Legislature(2017 - 2018)SENATE FINANCE 532
05/07/2018 09:30 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB47 | |
| HB233 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 47 | TELECONFERENCED | |
| += | HB 233 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 233(FIN) am
"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."
9:42:12 AM
Co-Chair MacKinnon relayed that the committee had heard the
bill on April 26, 2018; and had heard the Senate companion
version on March 26, 2018. The committee had considered a
Sectional Analysis, opened and closed the public hearing,
and reviewed the fiscal notes.
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 233(FIN), Work Draft 30-LS0152\T
(Nauman, 5/3/18).
Co-Chair MacKinnon OBJECTED for discussion.
JULI LUCKY, STAFF, SENATOR ANNA MACKINNON, discussed the
changes to the bill. She addressed an Explanation of
Changes document (copy on file):
SCS CS HB 233 (FIN) work draft version T:
Provides a step down for the tiered system or "sweet
spot" of the education credits. For two years (2019
2020), the credit for contributions between $100,000
and $300,000 would be 75%. See sections: 2, 7, 12, 17,
22, 27, and 33. These sections are effective January
1, 2019.
Starting in 2021, sets the amount of the credit would
be 50% of all contributions. See sections: 3, 8, 13,
18, 23, 28, and 34. These sections are effective
January 1, 2021.
Allows in-kind donations of equipment. The amount of
the contribution will be determined by an appraisal
consistent with regulations adopted by the department.
See sections: 5, 6, 10, 11,15,16, 20, 21, 25, 26, 30,
31 and 36. These sections are effective January 1,
2019.
Ms. Lucky stated that there was not a new fiscal note
relevant to the CS, however the director of the Tax
Division was present to explain the fiscal changes. She
referenced a document entitled "Education Tax Credit
Information - Detail of Credits Claimed & Potential
Contribution Cases, CY 2015 - CY 2017," (copy on file);
that had been provided by the Tax Division. She explained
that the fiscal note would reflect the first two years
impact of $6,347,520; and starting in FY 21 the amount
would step down to $5,424,282.
Senator Olson wondered about the support from institutions
regarding the changes that had been made to the bill.
Co-Chair MacKinnon relayed that email correspondence from
institutions indicated a willingness to accept more
funding.
Co-Chair MacKinnon WITHDREW her objection. There being NO
OBJECTION, it was so ordered.
9:47:27 AM
REPRESENTATIVE CHRIS TUCK, SPONSOR, discussed the purpose
of the bill. He explained that education tax credits
allowed educational institutions to receive donations from
industry and private interests, which in turn received a
tax credit for donations. He considered the tax credits as
a way to connect industry with educational institutions to
help and direct students to industry. He stated that the
bill was originally intended to extend the education tax
credits and would allow for extension to January 1, 2025.
He added that the bill would allow for national
accreditation; which would include professional and career-
oriented schools, and apprenticeship programs.
Representative Tuck agreed with the changes to the CS.
Co-Chair MacKinnon thought the CS was a compromise. She
thought the sponsor would have preferred 100 percent tax
credit.
Representative Tuck answered in the affirmative. He
furthered that the multiple sections in statute had made
working with the bill complicated.
9:50:11 AM
Senator Stevens thought the CS was a good compromise, and
though thought that the two-year time frame was an
opportunity to study the program and make changes to the
amount of tax credit if necessary. He asked the sponsor if
he agreed with the change.
Representative Tuck was not aware of the genesis of the
"sweet spot" as described by Ms. Lucky. He thought the CS
would provide an opportunity to see the outcome.
Co-Chair MacKinnon asked Vice-Chair Bishop to discuss the
in-kind equipment donation.
Vice-Chair Bishop stated that the provision for equipment
donation had been in the bill for four years. He considered
the way the bill was originally written.
Co-Chair MacKinnon clarified that to qualify for a credit
under the section, equipment had to be appraised consistent
with regulations adopted by the Department of Revenue to
determine the value of the contribution.
