Legislature(2011 - 2012)BARNES 124
02/07/2011 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB114 | |
| HB28 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 114 | TELECONFERENCED | |
| *+ | HB 28 | TELECONFERENCED | |
HB 114-OPT-OUT CHARITABLE GIVING PROGRAM
3:16:05 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 114, "An Act relating to an opt-out charitable
giving program offered by an electric or telephone cooperative."
3:16:07 PM
JANE PIERSON, Staff, Representative Steve Thompson, Alaska State
Legislature, on behalf of the prime sponsor, offered that Golden
Valley Electric Association (GVEA) brought this matter to
Representative Thompson's attention, she stated. This bill
proposes an opt-out charitable giving program, noting that more
than 250 cooperatives across the U.S. have implemented similar
successful programs. The programs are generally referred to as
round up programs because they round up to the next dollar on a
utility bill. This bill would allow the cooperative's members
the opportunity to participate in a charitable giving program
that would round their monthly bill to the next whole dollar
amount and use the excess for its program. The amount per
customer would not exceed 99 cents a month. He offered his
belief that this program would allow participants the
opportunity to contribute a small amount of money for charitable
use, which can help build strong, local communities.
MS. PIERSON related that this program is consistent with one of
the seven cooperative principles, which includes concern for the
community. The principle is as follows: "While focusing on
member needs, cooperatives work for the sustainable development
of their communities through policies accepted by the members."
Based on the collective generosity of cooperative members, the
small charitable donations ranging from $.01 to $.99 can add up
quickly. The funds would be collected and subsequently
disbursed back into the community to benefit qualified
organizations and individuals in the cooperative's service
district. Groups and individuals are encouraged to apply and
would complete and submit written applications, outlining the
level of need and the benefits in receiving the funds. One good
thing about this type of program is that it helps to fund the
small amounts charitable groups or individuals often need that
often go unfunded. She offered a wide variety of examples of
funding needs this program could fund: $2,480 for exam tables
for a health clinic, $2,500 in matching funds for new computers
for a library, $530 for a microscope for an elementary school,
$3,335 to purchase radios for a volunteer ambulance service,
$10,000 for a HAVAC system for a Boy Scout building, $3,500 to
fix a leaky roof for a disabled senior, $10,000 for a truck for
a fire department, and $10,000 to pay for a matching grant for a
recreation center.
MS. PIERSON explained that most electric cooperatives would
disperse funds through a separate board established under the
tax-exempt Internal Revenue Code Section 501 (c)(3). The board
would be comprised of a cross-section of the cooperative's
membership, with each voting district having representation. Of
the 250 cooperatives with charitable programs established, most
have an "opt-out" program rather than an "opt-in" program since
data has shown that "opt-out" programs have a significantly
higher involvement, typically with 90 percent member
participation. She related that under the program, cooperative
members would be given an opportunity to opt out of the program
at any time, in writing, by telephone, by using the internet, or
by applying in person at the cooperative. Additionally, its
members are given the opportunity to claim a full refund of all
amounts they paid under the program for up to the three
preceding years. This bill would clarify any possible conflicts
with AS 45.45.930, which refers to "opt-out" marketing plans.
Members also would have a voice in the "opt-out" charitable
giving programs as the program requires membership approval,
disclosure of the contribution amount on the member's billing,
and as previously mentioned, extends full refunds for up to
three years of any contributions.
3:20:17 PM
REPRESENTATIVE MILLER assumed that under this scenario any
monies would be collected by GVEA. He asked for the
disbursement procedure the cooperative would use in the opt-out
charitable program.
MS. PIERSON explained that monies would be collected either
quarterly or annually and be dispersed through a separate
section "501(c) (3)" entity. The board would review
applications and vote on how to apply the collected funds to
charities. In further response to Representative Miller, she
clarified that the board she was referring to is the board of
the separate "501(c)(3)" corporation established for this
purpose. She confirmed that a member could receive refunds for
up to three years for any charitable donation collected by the
cooperative if a member decided to opt-out of the program.
3:22:06 PM
REPRESENTATIVE JOHNSON referred to the wide variety of
disbursements possible, ranging from a pickup truck to a leaky
roof for a disabled senior. He asked whether disbursements must
be to a private not-for-profit and whether any organization is
prohibited from receiving funds such as a political campaign.
MS. PIERSON said she does not believe so, but deferred to Brian
Newton, Golden Valley Electric Association for further
clarification. She pointed out that a senior citizen with a
leaky roof would not be a "501(c)(3)" organization.
