SENATE BILL NO. 236 "An Act relating to tax credits for cash contributions by taxpayers that are accepted for certain educational purposes or for a college facility; and providing for an effective date." 10:01:43 AM Senator Meyer discussed SB 236.   CS for SB 236 amends the current statutes regarding higher education tax credits by expanding the range of the "second tier" of tax credits and by adding a third tier. Under current law, state income tax payers who make cash contributions to an Alaskan educational or vocational institution receive a tax credit of 50 percent for contributions up to $100,000 and 100 percent for contributions between $100,000 and $200,000. Therefore, maximum tax credit allowable in any given year is $150,000. This limit appears to be having a constraining effect on corporate donations to & investments in educational and vocational institutions in Alaska. Under CS for SB 236, cash contributions to an Alaskan educational or vocational institution receive a tax credit of 50 percent for contributions up to $100,000, a 100 percent tax credit for contributions between $100,000 and $300,000 and a 50 percent tax credit for contributions over $300,000, for a maximum allowable credit accrual of $25 Million per year. Many major employers in Alaska understand that the future success of their businesses requires a highly skilled workforce. These businesses want to hire Alaskans from Alaska's vocational schools, colleges and universities. In addition, many businesses are interested in, through commercialization of university-generated information and technologies, helping Alaska's universities expand their existing scientific research & development capacities - a process that has become a major source for economic development and diversification in other states. By facilitating greater cooperation between Alaska's business and education sectors, and encouraging greater financial support from the former to the latter, SB 236 hopes important workforce and economic development goals such as the following can be achieved: · Strengthening workforce development and job opportunities for Alaskans · Increasing collaboration between Alaska's employers and its higher education institutions · Diversifying funding sources for Alaska's higher education institutions · Enhancing student success through internships, K- 12 outreach, camps, and other developmental programs · Developing research programs that contribute to economic development in Alaska 10:03:46 AM JIM JOHNSEN, SENIOR VICE PRESIDENT, DOYON LIMITED (via teleconference), testified in support of the legislation. He stated that values from shareholders are encouraged through private development. The 50 percent tax credit for natural gas exploration effectively encourages the current exploration for gas in the Nanana Basin and for oil in the Yukon Flats. He opined that the state's encouragement of private investment in human resource development in colleges and universities is not as effective as it is capped at $150 thousand per year. He agreed that SB 236 addresses the shortcoming. 10:06:34 AM ROBYNN WILSON, TAX DIVISION (via teleconference), stated that she is unaware of the administration's position on the bill. She offered to present the committee with a list of technical suggestions, but stated no known concerns from the administration. Senator Huggins inquired about the sunset date. He recalled from his work on the Education Committee that industry provided a case for elimination of the sunset date. He requested the consideration of the industry's perspective. 10:08:47 AM Senator Olson stated that the contributor's receive tax relief under federal income tax so a state tax credit may be seen as "double dipping." Senator Meyer deferred to Ms. Wilson. Ms. Wilson responded that the statute reads that a taxpayer cannot claim both a charitable contribution and a credit for the same contribution to an educational facility. SB 236 was HEARD and HELD in Committee for further consideration.