Legislature(2017 - 2018)SENATE FINANCE 532
03/21/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Appointment: Commissioner - Department of Revenue | |
| Appointment: State Assessment Review Board | |
| Appointment: University of Alaska Board of Regents | |
| HB114 | |
| HB124 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 124 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 114 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
March 21, 2018
9:02 a.m.
9:02:06 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:02 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
None
ALSO PRESENT
Sheldon Fisher, Appointee, Commissioner - Department of
Revenue; Juli Lucky, Staff, Senator Anna MacKinnon;
Representative Sam Kito, Sponsor; Caitlyn Ellis, Staff,
Representative Sam Kito.
PRESENT VIA TELECONFERENCE
William Westover, Appointee, State Assessment Review Board;
Joey Sweet, Appointee, University of Alaska Board of
Regents; Sara Chambers, Deputy Director, Division of
Corporations, Business and Professional Licensing,
Department of Commerce, Community and Economic Development;
Steven Trimble, Arctic Solar Ventures, Anchorage.
SUMMARY
HB 114 BOILER/PRESSURE VESSEL INSPECTION REPORTS
SCS HB 114(FIN) was REPORTED out of committee
with a "do pass" recommendation and with one
previously published fiscal impact note: FN
2(LWD).
CSHB 124 BENEFIT CORPORATIONS
CSHB 124 was HEARD and HELD in committee for
further consideration.
APPOINTMENT: COMMISSIONER - DEPARTMENT OF REVENUE
APPOINTMENT: STATE ASSESSMENT REVIEW BOARD
APPOINTMENT: UNIVERSITY OF ALASKA BOARD OF REGENTS
^APPOINTMENT: COMMISSIONER - DEPARTMENT OF REVENUE
9:03:00 AM
SHELDON FISHER, APPOINTEE, COMMISSIONER - DEPARTMENT OF
REVENUE, discussed his qualifications and desire to serve
as commissioner of the agency. He felt privileged to serve
the governor and legislature in his professional capacity
as commissioner. He shared that he had served as the
commissioner of the Department of Administration (DOA) and
focused on finding efficiencies and improved the operations
of the services the department provided the state. He
discussed the shared services initiative, which was
designed to streamline costs by 10 to 30 percent for common
services. He discussed consolidation of information
technology across the state which resulted in savings of
several million dollars in the first year. He relayed that
he reduced the wait times in the Division of Motor vehicles
from over 45 minutes to under 13 minutes through process
improvement. He implemented the Healthcare Authority
Feasibility Study, which had been completed while he was
commissioner of DOA.
Appointee Fisher discussed his work as commissioner-
designee of the Department of Revenue (DOR). He viewed his
position as being able to impact the state's economy and
businesses in the state. He reminded the committee that
Alaska was ranked the last in the nation for the lowest
economic growth rate. He noted the fiscal uncertainty in
the state and agreed that using some of the earnings from
the Earning Reserve Account (ERA) was an important first
step. He believed that broadening the state's tax base was
another necessary step. He believed in small government and
strove to minimize costs in the operation of the agency and
supported spending decreases.
9:07:01 AM
Commissioner-designee Fisher continued that it was
important to try and stimulate economic growth. He
mentioned that the governor had proposed the oil tax credit
repurchase program that was beneficial for the economy and
could be "achieved with no cost, in essence, to the state
when compared to what the normal obligations would be." He
reaffirmed that he continued to look for efficiencies in
the department's operations. He pointed out that he was
"moving aggressively" to convert the process of Permanent
Fund Dividend (PFD) distribution to an online process. He
addressed the backlog in the tax audit division. The oil
industry had come to the department and expressed concern.
He was currently unable to offer a concrete plan but wanted
to assure the committee that he was examining solutions.
Co-Chair MacKinnon thanked the commissioner-designee for
his service.
Senator Olson thanked Commissioner-designee Fisher for
putting his name forward. He remarked that there was a
large difference between working in the public and private
sectors. He thought it could be problematic when a
commissioner wanted his directive to prevail in the
presence of disagreement within the administration. He
asked Commissioner-designee Fisher how he planned to
address the issue in DOR. He relayed that Commissioner-
designee Fisher had made decisions that were unpopular with
other commissioners in the administration. He believed that
decision making within DOR was a more "volatile" situation.
