Legislature(2013 - 2014)SENATE FINANCE 532
02/10/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB93 | |
| SB71 | |
| HB193 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 93 | TELECONFERENCED | |
| + | SB 71 | TELECONFERENCED | |
| + | HB 193 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 10, 2014
9:05 a.m.
9:05:36 AM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 9:05 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
David Scott, Staff, Senator Donnie Olson; Karen Cleary,
Project Director, Vocational and Technical Education
Center, Prince of Wales; Kathy Leary, Training Manager,
Ilisagvik College, Barrow; Grey Mitchell, Assistant
Commissioner, Department of Labor and Workforce
Development; Wanetta Ayers, Director, Division of Business
Partnerships, Department of Labor and Workforce
Development; Senator Peter Micciche; Kathy Hansen,
Executive Director, Southeast Alaska Fisherman's Alliance;
Dirk Craft, Staff, Representative Lance Pruitt; Tim
Cottongim, Revenue and Audit Supervisor, Department of
Revenue.
PRESENT VIA TELECONFERENCE
Charles Edwardson, Southern Southeast Alaska Technical
Education Center, Ketchikan; Fred Villa, University of
Alaska, Fairbanks; Daniel Moore, Treasurer, Municipality of
Anchorage, Anchorage; Johanna Bales, Deputy Director, Tax
Division, Department of Revenue.
SUMMARY
SB 71 PAYMENT OF FISHERY RESOURCE LANDING TAX
CS SB 71(FIN) was REPORTED out of committee with
a "do pass" recommendation and with new zero
fiscal note from the Department of Commerce,
Community, and Economic Development; and a new
indeterminate fiscal note from the Department of
Revenue.
SB 93 TECHNICAL/VOCATIONAL EDUCATION PROGRAM
SB 93 was HEARD and HELD in committee for further
consideration.
CSHB 193(FIN) MUNICIPAL TAXATION OF TOBACCO PRODUCTS
CS HB 193(FIN) was HEARD and HELD in committee
for further consideration.
SENATE BILL NO. 93
"An Act extending the unemployment contributions for
the Alaska technical and vocational education
program."
9:06:58 AM
Senator Olson explained that The Technical and Vocational
Education Fund (TVEP) authorized under AS 23.15.840 sunsets
on June 30, 2014. He felt it was important legislation,
because there were some capital projects that were
considered, based on the passage of the legislation.
DAVID SCOTT, STAFF, SENATOR DONNIE OLSON, stated that SB 93
extends the sunset date to June 30, 2024. In 2000 the
Alaska Legislature created the Training and Vocational
Education Program to provide financial assistance to
support facilities throughout the state that provide
technical and educational programs for industry specific
training. Alaska was experiencing unemployment rates that
were reaching to above 50 percent of the national average
in 2008. With large projects on the horizon, there was a
clear need for a trained, resident work force. The TVEP
program was extended to provide training to Alaskan
residents to help reduce the unemployment rate and put
Alaskan residents to work. Figures released on March 14,
2013 by the Department of Labor and Workforce Development
(DLWD) indicated that unemployment rates in Alaska for
December of 2012 were 6.6 percent, while the national
average was 8.1 percent. Alaska has had a consistent lower
rate than the national average for the past forty-six
months, indicating the effectiveness of this program. Funds
for the TVEP program are appropriated from amounts the
state collects in unemployment insurance contributions at a
rate of 0.15 percent and are allocated according to
statute. The more we can train our youth, as they enter the
work force, the more we will re-enforce the desirability of
staying in Alaska as part of a highly skilled, resident
work force. The last five years has shown this Fund works.
We can double the effectiveness with ten more years. He
stated that there were three fiscal notes attached to the
bill. He also noted some documents that were included in
the members' files.
Senator Dunleavy noticed that the sunset date was June 30,
2014, and wondered if the reauthorization would be the same
date. Mr. Scott assumed that the bill would need to be
amended to include an immediate effective date.
Senator Dunleavy observed that there may be adjustments to
the actual funding, if the effective date fell on a
different fiscal year than the sunset date.
