Legislature(2011 - 2012)BARNES 124
03/29/2012 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB366 | |
| HB364 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 366 | TELECONFERENCED | |
| += | HB 364 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 364-TAX CRED: CONTR. TO HOMELESS SHELT/DETOX
8:49:57 AM
CHAIR MUNOZ announced that the final order of business would be
HOUSE BILL NO. 364, "An Act relating to a credit against the net
income tax for a contribution made by a taxpayer to a nonprofit
organization that provides an emergency shelter for the homeless
or a facility for alcohol or drug detoxification."
8:50:15 AM
TERRY HARVEY, Staff, Representative Munoz, Alaska State
Legislature, pointed out that the committee should have a
Legislative Research Services' document that identifies the
nonprofit emergency and drug and alcohol detoxification
facilities in Alaska. The document does note that there is the
possibility that they may have overlooked other existing
facilities. He told the committee that information regarding
categorizing the facilities that offer only housing versus those
that offer housing and additional services for the homeless is
forthcoming.
8:51:51 AM
REPRESENTATIVE GARDNER recalled that the Salvation Army has a
facility that offers housing for fathers and children, which
isn't on the list.
MR. HARVEY offered to research that facility. In further
response to Representative Gardner, Mr. Harvey acknowledged that
facilities could face erratic funding if there aren't repeat
donors to these organizations, which could result in holes in
their budget for which they approach the legislature to fill.
The proposed committee substitute incorporates changes to
address the aforementioned.
8:54:43 AM
REPRESENTATIVE GARDNER moved to adopt CSHB 364, Version 27-
LS1425\I, Nauman, 3/27/12, as the working document. There being
no objection, Version I was before the committee.
8:54:58 AM
MR. HARVEY offered to review the changes encompassed in Version
I. He related that he heard from several of the shelters
regarding the requirement for individual organizations to report
to the state the donations received, the amount, and the use of
it. There was concern with regard to the paperwork involved and
the ability to track the donations, particularly for small
organizations that receive small dollar donations. There was
also concern with regard to how this would impact state agencies
involved with providing operational dollars to these
organizations, specifically there was concern that reports
indicating a certain amount of incoming dollars could impact
what the organization annually expects from the state. Those
concerns were addressed by deleting the reporting requirement
and on page 2, line 10, inserting paragraph (d), as follows:
(d) The commissioner shall, by January 1 of each year,
provide to the legislature a list of recipients of
contributions, the total amount of contributions
reported, and the total amount of credit claimed under
this section during the previous calendar year.
8:58:24 AM
CHAIR MUNOZ clarified that in HB 364 the organization had to
report to the legislature, but the change encompassed in Version
I requires the commissioner of DOR to provide a report to the
legislature regarding those organizations that had utilized the
tax credit.
MR. HARVEY replied yes, adding that it's still important for the
legislature to know how this tax credit is being implemented and
how effective it is. He reminded the committee that the
legislation includes a sunset provision. He then opined that he
doesn't believe the information would be used against an
organization requesting grants and state funding.
8:59:49 AM
REPRESENTATIVE FOSTER related that his district and region are
supportive of this legislation. Upon review of the list of
organizations, it seems to offer good regional balance.
9:00:51 AM
REPRESENTATIVE GARDNER maintained concern regarding whether
these funds [receiving the tax credit] would potentially
supplant state funds and create a lack of sustainability for
these organizations.
9:01:52 AM
MR. HARVEY, returning to his review of the changes in Version I,
directed attention to page 2, line 3, subsection (c). The
impetus for subsection (c) was from Representative Austerman who
expressed the desire for organizations that want to make a
donation to be able to obtain a predetermination regarding
whether their donation would receive the tax credit.
9:03:25 AM
REPRESENTATIVE GARDNER expressed concern that there is no plan
to have DOR confirm that an agency actually received a donation
for which the taxpayer filed a claim. Therefore, she questioned
whether there should be a confirmation process to confirm those
reported as receiving the donation actually did receive it.
MR. HARVEY deferred to DOR.
9:04:58 AM
JOHANNA BALES, Deputy Director, Tax Division, Department of
Revenue, explained that this proposed tax credit would work as
the existing tax credits. Therefore, when the division performs
its audit, it would confirm that the recipient received the
funds. With new tax credits, the division often performs a
compliance project, which reviews every taxpayer who claimed the
tax credit and reaches out to the recipients to ensure receipt
of the funds. The aforementioned are common processes for which
the division doesn't need additional statutory authority.