Commissioner-designee Fisher interpreted Senator Olson's
question as whether he could be effective working in
collaboration. He agreed that there was more of a
hierarchical arrangement in the private sector, while in
the public sector it was necessary to work more
collaboratively. He did not believe he had worked un-
collaboratively during his tenure at DOA and believed that
he ultimately garnered broad support for changes he
initiated. He thought some of the decisions made by DOA had
not been popular, but the department engaged in many
meetings with stakeholders and at the cabinet level to work
towards consensus. Commissioner Fisher hoped that his work
at DOA and DOR would not seem dictated and he did not feel
himself to be an intractable leader. He used the example of
his work on the oil tax credit bill, during which he tried
to listen to stakeholders and industry and listen to
concerns and objections and incorporate them into the bill.
9:14:19 AM
Senator Stevens thought Commissioner-designee Fisher had a
"remarkable" resume. He read the following from
Commissioner-designee Fisher's resume, "Launched a $87M ERP
system the only "major" state system delivered "On Time
and On Budget" in living memory. He asked what was learned
from the experience that could be applied to future
projects. Commissioner Fisher thought that his success had
been a result of the people he had gathered around him to
assist in different tasks. He acknowledged he had success
in certain areas but thought other people had also been
instrumental in achieving the successes. He shared that the
assessment applied to the Integrated Resource Information
System (IRIS) system that happened with a very dedicated
team of state employees.
Senator Micciche was impressed with Commissioner-designee
Fisher's habit of listening to questions and checking for
understanding. He asked for clarification regarding
Commissioner-designee Fisher's opening statement regarding
including broad based taxes in the revenue discussion.
Commissioner-designee Fisher thought it was important for
him to express his values so that the legislature could
consider his appropriateness for the position. He believed
the state should diversify its tax revenue base. He added
that a diversified tax base would create more stability and
improve the economy in the state.
9:19:07 AM
Senator Micciche asked if Commissioner Fisher was not
saying where the revenue should come from or that he wanted
a broad-based tax, rather the state should re-evaluate the
diversification of revenue in general. Commissioner Fisher
believed that the state had a structural deficit in the
budget and believed that the state either had to cut
spending or increase revenue. He thought there were areas
in which cost-savings were available and mentioned
healthcare. He believed that ultimately the state would
need to deal with both expenditures and revenue.
Co-Chair MacKinnon asked whether he was attempting to be
candid for both legislative bodies. Commissioner-designee
Fisher answered in the affirmative and added that he wanted
to remain "faithful" to his beliefs.
Vice-Chair Bishop was grateful that Commissioner-designee
Fisher had accepted the job as commissioner.
Co-Chair MacKinnon added to Vice-Chair Bishop's comments
and favored that the Commissioner-designee tried to provide
information that was important and trusted. She relayed her
confidence and trust in him and felt that he rose above the
political agenda. She believed Commissioner Fisher served
the people of the state remarkably well. She appreciated
his tenure as commissioner and acknowledged that his
experience allowed him to seek more profitable employment
elsewhere.
9:22:29 AM
AT EASE
9:22:49 AM
RECONVENED
Vice-Chair Bishop MOVED to FORWARD the appointment of
Sheldon Fisher in accordance with AS 39.05.080, to a joint
legislative session for consideration as commissioner of
Department of Revenue.
He read from the committee report as follows, "This does
not reflect an intent by any of the members to vote for or
against the confirmation of the individual during any
further sessions."
There being NO OBJECTION, it was so ordered.
^APPOINTMENT: STATE ASSESSMENT REVIEW BOARD
9:23:35 AM
WILLIAM WESTOVER, APPOINTEE, STATE ASSESSMENT REVIEW BOARD
(via teleconference), discussed his qualifications and
desire to serve on the board. He stated that he had been
appraising in the private sector and the assessment field
for 25 years. He worked on complex properties including
special purpose and regulated utility evaluations. He had
lived in the state for over 50 years and wanted to "give
back" to the state. He thought he had the skills and
experience to be of benefit to the board.
Co-Chair MacKinnon had not had a chance to review an audit
on the appraisal management board. She asked if Mr.
