Legislature(2025 - 2026)ADAMS 519
05/13/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB95 | |
| SB96 | |
| SB97 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 95 | TELECONFERENCED | |
| += | SB 96 | TELECONFERENCED | |
| += | SB 97 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 96
"An Act relating to education tax credits for certain
payments and contributions for child care and child
care facilities; relating to the insurance tax
education credit, the income tax education credit, the
oil or gas producer education credit, the property tax
education credit, the mining business education
credit, the fisheries business education credit, and
the fisheries resource landing tax education credit;
providing for an effective date by amending the
effective date of secs. 1, 2, and 21, ch. 61, SLA
2014; and providing for an effective date."
3:45:02 PM
Co-Chair Foster asked to hear an introduction from the bill
sponsor.
SENATOR BILL WIELECHOWSKI, SPONSOR, explained that the bill
expanded the current education tax credit and had a $3
million limit. The legislation created a tax credit for
employers who incur childcare expenditures in the form of
cash or equipment, or payments to employees. He indicated
that a concern had arisen in recent days about the cost of
the bill due to the fiscal problems currently facing the
state. The bill had no discrete fiscal limits and could
potentially cost the state tens of millions in lost
revenue. He deduced that if the 20 largest employers took
advantage of the credit at $3 million it would total $60
million from the treasury. He highlighted other concerns
that had arisen: There was no definition of childcare and
payments might be used for babysitters. There was no method
of how employees spent the money. The lack of a definition
could lead to unintended consequences. He thought it was
important to pass the bill. He suggested potentially adding
a closer sunset date to keep track of the credits' fiscal
impact.
BLUE SHIBLER, EXECUTIVE DIRECTOR, ASSOCIATION FOR THE
EDUCATION OF YOUNG CHILDREN (AEYC-SEA), JUNEAU (via
teleconference), testified in support of the bill. She
shared that AEYC-SEA was a nonprofit serving childcare
providers, families and young children in Southeast Alaska
for the past 40 years. She offered that the shortage of
childcare in Alaska was a complex problem that needed
innovative solutions from multiple partners that included
the state, municipalities, and the business sector. She
relayed that her work allowed her to foster the growth of
childcare programs and she had seen tremendous interest
from the business sector in providing solutions who were
looking for concrete ways to act. She communicated that SB
96 incentivized investment from corporate taxpayers to help
expand access to childcare. She shared the example that
AEYC-SEA was currently in the process of building a large
scale childcare center in Juneau. The project was going to
be expensive and a handful of corporations in the region
were very interested in contributing; they had been
tracking the legislation closely. She stressed that the
bill needed to pass in the current session. She hoped that
the bill would spark similar interest across the state.
3:50:51 PM
Co-Chair Foster OPENED public testimony.
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster requested a review of the fiscal notes from
his staff.
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER,
reviewed the published zero fiscal note from Department of
Commerce, Community and Economic Development (DCCED) (FN3
(CED) allocated to Insurance Operations. The note was a
zero fiscal note with no regulation changes. The credit was
currently scheduled to sunset effective January 1, 2029. He
explained that the bill changed the sunset provisions to
January 1, 2028. Due to a sharp decline in credits being
claimed by insurance companies, the Division of Insurance
anticipated the trend over the last nine years to continue.
Therefore, the fiscal note projected no lost revenue nor
any fiscal impact from the legislation. The second
published zero fiscal note was from the Department of Labor
and Workforce Development (DLWD) (FN1(LWF), allocated to
Labor Market Information. He commented that the zero fiscal
was due to no revenue or regulation changes. The last
published fiscal impact note was from the Department of
Revenue (DOR) (FN2(REV), allocated to the Tax Division. The
expenditure was zero with an indeterminate revenue change
for FY 28 and FY 29.
3:55:01 PM
Co-Chair Foster asked for the sponsor's comments regarding
the sunset issue.
Senator Wielechowski commented that the bill had been
rushed through the Senate. He thought it might be worth
considering shortening the sunset.
Co-Chair Foster asked Ms. Wallace for her opinion.