Co-Chair Meyer wondered if the funding was strictly from
the private sector. Mr. Scott responded in the affirmative.
Co-Chair Meyer asked if the bill requested an increase in
funding. Mr. Scott replied that the bill was only intended
to renew the program.
9:11:29 AM
KAREN CLEARY, PROJECT DIRECTOR, VOCATIONAL AND TECHNICAL
EDUCATION CENTER, PRINCE OF WALES, testified in support of
SB 93. She requested that the Prince of Wales Vocational
and Technical Center be added to the list of qualified
regional technical centers to receive the funding referred
to in SB 93, in the same percentage as the other regional
technical centers of 3 percent.
Co-Chair Meyer wondered what percentage of funding that the
Prince of Wales Vocational and Technical Center received.
Ms. Cleary responded that they were not currently on the
list, because it was a new center.
Senator Olson queried the population of Klawock. Ms. Cleary
replied that Klawock had 750 people, and Prince of Wales
Island had approximately 5,500 people. The technical center
served the entire island.
Senator Olson wondered if Prince of Wales Island had jet
service. Ms. Cleary responded that there was ferry service,
and small commuter aircrafts.
Senator Olson wondered if there was a dormitory to house
students for the technical center. Ms. Cleary replied that
the initial objective for the center was to offer courses
for the residents of the island. She furthered that it was
intended for the students to build a dormitory on site at a
later date.
Senator Olson queried the selection process for the
teachers. Ms. Cleary replied that there were some teachers
that were employed through the school district, and there
were also some distance learning options through the
University of Alaska (UA).
Senator Bishop wondered what kind of courses were to be
offered in the technical center. Ms. Cleary replied there
was an extensive needs assessment before the building
plans. She stated that there were courses for mining
safety; welding; health care professions; and water and
wastewater treatment certifications for municipalities. She
stressed that the technical center would be tailored
specifically to the needs of the municipalities and the
industry on Prince of Wales Island.
Senator Bishop wondered if there were industry
partnerships. Ms. Cleary replied that there were many
industry partners on the board of directors, and she
explained that they were waiting for the 501 C3
authorization from the federal government to use the Alaska
corporate tax structure to encourage industry partnerships.
Co-Chair Meyer wondered what types of mining occurred in
Prince of Wales Island. Ms. Cleary responded that there was
intent to open gold and rare earth mines. She stated that
the mines were in the permitting stages, and were already
hiring personnel.
9:16:20 AM
Senator Olson asked if the technical center was involved
with the Ketchikan Technical Institute. Ms. Cleary
responded the center was not directly involved with that
institute, because they were a self-contained college. She
furthered that there were plans to partner with the
institute in the future.
Vice-Chair Fairclough remarked that the percentages total
to 100 percent, so adding another entity to the program
would result in extracting percentages from other
organizations.
Co-Chair Kelly felt that there was a flaw in the list of
technical centers. He furthered that the list included UA
and UAS. He stated that the universities were included,
because UAS did not have programs that included some
programs that were offered on other campuses. He felt that
removing UAS from the list would not impact their funding,
because they would receive funding through the overall UA
budget.
Senator Olson stated that he remembered those political
discussions.
9:19:55 AM
KATHY LEARY, TRAINING MANAGER, ILISAGVIK COLLEGE, BARROW,
testified in support of SB 93. She requested that Ilisagvik
College be included in the list of regional training
centers to receive funding. She stated that the Ilisagvik
College offered various forms of training, including 247
classes, which served a total of 1877 students. She
stressed that the total included duplicate numbers, because
some students took more than one certification to enhance
employment capability. In addition to short-term classes,
the college offered its regular vocational and technical
education programs for heavy equipment, electrical,
plumbing, welding, commercial driver's licenses, and other
various certifications within the industry.
9:24:03 AM
Co-Chair Meyer wondered if she had a recommended percentage
Ms. Leary responded that she would like 10 percent for her
program.
Senator Olson remarked that UA did not have an operating
budget that included Ilisagvik College. He wondered how
many students were transfer students, and where from they
were transferring. Ms. Leary responded that many students
were from the North Slope villages, and much of the
training was conducted in those villages. She announced
that there were students from the Northwest Arctic region
villages. She stressed that the college tried to
consolidate the classes in order to leverage the cost of
the classes.
