04/03/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB252 | |
| HB301 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 252 | TELECONFERENCED | |
| + | HB 301 | TELECONFERENCED | |
| += | SB 128 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 3, 2012
1:32 p.m.
MEMBERS PRESENT
Senator Joe Paskvan, Vice Chair
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
Senator Dennis Egan, Chair
Senator Linda Menard
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 252(FIN)
"An Act exempting certain small businesses from the corporate
income tax; and providing for an effective date."
- HEARD & HELD
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 301(FIN)
"An Act relating to enforcement of boating safety statutes;
amending the termination date of certain statutes relating to
the use, operation, and regulation of boats, a uniform state
waterway marking system, and civil liability for boat owners;
providing for an effective date by amending the effective date
of secs. 3, 5, 7, 9, 11, 14, 16, 18, 20, 23, 26, and 27, ch. 28,
SLA 2000, as amended; and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 128
"An Act relating to brewery licenses."
- BILL HEARING POSTPONED TO APRIL 5, 2012
PREVIOUS COMMITTEE ACTION
BILL: HB 252
SHORT TITLE: SMALL BUSINESS INCOME TAX EXEMPTION
SPONSOR(s): REPRESENTATIVE(s) COSTELLO
01/17/12 (H) PREFILE RELEASED 1/6/12
01/17/12 (H) READ THE FIRST TIME - REFERRALS
01/17/12 (H) L&C, FIN
02/22/12 (H) L&C AT 3:15 PM BARNES 124
02/22/12 (H) Moved CSHB 252(L&C) Out of Committee
02/22/12 (H) MINUTE(L&C)
02/24/12 (H) L&C RPT CS(L&C) 6DP 1NR
02/24/12 (H) DP: THOMPSON, JOHNSON, SADDLER, HOLMES,
MILLER, OLSON
02/24/12 (H) NR: CHENAULT
02/29/12 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/29/12 (H) Heard & Held
02/29/12 (H) MINUTE(FIN)
03/13/12 (H) FIN AT 8:30 AM HOUSE FINANCE 519
03/13/12 (H) Moved CSHB 252(FIN) Out of Committee
03/13/12 (H) MINUTE(FIN)
03/14/12 (H) FIN RPT CS(FIN) 8DP 3NR
03/14/12 (H) DP: GARA, GUTTENBERG, JOULE, COSTELLO,
EDGMON, DOOGAN, STOLTZE, THOMAS
03/14/12 (H) NR: FAIRCLOUGH, T.WILSON, NEUMAN
03/23/12 (H) TRANSMITTED TO (S)
03/23/12 (H) VERSION: CSHB 252(FIN)
03/26/12 (S) READ THE FIRST TIME - REFERRALS
03/26/12 (S) L&C, FIN
04/03/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 301
SHORT TITLE: BOATING REGULATION: SUNSET/ENFORCEMENT
SPONSOR(s): REPRESENTATIVE(s) AUSTERMAN
01/27/12 (H) READ THE FIRST TIME - REFERRALS
01/27/12 (H) L&C
02/22/12 (H) L&C AT 3:15 PM BARNES 124
02/22/12 (H) Moved Out of Committee
02/22/12 (H) MINUTE(L&C)
02/24/12 (H) L&C RPT 7DP
02/24/12 (H) DP: CHENAULT, THOMPSON, SADDLER,
JOHNSON, HOLMES, MILLER, OLSON
02/24/12 (H) FIN REFERRAL ADDED AFTER L&C
03/07/12 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/07/12 (H) Scheduled But Not Heard
03/15/12 (H) FIN RPT CS(FIN) NT 10DP
03/15/12 (H) DP: FAIRCLOUGH, GARA, JOULE, T.WILSON,
GUTTENBERG, NEUMAN, COSTELLO, EDGMON,
03/15/12 (H) STOLTZE, THOMAS
03/15/12 (H) FIN AT 8:30 AM HOUSE FINANCE 519
03/15/12 (H) Moved CSHB 301(FIN) Out of Committee
03/15/12 (H) MINUTE(FIN)
03/23/12 (H) TRANSMITTED TO (S)
03/23/12 (H) VERSION: CSHB 301(FIN)
03/26/12 (S) READ THE FIRST TIME - REFERRALS
03/26/12 (S) L&C, FIN
04/03/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
REPRESENTATIVE MIA COSTELLO
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of HB 252.
JOSHUA WALTON, Staff
Representative Mia Costello
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Presented HB 252 for the sponsor and
answered questions.
