Legislature(2025 - 2026)GRUENBERG 120
05/15/2025 03:15 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB11 | |
| HB1 | |
| HB133 | |
| HB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 114 | TELECONFERENCED | |
| += | HB 146 | TELECONFERENCED | |
| *+ | HB 100 | TELECONFERENCED | |
| += | HB 1 | TELECONFERENCED | |
| + | HB 133 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 11 | TELECONFERENCED | |
| += | HB 4 | TELECONFERENCED | |
HB 1-SPECIE AS LEGAL TENDER
4:41:41 PM
CHAIR CARRICK announced that the next order of business would be
HOUSE BILL NO. 1, "An Act relating to specie as legal tender in
the state; and relating to borough and city sales and use taxes
on specie."
CHAIR CARRICK opened public testimony on HB 1.
4:42:22 PM
DANIEL DIAZ, Executive Director, Citizens for Sound Money,
testified in support of HB 1. He said that Citizens for Sound
Money promotes the use of sound money and protects people's
rights to do so. He said that the organization has been active
throughout the country, including Florida and Missouri. He
remarked that these states had recently passed legislation
supporting gold and silver as legal tender. He said that a
reason for this is because since 1971 the United States Dollar
(USD) has lost approximately 98 percent of purchasing power. He
said that given a study from the previous year, about 78 percent
of Americans are living "paycheck to paycheck." He said that he
has come across individuals who were struggling and gave an
example of an Uber driver he met in Missouri who was struggling
with retirement. He discussed a similar story in New Hampshire
regarding an individual's difficulty in making ends meet. He
said that given the loss of the purchasing power of the USD,
people are struggling to get by. He remarked that by bringing
gold and silver back as tender, it would give people the option
to save some "economic energy." He said that these precious
metals have consistently stored value that fights inflation. By
removing the sales tax on gold and silver, it would remove
penalties from people who are trying to preserve their wealth
and purchasing power. He commended Representative McCabe for
pushing the bill and others who have testified in support of
this legislation.
4:46:27 PM
NILLS ANDREASSEN, Executive Director, Alaska Municipal League
(AML), explained that he would seek answers to questions to
better understand the proposed legislation and its impact. He
said that to his understanding silver coins of the United States
that are legal tender already would include nickels, dimes, and
quarters and inquired what else would be included under the
bill. He said that the Coinage Act of 1965 already states that
these are legal tender for public debt and how exactly this
proposed legislation would intersect with pre-existing federal
legislation he did not know. He said that the legislation
states that people do not need to accept gold or silver specie
and asked about state and local governments since they are not
people. He asked whether this would apply to government and
whether there was a fiscal note for it. He opined that local
governments were not equipped to accommodate specie. He said
that Alaska Statute (AS) 01.10.060 definitions suggest that a
person could include corporations, company partnerships, firms,
associations, organizations, business trusts or society, and a
natural person. He explained definitions associated with
"persons." He asked whether the state would hire an assayer to
authenticate the weight and purity of the new tender and whether
local governments should do the same and, furthermore, whether
the state should start gathering a list of approved assayers.
He said that assayers in other states have received a fiscal
note of between $61,000 and $193,000 and asked whether this
should be expected and the department to which they would
belong. He asked if there would be a licensing process for this
and a board to oversee this. He also asked what regulations
would be necessary to determine precious metal pricing. He
discussed complications with spot prices and the challenges with
market fluctuations. He said that the legislation does not
specify how the state would manage these fluctuations. He also
asked whether the Department of Revenue would be involved as
well, how local governments should account for gold specie,
cash, or assets, and what accounting standards should be used.
He talked about minted coins being already in circulation.
MR. ANDREASSEN said that the remaining questions pertain to
foreign coins, non-circulating legal tender, and coins in the
world catalog. Furthermore, he asked how the legislation would
intersect with other legal codes and there was a litany of other
questions that would need to be answered.
CHAIR CARRICK noted that she appreciated the questions and asked
for them to be forwarded to the committee members.
