Legislature(2021 - 2022)ADAMS 519
03/03/2022 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB158 | |
| HB287 | |
| HB246 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 158 | TELECONFERENCED | |
| + | HB 246 | TELECONFERENCED | |
| + | HB 287 | TELECONFERENCED | |
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 158
"An Act relating to contributions from permanent fund
dividends to the general fund."
9:01:58 AM
9:02:09 AM
AT EASE
9:02:29 AM
RECONVENED
REPRESENTATIVE MIKE PRAX, SPONSOR, explained that the bill
would give individuals the opportunity to give their share
of the Permanent Fund Dividend (PFD) payment back to the
state if they desired. The bill asked the Department of
Revenue (DOR) to modify the electronic PFD application form
to include a check box that would allow applicants to
contribute up to the full value of the dividend in
increments of $25.
Representative LeBon asked if individuals would be able to
designate which agency the funds would go to.
Representative Prax answered in the negative. He explained
that the that funding would go to the General Fund.
Representative LeBon asked if the sponsor believed it would
be more popular if Alaskans could donate the money to a
specific department such as the Department of Public
Safety.
Representative Prax agreed. He believed the idea may be
worth considering in the future. His goal for the bill was
to make the basic option available to see how it worked.
Vice-Chair Ortiz shared that he had been approached by
several constituents who would like to see their PFDs
invested in a separate Permanent Fund account that would
grow over time and would be available to them at some point
in the future. He asked the bill sponsor if he had explored
the idea.
9:06:08 AM
Representative Prax answered that he had looked into it a
bit. He stated that it sounded like a great idea; however,
it would be legally challenging. He explained that it meant
there would be money in the Permanent Fund that belonged to
the public and individuals. He thought was a good idea, but
it was complicated to set up.
Representative Thompson thought he would likely come up
with an amendment to allow people to donate the funding to
the General Fund or to the principal of the Permanent Fund.
He asked the sponsor for his opinion.
Representative Prax did not object to the idea. He stated
the money belonged to the donor so they should get to
choose where it went. He explained that the PFD funds were
in the General Fund prior to going to individuals. He did
not know about the mechanics of transferring the funding
back into the Permanent Fund.
Representative Thompson asked for more detail about his
idea.
Representative Prax answered that the concepts proposed by
Representative Thompson and Representative LeBon may be
something worth investigating in another bill. He wanted to
see if the basic bill was a success first. He believed the
legislature should consider building on the idea after
determining how the basic concept worked.
9:08:30 AM
Representative Wool asked how much Representative Prax
thought people would donate back. He asked if there was an
approximation, or if the sponsor was "throwing it to the
wind."
Representative Prax answered it was hard to guess and he
was throwing it to the wind. He detailed that the previous
year, 105 people knew they could donate their check back to
DOR by endorsing the check and mailing back to the
department. He noted that in order to return the funds to
DOR by mail, recipients had to remember to request a paper
check when applying for the PFD. He anticipated the number
would increase because applicants determined what to do
with their PFD in March, at the same time the legislature
was discussing the budget. He noted that quite a few people
had stated they would rather have services than the check.
He explained that the bill would make it easier for
individuals to do. He did not believe people realized it
was possible to return their PFD to the department at
present.
Representative Wool referenced Representative Prax's
statement that individuals would be deciding what to do
with their PFD at the same time the legislature was
discussing the budget. He noted there was a spring forecast
coming up that would likely be advantageous to Alaska's
pocketbook. He thought people may choose to accept their
full PFD if there was plenty of money coming into the
state. He asked if the bill was only aimed at giving people
the option [to return the funds to the state]. He asked if
the bill was also aiming to retrieve some of the
expenditures. He asked the sponsor if he believed there
would be a substantial amount of money redeemed.
Representative Prax believed the funds redeemed as a result
of the bill would be enough to cover the costs of setting
up the computer program to accept the funds. He stated that
any operating costs would be de minimis once the program
was set up. From a business perspective, he believed it
would be worth putting money aside to advertise the option
to people. He explained that as long as the operating costs
were covered, there would be a profit for the state.
