03/27/1997 03:35 PM Senate STA

                                                                               
         SB 133 SMALL BUSINESS DEVELOPMENT TAX CREDIT                        
                                                                               
  CHAIRMAN GREEN  brought SB 133 before the committee as the final             
 order of business.                                                            
                                                                               
  COMMISSIONER WILLIAM HENSLEY , Department of Commerce & Economic             
 Development, said the vast majority of businesses in Alaska are               
 "small" but they play an enormous role in the state's economy,                
 providing 70 percent of the private jobs, so any effort to give a             
 boost to business in Alaska must consider small businesses.                   
                                                                               
 Commissioner Hensley said SB 133 is one of several bills that are             
 part of the Governor's Alaska Business Investment Incentive Plan.             
 It was introduced to encourage growth in small businesses by                  
 offering them tax credits for improving and expanding their                   
 operations.  The intent is to try to level the playing field                  
 between larger businesses, which have economies of scale and                  
 management, as well as ready access to investment capital at                  
 favorable interest rates.  The program can assist small businesses            
 in covering start-up costs, the purchase of new equipment, etc.               
                                                                               
                                                                               
 Commissioner Hensley also said the tax credit would benefit non-              
 affiliated corporations with fewer than 50 employees.  The tax                
 credit would be 10 percent of capital investment up to $100,000,              
 with a maximum annual credit of $10,000 and 50 percent of the                 
 business's corporate tax liability.  To qualify, the investment               
 must be for new property and the corporation must be in good                  
 standing on unemployment insurance and other state taxes.                     
                                                                               
 Number 220                                                                    
                                                                               
  BOB BARTHOLOMEW , Deputy Director, Income & Excise Audit Division,           
 Department of Revenue, speaking to the department's fiscal note,              
 said it is estimated that over 2,000 small businesses would be able           
 to benefit from the investment tax credit, which is a program that            
 has been used in prior years by both the federal and state                    
 governments.  The fiscal note shows the fiscal impact would be                
 approximately $2 million a year.                                              
                                                                               
 Number 209                                                                    
                                                                               
  CHAIRMAN GREEN  inquired if this was reflected in the budget, and            
  MR. BARTHOLOMEW  answered that it was not.                                   
                                                                               
 Because the committee had lost its quorum, there was no motion to             
 move SB 133 out of committee, and the meeting adjourned at 5:00               
 p.m.