Legislature(2017 - 2018)ADAMS ROOM 519
04/16/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB411 | |
| SB78 | |
| SB215 | |
| SB15 | |
| SB92 | |
| HB260 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 411 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 15 | TELECONFERENCED | |
| += | SB 78 | TELECONFERENCED | |
| += | SB 215 | TELECONFERENCED | |
| += | SB 92 | TELECONFERENCED | |
| += | HB 260 | 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."
2:26:13 PM
Co-Chair Seaton invited Mr. Fellman to the table.
2:26:39 PM
PETER FELLMAN, STAFF, SENATOR CLICK BISHOP, noted that he
had no comments.
2:27:11 PM
Representative Guttenberg announced that he would not be
offering Amendment 1.
2:27:34 PM
Vice-Chair Gara MOVED to ADOPT Amendment 2, 30-LS0534\Y.8
(Martin, 4/12/18) (copy on file):
Page 1, following line 6:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
LEGISLATIVE INTENT. It is the intent of the
legislature that the funds generated by the
permanent fund dividend raffle created in this
Act be used to supplement and not to supplant
state aid provided by the public school funding
formula under AS 14.17.410."
Page 1, line 7:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly. 14
Page 5, line 5, following "appropriation":
Insert "; money transferred under this paragraph
to the public education fund may be used in
addition to the state aid to districts calculated
under AS 14.l 7.410(b)(l)"
Page 5, line 31, following "AS 14.17.300.":
Insert "Money transferred under this subsection
to the public education fund may be used in
addition to the state aid to districts calculated
under AS 14.l 7.410(b)(l)."
Representative Wilson OBJECTED for discussion.
Vice-Chair Gara explained the amendment. He said that the
intent was that the legislature could supplement education
funding with the proceeds.
Representative Wilson expressed appreciation for the
amendment.
Representative Wilson WITHDREW her OBJECTION.
Co-Chair Seaton clarified that the amendment was version
Y.9.
There being NO OBJECTION, Amendment 2 was ADOPTED.
2:30:51 PM
AT EASE
2:32:19 PM
RECONVENED
ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
reviewed the fiscal notes. He explained that the fiscal
note was under the additional foundation funding allocation
under K-12 school districts in the Department of Education
and Early Development (DEED) but would impact several areas
of the state budget. He furthered that none of the impacts
would be felt in FY 19, so the division felt that, rather
than creating fiscal notes for allocation that had yet to
exist, allocations had been incorporated into one fiscal
note. The following items outline the budget actions
associated with the legislation. Other than the two
Department of Revenue fiscal notes which request (1) $10.0
GF/PR (Permanent Fund Dividend Division) in FY 19 for
programming changes to set up the database; and (2) $25.0
GF/PR (Tax Division) in FY 19 for program promotion, the
remaining budget items would occur in FY 20 or subsequent
fiscal years:
1. Flow to the Department of Education and Early
Development - FY 21
50 percent of dividend contributions shall be
appropriated to the Department of Education and Early
Development (using the new Raffle fund code which will
be created in FY 20 as grants supplementing the
foundation formula.
2. (new) Education Endowment Fund - FY 20
Using the new Raffle fund code, 25 percent of dividend
contribution will flow to the new Education Endowment
Fund. Eventually, an additional Endowment fund code
will need to be created for funding that comes out of
the Endowment Fund as overflow payments to the Public
Education Fund. There is no fiscal note because there
is no money anticipated during the first five years of
the program.
3. (new) Dividend Raffle Prize Fund - FY 20
25 percent of the dividend contribution will flow to
the Dividend Raffle Fund using the new raffle fund
code. There will be a new Prize fund code for
management of the Raffle funds plus any overflow to
the Education Endowment Fund. Prizes will be paid
without further appropriation.
4. Programming costs for DOR/PFD Dividend Division -
FY 19
(see DOR/Permanent Fund Division fiscal note) - $10.0
GF/PR is required in FY 19 for DOR to program their
database in time for 2019 PFD applications (which will
be paid out in FY 20).
5. Manage endowment - DOR/Taxation and Treasury - FY
20
(see DOR/Treasury Division fiscal note) - The current
fiscal note estimates management costs ranging from
$4.4 in FY 20 up to $26.3 in FY 24. This will be paid
for using the new Prize fund code.