JON BITTNER
Anchorage Economic Development Corporation (AEDC)
Anchorage, AK
POSITION STATEMENT: Strongly supported HB 252.
ALLEN JOHNSTON, representing himself
Anchorage, AK
POSITION STATEMENT: Strongly supported HB 252.
JOHANNA BALES, Deputy Director
Department of Revenue (DOR)
Anchorage, AK
POSITION STATEMENT: Answered questions on HB 252 and said the
department had not issues with it.
JANE SCHULTZ
Kenai Peninsula Emergency Services
Kenai, AK
POSITION STATEMENT: Supported HB 301.
JOHN BAKER, Assistant Attorney General
Civil Division
Natural Resources Section
Department of Law (DOL)
Anchorage, AK
POSITION STATEMENT: Answered questions on HB 301.
ASTRID LIEVANO, Staff
Representative Alan Austerman
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Presented HB 301 for the sponsor and
answered questions.
ACTION NARRATIVE
1:32:02 PM
VICE CHAIR JOE PASKVAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Davis, Giessel and Vice Chair
Paskvan.
HB 252-SMALL BUSINESS INCOME TAX EXEMPTION
1:33:38 PM
VICE CHAIR PASKVAN announced consideration of HB 252 [CSHB
252(FIN), version 27-LS1085\D, was before the committee].
1:33:46 PM
REPRESENTATIVE MIA COSTELLO, sponsor of HB 252, explained that
the premise behind this bill is to diversify the state's
economy. The state depends on the federal government, the oil
industry and then everything else, she said, but it can expect a
decrease in federal spending, and this bill focuses on the
"everything else" aspect of the economy by encouraging fast
growing businesses to come to Alaska and become corporate income
taxpayers.
She said that right now the state of Alaska has about 16,000
corporate income tax returns coming in; about half of those pay
no corporate income tax, and of the remaining 3,100, only about
900 companies pay more than $1,000 in corporate income tax
annually. HB 252 would exempt qualifying industries from the
state's corporate income tax until they reach $50 million in
gross aggregate assets. This bill dovetails with federal law
that exempts people from capital gains tax if they invest in an
initial public offering (IPO) and keep their money in it for
five years. In order for a company to be considered a 1202 C
corporation, it has to have $50 million gross aggregate assets
or less, cannot be in an exempted industry and 80 percent of its
assets have to be used in the daily conduct of its business.
That portion of the federal definition really makes it apply to
a small slice of industries, but this bill exempts additional
industries to those in the federal law.
1:37:04 PM
REPRESENTATIVE COSTELLO said she was trying to attract software
development, biotech, pharmaceutical, telecommunications,
superconductors, business technologies and solutions, media
storage servers, video games, mobile apps and industries that
deal primarily with intellectual property and that don't
typically have many physical assets.
1:38:10 PM
VICE CHAIR PASKVAN asked how long these tax provisions apply to
a company.
1:38:27 PM
JOSHUA WALTON, staff to Representative Mia Costello, replied
that neither the federal version nor the state version of this
exemption has a time limit, but the time limitation for how long
a company can qualify comes through the asset cap. He explained
that when companies are starting up they are looking for fast
growth; as they grow they either become profitable or not. If
they are not profitable, they go away. If they are, they wind up
accumulating assets which count towards the $50 million cap. At
least 80 percent of those assets have to be rolled into the
active conduct of their business: things like paying the costs,
increasing their production or additional research and
development.
VICE CHAIR PASKVAN asked if a company stays under $50 million in
assets, would the exemption continue to apply.
MR. WALTON said that was correct.
REPRESENTATIVE COSTELLO added if this bill becomes law, Alaska
would be the first state to piggyback on federal 1202 C
corporation law.
SENATOR PASKVAN opened public testimony.
1:40:54 PM
JON BITTNER, Vice President, Anchorage Economic Development
Corporation (AEDC), said they strongly supported HB 252. These
incentives are extremely important to generating a stronger
economy in Alaska as well as generating interest in relocating
here from outside. This measure also dovetails nicely with
several federal and municipal opportunities that are coming down
the pike over the next year. On the federal level, the Jobs Act
changes several regulations in the SEC code that hasn't been
changed since 1933; these changes will generate a lot of
interest and new business that could take advantage of this kind
of incentive. In Anchorage, it could dovetail with the Municipal
Angel Fund that is coming on line soon. There has never been a
better time than right now for businesses to come to Alaska.
VICE CHAIR PASKVAN asked his thoughts on a time limitation.
MR. BITTNER replied that they would leave the details up to the
legislature.
VICE CHAIR PASKVAN said he supported the bill, but was trying to
figure out some sideboards for it.
