Legislature(2017 - 2018)BUTROVICH 205

01/30/2018 03:30 PM STATE AFFAIRS

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 8 PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS TELECONFERENCED
Moved CSSB 8(STA) Out of Committee
*+ SB 154 PFD CONTRIBUTIONS TO GENERAL FUND TELECONFERENCED
Moved SB 154 Out of Committee
*+ SB 130 VOTER APPROVAL FOR NEW TAXES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                        January 30, 2018                                                                                        
                           3:31 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Kevin Meyer, Chair                                                                                                      
Senator David Wilson                                                                                                            
Senator Cathy Giessel                                                                                                           
Senator Dennis Egan                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator John Coghill                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 8                                                                                                               
"An Act allowing federally recognized tribal governments to                                                                     
receive contributions from permanent fund dividends."                                                                           
                                                                                                                                
     - MOVED CSSB 8(STA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 154                                                                                                             
"An Act relating to contributions from permanent fund dividends                                                                 
to the general fund."                                                                                                           
                                                                                                                                
     - MOVED SB 154 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 130                                                                                                             
"An Act relating to a vote of the people before a broad-based                                                                   
individual income tax or statewide sales tax takes effect."                                                                     
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 8                                                                                                                    
SHORT TITLE: PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS                                                                            
SPONSOR(s): SENATOR(s) STEVENS                                                                                                  
                                                                                                                                
01/18/17       (S)       PREFILE RELEASED 1/9/17                                                                                
01/18/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/17       (S)       STA, FIN                                                                                               
03/23/17       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/23/17       (S)       Bill Hearing Postponed to 3/28/17                                                                      
03/28/17       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/28/17       (S)       Heard & Held                                                                                           
03/28/17       (S)       MINUTE(STA)                                                                                            
04/06/17       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
04/06/17       (S)       -- MEETING CANCELED --                                                                                 
04/11/17       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
04/11/17       (S)       -- MEETING CANCELED --                                                                                 
01/30/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 154                                                                                                                  
SHORT TITLE: PFD CONTRIBUTIONS TO GENERAL FUND                                                                                  
SPONSOR(s): SENATOR(s) WILSON                                                                                                   
                                                                                                                                
01/24/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/18       (S)       STA, FIN                                                                                               
01/30/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 130                                                                                                                  
SHORT TITLE: VOTER APPROVAL FOR NEW TAXES                                                                                       
SPONSOR(s): SENATOR(s) MEYER                                                                                                    
                                                                                                                                
01/16/18       (S)       PREFILE RELEASED 1/8/18                                                                                
01/16/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/18       (S)       STA, FIN                                                                                               
01/30/18       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DOUG LETCH, Staff                                                                                                               
Senator Stevens                                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of SB 8.                                                                             
                                                                                                                                
NINA KEMPPEL, President & CEO                                                                                                   
The Alaska Community Foundation                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 8.                                                                             
                                                                                                                                
SARA RACE, Director                                                                                                             
Permanent Fund Dividend Division                                                                                                
Alaska Department of Revenue                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Addressed the division's fiscal note for SB                                                               
8.                                                                                                                              
                                                                                                                                
GARY ZEPP, Staff                                                                                                                
Senator Wilson                                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of SB 154.                                                                           
                                                                                                                                
SARA RACE, Director                                                                                                             
Permanent Fund Dividend Division                                                                                                
Alaska Department of Revenue                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Addressed potential federal tax implications                                                              
for SB 154.                                                                                                                     
                                                                                                                                
NINA KEMPPEL, President & CEO                                                                                                   
The Alaska Community Foundation                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Addressed concerns regarding SB 154.                                                                      
                                                                                                                                
PAMELA LEARY, Director                                                                                                          
Treasury Division                                                                                                               
Alaska Department of Revenue                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Addressed the impact on the state treasury                                                                
from SB 154.                                                                                                                    
                                                                                                                                
CHRISTINE MARASIGAN, Staff                                                                                                      
Senator Meyer                                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided an overview of SB 130.                                                                           
                                                                                                                                
EMILY NAUMAN, Attorney                                                                                                          
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained why SB 130 is possibly                                                                          
unconstitutional.                                                                                                               
                                                                                                                                
BRIAN JACKSON, Elections Program Manager                                                                                        
Alaska Division of Elections                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on SB 130.                                                                                      
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:31:11 PM                                                                                                                    
CHAIR  KEVIN  MEYER  called the  Senate  State  Affairs  Standing                                                             
Committee meeting  to order at 3:31  p.m. Present at the  call to                                                               
order were Senators Giessel, Wilson, Egan, and Chair Meyer.                                                                     
                                                                                                                                
