Legislature(1997 - 1998)

03/27/1997 03:35 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                 SENATE STATE AFFAIRS COMMITTEE                                
                         March 27, 1997                                        
                           3:35 p.m.                                           
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Lyda Green, Chairman                                                  
 Senator Jerry Ward, Vice-Chairman                                             
 Senator Jim Duncan                                                            
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Jerry Mackie                                                          
 Senator Mike Miller                                                           
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 42                                                            
 "An Act relating to the fiscal operations of the Alaska Railroad              
 Corporation and to land acquired by the State of Alaska under the             
 Alaska Railroad Transfer Act of 1982 or otherwise acquired for                
 railroad purposes; and providing for an effective date."                      
                                                                               
  -- CSSB 42(STA) ADOPTED AND MOVED OUT OF COMMITTEE                           
                                                                               
 SENATE BILL NO. 21                                                            
 "An Act relating to ferries and ferry terminals, establishing the             
 Alaska Marine Highway Authority, and relating to maintenance of               
 state marine vessels; and providing for an effective date."                   
                                                                               
  -- AMENDED AND FAILED TO MOVE OUT OF COMMITTEE                               
                                                                               
 SENATE BILL NO. 116                                                           
 "An Act relating to welfare to work tax credits under the Alaska              
 Net Income Tax Act; and providing for an effective date."                     
                                                                               
  -- HEARD AND HELD IN COMMITTEE                                               
                                                                               
 SENATE BILL NO. 129                                                           
 "An Act relating to the employer's required savings under the                 
 retirement incentive plan; and providing for an effective date."              
                                                                               
  -- HEARD AND HELD IN COMMITTEE                                               
                                                                               
 SENATE BILL NO. 133                                                           
 "An Act relating to a small business development tax credit under             
 the Alaska Net Income Tax Act; and providing for an effective                 
 date."                                                                        
                                                                               
  -- HEARD AND HELD IN COMMITTEE                                               
                                                                               
                                                                               
 SENATE BILL NO. 81                                                            
 "An Act relating to immunization records for children under the age           
 of seven."                                                                    
                                                                               
  -- SB 81 NOT TAKEN UP BY THE COMMITTEE THIS DATE                             
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 42 - See Senate Transportation Committee minutes dated 2/20/97             
         and Senate State Affairs Committee minutes dated 3/25/97.             
                                                                               
 SB 21 - See Senate Transportation Committee minutes dated 2/18/97             
         and 3/6/97 and Senate State Affairs minutes dated 3/18/97,            
     3/25/97.                                                                  
                                                                               
 SB 116 - See Senate State Affairs Committee minutes dated 3/25/97.            
                                                                               
 SB 129 - No previous action to record.                                        
                                                                               
 SB 133 - No previous action to record.                                        
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Representative Terry Martin                                                   
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information on SB 42                           
                                                                               
 Bill Cummings, Assistant Attorney General                                     
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, AK 99811-0300                                                         
  POSITION STATEMENT:   Supported removing land provision from                 
      original bill                                                            
                                                                               
 Joe Ambrose, Staff to Senator Robin Taylor                                    
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Explained amendment to SB 21                           
                                                                               
 Gary Hayden, System Director                                                  
 Alaska Marine Highway System                                                  
 Department of Transportation & Public Facilities                              
 3132 Channel Drive                                                            
 Juneau, AK 99801-7898                                                         
  POSITION STATEMENT:   Testified in opposition to SB 21                       
                                                                               
                                                                               
 Jim Nodlund, Director                                                         
 Division of Public Assistance                                                 
 Department of Health & Social Services                                        
 P.O. Box 110640                                                               
 Juneau, AK 99801-0640                                                         
  POSITION STATEMENT:   Presented overview on SB 116                           
                                                                               
 Bob Bartholomew, Deputy Director                                              
 Income & Excise Audit Division                                                
 Department of Revenue                                                         
 P.O. Box 110420                                                               
 Juneau, AK 99801-0420                                                         
  POSITION STATEMENT:   Offered information on SB 116 & SB 133                 
                                                                               