Ms. Wallace restated that the consequence of amending the
legislation was a policy call for the legislature. If SB 96
was amended and the court viewed it as new legislation
versus curative, there was risk that it would not be
sufficient and moot the litigation. She reminded the
committee that no definitive case law existed to assist in
the decision of whether to amend or not.
Representative Stapp voiced that he leaned towards not
amending the bill based on the explanation.
3:57:58 PM
AT EASE
4:01:44 PM
RECONVENED
Co-Chair Foster asked about the difference in the sunsets.
SONJA KAWASAKI, SENATE MAJORITY COUNSEL, restated that the
question was how the sunset date in the current bill
applied to the bill and existing statutory education tax
credits. She explained that the education tax credits, and
the enacted SB 189 childcare tax credits were subject to a
sunset of January 1, 2028, on page 5, line 17 of SB 96. The
sunset applied to both the education and childcare tax
credits. Therefore, if the committee entertained an
amendment, it would only apply to the childcare tax
credits.
Co-Chair Schrage wondered what the soonest practicable date
was so the committee could set the sunset and make it work
with the current bill structure, effective date, or any
other potential issue.
Ms. Wallace deferred the question to a colleague.
Co-Chair Schrage clarified that his question was what was
the soonest the program could be sunset.
EMILY NAUMAN, DIRECTOR, LEGISLATIVE LEGAL SERVICES (via
teleconference), answered that Section 16 of the bill made
the changes to the education and childcare tax credits
retroactive to July 23, 2024, which reflected that date SB
189 was passed. She recalled that the intention was that
the childcare tax credits would take effect on that day.
She calculated that if interested in learning how many
credits were claimed the bill would need a full year
sunset. Many corporations paid taxes on their own tax year
annual cycle, which varied. She believed that the decision
was a policy call. She suggested that the department may
have more insight on the corporate tax credit cycle
However, many use the calendar year, which was why she
suggested a full year.
4:06:17 PM
Co-Chair Schrage hypothesized proposing a sunset date of
September 1, 2025, and companies Had already earned tax
credits in the first quarter of the current year. He
wondered whether the companies would not be able to use the
tax credits at the end of the year. Ms. Nauman responded
that unless the legislature made a special provision
otherwise to the extent the law was in place, at the time
the taxpayer earned the credit they would be able to apply
it for activity during the time the law was active. She
opined that "it was a bit messy because of the situation
where the court could invalidate the law
Representative Bynum wondered whether the sunset date was
changed in SB 96 from 2029 to 2028, in an attempt to mimic
the original bill.
Ms. Kawasaki answered that the amendment on page 5 of the
bill was to recreate the law that was established in SB
189. She explained that a bill was enacted prior to SB 189
that extended the sunset of the entire education tax credit
program and included the prior childcare tax program to
2029. In order to copy what SB 189 put in place,
Legislative Legal Services drafters included the 2028
sunset date. She voiced that it was the reason there was a
shorter sunset date.
Representative Stapp thought that there was a practicality
in talking about a shortened sunset date that was being
missed in the discussion. He explained that the sunset date
was effective to provisions 1, 2, and 21 of the prior bill
and were for: "contributions of cash or equipment accepted
by a childcare facility in the state operated by a
nonprofit corporation and attended by one or more children
of the taxpayer's employees; and a payment to an employee
of the taxpayer made by the taxpayer for the purpose of
offsetting the employee's childcare costs incurred in the
state. He deemed that if there was an early sunset date it
would invalidate the tax credits and their effects which
was the purpose of the bill. He wondered why January 1,
2028, was in over 30 months and shortening it would
"liquidate" the chance to determine the efficacy of the tax
credits.
4:11:13 PM
Co-Chair Foster commented that trying to find consensus on
the issue may be challenging.
Representative Hannan asked if anyone from DOR was
available to find out if any businesses had taken advantage
of the tax credit.
BRANDON SPANOS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), replied that the division
did not know whether anyone took advantage of the credit,
the first tax returns were due on April 15, 2025, and most
corporations applied for an extension to October 15, 2025.
He expected most of the returns would be received by that
date. He affirmed that most taxpayers use the calendar
year. He offered that the tax division published the
education tax credit report after October, and it would
breakout the childcare portion of the tax.