          SB 8-PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS                                                                      
                                                                                                                              
3:32:14 PM                                                                                                                    
CHAIR MEYER announced the consideration  of Senate Bill 8 (SB 8).                                                               
He  noted that  at a  previous hearing,  Senator Wilson  raised a                                                               
concern pertaining  to prohibition  of a guardian  contributing a                                                               
child's Permanent Fund Dividend (PFD) to a tribal government.                                                                   
                                                                                                                                
3:32:59 PM                                                                                                                    
DOUG  LETCH, Staff,  Senator Stevens,  Alaska State  Legislature,                                                               
Juneau,  Alaska, said  SB 8  is straight  forward legislation  to                                                               
allow    PFD   contributions    to   tribal    native   nonprofit                                                               
organizations. He  noted that an  amendment will be  offered that                                                               
addresses Senator  Wilson's question.  He disclosed  that Senator                                                               
Stevens  supports the  proposed amendment  by Senator  Wilson. He                                                               
noted that  Melissa Borton, Tribal  Administrator for  the Native                                                               
Village of  Afognak intends  to testify  from Kodiak.  He pointed                                                               
out that  the Native  Village of  Afognak was  one of  the tribal                                                               
organizations  in Kodiak  that approached  Senator Stevens  about                                                               
accessing the PFD's Pick.Click.Give program.                                                                                    
                                                                                                                                
3:35:11 PM                                                                                                                    
CHAIR MEYER opened public testimony.                                                                                            
                                                                                                                                
3:36:04 PM                                                                                                                    
NINA KEMPPEL,  President & CEO,  The Alaska  Community Foundation                                                               
(ACF),  Anchorage, Alaska,  testified  in support  of  SB 8.  She                                                               
explained  that  ACF  manages   the  Pick.Click.Give  program  in                                                               
concert  with other  partners including  the Rasmuson  Foundation                                                               
and  The Foraker  Group. She  said ACF  has no  inherent concerns                                                               
regarding  SB 8.  She noted  that there  was an  Internal Revenue                                                               
Service  (IRS) ruling  that  allows  federally recognized  tribal                                                               
organizations to receive charitable donations.                                                                                  
                                                                                                                                
3:37:24 PM                                                                                                                    
SARA  RACE, Director,  Permanent Fund  Dividend Division,  Alaska                                                               
Department of  Revenue, Juneau, Alaska, addressed  the division's                                                               
fiscal note  as to  how SB  8 could impact  the PFD  Division and                                                               
noted  that  SB  8  is  in  line  with  the  other  participating                                                               
organizations in  the Pick.Click.Give program where  7 percent of                                                               
the  contributions are  collected by  the PFD  Division to  cover                                                               
administrative costs.                                                                                                           
                                                                                                                                
CHAIR MEYER asked  how the division arrived at  the dollar amount                                                               
in their fiscal note.                                                                                                           
                                                                                                                                
MS. RACE explained  that the division has a  contract with United                                                               
Way for  the Pick.Click.Give  program's application  process. She                                                               
detailed that  United Way provided their  billing input regarding                                                               
programming hours for changes required for SB 8.                                                                                
                                                                                                                                
3:39:43 PM                                                                                                                    
CHAIR MEYER closed public testimony.                                                                                            
                                                                                                                                
3:39:56 PM                                                                                                                    
SENATOR  WILSON   moved  to  adopt   Amendment  1,   labeled  30-                                                               
LS0176\A.2.                                                                                                                     
                                                                                                                                
                      A M E N D M E N T 1                                                                                   
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR WILSON                                                                 
                                                                                                                                
                                                                                                                                
     Page 4, following line 28:                                                                                                 
          Insert a new bill section to read:                                                                                    
        "* Sec. 7.  AS 43.23.062 is amended by  adding a new                                                                  
          subsection to read:                                                                                                   
                    (o) A  person who  claims a  dividend on                                                                    
          behalf   of    an   unemancipated    minor   under                                                                    
          AS 43.23.005(c)  when  the  minor is  the  subject                                                                    
          of   an   adoption  or   guardianship   proceeding                                                                    
          pending in a tribal court  may not elect to make a                                                                    
          contribution  from  the   minor's  dividend  to  a                                                                    
          federally recognized  tribal government  under (a)                                                                    
          of this section."                                                                                                     
                                                                                                                                
SENATOR WILSON  explained that the  amendment inserts a  new bill                                                               
section under page 4, [following  line 28]. He said the amendment                                                               
seeks to protect the unemancipated  minors  PFD when the minor is                                                               
the  subject  of an  adoption  or  guardianship proceeding  in  a                                                               
tribal  court. This  is  like  AS 47.10.15  for  a  PFD under  AS                                                               
43.23.15 where  the Office  of Children's  Services (OCS)  puts a                                                               
minor's PFD into  a trust until the minor turns  21 or reaches 18                                                               
and is emancipated. He summarized that  SB 8 would add a layer of                                                               
protection to  make sure a child's  PFD is not used  to help fund                                                               
tribal governments.                                                                                                             
                                                                                                                                
