Legislature(2017 - 2018)SENATE FINANCE 532
03/27/2018 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB154 | |
| SB86 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 286 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 154 | TELECONFERENCED | |
| += | SB 86 | TELECONFERENCED | |
SENATE BILL NO. 154
"An Act relating to contributions from permanent fund
dividends to the general fund."
9:14:45 AM
Co-Chair MacKinnon relayed that SB 154 had been heard on
February 20, 2018. The public hearing had been opened and
closed. The committee had heard from several members of the
public. The fiscal notes were reviewed. However, there was
a new fiscal note that would be addressed later in the
meeting. She invited Senator Wilson and Gary Zepp to the
table.
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for SB 154, Work Draft 30-LS0081\O (Martin,
3/21/18).
Co-Chair MacKinnon OBJECTED for discussion.
GARY ZEPP, STAFF, SENATOR DAVID WILSON, discussed the
Committee Substitute (CS) for SB 154. He explained that the
new CS changed to a new course. In the previous Version D,
they were going to use the Alaska Community Foundation's
Pick.Click.Give. (PCG) program to set up a mechanism for
Alaskans to donate their Permanent Fund Dividend (PFD) to
the state's general fund. In the course of the bill's
journey it had been modified (Version O) to affect a
different set of statutes (AS.43.23.015) which covered the
application and proof of eligibility. There was a new
section inserted, Section K, which directed the PFD
Division to modify the electronic PFD webpage to allow
Alaskans to donate their PFD's to the state's general fund.
It allowed contributions of $25 or more in increments of
$25 up to the total amount of the PFD that the applicant
was eligible to receive. It clarified that all PFD's
donated by Alaskans were subject to a 7% administrative fee
paid to the PFD Division. It structured the contributions
to the state general fund to appear in the following order:
garnishments, the University of Alaska college savings, the
PCG contributions, and the state general fund. He noted
that AS.43.23.062(e) stated that the department could not
use money from the fund for administrative costs incurred
in implementing the section even if it had been
appropriating for the cost of administering the dividend
program. The bill created an easy mechanism for Alaskans to
donate their PFDs partially or fully to the state general
fund.
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
further OBJECTION, it was so ordered.
9:18:14 AM
SENATOR DAVID WILSON, SPONSOR, thought Mr. Zepp provided an
in-depth analysis of the sectional. He believed the changes
helped accommodate some of the issues, concerns, and
questions that were brought up in the first hearing held in
February. He was available for questions.
Senator Olson commented that there seemed to be some
adamancy in not using any money for the administrative
costs to implement the bill. He wondered why there was such
passionate feelings about it. Senator Wilson thought that
it had to do with the fiscal note and issues with the
program. He thought someone from the PFD Division might be
able to better address the question. He mentioned a system
that might work without the use of PCG and that might not
overburden the user with the fee schedule.
Senator Olson asked if the sponsor was in favor of the
last-minute change to a bill he originally penned. Senator
Wilson stated he was amenable to the change. He did not
think it changed the intent of the bill which was to allow
users to more easily donate their PFD to the state general
fund.
Co-Chair MacKinnon OPENED public testimony. She shared that
her office had reached out to previous testifiers to let
them know the bill would be back before the committee.
Co-Chair MacKinnon CLOSED public testimony.
9:20:40 AM
Vice-Chair Bishop discussed a new fiscal note from
Department of Revenue (DOR). The fiscal note reflected an
appropriation for taxation and treasury; an allocation for
the Permanent Fund Dividend Division; and an Office of
Management and Budget component number of 981. The fiscal
impact was indeterminate because revenue was unknown. It
also reflected costs in the out years of $9,600. An
analysis would be required on the PFD application, as a new
section would be created. It would be the third option
along with the UA college savings program and the PCG
Program.
Senator Bishop continued that additionally the application
programming and modifications would be necessary in the
division's database to update the deduction priority order.
Both the general fund and the 7 percent breakdown would
need to be added to the division's monthly payment reports
that were generated from the financial transactions and
would increase. The division would be the primary contact
for all questions and concerns related to the new option.
Senator Bishop continued that revenue generated from
individuals that chose to contribute all or a portion of
their dividend from the program was indeterminate. Using
PCG as an example, annual contributions ranged from $25 to
$123,000. Presently, the estimated number of individuals
that would contribute to the general fund were in the lower
end of the range, but precisely where the general fund
would fall out was unknown.
Co-Chair MacKinnon asked Ms. Race to the table.
