04/09/2019 03:30 PM Senate STATE AFFAIRS

            SB  92-PFD CONTRIBUTIONS TO GENERAL FUND                                                                        
                                                                                                                                
3:37:13 PM                                                                                                                    
CHAIR SHOWER  announced the consideration  of SENATE BILL  NO. 92                                                               
"An Act  relating to contributions from  permanent fund dividends                                                               
to the general fund."                                                                                                           
                                                                                                                                
He recapped  that the bill was  first heard on 4/4/19  and public                                                               
testimony was  heard and  closed. He noted  there was  a proposed                                                               
committee substitute.                                                                                                           
                                                                                                                                
3:37:28 PM                                                                                                                    
SENATOR COGHILL moved to adopt  the committee substitute (CS) for                                                               
SB 92, work order 31-LS0703\M, as the working document.                                                                         
                                                                                                                                
CHAIR SHOWER objected for discussion purposes.                                                                                  
                                                                                                                                
3:38:04 PM                                                                                                                    
SENATOR DAVID  WILSON, Alaska State Legislature,  Juneau, sponsor                                                               
of SB 92  explained that the CS intends to  clarify the intent of                                                               
the  bill. It  removes language  from AS  43.23.130 dealing  with                                                               
Pick.Click.Give.   and   adds    Sec.   43.23.135   relating   to                                                               
contributions to  the general  fund and  creates a  mechanism for                                                               
donations to the general fund. He  explained that Title 43 is the                                                               
revenue  and  taxation statute  and  chapter  23 deals  with  the                                                               
permanent fund dividend (PFD). He  said the CS creates a separate                                                               
button on the electronic application  to clarify that this option                                                               
is not intended  to compete with any charitable  donations of the                                                               
Pick.Click.Give program.                                                                                                        
                                                                                                                                
SENATOR WILSON  reviewed the  following "Explanation  of Proposed                                                               
Changes Version A to Version M.":                                                                                               
                                                                                                                                
     Section 1:  All material from  Page 1, line  3, through                                                                    
     page 3, line  6, is deleted. It is replaced  with a new                                                                    
     section  of law  "Sec. AS  43.23.135. Contributions  to                                                                    
     the General Fund"                                                                                                          
        • Part (a)                                                                                                              
             o Defines the parameters and increments for                                                                        
               contributing to the general fund,                                                                                
             o  Establishes    that     donations    through                                                                    
               Pick.Click.Give.    take     priority    over                                                                    
               donations to the general fund if there is a                                                                      
               shortfall, and;                                                                                                  
             o Requires a seven percent administration fee                                                                      
               is deducted from donations to the general                                                                        
               fund.                                                                                                            
        • Part (b)                                                                                                              
             o Notes that a public agency that claims a                                                                         
               dividend on an individual's behalf is not                                                                        
               permitted to make contributions from that                                                                        
               dividend.                                                                                                        
        • Part (c)                                                                                                              
             o Explicitly states that this is separate from                                                                     
               the Pick.Click.Give. "button" or mechanism                                                                       
               in the dividend application.                                                                                     
                                                                                                                                
3:40:51 PM                                                                                                                    
CHAIR   SHOWER  removed   his  objection.   Finding  no   further                                                               
objection, version M was adopted.                                                                                               
                                                                                                                                
3:41:19 PM                                                                                                                    
SENATOR  COGHILL asked  for confirmation  that  returning all  or                                                               
part of  one's dividend to  the state  general fund would  not be                                                               
tax free.                                                                                                                       
                                                                                                                                
SENATOR WILSON agreed that at this  time there is no escaping the                                                               
tax. He noted the Legislative Legal opinion last year.                                                                          
                                                                                                                                
3:41:49 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
3:42:40 PM                                                                                                                    
CHAIR SHOWER reconvened the meeting.                                                                                            
                                                                                                                                
SENATOR  WILSON said  the Legislative  Legal  Services memo  last                                                               
year advised  that there is  no simple solution to  make dividend                                                               
contributions  to  the  general  fund  nontaxable.  He  suggested                                                               
contacting a tax professional on the best way to proceed.                                                                       
                                                                                                                                
SENATOR COGHILL said  he wanted the record to be  clear that this                                                               
donation would  not be tax  free. He also  expressed appreciation                                                               
that  the sponsor  addressed the  confusion  associated with  the                                                               
Pick.Click.Give program.                                                                                                        
                                                                                                                                
3:44:00 PM                                                                                                                    
SENATOR  REINBOLD  stated  support  for  the  statutory  PFD  and                                                               
emphasized the importance of  understanding that Alaskans receive                                                               
the dividend  because the  state holds  the subsurface  rights in                                                               
Alaska. She  said most of the  people in her district  want their                                                               
dividend if  they don't have  subsurface rights. She  offered her                                                               
perspective  that teachers  and public  employees typically  say,                                                               
"take  my permanent  fund dividend  and tax  me." SB  92 provides                                                               
that opportunity.  She described  the bill  as a  good compromise                                                               
and said she would probably be a [cosponsor].                                                                                   
                                                                                                                                
3:45:48 PM                                                                                                                    
SENATOR MICCICHE  referenced the Legislative Legal  Services memo                                                               
and  observed that  it appears  that this  donation could  be tax                                                               
free. He said he'll look at that  further as the bill moves on to                                                               
the finance committee.  His interest is keeping all  the money in                                                               
the state  instead of sending 30  percent of the donation  to the                                                               
federal  government in  tax.  [That assumes  the  30 percent  tax                                                               
bracket.]                                                                                                                       
                                                                                                                                
CHAIR  SHOWER  stated  support  for the  bill.  Based  on  public                                                               
testimony he  expects people to  donate between $400  million and                                                               
$500 million of their dividends to the general fund.                                                                            
                                                                                                                                
SENATOR  WILSON  commented  on  a  conversation  he  had  with  a                                                               
committee member about having the same idea at the same time.                                                                   
                                                                                                                                
3:48:44 PM                                                                                                                    
SENATOR COGHILL moved  to report [CSSB 92(STA)],  version M, from                                                               
committee  with  individual   recommendations  and  [forthcoming]                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR SHOWER  stated that without  objection, CSSB  92(STA) moved                                                               
from the Senate State Affairs Standing Committee.