Legislature(2023 - 2024)ADAMS 519
05/02/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB3 | |
| HB83 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 3 | TELECONFERENCED | |
| += | HB 83 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 3
"An Act relating to specie as legal tender in the
state; and relating to borough and city sales and use
taxes on specie."
1:37:01 PM
REPRESENTATIVE KEVIN MCCABE, SPONSOR, provided a brief
recap of the legislation. He read from a prepared
statement:
The purpose of HB 3 was to recognize Alaska's
constitutional duty, power and right under Section 10,
Article I, of the United States Constitution, and the
Tenth Amendment of the United States Constitution to
make gold and silver legal tender in the payment of
debt. The legislation would secure the rights of
citizens of this state under the Ninth and Tenth
Amendments of the United States Constitution to tender
gold and silver in the payment of a debt should the
merchant or payee agree to accept it. The bill took
the first step in protecting specie from the borough
city use or exchange tax. He added that 12 other
states adopted laws to accept gold and silver coins as
legal tender. As of 2022, 42 states had removed some
or all taxes from the purchase of gold and silver.
The bill would preserve, protect, and promote the
state and its economic security, safety, health, and
welfare of the people of this state; and protect the
state and its citizens in the acquisition and
possession of gold and silver and their use as legal
tender in the payment of debt.
1:38:54 PM
Co-Chair Foster asked for a review of the sectional
analysis.
BUDDY WHITT, CHIEF OF STAFF, REPRESENTATIVE KEVIN MCCABE,
reviewed the sectional analysis (copy on file):
Section 1 amends A.S. 29.45.650(a) to include a new
subsection (l) outlined under Section 2 below.
Section 2 amends AS 29.45.650 to add a new subsection
to protect "specie" from a borough sales or use tax on
the sale or exchange of specie.
Section 3 amends AS 29.45.700(a) to include a new
subsection (h) outlined under Section 4 below.
Section 4 amends AS 29.45.700 to add a new subsection
to protect "specie" from a city sales or use tax on
the sale or exchange of specie.
Section 5 amends AS 44.12 to add Article 5. Legal
Tender which defines "legal tender" in the state to
include gold and silver tender including "specie."
This section also states that person is not required
to accept gold or silver specie as tender and defines
"specie" and "legal tender."
Section 5 is further amended by adding a new section
to read: "The House Finance committee shall study the
possibility of establishing additional forms of legal
tender for the payment of debts, including public
charges, taxes, and other money owed to the state. If
the committee determines that additional forms of
tender are practical and beneficial, the committee
shall prepare legislation establishing an additional
form of legal tender for introduction."
Section 6. Section 4, ch. 100, SLA 2002, as repealed
and reenacted by sec. 9, ch. 117, SLA 2003 and sec. 2,
ch 30, SLA 2005 is repealed, reenacted, and amended to
read as outlined in Section 1 above.
Mr. Whitt noted Section 5 regarding the House Finance
Committee making the determination regarding additional
forms of legal tender and informed the committee that the
sponsor was agreeable to amending the provision.
Representative Galvin shared that she had taken some time
to read up on the constitution. She pondered what
implementation of HB 3 would look like. She wondered if
passage of the bill would send a message to Alaskans that
they could pull their gold bars out of storage and pay for
debt in that way. Representative McCabe responded in the
negative. The tender would have to be in the form of a coin
with a stamp stating its purity and value in ounces. If a
merchant accepted the specie, the merchant and buyer would
come to an agreement on the value of the coin and the
merchant would provide change in whatever method of his or
her choosing (specie or money). He stressed that the
transaction was purely voluntary. Representative Galvin
asked for verification that the exchange between an Alaskan
and any vendor was voluntary. Representative McCabe
responded in the affirmative. Representative Galvin cited
page 2, line 21 of the bill as follows:
The House Finance Committee shall study the
possibility of establishing additional forms of legal
tender for the payment of debts
Representative Galvin did not know it was within the scope
of the Finance Committee and questioned how that would
work. Representative McCabe replied that Representative
Hannan had brought the issue up the previous year. He
recently spoke with Co-Chair Foster's office about changing
the committee to the Legislative Budget and Audit Committee
(LBA). He explained that the provision left the door open
for the legislature to further consider the issue.