Westover had ever served on the board. Mr. Westover thought
that Co-Chair MacKinnon was referring to the Real Estate
Appraisal Board. He answered in the negative and indicated
he had not served on any other board previously.
9:26:02 AM
Senator von Imhof noted that Mr. Westover had significant
experience with real estate appraisals. She asked what type
of appraisals the board would review. Mr. Westover
understood that most of the properties evaluated by the
board were state oil and gas properties. He explained that
DOR had appraisal staff that assessed real and personal
property and if the appraisal was appealed the review board
reviewed the information and ruled on the state's
valuation. Senator von Imhof asked if Mr. Westover felt he
would need to perform background research or additional
preparation to focus on the specialized subset of
appraisals by the board. Mr. Westover acknowledged that he
would need to review and learn about the types of assets
associated with the topic but indicated that appraising
concepts applied equally to all different types of
properties.
Vice-Chair Bishop MOVED to FORWARD the appointment of
William Westover. In accordance with AS 39.05.080, the
Finance Committee reviewed the following and recommends the
appointments be forwarded to a joint session for
consideration of the State Assessment Review Board, William
Westover. This does not reflect an intent by any of the
members to vote for or against the confirmation of the
individual during any further sessions.
There being NO OBJECTION, it was so ordered.
9:29:10 AM
AT EASE
9:30:39 AM
RECONVENED
^APPOINTMENT: UNIVERSITY OF ALASKA BOARD OF REGENTS
9:30:39 AM
JOEY SWEET, APPOINTEE, UNIVERSITY OF ALASKA BOARD OF
REGENTS (via teleconference), discussed his qualifications
and desire to serve on the board. He stated that he was a
nominee for the student regent position to serve as a
member on the University of Alaska (UA) Board of Regents.
He related that his interest to serve was due to the
changing nature of the university. He believed that the
Strategic Pathways Initiative was a beneficial framework to
determine the best way to offer services in a time of
reduced financial resources. He offered that the student
regent position lasted for a term of 2 years. He voiced
that the time on the board would be relatively short, and
he intended to be an active member of the board and "make
the most" out of the experience. He had reached out to
various student leadership groups and organizations
throughout the university system. He understood that any
decisions he made as student regent had a significant
future impact on students well into the future.
9:33:02 AM
Senator Stevens related that he had met with the appointee
the previous day and felt he was a fine student and young
leader. He asked Mr. Sweet to discuss the value of a
student being on the Board of Regents. Mr. Sweet asserted
that the student perspective was unique within the
university community. He believed that students viewed the
university in fundamentally different ways compared to
staff or faculty. He thought that given the university's
goal of educating and graduating students the board seat
was critically important. He attempted to take the position
very seriously. He discussed that he helped educate
students about the board's role and the effect that the
decisions it made had on students. He prioritized listening
to students to help inform him in his decision-making
process.
9:35:24 AM
Vice-Chair Bishop MOVED to FORWARD the appointment of to a
joint legislative session for consideration of the Vice-
Chair Bishop MOVED to FORWARD the appointment of Joey
Sweet. In accordance with AS 39.05.080, the Finance
Committee reviewed the following and recommends the
appointments be forwarded to a joint session for
consideration of the University of Alaska Board of Regents,
Stephen (Joey) Sweet. This does not reflect an intent by
any of the members to vote for or against the confirmation
of the individual during any further sessions.
There being NO OBJECTION, it was so ordered.
9:36:03 AM
AT EASE
9:37:56 AM
RECONVENED
HOUSE BILL NO. 114
"An Act relating to boiler and unfired pressure vessel
inspection reports and fees."
9:37:56 AM
Co-Chair MacKinnon noted that HB 114 was previously heard
in committee on March 14, 2018.
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for HB 114, Work Draft 30-LS0361\O (Bannister,
3/20/18).
Co-Chair MacKinnon OBJECTED for discussion.
JULI LUCKY, STAFF, SENATOR ANNA MACKINNON, explained that
during the prior meeting there had been some confusion
regarding "non-electronic forms." She worked with
Legislative Legal Services and the Department of Labor and
Workforce Development (DLWD) to establish the clarifying
language contained in the committee substitute (CS). The
changes occurred on page 2, lines 1-4. She read the
following from the CS:
The department shall charge a company or special
inspector a fee of $10 for filing a report if the
company or special inspector does not file the report
by entering the report directly into the department's
electronic inspection report system.
