Legislature(2001 - 2002)
04/23/2002 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 493 - O.K. TO ASSIGN PFD TO NONPROFIT CORP Number 2494 CHAIR COGHILL announced that the next order of business would be HOUSE BILL NO. 493, "An Act relating to assignments of permanent fund dividends; and providing for an effective date." Number 2480 ROBIN PHILLIPS, Staff to Representative Lisa Murkowski, Alaska State Legislature, presented HB 493 on behalf of Representative Murkowski, sponsor. She told the committee that at the request of a former constituent, Representative Murkowski introduced HB 493, the Good Neighbor Act, which allows for a permanent fund dividend (PFD) to be assigned to an organization that qualifies for nonprofit status, or is exempt from federal taxation. Currently, permanent fund dividends may be assigned to a federal, state, or municipal government agency, or to a court. These grassroots constituents have been updating the members of both bodies regularly requesting support and cosponsorship of HB 493. House Bill 493 promotes the spirit of charitable giving by Alaskans, and she urged the committee's support. Number 2435 REPRESENTATIVE JAMES noted that people can and do donate their entire permanent fund dividends to charities, but this bill would require the Permanent Fund Dividend Division to handle that. She said she didn't know if paying $18.5 million the first year, and $37 million every year after that, for the division to handle that was a good idea. She commented that she didn't know if the state needs to get in the business of handling people's charities for them. She said she didn't really support this bill. Number 2209 REPRESENTATIVE CRAWFORD asked, if the PFD was assigned before it was received, whether it would be a true tax donation. It would seem that there would be a financial incentive to assign the dividend before it was received. He asked for clarification. MS. PHILLIPS replied that she believes that the person would still be responsible for taxes. REPRESENTATIVE JAMES explained that the PFD is income, and taxes would have to be paid. It wouldn't matter what someone did after that. Number 2131 REPRESENTATIVE CRAWFORD asked if there is a way to assign the PFD before it is received as income. REPRESENTATIVE JAMES answered that there isn't unless a piece of legislation is passed. Number 2088 NANCI JONES, Director, Permanent Fund Dividend Division, Department of Revenue, came forward to testify. She referred to the fiscal note and added that the path of least resistance for the division would be if the donation was an assignment, meaning that the donor would have the responsibility to fill out the form. Presently, the assignment form is used by people to pay debts voluntarily, which is different from the garnishment system. She went over the numbers on the fiscal note. She also noted that the effective date would be pushed back from 2003 to 2004. Number 1979 REPRESENTATIVE FATE asked what the motive was behind this piece of legislation. MS. PHILLIPS answered that constituents Ted and Francoise Gianoutsos had wanted to assign their PFDs to the Seward SeaLife Center and were unable to give the check directly to the center; they had to give it to the City of Seward to be passed on to the center. They asked for this legislation and requested that it be similar to the college savings plan whereby someone could "check off" the PFD check to a registered 26 U.S.C. 501(c)(3) [Internal Revenue Code] charity. Number 1890 TED GIANOUTSOS testified via teleconference. He explained that his and his wife's motivation was initially to assign their PFDs to the Alaska SeaLife Center in Seward. When they found that they could not do that directly, some of the board of the Alaska SeaLife Center recommended that they give it to the City of Seward. Once they realized they could be a benefit to the state, they asked their representatives to introduce legislation that would allow Alaskans to assign their PFD rights to any Alaskan nonprofit for the common good. They feel strongly that it is in the interest of Alaska to encourage and facilitate gift-assignment philanthropy to any Alaskan 501(c)(3) charity. MR. GIANOUTSOS noted that they had been aware of the cost to the state of this legislation. He said they suggested a fee, such as the $2 assignment fee, so there is no cost to the state. The cost of the administration is borne by the donor. Number 1600 REPRESENTATIVE JAMES commented that Mr. Gianoutsos could achieve the same thing by just writing a check without asking the state and the City of Seward to implement the donation. MR. GIANOUTSOS answered that there isn't any facilitating or encouraging of permanent fund gift philanthropy for others in the state if they don't know about it. On the PFD application there are four pages encouraging people to give to the College Savings Plan, and he wondered why there couldn't be something there to facilitate and encourage gift-assignment philanthropy and deduct the cost of the program from the donor. CHAIR COGHILL noted that this bill includes any nonprofit, not just those in Alaska, and that is an issue for him. Number 1483 REPRESENTATIVE WILSON commented that this might have some merit somewhere along the line, but right now when there isn't enough money in the budget to pay for the services of the state, she said she wouldn't like to see some of the money spent to do this, when a person could just write a check. CHAIR COGHILL announced that HB 493 would be held over, and that he would ask the sponsor some more questions.