Senator Olson wondered if students must be native in order
to be admitted to the college. Ms. Leary replied that
admissions were open to anyone, and explained that the
college received federal funds based on a number of native
students attending the college.
Senator Olson surmised that the college was open to native
and non-native students. Ms. Leary agreed with that
summation.
Senator Bishop asked for a couple of examples of the
college's industry partnerships, and if they were in-kind
or cash partnerships. Ms. Leary responded that the college
partnered with many companies in the industry, including
Umiak and Arctic Slope Regional Corporation (ASRC) Energy
Services and contracts with producers to provide personnel.
She stated that the college provided instruction, and the
industry usually provided travel and lodging, or vice
versa.
Senator Bishop queried the college's relationship with the
North Slope Borough. Ms. Leary responded that there was
extensive work with the borough and its employees whenever
requested.
9:29:55 AM
Co-Chair Meyer queried the employment success of the
graduates of the center. Ms. Leary replied that the
students were generally successful. The students that were
in intended for the Alaska Trucking Association (ATA)
industry were granted a Commercial Driver's License (CDL),
so they had a better chance of placement.
CHARLES EDWARDSON, SOUTHERN SOUTHEAST ALASKA TECHNICAL
EDUCATION CENTER, KETCHIKAN (via teleconference), testified
in support of SB 93. He remarked that the center was fully
staffed and a strong current student base. He announced
that the center had been in operation for over two years,
and had $3.3 million state capital appropriation
investment. The center was completed in 2010 with the
construction academy trainees and apprentices. The center
had served nearly 100 Ketchikan residents annually for the
two prior years. The center was awarded a grant from the
state to administer the Ketchikan Construction Academy. The
first group of trainees from the center graduated in May
2013. The center was working collaboratively with UA in
Ketchikan and local school districts. He stated that the
center provided a continuum of services that included all
Southeast Alaska learners who chose vocational training as
a career path. The center's goal was to be included in the
bill's funding at 3 percent. He stated that the inclusion
would allow the center to spread the programs to the entire
community. He announced that there would be a dormitory
complete in April 2014, and was funded by a $2.2 million
grant from the state through the capital budget. He
stressed that the center worked with the industry. The
industry had expressed challenges with recruiting and
retaining residents because of workforce behaviors. He
stated that the center's dormitory would have a fully
staffed social services department that would address
workforce behaviors.
9:38:30 AM
Senator Olson asked if Mr. Edwardson would be in favor of
including his center in the TVEP program, and wondered how
that would be balanced with the private sector funding. Mr.
Edwardson replied that the governor had a bill that would
allow private industry to invest directly into vocational
training centers for direct services. He stressed that the
center currently had a federal funding stream that allowed
the center to leverage with state funds. He felt that
reallocating the funding formula was a delicate issue, but
the history of the bill reflected expansion. He remarked
that the unemployment tax increase was a direct result of
vocational training.
9:42:31 AM
FRED VILLA, UNIVERSITY OF ALASKA, FAIRBANKS (via
teleconference), explained that that the University of
Alaska Technical Education program provided grants for high
demand career and technical education for industry specific
on-the-job and classroom training. The TVEP funds were
managed as a single allocation to initiate or enhance high
priority workforce development programs. The funding must
meet the following criteria within UA's allocations: 1)
high demand or regional workforce needs; 2) increased
access and flexibility of training delivery; 3) improved
persistence of educational progress associated with
workforce development; and 4) formal collaboration across
the university system by expanding partnerships. The three
priority areas that UA specifically provided through
educational pathways which included dual credit; technical
preparation for students transitioning from high school,
military, or other walks of life; economic development; and
addressed the high demand jobs identified by the Alaska
Workforce Development Board as state priority industries.
The funding distribution was such that any application
within the university and university partnerships must meet
the criteria vetted through the university campus; ranked
and tiered; and then presented to a committee that
discusses, negotiates, and evaluates the program to
determine the state, university, and regional priorities.
