Legislature(2017 - 2018)SENATE FINANCE 532

02/20/2018 09:00 AM FINANCE

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                  SENATE FINANCE COMMITTEE                                                                                      
                      February 20, 2018                                                                                         
                          9:04 a.m.                                                                                             
9:04:15 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 9:04 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Doug  Letch,  Staff,  Senator  Gary  Stevens;  Laurie  Wolf,                                                                    
President,  Foraker Group;  Sara  Race, Director,  Permanent                                                                    
Fund  Dividend  Division,  Department  of  Revenue;  Senator                                                                    
David  Wilson,  Sponsor;  Gary Zepp,  Staff,  Senator  David                                                                    
Wilson;  Sara   Race,  Director,  Permanent   Fund  Dividend                                                                    
Division, Department of Revenue.                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
Mary Bishop, Self, Fairbanks; Angela  Cox, Vice President of                                                                    
External  Affairs, Rasmussen  Foundation, Anchorage;  Laurie                                                                    
Wolf,  President, Foraker  Group, Anchorage;  Randy Griffin,                                                                    
Self,  Fairbanks; William  Harrington, Self,  Spenard; Glenn                                                                    
Gustafson, Assistant Attorney General, Anchorage.                                                                               
SB 8      PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS                                                                               
          SB 8 was HEARD and HELD in committee for further                                                                      
SB 154    PFD CONTRIBUTIONS TO GENERAL FUND                                                                                     
          SB 154 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SENATE BILL NO. 8                                                                                                             
     "An   Act   allowing    federally   recognized   tribal                                                                    
     governments to receive contributions from permanent                                                                        
     fund dividends."                                                                                                           
9:04:58 AM                                                                                                                    
SENATOR STEVENS,  SPONSOR, spoke  to SB  8. He  relayed that                                                                    
the bill was "remarkably simple."  He reported that the bill                                                                    
allowed federally  recognized tribal governments  to receive                                                                    
contributions  from  the   Permanent  Fund  Dividends  (PFD)                                                                    
through the popular Pick.Click.Give. program.                                                                                   
DOUG  LETCH,  STAFF,  SENATOR GARY  STEVENS,  addressed  the                                                                    
bill.  He related  that the  bill granted  native non-profit                                                                    
organizations   the  opportunity   to  participate   in  the                                                                    
Pick.Click.Give.   program.  Currently,   the  program   was                                                                    
reserved  for  501(c)(3)  non-profit  organizations.  Tribal                                                                    
governments  were  tax  exempt organizations  but  were  not                                                                    
designated as  501(c)(3). He elaborated  that SB  8 required                                                                    
the  Department   of  Revenue   (DOR)  to   allow  federally                                                                    
recognized   tribal    governments   to   appear    on   the                                                                    
Pick.Click.Give.  eligible  recipients  list.  Subsequently,                                                                    
the   tribal  entities   would  be   subject  to   the  same                                                                    
regulations  and   $250  fees   currently  applied   to  the                                                                    
program's  participants. The  idea was  derived from  native                                                                    
organizations in Kodiak. He noted  letters of support in the                                                                    
members  bill packet.  The sponsor  had not  encountered any                                                                    
opposition  to  the bill.  He  reminded  the committee  that                                                                    
Since 2009, Pick.Click.Give. offered  Alaskans an easier way                                                                    
to  help  hundreds  of  nonprofits  fulfill  their  missions                                                                    
through  direct contributions  from their  PFDs. The  result                                                                    
was millions  of dollars  donated to  eligible organizations                                                                    
over the years. The  addition of federally recognized tribal                                                                    
governments  to  the  list  of  Pick.Click.Give.  recipients                                                                    
extended the  program's reach, while opening  another avenue                                                                    
of fundraising for these important organizations.                                                                               
9:07:25 AM                                                                                                                    
Co-Chair MacKinnon requested that Mr. Letch proved a                                                                            
sectional analysis.                                                                                                             
Mr. Letch addressed the Sectional Analysis:                                                                                     
     Section   I.    Adds   federally    recognized   tribal                                                                    
     governments  to  AS  43.23.062(a),  allowing  federally                                                                    
     recognized tribal governments  to receive contributions                                                                    