1:43:59 PM
SENATOR DAVIS said she was looking at letters of support and was
impressed with someone who was born and raised in Alaska and
started his business at age 16. He is now 19. He was born and
raised in Alaska and is now in Europe. He is quite an
entrepreneur.
VICE CHAIR PASKVAN said that the man she was referring to, Tyler
Arnold, had provided written testimony.
1:45:00 PM
ALLEN JOHNSTON, representing himself, said he had been with an
investment company for the last 35 years and strongly supported
HB 252. This is the best bill he had seen for the least cost,
the most leverage for changing the psychology in Alaska as far
as getting people to think "can do" in identifying local
problems and becoming involved in their solutions and creating
different types of companies that don't make any sense to do
here right now. He remarked that this exemption could work as a
catalyst for a lot wonderful initiatives that are happening now.
VICE CHAIR PASKVAN remarked that he remembered meeting Mr.
Johnston in Fairbanks about 25 years ago.
1:47:03 PM
REPRESENTATIVE COSTELLO presented video testimony from Tyler
Arnold in which he explained that his current start up, "Simply
Social," is a 1202 C corporation based in Alaska. He said he may
be global, but he acts local and unfortunately, Alaska has one
of the highest state corporate income tax rates in the country.
HB 252 would not only remove this burden but would strengthen
the state's global competitiveness by waiving the state tax rate
for like-minded tech startups and high growth companies.
He said he chose to incorporate in Alaska partly because it's
his home, but also because he was able to attracted nine local
accredited angel investors who chose a path forward in mentoring
and funding him. He hoped lawmakers would be equally supportive.
1:50:30 PM
The video with Mr. Arnold's testimony ran from 1:48 to 1:50 p.m.
MR. WALTON said there was an 11 hour time difference in Romania
and Mr. Arnold had a sore throat, so he wasn't available for
questions right now and offered to provide contact information.
SENATOR PASKVAN found no questions from committee members and
asked if this tax had any appropriate sideboards.
1:51:44 PM
JOHANNA BALES, Deputy Director, Department of Revenue (DOR),
said this version of HB 252 has a 10-year sunset provision on
page 2, line 22. She said the department had no issues with
version D of HB 252, but didn't have an official position on it.
VICE CHAIR PASKVAN, finding no further comments, closed public
testimony and held HB 252 in committee.
HB 301-BOATING REGULATION: SUNSET/ENFORCEMENT
1:53:43 PM
VICE CHAIR PASKVAN announced consideration of HB 301 [CSHB
301(FIN), version 27-LS1152\M, was before the committee].
1:53:48 PM
ASTRID LIEVANO, staff to Representative Alan Austerman,
introduced herself and said Representative Austerman was in a
House Finance Committee meeting right now and sent his regrets.
SENATOR DAVIS moved to bring SCS CSHB 301( ), version 27-
LS1152\B, before the committee.
VICE CHAIR PASKVAN objected for discussion purposes.
MS. LIEVANO said the purpose of HB 301 was to repeal the sunset
date of the Alaska Boating Safety Program. Without legislative
action, the program would terminate on July 1, 2013. When the
program was established in the 21st Legislature, it cautiously
added two sunset clauses; one repealed the Boating Safety
Program by date and the second repealed it in case the federal
funds didn't come through. Since the program was established,
the legislature has acted three times to extend it. It has now
been in effect for 12 years and thanks to the "Kids Don't Float"
a loaner life jacket program, at least 22 children have survived
a water emergency.
MS. LIEVANO explained that federal financial assistance is
provided through the "Boating Safety Account for the Aquatic
Resource Trust Fund," also known as the "Sport Fish Restoration
and Boating Trust Fund." Alaska met the eligibility requirements
to receive the funds in the year 2000 with the passage of HB
108, the Alaska Boating Safety Act.
She said that sections 1 and 2 of the bill were added by the
House and the wording is related to the federal government not
being able to enforce or exercise enforcement in state
waterways. This wording already exists in statute, and it was
the will of the Finance Committee to put it in this section.
Section 3 is the meat of the bill and has the sunset repealer
requirements. Section 4 is the effective date of section 2 and
section 5 is the effective date of section 3.
1:56:48 PM
MS. LIEVANO explained that the CS broadens a statutory reference
in sections 1 and 2 of the bill that was too narrowly written
according to the Attorney General's Office. She said a
representative from that office was on line to speak to it.
VICE CHAIR PASKVAN added that sections 1 and 2 were substantive
additions that went beyond the sponsor's intent and weren't
connected to the sunset provisions.