Those recommendations were presented to the president, who
then authorizes the allocations.
Co-Chair Meyer referred to a question from Co-Chair Kelly,
and felt that the 5 percent allocation for UAS was properly
addressed.
Co-Chair Meyer CLOSED public testimony.
9:52:11 AM
GREY MITCHELL, ASSISTANT COMMISSIONER, DEPARTMENT OF LABOR
AND WORKFORCE DEVELOPMENT, introduced himself.
WANETTA AYERS, DIRECTOR, DIVISION OF BUSINESS PARTNERSHIPS,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, introduced
herself.
Mr. Mitchell announced that the Department of Labor (DLWD)
supported the reauthorization of TVEP. He remarked that
DLWD did not want to participate in the discussion
regarding who should share in the fund. He stressed that
DLWD would like to see some elements in the governor's
proposed legislation that included articulation agreements
for dual credits and reporting accountability requirements
for TVEP recipients.
Co-Chair Meyer noted that there were many new groups that
asked to be a part of TVEP, and queried DLWD's viewpoint on
those additional groups. Mr. Mitchell responded that DLWD
did not have a position with respect to those parties'
request. He stressed that DLWD was in a precarious
position, because AVTEC, which is part of DLWD, is a TVEP
recipient. He remarked that DLWD was careful to distance
itself from the discussion, because of the possible
conflict of interest.
Vice-Chair Fairclough looked at the fiscal note and
remarked that flat funding was anticipated. She wondered if
DLWD had anticipated additional revenues from the
unemployment tax. Mr. Mitchell replied that the fiscal note
assumed no changes in the unemployment contributions. He
furthered that it was difficult to calculate exact
unemployment contributions, so rather than determine an
inaccurate calculation, the fiscal note assumed no changes
from the FY 14 level.
Vice-Chair Fairclough requested that DLWD provide more
accurate proposed numbers. She felt that the increase in
wage and income should be reflected in the fiscal note. Mr.
Mitchell replied that DLWD was currently composing a chart
that would display accurate numbers.
9:58:12 AM
Senator Bishop agreed with Vice-Chair Fairclough, and
wondered if there could be an analysis of projected job
growth for Southeast and the North Slope.
Co-Chair Meyer wondered if the training areas were
adequately covered across the private and public training
centers. Mr. Mitchell responded that DLWD had an inventory
of the training providers in the state. He stressed that
training was critical to a strong workforce in Alaska.
Ms. Ayers announced that the issue of training
infrastructure in new places was the reason for the
increase in requests for funding. She stated that part of
the oversight was to advise the governor and legislature.
Co-Chair Meyer desired to see the report. He wanted to be
sure that the state was getting value from the technical
education training centers.
Senator Hoffman noted that the total training participants
had been identified, and saw that those participants were
employed in Alaska just one year after training. He
wondered if the additional reporting requirements
specifically for TVEP, and asked if the requirements
included better information to evaluate the existing
programs that were receiving funds. Mr. Mitchell replied
that there would be a report for the dual-credit
arrangements that the training providers would have. He
stressed that high school students should have the
opportunity to participate in the vocational training
programs to earn college or high school credit. He remarked
that, in Alaska, four out of five jobs do not require a
college degree.
10:04:32 AM
Senator Olson inquired the administration's position on
changing the rate. He remarked that the rate was
reauthorized to curb some of the former unemployment rates.
Mr. Mitchell replied that the administration wanted to
maintain the rate as it was currently producing information
to show what the impact would be.
Senator Olson understood that the program had been fully
funded, but then was suspended because of the current
unemployment rate. Mr. Mitchell responded that Senator
Olson may be referring to the reduction in the unemployment
insurance tax that occurred during the previous legislative
session. He agreed that the Unemployment Insurance Trust
Fund was healthy, and stated that the formulas from the
previous legislative session allowed for some refunds to
employers.
Senator Bishop stated that the refunds were issued to
employers and employees.
Senator Olson announced that TVEP was a successful program.
He felt their success should be rewarded with more success.
