Legislature(2007 - 2008)SENATE FINANCE 532
02/28/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB273 | |
| SB230 | |
| HB61 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 273 | TELECONFERENCED | |
| += | SB 230 | TELECONFERENCED | |
| += | HB 61 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 28, 2008
9:08 a.m.
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:08:36 AM.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
Senator Fred Dyson
MEMBERS ABSENT
None
ALSO PRESENT
Ann Gifford, Juneau; Mary Hakala, Great Alaska Schools,
Juneau; John Alcantra, Government Relations, NEA-Alaska;
Mary Francis, Executive Director, Alaska Council of School
Administrators; Carl Rose, Alaska Association of Alaska
School Boards (AASB); Reed Stoops, Motion Picture
Association; Rex Shattuck, Staff, Representative Neuman;
Representative Mark Neuman, Sponsor; Eddy Jeans, Director,
Education Support Services, Department of Education and
Early Development; Darwin Peterson, staff, Senator Stedman;
Max Hensley, staff, Senator Johnny Ellis
PRESENT VIA TELECONFERENCE
LaDawn Druce, President, Kenai Peninsula Education
Association, Soldotna; Dave Jones, Assistant Superintendent,
Kenai Penininsula School District, Soldotna/Kenai; Mark
Brinster; Pam Foreman; Sandy Lorrigan, Sitka convention and
Visitor Borough; Terri Gottstein; Bob Hammer, President,
Alaska State Home Builders Association
SUMMARY
CSHB 273(FIN)
"An Act relating to school funding, funding for student
transportation services, the base student allocation,
district cost factors, and the adjustments for
intensive services and average daily membership
calculations; and providing for an effective date."
CSHB 273(FIN) was REPORTED out of Committee with a "do
pass" recommendation and with fiscal note #1 by the
Department of Education and Early Development, fiscal
note #3 by the Department of Education and Early
Development, fiscal note #4 by the House Finance
Committee, and a new zero fiscal note by the Department
of Health and Social Services.
SSSB 230
"An Act establishing the film office in the Department
of Commerce, Community, and Economic Development; and
creating a transferable tax credit applicable to
certain film production expenditures incurred in the
state."
CSSB 230(FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new zero fiscal note by
the Department of Revenue and with a new fiscal note by
Department of Commerce, Community and Economic
Development.
CSHB 61(FIN)
"An Act relating to tax credits for cash contributions
by taxpayers that are accepted for certain educational
purposes, including vocational education programs and
courses at the secondary school level and to tax
credits for cash contributions by tax payers that are
accepted by a state-operated vocational technical
education and training school; and providing for an
effective date."
CSHB 61(FIN) was HEARD and HELD in Committee for
further consideration.
CS FOR HOUSE BILL NO. 273(FIN)
"An Act relating to school funding, funding for
student transportation services, the base student
allocation, district cost factors, and the
adjustments for intensive services and average
daily membership calculations; and providing for
an effective date."
Representative Hawker explained that CSHB 273(FIN) is the
result of a work product from the Joint Legislative
Education Funding Task Force (JLTF). He thanked all those
who worked on and with the JLTF and noted the collaborative
efforts from all parties involved. The provision is
identical to the companion legislation, SB 178. He
explained that the questions raised in Committee regarding
the pupil transportation recalibration had been addressed in
CSHB 273. The question regarding the recalibration of the
pupil transportation for Matsu has been resolved to the
satisfaction of Senator Huggins. The components of the bill
include: a declining enrollment cushion, an increase in
funding for intensive needs students, the phase in of the
Institute of Social & Economic Research (ISER) cost factors,
and an adjustment of the Base Student Allocation (BSA) with
an increase of $100 a year for the next 3 years. He
underlined that this provides for a 3 year stable platform
from which schools have predictable funding.
He noted the final fiscal note from House Finance recognizes
FY 09 funding but includes the forward funding for FY 10.
9:15:18 AM
Co-Chair Hoffman asked Representative Hawker about a
combined fiscal note from the CS regarding all district
impacts.
Representative Hawker said the pupil transportation
recalibration is reflected in fiscal note three.
EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, responded to the fiscal
note question. He confirmed that fiscal note three reflects
the recalibration for student transportation. He explained
the two fiscal notes represent two different components in
Department of Education and Early Development (DEED) budget.
Co-Chair Hoffman requested the total increase in funds for
education over the next five years, including pupil
transportation.
Mr. Jeans said the increase in the foundation program for a
five year period totals slightly over $2.5 million. The
increase for the pupil transportation would be $10 million.
9:18:52 AM
Co-Chair Hoffman quoted the total costs at $260 million for
the full implementation of the provision.
