Legislature(2017 - 2018)SENATE FINANCE 532
02/20/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB8 | |
| SB154 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 8 | TELECONFERENCED | |
| + | SB 154 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 20, 2018
9:04 a.m.
9:04:15 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Doug Letch, Staff, Senator Gary Stevens; Laurie Wolf,
President, Foraker Group; Sara Race, Director, Permanent
Fund Dividend Division, Department of Revenue; Senator
David Wilson, Sponsor; Gary Zepp, Staff, Senator David
Wilson; Sara Race, Director, Permanent Fund Dividend
Division, Department of Revenue.
PRESENT VIA TELECONFERENCE
Mary Bishop, Self, Fairbanks; Angela Cox, Vice President of
External Affairs, Rasmussen Foundation, Anchorage; Laurie
Wolf, President, Foraker Group, Anchorage; Randy Griffin,
Self, Fairbanks; William Harrington, Self, Spenard; Glenn
Gustafson, Assistant Attorney General, Anchorage.
SUMMARY
SB 8 PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS
SB 8 was HEARD and HELD in committee for further
consideration.
SB 154 PFD CONTRIBUTIONS TO GENERAL FUND
SB 154 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 8
"An Act allowing federally recognized tribal
governments to receive contributions from permanent
fund dividends."
9:04:58 AM
SENATOR STEVENS, SPONSOR, spoke to SB 8. He relayed that
the bill was "remarkably simple." He reported that the bill
allowed federally recognized tribal governments to receive
contributions from the Permanent Fund Dividends (PFD)
through the popular Pick.Click.Give. program.
DOUG LETCH, STAFF, SENATOR GARY STEVENS, addressed the
bill. He related that the bill granted native non-profit
organizations the opportunity to participate in the
Pick.Click.Give. program. Currently, the program was
reserved for 501(c)(3) non-profit organizations. Tribal
governments were tax exempt organizations but were not
designated as 501(c)(3). He elaborated that SB 8 required
the Department of Revenue (DOR) to allow federally
recognized tribal governments to appear on the
Pick.Click.Give. eligible recipients list. Subsequently,
the tribal entities would be subject to the same
regulations and $250 fees currently applied to the
program's participants. The idea was derived from native
organizations in Kodiak. He noted letters of support in the
members bill packet. The sponsor had not encountered any
opposition to the bill. He reminded the committee that
Since 2009, Pick.Click.Give. offered Alaskans an easier way
to help hundreds of nonprofits fulfill their missions
through direct contributions from their PFDs. The result
was millions of dollars donated to eligible organizations
over the years. The addition of federally recognized tribal
governments to the list of Pick.Click.Give. recipients
extended the program's reach, while opening another avenue
of fundraising for these important organizations.
9:07:25 AM
Co-Chair MacKinnon requested that Mr. Letch proved a
sectional analysis.
Mr. Letch addressed the Sectional Analysis:
Section I. Adds federally recognized tribal
governments to AS 43.23.062(a), allowing federally
recognized tribal governments to receive contributions
from permanent fund dividends.
Section 2. Amends AS 43.23.062(b), requiring the
department to place federally recognized tribal
governments on the contribution list.
Section 3. Amends AS 43.23.062(c) to state that the
department may not add a federally recognized tribal
government to the contribution list unless the purpose
of the federally recognized tribal government meets
one of the purposes listed.
Section 4. Amends AS 43.23.062(d) to exempt federally
recognized tribal governments from various
requirements that other educational and charitable
organizations must meet under the section.
Section 5. Adds federally recognized tribal
governments to AS 43.23.062(t), which requires an
application fee to be placed on the permanent fund
dividend contribution list.
Section 6. Adds federally recognized tribal
governments to AS 43.23.062(m), which allows the
department to withhold a coordination tee from each
entity that receives contributions from permanent
fund dividends.
Section 7. Adds new subsection (o) to AS 43.23.062
stating that a person who claims a dividend on behalf
of an unemancipated minor under AS 43.23.00S(c) when
the minor is the subject of an adoption or
guardianship proceeding pending in a tribal court may
not elect to contribute from the minor's dividend to a
federally recognized tribal government under (a) of
this section.
9:09:35 AM
Co-Chair MacKinnon OPENED public testimony.
