04/23/2002 08:05 AM House STA

HB 493 - O.K. TO ASSIGN PFD TO NONPROFIT CORP                                                                                 
                                                                                                                                
Number 2494                                                                                                                     
                                                                                                                                
CHAIR COGHILL announced that the  next order of business would be                                                               
HOUSE BILL NO. 493, "An  Act relating to assignments of permanent                                                               
fund dividends; and providing for an effective date."                                                                           
                                                                                                                                
Number 2480                                                                                                                     
                                                                                                                                
ROBIN PHILLIPS,  Staff to  Representative Lisa  Murkowski, Alaska                                                               
State Legislature,  presented HB 493 on  behalf of Representative                                                               
Murkowski, sponsor.   She told the committee that  at the request                                                               
of  a  former  constituent, Representative  Murkowski  introduced                                                               
HB 493, the Good Neighbor Act,  which allows for a permanent fund                                                               
dividend (PFD) to  be assigned to an  organization that qualifies                                                               
for  nonprofit  status,  or  is  exempt  from  federal  taxation.                                                               
Currently,  permanent  fund  dividends   may  be  assigned  to  a                                                               
federal, state,  or municipal government  agency, or to  a court.                                                               
These grassroots  constituents have been updating  the members of                                                               
both  bodies regularly  requesting support  and cosponsorship  of                                                               
HB 493.  House Bill 493  promotes the spirit of charitable giving                                                               
by Alaskans, and she urged the committee's support.                                                                             
                                                                                                                                
Number 2435                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  noted that people  can and do  donate their                                                               
entire  permanent  fund dividends  to  charities,  but this  bill                                                               
would  require the  Permanent Fund  Dividend  Division to  handle                                                               
that.   She  said she  didn't know  if paying  $18.5 million  the                                                               
first  year, and  $37  million  every year  after  that, for  the                                                               
division to handle that was a  good idea.  She commented that she                                                               
didn't  know  if the  state  needs  to  get  in the  business  of                                                               
handling  people's  charities for  them.    She said  she  didn't                                                               
really support this bill.                                                                                                       
                                                                                                                                
Number 2209                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD asked, if the  PFD was assigned before it                                                               
was received, whether it would be  a true tax donation.  It would                                                               
seem  that there  would be  a financial  incentive to  assign the                                                               
dividend before it was received.  He asked for clarification.                                                                   
                                                                                                                                
MS.  PHILLIPS replied  that she  believes that  the person  would                                                               
still be responsible for taxes.                                                                                                 
                                                                                                                                
REPRESENTATIVE JAMES explained that the  PFD is income, and taxes                                                               
would  have to  be paid.   It  wouldn't matter  what someone  did                                                               
after that.                                                                                                                     
                                                                                                                                
Number 2131                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  asked if  there is a  way to  assign the                                                               
PFD before it is received as income.                                                                                            
                                                                                                                                
REPRESENTATIVE JAMES answered that there  isn't unless a piece of                                                               
legislation is passed.                                                                                                          
                                                                                                                                
Number 2088                                                                                                                     
                                                                                                                                
NANCI   JONES,  Director,   Permanent  Fund   Dividend  Division,                                                               
Department of Revenue, came forward  to testify.  She referred to                                                               
the fiscal note  and added that the path of  least resistance for                                                               
the division would be if  the donation was an assignment, meaning                                                               
that  the donor  would have  the responsibility  to fill  out the                                                               
form.   Presently, the assignment form  is used by people  to pay                                                               
debts  voluntarily,  which  is  different  from  the  garnishment                                                               
system.  She went over the numbers  on the fiscal note.  She also                                                               
noted that the  effective date would be pushed back  from 2003 to                                                               
2004.                                                                                                                           
                                                                                                                                
Number 1979                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE asked  what the motive was  behind this piece                                                               
of legislation.                                                                                                                 
                                                                                                                                
MS.  PHILLIPS  answered  that   constituents  Ted  and  Francoise                                                               
Gianoutsos had wanted to assign  their PFDs to the Seward SeaLife                                                               
Center and were unable to give  the check directly to the center;                                                               
they had to give it to the City  of Seward to be passed on to the                                                               
center.   They asked for  this legislation and requested  that it                                                               
be  similar to  the college  savings plan  whereby someone  could                                                               
"check off"  the PFD  check to a  registered 26  U.S.C. 501(c)(3)                                                               
[Internal Revenue Code] charity.                                                                                                
                                                                                                                                
Number 1890                                                                                                                     
                                                                                                                                
TED GIANOUTSOS  testified via teleconference.   He explained that                                                               
his and his wife's motivation  was initially to assign their PFDs                                                               
to the  Alaska SeaLife Center  in Seward.   When they  found that                                                               
they could not do that directly,  some of the board of the Alaska                                                               
SeaLife  Center recommended  that they  give  it to  the City  of                                                               
Seward.   Once  they  realized they  could be  a  benefit to  the                                                               
state, they asked their  representatives to introduce legislation                                                               
that  would allow  Alaskans to  assign  their PFD  rights to  any                                                               
Alaskan nonprofit for  the common good.  They  feel strongly that                                                               
it  is in  the interest  of  Alaska to  encourage and  facilitate                                                               
gift-assignment philanthropy to any Alaskan 501(c)(3) charity.                                                                  
                                                                                                                                
MR. GIANOUTSOS noted that they had  been aware of the cost to the                                                               
state of  this legislation.  He  said they suggested a  fee, such                                                               
as the $2 assignment fee, so there  is no cost to the state.  The                                                               
cost of the administration is borne by the donor.                                                                               
                                                                                                                                
Number 1600                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES commented that  Mr. Gianoutsos could achieve                                                               
the same thing  by just writing a check without  asking the state                                                               
and the City of Seward to implement the donation.                                                                               
                                                                                                                                
MR.  GIANOUTSOS answered  that there  isn't  any facilitating  or                                                               
encouraging  of permanent  fund gift  philanthropy for  others in                                                               
the state  if they don't know  about it.  On  the PFD application                                                               
there are  four pages encouraging  people to give to  the College                                                               
Savings Plan,  and he  wondered why  there couldn't  be something                                                               
there  to facilitate  and encourage  gift-assignment philanthropy                                                               
and deduct the cost of the program from the donor.                                                                              
                                                                                                                                
CHAIR COGHILL  noted that this  bill includes any  nonprofit, not                                                               
just those in Alaska, and that is an issue for him.                                                                             
                                                                                                                                
Number 1483                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON  commented that this might  have some merit                                                               
somewhere along the  line, but right now when  there isn't enough                                                               
money in  the budget to  pay for the  services of the  state, she                                                               
said  she wouldn't  like to  see some  of the  money spent  to do                                                               
this, when a person could just write a check.                                                                                   
                                                                                                                                
CHAIR COGHILL announced that HB 493  would be held over, and that                                                               
he would ask the sponsor some more questions.