Mr. Jeans said the calculation was correct, but pointed out
that school districts currently receive $70 million in a one
time funding for FY 08. The $70 million is not included in
the fiscal note as an offset.
Representative Hawker said the provision is one leg of a
three legged stool. Other parts of the "stool" include some
form of community revenue sharing which would represent a
significant amount of cost sharing related to the unfunded
pension liabilities.
CARL ROSE, ASSOCIATION OF ALASKA SCHOOL BOARDS (AASB),
testified in support of HB 273. He said AASB supports an
increase of the BSA to $200. He cited his history in the
education field and the numerous changes to the foundation
formula and the discussions on forward funding of education.
He reiterated the request for the increase to the BSA to
$200. He acknowledged the monumental accomplishments and
significant increase of funds outlined in HB 273.
Co-Chair Hoffman commented that the BSA is not stagnant,
this year there is a $100 increase and there will be
additional increases for 2010 and for 2011, totaling $46.6
million. He maintained that the increase is a substantial
move forward.
9:25:21 AM
MARY FRANCIS, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS, (ACSA) testified in support of HB 273.
She said that the work of the JLTF was a great effort. She
pointed out that ACSA had a resolution that request
forwarded funding of education for three years. She said
her organization is pleased the provision will be in
statute.
ANN GIFFORD, JUNEAU, testified in support of HB 273. She is
a parent of three students that have been through the Alaska
school system. She pointed out how school districts have
been flat funded for some time. She supported the Governor's
proposal of a $200 increase to the BSA. She maintained that
there is a surplus of oil revenues and education is the
appropriate place to invest those funds.
MARY HAKALA, GREAT ALASKA SCHOOLS, JUNEAU, testified in
support of HB 273. She explained that her organization is
made up of volunteers that provide time and energy to
schools. She thanked those involved with the JLTF and
emphasized the hard work in addressing the needs of
education. She urged the committee to increase the BSA to
$200. She maintained that with funding at that level, the
money will reach the classroom.
9:33:08 AM
JOHN ALCANTRA, GOVERNMENT RELATIONS, NEA-ALASKA, testified
in support of HB 273. He thanked those who served on the
JLFT. He noted the difficulty of expressing sincere
appreciation for the work done and making additional
requests. NEA does support the Governor's proposed $200
increase to the BSA. He reiterated Mr. Jeans's comments;
the $70 million are duplicative funds from FY 08, not new
money. He referenced the Southwest region in the fiscal
note quoting the $934,000 that is duplicative funds from FY
08. The increase in funds is actually $340,000. The efforts
and the bill are considered a great product. He referenced
other funding amounts to provide an example of actual
increases versus duplicative funds. He underlined the
support of NEA and that the organization recognizes the
accomplishment and collaborative efforts in producing the
legislation. He said that many employees he represents
question, with the surplus oil and gas revenue, why the BSA
is not increased.
9:37:26 AM
LADAWN DRUCE, PRESIDENT, KENAI PENINSULA EDUCATION
ASSOCIATION, SOLDOTNA (Testified via teleconference),
testified in support of HB 273. She thanked the JLTF for
their hard work. She supported the positive results of
their efforts specifically the pupil transportation
adjustment, the increase in funds for intensive needs
students, and the decline in enrollment cushion. She
further commented on the importance of placing the
recommendations regarding area cost differential, from the
ISER study, into statute. She said the report illustrates
how much the Kenai School District has been underfunded.
Additionally, the Kenai School District had to adjust its
budget back to accommodate the $100 BSA rather than the
Governor's proposed $200 a day. She listed specific areas
the district would like to improve on through additional
programs. She reiterated comments from previous speakers
regarding surplus oil revenue and recommended the fund be
put towards education funding.
DAVE JONES, ASSISTANT SUPERINTENDENT, KENAI PENININSULA
SCHOOL DISTRICT, SOLDOTNA/KENAI (Testified via
teleconference), in support of HB 273. He thanked the
Committee and the JLFT for their hard work in addressing the
needs of education. He commented on the importance of
several of the recommendations from JLFT in the provision:
· He said intensive needs funding represents new money.
He maintained that districts have been underfunded for
some time.
· He supported the placing of the District Cost factor
recommendations from ISER, in statute.
· He supported the Pupil Transportation Calculation
recalibration noting that Kenai has been losing money
through transportation costs.
· He said the BSA amount of $100 is approximately the
amount received through school improvement grants and
was glad to see this in statute. He was appreciative
of all efforts.