     from permanent fund dividends.                                                                                             
     Section  2.  Amends   AS  43.23.062(b),  requiring  the                                                                    
     department   to  place   federally  recognized   tribal                                                                    
     governments on the contribution  list.                                                                                     
     Section  3. Amends  AS 43.23.062(c)  to state  that the                                                                    
     department may  not add  a federally  recognized tribal                                                                    
     government to the contribution  list unless the purpose                                                                    
     of  the federally  recognized  tribal government  meets                                                                    
     one of the purposes  listed.                                                                                               
     Section 4.  Amends AS 43.23.062(d) to  exempt federally                                                                    
     recognized    tribal     governments    from    various                                                                    
     requirements  that  other  educational  and  charitable                                                                    
     organizations  must meet under the section.                                                                                
     Section   5.    Adds   federally    recognized   tribal                                                                    
     governments  to  AS  43.23.062(t),  which  requires  an                                                                    
     application  fee to  be placed  on  the permanent  fund                                                                    
     dividend contribution list.                                                                                                
     Section   6.    Adds   federally    recognized   tribal                                                                    
     governments  to  AS   43.23.062(m),  which  allows  the                                                                    
     department  to withhold  a coordination  tee from  each                                                                    
     entity  that  receives  contributions   from  permanent                                                                    
     fund dividends.                                                                                                            
     Section  7. Adds  new subsection  (o)  to AS  43.23.062                                                                    
     stating that a  person who claims a  dividend on behalf                                                                    
     of an  unemancipated minor  under AS  43.23.00S(c) when                                                                    
     the   minor  is   the  subject   of   an  adoption   or                                                                    
     guardianship proceeding  pending in a tribal  court may                                                                    
     not elect to contribute from  the minor's dividend to a                                                                    
     federally  recognized tribal  government  under (a)  of                                                                    
     this section.                                                                                                              
9:09:35 AM                                                                                                                    
Co-Chair MacKinnon OPENED public testimony.                                                                                     
LAURIE WOLF, PRESIDENT, FORAKER  GROUP, testified in support                                                                    
of the  bill. She articulated  that the Foraker Group  was a                                                                    
statewide  nonprofit   organization  with  the   purpose  to                                                                    
strengthening   nonprofits   including  tribal   governments                                                                    
across  the  state.  The  group  worked  with  thousands  of                                                                    
nonprofits  statewide,  which  included small  remote  rural                                                                    
communities.  The  group provided  education,  facilitation,                                                                    
and  planning services.  She emphasized  that the  group was                                                                    
non-partisan. She  had been involved in  the Pick.Click.Give                                                                    
program since its inception. The  program was implemented by                                                                    
the  Foraker  Group,  Rasmussen Foundation,  United  Way  of                                                                    
Anchorage, and  DOR. Currently  the program  was run  by the                                                                    
Alaska Community  Foundation. The  unique program  had three                                                                    
goals; to grow the number  of donors, to increase the amount                                                                    
of donations  to nonprofits, and  to raise awareness  of the                                                                    
power of individual philanthropy.                                                                                               
9:13:01 AM                                                                                                                    
Ms.  Wolf continued  her testimony.  She  reported that  the                                                                    
"implementation  partners"  of  the program  had  wanted  to                                                                    
include   tribal  entities   lacking  501(c)(3)   status  as                                                                    
eligible  participants. She  understood the  impetus of  the                                                                    
legislation was to assist tribes  provide services for youth                                                                    
development,  workforce development,  arts and  culture, and                                                                    
services  for the  elderly and  low income  individuals. She                                                                    
emphasized that the group was  not opposed to clarifying the                                                                    
statutes to  allow the  participation of  tribal governments                                                                    
in the program.                                                                                                                 
Senator  von  Imhof asked  about  the  difference between  a                                                                    