Ms. Lucky furthered that the words non-electronic and form
were removed, and the language clarified that any entry not
made via the electronic system would be charged the $10
fee.
Co-Chair MacKinnon asked if the sponsor had concerns with
the CS.
REPRESENTATIVE SAM KITO, SPONSOR, supported the change and
felt the clarification was "worthwhile."
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
further OBJECTION, it was so ordered.
Co-Chair MacKinnon asked the sponsor for closing remarks.
Representative Kito thought HB 114 would ultimately direct
providers of the reports to a more easily accessible form
and created efficiencies for the process.
9:41:47 AM
Vice-Chair Bishop MOVED to report SCS HB 114(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SCS HB 114(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
fiscal impact note: FN 2(LWD).
9:42:43 AM
AT EASE
9:45:22 AM
RECONVENED
CS FOR HOUSE BILL NO. 124(FIN)
"An Act relating to corporations, including benefit
corporations, and other entities; and providing for an
effective date."
9:45:22 AM
Representative Sam Kito, Sponsor, introduced the
legislation. He reported that HB 124 created a benefit
corporation classification for C corporations in the state.
The benefit corporation allowed for more than just a
fiduciary duty to corporate activities. He provided the
example of a bike shop that offered its employees paid work
time for trail improvement work. In a traditional corporate
structure, the individuals would be working outside of the
fiduciary responsibility of the corporation risking
shareholder objections. The bill allowed for the bylaws of
a corporation to allow for employees to work on public
service projects or engage in another manner to provide a
public benefit. The benefit had to be clearly identified in
the corporation's bylaws and a periodic report was required
that indicated how the company was meeting its beneficial
and fiduciary duties.
9:48:40 AM
Senator Stevens asked whether other states had similar laws
in place. Representative Kito answered in the affirmative
and estimated that 30 other states adopted similar
statutes.
Senator Micciche thought the bill was interesting. He asked
who defined whether the actions were beneficial, or if each
company would define its "benefit." He believed that in
some cases "some of these companies worked against the
economy of the state of Alaska." He wondered if it was
possible for the benefit to counter what others believed
were beneficial. Representative Kito replied that the
determination of whether the action of a company would be
beneficial would be published in the articles of
incorporation and bylaws, which was available for public
scrutiny. He offered that a benefit would not be defined in
stature or regulation.
9:51:05 AM
Senator von Imhof understood that corporations currently,
through mission statements and value statements, could
express its objectives and intentions. She was unsure as to
what problem the bill was trying to solve. She used the
example of Wells Fargo, which had a corporate giving
program. The bank had employees dedicated to the program.
The bank offered defined allowances for employees to work
on company sanctioned events or volunteer opportunities.
She wondered what the bill was attempting to "fix."
Representative Kito thought that the examples Senator von
Imhof described did not violate the fiduciary
responsibility the company had to its shareholders. The
company had made profits and its board of directors
directed some profits to the charitable activities that did
not affect its "bottom-line." He advised that if a company
started having employees working on non-billable hours for
various beneficial projects, a complaint or lawsuit could
ensue on the basis that the company was not meeting its
fiduciary responsibility by paying for an employee that was
not generating income. The bill attempted to protect a
company whose board of directors wanted to offer company
time or resources to benefit a nonprofit or some other
public benefit like soup kitchens. He added that the bill
could also apply to native corporations. A regional native
corporation could provide resources to support its
nonprofit arm without concerns over lawsuits from
shareholders.
9:54:44 AM
Senator von Imhof asked whether there was a numerical
threshold in the bill that addressed a level of profit the
benefit corporation must maintain. She guessed that the
company could be accused of being too focused on the
benefit in lieu of profit and she wondered whether the
benefit corporation was subject to a certain level of
profit. Representative Kito answered that the line would be
drawn in the bylaws of the corporation and would be the
measure of accountability to its directors and
shareholders. He understood that the corporation that filed
as a benefit corporation would be accountable to itself in
identifying the benefit it wanted to offer and how it
wanted to provide it. He remarked that the board of
directors would regulate whether the corporation was
providing the benefit as determined by the bylaws.