1:45:03 PM
In response to a question by, Representative Galvin,
Representative McCabe answered that the transaction was not
on paper, it was actually a gold coin called specie. It
was not a gold certificate; the specie was stamped by
weight based on a troy ounce. Representative Galvin
questioned whether whatever was exchanged or agreed upon,
may be worth something else the next day because gold was a
commodity. She understood there were things like inflation,
but it was not exactly the same with specie, there was some
risk. She asked what the sponsor would say if gold was used
one day, and its value tanked the next day. There might be
merchants that fault the state for legalizing the tender
and putting them at risk.
1:46:58 PM
Representative McCabe related a historical story about
using a gold eagle worth $20 as currency. He reported
that today a gold eagle was worth $2,200 and believed that
gold had tracked with the rest of commodities, but money
had not because of inflation. He thought that gold held a
higher value and was not subject to inflation like the
dollar.
Representative Hannan observed that the bill protected gold
and silver specie. She wondered what the differentiation
was from just using a gold nugget. Representative McCabe
responded that the gold had to be coined as money in order
to be recognized by the bill. He ascertained that what she
had described was bartering. Representative Hannan asked
who was backing the currency. She remarked that the state
was not backing the specie. She asked if it was a private
currency exchanged between two people. She was trying to
determine how it was a currency versus a private agreement
between two people over a valued asset. Representative
McCabe answered that it needed no backing because it was
gold. He furthered that each certificate had a serial
number and believed that it was safer than dollars in terms
of counterfeiting.
1:51:22 PM
Representative Cronk asked if the sponsor had reached out
to communities about sales tax loss. Representative McCabe
answered in the affirmative. He had discussed the issue
with the Alaska Municipal League (AML) who thought it could
cost communities $5 million in taxes. He deduced that a $5
million loss at the lowest tax rate of 3 percent would
equate to selling $167 million in specie per year. He noted
another statement by AML that calculated a loss of $3000 in
tax revenue in Wasilla. He spoke to the municipality who
informed Representative McCabe that there was only one gold
and silver buyer licensed in Wasilla who only purchased
gold but did not sell it. He indicated that Juneau had
informed him that they tracked sales tax by vendor in
broader categories and did not know what impact the bill
would have. He shared data from Arkansas with a population
of over 3 million with a tax rate between 6.5 percent and
11.5 percent. Arkansas had lost $255,000 in sales tax due
to its bill legalizing specie. The state of Tennessee lost
$117,000 and Maine had lost $27,000 in sales taxes. He
believed the benefit of the bill outweighed the losses.
Co-Chair Foster asked why stores could not continue to
charge sales tax and keep track, similar to regular
currency. Representative McCabe answered that if a person
used specie to buy something, the sales tax on the purchase
would still apply. However, there would be no sales tax on
the transaction when exchanging a gold specie for money.
The one exception would be on collectible coins or dollars,
which were taxed when purchased.
1:56:49 PM
Representative Tomaszewski asked what the value of 1 troy
ounce would be. Representative McCabe stated the biggest
coin he had seen was valued at $50 and weighed one-fiftieth
of a troy ounce.
Co-Chair Foster moved to the fiscal note discussion.
PAM LEARY, DIRECTOR, TREASURY DIVISION, DEPARTMENT OF
REVENUE (via teleconference), relayed that the department
did not have a fiscal note. She did not have additional
comments on the bill.
Representative Galvin referenced Representative McCabe's
statement that another department might study other forms
of tender instead of the House Finance Committee. She
assumed the Department of Revenue (DOR) was not part of the
bill, but if that were the case, she asked if it would take
some resources to carry out the study. Representative
McCabe answered that they had decided a better entity to
address the issue was the Legislative Budget and Audit
Committee. Representative Galvin asked for verification
LB&A would implement the bill and determine the costs.
Representative McCabe answered in the affirmative.
Representative Hannan asked how the department felt about
the bill.
2:00:23 PM
Ms. Leary answered that the department was neutral on the
current version of the bill. She had testified in a
previous committee [House State Affairs Committee] on
Section 5 that authorized a study that included the state
accepting payment in gold or another legal tender. She
informed the committee that the state did not have any
expertise in precious metal within the treasury. She
discovered that there were not many if any states accepting
specie as a payment for taxes. She indicated that if the
state accepted gold, it would be difficult to value the
gold and the state would bear the risk of the valuation.