501(c)(3)  nonprofit,  which  was  not  politically  active;                                                                    
versus  the 501(c)(4),  that had  the liberty  to engage  in                                                                    
political   action.   She   asked   about   the   designated                                                                    
differences  and what  the  status  of tribal  organizations                                                                    
were. Ms.  Wolf qualified that  she was not an  attorney and                                                                    
could not  provide a  precise definition  of the  terms. She                                                                    
acknowledged   that   Alaskan    tribes   were   independent                                                                    
governments,  and many  had filed  for 501(c)(3)  status and                                                                    
some  carried  501(c)(4)  status.  She  indicated  that  the                                                                    
tribal  organization  was  required  to  meet  the  criteria                                                                    
established by  the program  for 501(c)(3)  organizations to                                                                    
provide human  resource and service  needs across  the state                                                                    
to  qualify. Regardless  of their  tax status  the program's                                                                    
criteria must  be met to qualify  for Pick.Click.Give. under                                                                    
the  bill.  Senator von  Imhof  understood  that the  tribal                                                                    
organization was  required to meet the  fundamental criteria                                                                    
of a 501(c)(3)  to qualify under the bill.  She relayed that                                                                    
currently one  could access the annual  financial income for                                                                    
any  501(c)(3)  nonprofit  with  the  Form  990.  She  asked                                                                    
whether the same ability would  exist with the non-501(c)(3)                                                                    
tribal governments that  qualified for Pick.Click.Give under                                                                    
the  bill to  determine if  they were  good stewards  of the                                                                    
money. Ms.  Wolf was  uncertain of the  answer. She  did not                                                                    
know   what  the   filing  requirements   were  for   tribal                                                                    
governments. She offered to provide the information later.                                                                      
Co-Chair  MacKinnon   asked  for   the  information   to  be                                                                    
delivered to her office for committee distribution.                                                                             
9:17:35 AM                                                                                                                    
MARY BISHOP, SELF, FAIRBANKS  (via teleconference), spoke in                                                                    
opposition to  the bill. She  stated that while  tribes were                                                                    
endeavoring  to  carry  out worthwhile  programs  for  their                                                                    
members, tribal  governments had immunity from  lawsuits for                                                                    
activities  like  misuse  of   funds,  unless  a  waiver  of                                                                    
sovereign  immunity  was  signed. She  mentioned  a  lawsuit                                                                    
between  two tribes  in Southeast  Alaska. She  believed the                                                                    
issue  was   problematic  in  relation  to   the  bill.  She                                                                    
purported   that  tribes   in  the   Lower  48   were  often                                                                    
politically  active,  and  she  saw  no  reason  why  tribal                                                                    
governments in  Alaska would not act  similarly. She thought                                                                    
the  funds  could  be  used   for  political  purposes.  She                                                                    
encouraged  the sponsor  to amend  the legislation  to avoid                                                                    
the stated issues.                                                                                                              
9:19:45 AM                                                                                                                    
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Co-Chair  MacKinnon asked  if there  was a  reason that  the                                                                    
bill  was  not limited  to  federally  recognized tribes  in                                                                    
Alaska rather than all  federally recognized tribes. Senator                                                                    
Stevens  answered in  the negative.  He  furthered that  the                                                                    
purpose of the bill was  specifically for Alaskan tribes. He                                                                    
reminded the  committee that the  donated funds  in question                                                                    
were from  individuals that received  PFDs who  could choose                                                                    
how to distribute the funds however they desired.                                                                               
Co-Chair MacKinnon did  not see the distinction  in the bill                                                                    
and  worried  that  lower  48 tribes  could  apply  for  the                                                                    
program. Senator Stevens stated that  he had no objection to                                                                    
limiting the bill to Alaskan tribal governments only.                                                                           
Senator Olsen voiced his support of the bill.                                                                                   
9:21:46 AM                                                                                                                    
Vice-Chair  Bishop addressed  the  fiscal  impact note,  FN1                                                                    
(REV), from  DOR, allocated to  the Permanent  Fund Dividend                                                                    