Co-Chair MacKinnon asked if the sponsor knew of any cases
in which a company had been sued for misusing proceeds.
Representative Kito deferred the answer to his staff. Co-
Chair MacKinnon asked if Representative Kito was aware of
specific lawsuits that happened in other states under the
terms he had discussed. Representative Kito was unaware of
any lawsuits and added that he was aware that the trend was
to provide corporations as many tools as possible to
fulfill their mission.
Senator von Imhof voiced that the sponsor had indicated
that a corporation's bylaws currently allowed them to fill
any mission they wish. She did not feel a state statute was
necessary. Representative Kito responded that the challenge
was whether a resource of a company could be used to
benefit a community versus direct profit. Currently, a
company could not perform an action that did not result in
a profit. The bill allowed for more flexibility in how a
corporation could perform community service and be shielded
from shareholder lawsuits.
Co-Chair MacKinnon asked if a benefit corporation would be
required to pay corporate taxes in the state.
Representative Kito replied that a benefit corporation was
another classification of a C corporation with a benefit
bylaw and would pay taxes and registration fees. Co-Chair
MacKinnon inquired whether B corporations were required to
pay taxes in the state. Representative Kito answered that
the benefit corporation was a C corporation and the bill
would not impact any other type of non-C corporation in the
state. The benefit corporation would be subject to any
applicable taxes.
10:00:12 AM
Senator Micciche asked if the sponsor could verify whether
the bill would affect any liability of a C corporation to
the state. Representative Kito stated that C Corporations
that currently existed would not be changed at all unless
they opted to become a benefit corporation. Senator
Micciche asked if a C corporation chose to organize as a
benefit corporation would the same tax rate paid prior to
the change apply. Representative Kito answered in the
affirmative and added that the only practical change would
be to the corporation's bylaws and mission and would still
be required and obligated to pay the same income tax.
Co-Chair MacKinnon questioned his answer. She wondered
whether more items were deducted against the bottom-line of
profit resulting in less corporate taxes paid to the state.
She surmised that the state would lose money by creating a
new category of expenses to write off from profit.
Representative Kito imagined that a tax impact would be
difficult to determine. He restated that his intent was
"not to take corporate profits and turn them into something
else." The benefit corporation status was another tool for
corporations to use. He elaborated that the amount of
revenue the state received from corporate income tax and
"the change in the bill was not substantial enough to make
an appreciable difference." Co-Chair MacKinnon considered
large oil companies that paid large amounts of taxes to the
state and wondered what the impact would be if they chose
to become benefit corporations. She was unsure how that
would be accountable to the Internal Revenue Service (IRS).
She would follow up on the issue.
10:03:19 AM
Vice-Chair Bishop referred to the last sentence of the
first paragraph of the Sponsor Statement (copy on file):
"Allowing the creation of benefit corporations will give
business owners more choice in how to run their business
and will bring to Alaska a slice of the $6.6 trillion that
is invested nationally in similar corporations." He
understood that the intent of the bill was to protect the
fiduciary responsibility of the shareholders. He offered a
hypothetical scenario of benefit corporation employees
rebuilding a playground during work hours. He deduced that
the shareholders could protest that the corporation's
bottom-line was not being increased by the benefit
activity. Representative Kito replied that his description
was exactly the type of situation the bill was attempting
to protect against; a shareholder lawsuit because the
employee was not fulfilling the fiduciary duty of the
corporation when engaged in benefit activity.
Vice-Chair Bishop mentioned the eventuality of an employee
getting injured performing benefit activity. He
characterized the situation as "going down another whole
rabbit trail." Representative Kito presumed that the
employee would still be covered by worker's compensation
and whatever insurance the corporation offered. Vice-Chair
Bishop deduced that insurance premiums would rise.
