memorial endowment fund and providing for credits against
certain taxes for contributions to that fund; relating to other
tax credits for certain contributions; and providing for an
effective date."
Number 1355
CAROL CARROLL, Director, Central Office, Administrative Services
Division, Department of Military & Veterans Affairs, came
forward to present HB 371. She explained that HB 371 creates
the Veterans' Memorial Endowment Fund by setting up a tax credit
similar to tax credits already in statute. A taxpayer may take
advantage of donating to an endowment fund for veterans'
memorials up to $150,000 the first year. The fund would be used
to maintain existing veterans' memorials or construct new ones.
The Department of Revenue would determine how much money was
available for appropriation by the legislature each year. That
money would come to the Department of Military & Veterans
Affairs, which in turn would grant it to appropriate
organizations to maintain the monuments around the state.
REPRESENTATIVE JAMES wanted to know who is getting the tax
credit.
MS. CARROLL answered that it's for corporate taxpayers. There
are several taxes that would be available for the credit:
insurance premium tax, title insurance premium tax, Alaska net
income tax, oil and gas production tax, oil and gas exploration
tax, fisheries business tax, or mining license.
REPRESENTATIVE JAMES commented that she liked the idea of a
veterans' memorial but said she hoped the money could come from
other sources, perhaps through private donations, rather than
through tax credits.
Number 1109
MS. CARROLL pointed out that individuals could donate to this,
but there wouldn't be a tax credit. She said with the addition
of this tax credit, the limitations that are set in statute for
those other tax credits are aggregated and the tax credit in
those is limited to a certain amount.
Number 0969
REPRESENTATIVE STEVENS commented that it is a great idea. He
asked Ms. Carroll if people could donate to a particular
community or specific site.
MS. CARROLL answered that she didn't know. She said she thought
that if money was stipulated, the granting process would attempt
to honor those requests. However, there is nothing in statute
to bind that.
Number 0827
REPRESENTATIVE FATE expressed concern about the cost to the
state.
MS. CARROLL said she believes that the education foundation tax
credit is built in the same manner as this, but she deferred to
the Department of Revenue.
Number 0732
BRETT FRIED, Economist, Tax Division, Department of Revenue,
explained that this credit mirrors the structure of the
education credit exactly.
REPRESENTATIVE JAMES asked how much the education endowment fund
gets every year and if it is spent as part of the budget process
or is not touchable because it's an endowment.
MR. FRIED answered that the education credit is not set up as an
endowment. He explained that if corporations contribute
$200,000, they would get $150,000 credit off their corporate
income tax. The corporation specifies what accredited
institution receives the credit.
REPRESENTATIVE JAMES said she was conflicted about giving the
Department of Revenue an accounting function for these various
charities and special interests. There is a cost to that. She
asked Mr. Fried if he thought this was the function of the
Department of Revenue and if it was a basic responsibility of
the department to handle these kinds of things.
MR. FRIED replied that the Department of Revenue does manage a
lot of different funds. He doesn't work on that; he's in the
tax division.
Number 0445
JOHN JENKS, Chief Investment Officer, Treasury Division,
Department of Revenue, explained that the department has
organized itself so it can manage these types of endowments
fairly efficiently through the investment and accounting
process. It would be more difficult if the funds were dedicated
to specific places.
REPRESENTATIVE JAMES asked if Mr. Jenks thought that was the
government's responsibility.
MR. JENKS said that when the department can help people
accomplish laudable goals efficiently - and this legislation
does have that - it makes a lot of sense. The department
wouldn't support something if it couldn't do it efficiently.
REPRESENTATIVE JAMES said that Alaska is in a position now such
that there aren't enough taxes to cover the basic government,
and she wondered why some of those taxes should be given away so
that more people pay.
MR. JENKS said he had misunderstood her question before, but he
is not in a position to make the value judgment about whether
the tax credit is a good idea or not. He spoke only to the
efficiency of the program.
Number 0140
REPRESENTATIVE STEVENS asked why there isn't a dedicated fund.
It seems like a good idea for this. He asked Mr. Jenks what the
problems would be of a dedicated fund for the department.
MR. JENKS said that the dedicated fund is a constitutional
issue. There could be a problem for the department in managing
the records if funds were specified for certain monuments or
places.
TAPE 02-45, SIDE A
Number 0015
REPRESENTATIVE STEVENS commented that he understood the problem
for the department but thought there would be some substantial
donations given if people knew it would be going to a particular
monument.
MS. CARROLL told Representative Stevens that she believes that
could be done through the grant process. If a letter
accompanied a specific request, the letter could certainly be
forwarded to the department, and it would be considered during
the granting process.
REPRESENTATIVE JAMES said she is excited about having a
veterans' memorial endowment fund in the state, but she just
isn't convinced that this is the way she'd like to do it.
Number 0369
CHAIR COGHILL agreed with Representative James. He asked Ms.
Carroll how many memorial sites are in the state now, and how
they are funded.
MS. CARROLL answered that there are 78 across the state. She
said some of the projects are funded by state appropriations.
The upkeep now is from donations, which haven't been very much
money in the past. She estimated that about $250,000 in the
fund would result in about $12,000 a year, and that would be
enough to maintain the monuments and maybe have some left over
to go toward a new memorial.
CHAIR COGHILL asked about the involvement of some of the
veterans' groups.
MS. CARROLL explained that they would be part of the group to
help determine where the money would be granted.
REPRESENTATIVE JAMES said she could support it if just the
endowment were created without the tax money going in it.
Number 0600
CHAIR COGHILL wondered if there was a way to facilitate through
the service organizations rather than to create something that
would draw away from the service organization.
MS. CARROLL indicated that that has not been part of the
conversations on this bill. She commented that the Department
of Revenue has the ability to invest in a much larger amount
than a small service organization, and it has the staff and
professionalism to do that. She said as long as it doesn't cost
the department in lost efficiency, then that is the best bet for
getting the most earnings out of whatever it gets. She hasn't
talked with the service organizations. She doesn't know if they
have an investments person.
MS. CARROLL told the committee that there already have been
donations of $125,000 from private individuals toward this.
That money is being held. She mentioned that this idea of this
bill came forward from some veterans' groups.
Number 0952
REPRESENTATIVE JAMES commented that government is growing
because the people are asking it to. She is here to protect
those who don't want the government to be so big. Whether
something is government's responsibility is something that needs
to be looked at carefully.
CHAIR COGHILL expressed concern about the plethora of funds with
dedicated titles and reiterated his concern to make sure that
the service organizations are not diminished.
Number 1161
CHAIR COGHILL announced that HB 371 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at
9:55 a.m.
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