MR. LETCH  stated that Senator Stevens  supports Senator Wilson's                                                               
amendment because it clarifies the process.                                                                                     
                                                                                                                                
CHAIR MEYER  announced that seeing  no objection, Amendment  1 is                                                               
adopted.                                                                                                                        
                                                                                                                                
3:42:02 PM                                                                                                                    
SENATOR GIESSEL moved to report  SB 8, [CSSB 8(STA)], version 30-                                                               
LS0176\A    as   amended    from   committee    with   individual                                                               
recommendations and attached fiscal note.                                                                                       
                                                                                                                                
3:42:27 PM                                                                                                                    
CHAIR  MEYER  announced  that  being  no  objection,  the  motion                                                               
carried.                                                                                                                        
                                                                                                                                
3:42:30 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
            SB 154-PFD CONTRIBUTIONS TO GENERAL FUND                                                                        
                                                                                                                                
3:44:42 PM                                                                                                                    
CHAIR MEYER called the committee  back to order and announced the                                                               
consideration of SB 154.                                                                                                        
                                                                                                                                
3:45:06 PM                                                                                                                    
SENATOR   WILSON,  Alaska   State   Legislature,  bill   sponsor,                                                               
explained that  SB 154 would  allow Alaskans  to donate all  or a                                                               
portion of  their PFD  directly to the  state's general  fund. He                                                               
said  the bill  would provide  those Alaskans  who would  like to                                                               
donate to  the state's general  fund a method and  an opportunity                                                               
to do so  through the Pick.Click.Give program.  He explained that                                                               
the  Alaska  Department  of  Administration   has  said  the  PFD                                                               
donation process  to the state would  be tax exempt and  could be                                                               
used to provide tax relief, reduce  the rates, and allow to "Only                                                               
tax  the other  portion of  their items."  He disclosed  that any                                                               
other cash donation to the general  fund would be exempt from the                                                               
7-percent coordination or  would not be required to  pay the $250                                                               
fee. He  added that the  "children protection piece" for  the PFD                                                               
already exists in statute.                                                                                                      
                                                                                                                                
3:46:53 PM                                                                                                                    
GARY  ZEPP,  Staff,  Senator Wilson,  Alaska  State  Legislature,                                                               
Juneau,  Alaska, provided  a  sectional analysis  for  SB 154  as                                                               
follows:                                                                                                                        
                                                                                                                                
     Section 1:                                                                                                             
     Amends AS  43.23.062(a) by adding  to the  general fund                                                                    
     and "the  general fund" to allow  contribution from the                                                                    
     electronic Alaska Permanent Fund  dividend to the state                                                                    
     general fund.                                                                                                              
                                                                                                                                
     Section 2:                                                                                                             
     Amends  AS 43.23.062(b)  to add  "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  list   of  organizations   that  do  not   have  a                                                                    
     coordination fee withheld.                                                                                                 
                                                                                                                                
MR.  ZEPP  noted  that  a  zero  fiscal  note  was  submitted  by                                                               
Centralized Administrative  Services-Finance Division, Department                                                               
of Administration.  He detailed the  second fiscal note  from the                                                               
Permanent   Fund  Dividend   Division,  Taxation   and  Treasury,                                                               
Department of Revenue as follows:                                                                                               
                                                                                                                                
   • FY2019: $20300 for programming to establish and administer                                                                 
     new process.                                                                                                               
 • FY2020 and beyond: $10000 annually to administer program.                                                                    
                                                                                                                                
3:51:15 PM                                                                                                                    
SENATOR WILSON emphasized  that the intent of  the legislation is                                                               
not to politicize the Pick.Click.Give program.                                                                                  
                                                                                                                                
CHAIR MEYER asked  if the bill should have a  fiscal note showing                                                               
some revenue to the general fund.                                                                                               
                                                                                                                                
SENATOR  WILSON  explained  that   the  statute  does  not  allow                                                               
donations to be  used to help offset the cost  of the program. He                                                               
said his  office has met with  the Department of Revenue  to look                                                               
at ways  to offset the ongoing  cost. He noted that  an amendment                                                               
could  be  introduced  where  a percentage  fee  from  the  first                                                               
donation could be used to offset some of the reoccurring cost.                                                                  
                                                                                                                                
CHAIR MEYER assumed  that somebody could write a  $1,500 check to                                                               
the State of Alaska if they wanted too.                                                                                         
                                                                                                                                
SENATOR WILSON answered correct.                                                                                                
                                                                                                                                
CHAIR  MEYER asked  if the  legislation would  save the  taxes by                                                               
having it taken off the PFD.                                                                                                    
                                                                                                                                
SENATOR WILSON specified that the  intent was to ease the process                                                               
for Alaskans. He  added that the transaction would also  be a tax                                                               
deduction.                                                                                                                      
                                                                                                                                