SB 93 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 71
"An Act relating to the filing date for the final
quarterly payment of, and to the assessment of
penalties under, the fishery resource landing tax."
10:10:17 AM
Vice-Chair Fairclough MOVED to ADOPT the proposed committee
substitute for CS SB 71 (FIN), Work Draft 28-LS0594\N
(Bullard, 2/7/14). There being NO OBJECTION, it was so
ordered.
SENATOR PETER MICCICHE, explained that SB 71 was introduced
to repair glitches in the landing resource tax statutes and
regulations that were requiring the payment of unfair
penalties and interest by commercial fishermen. Section on
aligned the date that the resource landing tax was due with
the date that the statewide average fish price report was
released. Currently the tax was due before April 1,
however, the statewide average fish price report, which was
calculated by the Department of Fish and Game (DFG) was not
always released by that time. While the Department of
Revenue (DOR) can grant an automatic extension to file the
landing tax return if the report was not released at least
30 days prior to the due date, this did not extend the time
for payment of the tax so penalties and interest could
occur. Section 2 of the legislation still maintained that
one must pay at least 100 percent of the previous year's
tax liability or at least 90 percent of the estimated
amount owed but took out the requirement for equal payments
each quarter and lets commercial fishermen pay tax based on
the earning s for the quarter. Depending on the fishery,
the current statute required payment of 50 percent of the
landing taxes before they had even left the dock to go
fishing.
10:15:25 AM
Co-Chair Meyer looked at Section 3, and noted the three
different methods of making tax payment. He asked for
further explanation of that section. Senator Micciche
deferred to Mr. Cottongim.
TIM COTTONGIM, REVENUE AND AUDIT SUPERVISOR, DEPARTMENT OF
REVENUE, stated that the calculation in sub-Section 3
required the processor to determine the amount of activity
for each quarter. In calculating the tax, they would
determine the amount of pounds landed in each quarter. They
would then take the number pounds landed for the
unprocessed resource; identify the last posted DOR
statewide average price list; calculated the value for the
resource using the prices for each of the species that they
landed; and take that value and multiply it by the 3
percent tax rate, taking 90 percent of that result which
would be their installment.
Vice-Chair Fairclough looked at Section 3, line 20. She
noted that if a tax payer had to choose a method each year,
the tax payer may get caught by not choosing. She asked if
there had been a conversation regarding the same form of
the tax method from a previous year moving forward, versus
the annual paperwork requirement to inform the department
of one's actions. Mr. Cottongim responded that the option
to notify the department by March 31 each year was only
necessary if the applicant chose the last E-3 option. He
remarked that DOR was always looking to see if they had
fulfilled the two requirements through safe harbors. The
third option would be particularly challenging for the
taxpayer, so it was thought that the paperwork could give
the tax payer an opportunity to be better prepared and know
that they would be required to make those calculations. It
also allowed for DOR to prepare, because DOR needed to
verify that the calculations were correct.
Vice-Chair Fairclough stated that she would have a
discussion with the sponsor off the record.
Senator Micciche announced that fisheries were constantly
changing, and remarked that many of them fished in
different quarters throughout the year or participate in
different fisheries across the state.
Vice-Chair Fairclough wondered if there was any consistency
in removing that particular paperwork requirement. Senator
Micciche replied that there could be some work saved, but
stressed that the fishery would be in communication with
DOR regardless of the paperwork requirement.
10:20:37 AM
KATHY HANSEN, EXECUTIVE DIRECTOR, SOUTHEAST ALASKA
FISHERMANS ALLIANCE, testified that the bill would affect
some of the members of the Southeast Alaska Fisherman's
Alliance. She felt that the legislation was a simple fix
that aligned the reporting date and the actual payment of
the taxes so that the tax payer did not automatically pay
interest and penalties every year. She felt that the glitch
was developed over time, and spoke in support of the
legislation. She noted the E-3 requirement regarding the
four installments calculated quarterly, and announced that
many of the fishermen preferred that method, because they
were paying on what they had actually earned in that
quarter. She stated that the fisheries that were required
to pay a fishery landing tax would be allowed an option to
pay in accordance with what they were actually catching.