LAURIE WOLF, PRESIDENT, FORAKER GROUP, testified in support
of the bill. She articulated that the Foraker Group was a
statewide nonprofit organization with the purpose to
strengthening nonprofits including tribal governments
across the state. The group worked with thousands of
nonprofits statewide, which included small remote rural
communities. The group provided education, facilitation,
and planning services. She emphasized that the group was
non-partisan. She had been involved in the Pick.Click.Give
program since its inception. The program was implemented by
the Foraker Group, Rasmussen Foundation, United Way of
Anchorage, and DOR. Currently the program was run by the
Alaska Community Foundation. The unique program had three
goals; to grow the number of donors, to increase the amount
of donations to nonprofits, and to raise awareness of the
power of individual philanthropy.
9:13:01 AM
Ms. Wolf continued her testimony. She reported that the
"implementation partners" of the program had wanted to
include tribal entities lacking 501(c)(3) status as
eligible participants. She understood the impetus of the
legislation was to assist tribes provide services for youth
development, workforce development, arts and culture, and
services for the elderly and low income individuals. She
emphasized that the group was not opposed to clarifying the
statutes to allow the participation of tribal governments
in the program.
Senator von Imhof asked about the difference between a
501(c)(3) nonprofit, which was not politically active;
versus the 501(c)(4), that had the liberty to engage in
political action. She asked about the designated
differences and what the status of tribal organizations
were. Ms. Wolf qualified that she was not an attorney and
could not provide a precise definition of the terms. She
acknowledged that Alaskan tribes were independent
governments, and many had filed for 501(c)(3) status and
some carried 501(c)(4) status. She indicated that the
tribal organization was required to meet the criteria
established by the program for 501(c)(3) organizations to
provide human resource and service needs across the state
to qualify. Regardless of their tax status the program's
criteria must be met to qualify for Pick.Click.Give. under
the bill. Senator von Imhof understood that the tribal
organization was required to meet the fundamental criteria
of a 501(c)(3) to qualify under the bill. She relayed that
currently one could access the annual financial income for
any 501(c)(3) nonprofit with the Form 990. She asked
whether the same ability would exist with the non-501(c)(3)
tribal governments that qualified for Pick.Click.Give under
the bill to determine if they were good stewards of the
money. Ms. Wolf was uncertain of the answer. She did not
know what the filing requirements were for tribal
governments. She offered to provide the information later.
Co-Chair MacKinnon asked for the information to be
delivered to her office for committee distribution.
9:17:35 AM
MARY BISHOP, SELF, FAIRBANKS (via teleconference), spoke in
opposition to the bill. She stated that while tribes were
endeavoring to carry out worthwhile programs for their
members, tribal governments had immunity from lawsuits for
activities like misuse of funds, unless a waiver of
sovereign immunity was signed. She mentioned a lawsuit
between two tribes in Southeast Alaska. She believed the
issue was problematic in relation to the bill. She
purported that tribes in the Lower 48 were often
politically active, and she saw no reason why tribal
governments in Alaska would not act similarly. She thought
the funds could be used for political purposes. She
encouraged the sponsor to amend the legislation to avoid
the stated issues.
9:19:45 AM
Co-Chair MacKinnon CLOSED public testimony.
Co-Chair MacKinnon asked if there was a reason that the
bill was not limited to federally recognized tribes in
Alaska rather than all federally recognized tribes. Senator
Stevens answered in the negative. He furthered that the
purpose of the bill was specifically for Alaskan tribes. He
reminded the committee that the donated funds in question
were from individuals that received PFDs who could choose
how to distribute the funds however they desired.
Co-Chair MacKinnon did not see the distinction in the bill
and worried that lower 48 tribes could apply for the
program. Senator Stevens stated that he had no objection to
limiting the bill to Alaskan tribal governments only.
Senator Olsen voiced his support of the bill.
9:21:46 AM
Vice-Chair Bishop addressed the fiscal impact note, FN1
(REV), from DOR, allocated to the Permanent Fund Dividend
Division which was in the amount of $9,000 in FY 19. He
read from page 2 of the analysis:
Additional programming will be required on the PFD
application as well as the participation application
as tribal governments do not have the same
requirements as the other participants, nor are there
search options that fit their criteria. As fees are
collected, continued administrative costs will be
covered. However, since AS 43.23.062(e) states that
"the department may not use money from the dividend
fund for administrative costs incurred in implementing
this section, even if it has been appropriated for
costs of administering the dividend program" a onetime
amount of $9,000 will be necessary. This is an
estimate of 75 hours of programming at a rate of $120
per hour.
