Legislature(1995 - 1996)
04/26/1996 02:00 PM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
26 April 1996
2:00 P.M.
TAPES
SFC-96, #95, Side 1
CALL TO ORDER
Senator Rick Halford, Co-chairman, convened the meeting at
approximately 2:00 P.M.
PRESENT
In addition to co-chairman Halford, co-chairman Frank,
Senators Phillips, Sharp, Rieger and Zharoff were present
when the meeting was convened. Senator Donley did not
attend.
Also Attending: Senator Georgianna Lincoln; Representative
Alan Austerman; Representative Con Bunde; Tomas H. Boutin,
Director, Division of Forestry, Department of Natural
Resources; Nico Bus, Acting Director, Division of Support
Services, Department of Natural Resources; Carol Carroll,
Special Assistant to the Commissioner, Department of Natural
Resources; Clark Gruening, lobbyist; Elmer Lindstrom,
Special Assistant to the Commissioner Department of Health
and Social Services; Bob Bartholomew, Director, Income &
Excise Audit Division, Department of Revenue; Steven (Neil)
Slotnick, Assistant Attorney General, Commercial Section,
Civil Division, Department of Law; Jetta Whittaker, Fiscal
Analyst, Division of Legislative Finance; and aides to
committee members.
SUMMARY INFORMATION
SENATE BILL NO. 201
"An Act relating to the employment of emergency
fire-fighting personnel by the commissioner of natural
resources."
Senator Lincoln testified on behalf of the bill. Senator
Sharp moved work draft CSSB 201(FIN) and it was adopted.
Senator Rieger moved CSSB 201(FIN) and without objection it
was reported out with individual recommendations and zero
fiscal note from Department of Public Safety and $250.0 from
Department of Natural Resources.
SENATE BILL NO. 180
"An Act authorizing the commissioner of the Department of
Natural Resources to negotiate and enter into timber sale
contracts that provide for local manufacture of high
value-added wood products; and establishing an Alaska Forest
Products Research and Marketing Program within the
Department of Commerce and Economic Development."
Tom Boutin, Department of Natural Resources testified on
behalf of the bill. Senator Frank moved the work draft CSSB
180(FIN) and it was adopted. Senator Frank moved CSSB
180(FIN) and without objection it was reported out with
individual recommendations and zero fiscal note from the
University of Alaska and Department of Community and
Regional Affairs and $26.5 from Department of Natural
Resources.
CS FOR HOUSE BILL NO. 404(STA)
"An Act relating to the Board of Chiropractic Examiners; and
providing for an effective date."
No testimony was offered regarding this bill. Senator
Phillips moved CSHB 404(STA) and without objection it was
reported out with individual recommendations and $26.8
fiscal note from Department of Commerce & Economic
Development.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 397(FIN)
"An Act relating to the fisheries resource landing tax and
to the seafood marketing assessment; and providing for an
effective date."
Representative Alan Austerman and Bob Bartholomew from the
Department of Revenue testified and answered questions from
members. Steven (Neil) Slotnick from the Department of Law
explained why credit portion was made retroactive. Senator
Rieger moved CSSSHB 397(FIN) and without objection it was
reported out with individual recommendations and zero fiscal
note from Department of Revenue and $1,300.0 from Department
of Commerce and Economic Development.
CS FOR HOUSE BILL NO. 211(FIN)
"An Act relating to voter registration and to state election
administration."
Representative Con Bunde briefly explained the bill. Co-
chairman Halford held the bill in committee.
CS FOR SENATE BILL NO. 201(FIN)
"An Act relating to the employment of emergency
fire-fighting personnel by the commissioner of natural
resources."
Senator Georgianna Lincoln was invited to join the
committee. Co-chairman Halford indicated that there was a
proposed Finance CS in the file which added language that
said the commissioner may not use appropriations from state
funds for emergency fire fighting personnel engaged in non-
emergency activities under this section. It is non-state
funds and adds fire suppression funds language to make sure
it does not use fire suppression funds. That apparently was
the original intent. Senator Lincoln said the department
was available to answer and the sponsor statement was
available in members' files. She re-iterated that this does
not use state money at all and it was never the intent of
the language. There is between $250,000 and $500,000
available to be used to generate employment and promote
safety for the many communities around the state.