CAITLYN ELLIS, STAFF, REPRESENTATIVE SAM KITO, stated that
benefit corporations were formed voluntarily by a two-
thirds vote of the shareholders. The shareholders endorsed
whatever public good was defined by the company. She
explained that benefits could include redistributing a
percentage of profits or allow employees to perform benefit
work. The result was a two-fold option for the business; a
fiduciary responsibility and a public benefit
responsibility. The bill allowed the company to prioritize
its values and the shareholders were "well aware" of the
mission. The state could benefit from the $6.6 trillion
invested in B Corporations by allowing benefit
corporations. She elucidated that a handful of companies in
the state wanted benefit corporation status.
10:06:58 AM
Senator von Imhof asked what would stop an existing
corporation from switching to a B-Corporation and then
writing off more expenses claiming the work is for the
common good and paying less taxes. She characterized the
bill as granting allowable and legal tax breaks. Ms. Ellis
stated that the bill would not change what a company could
do. The bill offered protection to a company from its
shareholders. The same write-offs would be available that
were currently in existence as under HB 124. She reiterated
that benefit corporations were voluntary, and the
shareholders were aware of the bylaws.
Co-Chair MacKinnon asked whether Ms. Ellis was aware of a
corporation that was sued by its shareholders. Ms. Ellis
was not aware of a company sued by shareholders but offered
to follow up with a definitive answer.
Representative Kito commented that the state currently
offered a series of tax credits currently available to C
corporations that allowed them to reduce their tax
liability by donating to things like the education system.
He thought the scope of the change created by the bill
would be significantly smaller than any of the tax credits
the state currently offered. The bill would allow a new
type of community and public involvement with corporations
and permit a company to define its values in its bylaws.
10:10:06 AM
Ms. Ellis addressed portions of the Sectional Analysis
(copy on file):
Section 1 10.06.633(a) Establishes how corporations
may be dissolved and is amended to include benefit
corporations; (a8) declares that a benefit corporation
is dissolved if delinquent for 6 months or more in
including its benefit report in the biennial report or
in paying the benefit report filing fee.
Section 2 Adds a new chapter to AS 10 Alaska
corporations code, chapter 60-Benefit Corporations.
Article 1
Establishes how a business corporation may incorporate
or amend its status to become a benefit
corporation; that the benefit corporation shall have a
purpose of creating general public benefit from
all effects of its business and operations and may
identify a specific public benefit; requires that any
status change must be approved by the minimum two-
thirds vote.
Article 2
Establishes the duties of the board and the directors
and enumerates seven factors that must be considered
while making decisions; clarifies that a director of a
benefit corporation is not personally liable for the
failure to create a general public benefit if they are
acting in compliance with the chapter and in good
faith.
Article 3
Directs how the board of a benefit corporation my
designate a benefit director, who shall not have a
material relationship with the corporation; outlines
the benefit director's role, especially relating to
the biennial benefit report; allows that the benefit
director shall have the same role and rights as any
other director of the benefit corporation.
Article 4
Directs an officer of a benefit corporation to
consider the factors enumerated under the board of
directors; clarifies the duties of an officer acting
in good faith; and allows that a benefit corporation
may designate a benefit officer, who shall have duties
similar to the benefit director.
Article 5
Identifies the persons that may bring actions or
claims against a benefit corporation for a failure to
pursue general or specific public benefit.
Article 6
Defines what must be contained in the required
biennial benefit report; requires that the benefit
report must be held against a third party standard;
establishes a timeline for the delivery of the report
to shareholders; requires public availability of the
report; and directs the benefit corporation to file
the benefit report with the department as part of
their biennial report.
Article 7
Identifies the process necessary for a benefit
corporation to effect a status change; allows for
shareholder dissent under a status change; defines
guidelines for the third-party standards; clarifies
that a benefit corporation is not eligible for any tax
exemptions beyond those available for a traditional
corporation; and states that this chapter does not
prevent a non-benefit corporate entity from
considering a general or specific public benefit.
Article 8
Allows from the creation of regulations for this
chapter; clarifies that this chapter does not affect
non-benefit corporate entities; declares that benefit
corporations are subject to Alaska corporate law
unless specifically addressed; and defines terms used
in the chapter.
10:13:35 AM
Co-Chair MacKinnon asked whether it was unique with
corporations to "indemnify or protect" directors who act on
behalf of corporations. Ms. Ellis did not know the answer
and offered to provide the information. Co-Chair MacKinnon
asked whether it was common to extend the protection to
third parties that engaged with the director of the benefit
corporation. She requested more clarity on the difference
between a benefit corporation and a C corporation.