 Joseph Freidman                                                               
 Trade Dollar Exchange                                                         
 3820 Lake Otis                                                                
 Anchorage, AK 99508                                                           
  POSITION STATEMENT:   Testified in support of SB 116                         
                                                                               
 Commissioner William Hensley                                                  
 Department of Commerce & Economic Development                                 
 P.O. Box 110800                                                               
 Juneau, AK 99811-0800                                                         
  POSITION STATEMENT:   Testified in support of SB 116 & SB 133                
                                                                               
 Senator Jim Duncan                                                            
 State Capitol                                                                 
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Prime Sponsor of SB 129                                
                                                                               
 Bill Church, Retirement Supervisor                                            
 Division of Retirement & Benefits                                             
 Department of Administration                                                  
 P.O. Box 110203                                                               
 Juneau, AK 99801-0203                                                         
  POSITION STATEMENT:   Answered questions on SB 129                           
                                                                               
  ACTION NARRATIVE                                                             
 TAPE 97-15, SIDE A                                                            
 Number 001                                                                    
                                                                               
                SB 42 ALASKA RR BUDGET AND LAND                              
                                                                               
  CHAIRMAN GREEN  called the Senate State Affairs Committee to order           
 at 3:35 p.m. and brought up SB 42 as the first order of business              
 before the committee.                                                         
                                                                               
  REPRESENTATIVE TERRY MARTIN , Vice Chairman of the Legislative               
 Budget & Audit Committee, said SB 42 was introduced on behalf of              
 that committee.  He explained the legislation will put the Alaska             
 Railroad under the Executive Budget Act, which will give the                  
 Legislature more oversight over the corporation.  The legislation             
 will also transfer land not needed for rail operations to the                 
 Department of Natural Resources.                                              
                                                                               
  CHAIRMAN GREEN  directed attention to a proposed State Affairs CS,           
 which she said splits out the land portion contained in the                   
 original bill.   REPRESENTATIVE MARTIN  added that the land issue is          
 going to take a lot of time, and the Senate Resources Chair wants             
 to specifically work on that issue, so removing the land provision            
 eases that problem.                                                           
                                                                               
  SENATOR WARD  moved the adoption of CSSB 42(STA).  Hearing no                
 objection, it was so ordered.                                                 
                                                                               
 Number 100                                                                    
                                                                               
  BILL CUMMINGS , an assistant attorney general in the Department of           
 Law, agreed that separating the Executive Budget portion from the             
 land portion of the bill is a good idea because the land's portion            
 is a lot more complicated due to the environmental liabilities                
 that attach to it.  He advised that The Department of Law has been            
 working with the Department of Environmental Conservation and they            
 have come up with approximately 40 very polluted sites that are on            
 railroad land.  The way the bill was originally written the title             
 would vest to that land immediately in the state of Alaska upon the           
 effective date of the bill.  By vesting title, it opens the state             
 treasury to claims for cleaning up the pollution.  Right now the              
 claims are born strictly by the railroad and the railroad's revenue           
 stream.                                                                       
                                                                               
 Mr. Cummings related that the department believes that if the land            
 portion were to be left in with the Executive Budget portion of the           
 bill, it would necessitate the hiring of three more lawyers to                
 handle the environmental litigation.  He added that there are ways            
 to deal with transferring the land to the state where the state               
 would not be liable for cleaning up the sites.                                
                                                                               
 Number 170                                                                    
                                                                               
 There being no further testimony on CSSB 42(STA), CHAIRMAN GREEN              
 stated she would entertain a motion.                                          
                                                                               
  SENATOR WARD  moved CSSB 42(STA) and the accompanying fiscal notes           
 be passed out of committee with individual recommendations.                   
 Hearing no objection, it was so ordered.                                      
                                                                               
 Number 178                                                                    
             SB  21 ALASKA MARINE HIGHWAY AUTHORITY                           
                                                                              
  CHAIRMAN GREEN  brought SB 21 before the committee as the next order         
 of business.                                                                  
                                                                               