9:06:08 AM
REPRESENTATIVE GARDNER posed a scenario in which a contribution
is for a building fund. She asked if that information would be
easily included in the report so that having a building fund
with assets in it wouldn't adversely impact the organization
when it approached the legislature for operating funds.
MS. BALES answered that more than likely, the division wouldn't
know specifically for what the funds were used. The division
would merely track the contribution to ensure that a qualified
organization received it. Therefore, at the time the agency
requests additional funds, it would be up to it to let the
legislature know how the funds were used. The division would
provide the data to confirm that the agency did receive the
contribution.
9:07:30 AM
DAN AUSTIN, General Manager, St. Vincent de Paul Society of
Juneau, began by highlighting that Juneau is Alaska's most
homeless city. On a per capita basis, Alaska has one-and-a-half
times the homeless rate in Anchorage, four times that of
Fairbanks, and three times that of Los Angeles County to which
some refer to as the homeless capital of America. Over the last
two decades, homelessness has grown throughout the nation but
the resources to operate shelters have not kept pace. For
instance, after more than 10 years of operating a childcare
facility for low income families St. Vincent de Paul had to
close it last year because it had to decide whether to utilize
its resources for maintenance and operation of its homeless
facility or to subsidize its childcare facility. On top of
that, just last month heating oil increased to over $4.00 per
gallon. Furthermore, St. Vincent de Paul had to suspend the
purchase of food vouchers. Mr. Austin emphasized that it's
important to know that many shelters such as St. Vincent de Paul
provide housing as well as other services to those who are
homeless and poor, including food vouchers, travel assistance,
medical assistance, and emergency family aid. Therefore, as the
operating expense of the shelter and the demand on the shelter
increase, something has to be eliminated. Normally, the
discretionary services that help keep the safety net together
for the poor in the state is the first to be eliminated. Mr.
Austin informed the committee that St. Vincent de Paul doesn't
rely on state and federal grants for the shelter's operation
rather it relies on the thrift store revenues, which supply
about 51 percent of the actual operating expense of the shelter,
and the other 49 percent is provided by the residents
themselves. In conclusion, Mr. Austin urged the committee to
move HB 366 forward so that shelters in Alaska can sustain
operations while working on the critical issue of homelessness.
9:11:30 AM
LAUREN RICE, Director, Public Advocacy, Covenant House Alaska,
explained that Covenant House is a shelter for homeless and at-
risk youth in Anchorage. Although the facility is located in
Anchorage, it truly serves the entire state. Last year,
Covenant House Alaska served over 4,000 individual youth of
which about 48 percent of the youth served are Alaska Native.
Covenant House Alaska provides a spectrum of services including
emergency services as the facility is open all day every day and
programs through which youth can stay with Covenant House for up
to a year-and-a-half and live in transitional housing and gain
life skills. Covenant House Alaska offers everything from food
and showers to long-term educational support. She characterized
Covenant House Alaska as almost serving as the family for these
youth well into their late teens and early twenties. Ms. Rice
related support for HB 364 and the intent behind it; private
investment in the nonprofit community is essential not only so
that nonprofits can provide services but also for the health of
the entire community. The majority of the Covenant House Alaska
budget consists of private funds and its work is to share with
individual corporations and businesses in the community stories
of the youth and the mission of Covenant House Alaska to meet
the needs of the youth. The aforementioned is vital to Covenant
House Alaska's operating budget and to its advocacy and
communication efforts because the youth at Covenant House Alaska
are some of the most invisible youth in the state. Homeless
youth become invisible as a means of survival, she stated. The
corporate employees to which Covenant House Alaska reaches out
become mentors, instructors of life skills classes and provide
service work and special events. The benefits youth receive
from corporate volunteers go well beyond the monetary amount
invested. This legislation incentivizes the efforts of Covenant
House Alaska even more as it provides an incentive for companies
to learn and invest in nonprofits serving their neighbors.
Furthermore, HB 364 facilitates private investment in human
services from which all involved parties benefit. Ms. Rice
noted her appreciation for the changes in Version I. In
conclusion, Ms. Rice stressed that Covenant House Alaska's
support of HB 364 is to encourage and incentivize private
investment in nonprofits, not to diminish or impact the state's
role in caring for the state's most vulnerable population. She
related her view that HB 364 is a way to increase private
investment and community support of Covenant House Alaska's
work, not replace state funding or grants.