3:53:13 PM                                                                                                                    
MR. ZEPP  noted that Senator  Wilson's office will work  with The                                                               
Alaska  Community   Foundation  to  address   potential  concerns                                                               
regarding donor  competition and work  on messaging to  make sure                                                               
folks understand the difference of their donations.                                                                             
                                                                                                                                
SENATOR GIESSEL  pointed out that  a PFD  must be declared  on an                                                               
individual's  income report  to the  IRS. She  asked if  donating                                                               
directly to the general fund would bypass IRS notification.                                                                     
                                                                                                                                
MR. ZEPP  emphasized that he is  not a tax consultant  but opined                                                               
that  donating  a  PFD  to  the general  fund  would  bypass  IRS                                                               
notification.                                                                                                                   
                                                                                                                                
SENATOR  GIESSEL replied  that she  was surprised  by Mr.  Zepp's                                                               
answer.                                                                                                                         
                                                                                                                                
MR.  ZEPP  disclosed that  the  executive  branch classified  the                                                               
donation as charitable.                                                                                                         
                                                                                                                                
SENATOR GIESSEL  pointed out  that the  proper definition  is the                                                               
donation  is  tax  deductible but  nevertheless  income  that  an                                                               
individual will be taxed on.                                                                                                    
                                                                                                                                
MR. ZEPP answered that he believed so.                                                                                          
                                                                                                                                
3:54:53 PM                                                                                                                    
SARA  RACE, Director,  Permanent Fund  Dividend Division,  Alaska                                                               
Department of Revenue,  Juneau, Alaska, noted that she  was not a                                                               
tax professional  but opined  that once a  dividend is  issued it                                                               
becomes income; however, a contribution  back to the state can be                                                               
used  as an  itemized deduction  just  like a  contribution to  a                                                               
nonprofit.                                                                                                                      
                                                                                                                                
3:55:23 PM                                                                                                                    
CHAIR MEYER opened public testimony.                                                                                            
                                                                                                                                
SENATOR  WILSON  asked what  happens  if  an individual  declines                                                               
their PFD.                                                                                                                      
                                                                                                                                
MS.  RACE  assumed that  an  individual  would  not apply  for  a                                                               
voluntary program;  however, she  noted that  there is  an option                                                               
available for somebody  that decided to sign  over their dividend                                                               
or  write a  check  back to  the  state and  the  funds would  be                                                               
deposited into the  general fund. She disclosed that  there are a                                                               
couple  of individuals  every year  that call  the Department  of                                                               
Revenue and go through the process of returning their PFD.                                                                      
                                                                                                                                
CHAIR MEYER asked  Ms. Race if she had any  other comments on the                                                               
division's fiscal note.                                                                                                         
                                                                                                                                
MS. RACE  explained that the  administrative costs taken  on from                                                               
SB 154  ends up being different  because there is a  statute that                                                               
says  that the  department cannot  use operating  funds from  the                                                               
dividend  fund  to  administer the  Pick.Click.Give  program,  so                                                               
without the 7-percent fee being  taken off for an application fee                                                               
that is why a fiscal note was included.                                                                                         
                                                                                                                                
3:57:24 PM                                                                                                                    
NINA KEMPPEL,  President & CEO, The  Alaska Community Foundation,                                                               
Anchorage,  Alaska,  noted  the success  of  the  Pick.Click.Give                                                               
program   and  thanked   the  Legislature   for  developing   and                                                               
continually  refining the  program. She  disclosed that  over $20                                                               
million  has  been  raised  in charitable  giving  for  over  700                                                               
charitable organizations.                                                                                                       
                                                                                                                                
She remarked  that the  Pick.Click.Give program  faces challenges                                                               
due to the uncertainty around  the permanent fund and the state's                                                               
near-term  finances.   She  disclosed  that  the   program  finds                                                               
attracting  new  donors to  be  harder.  She explained  that  the                                                               
original intent of  the Pick.Click.Give program was to  be a tool                                                               
for  the   nonprofit  sector  to   be  able  to   increase  their                                                               
unrestricted  charitable donations.  She added  that the  program                                                               
was  also   intended  to   assist  charitable   organizations  in                                                               
cultivating new  and existing relationships with  their donors as                                                               
well as increasing the impact of Alaska's nonprofit sector.                                                                     
                                                                                                                                
4:00:08 PM                                                                                                                    
MS. KEMPPEL said The Alaska  Community Foundation sees the merits                                                               
of  SB  154   but  noted  the  foundation's   concerns  with  the                                                               
legislation  where the  charitable  intention of  Pick.Click.Give                                                               
will be "watering  down" as well as causing  confusion about what                                                               
is a  charitable organization by  bringing in a new  element into                                                               
the program.  She opined that  the legislation opens the  door to                                                               
anyone joining  the program outside of  charitable organizations.                                                               
She said the  foundation's final concern pertains  to the general                                                               
fund  not having  to contribute  towards the  program's 7-percent                                                               
administrative fee  and that may  lead to a  public misperception                                                               
regarding the program's low-overhead-number administrative fee.                                                                 
                                                                                                                                
