Legislature(2017 - 2018)CAPITOL 106
02/16/2018 08:00 AM House EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| HB339 | |
| HB233 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 339 | TELECONFERENCED | |
| *+ | HB 233 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 233-EDUCATION TAX CREDITS; SUNSET; REPEALS
8:30:41 AM
CHAIR DRUMMOND announced that the next order of business would be
HOUSE BILL NO. 233, "An Act relating to the insurance tax
education credit, the income tax education credit, the oil or gas
producer education credit, the property tax education credit, the
mining business education credit, the fisheries business
education credit, and the fisheries resource landing tax
education credit; providing for an effective date by repealing
the effective dates of secs. 3, 5, 7, 10, 14, 16, 18, 21, 23, 25,
28, 30, 32, 35, 37, 39, 42, 44, 46, 49, 51, 53, and 55, ch. 92,
SLA 2010, sec. 14, ch. 7, FSSLA 2011, secs. 15, 17, 19, 21, 23,
and 25, ch. 74, SLA 2012, sec. 49, ch. 14, SLA 2014, secs. 37,
40, 43, and 46, ch. 15, SLA 2014, and secs. 26 and 31, ch. 61,
SLA 2014; providing for an effective date by amending the
effective date of secs. 1, 2, and 21, ch. 61, SLA 2014; and
providing for an effective date."
8:31:06 AM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, thanked
members for hearing the bill today. He stated that HB 233 would
extend the education tax credit program from December 31, 2018 to
January 1, 2025 and ensure that the credits that exist in statute
today will continue to support our education programs and
institutions.
REPRESENTATIVE TUCK stated that the education tax credit program
would allow private businesses to make charitable contributions
to support public and private education in Alaska. Private
businesses can fund institutions and programs throughout Alaska
with direct monetary contributions or provide equipment and
supplies. He said the objective was to help the next generation.
He related that the fishing, mining, construction and oil and gas
industries can contribute to education programs and institutions
but can also foster student' interest in career opportunities.
He characterized the education tax credit as a direct connection
between businesses, our education system and students.
8:32:48 AM
REPRESENTATIVE KOPP remarked that he was excited about this bill.
He said that he had heard from several industries, including
Hecla Mining Company, Greens Creek and oil and gas industries.
He agreed that this makes education directly responsive to the
needs of the local communities and it promotes a strong Alaska
labor: local labor and local hire. He characterized it as a
great policy to move forward. He offered his complete support
for HB 233.
8:34:07 AM
SUSAN FOLEY, President, University of Alaska Foundation, stated
she has submitted a letter of support for HB 233. The University
of Alaska (UAA) has been one of the highest recipients of
contributions of education tax credits. The impact has been
significant. She related that many companies in Alaska would
like to support education in Alaska. These companies
strategically engage in multi-year planning to have impact over a
sustained period of a time. They also want their employees to
see the results of their contributions. She characterized the
six-year extension of this bill as very important because it
enables companies to partner with educational institutions and to
institute and foster programs. She found the multi-year aspect
of HB 233 as allowing companies to be influential.
MS. FOLEY stated that the University of Alaska Foundation has
received feedback from corporations that the way the education
tax credit program was structured creates a major incentive for
their donations. The structure allowed corporations to see the
direct impact of their donations and receive recognition for
their support. This enables them to partner in significant
programs that will benefit their future business enterprise.
Finally, for an academic institution, the long-term nature of
this extension was important because it takes time to start
programs, get them running efficiently, recruit students, and
bring things to fruition. She acknowledged and appreciated the
work legislators make.
8:38:36 AM
ROBERT ONDERS, M.D., J.D., M.P.A.; President, Alaska Pacific
University (APU), offered his support for HB 233. He
characterized this bill as providing a critical connection
between industry, education, and students. This bill facilitates
community-based research that engages students with industry and
the external community, which was an essential component of
education at Alaska Pacific University (APU).
