Legislature(1999 - 2000)
02/22/2000 08:06 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 380-INSURER TAX CREDIT:FIRE STANDRDS COUNCIL Number 2363 CHAIR JAMES announced the next order of business is HOUSE BILL NO. 380, "An Act relating to contributions to the Alaska Fire Standards Council and to an insurer tax credit for those contributions; and providing for an effective date." REPRESENTATIVE GENE THERRIAULT, Alaska State Legislature, sponsor of HB 380, explained that HB 380 is an attempt to follow through on actions of the legislature in passing HB 473, which created the Alaska Fire Standards Council (AFSC) but had a delayed effective date. He noted that the date of implementation is approaching and a funding mechanism has to be found. When he was approached by the fire chiefs organization about funding, they had discussed a few ideas and had decided to invite certain insurance companies to contribute because the insurance companies would benefit from the training of firefighters. The AFSC proposes to train fire suppressant personnel and the public in general as far as losses from fires, primarily structure fires, in Alaska. REPRESENTATIVE THERRIAULT indicated he had information from the Division of Insurance, Department of Community & Economic Development, that shows substantial fire-related losses in Alaska are $9 million. He and the ASFC had determined to invite insurance companies that do business in the state to make a contribution to the AFSC to cover operational costs. He remarked that the fiscal note relating to HB 473 was for $166,000 a year, but AFSC wants to come up with at least $150,000 a year to pay for AFSC operational costs. REPRESENTATIVE THERRIAULT explained how HB 380 will work. An insurance company would make a contribution to the AFSC and, in return, receive a 50 percent tax reduction on the first $100,000 on insurance premium tax owed to the state. If an insurance company contributed more than $100,000, any money over $100,000 would result in a 100 percent tax reduction, or the insurance company could elect a 50 percent tax reduction on its total tax owed to the state, whichever is less. The legislature would control the total amount that is raised by the tax-break mechanism by making an appropriation to the AFSC. He noted that any surplus money that was raised which the legislature did not appropriate to the AFSC would lapse into the general fund. The plan is to entice insurance companies to help fund the AFSC but still maintain legislative control on the total amount appropriated for yearly operation. Number 2130 REPRESENTATIVE GREEN asked whether a contribution to AFSC would affect insurance companies' actuarial figures. REPRESENTATIVE THERRIAULT answered no because the contribution is just a tax offset and the money contributed does not enter into the actuarial computation. CHAIR JAMES requested some numbers to demonstrate how HB 380 would work, assuming the insurance company donates $25,000 to AFSC. She said she understood that the company's insurance premium tax would be reduced by $12,500, half of the donation. She asked if the $25,000 comes first through the legislature for appropriation to AFSC, and whether the money would be considered non-general funds. If that is the case, then the general fund loses $12,500. Number 2023 REPRESENTATIVE HUDSON asked if the $25,000 flows first into the general fund and then the legislature appropriates it to AFSC. REPRESENTATIVE THERRIAULT explained that the money comes in as a statutory designated program receipt. If the legislature did not make an appropriation on a yearly basis, the money donated by insurance companies for fire training would lapse into the general fund. There is a similar mechanism for contributions made to the university, he noted, which only one insurance company in the state has ever used. A section in HB 380 says a credit can only be given under one section of statute; therefore, someone cannot make a donation and make it count in different areas. Number 1909 CHAIR JAMES asked if a charitable-type mechanism has also been used in corporation taxes. She noted that HB 380 serves as a loss-payable incentive for the insurance companies to contribute. MICHAEL McGOWAN, past president of the Alaska Fire Chiefs' Association, testified via teleconference from Fairbanks. He said his organization is committed to improving the state's record for fire and fatality loss. Alaska has the worst fire loss record in the United States, he reported; therefore, he supports HB 380. He noted that the Representative Therriault's sponsor statement presents the best option of funding AFSC. The bill appears to be a win-win situation for the insurance industry and fire departments throughout Alaska. He explained that AFSC is needed, and it is about time because the Police Standards Council has been in force for 22 years. MR. McGOWAN informed members that right now the only training standards available in Alaska for the fire service come from the National Fire Protection Association as adopted by the Occupational Safety and Health Administration (OSHA). He indicated that urban fire departments find those standards to be difficult to achieve, but for many rural volunteer fire departments the training standards have proven unrealistic due to [Alaska's] unique environment and economic conditions. If HB 380 provides a mechanism for funding AFSC, he noted, AFSC would adopt minimum training standards for firefighters and instructors. He pointed out that local entities do have the option to choose not to become a member of AFSC; instead, they may choose to adopt the national fire standards. He envisions increased firefighter safety and a reduction of fire loss and fatalities through efficient operations as the end result of HB 380. Number 1650 SCOTT WALDEN, Assistant Chief, Kenai Fire Department, testified via teleconference from Kenai, saying he is in full support of HB 380. It is essential that a mechanism be developed to fund AFSC for the safety of fire personnel across the state and improved efficiency to communities for fire protection. The end result of HB 380 would be reduced fire loss, injuries and death. STEVE O'CONNOR, Assistant Chief, Central Emergency Services, testified via teleconference from Soldotna. He informed the committee that he views HB 380 as being extremely important and encourages the committee to use it as a mechanism to fund AFSC so that standards can be established for fire service. Number 1645 REPRESENTATIVE THERRIAULT said there is concern that the language of HB 380 is written tightly. There are two functions to be covered: actual operations of AFSC and training programs that AFSC administers. He noted that page 1, line 6, is worded as follows: "For cash contributions made for fire services training programs"; therefore, there is concern that those words are not broad enough to cover the operation expense of AFSC itself. He noted that the legal drafters had suggested dropping the word "training" and then HB 380 would be broad enough to cover AFSC personnel and functions, plus training programs that AFSC would provide. Number 1554 REPRESENTATIVE GREEN made a motion to adopt that as Amendment 1 to HB 380. There being no objection, it was adopted. REPRESENTATIVE HUDSON made a motion to move HB 380, as amended, out of committee with individual recommendations and the attached zero fiscal note; he asked unanimous consent. There being no objection, CSHB 380(STA) moved from the House State Affairs Standing Committee.
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