SENATOR  GIESSEL asked  Ms. Kemppel  if charitable  organizations                                                               
are defined as 501(c)(3).                                                                                                       
                                                                                                                                
MS.   KEMPPEL   replied   yes,  except   for   some   educational                                                               
organizations such as the university.                                                                                           
                                                                                                                                
4:02:47 PM                                                                                                                    
PAMELA LEARY,  Director, Treasury Division, Alaska  Department of                                                               
Revenue, Juneau,  Alaska, said the  only impact from the  bill in                                                               
terms  of processes  is  that there  will be  more  money in  the                                                               
general fund to go towards the state's operating cost.                                                                          
                                                                                                                                
SENATOR GIESSEL  asked how many  people routinely give  their PFD                                                               
back,  how much  revenue is  generated, and  how many  more might                                                               
return their PFD if SB 154 is passed.                                                                                           
                                                                                                                                
MS.  LEARY replied  that she  did not  know. She  noted that  the                                                               
bill's intent will provide a  process should an individual decide                                                               
to return their PFD.                                                                                                            
                                                                                                                                
CHAIR  MEYER  asked if  a  person  could  write  a check  to  the                                                               
"treasury or  revenue" if a person  wanted to give $10000  to the                                                               
state government because Alaska does not have an income tax.                                                                    
                                                                                                                                
4:04:39 PM                                                                                                                    
MS. LEARY  answered yes. She  explained that an  individual could                                                               
write a check to the "State  of Alaska." She noted that the money                                                               
is sent to the general fund.                                                                                                    
                                                                                                                                
CHAIR MEYER  asked if  an individual can  request that  the money                                                               
specifically go to education.                                                                                                   
                                                                                                                                
MS. LEARY replied that she is  not sure the money can go anywhere                                                               
other than the general fund.                                                                                                    
                                                                                                                                
4:06:34 PM                                                                                                                    
CHAIR MEYER closed public testimony.                                                                                            
                                                                                                                                
SENATOR WILSON  noted that  he would like  to offer  an amendment                                                               
either  in  the  Senate  State  Affairs  Committee  or  the  next                                                               
committee of referral.  He explained that his intent  is to lower                                                               
the fiscal note's ongoing costs and  figure out ways to make sure                                                               
the  process  is  easy without  burdening  additional  charitable                                                               
giving.                                                                                                                         
                                                                                                                                
CHAIR MEYER  noted that Senate  Finance is the next  committee of                                                               
referral, an  appropriate venue for  Senator Wilson to  offer his                                                               
amendment. He remarked that SB 154  is a good mechanism for those                                                               
that want to give their PFD back to the state.                                                                                  
                                                                                                                                
4:08:11 PM                                                                                                                    
SENATOR GIESSEL moved to report  SB 154, version 30-LS0081\D from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
4:08:21 PM                                                                                                                    
CHAIR MEYER said there being no objection, the motion carried.                                                                  
                                                                                                                                
4:08:35 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
              SB 130-VOTER APPROVAL FOR NEW TAXES                                                                           
                                                                                                                                
4:12:49 PM                                                                                                                    
CHAIR MEYER announced  the consideration of SB  130. He disclosed                                                               
that he is the sponsor of the bill.                                                                                             
                                                                                                                                
4:13:18 PM                                                                                                                    
CHRISTINE   MARASIGAN,  Staff,   Senator   Meyer,  Alaska   State                                                               
Legislature,  Juneau, Alaska,  said the  intent of  SB 130  is to                                                               
require  a vote  of the  people before  a broad-based-individual-                                                               
income tax or statewide sales tax takes effect.                                                                                 
                                                                                                                                
MS. MARASIGAN disclosed that there  are four sections in the bill                                                               
and provided an analysis as follows:                                                                                            
                                                                                                                                
     Section 1                                                                                                              
     The  section would  be amended  to  include tax  levied                                                                    
     under AS 43.98.020.  The section makes a  vote on taxes                                                                    
     subject  to the  same rules  and limitations  as ballot                                                                    
     propositions when it comes to contributions.                                                                               
                                                                                                                                
     Section 2                                                                                                              
       Would amend AS 15.15.030 to direct the Division of                                                                       
         Elections' director to place a question on the                                                                         
     election  ballot;  this  is  essentially  the  kind  of                                                                    
     language used when requiring an advisory vote.                                                                             
                                                                                                                                
     Section 3                                                                                                              
     Amends  AS  15.80.010(33)  to include  taxes;  in  that                                                                    
     section  there are  a series  of definitions  and there                                                                    
     are about 45 definitions in  that section that the word                                                                    
     "taxes" is included under questions.                                                                                       
                                                                                                                                