Division which  was in  the amount  of $9,000  in FY  19. He                                                                    
read from page 2 of the analysis:                                                                                               
     Additional  programming will  be  required  on the  PFD                                                                    
     application  as well  as the  participation application                                                                    
     as   tribal   governments   do  not   have   the   same                                                                    
     requirements as  the other participants, nor  are there                                                                    
     search  options that  fit their  criteria. As  fees are                                                                    
     collected,  continued  administrative   costs  will  be                                                                    
     covered.  However, since  AS  43.23.062(e) states  that                                                                    
     "the  department may  not use  money from  the dividend                                                                    
     fund for administrative  costs incurred in implementing                                                                    
     this  section, even  if it  has  been appropriated  for                                                                    
     costs of administering the  dividend program" a onetime                                                                    
     amount  of  $9,000  will  be   necessary.  This  is  an                                                                    
     estimate of 75  hours of programming at a  rate of $120                                                                    
     per hour.                                                                                                                  
Senator von  Imhof believed  that non-profits  that received                                                                    
funds   from  Pick.Click.Give   pay  a   7  percent   annual                                                                    
administrative fee. She asked whether she was correct.                                                                          
SARA  RACE,  DIRECTOR,  PERMANENT  FUND  DIVIDEND  DIVISION,                                                                    
DEPARTMENT  OF REVENUE,  answered  in  the affirmative.  She                                                                    
informed committee members that  participants in the program                                                                    
pay  an initial  $250  application fee  and subsequently,  7                                                                    
percent  annually   was  withheld  from   contributions  for                                                                    
administering the program. She asked  if it would make sense                                                                    
to extend the  annual fee to any native  entities that enter                                                                    
the program  via the bill.  Ms. Race believed that  the bill                                                                    
contained a  provision to collect the  7 percent assessment.                                                                    
Senator  von  Imhof  asked  if the  one-time  fee  was  also                                                                    
included  in  the  bill.  Ms.  Race  stated  that  the  $250                                                                    
application fee was included in the legislation.                                                                                
Co-Chair MacKinnon appreciated the clarity.                                                                                     
9:25:03 AM                                                                                                                    
Co-Chair MacKinnon asked whether  Ms. Race wanted to provide                                                                    
comments  on   the  bill.  She  referenced   testimony  that                                                                    
suggested tribes should currently  qualify, and the bill was                                                                    
a clarification rather than a  new provision. She also noted                                                                    
the  testimony about  tribal sovereignty  and the  potential                                                                    
difficulty  in  tracking  how funds  were  spent.  Ms.  Race                                                                    
understood  that not  all tribal  governments had  501(c)(3)                                                                    
status.  She clarified  that the  tribal organizations  were                                                                    
subject to  the same fees  and requirements under  the bill.                                                                    
Therefore,  from the  administrative  and agency  standpoint                                                                    
the   tribal  organizations   would   be   like  the   other                                                                    
organizations  the program  currently worked  with. Co-Chair                                                                    
MacKinnon  asked  if the  bill  should  require that  tribal                                                                    
organizations   gain   501(c)(3)    status   in   order   to                                                                    
participate in  the program. Ms.  Race felt that  she should                                                                    
not speak to the question.                                                                                                      
Senator Micciche inquired why  Co-Chair MacKinnon was asking                                                                    
the question. He favored the  ability to check the financial                                                                    
records  of  the  tribal  participants.  Co-Chair  MacKinnon                                                                    
stated she  was referencing  the two previous  speakers, one                                                                    
of  which had  suggested  that the  bill  address the  legal                                                                    
immunity  issue.   She  referred  to  Senator   von  Imhof's                                                                    
comments    about    the    Form   990    disclosure    that                                                                    
501(c)(3)nonprofits were subject to.  She commented that she                                                                    
had asked  the question to  determine whether the  state had                                                                    
legal recourse  if the  contributions were  misused. Senator                                                                    
Micciche  requested information  regarding  how many  tribal                                                                    