Senator von Imhof believed that non-profits that received
funds from Pick.Click.Give pay a 7 percent annual
administrative fee. She asked whether she was correct.
SARA RACE, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, answered in the affirmative. She
informed committee members that participants in the program
pay an initial $250 application fee and subsequently, 7
percent annually was withheld from contributions for
administering the program. She asked if it would make sense
to extend the annual fee to any native entities that enter
the program via the bill. Ms. Race believed that the bill
contained a provision to collect the 7 percent assessment.
Senator von Imhof asked if the one-time fee was also
included in the bill. Ms. Race stated that the $250
application fee was included in the legislation.
Co-Chair MacKinnon appreciated the clarity.
9:25:03 AM
Co-Chair MacKinnon asked whether Ms. Race wanted to provide
comments on the bill. She referenced testimony that
suggested tribes should currently qualify, and the bill was
a clarification rather than a new provision. She also noted
the testimony about tribal sovereignty and the potential
difficulty in tracking how funds were spent. Ms. Race
understood that not all tribal governments had 501(c)(3)
status. She clarified that the tribal organizations were
subject to the same fees and requirements under the bill.
Therefore, from the administrative and agency standpoint
the tribal organizations would be like the other
organizations the program currently worked with. Co-Chair
MacKinnon asked if the bill should require that tribal
organizations gain 501(c)(3) status in order to
participate in the program. Ms. Race felt that she should
not speak to the question.
Senator Micciche inquired why Co-Chair MacKinnon was asking
the question. He favored the ability to check the financial
records of the tribal participants. Co-Chair MacKinnon
stated she was referencing the two previous speakers, one
of which had suggested that the bill address the legal
immunity issue. She referred to Senator von Imhof's
comments about the Form 990 disclosure that
501(c)(3)nonprofits were subject to. She commented that she
had asked the question to determine whether the state had
legal recourse if the contributions were misused. Senator
Micciche requested information regarding how many tribal
organizations that could potentially participate in the
program were 501(c)(3)nonprofits and how many were not.
Co-Chair MacKinnon asked the sponsor to find the answer.
9:28:38 AM
Senator von Imhof stated that the Pick.Click.Give program
was the "brain child of the Rasmussen Foundation," of which
she was a member. She emphasized that the original intent
of the program was to provide money to nonprofit
organizations designated by its 501(c)(3) status.
Co-Chair MacKinnon asked whether the administration had a
position on the bill and whether participation should
extend to all federal tribes or exclusively Alaskan tribes.
Ms. Race answered that the agency was neutral on the bill
but believed the tribes should be Alaskan.
Co-Chair MacKinnon stated that amendments to the bill were
due to her office by the following Thursday at 5:00 p.m.
SB 8 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 154
"An Act relating to contributions from permanent fund
dividends to the general fund."
9:30:10 AM
SENATOR DAVID WILSON, SPONSOR, discussed the bill. He
voiced that if enacted, Senate Bill 154 would allow
Alaskans applying for a Permanent Fund Dividend (PFD) to
donate all or a portion of their PFD directly to the
state's General Fund (GF). He related that he had heard
from many Alaskans who said they would not mind giving
"their fair share" to the State of Alaska. This bill would
create a process where Alaskans could donate their PFDs to
the State General Fund using the Click.Pick.Give program.
He indicated that the donations would be tax exempt and
exempt from the annual fee and the 7 percent administrative
fee. He furthered that a provision in the bill allowed for
children in state custody to hold the donations in a trust
until the child turns 18 years of age.
GARY ZEPP, STAFF, SENATOR DAVID WILSON, discussed the
Sectional Analysis for the bill:
Section 1: Amends AS 43.23.62(a) by adding "to the
general fund" and "the general fund" to allow a
contribution from the electronic Alaska permanent fund
dividend to the state general fund.
Section 2: Amends AS 43.23.062(b) to add "the general
fund" to the list of organizations, community
foundations, or charitable organizations eligible to
be added to the contributions list.
Section 3: Amends AS 43.23.062(m) by adding "general
fund or to the" to the list of organizations that do
not have a coordination fee withheld.