     Section 4                                                                                                              
     Adds a new  section to AS 43.98 to  include Article 1A,                                                                    
     which  is  the language  requiring  any  bill that  the                                                                    
     legislature  passes  levying a  broad-based  individual                                                                    
     income  tax  or  statewide  sales tax  or  both  to  be                                                                    
     ratified by the people,  and it specifies the statewide                                                                    
     election  ballot  in which  the  question  on the  bill                                                                    
     levying the tax  is asked either a yes  or no question;                                                                    
     essentially,  it  just  requires that  the  legislation                                                                    
     that you  would pass to levy  a tax has to  include the                                                                    
     instructions that requires the  vote of the people upon                                                                    
     passage,  so  that  would   be  written  into  whatever                                                                    
     vehicle used to tax.                                                                                                       
                                                                                                                                
MS. MARASIGAN summarized that SB  130 would put into statute that                                                               
any legislation levying  a broad-based tax be ratified  by a vote                                                               
of the people.                                                                                                                  
                                                                                                                                
4:16:09 PM                                                                                                                    
She  said  Emily   Nauman,  legal  drafter  for   the  bill  from                                                               
Legislative Legal Services, will  address the committee. He noted                                                               
that  Ms.  Nauman  also  wrote  a memo  that  explained  why  the                                                               
legislation is  unconstitutional. She pointed out  that while Ms.                                                               
Nauman   raised   the   case    for   the   legislation   to   be                                                               
unconstitutional,  there  are  many ways  that  governments  have                                                               
weighted the opinion of its people on taxes.                                                                                    
                                                                                                                                
She  revealed that  the Anchorage  municipality uses  an advisory                                                               
vote on  any tax increases,  or the proposition process  that may                                                               
alter  or do  away  with a  tax.  She said  according  to a  very                                                               
cursory survey  by Legislative Research, Californians  have voted                                                               
on 10  statewide sales-tax-related ballot measures  since 1932: 4                                                               
defeated  and  6 approved.  Colorado  has  the Taxpayer  Bill  of                                                               
Rights (TABOR); they wrote that  into their state constitution in                                                               
1992 and  it had  a simple  premise, if  lawmakers want  to raise                                                               
taxes  or  issue  a  debt,  they  need  to  ask  the  voters  for                                                               
permission.  She pointed  out that  Washington state  voters have                                                               
been asked  on 11  separate occasions to  adopt a  state personal                                                               
income tax  or corporate income tax,  but the first vote  in 1932                                                               
was the only one that was successful.                                                                                           
                                                                                                                                
MS.  MARASIGAN noted  that  not  all taxes  are  voted down.  She                                                               
disclosed  that  22  states  approved   ballot  measures  in  the                                                               
November 8 election that would  provide more than $201 billion in                                                               
funding   extension  and   new  revenue   for  state   and  local                                                               
transportation projects. She opined that  the November 8 vote for                                                               
funding ballot measures  indicates that there is  an appetite for                                                               
voting  in  taxes  that  people want  to  see,  particularly  for                                                               
transportation and roads.                                                                                                       
                                                                                                                                
4:18:15 PM                                                                                                                    
MS.  MARASIGAN explained  that the  intention is  to explore  the                                                               
idea that the  vote of the people should take  place to enact new                                                               
income or sales  taxes. She noted that voters are  being asked to                                                               
approve  budget timelines,  spending caps,  and per  diem funding                                                               
spending. She  asserted that having  the Legislature  consult the                                                               
people who "foot the bill" makes sense.                                                                                         
                                                                                                                                
SENATOR EGAN asked why the committee  is looking at the bill that                                                               
Legislative Legal Services is saying is unconstitutional.                                                                       
                                                                                                                                
CHAIR  MEYER  replied that  Senator  Egan's  question is  a  good                                                               
question and  noted that Legislative Legal  Services will address                                                               
the committee during the meeting.                                                                                               
                                                                                                                                
SENATOR GIESSEL  asked Senator Egan  to verify that  Juneau votes                                                               
on  sales taxes  every  five years.  She  recalled that  Juneau's                                                               
citizens voted on a 1.5 percent sales tax.                                                                                      
                                                                                                                                
SENATOR EGAN  concurred with Senator  Giessel and  specified that                                                               
the tax  is a little above  1.5 percent. He detailed  that Juneau                                                               
has  a permanent  tax and  citizens  vote whether  to extend  the                                                               
sales tax.                                                                                                                      
                                                                                                                                
CHAIR MEYER  noted that  Alaska's citizens vote  on bonds  all of                                                               
the time. He asked Ms.  Nauman from Legislative Legal Services to                                                               
address  the committee  and comment  on her  memo concerning  the                                                               
bill.                                                                                                                           
                                                                                                                                