3:23:08 PM
BRIAN NEWTON, President and CEO, Golden Valley Electric
Association (GVEA), responded to Representative Johnson's
question by stating that the bylaws prohibit any donations to
political campaigns or any religious purposes. Therefore, the
donations would primarily be given to people in need or agencies
such as a "501(c)(3)'s" that apply for funds. In further
response to Representative Johnson, he clarified that the by-
laws he was referring to are the separate corporation's bylaws
filed with the State of Alaska.
3:23:51 PM
REPRESENTATIVE JOHNSON asked how difficult it would be to change
the corporation entity's bylaws.
MR. NEWTON answered that any proposed bylaw change would need to
be approved by the board and by the GVEA board. He remarked
that a "501(c)(3)" organization must abide by certain criteria
in order to qualify for its tax exempt status. Thus, the IRS
guidelines restrict disbursement of the tax exempt corporate
funds. In further response to Representative Johnson, Mr.
Newton said he was not sure whether the Alaska Center for the
Environment held that status.
3:24:45 PM
REPRESENTATIVE JOHNSON offered his belief that the Alaska Center
for the Environment qualifies as a section "501(c)(3)" entity.
He asked whether that organization donates to political
candidates.
MR. NEWTON answered that he was unsure. He commented that the
board must wrestle with a lot of individual questions such as
these and will also need to review a number of layers. He said
that typically the charitable giving program would identify
particular projects based on need that would benefit Interior
residents. The opt-out program is not intended for political or
religious purposes, he said. He reiterated that the funds would
be used to start programs to benefit Interior residents.
3:25:43 PM
REPRESENTATIVE JOHNSON surmised that a political purpose might
be considered as beneficial to Interior residents.
MR. NEWTON offered his belief that a political purpose would not
constitute a proper "501 c 3" purpose so a charitable opt-out
entity would be prohibited from donating funds used for
political purposes. He described the application process,
noting the "501 (c) (3)" board would meet quarterly to review
applications and distribute funds. He related the application
process is public so people can view the applications submitted.
He characterized the process as a very transparent process.
3:26:34 PM
REPRESENTATIVE JOHNSON asked whether the group could contribute
to the "501 (c) (3)" entity and use funds to build transmission
facilities if a utility wanted to bond transmission facilities.
MR. NEWTON suggested the Department of Law could better answer
what the IRS would allow than he could. He reiterated the "501
(c) (3)" bylaws specifically prohibit any individual member from
using funds to pay an electric bill or to fund electrical
projects. Therefore, the scenario Representative Johnson
described would not fit the proper purpose and would be
prohibited, he stated.
3:27:26 PM
REPRESENTATIVE MILLER asked how funds would be collected and
managed and for further clarification of the board structure and
process.
MR. NEWTON responded that the bylaws of the "501 (c) (3)"
establish the boundaries of board member selection. He
described actions the GVEA member advisory committee (MAC) has
taken thus far. The MAC published notices in the local
newspaper and in its newsletter, soliciting volunteers for the
"Goodcents" board and has made recommendations of who should
serve on the "Goodcents" board. The GVEA board subsequently
approved the "Goodcents" board members. Potential funds will be
derived from a "round up" on each participating consumer's
electric bill - collected monthly and deposited in a separate
fund. The fund balance will be maintained until the "Goodcents"
board holds its quarterly board meeting, at which time it would
allocate funds to specific projects submitted by application.
He recapped that an application must be submitted that includes
the potential recipient - the specific person or entity - the
timeline, and the details of a proposed project. The
"Goodcents" board will subsequently grant or deny the funds and
a complete accounting of these funds would be available.
3:29:24 PM
REPRESENTATIVE MILLER related that he has received a few phone
calls and while he did not see anything wrong with the proposed
plan, the question arose as to why the funds would not simply be
used to lower electric costs for everyone or be used for
specific individuals in need.
MR. NEWTON answered that the MAC wrested with this concept, as
did the GVEA's Board of Directors (BOD), and both agreed that it
would be "self serving" simply to collect funds from those who
could afford to pay and apply them to consumers' accounts who
cannot afford to pay their bills. Thus, the MAC and GVEA's BOD
decided not to do so. He advised that some cooperatives in
other states use these types of funds to cover client
delinquencies. He reiterated that the MAC's board chose not to
take that approach, and in fact, included a prohibition in the
"Goodcents" bylaws to prohibit applying the funds to customers'
delinquent bills.