Senator Sharp moved work draft CSSB 201(FIN) and without
objection it was adopted. Senator Rieger moved CSSB
201(FIN) and without objection it was reported out with
individual recommendations and zero fiscal note from
Department of Public Safety and $250.0 from Department of
Natural Resources.
SENATE BILL NO. 180
"An Act authorizing the commissioner of the Department
of Natural Resources to negotiate and enter into timber
sale contracts that provide for local manufacture of
high value-added wood products; and establishing an
Alaska Forest Products Research and Marketing Program
within the Department of Commerce and Economic
Development."
Co-chairman Halford indicated there was a Finance CS and
noted the primary difference was that it changed the
Resources CS in that "the commissioner by regulation would
set a maximum number of contracts but not less than two" and
the number "two" was changed to "not less than three" and it
takes some out of the language on area plans. He said he
was concerned about when the legislature authorized some
things and then a series of plan requirements the fiscal
notes were added to with the very thing that was being
authorized. Senator Rieger commented on the bill, AS
38.05.115 and AS 38.05.120.
Mr. Tom Boutin was invited to join the committee and
explained AS 38.05.115 and said that it limited negotiated
sales to 500,000 feet and one year. Co-chairman Halford
commented on the up-dated forest land use plan and conflict
with forest use plan is deleted. He also indicated the
number "two" being changed to "three". The language remains
permissive but it takes out things that could be fiscal note
generators. Mr. Boutin advised the reason there was an up-
date of the forest land use plan in the bill is that forest
use land plans become stale after about five years.
Senator Frank moved work draft CSSB 180(FIN) and it was
adopted. Senator Frank moved CSSB 180(FIN) and without
objection it was reported out with individual
recommendations and zero fiscal note from the University of
Alaska and Department of Community and Regional Affairs and
$26.5 from Department of Natural Resources.
CS FOR HOUSE BILL NO. 404(STA)
"An Act relating to the Board of Chiropractic
Examiners; and providing for an effective date."
No testimony was offered regarding this bill. Senator
Phillips moved CSHB 404(ST) and without objection it was
reported out with individual recommendations and $26.8
fiscal note from Department of Commerce & Economic
Development.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 397(FIN)
"An Act relating to the fisheries resource landing tax
and to the seafood marketing assessment; and providing
for an effective date."
Representative Alan Austerman was invited to join the
committee and testified on behalf of the bill. This bill
makes the on-shore and the off-shore processors tax to be
more identical. The off-shore processors took the state to
court over this tax and one of the reasons they gave was
because they were different. The court has sent them back
to the state of Alaska to handle the matter
administratively. Senator Rieger asked the fiscal note to
be amended noting the money was to be directed to ASMI.
Representative Austerman said the money being discussed was
for salmon marketing and this money was collected on a white
fish basis. He is not in favour of the intent language
because it created some problems between the two fisheries.
One problem is that the white fisheries is paying this tax
now and if we are going to go in and rob that out to promote
salmon then another loophole has been created if and when
this goes to court for them to use as justification. The
money that is being collected on this white fish is being
held in escrow and probably will not be available for a
couple of years. It is expected they will take this matter
to Court after the administrative processes have been
exhausted. The intent language does not answer any kind of
immediate problem for the coming money they were trying to
get from the federal government to match the ASMI money that
was taken out of the budget. Senator Rieger withdrew his
amendment to the fiscal note as he did not wish to go
against the wish of the prime sponsor. Co-chairman Halford
said it appeared there was a loss on the revenue side and
then a gain on the ASMI side.