  JOE AMBROSE , staff to Senator Robin Taylor who is the prime sponsor         
 of SB 21, directed attention to a proposed Amendment No. 3.                   
 (Amendments one and two were adopted at the previous hearing on the           
 bill.)                                                                        
                                                                               
  SENATOR WARD  moved adoption of the following Amendment No. 3.               
  SENATOR DUNCAN  objected and asked for an explanation of what the            
 amendment does.                                                               
 SENATOR WARD moved adoption of the following Amendment No. 3:                 
                                                                               
 Amendment No. 3                                                             
                                                                               
 Page 16, lines 12 - 16:  Delete "In this subsection, "commissioner            
 of the department that operates the marine vessel" includes the               
 president of the University of Alaska with regard to a vessel                 
 operated by the university and the chief executive officer of the            
 Alaska Marine Highway Authority with regard to a vessel operated by           
 the Alaska Marine Highway Authority."                                         
                                                                               
  Insert "A detailed list of the costs and factors considered in             
 calculating the interport differential must be provided to each               
 person who expresses an interest in submitting a bid to perform               
 maintenance or repair work on a marine vessel owned by the state.            
 [IN THIS SUBSECTION, "COMMISSIONER OF THE DEPARTMENT THAT OPERATES            
 THE MARINE VESSEL" INCLUDES THE PRESIDENT OF THE UNIVERSITY OF                
 ALASKA WITH REGARD TO A VESSEL OPERATED BY THE UNIVERSITY.]"                  
                                                                               
 Page 16, line 18, through page 17, line 1:  Delete all material and           
 insert:                                                                       
  "(c)  The commissioner of a department that operates a marine                
 vessel shall adopt regulations establishing the criteria that the             
 department shall use to determine whether the cost of maintenance             
 or repair work at a shipyard facility located int he state is                 
 reasonable under (a) of this section.  The commissioner shall                 
 designate by regulation the designated base port for each vessel              
 operated by the department.  A vessel's designated base port is the           
 vessel's delivery and redelivery port.  The Alaska Marine Highway             
 Authority shall adopt regulations establishing the criteria that              
 the authority shall use in calculating the interport differential             
 under this section.  The criteria for calculating the interport               
 differential must include costs incurred from the time that the               
 vessel leaves the vessel's designated base port to enter the                  
 shipyard facility until the time the vessel returns to the                    
 designated base port from the shipyard facility.                              
                                                                               
  (d)  In this section,                                                        
   (1)  "commissioner of the department that operates the                      
 marine vessel" includes the president of the University of Alaska             
 with regard to a vessel operated by the university and the chief              
 executive officer of the Alaska Marine Highway Authority with                 
 regard to a vessel operated by the Alaska Marine Highway Authority;           
   (2)  "interport differential" includes all costs related                    
 to the performance of the maintenance or repair work of a marine              
 vessel at a shipyard located outside of the state, including travel           
 costs incurred moving the vessel from its designated base port to             
 the shipyard outside of the state; additional fuel consumption;               
 cost of consumable including lubricants and other engine and deck             
 stores; maintenance costs incurred during running time; cost of               
 crew transfers including airfare between Alaska and the shipyard;             
 wages in travel status; crew room and board; and other interport              
 costs identified by the Alaska Marine Highway Authority."                     
                                                                               
 Number 200                                                                    
                                                                               
  MR. AMBROSE , speaking to Amendment No. 3, explained there has been          
 discussion with DOTPF on a provision in the legislation that deals            
 with the use of Alaska shipyards, and he believes the new language            
 in the amendment is less onerous.  He said the intent throughout              
 this process is to make use of the two shipyards, which the state             
 of Alaska has spent a tremendous amount of money on, a little more            
 practical.                                                                    
                                                                               