3:30:26 PM
REPRESENTATIVE SEATON said he did not see any requirement that
an electric cooperative must establish a "501 (c) (3)" entity in
the bill. He related his understanding that under this bill, an
electric cooperative could collect up to $.99 from each customer
and use the collected funds for a charitable giving program. He
asked whether the GVEA's BOD could decide how to disperse the
funds.
MS. PIERSON answered yes, that is correct. She offered that
each individual cooperative would set up its own opt-out
program, which would be approved by their membership.
3:31:39 PM
REPRESENTATIVE SADDLER referred to page 3, paragraph 4 of the
bill. He asked whether the utility has included provisions to
pay interest to members who request a refund.
MS. PIERSON answered that she does not believe so.
MR. NEWTON explained that the opt-out program would hold the
collected funds for a relatively short time period. He pointed
out that the GVEA's "Goodcents" entity is not set up as a trust
or a foundation. He suggested that the few cents collected, on
average $.50 per month per customer, would not amount to
interest of even a penny.
REPRESENTATIVE SADDLER disagreed and said he thought the
interest would not be insignificant and would amount to more.
MR. NEWTON reiterated his belief that the amount collected for
charitable giving per customer would be minimal and would
benefit the entire program plus any interest accrued would stay
in the fund and be distributed in its entirety.
3:33:00 PM
REPRESENTATIVE SADDLER asked whether the opt-out funds would
provide extra revenue or would serve any other cooperative
function.
MR. NEWTON offered that the opt-out fund would not serve any
other function and the IRS specifies the allowable uses, which
are similar to scientific, educational, and philanthropic
purposes.
3:33:43 PM
CHAIR OLSON stated his intent to hold HB 114 over. He asked
members to submit written questions to him, which will be
forwarded to the attorney to answer.
3:34:39 PM
REPRESENTATIVE HOLMES made a motion to adopt Amendment 1,
labeled 27-LS0424\A.2, Kane, 2/4/11, which read as follows:
Page 1, line 2, following "cooperative":
Insert "; and allowing for an electric
cooperative to assist persons in acquiring and
installing weatherization and energy efficiency
products and services"
Page 2, following line 27:
Insert a new bill section to read:
"* Sec. 2. AS 10.25.020 is amended to read:
Sec. 10.25.020. Powers of electric cooperative.
An electric cooperative may
(1) generate, manufacture, purchase,
acquire, accumulate, and transmit electric energy, and
distribute, sell, supply, and dispose of electric
energy to its members, to governmental agencies and
political subdivisions, and to other persons not
exceeding 10 percent of the number of its members;
however, a cooperative that acquires existing electric
facilities may continue service to persons, not in
excess of 40 percent of the number of its members, who
are already receiving service from these facilities
without requiring them to become members, and these
persons may become members upon the terms as may be
prescribed in the bylaws;
(2) assist persons to whom electric energy
is or will be supplied by the cooperative in wiring
their premises and in acquiring and installing
electrical and plumbing appliances, equipment,
fixtures, and apparatus, and weatherization and energy
efficiency products and services by financing them,
and, in connection with these services, wire or have
wired the premises, and buy, acquire, lease, sell,
distribute, install, and repair electric and plumbing
appliances, equipment, fixtures, and apparatus, and
weatherization and energy efficiency products and
services;
(3) assist persons to whom electric energy
is or will be supplied by the cooperative in
constructing, equipping, maintaining, and operating
electric cold storage or processing plants by
financing them or otherwise;
(4) operate a waste heat distribution
system;
(5) operate a heating distribution system
that was in existence on June 9, 1988;
(6) provide sewer, water, or gas utility
service if the cooperative has received a certificate
of convenience and necessity under AS 42.05.221 -
42.05.281 from the former Alaska Public Utilities
Commission or the Regulatory Commission of Alaska for
each type of service provided;
(7) provide direct satellite television
programming services; in this paragraph, "direct
satellite television programming services" means a
video broadcast signal that is received directly from
a satellite by an end user."
Renumber the following bill sections accordingly.
CHAIR OLSON objected for the purpose of discussion.
3:35:01 PM
REPRESENTATIVE HOLMES explained the purpose of proposed
Amendment 1. Currently, some electric cooperatives have the
ability to loan money to its members. Proposed Amendment 1
would extend the list of services and allow electric
cooperatives to loan money for the purpose of weatherization
energy efficiency products and services. As it stands now,
people often must incur the weatherization expenses for an
energy audit, including paying for a second inspection prior to
requesting reimbursement for energy audit expenses. This
amendment would allow electric cooperatives to loan money to its
members for weatherization expenses in the interim. She urged
members to adopt proposed Amendment 1.
