Legislature(2013 - 2014)
04/20/2014 04:37 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| HB306 | |
| HB287 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 306(FIN)
"An Act relating to the review 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 the
insurance tax education credit, the income tax
education credit, the veteran employment tax credit,
the oil or gas producer education credit, the property
tax education credit, the mining business education
credit, the fisheries business education credit, the
fisheries business tax credit for scholarship
contributions, the fisheries business salmon product
development tax credit, the fisheries business salmon
utilization tax credit, the fisheries business landing
tax credit for scholarship contributions, the
fisheries resource landing tax credit for the
fisheries resource harvested under the community
development quota, the fisheries resource landing tax
education credit, and the film production tax credit;
and providing for an effective date."
4:38:20 PM
Vice-Chair Fairclough MOVEDMOVED to ADOPT the proposed
committee substitute for HB 306, Work Draft 28-LS1396\K
(Nauman, 4/19/14)) as a working document. There being NO
OBJECTION, it was so ordered.
SUZANNE ARMSTRONG, STAFF, SENATOR KEVIN MEYER, walked
through the changes in the new version of the bill. She
stated that there were two different sets of changes in the
document. She announced that she would discuss the
substantive changes, and Mr. Anderson would discuss the
sections pertaining to the transition language. The first
change was on Section 5, which was a new section. It
proposed to delete language that pertained to construction
of a public facility under AS 37.05.315(b). She stated that
not all grants to municipalities were for the construction
of a public facility, so the section updated the statute to
more accurately reflect the practice of grants to
municipalities, which ranged from road construction; water
and waste water systems; public buildings; and equipment
purchases. Another change was in Section 6, which pertained
to grants to named recipients AS 37.05.316, and was a new
section to the bill. It proposed to add a new subsection
that provided that grants to named recipients lapse of
substantial ongoing work on the project had not begun
within five years after the effective date of the
appropriation or allocation. It was the same standard that
was used under grants to municipalities, so it was meant to
draw a parallel between the two standards. She furthered
that Department of Commerce, Community and Economic
Development (DCCED) used the same standard in practice when
administering grants to named recipients, although it was
not codified in law. Another changed occurred in Section 7,
which was a new section to the legislation.
4:44:40 PM
Ms. Armstrong looked at Section 9, which proposed to delete
a reference that was no longer necessary in statute. She
announced that the CS did not delete the International
Airports Construction Fund. Section 10 was included in HB
306, but there were some proposed changes. She stated that
Section 10 pertained to unexpended balances of
appropriations for capital projects. Under AS 37.25.020, it
stipulated that an appropriation for a capital project was
valid for the life of the project, and the unexpended
balance shall be carried forward to subsequent fiscal
years. The legislation proposed to amend the statute to
include the same language that if substantial ongoing work
on the project had begun within five years after the
effective date of the appropriation. There had been an
examination of prior year capital appropriations, and felt
that she could have examined more appropriations if given
more time. She had identified capital projects that were
complete, but had not been closed out, and estimated
balances remained. She was able to work with the
departments to identify the funds, and reappropriate the
funds to FY 15 priorities. Under the Executive Budget Act,
it was loosely required that the executive branch provide a
capital appropriation status report (CASR) annually. The
information in the CASR could be helpful to the legislature
when they considered capital programs for state agencies.
4:48:31 PM
Ms. Armstrong related that the next change was found on
Section 17, which proposed to repeal four sections of law
that established capital projects funds that were no longer
utilized for accounting purposed by Department of
Transportation and Public Facilities (DOT/PF) and the
Office of Management and Budget (OMB).
Co-Chair Meyer felt that the changes in the bill were
technical and for "clean up purposes."
Senator Dunleavy asked how the tax credits that were
outlined in other legislation would fit into the bill. He
wondered if those credits would be reviewed before they
were enacted. Co-Chair Meyer deferred to Mr. Anderson.
Vice-Chair Fairclough wondered if there was a fiscal note
to account for the additional reporting requirements. Ms.
Armstrong replied that there was not an updated fiscal note
from the two departments as it pertained to the
administration of grants to the municipalities, named
recipients, and unincorporated communities. She explained
that the bill focused on current processes and procedures
that DCCED, but were not codified. She felt that the other
fiscal impact would be through OMB in quickly preparing the
CASR.
Vice-Chair Fairclough observed that the CASR would already
be used for best business practices.
BRODIE ANDERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,
stated that there were some necessary technical changes in
the CS, in order to ensure that the legislation was
constitutional. He looked at Session Law. He remarked that
some of the effective dates were not outlined in statute,
but were outlined in Session Law. He stated that the
drafters added some sections of the bill to address the
Session Law. He looked at Section 22, in which Session Law
that impacted the film tax credit.
Vice-Chair Fairclough announced that Section 22 was on page
9. Mr. Anderson agreed, and stated that Section 22 was on
page 9, line 18.
4:53:24 PM
AT EASE
4:53:50 PM
RECONVENED
Mr. Anderson looked at page 9, line 13, Section 22, and
stated that it related to the film tax credit. He stated
that Section 23 dealt with the education tax credit session
law. He explained that Section 24 related to both the
salmon product development tax credit, and the salmon
utilization tax credit. He looked at page 10, line 12,
which was the session law referencing the salmon production
development tax credit and the salmon utilization tax
credit.