 Mr. Ambrose said a major change being made in the amendment                   
 requires that the commissioner, by regulation, designate a base               
 port for each vessel, and that base port then becomes the delivery            
 and redelivery port for the vessel.  He said the delivery and                 
 redelivery port is important because that is the point of                     
 calculation for the interport differential when a vessel is shipped           
 out of state.  Federal highway authorities have indicated that in             
 order to use that calculation all the time, there has to be a                 
 delivery and redelivery port.  The second change is the defining of           
 "interport differential" which is all costs related to moving a               
 vessel to an out-of-state shipyard.                                           
                                                                               
 Number 325                                                                    
                                                                               
  GARY HAYDEN , Director, Alaska Marine Highway System, Department of          
 Transportation & Public Facilities, stated the Marine Highway                 
 System has demonstrated a commitment to doing work in Alaska                  
 shipyards.  Over the last seven years, most of the work that did              
 not involve federal funds has been done in Alaska.  When federal              
 funds are involved, it necessitates going out to bid on these                 
 projects.                                                                     
                                                                               
 Mr. Hayden questioned the need for the amendment because he wasn't            
 sure there was a problem at this point in time.  He referenced a              
 Legislative Budget & Audit Committee report where it stated they              
 found the method used by DOTPF in determining the interport                   
 differential for bidding purposes to be sound and based upon a                
 logical approach for determining vessel transport related costs.              
 He also suggested that if a Alaska Marine Highway Authority is                
 going to be established, maybe a good approach to this issue is to            
 let its board of directors and executive director make the decision           
 has to how they go out and put together their bidding package on              
 getting their ships maintained.                                               
                                                                               
 Mr. Hayden said there is definitely an issue of declining                     
 maintenance funds, while at the same time, the ships are getting              
 older and the cost of maintenance is going up.  His approach to               
 getting the most possible out of the maintenance dollars has been             
 to have competition and get good prices on the work that is being             
 done.                                                                         
                                                                               
 Mr. Hayden explained that in calculating the interport differential           
 it starts at the point that the vessel is taken off line.  Juneau,            
 Ketchikan and Seward are currently designated the home ports for              
 the vessels, but the home port designations are just for the                  
 purpose of crew changes.  He questioned designating a base port in            
 regulation because it ties the system's hands as to where they take           
 the vessel off a revenue run.  The past practice has been to take             
 it off at the end of the revenue run, and then that would be the              
 start of their calculations.                                                  
                                                                               
 Number 410                                                                    
                                                                               
  MR. AMBROSE  pointed out that nothing in the amendment would affect          
 the competitive bidding process, and nothing in the bill is                   
 intended to give the Alaska shipyards so much of an advantage that            
 bids would be awarded that were not fair to the state as far as               
 expense is concerned.                                                         
                                                                               
 Number 430                                                                    
                                                                               
 There being no further objection to Amendment No. 3, it was                   
 adopted.                                                                      
                                                                               
  CHAIRMAN GREEN  asked for the will of the committee on CSSB 21(STA).         
                                                                               
  SENATOR WARD  moved CSSB 21(STA), as amended, be passed out of               
 committee with individual recommendations.   SENATOR DUNCAN  objected         
 and stated he was concerned about this piece of legislation.  The             
 roll was taken with the following result:  Senators Ward and Green            
 voted "Yea" and Senator Duncan voted "Nay."   CHAIRMAN GREEN  stated          
 the motion to move CSSB 21(STA) out of committee failed.                      
                                                                               
                                                                               
               SB 116 WELFARE TO WORK TAX CREDITS                             
                                                                               
 CHAIRMAN GREEN  brought SB 116 before the committee.                         
                                                                               
  JIM NORDLUND , Director, Division of Public Assistance, Department           
 of Health & Social Services, explained the legislation would offer            
 tax credits to Alaskan corporations that hire disadvantaged                   
 workers. He said welfare recipients is one of the categories of               
 disadvantaged workers that this legislation would help the most.              
 In order to comply with federal law, there is a need to put                   
 approximately 4,000 individuals into a work activity within the               
 next year.                                                                    
                                                                               