Mr. Zepp noted that the DOR fiscal note covered all the
cost associated with the bill, which was why the donations
were exempted from fees.
9:34:59 AM
Co-Chair MacKinnon OPENED public testimony.
ANGELA COX, VICE PRESIDENT OF EXTERNAL AFFAIRS, RASMUSSEN
FOUNDATION, ANCHORAGE (via teleconference), testified in
opposition to the bill. She explained that the foundation
spearheaded and funded the implementation of the
Click.Pick.Give program in 2007 in support of the state's
nonprofit sector. The program had raised $20 million since
its exemption. The foundation felt that the bill was not
aligned with the "intent of the true spirit" of the
program. She stressed that the program was never intended
to fund state government. She believed the contributions
should be subject to the administrative and application
fees if the bill was enacted.
Co-Chair Hoffman asked if Ms. Cox's position represented a
formal action from the board. Ms. Cox replied that no
formal action was taken but the members "weighed in" on the
matter.
9:37:51 AM
LAURIE WOLF, PRESIDENT, FORAKER GROUP, ANCHORAGE (via
teleconference), testified in opposition to the bill. She
conveyed that the group was grateful over the success of
the program and the charitable spirit of Alaskans. She
noted the group supported efforts to enhance the program to
better serve nonprofits in pursuit of their mission. The
group was concerned that the bill was inconsistent with the
original intent of the PFD charitable contributions program
and she pointed to the eligibility criteria. The state's GF
was not a charitable purpose. She believed the
contributions should be subject to the administrative fee
if the bill was enacted. The fee exemption would
unfavorably add to the burden of the charitable
organizations who participated in the program and was a
matter of fairness. She maintained that the bill posed a
clear policy call to the legislature whether the program
should remain true to its original intent. She offered to
read the eligibility criteria of the program.
9:41:54 AM
RANDY GRIFFIN, SELF, FAIRBANKS (via teleconference),
testified in support of the legislation. He stated that he
had given his dividend to the state for the last three
years. He believed that there was a variety of ways to
administer the program. He indicated that he had endorsed
the PFD check and mailed it to DOR with a list of things he
wanted done and requested a receipt. He encouraged people
to donate to the state.
9:43:15 AM
WILLIAM HARRINGTON, SELF, SPENARD (via teleconference),
spoke in support of the bill. He reported that he had heard
many people endorse taxation and wanted to contribute to
government but doubted that many people ever had. He
characterized the 7 percent administrative fee as "greedy"
and "disgusting."
9:44:43 AM
Co-Chair MacKinnon CLOSED public testimony.
Senator von Imhof wondered whether federal taxes would be
assessed on the PFD amount if it was donated to the GF.
SARA RACE, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, stated that she was not a tax expert
but surmised that the PFD amount would be taxed as income
at the federal level. However, if donated the contribution
could be an itemized deduction. Senator von Imhof suggested
that it depended on an individual's tax status whether it
was a tax deduction. Ms. Race believed that the statement
was correct.
Co-Chair MacKinnon thought that Ms. Race had communicated
that the PFD was considered as income for federal taxes but
could be a deduction if applicable to the individual.
GLENN GUSTAFSON, ASSISTANT ATTORNEY GENERAL, ANCHORAGE (via
teleconference), answered in the affirmative and confirmed
the statement. He referenced the testifier from Fairbanks,
who had to declare the PFD as income but take a deduction
as a charitable contribution.
9:48:44 AM
Senator Micciche thought that if a person gave the entire
dividend through the program, a person would have a greater
deduction than if the check was sent and subsequently
contributed to the state. Mr. Gustafson confused Senator
Micciche's question with a deduction regarding the 7
percent administrative fee and how it impacted an
individual's deduction. He concluded that there would be no
net effect of contributing the PFD and additional taxes
were not owed.
Co-Chair MacKinnon asked if Mr. Gustafson was a tax
attorney. Mr. Gustafson specified that he was an
accountant, and not a tax attorney. Co-Chair MacKinnon
thought it was important to ensure the information was
accurate on the public's behalf.
Senator Micciche clarified that if an individual denied the
check as a contribution back to GF, then there was no
income to report. He added that charitable contributions
were worth a proportion of the contribution as a deduction.