4:12:42 PM
Representative Hannan thought that if they were trying to
be cautious and change as little as possible, she would
look to change to January 2026, which offered a full year.
Representative Bynum viewed the situation as a curing
process and as a legal matter. He commented that whether or
not he agreed with the original bill was "a completely
different conversation." He felt that changing the date to
2026 was a significant change and would want a full
hearing. He was supportive of a minor sunset date
adjustment, but he was uncomfortable with killing the bill
and wanted to let the bill remain in statute as was
adopted.
4:14:56 PM
Senator Wielechowski remarked that it was a fantastic bill
in "a world of unlimited resources." However, he wanted to
manage the state's financial risk. He deduced that the
credits could climb as high as $100,000 or $100 million. He
expressed concern over how the state could afford it. The
impacts of the bill were unknown.
Representative Bynum pointed to the statute that had a $3
million cap. He wanted to ascertain how many affiliated
groups could afford the $3 million investment and he
doubted there were many in the state. Prior to altering the
bill, he would like to know who and how many potential
taxpayers there were and who was being impacted by the
bill. He maintained that childcare was a major issue in the
state.
Representative Stapp rejected Senator Wielechowski
speculative notion. He recalled that the committee
discussed the bill in the prior year and the loss of
potential revenue. He noted the $3 million cap and that
very few entities in the state even paid corporate income
tax. The state did not net hundreds of millions of dollars.
He noted a sunset as early as January 2026 and reminded the
committee that one of the key provisions was to allow an
employer to make expenditures to operate an onsite
childcare facility for children of taxpayers. He discerned
that no employer would invest into building a childcare
facility with such a short sunset date. He thought it was
imperative the legislature grant the bill the time to work
as intended. He suggested revisiting the statutes if the
state experienced a significant decrease in revenues, but
he did not foresee that scenario. The current sunset was
not far off. He noted that the bill was adopted in the
prior year because they all agreed the childcare sector was
in crisis. In addition, the legislation created a state
incentive that mirrored a federal incentive that allowed
employees to take pretax payroll deductions for the purpose
of dependent care. He believed the provisions were
productive. He encouraged the committee to leave the bill
as is to see if it worked.
Co-Chair Schrage agreed with a lot of what the prior member
said. He noted that the price of oil had also been
substantially higher at that time the original bill passed.
He needed more time to think about it.
Co-Chair Foster noted the committee may come back quickly
after conference committee.
Senator Wielechowski clarified that the bill applied to not
only corporate taxpayers but 7 categories of taxpayers. He
noted correspondence from the Legislative Finance Division
(LFD) stating that oil companies could dip below the 4
percent minimum with the credit. He listed the potential
taxpayers eligible for the credit and judged that it was an
expansive list.
Co-Chair Foster RECESSED the meeting.
4:21:46 PM
AT EASE
5:04:56 PM
RECONVENED
Co-Chair Foster stated that he did not want to be rushed.
His intent was to come back after 6:00 p.m.
5:06:20 PM
RECESSED
6:54:08 PM
RECONVENED
Co-Chair Foster did not want to make any rash decisions on
SB 96 and wanted to sleep on it. He set the bill aside.
SB 96 was HEARD and HELD in committee for further
consideration.
Representative Bynum asked a procedural question. He
recounted that there had been some conversations about
altering the sunset in SB 96, effectively killing the bill.
The assumption had been that the hearing was for a
statutory "cleanup process" to protect the legality of the
original bill, which was what the committee had done by
moving SB 95 out of committee. He asked if the committee
should reconsider passing out SB 95 if they were taking
alternative actions on SB 96.
Co-Chair Foster restated his understanding of the question
and statement. He observed that members were unsure if a
sunset should be changed or not. He surmised that there
were options regarding the sunset date. He concluded that
members wanted more time.
Co-Chair Schrage believed that there were some complexities
with SB 96 that may need to be cleaned up and there were a
"number of options available." He favored taking more time
with SB 96 to understand the impacts.
SB 96 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 97 Public Testimony Rec'd by 051325.pdf |
HFIN 5/13/2025 1:30:00 PM |
SB 97 |