4:21:01 PM                                                                                                                    
EMILY NAUMAN,  Attorney, Legislative Legal  Services, Legislative                                                               
Affairs Agency,  Juneau, Alaska,  confirmed that she  believes SB                                                               
130  is  very   likely  if  not  certainly  going   to  be  found                                                               
unconstitutional  by the  Alaska  Supreme  Court. She  referenced                                                               
previous discussions  about other  types of  jurisdictions, other                                                               
states and some of Alaska's  municipalities; however, she pointed                                                               
out that they all have different voting rules.                                                                                  
                                                                                                                                
MS.  NAUMAN specified  that her  concern with  SB 130  is that  a                                                               
state  law  is being  enacted  under  the provision  of  Alaska's                                                               
constitution that binds the Legislature  to act and pass bills in                                                               
a  certain  way.  She  stated  that one  of  her  main  concerns,                                                               
although  not in  the  constitution outright,  is  that the  U.S.                                                               
Supreme Court has  found for anytime that  a legislature attempts                                                               
to bind  a future  legislature; in  other words,  SB 130  has the                                                               
effect of  putting a requirement  on all  subsequent legislatures                                                               
for any tax that they want to pass.                                                                                             
                                                                                                                                
MS. NAUMAN  said Legislative  Legal Services  also has  a concern                                                               
under the constitution, Article IX,  Section 1, that the power of                                                               
taxation cannot be  delegated; this is generally  recognized as a                                                               
legislative power. She  explained that her concern  of leaving it                                                               
up to the  people whether to enact  a tax is a  delegation of the                                                               
Legislature's  power to  tax  and is  a  direct contradiction  to                                                               
Article IX, Section 1.                                                                                                          
                                                                                                                                
She  added  that another  concern  is  about using  the  proposed                                                               
structure for  initiatives and referendums,  something that  is a                                                               
little more of a "muddy issue."  She pointed out that the state's                                                               
constitution  contemplates an  initiative and  referendum as  the                                                               
two sorts of methods to bring  a binding vote to the people about                                                               
something that is going to become  law or a law that is repealed.                                                               
She detailed  that the initiative  and the referendum  are really                                                               
fleshed  out  in the  state's  constitution;  however, the  state                                                               
constitution does not really have any  space for the kind of vote                                                               
that originates from the Legislature.                                                                                           
                                                                                                                                
She said  her final  concern is about  the actual  enactment. She                                                               
pointed out that  there are several sections  in the constitution                                                               
that  talk about  how  and when  a  law or  bill  becomes a  law;                                                               
specifically,  Article II,  Sections  14, and  16-18. She  opined                                                               
that  there  are  going  to  be some  timing  issues  related  to                                                               
enactment; for instance,  normally when a bill becomes  law is 90                                                               
days after approval  by the governor or a veto  is overwritten by                                                               
the Legislature,  and that language  is in the  constitution. She                                                               
summarized as follows:                                                                                                          
                                                                                                                                
     If we pass a tax bill  that becomes law, but is delayed                                                                    
     in  effect,   that  sort  of  structure   really  isn't                                                                    
     contemplated  in  the  constitution  and  I  have  some                                                                    
     concerns about how that would be integrated as well.                                                                       
                                                                                                                                
4:24:41 PM                                                                                                                    
CHAIR MEYER asked  how Colorado was able to get  around the issue                                                               
with the U.S. Supreme Court.                                                                                                    
                                                                                                                                
MS.  NAUMAN   replied  that  Colorado  passed   a  constitutional                                                               
amendment. She explained that the  state through the constitution                                                               
can make  the Legislature comply with  whatever requirements they                                                               
would like.  She pointed out  that one way  to make SB  130 legal                                                               
would  be  to rephrase  it  as  a constitutional  amendment.  She                                                               
conceded  that there  are  limitations or  extra  steps that  are                                                               
required before  a constitutional amendment resolution  can pass;                                                               
however,  she  noted that  she  would  not  have a  problem  with                                                               
putting the  requirement in  the constitution for  a vote  of the                                                               
people before  a broad-based individual  income tax  or statewide                                                               
sales tax takes effect.                                                                                                         
                                                                                                                                
CHAIR MEYER  asked if there would  be a problem with  an advisory                                                               
vote.                                                                                                                           
                                                                                                                                
MS. NAUMAN replied that advisory  votes are non-binding; however,                                                               
she said she would still  worry about the structure regarding how                                                               
the Legislature  would get the  advisory vote on the  ballot, but                                                               
the issues could be  worked out. She said one idea  is to have an                                                               
advisory vote that  requires the vote to take place  before a tax                                                               
bill's effective  date; however, that  language would have  to be                                                               
inserted into every single tax bill that passed.                                                                                
                                                                                                                                