organizations  that  could  potentially participate  in  the                                                                    
program were 501(c)(3)nonprofits and how many were not.                                                                         
Co-Chair MacKinnon asked the sponsor to find the answer.                                                                        
9:28:38 AM                                                                                                                    
Senator von  Imhof stated  that the  Pick.Click.Give program                                                                    
was the "brain child of  the Rasmussen Foundation," of which                                                                    
she was  a member. She  emphasized that the  original intent                                                                    
of   the  program   was  to   provide  money   to  nonprofit                                                                    
organizations designated by its 501(c)(3) status.                                                                               
Co-Chair MacKinnon  asked whether  the administration  had a                                                                    
position  on  the  bill  and  whether  participation  should                                                                    
extend to all federal  tribes or exclusively Alaskan tribes.                                                                    
Ms. Race  answered that the  agency was neutral on  the bill                                                                    
but believed the tribes should be Alaskan.                                                                                      
Co-Chair MacKinnon  stated that amendments to  the bill were                                                                    
due to her office by the following Thursday at 5:00 p.m.                                                                        
SB  8   was  HEARD  and   HELD  in  committee   for  further                                                                    
SENATE BILL NO. 154                                                                                                           
     "An Act  relating to contributions from  permanent fund                                                                    
     dividends to the general fund."                                                                                            
9:30:10 AM                                                                                                                    
SENATOR  DAVID  WILSON,  SPONSOR,  discussed  the  bill.  He                                                                    
voiced  that  if  enacted,  Senate   Bill  154  would  allow                                                                    
Alaskans  applying for  a Permanent  Fund Dividend  (PFD) to                                                                    
donate  all  or a  portion  of  their  PFD directly  to  the                                                                    
state's  General Fund  (GF). He  related that  he had  heard                                                                    
from  many Alaskans  who  said they  would  not mind  giving                                                                    
"their fair share"  to the State of Alaska.  This bill would                                                                    
create a process  where Alaskans could donate  their PFDs to                                                                    
the State  General Fund  using the  Click.Pick.Give program.                                                                    
He  indicated that  the donations  would be  tax exempt  and                                                                    
exempt from the annual fee  and the 7 percent administrative                                                                    
fee. He furthered  that a provision in the  bill allowed for                                                                    
children in state  custody to hold the donations  in a trust                                                                    
until the child turns 18 years of age.                                                                                          
GARY  ZEPP,  STAFF,  SENATOR  DAVID  WILSON,  discussed  the                                                                    
Sectional Analysis for the bill:                                                                                                
     Section  1: Amends  AS 43.23.62(a)  by  adding "to  the                                                                    
     general  fund"  and  "the  general  fund"  to  allow  a                                                                    
     contribution from the  electronic Alaska permanent fund                                                                    
     dividend to the state general fund.                                                                                        
     Section 2:  Amends AS 43.23.062(b) to  add "the general                                                                    
     fund"   to  the   list   of  organizations,   community                                                                    
     foundations,  or charitable  organizations eligible  to                                                                    
     be added to the contributions list.                                                                                        
     Section 3:  Amends AS  43.23.062(m) by  adding "general                                                                    
     fund or  to the" to  the list of organizations  that do                                                                    
     not have a coordination fee withheld.                                                                                      
Mr.  Zepp noted  that the  DOR fiscal  note covered  all the                                                                    
cost associated with  the bill, which was  why the donations                                                                    
were exempted from fees.                                                                                                        
9:34:59 AM                                                                                                                    
Co-Chair MacKinnon OPENED public testimony.                                                                                     
ANGELA COX,  VICE PRESIDENT  OF EXTERNAL  AFFAIRS, RASMUSSEN                                                                    
FOUNDATION,  ANCHORAGE  (via teleconference),  testified  in                                                                    
opposition to  the bill. She  explained that  the foundation                                                                    
spearheaded   and   funded   the   implementation   of   the                                                                    
Click.Pick.Give program  in 2007  in support of  the state's                                                                    
nonprofit sector.  The program had raised  $20 million since                                                                    
its exemption.  The foundation  felt that  the bill  was not                                                                    
