04/17/1998 09:25 AM Senate FIN

                                                                               
HOUSE BILL NO. 472                                                             
"An Act relating to apportionment of business income."                         
                                                                               
                                                                               
Co-Chair Sharp noted that the committee held a hearing on                      
this bill the day before.  It had been set aside because of                    
questions members wished to have addressed.  Representative                    
Rokeberg was invited to join the committee and comment:                        
                                                                               
"Mr. Chairman, I'll be very brief.  This committee has                         
already reviewed the substance of this legislation in SB
.  Yesterday, I hope you have available on your desk, a                     
list of supporters for HB 472.  I've listed them in a list                     
rather than provide the actual backup.  You have additional                    
backup in your folder.  I'd ask that any additional                            
information on [SB] 345 be adopted by reference into the                       
bill package for this bill."                                                   
                                                                               
"Also you have, Mr. Chairman - I've distributed something I                    
wanted to make part of the permanent record - under a cover                    
letter from COMICO Alaska from the producer's council, a                       
list of the foreign flag vessels shipping mined ore out of                     
the State Of Alaska during the years 1996 and 97, including                    
the Skagway terminal, which is a $25 million investment                        
financed by AIDEA bonds.  It's also my understanding, Mr.                      
Chairman that there is no US flag high-seas ore carriers in                    
the United States.  I wanted to introduce that as part of                      
the record."                                                                   
                                                                               
"Additionally, Mr. Chairman, you should have distributed to                    
the committee, a letter addressed to myself from the law                       
firm of Gross and Burke of April 7, 1998, which speaks to                      
the issues relating to the retroactivity provision, the                        
constitution issue and severability.  I'd like that as part                    
of the record Mr. Chairman."                                                   
                                                                               
"Also I notice that you do have a letter to Senator Donley                     
from the Department of Revenue regarding some questions the                    
committee raised in the last hearing on this bill."                            
                                                                               
"With that, Mr. Chairman, I would point out that Ms. Burke                     
is in the audience and available for any questions you may -                   
the committee may have as to any legal aspects relating to                     
the bill.  And with that I'd be available for any                              
questions."                                                                    
                                                                               
Senator Parnell offered Amendment #1 and moved for its                         
adoption.  He explained that it addressed the retroactivity                    
question that came up at the earlier meeting. He believed                      
the bill as it currently stood, sufficiently established the                   
public purpose for the retroactivity.  However, this                           
amendment would make it clear that if the court made a final                   
determination that retroactive application, under Section 2,                   
was invalid, that the act would apply to tax years ending                      
on, or after the effective date of the act.  He felt the                       
amendment would give a clear direction as to what was                          
intended.                                                                      
                                                                               
Without objection, Amendment #1 was adopted.                                   
                                                                               
Senator Adams expressed approval of the change made with                       
Amendment #1.  But, he still disagreed with the law summary                    
of Gross and Burke.  He stated his feelings that the bill                      
without the amendment was unconstitutional.  He spoke of how                   
the bill was supposed to help cruise lines and shared that                     
cruise lines generated pre-tax revenues of $671 million last                   
year.  In the US, they only paid $6 million, which was less                    
than one percent.  He expressed his desire that the tax                        
break not be given to these industries.  He felt this bill                     
would entice a lawsuit from the public.  He hoped the                          
amendment would clarify whether the bill was constitutional.                   
He voiced his objection to the passage of the bill.                            
                                                                               
Senator Parnell made a motion to move CS HB 472 (FIN) from                     
committee.  Co-Chair Sharp directed committee staff to                         
review the fiscal note and determine if changes needed to be                   
made as the result of the amendments.  He noted there was                      
objection to the motion and called for a vote.  The motion                     
passed by a vote of 6-1 and the bill was moved from                            
committee.  Senator Adams cast the nay vote.