4:26:52 PM                                                                                                                    
SENATOR EGAN pointed  out that if a future  legislature must pass                                                               
a tax, they  could ignore or change the  proposed legislation. He                                                               
asked  Chair   Meyer  why  he   did  not  consider   proposing  a                                                               
constitutional amendment.                                                                                                       
                                                                                                                                
CHAIR MEYER  concurred with  Senator Egan and  noted that  he may                                                               
consider the  option. He explained  that his intent was  to bring                                                               
the bill  before the committee  to address concerns. He  said his                                                               
intent is  not to move  SB 130  out of committee  until revisions                                                               
are made  and the legislation  meets Legislative  Legal Services'                                                               
standards.                                                                                                                      
                                                                                                                                
SENATOR GIESSEL noted that Ms.  Nauman cited Article IX regarding                                                               
voter approval of tax and specified as follows:                                                                                 
                                                                                                                                
     The power of taxation shall never be surrendered; this                                                                     
        power shall not be suspended or contracted away,                                                                        
     except as provided in this article.                                                                                        
                                                                                                                                
SENATOR GIESSEL asked  to verify that if SB 130  is changed to an                                                               
advisory  vote  that Article  IX,  Section  1  would have  to  be                                                               
repealed.                                                                                                                       
                                                                                                                                
4:28:41 PM                                                                                                                    
MS.  NAUMAN answered  no. She  explained  that the  reason is  an                                                               
advisory vote has  no effect. She said the issue  in front of the                                                               
committee is  SB 130 would have  the effect of leaving  whether a                                                               
tax is enacted  or not that was made by  the people's vote rather                                                               
than by the Legislature. She  summarized that because an advisory                                                               
vote  has  no   effect,  the  advisory  vote   only  informs  the                                                               
Legislature and the Legislature would still be enacting the tax.                                                                
                                                                                                                                
SENATOR  GIESSEL asked  if Article  IX,  Section 1  in the  state                                                               
constitution would  have to be  repealed if the bill  was amended                                                               
to constitutionally allow citizens to determine taxation.                                                                       
                                                                                                                                
MS. NAUMAN answered no due to  the language that said, "Except as                                                               
provided  in this  article." She  believed that  a constitutional                                                               
amendment would be placed into Article IX.                                                                                      
                                                                                                                                
CHAIR MEYER  asked her to verify  that a referendum to  repeal an                                                               
income or sales tax passed by the legislative body is okay.                                                                     
                                                                                                                                
MS.  NAUMAN  answered  correct.  She  explained  that  the  state                                                               
constitution has  the structure  and place  for a  referendum and                                                               
that is the reason why  a referendum is constitutional as opposed                                                               
to the structure SB 130 is exploring.                                                                                           
                                                                                                                                
CHAIR MEYER  asked a representative  from the Alaska  Division of                                                               
Elections to address  the committee and inquired  if the division                                                               
has any input or concerns about the bill.                                                                                       
                                                                                                                                
4:32:04 PM                                                                                                                    
BRIAN  JACKSON, Elections  Program  Manager,  Alaska Division  of                                                               
Elections,  Juneau,  Alaska,  replied  that SB  130  is  straight                                                               
forward with  the understanding  that the  division will  have to                                                               
reanalyze the bill after it is  reworked. He pointed out that the                                                               
legislation  would place  a question  to the  voters on  a ballot                                                               
that would  also force the  division to put the  information into                                                               
the  official  election  pamphlet   whereby  the  division  would                                                               
require enough  time to obtain  information for  translation into                                                               
Alaska Native languages.                                                                                                        
                                                                                                                                
SENATOR  WILSON  asked  if  there would  be  an  additional  cost                                                               
between  an advisory  vote  versus going  to  the general  voting                                                               
process.                                                                                                                        
                                                                                                                                
MR. JACKSON replied that he did not know.                                                                                       
                                                                                                                                
4:34:25 PM                                                                                                                    
CHAIR MEYER closed public testimony.                                                                                            
                                                                                                                                
4:34:33 PM                                                                                                                    
CHAIR MEYER held SB 130 in committee.                                                                                           
                                                                                                                                
4:35:18 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Meyer adjourned the Senate State Affairs Standing                                                                         
Committee at 4:35 p.m.                                                                                                          

Document Name Date/Time Subjects
SB - 8 Sponsor Statement.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Version A.PDF SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Sectional Analysis.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Support Letter Native Village of Afognak.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Support Letter Woody Island Tribal Council.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Fiscal Note Updated 2018.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 154 - Sponsor Statement.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Version D.PDF SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Sectional Analysis, ver D.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Invited-Expert Testimony Summary.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Fiscal Note DOA.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Fiscal Note DOR PFD.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 130 Sponsor Statement .pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Version A.PDF SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Legal Memo 11.20.2017.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Letter of Support NFIB.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Fiscal Note DoE.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 154 - PickClickGive Flowchart.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - PickClickGive Program Overview.pdf SSTA 1/30/2018 3:30:00 PM
SB 154