aligned  with  the  "intent  of  the  true  spirit"  of  the                                                                    
program. She  stressed that the  program was  never intended                                                                    
to  fund state  government. She  believed the  contributions                                                                    
should  be subject  to  the  administrative and  application                                                                    
fees if the bill was enacted.                                                                                                   
Co-Chair Hoffman  asked if Ms. Cox's  position represented a                                                                    
formal  action  from the  board.  Ms.  Cox replied  that  no                                                                    
formal action was taken but  the members "weighed in" on the                                                                    
9:37:51 AM                                                                                                                    
LAURIE  WOLF,  PRESIDENT,   FORAKER  GROUP,  ANCHORAGE  (via                                                                    
teleconference), testified  in opposition  to the  bill. She                                                                    
conveyed that  the group  was grateful  over the  success of                                                                    
the  program  and the  charitable  spirit  of Alaskans.  She                                                                    
noted the group supported efforts  to enhance the program to                                                                    
better  serve nonprofits  in pursuit  of their  mission. The                                                                    
group was concerned that the  bill was inconsistent with the                                                                    
original intent of the  PFD charitable contributions program                                                                    
and she pointed to the  eligibility criteria. The state's GF                                                                    
was   not   a   charitable   purpose.   She   believed   the                                                                    
contributions should  be subject  to the  administrative fee                                                                    
if   the  bill   was  enacted.   The  fee   exemption  would                                                                    
unfavorably   add   to   the  burden   of   the   charitable                                                                    
organizations  who participated  in  the program  and was  a                                                                    
matter of  fairness. She  maintained that  the bill  posed a                                                                    
clear  policy call  to the  legislature whether  the program                                                                    
should remain  true to its  original intent. She  offered to                                                                    
read the eligibility criteria of the program.                                                                                   
9:41:54 AM                                                                                                                    
RANDY   GRIFFIN,  SELF,   FAIRBANKS  (via   teleconference),                                                                    
testified in support  of the legislation. He  stated that he                                                                    
had  given his  dividend to  the  state for  the last  three                                                                    
years.  He believed  that there  was  a variety  of ways  to                                                                    
administer the  program. He indicated  that he  had endorsed                                                                    
the PFD check and mailed it to  DOR with a list of things he                                                                    
wanted done  and requested a  receipt. He  encouraged people                                                                    
to donate to the state.                                                                                                         
9:43:15 AM                                                                                                                    
WILLIAM  HARRINGTON,  SELF,  SPENARD  (via  teleconference),                                                                    
spoke in support of the bill.  He reported that he had heard                                                                    
many  people endorse  taxation and  wanted to  contribute to                                                                    
government  but  doubted  that  many  people  ever  had.  He                                                                    
characterized the  7 percent administrative fee  as "greedy"                                                                    
and "disgusting."                                                                                                               
9:44:43 AM                                                                                                                    
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Senator von  Imhof wondered whether  federal taxes  would be                                                                    
assessed on the PFD amount if it was donated to the GF.                                                                         
SARA  RACE,  DIRECTOR,  PERMANENT  FUND  DIVIDEND  DIVISION,                                                                    
DEPARTMENT OF REVENUE, stated that  she was not a tax expert                                                                    
but surmised  that the PFD  amount would be taxed  as income                                                                    
at the  federal level. However, if  donated the contribution                                                                    
could be an itemized  deduction. Senator von Imhof suggested                                                                    
that it  depended on an  individual's tax status  whether it                                                                    
was a  tax deduction. Ms.  Race believed that  the statement                                                                    
was correct.                                                                                                                    
Co-Chair MacKinnon  thought that  Ms. Race  had communicated                                                                    
that the PFD was considered  as income for federal taxes but                                                                    
could be a deduction if applicable to the individual.                                                                           
GLENN GUSTAFSON, ASSISTANT  ATTORNEY GENERAL, ANCHORAGE (via                                                                    
teleconference), answered  in the affirmative  and confirmed                                                                    
the statement.  He referenced the testifier  from Fairbanks,                                                                    