9:45:37 AM
Co-Chair Hoffman MOVED CSHB 273(FIN) to REPORT out of
Committee with individual recommendations and the
accompanying fiscal notes.
CSHB 273(FIN) was REPORTED out of Committee with a "do pass"
recommendation and with fiscal note #1 by the Department of
Education and Early Development, fiscal note #3 by the
Department of Education and Early Development, fiscal note
#4 by the House Finance Committee, and a new zero fiscal
note by the Department of Health and Social Services.
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230
"An Act establishing the film office in the Department
of Commerce, Community, and Economic Development; and
creating a transferable tax credit applicable to
certain film production expenditures incurred in the
state."
Co-Chair Hoffman MOVED to adopt the Work Draft to SB 230,
25-LS1275/V, 2/28/08, Bullard.
Co-Chair Stedman OBJECTED.
9:50:51 AM
DARWIN PETERSON, STAFF, SENATOR STEDMAN, addressed the
changes in CSHB 273:
· Page 1 includes a title "and providing for an effective
date".
· Page 2, line 5 inserts a new section requiring the
credits to be used within 3 years.
· Page 2, line 29 added sections (c) and (d) requires the
commissioner to appoint the director of the film office
from a list of five names provided to the commission by
the Alaska Film Group. The intent is to make sure that
there is partnership between the public and private
sector to ensure success of the office.
· Page 3 line 9, increases the qualifying expenditures
from $50,000 to $100,000. Additional language
clarifies that the $100,000 has to be reached within a
consecutive 24 month period.
· Page 3, line 12, subsection (b) provides a list of
productions that are not eligible for the credit.
Three productions were removed from that section which
takes them from the ineligible list, thereby making
them eligible for the credit. The three productions
removed are: finance, talk and game shows, sporting
events and award shows.
· Page 5, line 25 provides a list of expenses that
qualify for the tax credit. The cost of state and
municipal taxes levied on rental cars and lodging was
added as a qualified expense.
· Page 5, line 29, subsection (b) is a list of
expenditures that do not qualify for credit. The
addition to that list is on page 6, line 9;
compensation and wages paid to a highly compensated
individual, (defined on page 10).
· Page 6, lines 16 & 18, definitions for "commissioner"
and "department" were added.
· Page 6, line 28 is repealer language due to the 5 year
sunset for the tax credit.
· Page 7, line 9 establishes the July 1, 2013 sunset
language and transition language. Lines 1-8, allow a
company to receive the tax credit if they qualify prior
to the sunset date.
Senator Elton asked about a change on page 2 regarding the
hiring from a list provided by the Alaska Film Group. He
registered concern that a special interest group would
prepare the list and the commissioner was limited to hiring
from that list. He was unaware of any other authority
within government employing this form of hiring.
Mr. Peterson said the previous film office had not been very
successful. He explained that it is important that those
hired for the position have an understanding of the film
industry and the ability to establish and maintain a
relationship with the private sector.
9:56:57 AM
Senator Elton said there are many positions that require an
ability to work with the private sector. He said he
appreciated the reason for the accommodation, but was still
uncomfortable with the change. He felt that it is the
responsibility of the commissioner to resolve employee
problems as well as hire adequately qualified staff.
Senator Ellis said he appreciated the work of the Committee
and that there has been a good collaborative process.
Co-Chair Stedman said he felt that there has been success
with the fish tax credit. The bill is an attempt to provide
the same incentive to the film industry. The sunset date
allows the legislature to review credits and the potential
impact to the state treasury. It will allow them to
determine if there is a benefit from the provision.
9:59:25 AM
Senator Ellis said there have been over 75 letters of
support for SB 230 including, cities, native corporations,
municipal conferences, University of Alaska, labor, and
business groups.
Co-Chair Hoffman referenced page 6 line 25 and pointed out
that Bethel would not be considered rural under the
definition. He asked where "rural" is referred to in the
bill.
10:01:11 AM
Senator Ellis said SB 230 uses the standard definition of
"rural" from other statutes. He said he would be open to a
change if some adjustment needed to be accommodated.
Co-Chair Hoffman said he thought the overall definition
should be addressed at some point. He stated the community
had grown over the years, changing the rural status. He
wondered if there were other rural communities in a similar
situation. He asked the sponsor to identify the reference
to rural in the legislation.
Senator Stedman was uncertain as to why Juneau would be
included in the definition and Bethel would not be included.
Senator Elton said he understood rural to be defined as "not
connected by road or rail". The Alaska Marine Highway is
not considered road and that is why Juneau would qualify as
rural even though the population is over 30,000. He thought
the reason for the distinction within the provision was to
address the higher costs of production in rural areas.