2:36:01 PM
Representative Wilson pointed to the DOR note, OMB
component 2476, and DOR note, OMB component 981, which
reflected program receipts. She noted that there were no
program receipts, and she asked whether the intent had been
to show that DOR would provide the funds and then the money
would be paid back as the program made money.
Mr. Fellman replied that that was his understanding.
Representative Wilson thought that the department would
unlikely have and additional $35,000 to fund the initial
payouts. She surmised that the funds would be undesignated
general fund (UGF) dollars initially, which would be
returned as designated general funds (DGF).
Mr. Fellman responded that initially, pre-program dollars
were supposed to be spent for advertisement. He said that
he had pointed out that the language in the fiscal note
should be changed.
Representative Wilson directed committee attention to
fiscal note OMB # 2476, Page 2:
For FY 19, the Department of Revenue intends to
provide $25,000 in raffle proceeds to the Department
of Education and Early Development. DEED will use the
funds to inform Alaskans of the existence of the
raffle and that a large portion of their ticket
purchases goes to directly support education programs.
Mr. Fellman deferred to Mr. Alper to respond. He understood
that the appropriation was to cover the first year of
advertising.
2:38:53 PM
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
said that the note had been written to relay that a small
fraction of money that came into the fund would be used for
marketing. He stated that how to fund that advertising in
year 1 had been recently discussed. He related that he did
not precisely know how the first year of the program would
fund advertising.
Representative Wilson explained that her issue was with the
fund code. She expressed curiosity that the intent was that
the money be paid back with designated general funds, when
no fund currently existed. She understood that the state
would be paid back out of the first $35,000 raised in the
fund.
Mr. Painter believed the fiscal note should indicate UGF if
there were no DGF to spend. He recommended amending the
note.
Representative Wilson wanted additional clarification in
the note in the form of intent language.
2:41:44 PM
Representative Guttenberg referred to the DEED note, OMB
component 3112. He asked whether one-fifth of the fund was
the total of prizes distributed.
Mr. Fellman replied that the one-fifth represented one-
fifth of the money in the fund.
Representative Guttenberg expressed concern that only one-
fifth of the total fund went out in prizes.
Mr. Fellman responded that one-fifth was 20 percent. He did
not believe the chart attached to the note reflected the
current CS. He stated that the other 80 percent would stay
in the fund for education. He said that if the fund
exceeded $300 million by a $1 million, the $300 million
would be where the prized were drawn from and the
additional $1 million would go directly into the Education
Endowment Fund.
Mr. Alper stated that currently the profits of charitable
gaming in the state, predominately pull-tabs and bingo, was
approximately $350 million, of which 10 percent passed
through to eventual recipients as charitable donation. He
said that a great bulk of the difference was distributed in
prizes and used to pay costs to operate the games.
2:45:50 PM
Vice-Chair Gara wondered if it would be proper to meld what
Representative Wilson and Mr. Painter stated into a
conceptual amendment that clarified intent.
Vice-Chair Gara MOVED to ADOPT Conceptual Amendment 3 to
amend fiscal note OMB component 2476, to change the the
$25,000 to UGF, and to state in the analysis that it was
the intent of the legislature that the funds be repaid in
the future out of raffle proceeds.
Representative Wilson OBJECTED.
Representative Wilson thought the same amendment should be
made to fiscal note OMB component 981.
Vice-Chair Gara agreed. He said that he would move a
separate amendment for OMB component 981.
Representative Wilson WITHDREW her OBJECTION.
There being NO OBJECTION, Conceptual Amendment 3 was
ADOPTED.
Vice-Chair Gara MOVED to ADOPT Conceptual Amendment 4 to
amend fiscal note OMB component 9816, to change the $10,000
to UGF, and to state in the analysis that it was the intent
of the legislature that the funds be repaid in the future
out of raffle proceeds.
There being NO OBJECTION, it was so ordered.
Representative Kawasaki was uncertain that he would support
the bill on the floor but would not stop it from moving
forward from committee. He expounded on his reasoning. He
expressed concern that non-profits would lose funds from
the Pick-Click-Give program.
2:51:48 PM
Representative Grenn would be objecting to moving the bill
from committee. He echoed Representative Kawasaki's
concerns that non-profits would lose funding.
Representative Wilson praised the innovative nature of the
bill. She thought that it was clear where the money would
be distributed. She expressed 100 percent support.