4:51:47 PM
LAWRENCE HILTON, General Counsel, United Precious Metals
Association, testified in support of HB 1. He remarked that
United Precious Metals is dedicated to helping people. He
discussed the Gold and Silver Coin Act of 1985, [a combination
of the Gold Bullion Coin Act of 1985 and the Liberty Coin Act],
which was adopted at the federal level during the Reagan
Administration. He said that the proposed legislation has some
important levels of consumer protection. Furthermore, he
described the issue of capital gains tax relative to gold and
silver. He said that when using gold and silver that is not
classified as legal tender, under Internal Revenue Code (IRC)
Section 1001(b) there would be a requirement to calculate the
capital gains. He said that by making gold and silver legal
tender, it becomes money and gets excluded from the laborious
and difficult capital gains calculation when transacting in gold
and silver. He pointed out that Alaska is the number two
producer of refined gold in the United States. He said that
Alaska has a large measure of gold in the economy, and the bill
would promote the use of gold and promote Alaska's economy.
MR. HILTON noted that there was some suggestion that
municipalities would be required to accept gold or silver as
payment. However, the bill explicitly states that no person
shall be required to do so, and participation is entirely
voluntary. He said it is important for the committee to
understand this point clearly. Additionally, the bill
references a Federal Criminal Statute, 18 U.S. Code 486, which
imposes liability on individuals who "utter or pass" precious
metal currency. There is, however, a critical qualifier:
"unless otherwise authorized by law". This bill would create a
legal safe harbor in which Alaskans can operate without fear of
federal prosecution under 486. This concern was raised
previously. During the Reagan Administration, there was a
reintroduction or re-mintage of gold and silver coins in
1985. A little known provision from that time requires the
Secretary of the Treasury to apply all proceeds from the sale of
gold toward reducing national debt. When asked how this
mechanism was intended to work, then-Treasury Secretary Donald
Regan explained to one of the board members that the idea was to
give Americans the ability to replace the current debt-based
monetary system with a solid, sound money currency. As people
adopted gold and silver coins, they would gradually retire from
the old system. He talked about consumer protection and said
that the proposed bill has many consumer protections. He then
talked about capital gains tax, if using non legal gold and
silver. He mentioned IRC code section 1001b and talked about
calculating capital gains tax.
4:56:46 PM
CHAIR CARRICK, after ascertaining there was no one else who
wished to testify, closed public testimony on HB 1.
4:57:01 PM
REPRESENTATIVE HOLLAND moved to adopt Amendment 1 to HB 1,
labeled 34-LS0001\A.1, Nauman, 5/8/25, which read as follows:
Page 2, line 3, following "the":
Insert "value of the gold or silver contained
within specie during the"
Page 2, line 13, following "the":
Insert "value of the gold or silver contained within
specie during the"
CHAIR CARRICK objected for the purpose of discussion.
REPRESENTATIVE HOLLAND said that Amendment 1 would insert
language regarding the value of gold and silver contained in the
specie, into the language of the bill. He said that this was
brought forward with his efforts and joint discussions with the
prime sponsor, Representative McCabe. He said this was to
clarify whether the sales tax would be on any sort of gold or
silver that might meet the page 3 definition of legal tender.
He said that it could be a Roman Coin from 2,000 years ago, in
which case, the sales tax might be exempted on the collectible
value of it, versus the intent of the bill which is to exempt
the use of specie as a form of value based on actual precious
metal content. He said that Amendment 1 is an attempt to
provide some clarification of what the sales tax is being
exempted on. He believed Amendment 1 would conform to the
intent of the bill and sales tax differences could be clarified
between monetary use based on precious metal value and
collection value. He said if it was a Roman Coin made from gold
that had a value beyond its precious metal price, then the
remaining value would be subject to sales tax. He allowed that
the proposed amendment may not be perfect, but it was an attempt
to clarify and protect the intent of the bill and he welcomed
any questions.