 SB 116 allows an Alaskan corporation to use as a credit up to 15              
 percent of an employee's wages or up to $1,000 of wages paid in a             
 year.  There is an additional $500 credit if that employer offers             
 training to that recipient.  To earn the credit, the employee must            
 be on the job for 180 days or 400 hours.  Mr. Nordlund pointed out            
 that they don't need to be consecutive days, taking into account              
 the seasonality of employment in Alaska.  It was also pointed out             
 that the Alaska Welfare to Work program mirrors the federal work              
 opportunity tax credit bill.                                                  
                                                                               
 Mr. Nordlund said SB 116 is one of several incentives the                     
 Administration is looking at because there are a number of tools              
 they need to have at their disposal to encourage the employer                 
 community to hire welfare recipients.                                         
                                                                               
 Number 510                                                                    
                                                                               
 Responding to an inquiry by Senator Ward,  MR. NORDLUND  explained            
 that to the extent that an employer takes advantage of this                   
 provision and hires a welfare recipient, that welfare recipient is            
 then going to not receive as much money in welfare benefits because           
 of being employed and becoming self-sufficient.  There is a cost to           
 the state in the sense that there is a credit that's given to that            
 employer for hiring that recipient, but that would be offset by the           
 dollars that the recipient is earning on the job as opposed to                
 being paid in welfare benefits.                                               
                                                                               
  CHAIRMAN GREEN  asked if this program was reflected in any of the            
 budget proposals.   MR. NORDLUND  advised that the Governor's budget          
 predicts a $2 million reduction in benefits that takes into                   
 consideration a number of different factors, one of which is the              
 possibility of SB 116 passing this Legislature.                               
                                                                               
 Number 565                                                                    
                                                                               
  BOB BARTHOLOMEW , Deputy Director, Income & Excise Audit Division,           
 Department of Revenue, speaking to the fiscal note, said the                  
 Department of Revenue worked with the Department of Health & Social           
 Services to try to estimate what would be the impact of this                  
 legislation.  The biggest issue was that not all businesses in                
 Alaska are corporations, so this incentive relates to corporations            
 that are registered to pay taxes in Alaska.  They estimate that               
 approximately 880 workers will go work each year, which is a best             
 guess, high end estimate.  If that were the case, the fiscal note             
 reflects that corporations would have a $1 million a year reduction           
 in taxes because of hiring employees that are eligible for that               
 program.                                                                      
                                                                               
  TAPE 97-15, SIDE B                                                           
 Number 001                                                                    
                                                                               
 Mr. Bartholomew pointed that currently the federal government                 
 allows for a federal work opportunity credit, which the state has             
 never adopted in the past.  It is just by the event that the state            
 adopted the Federal Internal Revenue Code that it gets their tax              
 credit along with it, so the state has been losing tax revenues               
 every year because of people taking the federal credit and then               
 flowing it to their Alaska return.  SB 116 repeals that adoption of           
 the federal tax credit and provides that if Alaska wants a credit,            
 it will adopt its own.                                                        
                                                                               
 Mr. Bartholomew noted there was a lot of discussion amongst the               
 agencies and with individual businesses about how to keep the                 
 process simple and keep the paper work down.  As there is currently           
 a federal program that employers use, those requirements have been            
 adopted, so there is no new paper work or new Alaska guidelines.              
                                                                               
 Number 546                                                                    
                                                                               
  JOSEPH FREIDMAN , testifying from Anchorage, said he was                     
 representing the Trade Dollar Exchange in Anchorage, which is a               
 program created by private industry to assist small Alaskan                   
 businesses with programs such as the Alaska Welfare to Work                   
 program.  It provides the opportunity for a lot of these people who           
 must go to work at a minimum of 20 hours a week an opportunity  to            
 go into a small business where the business owner will provide the            
 role modeling and the mentorship to make the transition successful.           
                                                                               
 Mr. Freidman said their program is very dynamic in the way that it            
 activates the community and presents a forum for the low income               
 people to actually work together to help each other.  He said to              
 provide the successful transition for these people, he thinks it is           
 small business that can do it and private industry needs to take              
 the lead.  He suggested providing a disregard for trade dollars               
 that these people earn so as not to reduce their cash benefits and            
 deter them from going to work.                                                
                                                                               
