04/01/2010 09:00 AM Senate FINANCE

SENATE BILL NO. 236                                                                                                           
                                                                                                                                
     "An Act relating to tax  credits for cash contributions                                                                    
     by taxpayers that are  accepted for certain educational                                                                    
     purposes or  for a college facility;  and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
10:01:43 AM                                                                                                                   
                                                                                                                                
Senator Meyer discussed SB 236.                                                                                                 
                                                                                                                              
     CS  for SB  236 amends  the current  statutes regarding                                                                    
     higher education tax credits  by expanding the range of                                                                    
     the "second tier" of tax  credits and by adding a third                                                                    
     tier.                                                                                                                      
                                                                                                                                
    Under current law, state income tax payers who make                                                                         
     cash contributions to an Alaskan educational or                                                                            
     vocational institution receive a tax credit of 50                                                                          
     percent for contributions up to $100,000 and 100                                                                           
     percent for contributions between $100,000 and                                                                             
     $200,000. Therefore, maximum tax credit allowable in                                                                       
     any given year is $150,000.  This limit appears to be                                                                      
     having a constraining effect on corporate donations to                                                                     
     & investments in educational and vocational                                                                                
     institutions in Alaska.                                                                                                    
                                                                                                                                
     Under CS for  SB 236, cash contributions  to an Alaskan                                                                  
     educational  or vocational  institution  receive a  tax                                                                    
     credit of 50 percent  for contributions up to $100,000,                                                                    
     a  100 percent  tax  credit  for contributions  between                                                                    
     $100,000 and $300,000  and a 50 percent  tax credit for                                                                    
     contributions  over $300,000,  for a  maximum allowable                                                                    
     credit accrual of $25 Million per year.                                                                                    
                                                                                                                                
     Many  major employers  in  Alaska  understand that  the                                                                    
     future success  of their  businesses requires  a highly                                                                    
     skilled  workforce.  These   businesses  want  to  hire                                                                    
     Alaskans  from  Alaska's vocational  schools,  colleges                                                                    
     and  universities.  In  addition, many  businesses  are                                                                    
     interested    in,    through    commercialization    of                                                                    
     university-generated   information  and   technologies,                                                                    
     helping  Alaska's  universities expand  their  existing                                                                    
     scientific  research  &   development  capacities  -  a                                                                    
     process  that has  become a  major source  for economic                                                                    
     development and diversification in other states.                                                                           
                                                                                                                                
     By  facilitating greater  cooperation between  Alaska's                                                                    
     business   and  education   sectors,  and   encouraging                                                                    
     greater  financial  support  from  the  former  to  the                                                                    
     latter, SB  236 hopes important workforce  and economic                                                                    
     development  goals   such  as  the  following   can  be                                                                    
     achieved:                                                                                                                  
                                                                                                                                
       · Strengthening workforce development and job                                                                            
          opportunities for Alaskans                                                                                            
        · Increasing collaboration between Alaska's                                                                             
          employers and its higher education institutions                                                                       
        · Diversifying funding sources for Alaska's higher                                                                      
          education institutions                                                                                                
        · Enhancing student success through internships, K-                                                                     
          12 outreach, camps, and other developmental                                                                           
          programs                                                                                                              
        · Developing research programs that contribute to                                                                       
          economic development in Alaska                                                                                        
                                                                                                                                
10:03:46 AM                                                                                                                   
                                                                                                                                
JIM  JOHNSEN,  SENIOR  VICE PRESIDENT,  DOYON  LIMITED  (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
He  stated  that  values from  shareholders  are  encouraged                                                                    
through private  development. The 50 percent  tax credit for                                                                    
natural gas  exploration effectively encourages  the current                                                                    
exploration for gas  in the Nanana Basin and for  oil in the                                                                    
Yukon  Flats. He  opined that  the state's  encouragement of                                                                    
private   investment  in   human  resource   development  in                                                                    
colleges  and universities  is  not as  effective  as it  is                                                                    
capped  at $150  thousand per  year. He  agreed that  SB 236                                                                    
addresses the shortcoming.                                                                                                      
                                                                                                                                
10:06:34 AM                                                                                                                   
                                                                                                                                
ROBYNN  WILSON, TAX  DIVISION  (via teleconference),  stated                                                                    
that she is unaware of  the administration's position on the                                                                    
bill. She  offered to present  the committee with a  list of                                                                    
technical  suggestions, but  stated no  known concerns  from                                                                    
the administration.                                                                                                             
                                                                                                                                
Senator Huggins inquired about the  sunset date. He recalled                                                                    
from  his  work on  the  Education  Committee that  industry                                                                    
provided  a case  for  elimination of  the  sunset date.  He                                                                    
requested the consideration of the industry's perspective.                                                                      
                                                                                                                                
10:08:47 AM                                                                                                                   
                                                                                                                                
Senator  Olson stated  that  the  contributor's receive  tax                                                                    
relief under  federal income tax  so a state tax  credit may                                                                    
be seen as  "double dipping." Senator Meyer  deferred to Ms.                                                                    
Wilson. Ms. Wilson  responded that the statute  reads that a                                                                    
taxpayer cannot  claim both a charitable  contribution and a                                                                    
credit  for   the  same   contribution  to   an  educational                                                                    
facility.                                                                                                                       
                                                                                                                                
SB  236  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.