2:57:19 PM
Representative Guttenberg categorized the legislation as a
"gaming bill disguised as educational funding." He thought
that the assumptions built into the bill were random and
arbitrary. He felt that a more comprehensive analysis of
the repercussions of the legislation should be executed. He
thought that gambling was disproportionately detrimental to
the poor. He expressed opposition to the bill.
3:00:17 PM
Co-Chair Seaton was in support of the bill. He spoke of
suggested tax credits to industry members that made
significant contributions to education. He felt that the
inducement was more significant than the potential payout.
He thought that the supplemental funding would be
beneficial to all districts in the state.
3:02:30 PM
Representative Grenn thought if the bill was about
education and not gambling, the proceeds would be given to
schools.
3:02:59 PM
Representative Grenn asked where in the application, on the
website, would be the option to purchase the raffle
tickets.
SARA RACE, DIRECTOR, PERMANENT FUND, DEPARTMENT OF REVENUE,
responded that the this was currently unknown but that
there was a new application under development that broke
out voluntary options for directing funds.
Representative Grenn asked whether the items would be
listed on the same page.
Ms. Race replied in the affirmative.
Representative Grenn asked who would oversee advertising.
Ms. Race thought that DOR would advertise in partnership
with the Permanent Fund.
3:04:32 PM
Representative Grenn was uncomfortable with the logistical
unknowns.
3:04:46 PM
Vice-Chair Gara respected the various views of committee
members on the bill. He believed that the legislation
should be debated on the floor. He supported moving the
bill from committee.
3:07:05 PM
Representative Pruitt supported moving the bill out of
committee. He echoed concerns mentioned by other committee
members. He felt that the bill should be voted on the
floor.
3:08:29 PM
Representative Ortiz wondered how the raffle option would
be clearly separated from the Pick-Click-Give option.
Mr. Fellman felt that the options that were already
available. He believed that the option would be clearly
delineated on the alienation. He stressed that assumptions
were hard to make but that sometimes chances had to be
taken.
Ms. Race added if an individual was selecting many options
that they wanted to voluntarily give to, making sure that
there was a clear understanding of payment priority was a
consideration.
Representative Ortiz asked whether it would possible to
require clicking a button that took the applicant to a
separate donation page for the raffle option.
Ms. Race responded that it was possible and had been
considered during the application redesign process.
3:12:12 PM
Representative Kawasaki wondered about an analysis of the
economic repercussion of the lottery money not filtering
through the economy by other means or regular spending.
Mr. Fellman responded that many businesses advertise PFD
specials. He said that it was hard to tell how people would
spend their dividends, but that the money would filter down
eventually. He noted that there were already 15 different
variations of raffles in the state, generating $388 million
yearly. He could not say whether an evaluation of those
fund had been conducted.
Representative Kawasaki cautioned that there could be a
negative impact on Pick-Click-Give recipients, as well as
less PFD money circulating in the state economy.
Mr. Fellman argued that at least 75 percent would go
directly into savings or education. He contended that at
least 50 percent of the raffle funds would go back into the
economy.
3:16:22 PM
Co-Chair Seaton MOVED to report HCSCSSB 78(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes.
Representative Grenn OBJECTED.
Representative Wilson asked clarifying questions about the
fiscal notes.
Co-Chair Foster suggested calling them forthcoming fiscal
notes.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Pruitt, Thompson, Tilton, Wilson, Gara,
Kawasaki, Foster, Seaton
OPPOSED: Grenn, Guttenberg
The MOTION to report the bill from committee PASSED (9/2).
HCSCSSB 78 (FIN) REPORTED out of committee with four "do
pass" recommendations, four "do not pass" recommendations,
and three "no recommendation" recommendations and with five
new fiscal notes: three fiscal impact notes by the
Department of Revenue; one indeterminate fiscal note by the
Department of Education and Early Development; and one zero
fiscal note by the Department of Law.
3:18:24 PM
AT EASE
3:21:15 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| IN3NERGY_HFIN HB411_04162018.pdf |
HFIN 4/16/2018 1:30:00 PM |
HB 411 |
| SB 15 Amendment #1 Wilson.pdf |
HFIN 4/16/2018 1:30:00 PM |
SB 15 |
| HB 260 Conceptual Amendment #1.pdf |
HFIN 4/16/2018 1:30:00 PM |
HB 260 |