Co-Chair Meyer CLOSED public testimony.
10:23:47 AM
Co-Chair Meyer looked at the zero and indeterminate fiscal
notes. He noted that there would be some revenue in the
form of late payments, and remarked that there was total
revenue of $17,954 for FY 13 and $9,000 for FY 12. He asked
why there was an almost doubling in revenue in just one
year. Senator Micciche responded that the beta for
fisheries can change dramatically from year to year. He
stressed that individuals and fisheries should be charged
late fees that have control over timing and filing. He
stressed that the vast majority of the current fees were
because of conditions that could not be controlled by the
fisheries.
Co-Chair Meyer wondered to whom the bill directly applied.
Senator Micciche replied that the legislation applied to
fishermen and processors that were responsible for paying a
landing tax in Alaska.
Senator Olson looked at Section 3, line 14, regarding the
installments that were outlined. He wondered if Senator
Micciche agreed that the fishermen supported that
installment plan. Senator Micciche replied that he believed
that the fishermen supported the installment plan, because
of the flexibility. He stressed that it was most important
for fisheries and processors to pay their landing taxes.
Senator Bishop felt that the bill would have a positive
effect on some smaller processors with a smaller cash flow.
Co-Chair Meyer wondered when there would be a true-up. If
the 90 percent were paid, but the estimate needed to match
up with the actual revenue at a certain point. Mr.
Cottongim replied that the true-up would occur at the end
of the year, when the fishery or processor files their tax
return.
Vice-Chair Fairclough MOVED to ADOPT Amendment 1 (copy on
file):
Section 3, letter (e), number (1):
after "preceding" insert the word "or"
There being NO OBJECTION, it was so ordered.
Vice-Chair Fairclough MOVED to REPORT CS SB 71(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
CS SB 71(FIN) was REPORTED out of committee with a "do
pass" recommendation and with new zero fiscal note from the
Department of Commerce, Community, and Economic
Development; and a new indeterminate fiscal note from the
Department of Revenue.
10:29:21 AM
AT EASE
10:30:21 AM
RECONVENED
CS FOR HOUSE BILL NO. 193(FIN)
"An Act relating to the joint administration of
tobacco taxes by the state and a municipality."
10:31:15 AM
DIRK CRAFT, STAFF, REPRESENTATIVE LANCE PRUITT, introduced
SB 193. He stated that Passage of CS HB 193 seeks to
promote greater cooperation and reciprocal information
sharing between State and local jurisdictions in Alaska
resulting in more efficient and effective oversight,
enforcement and collection of commonly assessed, legally
due taxes (e.g., tobacco tax and rental vehicle tax).
The result of information sharing between State and local
jurisdictions is that tax evasion by businesses and
individuals will be less likely to occur, thereby promoting
a more competitive business environment for Alaskan
businesses and decreasing tax subsidization caused by
willful tax evaders who otherwise shift the tax burden to
law abiding citizens. Such joint information sharing
between state and local government is a commonly authorized
practice in many other state statutes. The proposed change
to state statutes is comprised of two sections. The first
section amends existing language to add political
subdivisions of the State to the list of entities with
which the State can share information. Implementation is
expected to be cost neutral and should produce additional
revenue through shared results of discovery efforts and
audits. The second section of the CS HB 193 authorizes the
State of Alaska Department of Revenue (Department) to enter
into an agreement such as a Memorandum of Understanding
(MOU) with a municipality, authorizing the Department to
act as central administrator of any potential joint tobacco
tax stamp program which meets their economy of scale
criteria. The purpose of section two of the bill is to
promote efficiency with respect to any potential joint
tobacco stamp program, and to minimize impact on private
sector stamp purchasers. Program administration by the
Department would include central issuance of joint tobacco
stamps as well collection of associated tobacco stamp
revenues on behalf of a municipality. The cost causer -
cost payer principle would be in effect, such that a
participating municipality would be responsible for
reimbursing the Department for direct, incremental cost
increases resulting from a joint tobacco tax program. A
number of jurisdictions, particularly in more largely
populated city areas around the country, have multi-
jurisdictional tobacco stamps in use based on economies of
scale.