MAX HENSLEY, STAFF, SENATOR JOHNNY ELLIS, clarified that on
Page 4, lines 13 & 14 provide for an additional 2 percent
credit above the base credit, for qualified expenditures
made in rural areas.
Co-Chair Hoffman said he found no need to address the
definition in SB 230.
10:03:04 AM
Senator Elton addressed the issue of defining "rural". He
noted that under the definition Juneau could qualify for the
credit and Bethel may not. He thought that was odd as the
costs for production would likely be much higher in Bethel.
Mr. Hensley referenced page 6, line 25, which defines rural
as a community with a population of 1,500 or a community
with 5,500 or less that is not connected by road or rail to
Anchorage and Fairbanks.
10:05:17 AM
MARK BRINSTER (Testified via teleconference), in support of
SB 230. He explained that when film makers come to Alaska
they do not hire Alaskans. He felt this could be addressed
by providing incentives to hire qualified local Alaskans.
He questioned the allowed "qualified expenses" and explained
that many of the expenses are not within the local economy.
10:10:17 AM
TERRI GOTTSTEIN (Testified via teleconference), in support
of SB 230. She endorsed comments regarding the
diversification of our economy. She pointed out that film
location selections are driven in two ways, by story; and by
business. Alaska can do some things to promote story there
are a number of things the state can do to promote business.
She pointed out that the longer daylight hours provide the
opportunity to shoot more footage in a day. She also
pointed out that the cost of filming in Alaska is less than
in Canada due to the value of the dollar.
10:13:08 AM
PAM FOREMAN (Testified via teleconference), in support of SB
230 and provided examples of missed opportunities due to a
lack of tax credits available to producers. She urged
passage of SB 230.
SANDY LORRIGAN, DIRECTOR, SITKA CONVENTION AND VISITOR
BUROUGH (Testified via teleconference), in support SB 230.
She provided examples of missed opportunities to for Alaskan
productions. She underlined the importance of film tax
incentives to attract film makers to Alaska.
REED STOOPS, LOBBYIST, MOTION PICTURE ASSOCIATION, testified
in support of SB 230. He explained that ten other states
adopted similar legislation in the last year. He said both
the tax credit and the reinstitution of the film office will
encourage film production in Alaska.
AT EASE: 10:18:54 AM
RECONVEINE: 10:20:54 AM
Co-Chair Stedman noted a previous concern by Senator Elton.
10:21:27 AM
Senator Elton MOVED to adopt a conceptual amendment to
reflect that the commissioner "shall" consider appointing
the director of the film office from a list of 5 candidates
submitted by the Alaska Film Group. This allows for the
submission of names, but does not limit the commissioner's
ability to hire outside of the list. Senator Ellis felt that
the conceptual amendment was a reasonable compromise.
There being NO OBJECTION, the conceptual amendment was
adopted.
Co-Chair Hoffman MOVED to REPORT CSSB 230 out of Committee,
as amended, with individual recommendations and accompanying
fiscal notes. There being NO OBJECTION, it was so ordered.
CSSB 230(FIN) was REPORTED out of Committee with a "do pass"
recommendation and with a new zero fiscal note by the
Department of Revenue and with a new fiscal note by
Department of Commerce, Community and Economic Development.
10:23:40 AM
CS FOR HOUSE BILL NO. 61(FIN)
"An Act relating to tax credits for cash contributions
by taxpayers that are accepted for certain educational
purposes, including vocational education programs and
courses at the secondary school level and to tax
credits for cash contributions by tax payers that are
accepted by a state-operated vocational technical
education and training school; and providing for an
effective date."
REPRESENTATIVE MARK NEUMAN, SPONSOR, explained that HB 61
amends the current provision for educational tax credits.
The provision adds to statute that contributions made to
school districts for secondary school vocational education
programs are eligible for a corporate tax credit. In
essence, the provision allows a corporate tax credit for
direct cash contribution to a school. The limitations are;
a 50 percent corporate tax credit on the first $100,000 and
a 100 % credit on the second $100,000. He felt it important
to provide the high schools with an opportunity to receive
funds from private industry and to help incent industry to
do so.
10:27:02 AM
Representative Neuman shared dropout rate statistics:
60percent graduation rate, 40 percent drop out rate, and 25
percent in the native population. Of the 60 percent that
graduate, approximately 48 percent attempt higher education
but only 28 percent actually complete degree requirements.
Of the 28 percent, 12-14 percent enters four year programs.
He concluded that only 7 percent pursue and complete a four
year college program. He used the information to point out
the high percentage of students who could benefit from a
vocational education program.
