SENATE STATE AFFAIRS COMMITTEE  April 27, 1995 4:10 p.m. MEMBERS PRESENT Senator Bert Sharp, Chairman Senator Randy Phillips, Vice-Chairman Senator Loren Leman Senator Jim Duncan MEMBERS ABSENT Senator Dave Donley [Due to a coinciding Finance Committee meeting, Senator Donley was not present.] COMMITTEE CALENDAR SENATE BILL NO. 141 "An Act relating to legislative ethics; and providing for an effective date." SENATE BILL NO. 118 "An Act relating to credits against certain taxes for contributions to certain public educational radio and television networks and stations; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 141 - See State Affairs minutes dated 4/20/95. SB 118 - See State Affairs minutes dated 4/20/95. WITNESS REGISTER Margie MacNielle, Chairperson House Subcommittee Select Committee on Legislative Ethics P.O. Box 101468, Anchorage, AK 99501-1468¶258-8172 POSITION STATEMENT: supports SB 141 Susie Barnett, Professional Assistant Select Committee on Legislative Ethics P.O. Box 101468, Anchorage, AK 99501-1468¶258-8172 POSITION STATEMENT: testified on SB 141 Brooke Miles, Juneau Branch Administrator Alaska Public Offices Commission P.O. Box 110222, Juneau, AK 99811-0222¶465-4864 POSITION STATEMENT: testified on SB 141 Senator John Torgerson State Capitol, Juneau, Alaska, 99801-1182¶465-2828 POSITION STATEMENT: prime sponsor of SB 118 Bob Bartholomew, Deputy Director Income & Excise Audit Division Department of Revenue P.O. Box 110420, Juneau, AK 99811-0420¶465-4773 POSITION STATEMENT: testified on SB 118 Diane S. Kaplan KOAHNIC Broadcasting Corporation P.O. Box 100108, Anchorage, AK 99510¶272-7997 POSITION STATEMENT: supports SB 118 ACTION NARRATIVE SSTA - 4/27/95 TAPE 95-21, SIDE A Number 001 SB 141 LEGISLATIVE ETHICS CHAIRMAN SHARP calls the Senate State Affairs Committee to order at 4:10 p.m. and brings up SB 141 as the first order of business before the committee. The chairman calls the first witness. Number 020 MARGIE MACNIELLE, Chairperson of the House Subcommittee, Select Committee on Legislative Ethics, testifying from Anchorage, informs the committee that most changes made by SB 141 to the Legislative Ethics law are simply technical changes. The full Ethics Committee has reviewed the draft changes, and has voted unanimously to forward the draft to the legislature for legislative consideration. MS. MACNIELLE lists the substantive changes: 1) Increasing the gift threshold from $100 to $250; 2) Permitting the Ethics Committee to impose fines of $2 a day, for a maximum $25 for late disclosures; 3) Listing possible sanctions for violations of the ethics code; 4) Changing the contract and lease section to allow those covered by the ethics code to participate in contracts for less than $5,000, with an added disclosure of participation. MS. MACNIELLE lists the minor changes: 1) In Section 13, add "spousal equivalent", and replace the word "clientele" with "employer", to avoid requiring reporting every individual member of an association or trade group that employs a lobbyist; 2) In Section 16, (c)(4) was added to the reference; 3) In Section 30, change the word "to" to "of." Number 080 MS. MACNIELLE asks for support of SB 141 on behalf of the Select Committee on Legislative Ethics. Number 105 SUSIE BARNETT, Professional Assistant, Select Committee on Legislative Ethics, states she does not have specific comments, but is available to answer questions. SENATOR LEMAN refers to Section 37. Senator Leman would like to see the term "substantial interest" clarified to reflect legislative intent at the time the Legislative Ethics Law was passed. The current interpretation of "substantial interest" means that legislators who earn money from businesses that pay more than $5,000 in taxes to the State of Alaska, but who do not hire a lobbyist, aren't involved in the legislative process, and do not have any more interest in state government than would any citizen, are required to report those sources and the amount of income earned from those sources. Number 152 MS. MACNIELLE responds that Section 37 deals with APOC, so the Legislative Ethics Committee does not really have a position or an interest in that section. Number 215 BROOKE MILES, Juneau Branch Administrator for the Alaska Public Offices Commission, responds that the status of the proposed adopted regulations is 2.5 years down the line; they still have not been finalized through the Department of Law. The regulations are currently undergoing significant changes to the earliest drafts, and Ms. Miles states she is not completely up-to-date on the definition of "substantial interest." Ms. Miles states she will get an answer from the Anchorage office of APOC for Senator Leman. If the statute contained a definition for "substantial interest", that would also solve the problem. Number 245 SENATOR LEMAN suggests that the committee consider defining "substantial interest", while it is working on SB 141. Senator Leman asks if, since the regulations are not signed and are not final, legislators are required to follow the booklet put out by the APOC for filing disclosures. Number 258 MS. MILES replies that the only thing that can be used as guidance by APOC in preparing the manual and the form are the proposed regulations. However, it is Ms. Miles understanding that proposed regulations do not have the force of law. Number 265 CHAIRMAN SHARP asks Senator Leman to work on a definition for "substantial interest." Number 288 SENATOR RANDY PHILLIPS asks Ms. Miles what percentage of requests for financial disclosure reports are public requests. Number 297 MS. MILES estimates that 15% of the requests are public requests. Number 318 SENATOR LEMAN states he does not like the term "spousal equivalent." He knows that term is already in statute, but he thinks it destroys the sanctity of marriage. Senator Leman thinks that to equate spousal equivalent to marriage and put it in the force of law is