8:39:28 AM
BRADLEY HARRIS, PhD; Associate Professor of Marine Biology,
Alaska Pacific University (APU), offered his support for HB 233.
He reiterated the importance of this bill in terms of APU's
educational profile. He related his experience as a professor.
DR. HARRIS said he has seen industry resources go directly to
support student outcomes. He said that the tax credit program
was working as designed. It has provided opportunities for
students in Alaska to obtain a high-quality education in areas
that directly align with needs within Alaska. He stated that
this program provided opportunities for world class education and
research opportunities and created a "win-win" solution for
educational institutions, industry, and students.
8:40:38 AM
DR. HARRIS offered to outline four things that highlighted the
strategic components of the tax credit program. First, the tax
credit program has allowed professors, such as himself, to
recruit and support excellent students throughout Alaska and
outside Alaska. He said this was particularly important in
natural resource fields, which are highly competitive fields. He
pointed out that the tax credit program provides tuition and
project support, which are critical elements when recruiting
students. Second, the program has allowed the university to
invest in strategically important research areas, in particular,
applied research projects require high levels of engagement from
practicing professionals; for example, researchers from federal
and state agencies and other universities are drawn to Alaska
because of the type of research being performed. Our students
benefit from this, he said. These robust and strategic
partnerships can be developed with state, federal, industrial,
and private partners and ultimately produce new levels of
funding.
DR. HARRIS said the third thing was that since the university has
ongoing projects it can submit proposals, which have experienced
a high-rate of success, which results in value-added growth in
these programs. Finally, APU has been expanding research and
education with partnerships in the nation and worldwide. He
related that APU had researchers from Cornell University, the
Smithsonian, National Oceanic and Atmospheric Administration, the
US Geological Survey, US Fish & Wildlife Service and ADF&G
actively working with students to address natural resources
issues important to Alaska. He referred to a letter in members'
packets that contained a list outlining some very specific
outcomes including listing home towns of students and where they
are working. He said that list was a small subset of students
that were being impacted by the tax credit program in HB 233. He
hoped that would illustrate his point that the tax credit program
works. He asked members to please support HB 233.
8:43:22 AM
MIKE SATRE, Manager, Government and Community Relations, Hecla
Greens Creek Mine; Board Member; Council of Alaska Producers,
stated that his wife has also spent 20 years working in the
Juneau School District. The work this committee does directly
affects his family and he appreciated members' service.
MR. SATRE offered general comments on tax policy. The
legislature holds many discussions on tax policy. We know that
we can tax things to curtail activities that are not beneficial
to our communities or the legislature can provide incentives by
rolling back taxes. He characterized the education tax credit as
a means to encourage industry to invest in Alaska's educational
system, both at the secondary level and with our universities by
forming partnerships. This benefits companies but also the
regions companies operate in to build community and capacity. He
offered his belief that one of the private sector's challenges
was recruitment and retention of an Alaskan work force. As
Alaska works to grow its economy, that challenge will become even
greater. This has been something that Hecla Greens Creek mine
has recognized, that attracting Alaskan workers provides a stable
work force since they stay longer and contribute to their
community.
MR. SATRE said he also recognized that posting a job opening
would not necessarily provide the highly skilled, highly-educated
work force Greens Creek mine needs. The industry does not have
the capacity to provide all the training necessary; however, the
universities do. In 2011, Hecla Greens Creek looked to partner
with the University of Alaska [Southeast] (UAS) to develop a
program called "Pathways to Mining Careers." This program starts
with a college course that high school juniors and seniors take
that provides a broad survey of hundreds of career opportunities
in the mining industry. This program provides students with an
educational foundation for choices they may make when choosing
their professions. Once they take that course, Hecla Greens
Creek tries to direct interested students into a two-year diesel
mechanic degree program at the Career and Technical Education
program at UAS. He emphasized that the diesel mechanic
represented one of the mine's greatest needs. He characterized
the diesel mechanic program as a high-tech profession that
requires specialized training. Hecla Greens Creek provides
scholarships for students, an internship, and ultimately hopes
students will choose them as an employer. Between 2011-2016 over
200 students have taken the entry level course, with 13-14
students completing the two-year degree program. Further, many
of these students have chosen to work for Greens Creek mine, live
in Juneau, and provide for their families.