 Number 496                                                                    
                                                                               
  COMMISSIONER WILLIAM HENSLEY , Department of Commerce & Economic             
 Development, testifying from Anchorage, said he has spent a great             
 deal of time in the last few weeks working with the Department of             
 Labor and the Department of Health & Social Services on this issue            
 of welfare to work, and he believes it is a problem that business             
 and industry is going to have to help government with.  He has also           
 talked with a number of businesses in the private sector and they             
 are universally supportive of working with the state on this                  
 subject, but he believes small business is the real key to putting            
 these people to work.  He said if these people are given the proper           
 support systems and if they stay on the job, they have an                     
 opportunity to become productive.                                             
                                                                               
 Number 465                                                                    
                                                                               
 There being no further testimony on SB 116,  CHAIRMAN GREEN  stated           
 the bill would be held and scheduled for another meeting.                     
                                                                               
 Number 460                                                                    
                                                                               
            SB 129 PERS REQUIRED SAVINGS UNDER RIP                           
                                                                               
  CHAIRMAN GREEN  brought SB 129 before the committee as the next              
 order of business.                                                            
                                                                               
  SENATOR DUNCAN , prime sponsor of SB 129, explained the legislation          
 relates to the Retirement Incentive Program (RIP) passed last year            
 by the Legislature.  Last year's bill allowed cost savings to be              
 calculated over a three-year period of time, and SB 129 amends that           
 provision to a five-year cost savings calculation.  He said he                
 thinks it is an important provision to consider as far as ensuring            
 that the program that passed last year will work to its maximum and           
 allow the cost savings that he believes should be generated under             
 the program.                                                                  
                                                                               
 Senator Duncan pointed out that the five-year cost savings                    
 calculation is not a new concept, having been in two previous                 
 Retirement Incentive Programs.  The numbers of people who not only            
 were eligible but designated to participate were of a much higher             
 percentage than what is occurring in the current program.  Changing           
 to the five-year calculation would increase the number of people              
 who would be eligible to retire and who potentially would retire.             
 Therefore, as that happens, there is more cost savings in state               
 government and it will have a very positive impact on helping                 
 reduce government expenditures overall, he stated.                            
                                                                               
 Number 420                                                                    
                                                                               
  CHAIRMAN GREEN  commented that in listening to the budget process            
 this year, she was disappointed in the amount of cost savings being           
 shown.    SENATOR DUNCAN  said he thinks this program is being                
 managed much more conservatively than previous programs were,                 
 primarily because the legislative intent was to do that.  He said             
 it is hard to compare this program with previous programs because             
 of the three-year calculation and because the last two programs had           
 only one window period whereas this program runs through 1999.  He            
 noted Senator Sharp has introduced legislation that would require             
 eligible employees to take the RIP in the first window they are               
 eligible.                                                                     
                                                                               
 Number 400                                                                    
                                                                               
  SENATOR WARD  commented that it would appear that the Administration         
 has been restrictive and selective in their approach, making the              
 program not necessarily working in the way the Legislature had                
 intended.  He also noted that Senator Sharp's bill, SB 126, has a             
 broad enough title to extend the three-year calculation to five               
 years, but it is his understanding that the 5-year calculation was            
 rejected by Senate Finance because that tool was not considered as            
 a necessity.   SENATOR DUNCAN  agreed that the provision was                  
 discussed in the Senate Finance Committee, but he said it was never           
 rejected by the committee.  It was only discussed because Senator             
 Adams asked a question of a union representative.  He also stated             
 he would have no problem with amending Senator Sharp's bill to                
 include a 5-year cost savings.   SENATOR WARD  then voiced his                
 concern that he was not sure if changing the provision from three             
 years to five years was good public policy.                                   
                                                                               
 Number 340                                                                    
                                                                               
  BILL CHURCH , Retirement Supervisor, Division of Retirement &                
 Benefits, Department of Administration, came forward to respond to            
 questions from the committee.                                                 
                                                                               