Co-Chair Merrick noted that Representative Rasmussen had
joined the meeting via teleconference.
9:11:56 AM
Representative Thompson was interested in the people who
received a paper check and sent it back to DOR. He
highlighted that once a person received a paper check, a
tax liability was created. He asked if people had to pay
taxes on the returned funds. Alternatively, he asked if the
State of Alaska was considered a nonprofit donation. He
highlighted there was an annual limit on donations that
could be claimed against a person's taxes.
Representative Prax confirmed that individuals [returning
the funds] were liable for the tax. He noted committee
members' packets included a legal memo specifying it
appeared the donation would be considered tax deductible.
The donation back to the state was considered a tax
deduction and how it applied to any individual was a
conversation between the individual, their accountant, and
the IRS.
9:13:24 AM
Representative Johnson thanked the bill sponsor for
introducing the legislation. She expressed appreciation for
bills that came from the people. She asked if the option
provided by the bill would be another check box like
Pick.Click.Give or the education lottery. She asked if
there were any associated costs.
Representative Prax answered that the box would appear at
the bottom of the list of the Pick.Click.Give choices on
the application screen.
Representative Johnson asked how much it would cost to add
the option.
Representative Prax replied the option would appear as
another check box below the Pick.Click.Give list. He
detailed that the fiscal notes estimated a programming and
set up cost of $43,600. He elaborated that the bill
included a 7 percent charge similar to the other
Pick.Click.Give contributions. He thought it could be an
amendment for consideration. He did not believe there would
be an expense after setting the option up.
Representative Carpenter asked about the difference between
not applying for the PFD and receiving the PFD and
returning it.
Representative Prax answered that if someone did not apply
PFD, their share was distributed between all the other
applicants. He explained that opting not to apply for the
PFD did not accomplish the objective of directing the money
back to the General Fund.
9:16:37 AM
Representative LeBon asked if the contribution back to the
General Fund would avoid a tax liability. He wondered if a
person made a taxable donation they never really took
possession of the funding and the funds never really left
the state.
Representative Prax answered that it was difficult to
estimate the number of people who wanted to give their
check back without asking them first. He explained that if
a person said they wanted to give the funds back, they had
technically taken possession of payment even though it
never reached their hands.
Representative Carpenter asked how many people were
eligible for the PFD who did not apply.
Representative Prax answered that the number was around 15
percent. He did not have the figure on hand.
Co-Chair Merrick asked if DOR could answer the question.
COREY BIGELOW, OPERATIONS MANAGER, PERMANENT FUND DIVIDEND
DIVISION, DEPARTMENT OF REVENUE (via teleconference),
replied he was uncertain the division had the information.
He explained that the PFD Division received approximately
670,000 applications annually. He noted that duplicate
applications could reach up to several thousand. He
reasoned it could be possible to determine the number based
on the number of applicants compared to the number of
Alaskan residents. He did not have the information on hand.
Representative Carpenter considered individuals who chose
not to apply for the PFD because they were philosophically
opposed or because they thought the funds remained with the
government. He thought the individuals may choose to use
the program to ensure the funds went to state government.
He did not believe there was a way to determine the number.
9:20:34 AM
Co-Chair Merrick OPENED public testimony.
Co-Chair Merrick CLOSED public testimony.
9:21:03 AM
Co-Chair Merrick asked the department to review the fiscal
note.
Mr. Bigelow provided a brief summary of the fiscal note. He
stated that the bill would enable Alaskans to direct their
PFD funds to the state's General Fund during the electronic
application process. He detailed that the contribution
would be available for individuals filing for themselves
versus individuals filing on behalf of another person. The
department expected the latter to be excluded. The
department estimated it would take 150 hours to modify the
online application and an additional 150 hours to make
changes to the "My Info" portal where Alaskans logged on to
view their application history and status. He explained
that all of the hours pertained to the initial build and
the PFD Division would absorb any ongoing costs for
administering the program for all subsequent years.
Co-Chair Merrick set an amendment deadline for March 7 at
5:00 p.m.
HB 158 was HEARD and HELD in committee for further
consideration.
9:24:03 AM
AT EASE
9:24:42 AM
RECONVENED