Legislature(2021 - 2022)GRUENBERG 120
05/18/2021 03:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB95 | |
| HB177 | |
| HB158 | |
| HB94 | |
| HB31 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 95 | TELECONFERENCED | |
| *+ | HB 158 | TELECONFERENCED | |
| *+ | HB 94 | TELECONFERENCED | |
| *+ | HB 31 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 177 | TELECONFERENCED | |
HB 158-PFD CONTRIBUTIONS TO GENERAL FUND
3:36:37 PM
CHAIR KREISS-TOMKINS announced that the next order of business
would be HOUSE BILL NO. 158, "An Act relating to contributions
from permanent fund dividends to the general fund."
3:37:05 PM
REPRESENTATIVE MIKE PRAX, Alaska State Legislature, prime
sponsor, introduced HB 158. He paraphrased the sponsor
statement [included in the committee packet], which read as
follows [original punctuation provided]:
House Bill 158 sets up a mechanism to give Alaskans
the choice of donating all or a portion of their
Permanent Fund dividends (PFDs) directly to the
state's general fund. Participants can donate from a
minimum of $25 to the full amount of their PFD in
increments of $25.
A donation to the State General fund, in some case,
can be counted as a charitable donation for federal
tax purposes. It is advised, however, that Alaskans
consult with a tax professional to verify how this may
apply to them individually.
Donations through HB 158 are subject to a seven
percent administrative fee paid to the Permanent Fund
Dividend Division. HB 158 also clarifies that
donations through Pick.Click.Give., take priority over
donations to the general fund if there is a shortfall.
REPRESENTATIVE PRAX indicated that HB 158 would simplify the
donation process by enabling an option to donate that could be
selected during the electronic permanent fund dividend (PFD)
application process. He believed it would result in
"considerably more" dividends being returned to the general fund
(GF).
3:39:07 PM
REPRESENTATIVE TARR, referring to the fiscal note, pointed out
that there was no estimation of how many people might choose to
donate their dividend. She asked whether the bill sponsor had
discussed this with the Permanent Fund Dividend Division ("the
division") and whether the division had provided any projections
or information on the number of potential donations.
REPRESENTATIVE PRAX answered no, he had not inquired about how
many people may donate.
3:40:18 PM
REPRESENTATIVE CLAMAN asked whether the sponsor was focusing on
people who wanted to donate all or a portion of their dividend.
He was unclear why a person would go through the process of
applying for a dividend if he/she intended to return it all to
the state.
REPRESENTATIVE PRAX explained that a person would be able to
donate his/her dividend in increments of $25.
REPRESENTATIVE CLAMAN asked whether a person who donated a
portion of the dividend would be taxed by the federal government
for the full amount.
REPRESENTATIVE PRAX said it was unclear whether it would be a
tax-deductible donation. He believed that as far as the
legislature was concerned, it did not matter.
REPRESENTATIVE CLAMAN said he would be interested in knowing the
answer.
REPRESENTATIVE PRAX assumed that it would not be tax deductible;
therefore, a person who donated his/her entire dividend to the
state, would still be taxed for the full dividend amount. He
suggested that anyone who was interested in donating could
calculate their tax liability and give the remainder to the
state.
CHAIR KREISS-TOMKINS recommended that Representative Prax
consult with Legislative Legal Services or other outside
experts, as he was interested in a more definitive answer.
REPRESENTATIVE PRAX agreed to follow up with the requested
information.
CHAIR KREISS-TOMKINS asked who sponsored the companion bill in
the Senate during the Thirty-First Alaska State Legislature.
REPRESENTATIVE PRAX answered Senator Wilson.
CHAIR KREISS-TOMKINS sought to confirm that the legislation
never made it out of the Senate Finance Committee.
REPRESENTATIVE PRAX confirmed.
3:44:33 PM
CHAIR KREISS-TOMKINS asked Ms. Scherrer to comment from an
operational perspective on implementation.
3:44:49 PM
BOBBI SCHERRER, Appeals Manager, Permanent Fund Dividend
Division, Department of Revenue (DOR), explained that if the
bill were to pass, the electronic PFD application would be
modified to allow for contributions to the GF in increments of
$25.
CHAIR KREISS-TOMKINS asked what would be entailed in modifying
the electronic application.
MS. SCHERRER conveyed that the program manager had completed a
deep dive on the modification process, which would entail
consideration of the requirements for gathering the data;
developing the application; testing the processes; rolling out
the final product. She said the time needed to modify the
online application and the MyInfo portal were the largest
contributing factors at approximately 150 hours each.
CHAIR KREISS-TOMKINS asked whether there would be an internal
hourly rate.
MS. SCHERRER responded that it would depend on staffing. She
noted that the time needed for developing and testing would
allow the applicant to have a more effective and less confusing
experience and ensure that the most accurate data was captured.
CHAIR KREISS-TOMKINS asked her to elaborate on her previous
statement.
MS. SCHERRER indicated that the intent was for every Alaskan to
have an easy experience with the electronic application process.
3:47:31 PM
MS. SCHERRER, in response to a question from Representative
Tarr, said the majority of applicants submit their PFD
application electronically.
REPRESENTATIVE TARR asked whether it would be difficult to
update the paper application to include the option to donate.
MS. SCHERRER clarified that the bill specifically stated that
the option to donate would be made available on the electronic
PFD application.
REPRESENTATIVE TARR sought to confirm that it would only be
added to the electronic option.
MS. SCHERRER confirmed.
CHAIR KREISS-TOMKINS asked for the percentage of applicants that
apply electronically versus by paper.
MS. SCHERRER offered to follow up with the requested
information.
CHAIR KREISS-TOMKINS inquired about the status of filling the
division's directorship.
MS. SCHERRER offered to follow up with the requested
information, as that was not something she monitored as the
appeals manager.
3:50:24 PM
REPRESENTATIVE KAUFMAN discussed the notion of a "bypass" rather
than a "pass through" and asked whether the sponsor was able to
gather more information on that as a more beneficial tax
structure for the program.
REPRESENTATIVE PRAX answered no. He said after checking notes
on the bill from the previous legislature, it sounded like it
would be difficult to effectuate.
REPRESENTATIVE KAUFMAN acknowledged that it may be difficult;
nonetheless, he asked whether Ms. Scherrer had any comments on
the matter.
3:52:17 PM
MS. SCHERRER asked him to restate the question.
REPRESENTATIVE KAUFMAN wondered whether there was a way for the
recipient of the PFD to relinquish "ownership" of it, thus
allowing it to go directly from the Alaska Permanent Fund to the
GF, to avoid taxation.
MS. SCHERRER responded that she would have to confer with the
Tax Division, (DOR).
CHAIR KREISS-TOMKINS requested a formal response on the
practicability of bypassing a person's receipt of the dividend
for the purpose of donation.
3:53:40 PM
REPRESENTATIVE CLAMAN asked how a contribution to the state
would be treated for purpose of the division's reporting
process.
MS. SCHERRER sought to confirm that Representative Claman was
inquiring about reporting to the Internal Revenue Service (IRS).
REPRESENTATIVE CLAMAN answered yes. He considered a scenario in
which the dividend was $500, and a person donated the full $500
back to the state. He asked whether that person would report
$500 in revenue to the IRS.
MS. SCHERRER answered yes.
3:55:27 PM
CHAIR KREISS-TOMKINS announced that HB 158 was held over.