who had  to declare the PFD  as income but take  a deduction                                                                    
as a charitable contribution.                                                                                                   
9:48:44 AM                                                                                                                    
Senator Micciche  thought that if  a person gave  the entire                                                                    
dividend through the program, a  person would have a greater                                                                    
deduction  than  if  the check  was  sent  and  subsequently                                                                    
contributed  to the  state. Mr.  Gustafson confused  Senator                                                                    
Micciche's  question  with  a   deduction  regarding  the  7                                                                    
percent   administrative  fee   and  how   it  impacted   an                                                                    
individual's deduction. He concluded  that there would be no                                                                    
net  effect of  contributing  the PFD  and additional  taxes                                                                    
were not owed.                                                                                                                  
Co-Chair  MacKinnon  asked  if   Mr.  Gustafson  was  a  tax                                                                    
attorney.   Mr.  Gustafson   specified   that   he  was   an                                                                    
accountant,  and  not  a tax  attorney.  Co-Chair  MacKinnon                                                                    
thought  it  was important  to  ensure  the information  was                                                                    
accurate on the public's behalf.                                                                                                
Senator Micciche clarified that  if an individual denied the                                                                    
check  as a  contribution  back  to GF,  then  there was  no                                                                    
income  to report.  He added  that charitable  contributions                                                                    
were worth a proportion of the contribution as a deduction.                                                                     
Co-Chair  MacKinnon  stated  that  currently,  there  was  a                                                                    
process  at  the  PFD  Division  by  which  residents  could                                                                    
withdraw the application,  so a check was  not received. She                                                                    
noted that the  way Mr. Griffin contributed  was complex and                                                                    
noted the  tax effect would impact  individuals in different                                                                    
ways.  She  informed  the  committee  that  everyone  else's                                                                    
dividend would proportionately increase  by the total amount                                                                    
of  everyone who  chose to  withdraw  their application  and                                                                    
forego  a dividend.  She  noted  that approximately  700,000                                                                    
Alaskans  applied  for  a  dividend   out  of  a  population                                                                    
735,000. She asked Ms. Race whether she was correct.                                                                            
9:53:03 AM                                                                                                                    
Ms.  Race answered  in the  affirmative. She  commented that                                                                    
once the  dividend was paid  out, it became  taxable income.                                                                    
Co-Chair  MacKinnon asked  whether the  PFD was  reported as                                                                    
income on  the form 1099  from the state. Ms.  Race answered                                                                    
in  the affirmative.  She assumed  that  the testifier  from                                                                    
Fairbanks  received a  1099  and wanted  a  receipt for  tax                                                                    
Senator von  Imhof wondered  what "accounting  mechanism was                                                                    
triggered for  the filer" by  applying for the PFD  and then                                                                    
checking  the  box  to  donate   it  to  the  GF.  Ms.  Race                                                                    
reiterated that in the scenario  provided an individual that                                                                    
applied for  the PFD  would still receive  a 1099.  The 1099                                                                    
would  include  a  breakdown of  distribution,  which  would                                                                    
include  the  donation   to  the  GF.  She   added  that  an                                                                    
individual   applicant    could   be   subject    to   other                                                                    
garnishments,  which would  be paid  before the  donation to                                                                    
the state.                                                                                                                      
9:55:24 AM                                                                                                                    
Co-Chair Hoffman thought that  the problem with not applying                                                                    
for  the dividend  did  not benefit  the  state, but  rather                                                                    
benefitted the other recipients since  it did not go back to                                                                    
the GF, but rather made each dividend larger.                                                                                   
Senator  Micciche   thought  it  would  be   beneficial  for                                                                    
individuals to  be able  to donate a  dividend to  the state                                                                    
without having a tax liability.  He communicated that he was                                                                    
a  donor to  the Pick.Click.Give,  and a  board member  to a                                                                    
"couple"  of nonprofits  that benefit  from the  program. He                                                                    
thought  it   appeared  that   there  were   concerns  about                                                                    