8:46:55 AM
MR. SATRE offered that his company has also endowed scholarships
at the University of Alaska Fairbanks and geology scholarships at
the University of Alaska Anchorage, and Hecla Greens Creek works
with secondary schools in the region to develop interest. He
urged members to support this bill and pass it on to the next
committee of referral. He acknowledged that the program would
sunset at the end of the year, making it very difficult to bring
this valuable tax credit into existence. He appreciated
Representative Tuck introducing this bill.
8:47:35 AM
CHAIR DRUMMOND asked whether the partnership with UAS begins with
junior and seniors in high school and was not limited to post-
secondary training.
MR. SATRE responded that current students were more aware of
educational tracks and professions much earlier, so the company
felt it was important to start its program to benefit high school
students to give them an opportunity to follow a pathway that
will benefit them.
CHAIR DRUMMOND commented there was a theory that states that
students in second or third grade know what they want to do as
adults. She closed invited testimony.
8:49:37 AM
REPRESENTATIVE PARISH asked for further clarification on the
types of business that uses the tax education credit.
8:50:16 AM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue (DOR), responded that in 2016, 37 companies used the
education tax credit, varying from oil and gas and mining to
banking and retail sector. He said that any corporate income tax
payer with qualifying donations could use the education tax
credit.
REPRESENTATIVE PARISH was hoping to learn about the average size
of the companies using the education tax credit program.
MR. SPANOS said that most companies were large multi-state or
multi-national companies.
REPRESENTATIVE PARISH asked if he had any idea about the smallest
company.
MR. SPANOS deferred to Mr. Stickle.
8:52:02 AM
DAN STICKEL, Chief Economist, Tax Division, Department of Revenue
(DOR), stated that the primary business are large businesses. He
pointed out that these companies must be large enough to have a
significant corporate income tax liability to apply these types
of credits. The primary beneficiaries would be large resource-
oriented companies.
8:52:27 AM
REPRESENTATIVE KOPP offered his belief that these would be the
same companies producing the same employees that make this
community work; ones that fund everything.
CHAIR DRUMMOND reiterated these companies must be large enough to
have a significant corporate income tax liability in order to
make contributions like this.
MR. STICKEL agreed.
8:52:58 AM
REPRESENTATIVE PARISH expressed an interest in exploring ways for
the smaller companies to participate, as well. He was unsure of
the threshold but said that currently the sweet spot for
donations seemed to be $300,000. He would like to see that
lowered. He stated that the amount of the credit was 50 percent
of contributions of not more than $100,000; 100 percent up to
$300,000 of contributions; and 50 percent of the amount of
contributions that exceed $300,000 [as per AS 43.20.014 (12)(b)].
He recalled the cap was $5 million. He related his understanding
this could discourage companies that could not reach the $300,000
"sweet spot" from participating. He said he thought that some
smaller businesses in the state would be interested in
participating in a program that promotes education in the state
for excellent causes.
8:54:41 AM
CHAIR DRUMMOND acknowledged that the names of the companies was
confidential information. She said that if those companies
wanted to identify themselves, nothing would prevent them from
doing so; for example, Hecla Greens Creek or the other companies
that visited her office and revealed themselves as participants
who helped create jobs and training in Alaska.
MR. SATRE agreed that was correct.
8:55:16 AM
CHAIR DRUMMOND encouraged companies to identify themselves if
they so choose.
8:55:33 AM
CHAIR DRUMMOND announced that HB 233 would be held over.