Co-Chair MacKinnon wanted the Department of Commerce,
Community and Economic Development (DCCED) to provide
feedback from a licensing perspective and whether the
department supported the bill.
SARA CHAMBERS, DEPUTY DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT (via
teleconference), stated that the department had an
administrative interest in the bill, but did not have a
recommendation either way. She elaborated that the division
did "very little qualitative work" with corporations that
were required to register. The division only collected a
filing tax and the tax would not change.
Co-Chair MacKinnon OPENED public testimony.
10:17:05 AM
STEVEN TRIMBLE, ARCTIC SOLAR VENTURES, ANCHORAGE (via
teleconference), testified in support of the bill. He
reported that the. company was Alaska's largest solar
company and grew 300 percent each year since its inception
in 2015. The company was expecting to build 1 megawatt of
solar projects in the state through its two business
locations in Anchorage. He delineated that Arctic Solar
Ventures was a Certified B Corporation and was certified
through and international body called B Lab that worked
with other states to enact legislation creating benefit
corporations. He explained that the international
certification allowed his company to adopt a triple bottom-
line approach to business; economic, societal and
environmental. The benefit corporation legislation allowed
a company to protect its certification from leadership
changes and shareholders votes. He noted that a two-thirds
vote was required to become a benefit corporation and the
same vote would be required to undo it. He emphasized that
he wanted state protection like the 33 other states that
adopted similar legislation and operate as a benefit
corporation. He mentioned that he was a co-owner of a
nationwide cooperative of 48 other solar companies that
were certified B Corporations and were benefit corporations
or in the process of becoming one. The cooperative members
shared the same values and reflected a national movement.
He favored adoption of HB 124 as a tool that differentiated
the way benefit companies engaged in business "with the
backbone that we are here to do good for Alaska." He
pointed out that B corporations were held accountable by a
third party through a "very rigorous assessment process."
The benefit corporation status protected the certification.
10:22:04 AM
Vice-Chair Bishop asked whether Mr. Trimble would have
access to more capital if the bill was to become law. Mr.
Trimble answered in the affirmative and added that because
his company was a certified B corporation people opted to
patronize his business, which "directly contributed" to his
company's bottom-line.
Co-Chair MacKinnon asked whether Mr. Trimble could provide
a copy of the third-party rigorous assessment standards
that he complied with. Mr. Trimble agreed to provide the
requested information from B Lab. Co-Chair MacKinnon asked
if Mr. Trimble served on the board since he had an owner
interest in setting the standards. Mr. Trimble clarified
that he was a member of the board of the national
cooperative where he was a member owner. He answered that
each of the 48 solar companies had one voting member that
voted in the decisions of the cooperative. The cooperative
had a board of directors, but each member had one equal
vote within the cooperative. Co-Chair MacKinnon asked
whether he served on the board or if he was the one voting
member out of the 48. Mr. Trimble responded that he was one
voting member. Co-Chair MacKinnon asked if Mr. Trimble
could speak further about protecting the company through
leadership changes. Mr. Trimble hypothesized that if he
left the company and someone else took over who did not
want to engage in the benefit activity the new owner could
simply change the directive without protective statutes. He
emphasized that the benefit was an integral part of the way
he built and operated the company and without the state's
benefit corporation status leadership change could reverse
everything his company accomplished.
10:26:32 AM
Co-Chair MacKinnon asked if Mr. Trimble's company competed
with other corporations as an energy company. Mr. Trimble
answered in the affirmative and stated that he competed
with other solar companies that installed solar panels. Co-
Chair MacKinnon asked if Mr. Trimble could practice as a B
corporation under a C corporation and maintain the culture
of his company. Mr. Trimble stated that there was nothing
preventing his company from operating as a C corporation,
but the issue of limited protection still existed. He
detailed that his company had a publicly published
scorecard through the assessment and certification of B
Lab. He reiterated that he could establish a corporation
like a benefit corporation in the state but lacking the
protection and reporting requirements. He furthered that a
corporation could claim they were providing public benefits
without being required to show accountability.
10:29:57 AM
Co-Chair MacKinnon asked if Mr. Trimble was aware of
lawsuits in which shareholders were challenging a director.