inappropriate. Number 333 SENATOR RANDY PHILLIPS informs the committee he will be offering an amendment that will disallow spouses and spousal equivalents of legislators from being lobbyists. CHAIRMAN SHARP asks Senator Phillips if he has an opinion from Legislative Legal Services regarding the legality of that amendment. SENATOR RANDY PHILLIPS responds he has received a verbal opinion from Legal Services that the prohibition for money is legal, but prohibition for nonprofit might interfere with freedom of speech. Number 355 CHAIRMAN SHARP would like to address Section 36. He thinks some of the recommended sanctions might disenfranchise voters. Chairman Sharp announces that SB 141 will be set aside. SSTA - 4/27/95 Number 368 SB 118 TAX CREDIT: GIFTS TO PUBLIC BROADCASTING SENATOR SHARP brings up SB 118 as the next order of business before the Senate State Affairs Committee and calls the first witness. Number 373 SENATOR TORGERSON, prime sponsor of SB 118, informs the committee that SB 118 is an attempt to plug some of the gaps in funding for public broadcasting that were created by budget cuts. The original intent of the bill was to allow up to a $100,000 tax credit. It is his intent to create a true public-private partnership in the face of declining revenue. Senator Torgerson understands there might be a motion to adopt the house version of this legislation, which is quite different from SB 118. Number 390 SENATOR LEMAN states he has not seen a proposed committee substitute. CHAIRMAN SHARP does not have one either. SENATOR LEMAN comments that SB 118 seems to be reasonably consistent with existing tax credits. But if it [the house version?] is substantially different, he would want to give it careful scrutiny. SENATOR TORGERSON states it [the house version?] will increase the amount available for a tax credit to $350,000, and includes other categories. It also has a sunset at five years. SENATOR LEMAN asks if it [the house version?] keeps the credit at 50% of the amount given. SENATOR TORGERSON replies he would have to defer to his staff on that question. Number 427 BOB BARTHOLOMEW, Deputy Director of the Income & Excise Audit Division, Department of Revenue, informs the committee that there is currently in statute a provision for taking a tax credit for contributions to postsecondary educational institutions. This bill would expand that credit to cover public broadcasting contributions. The estimated fiscal impact of SB 118 is about $845,000. This figure is included in the department's fiscal note. CHAIRMAN SHARP asks what amount was taken for education credits last year. MR. BARTHOLOMEW responds that $944,000 in education tax credits were taken last year. SENATOR RANDY PHILLIPS asks Ms. Kaplan to convey her concerns to the committee. Number 460 DIANE KAPLAN, KOAHNIC Broadcasting Corporation, states the purpose of SB 118 is to encourage increased private contributions from corporations in Alaska. The goal is to begin an endowment fund to begin to replace some of the state funding that has been lost over the last ten years, and to preserve essential services throughout the state. The house version of the bill that was adopted originally had a $500,000 cap, with no sunset date. The committee substitute that was reported from the House Finance Committee places a $350,000 maximum on tax credits, with a five-year sunset provision. It also includes the fish-landing tax as one of the eligible taxes. We consider this to be the most important piece of legislation for public broadcasting this year: in addition to encouraging new private contributions, it also increases the ability of corporations to donate to higher education. Ms. Kaplan hopes that the Senate State Affairs Committee will adopt a senate committee substitute that matches the house version of the bill. She thinks it is important that public broadcasting and higher education not be put in competition for the same level of contributions. Number 483 SENATOR LEMAN asks, why not allow for donations to primary and secondary education, in addition to donations for postsecondary education? Number 499 SENATOR RANDY PHILLIPS comments he would like to keep the bill moving, and asks if a committee substitute can be presented when the bill is in the Finance Committee. CHAIRMAN SHARP adds that he would be more comfortable moving the original bill, than something he hasn't seen. Number 510 SENATOR LEMAN states he is not on the Finance Committee, and he thinks the committee should consider expanding SB 118 to include contributions towards primary and secondary education. CHAIRMAN SHARP notes that any diversion from the general fund is a dilution of funds available for appropriation. Number 545 SENATOR LEMAN states he intends to offer an amendment to include K- 12 education in the state. SENATOR RANDY PHILLIPS asks if that would be constitutional, especially if the money was contributed to a private, religious school. SENATOR LEMAN responds that it's not unconstitutional to make tax- deductible contributions to a church. SENATOR TORGERSON adds that Senator Leman's suggestion would also require a title change. Number 563 CHAIRMAN SHARP states he would just as soon hold the bill over to work on those suggestions, if it is the desire of the committee to make such substantial changes to the bill. Number 567 MS. KAPLAN expresses concern that if too many items, or even any other beneficiaries are added to SB 118, it would so dilute the amount of money that would go to any one entity, that it would not make a meaningful difference. She also thinks adding on other items would make it harder to pass the bill. Number 580 SENATOR LEMAN expresses disagreement with Ms. Kaplan's previous statement. CHAIRMAN SHARP states the committee will hear SB 118 again, as soon as the committee substitute for the bill is prepared. Number 590 CHAIRMAN SHARP adjourns the Senate State Affairs Committee meeting at 4:55 p.m.