Co-Chair Meyer inquired what line Mr. Anderson was
referencing. Mr. Anderson responded that he was looking at
line 15.
Mr. Anderson continued to discuss the technical changes
relating to Session Law.
4:58:14 PM
Mr. Anderson stated that there was a component in the film
tax credit which related to a prequalified film tax credit.
He explained that Department of Revenue (DOR) needed
clarification of at one point the credits should be carried
forward. It was the intention that the prequalified credits
be issued, so the language clarified that the
prequalification could be used to claim the tax credit. The
final change was on page 11, lines 5 and 6, which was an
effective immediate date for the report sections. He
clarified that it was in Section 30, line 10, which was an
effective date of July 1, 2014. He explained that the
capital budget effective dates were the first day of the
fiscal year. He stated that line 28, Section 35 was the
immediate effective date for the report that would be
created for both DOR and Legislative Finance Division
(LFD).
Senator Dunleavy remarked that there were some tax credits
included in legislation that related to the liquid natural
gas (LNG) pipeline and education. He wondered how this
legislation would impact those credits. Mr. Anderson
responded that the education bill held tax credits that
impacted corporate income tax; fisheries business tax;
fisheries resource landing tax; the mining license tax; and
the oil and gas property and production tax. He stated that
the passing of the education bill and HB 306 would roll
into the 2018 sunset date for education tax credits.
5:02:24 PM
Senator Dunleavy noted that the credits would have two
years of data to see the outcomes and benefits of the
contributions. Mr. Anderson replied in the affirmative.
Senator Dunleavy noted that there were tax credits in the
gas bill as well and wondered if the amount of time was
sufficient. Mr. Anderson responded that HB 306 did not
address the oil and gas tax credits.
Senator Dunleavy remarked that he was not following the
explanation.
Co-Chair Meyer wondered what areas were exempt. Mr.
Anderson replied that the tax credits that were addressed
were education tax credits, film production tax credits,
veteran's employment tax credit, salmon utilization tax
credit, CDQ tax credit, and the salmon production
development tax credit.
Senator Dunleavy asked how the tax credits were determined
to be included in the legislation. Mr. Anderson replied
that in the beginning of the bill's formulation, there had
been a bill that exempted any tax credits that were part of
Title 38. They had been told that they could not use
language that "tied the hands of future legislators."
Therefore, they looked at a different way to assign tax
credits.
5:06:44 PM
Senator Dunleavy surmised that there were recipients of a
donation from a company and the companies that were
recipients of a tax credit from the state. He noted that
the LNG bill had some tax credits for gas and oil
companies, but there may be a recipient that would be
training in Fairbanks. He wondered how the labor and
training tax credits would be impacted by the legislation.
Mr. Anderson responded that those proposed tax credits
would be listed in the report section, and could be
evaluated. He stressed that the bill did not sunset those
credits or evaluations.
Senator Bishop surmised that the oil and gas production
credits that applied to the education and training would be
immune from the legislation. Mr. Anderson responded that he
would have to examine the specific statute.
Senator Bishop surmised that the legislature would review
the credit report, and he wondered if there would be a
matrix to outline a proper decision. Mr. Anderson responded
that DOR must create a report, and there were strict
guidelines about the drafting of the report. Then LFD was
then obligated to answer the questions within the statute,
to analyze the ratios and benefits of the credits, then
provide a recommendation. He stated that LFD was required
to provide the methodology for the conclusion.
Senator Dunleavy wondered if the bill prevented other tax
credits from being created by statute. Mr. Anderson replied
in the negative.
5:11:38 PM
Senator Dunleavy wondered what determined a new tax
credit's sunset for review. Mr. Anderson replied that the
bill that created the tax credit would include a sunset
date, unless it was a component of the listed education tax
credit.
Ms. Armstrong furthered that often times the legislature
would create credits, deductions, or monetary incentives
for activity without any comprehensive review of the
performance of the credits. She stressed that the focus of
the bill was on bringing the evaluations to the
legislature's attention and the cumulative impact on the
treasury of the state.
Senator Bishop surmised that the bill was a cost benefit
analysis of each credit. Ms. Armstrong replied in the
affirmative, with other capital budget items.
Vice-Chair Fairclough directed the committee's attention to
the fiscal notes.
Vice-Chair Fairclough MOVED to REPORT SCS CSHB 306(FIN) out
of committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCS CSHB 306(FIN) was REPORTED out of committee with
"individual recommendations" and with a previously
published zero fiscal note: FN1(CED), a previously
published zero fiscal note: FN2(CED), previously published
indeterminate fiscal note: FN3(LWD), a previously published
zero fiscal note: FN4(DNR), a previously published
indeterminate fiscal note: FN5(CED), a previously published
fiscal impact note: FN6(LEG), and a previously published
fiscal impact note: FN7(REV).
5:17:50 PM
RECESSED
7:31:34 PM
RECONVENED
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