Legislature(2017 - 2018)HOUSE FINANCE 519
04/28/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB83 | |
| SB78 | |
| HB105 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 78 | TELECONFERENCED | |
| + | HB 105 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 83 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 78(FIN)
"An Act creating the education endowment fund and the
dividend raffle fund; authorizing donations from the
permanent fund dividend for educational purposes and
to enter the permanent fund dividend raffle; relating
to transfers from the dividend raffle fund and the
education endowment fund; relating to the duties of
the Department of Revenue; relating to the definition
of 'gambling'; and providing for an effective date."
2:15:00 PM
Co-Chair Seaton MOVED to ADOPT proposed committee
substitute for CSSB 78, Work Draft 30-LS0534\L (Martin,
04/15/17).
Representative Wilson OBJECTED for discussion.
Co-Chair Foster invited the testifiers to put themselves on
the record.
SENATOR CLICK BISHOP, SPONSOR, introduced the legislation.
He relayed that the bill was a creative way to fund
education. He suggested that the bill would go a long way
to funding education. He thought it was high time the
legislature looked to other funding sources. The fund was
completely voluntary. He had looked at other ways such as
bring back the head tax - which did not have good
reception.
Co-Chair Seaton had just received communication from folks
in Homer asking about that legalizing gambling.
2:20:21 PM
PETE FELLMAN, STAFF, SENATOR CLICK BISHOP, amending the
current gambling law to allow an additional raffle - to be
exempt from the gambling laws in the state already in
current law.
Vice-Chair Gara appreciated the senator thinking outside of
the box. He could not tell how much of the bill the state
would receive back. It was close to $5 million.
Mr. Fellman responded that it would be difficult to know
what would go directly into the education fund.
Vice-Chair Gara thought all good ideas should move forward.
He expressed a concern about people donating part of their
Permanent Fund Dividend (PFD). There was nothing in the
bill stated that if a person donated their money education
would go up.
Senator Bishop responded that he had another senator that
initially did not like the bill but did end up like the
bill once the name was changed from lottery to raffle. He
commented that the legislature still had the power to
appropriate.
Representative Guttenberg had a similar concern as Co-Chair
Seaton. He wondered about the federal law even though the
state already had its own law.
2:26:42 PM
Mr. Fellman was happy to review the changes to the
committee substitute.
Representative Guttenberg stated that he wanted a "nod from
the staff" about the changes.
Representative Kawasaki surmised that there were currently
two options for donating within the PFD program. He
wondered whether the legislation provided a third option.
Mr. Fellman responded in the affirmative.
Representative Kawasaki commented that the legislature had
recently received a letter from Pick Click Give, which
stated that there might have an unintended consequence of
less money going to the charities.
Mr. Fellman responded that many people committed to
charitable donations for belief in the organization and for
the tax break.
Representative Kawasaki felt that the gambling was a tax on
poor people and targeted to people who were "bad at
statistics." He understood that people supported education
and there were also people that wanted to win a lottery. He
asked for comment regarding that concern.
2:29:41 PM
Mr. Fellman asked Representative Kawasaki to repeat his
questions.
Representative Kawasaki repeated his question.
Mr. Fellman replied that the raffle was limited, and could
only be played once a year from the PFD. He stressed that
the limit was the maximum amount of the PFD.
Representative Kawasaki asked if it precluded a parent from
using their child's PFD.
Mr. Fellman added that only adults 18 and older could
participate.
2:34:30 PM
Representative Wilson noted that Pick Click Give had a
sweepstakes.
Mr. Fellman responded in the affirmative.
Representative Wilson felt that the bill did the same thing
as the sweepstakes.
Mr. Fellman agreed.
Representative Guttenberg clarified that the committee was
referencing version L of the bill.
Co-Chair Foster responded in the affirmative.
Mr. Fellman reviewed the changes in the CS:
Explanation of Changes CS CSSB78 (30-LS0534\L):
Proposed House Finance CS reduces the raffle fund
cap from $500 million to $300 million. The change
will allow the fund to start funding education
sooner and reduce the maximum prizes payouts.
Page 5, line 17:
Delete "$500,000,000"
Insert "$300,000,000"
Page 5, line 18:
Delete "$500,000,000"
Insert "$300,000,000"
The second change proposed is to reduce the prize
payout percentages so more money stays in the
raffle fund.
Page 6, line 5:
Delete "10"
Insert "eight"
Page 6, line 7:
Delete "five"
Insert "four"
Page 6, line 9:
Delete "three"
Insert "two"
Page 6, line 11:
Delete "two"
Insert "one"
Representative Wilson WITHDREW her OBJECTION.