10:28:38 AM
Co-Chair Stedman MOVED to ADOPT Amendment #1 to CSSB
61(FIN):
Page 3, lines 2 - 3:
Delete "the lesser of
(1) an amount equal to"
Page 3, line 4:
Delete "(A)"
Insert "(1)"
Page 3, line 5:
Delete "(B)"
Insert "(2)"
Page 3, lines 5 - 6:
Delete "; or
(2) 50 percent of the taxpayer's tax
liability under this title"
Page 3, lines 21 - 22:
Delete ", in current or emerging employment sectors"
Page 7, line 28:
Delete "2008"
Insert "2009"
Co-Chair Stedman objected.
REX SHATTUCK, STAFF TO REPRESENTATIVE NEUMAN, explained that
there was a drafting anomaly and the amendment is offered to
address that.
Mr. Shattuck reference the portion of the amendment on Page
3, lines 5-6. He explained that prior to 1991 this section
was repealed from statute. The section was inadvertently
put into the draft. The language in the amendment conforms
to existing statute by removing the section. He added that
on page 3, line 21-22 the language deletion is due to
conversations with the Department of Revenue regarding the
difficulties of administrating. On page 7, line 28 delete
"2008", insert "2009". He explained that the bill was
introduced last year and was uncertain of the time it would
take to move through the legislature.
Co-Chair Stedman WITHDREW his OBJECTION to adopt Amendment
1.
There being NO OBJECTION, Amendment 1 was adopted.
10:31:55 AM
Senator Elton informed the Committee that the partnership
with the Alaska Homebuilders Association at the Juneau
Douglas High School is a great example of private industry
support of vocational programs. The Juneau Douglas High
School students' participating in the building program won a
national contest in Orlando Florida last year.
Representative Neuman said the example by Senator Elton is
exactly what HB 61 supports through the incentive of a tax
credit for industry.
10:34:27 AM
BOB HAMMER, PRESIDENT, ALASKA STATE HOME BUILDERS
ASSOCIATION (Testified via teleconference), in strong
support of HB 61. He said Alaska will soon be facing a
critical shortage of qualified workers in many of the trade
and construction related areas. Sustainable funding for
vocational education is critical to the future of our state.
Future Alaskans will be called upon to fill the jobs vacated
by our aging workforce as well as the new jobs created by
the future gas line project. "It is imperative that these
Alaskans have access to quality, well-funded training
programs that will teach them the skills they will need to
help build Alaska's future." He further maintained that not
only can students be trained, but establishing incentive for
the industry, a partnership is created for all to benefit.
Co-Chair Stedman noted the indeterminate fiscal notes and
quoted from the analysis:
We anticipate that this bill will have a negligible
effect on revenue. The education tax credit is little-
used. In 2005, the most recent year for which data is
available, 26 companies took education tax credits
amounting to approximately $2.5 million. We have no
data to assess the amount of additional donations under
the provision. It is anticipated that the additional
amount will be a small fraction of the current credits.
10:36:57 AM
Senator Thomas asked if there were any changes from the
original statute regarding the removal of 50 percent of the
tax liability.
Mr. Shattuck replied that the percentage has not changed.
The provision repeals and reenacts the existing language in
statute for the university. He further clarified that at
the suggestion of legislative legal, conforming language was
added for continuity.
Senator Thomas referred to page 3, and asked why the
language regarding 50 percent is removed. He also asked if
there was a list of Regional Education Accreditation
facilities (REA). Mr. Shattuk reported that the reason for
settling on municipal school districts and REAs was to
ensure that public funds were contributed to a public
purpose. He further noted that the 50 percent suggested to
be removed was present in Sec. 21.89.070. When the bill was
drafted it was inadvertently added in Sec. 43.20.014. The
language repeals the redundancy and extends the 50 percent
tax credit to contributions made to vocational education.
Representative Neuman clarified that the funding would go
through the Department of Education and Early Development to
solely fund public education.
10:40:53 AM
Co-Chair Stedman questioned if private and non-profit
vocational education programs would qualify for the credit.
Representative Nueman did not think that private facilities
were eligible as it would be difficult to track the funds.
Senator Olson asked if technical educational programs had
commented on HB 61. Representative Neuman responded that the
legislation was amended in the House Finance Committee to
assure that technical programs would be allowed to take
advantage of the provisions.
Representative Neuman provided closing comments, noting the
importance of providing opportunities to the high percentage
of students who do not attend college. He felt that
allowing private industry to assist in the effort through
training and funds is the best way to help students.
CSHB 61(FIN) was HEARD and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 10:43 AM.
| Document Name | Date/Time | Subjects |
|---|