REPRESENTATIVE SEATON asked for clarification that proposed
Amendment 1 would not pertain to the opt-out program, but would
add a new section that would pertain to electric cooperatives'
ability to lend money.
CHAIR OLSON agreed that is the purpose of Amendment 1.
3:36:34 PM
REPRESENTATIVE MILLER referred to talking points in members'
packets, noting members must vote in favor of the opt-out
program. He asked whether this action had been taken yet on the
GVEA's "Goodcents" program.
CHAIR OLSON asked to hold that question until the pending
amendment was acted upon.
CLAY KOPLIN, Executive Director, Cordova Electric Cooperative
(CEC), indicated his comments related to the bill.
JOE GALLAGHER, Public Relations Coordinator, Homer Electric
Association (HEA), interjected that HEA has a line of credit
program that is a popular program, but HEA cannot currently use
its program to finance weatherization project requests. He
offered support for proposed Amendment 1, as it would allow HEA
to extend those services to its members. He said he anticipated
that HEA members would use the services.
CHAIR OLSON removed his objected to proposed Amendment 1. There
being no further objection, Amendment 1 was adopted.
3:39:18 PM
MR. KOPLIN asked to speak in support of HB 114. He explained
that what he liked about the opt-out program is this program
would allow a democratic choice for members to create a
charitable giving program, unlike rate setting or other
democratic processes a board would incorporate into the bylaws.
Additionally, members also have the ability to opt out if they
do not choose to participate. He said he appreciated the
cooperatives' ability to be self-governed as private not-for-
profit organizations. He surmised that in this challenging
environment it will be important to allow cooperative members to
use energy and make decisions to meet their needs and benefit
local communities.
MR. NEWTON answered an earlier question, noting that GVEA's
membership approved the program last spring. He advised that
the GVEA also worked with the attorney general's office on
language in the bill in hopes to eliminate any ambiguity with
the opt-out program provisions. He asked Mr. Sniffen, Alaska
Department of Law, to discuss the criteria in HB 114 and the
charitable purposes with respect to the proposed opt-out
programs.
3:42:25 PM
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General,
Commercial/Fair Business Section, Civil Division (Anchorage),
Department of Law (DOL), agreed that he has worked with GVEA on
this issue. He provided a brief history, noting that currently
under Alaska law, AS 45.45.930 prohibits opt-out marketing
plans. Thus, a company cannot tell someone that they will
receive something and subsequently charge someone unless he/she
has taken affirmative action to decline. He described a
specific scenario in which Alaska Communications Systems (ACS)
attempted to sell upgraded calling plans to consumers by
providing notification on customers' bills that their plans had
been upgraded. The ACS also advised its customers they would be
charged a fee for the improved plan unless the customers
informed ACS that they did not want the plan. He said that
ACS's customers held significant opposition to the marketing
plan, and the legislature subsequently passed AS 45.45.930,
which addressed the issue. He reported that when GVEA initially
proposed its opt-out program, questions arose as to whether AS
45.45.930 would prohibit this kind of charitable giving, taking
into consideration that the electric or telephone cooperative
would not be selling a product or service. Discussions ensued
with GVEA with respect to whether the opt-out program would
violate the current statutes. The language developed is
intended to make it clear that HB 114, if passed, would not
conflict with AS 45.45.930, and the bill includes a specific
exemption, in proposed Section 3 of HB 114, that would indicate
the statute does not apply to these types of plans. Further,
the new language would also be inserted in Title 10, he said.
3:44:47 PM
MR. SNIFFEN advised that the DOL has reviewed the language in
the bill. He offered his belief that while the DOL does not
take a position on the bill, HB 114 contains some fairly
significant consumer protections. He elaborated on the consumer
protection aspects, including that a member cooperative must
approve the plan and a three-year roll back refund provision to
consumers. Additionally, the amount of money collected from
individual customers is small. Further, the billing statements
must clearly identify the voluntary contributions and allow
consumers to opt out, plus the opt-out provisions are easy for
consumers to use. One thing that is not in the bill is a
requirement that a cooperative be a "501 (c) (3)" corporation
under this bill, he said.
MR. SNIFFEN indicated that while GVEA has chosen for its
"Goodcents" program to set up a "501 (c) (3)", which is limited
by the Internal Revenue Code regulations in terms of entities
that it can donate money, other electric cooperatives may decide
not to create a "501 (c) (3)" and could instead give money to a
political action committee (PAC) or religious organization or
offset delinquent bills from consumers. Nothing in the bill
would prevent a change by GVEA or another electric cooperative
from to allow contributions to PACs or religious organizations.