Mr. Bob Bartholomew, Department of Revenue was invited to
join the committee. Sections 22 and 23 are allowing for the
landing tax to credit programs that are available for the
on-shore fishery business tax. If the taxpayers had made
contributions to either the scholarship fund or to an
eligible education institution they would be eligible for
the tax credit they do not have now. It is estimated the
potential loss on that fiscal note to be $130,000 and it was
just to mirror the two tax programs. The tax at risk with
the Court challenge is $7 million per year, what is
collected in the landing tax. Two credits are available
that are retroactive. Co-chairman Halford said it seemed
that any kind of a retroactive tax credit is kind of hard to
justify as an incentive for performance that otherwise would
not occur. Mr. Bartholomew said if an individual has
already made the contributions in those previous tax years
they would get a credit. Part of all the provisions of this
bill are retroactive to try to say these are complimentary
taxes to each other. Co-chairman Halford said if it was a
legal thing that has to be done for defensive purposes for
other reasons that can be understood. However, any time one
sees a tax credit incentive that is retroactive there is
another reason rather than encouraging the action
retroactively. Mr. Bartholomew said the hope was that there
had not been eligible contributions to those organizations.
If there has not been there will be no fiscal impact. At
this point, however, they have looked at what would be
reasonable compared to what has happened in other tax
programs. $130,000 is at the top end.
Senator Sharp wanted to know if there were any credit
applications on file at this time. Mr. Bartholomew said the
taxpayers have filed their tax returns and they have paid
taxes. Since the credits were not available it is not sure
if they would have applied.
Steven (Neil) Slotnick, Department of Law was invited to
join the committee. He explained why the credit portion was
retroactive in the area the credit did not exist before.
This seemed to be an easy cure for any potential
discrimination. If contributions were made individuals will
be able to receive a tax credit same as the fisheries
business taxpayers will be able to. Co-chairman Halford
stressed that he was only questioning the retroactivity
provision and not the equality provision. Mr. Slotnick said
he could not guarantee that but possibly there would be a
legal argument that the retroactivity does not cure the
potential discrimination because there was no incentive
before. Co-chairman Halford said the only reason for a tax
credit is to get something done that otherwise would not get
done.
Senator Sharp moved to amend section 29, page 9, line 8
after the word "act" inserting "except section 22" as
retroactive. Co-chairman Halford said if the maximum
exposure was only $130,000 and if it is clearly advantageous
in a legal case in which we stand to lose $7 million he
wanted to know that in being retroactive we were really
getting our money's worth. Senator Sharp wanted to know how
it was legally advantageous to make a contribution tax
exemption retroactive. Mr. Slotnick explained why it was
advantageous in that they had been taken to Court and
presently has been moved back to an administrative hearing.
The matter has been taken retroactively from the first day
of the tax. The tax was paid under protest. Senator Sharp
asked if it was part of the Court case the fact the
individual did not get a contribution credit? Mr. Slotnick
indicated that it was. Representative Austerman said the
reason the matter was taken to Court was because it was
discriminatory and was not the same as the on-shore
processors were paying or that they were allowed to
contribute. That is why the matter is here now and being
retroactive is a question that must be decided. Senator
Sharp withdrew his motion from further consideration.
Senator Zharoff said he would be surprised if any
contributions had been made. There is a deadline that must
be met to identify any contributions that might have been
made. He further said that when the bill was previously
before the committee he had wanted to include at the time a
tax credit to entice the off-shore processors to develop on-
shore. It would create economic stability and jobs in the
communities.
Senator Rieger moved CSSSHB 397(FIN) and without objection
it was reported out with individual recommendations and zero
fiscal note from Department of Revenue and $1,300.0 from
Department of Commerce and Economic Development.
CS FOR HOUSE BILL NO. 211(FIN)
"An Act relating to voter registration and to state
election administration."
Representative Con Bunde was invited to join the committee
and explained the bill. Now individuals may register by fax
and it removes a requirement that one must sign an oath and
brings us into compliance with the National Voter
Registration Act. It improves the procedures for absentee
and question ballots. It removes deceased voters and
convicted felons on a more timely basis. It makes sure the
review board will be impartial by not allowing state
employees to serve on it and broadens who can serve on the
district
counting boards, clarifies the ballot tabulation security
and will reflect the increased cost of providing voters with
printed election materials. There is now available a master
registration list that keeps everyone on the list for two
general elections and makes them available to candidates and
it will encourage people to get out and vote and update
their registration.
Co-chairman Halford held the bill in committee.
ADJOURNMENT
The meeting recessed at 2:30 P.M. to a call of the chair.
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