There being NO OBJECTION, the proposed committee
substitute, CSSB 78(FIN) was adopted.
Mr. Fellman shared that there was a concern about securing
the raffle. Therefore, the cap was reduced, so it would put
money into the endowment fund sooner. He stated that the
cap was now at $300 million, so everything above that
amount would be put into the fund. He shared that the
payouts were also reduced by a few percentages.
2:39:47 PM
Vice-Chair Gara wondered whether someone would expect an
increase in education funding, should they participate in
the program.
Mr. Fellman replied that education funding was already seen
as being reduced, and felt that the public would expect
more cuts in the time of oil price. He hoped that the price
of oil would increase, so the budget could secure. He
remarked that there were other measures that would add more
money to education.
Vice-Chair Gara thought the positive portion of the bill
was that more money would be put into the education fund.
Mr. Fellman was happy to work with the committee to develop
a plan.
Vice-Chair Gara could be wrong as well.
Representative Wilson suggested that a disclaimer would not
necessarily because of the application for a PFD.
Mr. Fellman answered that it would be added to the previous
year's funding.
2:44:48 PM
Representative Wilson asked Mr. Fellman how much would
likely be gained in the first year.
Mr. Fellman stated that the prize would be $5 million.
2:51:56 PM
Representative Wilson asked if the state was starting at 50
percent, but it would grow up to 65 percent as the
donations increased.
Mr. Fellman replied in the affirmative.
Co-Chair Seaton noted that the fund started at $10 million.
He queried the annual receiving for Pick Click Give.
Mr. Fellman replied that it was between $2.5 million and $3
million. He remarked that Pick Click Give distributed the
money to over 600 organizations. He did not know their
administration costs.
Co-Chair Seaton remarked that queried an analysis that
determined that there would be three times the amount of
donations in the new program than the donations to Pick
Click Give.
Mr. Fellman replied that Pick Click Give was a complicated
program. He stated that the proposed program was not
connected to Pick Click Give.
2:57:14 PM
Co-Chair Seaton asked if any study showed the impact of
Pick Click Give, with the inducement to pull out $10
million.
Mr. Fellman answered that the bill had only been introduced
40 days earlier and a study would be costly. He elaborated
that their own costs had been built in.
Representative Ortiz felt the kind of people interested in
gaming may not be the same as those interested in donating.
Mr. Fellman believed that when the Permanent Fund Dividend
had been reduced the past year it had a large impact. He
had received many phone calls received from individuals who
sent money to relatives out of state for them to play Power
Ball
Representative Ortiz asked if Mr. Fellman saw the bill as a
way to augment current obligations made to education or as
a supplement.
Mr. Fellman answered that he could not speak for future
legislatures. The bill would create another pot of money
that could help children. The sponsor hoped it would be the
case, but there was not a guarantee.
Representative Guttenberg agreed that it was a group of
individuals interested in gaming, which was different from
individuals interested in donating.
3:01:42 PM
Mr. Fellman replied that the larger the prize, the more
people wanted to play.
Representative Guttenberg love Mr. Fellman's enthusiasm.
The only raffle tickets he typically only bought raffle
tickets he sold himself. He wondered how realistic the
numbers were in terms of participation.
Co-Chair Seaton relayed a list of testifiers available for
questions.
Mr. Fellman relayed that 95 percent of the money would go
towards education, and benefitted Alaska's children.
Co-Chair Seaton invited Nina Kempel to testify.
3:07:00 PM
NINA KEMPEL, CEO, ALASKA COMMUNITY FOUNDATION, ANCHORAGE,
stated that Pick Click Give was part of a larger
partnership with other organizations. She stated that it
was a natural partnership to support the program for
nonprofits in the state.
Co-Chair Seaton asked that her written testimony be
provided.
Vice-Chair Gara thanked the organization for all it did for
the state.
Representative Wilson asked how much was donated to the
charity and how much it received.
Ms. Kempel responded that that the organization received 93
percent.
3:13:57 PM
Representative Wilson was confused. She remarked that there
was an administration fee of 15 percent.
Ms. Kempel clarified that 7 percent of the administration
fees came from the voluntary participation of
organizations. The remaining 8 percent came from the
private partnership with organizations across the state
from donors.
Representative Wilson surmised that $7 dollars of $100
would be utilized for the administrative fee, and the other
$93 would go to the organization. Ms. Kempel agreed.