Co-Chair MacKinnon stated that currently, there was a
process at the PFD Division by which residents could
withdraw the application, so a check was not received. She
noted that the way Mr. Griffin contributed was complex and
noted the tax effect would impact individuals in different
ways. She informed the committee that everyone else's
dividend would proportionately increase by the total amount
of everyone who chose to withdraw their application and
forego a dividend. She noted that approximately 700,000
Alaskans applied for a dividend out of a population
735,000. She asked Ms. Race whether she was correct.
9:53:03 AM
Ms. Race answered in the affirmative. She commented that
once the dividend was paid out, it became taxable income.
Co-Chair MacKinnon asked whether the PFD was reported as
income on the form 1099 from the state. Ms. Race answered
in the affirmative. She assumed that the testifier from
Fairbanks received a 1099 and wanted a receipt for tax
reporting.
Senator von Imhof wondered what "accounting mechanism was
triggered for the filer" by applying for the PFD and then
checking the box to donate it to the GF. Ms. Race
reiterated that in the scenario provided an individual that
applied for the PFD would still receive a 1099. The 1099
would include a breakdown of distribution, which would
include the donation to the GF. She added that an
individual applicant could be subject to other
garnishments, which would be paid before the donation to
the state.
9:55:24 AM
Co-Chair Hoffman thought that the problem with not applying
for the dividend did not benefit the state, but rather
benefitted the other recipients since it did not go back to
the GF, but rather made each dividend larger.
Senator Micciche thought it would be beneficial for
individuals to be able to donate a dividend to the state
without having a tax liability. He communicated that he was
a donor to the Pick.Click.Give, and a board member to a
"couple" of nonprofits that benefit from the program. He
thought it appeared that there were concerns about
competition regarding the bills proposed use of the
program. He understood the concern among the Rasmussen
Foundation and Foraker Group. He believed that the program
was a good mechanism to employ for ideas like the one in SB
154. He hoped the committee and organizations could find a
way for the appropriate use of the program without
complicating the "good ideas" presented during the meeting.
Senator Olson thought his constituents would find it
peculiar that an individual would apply for a dividend and
then surrender it to the state. He asked how many
individuals had done so. Ms. Race relayed that only a
handful of individuals had contacted the division. She
indicated that when the request was made a staff member
provided instructions that the person must endorse the
check and send it to DOR with a directive to deposit it to
the GF.
9:58:54 AM
Co-Chair MacKinnon directed attention to the DOR fiscal
note, FN2 (REV).
Ms. Race addressed the fiscal impact note. She indicated
that the bill was associated with costs in FY 19 and in
ensuing years. She read from the analysis on page 2:
Currently, funds collected through the coordination
fee and the application fee are used for
administrative costs. AS 43.23.062(e) states that "the
department may not use money from the dividend fund
for administrative costs incurred in implementing this
section, even if it has been appropriated for costs of
administering the dividend program." For that reason,
financial costs will be associated with this bill
because no fees will be collected to cover the
administrative costs.
Ms. Race stated that because all other organizations were
philanthropic, and the proposed state program was not, the
department would administer the program instead of the
Alaska Community Foundation. The cost was for programming
time, application processing, financial reporting, and
general administration of the program.
Senator Micciche asked if Ms. Race had an opinion on the
matter. He thought that it would be beneficial to employ
the same 7 percent administrative fee versus a fiscal note.
Ms. Race replied that a 7 percent coordination fee would be
one way to reduce ongoing costs for the bill.
10:01:36 AM
Senator Wilson thought many people had different opinions
as to what government was. He listed the many government
services the state provided. He envisioned the program to
work similarly to the Pick.Click.Give program with a one
click option to contribute to the state.
SB 154 was HEARD and HELD in committee for further
consideration.
Co-Chair MacKinnon asked for amendments to be turned in to
her office by 5:00 p.m. on the following Thursday. She
stated that her office would work with the department to
modify the fiscal note.
ADJOURNMENT
10:04:18 AM
The meeting was adjourned at 10:04 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 8 Sectional Analysis.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 8 Summary of Changes.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 8 Sponsor Statement.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 8 support letters.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |
| SB 154 pick click give flow chart.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 154 Pick Click Give Program overview.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 154 Sectional Analysis, ver D.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 154 Sponsor Statement.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 154 |
| SB 8 - Opposition Bishop.pdf |
SFIN 2/20/2018 9:00:00 AM |
SB 8 |