MS. LIEVANO said that was correct.
1:58:06 PM
JANE SCHULTZ, Kenai Peninsula Emergency Services, Kenai, said
she had attended the Boating Safety class and that it is
excellent. It's provided free of charge and goes all over the
state. In her job she gets many calls asking where this
information can be obtained, and she directs them to the Office
of Boating Safety. It has kids' books that they are willing to
share and videos on boating safety. They provide a pre-departure
check list and a float plan for people and encouragement to use
it. Their posters are all over the state providing information
on boating safety. One is called the "Choose LIFE Poster."
"LIFE" stands for "use your Life jacket, Inspect your boat, File
a Float plan and get continuing Education." It is a very
worthwhile program.
2:00:12 PM
MS. SCHULTZ said the "Kids Don't Float program" is a tremendous
life saver. She didn't see any need for the sunset clause and
encouraged passage of HB 301.
VICE CHAIR PASKVAN asked the assistant attorney general to walk
them through the department's legal concerns.
2:01:31 PM
JOHN BAKER, Assistant Attorney General, Civil Division, Natural
Resources Section, Department of Law (DOL), said Ms. Lievano
accurately summarized the history of the program. He explained
that most of the past amendments (mostly extending the sunset)
had been directed at the conditional sunset date and were
required to be achieved by special session laws rather than
through amendments to the permanent statute. That may have led
to some confusion in the process of an amendment that came out
from the House Finance Committee CS.
He said the only concern DOL had was with two very narrow
provisions in sections 1 and 2 that have brief references to AS
12.25, the citation authority. For reasons not entirely clear,
the House Finance CS would substitute only one section of that
law for the original version in statute, which would make all of
AS 12.25 applicable to citations issued by officers enforcing
the Boating Safety Program. The complication in that provision
is that it would lead to other sections in AS 12.25 being
exempted from citations under the program - for instance,
uniform citation format, notice requirements for citations that
are issued, whether the normal bail forfeiture schedule would
apply to citations and disposition of records if an individual
were cited. It raises questions as to whether any of those
provisions would apply, and they apparently would not. It's
their working assumption that the change was an error.
MR. BAKER said he consulted with Assistant Attorney General
Annie Carpenetti in the Criminal Division, and she concurred
that it would be problematic to change the format and have only
one section of that statute apply to citations. That was their
only objection to the House Finance CS. He said they had no
objection to the substantive amendment in sections 1 and 2,
which clarifies that federal officials wouldn't be able to
enforce the act.
VICE CHAIR PASKVAN asked if the Attorney General's Office favors
section 1 as currently written.
MR. BAKER replied yes. The recommendation would be the current
language in sections 1 and 2 that refers to "peace officer may
issue a citation as provided in AS 12.25.175 through AS
12.25.230" and then repeat that language again in section 2.
2:06:23 PM
VICE CHAIR PASKVAN asked if the problem was in the current
version.
MR. BAKER answered that version B had the correct language.
SENATOR DAVIS asked if he was okay with section 3 in version B,
also.
MR. BAKER answered yes.
VICE CHAIR PASKVAN closed public testimony and said he would
hold HB 301 in committee.
2:08:05 PM
Finding no further business to come before the committee, Vice
Chair Paskvan adjourned the Senate Labor and Commerce Committee
meeting at 2:08 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 301 CS FIN v B.PDF |
SL&C 4/3/2012 1:30:00 PM |
HB 301 |
| HB 301(FIN) Amendment.pdf |
SL&C 4/3/2012 1:30:00 PM |
HB 301 |
| HB 301 email re technical amendment to CS FIN.PDF |
SL&C 4/3/2012 1:30:00 PM |
HB 301 |
| HB 252 - Explanation of Changes - CSHB252(L&C) vs. CSHB252(FIN).pdf |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| HB 252 - re FN #2 - DOR 031212, 1 of 2.pdf |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| HB 252 - Fiscal Note 2 - Revenue - HB0252-1-2-022412-REV-Y.PDF |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| HB 252 - re FN #2 - DOR 031212, 2 of 2.pdf |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| HB 252 - lttr supporting, AEDC 031912.pdf |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| HB 252 - Reference Information - Excluded and Qualifying Industries Under HB 252.pdf |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| HB 252 - Bill Version D (CSHB 252 (FIN)).PDF |
SL&C 4/3/2012 1:30:00 PM |
HB 252 |
| SB 217 lttr supporting, Fred Meyer, FM 040412.pdf |
SL&C 4/3/2012 1:30:00 PM |
SB 217 |