She understood that there were ways of establishing usage
outside of the treasury, but it was not something the
department could currently handle.
2:01:54 PM
ROBERT PEARSON, STATE/FEDERAL PROGRAMS MANAGER, DEPARTMENT
OF COMMUNITY AND REGIONAL AFFAIRS (via teleconference),
spoke to the Department of Commerce, Community and Economic
Development's zero fiscal note FN2 (CED). The bill would
not impact the Department of Commerce, Community and
Economic Developments (DCCED) operations.
2:03:21 PM
Co-Chair Foster OPENED public testimony.
2:04:07 PM
GEORGE HIGHTOWER, SELF, WASILLA (via teleconference), spoke
in support of the bill. He shared that he was 66 years old
and recalled when people carried gold and silver coins in
everyones pockets. He referenced Article 1 and Article 2
of the United States (US) Constitution naming gold and
silver as legal tender in the payment of debt. He recalled
as a child in the early 60s paying for goods and receiving
change in silver quarters and dimes and half dollars coined
by the US Mint. He offered that today the same quarter
coined by the U.S. Mint would purchase more than one gallon
of gas today because the silver quarter would now be worth
$5.00. He believed that proved the stability of using of
silver and gold as the foundation of the monetary system.
He thought that it spoke to the question of taxation and
inflation. The value of silver and gold had kept up and
surpassed inflation over time. He spoke to the effects of
inflation on the dollar. He believed that money was lost
through inflation by not utilizing gold and silver as
money. He believed that the bill was reestablishing
something that was already proven to be a sound system.
He added that other nations were also moving back to
accepting gold and silver as money.
2:11:38 PM
Co-Chair Foster CLOSED public testimony.
Representative Hannan stated that the Alaska Municipal
League had answered some questions that were included in
the bill packet (copy on file). She asked about capital
gains taxes and noted that AML stated species was still
subject to capital gains taxes. She asked for the sponsor's
thoughts on the topic. She asked about the problem the
sponsor was aiming to solve through the bill.
Representative McCabe responded in the affirmative and
stated that specie was still subject to capital gains tax,
and it was a federal requirement. He shared that a
constituent brought the idea of the bill to him who wanted
to store gold specie instead of saving cash. He discovered
that it was possible to pay taxes in Texas with gold.
Representative Hannan stated it was her understanding that
four states had gold specie: Utah, Nevada, Wyoming, and New
Hampshire. She wondered why Alaska needed its own specie if
others existed. Representative McCabe answered that the
state did not need to produce its own specie since other
states specie would be valid. He thought it would be
amazing if Alaska produced its own with images of Denali
and other Alaskan symbols. He added that specie could be
currently purchased but it could not be used in cities that
had sales tax unless tax was paid on the specie.
2:17:07 PM
Representative Stapp thanked the sponsor for bringing the
bill forward. He favored the state to producing its own
specie.
Co-Chair Foster asked the Department of Administration to
review its fiscal note.
HANS ZIGMEND, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT OF
ADMINISTRATION (via teleconference), reviewed the
department's zero fiscal note. He voiced that there would
be minimal impact on the Division of Finance and the State
of Alaska's accounting system, which could be absorbed with
existing resources.
Co-Chair Foster set an amendment deadline of Friday, May 5
at 5:00 p.m.
Representative McCabe appreciated the committee hearing the
bill.
HB 3 was HEARD and HELD in committee for further
consideration.
2:19:46 PM
AT EASE
2:26:23 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 83 NEW FN LAW 042823.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 83 |
| HB3 - Municipal Impact Statement 050123.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 3 |
| HB 83 Public Testimony Rec'd by 050223.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 83 |
| HB 83 Public Testimony Rec'd by 050223 Pkt. 2.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 83 |
| HJR2 HB38 Response OpCap Split graph. 050323pdf.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 38 HJR 2 |
| HB 83 Public Testimony Rec'd by 050923.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 83 |
| HB 83 Public Testimony Rec'd by 050923 Pkt 2.pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 83 |
| HB 83 Public Testimony 09-13-23 .pdf |
HFIN 5/2/2023 1:30:00 PM |
HB 83 |