Legislature(2013 - 2014)HOUSE FINANCE 519
02/27/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB49 | |
| HB204 | |
| HB306 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 204 | TELECONFERENCED | |
| *+ | HB 306 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 49 | TELECONFERENCED | |
HOUSE BILL NO. 306
"An Act relating to tax credits and administration of
tax credit programs; requiring the Department of
Revenue to report indirect expenditures; relating to
the duties of state agencies; requiring the
legislative finance division to analyze certain
indirect expenditures; relating to lapse dates for
appropriations for capital projects; repealing certain
statutes authorizing indirect expenditures; and
providing for an effective date."
3:25:00 PM
REPRESENTATIVE STEVE THOMPSON, SPONSOR, spoke to the bill's
goal pertaining to fiscal responsibility. The bill would
create a process by which lost revenue through indirect
spending was reviewed by the legislature. The bill would
enable the legislature to make sound policy decisions on
whether certain indirect spending should continue. He read
from a prepared statement:
House Bill 306 creates the process which lost revenue
through indirect spending is reviewed by the
legislature and enables them to make sound policy
decisions on whether certain indirect spending should
continue. With our future budget declining, this
legislature must have a mechanism established that
routinely brings indirect spending under legislative
scrutiny. Indirect spending in the State of Alaska is
authorized through provisions in law that confers
preferential treatment through credits, exemptions,
deductions, deferrals, discounts, exclusions, and
differential allowances. Like direct spending,
indirect spendings are designed to encourage certain
kinds of activities for public benefit or to aid tax
payers. Unlike direct spending programs, indirect
expenditures are not itemized and do not go through
the scrutiny of any budget process that we have. An
indirect expenditure provision may continue
indefinitely without any fiscal oversight. [Discounts]
were designed to encourage benefit for taxpayers and
encourage business.
What this bill does is require that the Department of
Revenue prepare and deliver a report to include the
name of the indirect expenditure, a brief description,
statutory authority, sunset date, date of repeal if
applicable, legislative intent, public purpose,
estimated annual effect for the past five years, cost
to administer the indirect expenditure, and the number
of beneficiaries. The report would be prepared by
November 1, before the first regular session of each
new legislature.
All the department agents and agencies and public
corporations are directed to work with the Department
of Revenue commissioner to complete this information.
This requires Legislative Finance to prepare and
deliver a report to the legislature that includes the
estimate of the lost revenue from the indirect
expenditure, the estimate of the monetary benefit of
the indirect expenditure to the recipients, a
determination if legislative intent was met or not and
why the intent was not met if applicable, a
recommendation whether this indirect expenditure
should continue, and an explanation of the methodology
and the assumptions used to create the report.
Representative Thompson explained that the report would
analyze all departments, agencies, and public corporations
beginning with the FY 15 legislative two-year session and
including: Department of Fish and Game, Department of
Health and Social Services, Department of Labor and
Workforce Development, and Department of Revenue. The
legislative session beginning in 2017 would include the
Alaska Court System and the Department of Administration.
All remaining agencies would be reviewed in 2019. After
initial review, reviews would be conducted every 6 years.
The report would be delivered on the first day of the first
regular session of each new legislature. The legislature
would have two years to review the reports.
3:29:56 PM
Representative Thompson continued to read a statement.
Sunsets the following credits on the day after the
last day of the regular session of the 29th
Legislature. First up would be education tax credits,
film tax credits, veteran employment tax credits, Winn
Brindle scholarship tax credits, salmon production tax
credits, salmon utilization tax credits, CDQ tax
credits.
Representative Thompson acknowledged that many of the
credits were important and created jobs; therefore, the
vast majority of the items would most likely be renewed. He
pointed to an extensive study that compiled the list of
credit programs over the prior interim. He stated that the
bill would not place a significant burden on the Department
of Revenue. He believed it was important for the
legislature to review credits it had created years earlier
and to determine their effectiveness. Additionally, the
bill included a claw-back provision that would lapse unused
appropriations when substantial and ongoing work on capital
projects failed to begin within five years of the
appropriation; including named recipients, unincorporated
communities, and state agencies. Currently municipalities
and boroughs were the only entities required to use or
loose within five years. Entities would either be granted a
reappropriation or the funds would be returned to the
state. He thanked the committee for its time.
3:32:03 PM
Co-Chair Stoltze disclosed that he was co-sponsoring the
legislation. He discussed that the bill would address the
state's general fund expenditures. He relayed that the bill
included much more than the film industry credit. He
believed the bill reflected substantial change in the way
business was done.
Representative Thompson replied that every piece of
legislation representing an indirect expenditure to the
state had been included. He spoke to the importance of
providing equal scrutiny to all programs.
HB 306 was HEARD and HELD in committee for further
consideration.
Co-Chair Stoltze discussed his intent to recess the meeting
until the following morning.