  SENATOR WARD  asked if it was correct that out of the state's 12,500         
 department employees, there have been 46 individuals that have                
 actually retired under this RIP.   MR. CHURCH  responded that it is           
 probably a little bit more at this point in time.  There are people           
 retiring each month under the program so it's very dynamic in                 
 nature.  He agreed with Senator Duncan that they are seeing fewer             
 people retire under this program than they have in previous RIPs,             
 although this program is structured much differently than previous            
 programs.                                                                     
                                                                               
  SENATOR WARD  asked Mr. Church if he thinks the new RIP has been             
 structured to the letter of the legislative intent, or has it been            
 selective and restrictive on the part of the Administration.   MR.            
 CHURCH  replied that he wasn't at the committee hearings when the             
 bill was passed, but it his understanding that the program is being           
 run in accordance with the guidance and understanding that was                
 given through the Legislature.                                                
                                                                               
 Number 300                                                                    
                                                                               
  SENATOR DUNCAN  asked Mr. Church his reaction to computing cost              
 savings over five years instead of over three years.   MR. CHURCH             
 said when the law was changed in the previous RIP from three years            
 to five years, there were many more individuals who met the                   
 qualifications to be able to retire under the program.  He added he           
 believes it was very successful by allowing more people to take               
 advantage of the RIP, reducing personal services costs to the                 
 employers.                                                                    
                                                                               
 Number 270                                                                    
                                                                               
 There being no further testimony on SB 129,  CHAIRMAN GREEN  said she         
 was willing to move the bill out of committee, but she didn't think           
 there were the signatures to do so.  She advised SB 129 would be              
 held over to the April 1 meeting.                                             
                                                                               
                                                                               
         SB 133 SMALL BUSINESS DEVELOPMENT TAX CREDIT                        
                                                                               
  CHAIRMAN GREEN  brought SB 133 before the committee as the final             
 order of business.                                                            
                                                                               
  COMMISSIONER WILLIAM HENSLEY , Department of Commerce & Economic             
 Development, said the vast majority of businesses in Alaska are               
 "small" but they play an enormous role in the state's economy,                
 providing 70 percent of the private jobs, so any effort to give a             
 boost to business in Alaska must consider small businesses.                   
                                                                               
 Commissioner Hensley said SB 133 is one of several bills that are             
 part of the Governor's Alaska Business Investment Incentive Plan.             
 It was introduced to encourage growth in small businesses by                  
 offering them tax credits for improving and expanding their                   
 operations.  The intent is to try to level the playing field                  
 between larger businesses, which have economies of scale and                  
 management, as well as ready access to investment capital at                  
 favorable interest rates.  The program can assist small businesses            
 in covering start-up costs, the purchase of new equipment, etc.               
                                                                               
                                                                               
 Commissioner Hensley also said the tax credit would benefit non-              
 affiliated corporations with fewer than 50 employees.  The tax                
 credit would be 10 percent of capital investment up to $100,000,              
 with a maximum annual credit of $10,000 and 50 percent of the                 
 business's corporate tax liability.  To qualify, the investment               
 must be for new property and the corporation must be in good                  
 standing on unemployment insurance and other state taxes.                     
                                                                               
 Number 220                                                                    
                                                                               
  BOB BARTHOLOMEW , Deputy Director, Income & Excise Audit Division,           
 Department of Revenue, speaking to the department's fiscal note,              
 said it is estimated that over 2,000 small businesses would be able           
 to benefit from the investment tax credit, which is a program that            
 has been used in prior years by both the federal and state                    
 governments.  The fiscal note shows the fiscal impact would be                
 approximately $2 million a year.                                              
                                                                               
 Number 209                                                                    
                                                                               
  CHAIRMAN GREEN  inquired if this was reflected in the budget, and            
  MR. BARTHOLOMEW  answered that it was not.                                   
                                                                               
 Because the committee had lost its quorum, there was no motion to             
 move SB 133 out of committee, and the meeting adjourned at 5:00               
 p.m.                                                                          
                                                                               

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