9:53:41 AM
Co-Chair MacKinnon stated that the committee intended to
move the bill pending an updated fiscal note.
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
stated that there was a fiscal note being drafted that
should be available before the bill was heard on the Senate
floor. He explained that the CS was a step-down, while the
previous version of the fiscal note had a split fiscal year
in FY 19, because the credit-rate changes were on a
calendar year basis, whereas the fiscal note was on a
fiscal year basis. There was a similar split in FY 21,
where the second step from 75 percent to 50 percent
happened. The baseline was as if the tax credit went away
on January 1, 2019. The extension of the credit in any form
was officially a reduction in revenue but was really an
increase in revenue versus what would be a clean extension
that continued the existing rates. He discussed the fiscal
impact of the CS.
Mr. Alper thought there was about a $1.2 million benefit in
the near term, and a $2.1 billion benefit in the longer
term as the step-down was continued. The department had not
ascribed a value to the change that pertained to in-kind
donated equipment. He relayed that the department was
pleased with the language regarding appraisals and
regulations. He thought it was important that any equipment
had an ascribed fair market value. He thought there would
be a form change and a regulation-drafting process; and he
had put in a small one-time dollar amount of $50,000 for
the associated administrative costs.
Mr. Alper summarized that the department was comfortable
with the changes to the bill.
9:56:53 AM
Vice-Chair Bishop encouraged Mr. Alper to communicate with
the Department of Administration's Division of Motor
Vehicles to learn about its process for appraisal of
vehicles that did not have a title. He thought using
existing language might preclude the need for the entire
$50,000 in administrative costs as requested in the
forthcoming fiscal note.
Senator Olson considered the changes to the bill and asked
which version of the bill Mr. Alper was most comfortable
with.
Mr. Alper indicated he was not authorized to speak to the
bill on behalf of the administration. He agreed with the
co-chair that a 100 percent tax credit was inappropriate;
and thought that given the choice the industry would want
as much as possible. He understood why donors had an issue
with an immediate drop to a 50 percent tax credit and
thought the step-down in the current version of the bill
was a fair compromise. He observed that the bill was a tax
credit rather than a personal tax deduction. He thought
have the amount set at 50 percent in the long run was
reasonable and balanced the incentive to donate to a good
cause. He thought it represented a partnership by which the
state shared the cost with the donor.
9:59:46 AM
Senator Stevens assumed that the step-down would give the
state time to reflect on if the process was working. He
asked if Mr. Alper thought two years was an adequate time
to reflect on the program.
Mr. Alper thought it would not be possible to look back in
two years because the first year of the step down was 2019.
It would not be possible to see the tax implications by
2019 due to late filing deadlines. He thought that
reflection might be an effort of the 2021 session. He
commented on the number of times the statute had been
amended and expected the issue would surface again. He
considered the advantage of writing the statute in one area
rather than spread out. He thought the donations reflected
fiscal health of companies.
10:02:12 AM
Co-Chair MacKinnon remarked that all the various tax
credits or benefits given to individual Alaskans were
supported by others that were paying taxes. She found that
as the state considered taxing individual Alaskans, it was
difficult to contemplate some indirect tax expenditures to
the state. She intended to set the bill aside and
communicate with the sponsor. She stated that the bill
would not leave committee with the $50,000 administrative
cost on the fiscal note as explained by the Tax Division
Director.
Co-Chair MacKinnon stated she would look for committee
support in finding a compromise with the department.
Mr. Alper asserted that the department was happy to pull
the language out of the bill. He reminded that the tax
credit language appeared seven times in statute. He thought
there should be language around the appraisal provision to
include terms such as "fair market value" and there would
be forms changes. He did not want to burden the bill.
Co-Chair MacKinnon stated she would take out the $50,000 as
proposed in the forthcoming fiscal note.
Mr. Alper noted that there was other indirect expenditure
legislation that he looked forward to the committee
considering.
CSHB 233(FIN) am was HEARD and HELD in committee for
further consideration.
Co-Chair MacKinnon discussed the agenda for the afternoon.