competition  regarding   the  bills  proposed  use   of  the                                                                    
program.  He  understood  the concern  among  the  Rasmussen                                                                    
Foundation and  Foraker Group. He believed  that the program                                                                    
was a good mechanism to employ  for ideas like the one in SB
154. He hoped  the committee and organizations  could find a                                                                    
way  for   the  appropriate  use  of   the  program  without                                                                    
complicating the "good ideas" presented during the meeting.                                                                     
Senator  Olson  thought  his   constituents  would  find  it                                                                    
peculiar that an  individual would apply for  a dividend and                                                                    
then  surrender  it   to  the  state.  He   asked  how  many                                                                    
individuals  had  done so.  Ms.  Race  relayed that  only  a                                                                    
handful  of  individuals  had contacted  the  division.  She                                                                    
indicated  that when  the request  was made  a staff  member                                                                    
provided  instructions  that  the person  must  endorse  the                                                                    
check and send  it to DOR with a directive  to deposit it to                                                                    
the GF.                                                                                                                         
9:58:54 AM                                                                                                                    
Co-Chair  MacKinnon directed  attention  to  the DOR  fiscal                                                                    
note, FN2 (REV).                                                                                                                
Ms.  Race addressed  the fiscal  impact note.  She indicated                                                                    
that the  bill was  associated with  costs in  FY 19  and in                                                                    
ensuing years. She read from the analysis on page 2:                                                                            
     Currently,  funds  collected through  the  coordination                                                                    
     fee   and   the   application    fee   are   used   for                                                                    
     administrative costs. AS  43.23.062(e) states that "the                                                                    
     department  may not  use money  from the  dividend fund                                                                    
     for administrative costs  incurred in implementing this                                                                    
     section, even if it has  been appropriated for costs of                                                                    
     administering the  dividend program." For  that reason,                                                                    
     financial  costs  will  be associated  with  this  bill                                                                    
     because  no  fees  will  be   collected  to  cover  the                                                                    
     administrative costs.                                                                                                      
Ms. Race  stated that because  all other  organizations were                                                                    
philanthropic, and  the proposed state program  was not, the                                                                    
department  would  administer  the program  instead  of  the                                                                    
Alaska Community  Foundation. The  cost was  for programming                                                                    
time,  application  processing,   financial  reporting,  and                                                                    
general administration of the program.                                                                                          
Senator Micciche  asked if  Ms. Race had  an opinion  on the                                                                    
matter. He  thought that  it would  be beneficial  to employ                                                                    
the same 7 percent administrative  fee versus a fiscal note.                                                                    
Ms. Race replied that a  7 percent coordination fee would be                                                                    
one way to reduce ongoing costs for the bill.                                                                                   
10:01:36 AM                                                                                                                   
Senator Wilson  thought many  people had  different opinions                                                                    
as to  what government  was. He  listed the  many government                                                                    
services the  state provided. He  envisioned the  program to                                                                    
work  similarly to  the Pick.Click.Give  program with  a one                                                                    
click option to contribute to the state.                                                                                        
SB  154  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair MacKinnon asked  for amendments to be  turned in to                                                                    
her  office by  5:00  p.m. on  the  following Thursday.  She                                                                    
stated that  her office  would work  with the  department to                                                                    
modify the fiscal note.                                                                                                         
10:04:18 AM                                                                                                                   
The meeting was adjourned at 10:04 a.m.                                                                                         

Document Name Date/Time Subjects
SB 8 Sectional Analysis.pdf SFIN 2/20/2018 9:00:00 AM
SB 8
SB 8 Summary of Changes.pdf SFIN 2/20/2018 9:00:00 AM
SB 8
SB 8 Sponsor Statement.pdf SFIN 2/20/2018 9:00:00 AM
SB 8
SB 8 support letters.pdf SFIN 2/20/2018 9:00:00 AM
SB 8
SB 154 pick click give flow chart.pdf SFIN 2/20/2018 9:00:00 AM
SB 154
SB 154 Pick Click Give Program overview.pdf SFIN 2/20/2018 9:00:00 AM
SB 154
SB 154 Sectional Analysis, ver D.pdf SFIN 2/20/2018 9:00:00 AM
SB 154
SB 154 Sponsor Statement.pdf SFIN 2/20/2018 9:00:00 AM
SB 154
SB 8 - Opposition Bishop.pdf SFIN 2/20/2018 9:00:00 AM
SB 8