Representative Wilson stressed that losing the private
donations, would result in the state covering the
additional cost to cover the 15 percent. Ms. Kempel agreed,
and stated that the hope was that the 7 percent would
eventually support the program. She stressed that the state
did not pay any portion of the funding.
Co-Chair Seaton relayed the testifiers available online.
3:16:49 PM
Representative Pruitt asked about the administrative costs
to the state.
Ms. Kempel deferred to Ms. Race.
Representative Pruitt asked if the money came from the
private donations.
Co-Chair Seaton thought the committee was going too far
into the weeds. He wanted members to refocus on the bill
before the committee.
Representative Pruitt was trying to understand the long-
term impacts and the fall back for the Pick Click Give
program
Ms. Kempel answered that it was not a part of the 15
percent.
Representative Guttenberg queried preliminary analysis of
the impacts program.
Ms. Kempel responded that the organization had not been
involved in a research and wanted to be part of the effort.
3:24:00 PM
DEBORAH BITNEY, VICE PRESIDENT AND CHIEF ADMINISTRATIVE
OFFICER, RASMUSON FOUNDATION, ANCHORAGE (via
teleconference), stated that the Rasmuson Foundation
invested $3 million in Pick Click Give. She shared that
over ten years, Pick Click Give had raised approximately
$20 million for nonprofit service providers across the
state. She felt that the lottery deduction would have a
direct affect on the Pick Click Give program, and felt that
the legislation had not been properly examined to assess
the impact of the dividend application process, the
nonprofit sector, or the people that it served. She
stressed that the addition to the application process
required time, resources, and expensive testing. She felt
that short notice mandated adjustments to the applications
can fail. She stated that the failure of the application
had a direct negative impact on the associated programs and
the department.
Representative Wilson wondered how often a charitable
organization was added to the Pick Click Give list.
Ms. Bitney did not know the answer to that question.
Ms. Kempel announced that each organization must meet
standards when wanted to be added to the Pick Click Give
list.
3:28:06 PM
Representative Wilson felt that there were already ongoing
adjustments to the application.
Ms. Kempel responded that there were not constant changes
to the process. She stated that there were updates to the
modifications to the website and technology. She stressed
that the process was understood by the participating
nonprofits, and would continue in the same historic manner.
Representative Wilson relayed that there was a concern that
adding a charity or program would be costly. She understood
that the Pick Click Give list was already adjusting.
Co-Chair Seaton stated that the issue was about adding a
factor into the PFD application process, and not related to
the list that was assigned to Pick Click Give.
Ms. Bitney agreed.
Co-Chair Seaton stressed that the issue was related to the
addition of the PFD technical system.
Representative Wilson surmised that the program would be
more affordable, if it were integrated in Pick Click Give.
Ms. Bitney responded that the statement was accurate. She
furthered that she was concerned with adding a process to
the application.
Representative Wilson wondered whether there was another
part of state government, besides the University, that was
part of Pick Click Give.
Ms. Kempel replied that only nonprofit organizations could
participate in Pick Click Give, so there were no
organizations that were part of Pick Click Give.
3:32:32 PM
Vice-Chair Gara queried the cost of running the program. He
Ms. Kempel responded that she was not familiar with the
$275,000 fiscal note. She stated that she had seen an
inaccurate fiscal note for $8000. She stressed that
implementing a new program required a robust system for
dealing with questions, and did not see that system in the
plan. She also wanted to know how that cost would be
covered.
Co-Chair Seaton relayed that Ms. Race could answer the
question.
Vice-Chair Gara felt that the proceeds from the cost would
pay for the administration.
Co-Chair Seaton was going to get the other invited
testimony online.
3:34:45 PM
ELIZABETH RIPLEY, PRESIDENT OF THE FORAKER GROUP, ATLANTA,
GA (via teleconference), shared that the Foraker Group
helped to implement Pick Click Give.
Representative Wilson asked if Ms. Ripley was concerned
with the addition of the income tax being part of the
process.
Ms. Ripley was not familiar with what she was asking.
Representative Wilson suggested that advertising frequently
"ate up costs."
Ms. Ripley thought some of the advertising could be
coordinated.
Representative Wilson felt that the level of awareness
would help bring more people to Pick Click Give.
3:43:42 PM
Co-Chair Seaton stated that some testifiers were concerned
with how the programs would interact.
Representative Wilson thought there was the same problem
with Alaska Seafood Marketing Institute (ASMI) and tourism.
He felt that there may be competition in the programs. She
did not know how a study would be done to determine how the
programs might interact.