Vice-Chair Fairclough wondered why the state was incurring
an additional cost on behalf of municipalities. Mr. Craft
stated that the Department of Revenue (DOR) might be better
suited to answer the question.
Senator Olson inquired what the vendors thought of the
bill. Mr. Craft replied that he understood that there was
no opposition from the vendors.
10:35:00 AM
DANIEL MOORE, TREASURER, MUNICIPALITY OF ANCHORAGE,
ANCHORAGE (via teleconference), spoke in support the
legislation. He stated the bill served two purposes. It was
an information sharing bill as well as. It made sense for
the state to administer the program on behalf of the
municipalities. He expressed that there had been concern
that had been voiced by lobbyists regarding the information
sharing portion of the bill; however, language had been
developed that had led to a consensus between all parties
and he hoped that the committee would consider adopting it.
He referenced a letter of support from the Municipality of
Anchorage (copy on file):
The Municipality strongly supports passage of HB 193
which benefits municipalities in Alaska by promoting
greater cooperation and reciprocal information sharing
between State and local jurisdictions concerning
administration and enforcement of commonly assessed,
legally due taxes. The primary concept behind this
legislation is consistent with joint information
sharing practices cited in many other state statutes.
HB 193, if passed, will result in more efficient and
effective oversight, enforcement and collection of
taxes assessed by both the State of Alaska and
municipalities (i.e., enforcement of tobacco tax and
rental vehicle tax). Overall revenue realization by
the State and municipalities is likely to be
strengthened through shared results of discovery
actions and audits. and more coordinated
administration and enforcement of these commonly
assessed taxes will serve to notably reduce tax
evasion, thereby: (1) promoting a more competitive
business environment for Alaskan businesses; and (2)
decreasing the tax subsidization caused by willful tax
evaders who otherwise shift tax burden to law abiding
citizens.
In summary HB 193 is sound legislation that encourages
greater intergovernmental efficiency and effectiveness
in fulfilling tax collections mandated by law at both
the State and local level. This bill levels the
playing field for law abiding businesses and citizens
by helping to reduce the number of willful tax evaders
not paying their fair share of legally due taxes.
10:40:45 AM
Vice-Chair Fairclough looked at the fiscal note, and
wondered if the Municipality of Anchorage was prepared to
take on the additional cost. Mr. Moore replied that he
provided previous testimony that state that Anchorage would
evaluate the cost of the program at the time it was ready
to pursue a local stamp option. He remarked that there were
other considerations such as inflation proofing that were
already built into its tobacco tax. He felt that there
would need to be an analysis in order for Anchorage to sign
on to covering the additional cost. He furthered that if
multiple jurisdictions participated in local stamp
programs, it would make it more affordable and cost-
beneficial for Anchorage.
Co-Chair Meyer CLOSED public testimony
Vice-Chair Fairclough wondered if the fiscal note should be
amended to show a change of revenue on the positive of
$136,700, which would require the department to wait to set
up the person until the revenue was received by the
requestor.
JOHANNA BALES, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE (via teleconference), responded that Vice-Chair
Fairclough had a fair assessment of the fiscal note. She
furthered that she was directed to estimate the cost if
municipalities wanted to enter into a memorandum of
agreement with the state to administer a tax stamp on their
behalf. Instead of showing the tax stamp as revenue, it
would be shown as a designated general fund that would be
reimbursed from the municipalities.
Senator Olson queried the frequency of flexibility
recommendations at the cost detriment to the state. Ms.
Bales replied that there were not many programs that worked
directly with the government.
Senator Olson wondered how often investigations occurred
with large sums of money at stake. Ms. Bales responded that
most investigations did not deal with millions of dollars,
but shared that there were some vehicle rental cases that
were in the hundreds of thousands of dollars range.
Vice-Chair Fairclough shared that the Division of Motor
Vehicles (DMV) had taxation, and wondered if there may be
dual taxation. She asked Ms. Bales to be prepared for that
type of discussion at a later meeting.
CS HB 193(FIN) was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:48:47 AM
The meeting was adjourned at 10:48 a.m.