Mr. Trimble replied in the affirmative and elucidated that
Ben and Jerry's Company was subject to a hostile takeover
because they were operating like a benefit corporation,
before benefit corporation legislation was adopted in
Vermont. A group of shareholders got together and sued the
company in an attempt to take it over, which lead to a
lengthy and costly lawsuit that removed many of the co-
founders of the company.
Senator von Imhof asked if passage of the bill would
provide the ability of benefit corporations to undercut
prices and compete against profit-driven competitors in
order to gain market share and in Artic Solar Venture's
case, in order to get customers off oil and gas through
renewable energy. She asked if the bill provided an unfair
business advantage because increased volumes at a lower
price could yield a higher net profit. Mr. Trimble answered
in the negative. He pointed out that his company was
branded as a premium solar provider and were not the lowest
cost option as per a "strict" company philosophy. He
stressed he did not see any scenario where the benefit
status could provide an unfair competitive advantage.
10:33:01 AM
Co-Chair MacKinnon CLOSED public testimony.
Vice-Chair Bishop discussed FN2 (CED) from DCCED. He
detailed that the cost for FY 19 was $22.4 thousand
allocated to Corporations, Business and Professional
Licensing. He read from page 2 of the fiscal note:
To implement this legislation the corporation's
database will need a systems change to create a new
entity indicator, new types of officials, and a new
reporting requirement. A regulations project will be
necessary to adopt regulations for the newly created
Chapter 60, Benefit Corporations, and to amend AS
10.06.633.
If the bill passes the following expenses will be
incurred:
Services: $11.9 (legal costs to amend regulations,
printing, and postage in the first year) $10.5
(information technology services for system change)
Corporation filing fees are General Fund/Program
Receipts fund source 1005 GF/Prgm (DGF). Corporation
filing fees are
set in regulation per AS 10 and 32, and revenue in
excess of authorized budgeted expenses reverts to the
State of Alaska general fund.
Co-Chair MacKinnon wondered whether the state would
initially use receipts from other corporations licensing
to support the new licensure. Ms. Chambers stated that any
cost incurred would be recouped in the same fiscal year
from the benefit corporations. The division generated
approximately $6 million to GF each year from corporate
licensing.
10:36:47 AM
Co-Chair MacKinnon asked what the filing fee for a benefit
corporation was. Ms. Chambers stated that all filing fees
for corporations were the same. She deemed that it was
possible that if an existing C-corporation changed to a B-
corporation, they would generate additional revenue due to
a fee to reincorporate. She reported that the fee was $250,
which $100 was a tax and the remainder were fees. In
addition, other fees were charged for multiple required
reporting. Reincorporating would generate additional
revenue to the state. Co-Chair MacKinnon estimated that it
would take approximately 90 new B corporations to break
even or the division would utilize other corporate
licensing funds. Ms. Chambers had not performed the
calculation required to answer the question. She offered to
provide an answer.
HB 124 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:39:06 AM
The meeting was adjourned at 10:39 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FIN COMMISSIONER - Sheldon Fisher.pdf |
SFIN 3/21/2018 9:00:00 AM |
Confirmations 2018 |
| FIN ASSESSMENT REVIEW BOARD Westover.pdf |
SFIN 3/21/2018 9:00:00 AM |
Confirmations 2018 |
| FIN REGENT, UNIVERSITY of ALASKA Sweet.pdf |
SFIN 3/21/2018 9:00:00 AM |
Confirmations 2018 |
| HB124 Sponsor Statement 1.18.18.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 124 |
| HB124 Sectional Analysis ver U 1.18.18.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 124 |
| HB124 Explanation of changes from ver A to ver U 1.18.18.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 124 |
| HB124 Support Documents - Letters of Support 4.11.17.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 124 |
| HB 114 HB114 SCS v. O Explanation.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 114 |
| HB 114 SCS HB 114 FIN work draft v.O.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 114 |
| HB 114 DOWLD QA.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 114 |
| HB124 Support BENEFIT CORPORATIONS.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 124 |
| HB124 SFIN memo - follow up.pdf |
SFIN 3/21/2018 9:00:00 AM |
HB 124 |