The committee would need to address that issue if it decides to
prohibit that type of activity, he advised.
3:47:17 PM
REPRESENTATIVE HOLMES referred to "charitable" and asked if any
definition exists.
MR. SNIFFEN said he was unsure, but was not aware whether Title
10 contains the definition, noting that charitable is sometimes
defined to include qualifying "501 (c)(3) and (c)(4)" entities.
He recalled that in other parts of the applicable proposed
statutes in the bill, it refers only to "501 (c) (3)" entities.
3:47:52 PM
REPRESENTATIVE SEATON offered his belief that the bill should
not restrict cooperatives to only distribute funds to a "501 (c)
(3) or (c) (4)" since the intent is to allow the cooperative to
donate funds for charitable purposes. The local community would
identify its priorities, he remarked.
CHAIR OLSON clarified that the GVEA has structured its entity to
fall under the IRS interpretation of what a "501 (c) (3)" entity
can donate its funds to but other cooperatives may not be
subject to the IRS restrictions since the cooperatives may
decide not to use the "501 (c) (3)" status.
REPRESENTATIVE SEATON asked for clarification about whether the
definition of charitable would address that issue.
MR. SNIFFEN advised that HB 114 does not specifically limit
donations to a charitable organization since the language
indicates the program would be an opt-out charitable giving
program. Provisions in HB 114 are a little vague as to whether
the funds can be used for a broader range of charitable purposes
that include "501 (c) (3)" entities or to other entities such as
for donations to disabled individuals, he said. He also offered
his belief that the bill, as a whole, seems to indicate the
intent is to allow collected funds to be used for a charitable
purpose. He reiterated the current language is somewhat vague.
3:51:35 PM
REPRESENTATIVE HOLMES related her understanding that the
discussion pertained to whether an electric cooperative would
set up a "501 (c) (3)" entity to manage the money, recognizing
that the "501 (c) (3)" entities donations are constrained by
federal law. Therefore a "501 (c) (3)" could not donate to a
PAC but could donate funds to a boys or girls club, she said.
She suggested that issue Representative Seaton referenced it
seems to imply that the electric cooperative must donate funds
to an entity or organization that is set up as a "501 (c) (3)"
entity. She asked for further clarification.
MR. SNIFFEN said that GVEA established a "501 (c) (3)" entity to
manage its charitable giving program. Nothing in the bill would
require another electrical cooperative, such as HEA to do the
same. He agreed that GVEA will be a little restricted as to how
it can use funds to implement its program, since it is subject
to the IRS code. He reiterated another cooperative could
structure its opt-out program in another way that would allow it
to donate to a PAC or other organization.
MR. NEWTON agreed that GVEA is set up as a "501 (c) (3)" but the
bill does not preclude another structure.
3:54:00 PM
REPRESENTATIVE JOHNSON asked what kind of disclosure laws would
apply to the board, such as whether anything would restrict a
board member of a cooperative from fixing his mother's roof with
the funds.
MR. SNIFFEN stated that under this program, the bill does not
require disclosure, but he offered his belief that GVEA would
disclose its recipients. He thought Mr. Newton could elaborate
on the process.
CHAIR OLSON pointed out two issues which have been raised: how
the bill would affect the GVEA program and how it would affect
other cooperatives.
MR. SNIFFEN agreed. He acknowledged that he was not familiar
enough with the cooperatives to advise whether any requirement
for disclosure would apply. He also said he could not recall
any consumer protection provision that would require such
disclosure.
MR. NEWTON responded that electric cooperatives are membership
owned so GVEA's members can request the information and the
cooperative would share the source and distribution of funds.
He suggested that if the GVEA funded a new roof for a senior
citizen that the GVEA would not specifically identify the person
by name since such action would likely deter people from
applying for its charitable funding program. However, the
causes would be public and GVEA would work to ensure the process
is a transparent process. He suggested the committee may wish
to structure the bill to add a prohibited list, which would
identify purposes not allowed in the opt-out charitable giving
programs.
3:57:30 PM
REPRESENTATIVE JOHNSON asked whether anything similar to the
Ethics Act would govern utilities to provide disclosure
requirements.
MR. SNIFFEN said he was uncertain. He said he was unaware of
any provision although it is possible that some provision in
Title 10 might apply to disclosures by cooperatives. He offered
to research this and report back to the committee.