Representative Ortiz spoke to the uniqueness of the
Permanent Fund and the Pick Click Give program. He asked if
there was confidence in how to study the impact of the
program.
Ms. Ripley answered they would like to have much more
communication about SB 78 to work through concerns.
Co-Chair Seaton had no idea whether there were examples
around the country about locations that had started a
lottery or Power Ball.
3:46:19 PM
Co-Chair Seaton OPENED public testimony.
DANIEL LYNCH, SELF, SOLDOTNA (via teleconference),
complimented the House to find real solutions to the
problems facing the state. He stated the bill was no more
than a gimmick or diversion to distract from finding real
solutions. He provided further detail about living in
another state in the past. The model would never be
profitable in Alaska; however, there was potential in
limited casinos. He expounded on the idea, which he
believed would create employment and diversification. He
thought it would bring in revenue. He spoke to empty
buildings in Kenai and Anchorage that would work as
casinos. He knew what manure smelled like - like SB 78.
3:49:23 PM
JOY STEWARD, SELF, HOMER (via teleconference), spoke to her
concerns about the bill. She applauded all legislators who
were working hard to find a way to balance the state's
budget. She did support finding increased funding for
education. She thought the bill could negatively impact
nonprofits. She referred to earlier testimony that had
cited concerns.
3:52:07 PM
TAMMY SMITH, NEA ALASKA, ANCHORAGE (via teleconference),
spoke in support of SB 78. She was currently serving as a
director for NEA Alaska. She suggested that although SB 78
was not a total solution but was a sort-term fix. She had
received an email that non-tenured teachers would be
receiving layoff notices, which ultimately would hurt
Alaska's students. She advocated for a long-term solution.
It was not the solution for the large fiscal gap. She
highlighted the necessity of passing a total fiscal plan
along with a broad-based tax. SB 78 was a supplemental
effort to a larger plan. She thanked the committee.
3:55:33 PM
BILL WRIGHT, UNITED WAY OF TANANA VALLEY, FAIRBANKS (via
teleconference), stated that his agency relied on donations
from Pick. Click. Give. He advocated for further study of
the raffle although he was not speaking against it.
3:58:12 PM
MIKE COONS, SELF, PALMER (via teleconference), spoke in
opposition of the bill. He thought the bill would have a
huge impact on the senior programs. He agreed with
Representative Wilson that giving to charity would be
greatly impacted with the reduction of the dividend. He
opposed the bill as well as an income tax. He provided the
example of the lottery in the state of Ohio. He gave kudos
to the house Minority for standing against the income tax.
Co-Chair Seaton CLOSED Public Testimony.
4:01:40 PM
Representative Wilson wondered if it was an appropriate
time to hear from Ms. Race.
SARA RACE, DIRECTOR - DIVISION OF ADMINISTRATION,
DEPARTMENT OF REVENUE, JUNEAU, introduced herself.
Representative Wilson wondered whether the division set up
Pick Click Give, and would that same management be in place
for the program outlined in the legislation.
Ms. Race replied that there were some administration
procedures with Pick Click Give. The proposed program would
add a question to the PFD application that would allow an
individual to participate in the raffle, and select in $100
increments. She stated that it would be the last priority
order item to pay out, after approval. She stated that the
portion would return to the applicant, should there not be
$100 available for payment.
Representative Wilson queried the added cost for the PFD
application.
Ms. Race answered that most infrastructure was already
built into the program, but there was an addition of a
question to the application and the creation of the vender
in the vender table.
4:03:39 PM
Representative Wilson queried the anticipated ongoing costs
to the program.
Ms. Race replied that there was a one-time additional cost.
She furthered that the outgoing years would not be too
great. She stated that the there needed to be creative
solutions to advertise the program. She stated that the
following years allowed for 2 percent available after the
first year for advertising.
Representative Wilson queried the accounting costs to Pick
Click Give.
Ms. Race responded that there were accounting costs, but
did not necessarily come from the state. She stated that
there was a $250 application fee for businesses that wished
to participate in Pick Click Give. She stated that United
Way vetted the applications.
Co-Chair Seaton wondered who advertised and administrated
the program.
Ms. Race replied that after the first year of the program,
2 percent was dedicated to administration and advertising.
Co-Chair Seaton asked wondered whether the division would
absorb the work.
Ms. Race responded that there were no additional personnel
needed for the program, and the 2 percent would be used for
advertising and administration costs.
SB 73 was HEARD and HELD in committee for further
consideration.
4:08:32 PM
AT EASE
4:13:41 PM
RECONVENED