SARA RACE, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, thought that Senator Olson's
question pertained to why funds from the Permanent Fund
would not be used to support the program. Although she was
not there when it was initially implemented, she believed
the intent was that the primary mission of the Permanent
Fund was to administer dividends. The proposed legislation
would be a subset of the primary mission.
Senator Micciche noted the primary purpose of the permanent
Fund was to administer dividends. He asked her to restate
what she had said. Ms. Race stated that the primary mission
of the Permanent Fund Dividend Division was to determine
eligibility and to administer dividends.
Senator Olson was glad for the clarification gleaned from
the answer to Senator Micciche's question. He mentioned
that the Permanent Fund Dividend Division had a large
administrative force. However, when things like the PCG
component, there would be significant costs associated with
it. He wondered if there was enough reserve within the
administration of the division to absorb the workload
without any increased costs. Ms. Race relayed that in
talking about the PCG program, there were two fees.
Pick.Click.Give. had a fee of $250 fee to participate in
the program and once contributions were made from
individual's dividends, 7 percent was collected. The bill
would be a 7 percent charge collected from contributions.
9:25:24 AM
Co-Chair MacKinnon noted that there were students in the
gallery. She discussed the history of the bill, which
proposed to create a method for citizens to donate the
entirety of their dividend. The bill proposed by Senator
Wilson indicated that if people wanted to donate their PFD
to state government, they should be able to do so. The
original bill had it happening through the PCG program. The
committee substitute created a separate process for the
Permanent Fund Dividend Division but paid for it separately
from the dividend fund.
Senator Micciche further explained that it was not the same
as a person simply not accepting the dividend. In that
case, the money would be left in the fund and divided by
the remaining folks that wanted their dividend. The bill
provided a system for people to be able to contribute their
dividend and have a record of it. The contribution would go
into the general fund rather than staying in the dividend
fund.
Co-Chair MacKinnon suggested that people check with their
accountants, as the money was still taxable income.
According to her research, the contribution should be a
deduction on a person's taxes. Although governments were
not considered non-profits, they were included in the
federal internal revenue service code. The bill was trying
to provide an opportunity for Alaskans to donate their PFD
should they choose to in order to provide services to other
Alaskans.
Senator Bishop requested a brief at ease.
9:27:47 AM
AT EASE
9:30:47 AM
RECONVENED
Co-Chair MacKinnon relayed that there had been brief
dialogue about the issue and notion of whether a parent
could donate their child's dividend to state government.
She wanted to hear from committee members about this
concept. She asked the bill sponsor to comment on the
issue. Senator Wilson stated that the bill concept did not
change the guardianship rights of parents, parental
figures, or guardians regarding their rights to their
children's PFD. A statute was already in place,
AS.47.10.115, requiring that PFDs of children in custody of
the Office of Children's Services (OCS) or guardianship of
the State of Alaska go into a trust.
Senator Micciche did not think there was much of a
difference. The current structure allowed a parent or
guardian to do almost anything with their child's dividend,
good or bad. He did not believe the bill changed a parent's
or guardian's right to manage their children's dividend.
Senator von Imhof echoed the comments of Senator Micciche.
Currently dividend checks were under the absolute control
of parents to do with as they wished. She mentioned
inserting a provision for children over 18. She wondered
whether it would change other freedoms noted by Senator
Micciche previously.
Co-Chair MacKinnon thought that if a parent was in a higher
income bracket and could provide for themselves, they might
want to have the additional write-off for reasons of
personal decisions versus reasons of child protection. She
believed the issue was raised to her as the chairman
because perhaps a child would want to retain their assets
but did not have a voice. She wanted to have a discussion
on the issue prior to moving the bill out of committee. She
asked if Ms. Race if she could offer additional
perspective. Ms. Race stated that parents were currently
allowed to determine where children's dividends went.
9:35:30 AM
Vice-Chair Bishop MOVED to report CSSB 154(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes.
There being NO OBJECTION, it was so ordered.
CSSB 154(FIN) was REPORTED out of committee with a "do
pass" recommendation with one new fiscal impact note from
Department of Revenue; and with one previously published
zero fiscal note: FN 1(ADM).
9:36:07 AM
AT EASE
9:40:07 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 86 work draft v. U.pdf |
SFIN 3/27/2018 9:00:00 AM |
SB 86 |
| SB 154 work draft v. O.pdf |
SFIN 3/27/2018 9:00:00 AM |
SB 154 |
| SB 86 - Sectional Version U.pdf |
SFIN 3/27/2018 9:00:00 AM |
SB 86 |