MR. NEWTON remarked that GVEA is a membership owned cooperative
with ethics and conflict of interest policies that would also
extend to its "501 (c)(3)" board. He indicated that the
disclosure provisions are included in its bylaws and policies.
He said he was not aware of any state statute requirement that
would apply since GVEA is a private entity owned by its members.
REPRESENTATIVE SEATON said he was comfortable with the bill
because of the individual opt out provisions that allow members
refunds and they would have up to three years to decide whether
to opt-out of the program. He said he was reluctant to burden
smaller utilities to require them to set up a "501 (c)(3)"
entity when its board of directors, which is subject to
elections, could reasonably make decisions and determinations on
any donations.
CHAIR OLSON offered his belief that some of the issues could
also be resolved in the next committee of referral, which is the
House Judiciary Standing Committee.
REPRESENTATIVE HOLMES agreed since she also sits on that
committee.
4:00:45 PM
REPRESENTATIVE JOHNSON asked for GVEA's size as compared to
Chugach Electric Association (CEA) and the Alaska Electric Light
and Power (AEL&P).
MR. SNIFFEN was uncertain. He surmised that the CEA and AEL&P
would be in the hundreds of thousands.
REPRESENTATIVE JOHNSON suggested that if it was 100,000 people
the average amount would be $50,000 per month.
MR. NEWTON said he thought GVEA has about 45,000 members, while
CEA would be nearly double that size, perhaps 60,000, which
would generate about $30,000 per month.
REPRESENTATIVE JOHNSON recalled an earlier question raised the
issue that the potential for the amount collected is not
insignificant. He said he thought the total amount collected
could range up to $100,000 per month.
MR. NEWTON asked for clarification on the question.
REPRESENTATIVE JOHNSON related that his calculation on the total
amount is based on an average of $.50 per customer. He asked
how the funds would be accounted for in the accounting process.
MR. NEWTON answered that the funds are not the GVEA's or other
cooperative's funds. He pointed out that AEL&P is a municipal
entity and therefore the proposed bill would not apply to it.
He offered that electric cooperatives would be affected but the
funds are not owned by the cooperative. Thus, the funds would
"sweep" automatically to the not-for-profit organization set up
for that purpose, he stated.
4:03:08 PM
REPRESENTATIVE JOHNSON reiterated that the overall amount in
question represents a significant amount of money. He said he
likes the bill's overall concept. He expressed concern about
where the money might be donated, in particular, with
cooperatives that have not yet set up an opt-out program. He
said it is possible an electric cooperative could have upwards
of $1 million per year collected and donated. He said he would
like to flesh out these concerns.
REPRESENTATIVE SADDLER related he would like some "hard numbers"
on the level of participation. He offered his belief that it
would be helpful to know how much money could be generated by
the electric cooperatives in the state.
REPRESENTATIVE SEATON agreed it would be helpful to have a chart
that showed the annual amount that would potentially be
collected.
REPRESENTATIVE JOHNSON asked whether GVEA could gauge the
participation level for its opt-out program.
MR. NEWTON answered by indicating part of the attorney general's
initial concern was over proper notification. He reported the
GVEA held discussions with its membership for a six month
period. He further reported that 90 percent of its members have
chosen to participate in the opt-out program, whereas 10 percent
have chosen not to participate. He offered his belief that what
GVEA has experienced is typical for cooperatives offering this
type of program. He informed members that GVEA expects to
collect $225,000 annually and these funds will be available to
redistribute for charitable purposes.
4:06:21 PM
REPRESENTATIVE THOMPSON related his understanding that the bill
would fund things such as providing microscopes to schools. He
further thought that one condition of a "501 (c)(3)" entity is
that an IRS 1099 form would be issued each time funds are
dispersed.
MR. NEWTON answered that is partially correct. He related that
GVEA set up a "501 (c) (3)" entity since that structure offers
the best advantage to GVEA, with respect to distribution of
funds. The GVEA limits its charitable donations to $10,000 in
order to spread the funds to as many good causes as possible.
He acknowledged that funds would typically be used for projects
that cannot obtain its funds elsewhere, such as from the United
Way campaign. He was uncertain about the necessity of the 1099
from, but he pointed out that GVEA has the ability to disperse
funds to individuals, just as Love, Inc. currently donates money
to an individual to pay an electric bill.
[HB 114, as amended, was held over.]
4:09:33 PM
The committee took an at-ease from 4:09 p.m. to 4:10 p.m.