9:15:15 AM
REPRESENTATIVE GARDNER asked then if Ms. Rice has no concern
that corporate donations might supplant state funding.
MS. RICE answered that wouldn't say that she has no fear of that
and acknowledged that tax incentives and tax breaks have
replaced some federal funding. However, nothing in HB 364
indicates to Covenant House Alaska that the aforementioned is a
process the state will go through. This legislation is viewed
as another tool in the tool box. If organizations find that
[the tax credit] impacts gaining state support for their
services, they could choose not to participate. Ms. Rice opined
that the onus is on the organization to do the strategic
planning and maximize resources and services provided when there
is extra revenue while not putting into place systems that are
unsustainable. Organizations such as Covenant House Alaska,
which has been providing services for over 20 years, that have a
long history of building sustainable budgets understand that
every year they have to build their operating budget and they
are prepared to make responsible decisions.
9:17:18 AM
REPRESENTATIVE GARDNER inquired as to the purpose for including
the requirement that DOR provide a list of donation recipients
to the legislature if it's not to possibly supplant state
funding.
MR. HARVEY related that he worked with DOR on that language.
He further related that the success of this program depends upon
donations and what kind of tax credit is acted upon. The annual
report to the legislature was felt to be beneficial and provide
insight into how the program develops.
9:18:47 AM
CHAIR MUNOZ asked whether this requirement is similar to that of
the education tax credit and other tax credit programs.
MR. BALES informed the committee that in other tax credit
programs DOR provides the aggregate number of contributions, not
a list of who receives the contribution.
CHAIR MUNOZ asked then if Ms. Bales believed it would be best to
make the language consistent with what is done with other [tax
credit programs].
MS. BALES responded that it would depend upon the legislature's
intent in terms of analyzing this credit. She recalled the
hearings on the film credit, during which she understood the
legislature wanted to know the recipients of the tax credit in
order to determine whether the tax credit is working. Ms. Bales
said she wasn't sure the list of recipients of the tax credit
would really tell the legislature [whether it's working] rather
it provides knowledge as to how many contributions were made.
Therefore, she opined that it's up to the legislature to
determine.
9:20:16 AM
CHAIR MUNOZ announced that she is amenable to a language change
regarding the list.
9:20:33 AM
REPRESENTATIVE GARDNER moved Amendment 1, as follows:
Page 2, line 11,
Delete "a list of recipients of contributions,"
9:21:06 AM
REPRESENTATIVE SADDLER objected, and added that the legislation
proposes some generous incentives. Therefore, it might be
useful to know who is receiving the [tax credit]. He opined
that who is receiving the benefits might be useful for the state
to know how effective the organizations are.
9:21:42 AM
REPRESENTATIVE CISSNA said she could see real value in knowing
the categories of totals there are. However, listing specific
names is problematic, she indicated. She asked whether there is
an easy way to provide an aggregate of different groups, such as
those dealing with homelessness, substance abuse, and child
welfare.
9:23:08 AM
CHAIR MUNOZ pointed out that the legislation already speaks to
emergency shelters for the homeless and facilities for alcohol
and drug detoxification. She asked whether it would be possible
to provide aggregate totals in those two broad categories.
MS. BALES answered that the division could do that, but asked if
the committee is interested in the size or other details of the
shelters.
CHAIR MUNOZ asked whether the aforementioned can be accomplished
with Amendment 1.
MS. BALES said the division would need more specific language,
such as "and the types of facilities". She related that when
the division writes regulations it listens to the appropriate
legislative meetings to determine the intent.
9:25:05 AM
REPRESENTATIVE GARDNER withdrew Amendment 1.
9:25:19 AM
REPRESENTATIVE GARDNER moved Conceptual Amendment 2, which would
insert language requiring a list of total [contributions] by
category of recipients. Representative Gardner specified the
language to be inserted [in place of the language on page 2,
line 11, "a list of recipients of contributions,"] would be:
"the amount of the contributions subtotaled by category of
recipient for" and the categories would match those listed on
page 1, lines 11-13 of Version I.
There being no objection, Conceptual Amendment 2 adopted.
9:27:25 AM
REPRESENTATIVE GARDNER asked whether it would be the intention
of DOR to make the list of eligible entities available on its
website.
MS. BALES answered that DOR would do that. Because of the
501(c)(3) requirement the IRS has a list of those and the
division would work with the sponsor and the organizations in
the state to compile such a list.
9:28:09 AM
CHAIR MUNOZ recalled that there was an Anchorage facility
missing from the list of [nonprofit emergency shelters and drug
and alcohol detoxification facilities in Alaska]. She expressed
the need to include any organizations that may have been
inadvertently missed.
REPRESENTATIVE GARDNER informed the committee that the facility,
the McKinnell House in Anchorage, is actually listed.
MS. BALES told the committee that the statutory language would
trump the list, and therefore those entities that are properly
designated would be on the list.
9:29:22 AM
REPRESENTATIVE SADDLER maintained his belief that it would be
beneficial for the state to have more specific information
regarding who is using the tax credits and how they are applied.
Therefore, he expressed interest in obtaining a clear definition
of the various types of facilities so that as much information
as possible could be obtained in order to determine how
effective the tax credit program is. He also expressed the need
to know which entities would fall under HB 364 and which
wouldn't because there is a list from Legislative Research
Services and another list of homeless shelters and they don't
necessarily overlap. For example, Beans Cafe and Alley Chalet
aren't on the Legislative Research Services list.
REPRESENTATIVE GARDNER clarified that those entities not on the
Legislative Research Services list aren't shelters.
9:31:04 AM
CHAIR MUNOZ asked if Ms. Bales could further refine those
categories as the legislation moves forward.
MS. BALES agreed to do so.
9:31:30 AM
REPRESENTATIVE CISSNA expressed concern with regard to lists of
taxpayers who donate as there would seem to be privacy issues.
CHAIR MUNOZ clarified that it would be an aggregate list by
broad category of recipients. Therefore, the individual donor
information wouldn't be reported.
REPRESENTATIVE CISSNA acknowledged that, but expressed suspicion
that [the individual donor information] may be linked.
Moreover, she didn't want people to unknowingly jeopardize [an
entity] and expressed concern with donations taking over the
role of state funding.
CHAIR MUNOZ related her understanding that this tax credit is
for companies that make donations and receive a corporate tax
credit or other tax credit per the IRS code.
MS. BALES confirmed Chair Munoz's understanding and then
directed attention to the language on page 2, line 1, which
specifies that the amount of the credit is 50 percent of the
contribution up to $200,000. Therefore, for a corporation that
makes a $400,000 donation, $200,000 will come from the
corporation and $200,000 from state's general fund in the form
of a tax credit. The tax credit proposed in HB 364 is
structured such that for every dollar a donor gives, the state
matches.
CHAIR MUNOZ related her understanding that this doesn't refer to
small individual donations rather it refers to corporate
donations.
MS. BALES agreed, and added that the only tax type for which
this contribution can be taken against is the corporate income
tax.
9:36:31 AM
REPRESENTATIVE SADDLER offered his understanding that there are
26 different pieces of tax credit legislation. The legislature
should be concerned with regard to the cumulative impact of
those tax credits to the state treasury even though much of the
information indicates the cost to the state treasury is
indeterminate. While this is a generous credit and it's good to
review creative efforts to support worthy causes, there has to
be concern with regard to the possibility of supplanting federal
funds and the need for more state funds later for these
causes/charities.
9:37:31 AM
REPRESENTATIVE GARDNER related her agreement, but hesitated to
draw the line for the most indigent and needy group.
Furthermore, the cumulative issue is for the House Finance
Committee to address.
9:38:11 AM
REPRESENTATIVE GARDNER moved to report CSHB 364, Version 27-
LS1425\I, Nauman, 3/27/12, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 364(CRA) was reported from the
House Community and Regional Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB364 Sponsor Statement.pdf |
HCRA 3/29/2012 8:00:00 AM |
HB 364 |
| CSHB364 version I.pdf |
HCRA 3/29/2012 8:00:00 AM |
HB 364 |
| HB364-DOR-TAX-03-16-12.pdf |
HCRA 3/29/2012 8:00:00 AM |
HB 364 |
| HB364 Leg Research Homeless Stats.pdf |
HCRA 3/29/2012 8:00:00 AM |
HB 364 |