4:58:56 PM
REPRESENTATIVE MCCABE responded that this was discussed with The
Sound Money Group and Mr. Diaz. He said that Amendment 1 was
not necessary because if a $10,000 gold Roman coin were used, it
would be a barter as opposed to being used as a currency. He
said the amendment would not impair the original intent of the
bill and he was neither in opposition nor support of the
amendment.
5:00:41 PM
REPRESENTATIVE HIMSCHOOT said that she has continually been
troubled by when the Federal Government issues USDs and it is
counterfeit if anybody else issues it. She wondered that with
HB 1, whether there could be multiple sources of specie. She
said she may support the amendment because it pertains to the
value or the amount of gold or silver in the tender.
5:01:41 PM
REPRESENTATIVE MCCABE responded yes, when the government issues
a bill that is not gold and it is counterfeit, it would be a
crime. He told the committee to remember that when dealing with
gold, it has nothing to do with bill currency. He said that it
pertains to using metals under the U.S. Constitution as legal
tender. He talked about consumer protections associated with
counterfeiting gold and compared them to using a brown pen when
authenticating 100-dollar bills. He talked about using serial
numbers and other means of authentication for previous metals.
He said that conflating this issue with dollar bills would mean
that the legislation is not being thought of in the correct
terms.
5:02:58 PM
REPRESENTATIVE HIMSCHOOT commented on the specie example that
was previously brought to the committee. She said that if
someone had a different instrument and claimed there was a
certain amount of gold in it, someone may not know how much was
in it unless they had the appropriate equipment or tools. She
was unsure whether the sentiment had to do with just
counterfeiting but assuring consumer protection when trading in
the new legal tender.
REPRESENTATIVE MCCABE responded that Mr. Hilton could better
address this. He said that someone could absolutely use a Loony
or Krugerrand, and it would require stamping and weight. He
opined that Goldback specie is less counterfeitable due to
protections that Goldbacks have.
5:04:48 PM
MR. HILTON explained gold and silver are valued based on form,
weight, and purity, which means the monetary worth of a unit
depends on its physical characteristics and associated premiums.
For example, a 400-ounce gold bar used by central banks carries
a different metal value than a Goldback, which contains just
one-thousandth of an ounce. He commented that states often
address this by exempting the value of gold or silver
instruments from taxation up to a certain percentage above the
spot price, typically based on the 400-ounce bar standard. He
noted that collectibles or jewelry may be worth many times more
than the raw metal value, so a capsuch as 100 percent over the
spot priceis suggested to maintain fairness. He commented that
the London Bullion Market Association (LBMA) publishes a daily
fix based on the 400-ounce delivery bar, while the United
Precious Metals Association (UPMA) provides a rate based on U.S.
minted gold coins, each reflecting different premiums.
Therefore, a reasonable approach is to define value as a
percentage over the most recent LBMA daily fix.
5:07:25 PM
CHAIR CARRICK removed her objection to Amendment 1. There being
no further objection, Amendment 1 was adopted.
5:07:38 PM
CHAIR CARRICK moved to adopt Amendment 2 to HB 1, labeled 34-
LS0001\A.2, Nauman, 5/14/25, which read as follows:
Page 3, line 11, following "state.":
Insert "The committee shall also study consumer
protections and consumer behavior related to the sale
and use of specie."
CHAIR CARRICK stated that she would object to Amendment 2 for
the purpose of discussion. She said that Amendment 2 would
simply add to the last section of the proposed legislation. She
said that it would include a Joint Legislative Budget and Audit
Committee study regarding consumer protection, consumer behavior
related to sale and use of specie. It was to her understanding
that this type of tender is already being used in Alaska, and a
study could help illustrate circulation. Her intent is to have
the scope of the study look at this type of information and help
develop a better specie market in Alaska.
CHAIR CARRICK responded to a previous concern from
Representative Story regarding consumer protection. She said
that when embarking on this legislative route, she wanted the
scope of the study to also include what types of consumer
protection issues may have arisen and what would be done to
mitigate any outstanding issues. She deferred to Representative
McCabe, bill sponsor, for any comments.
5:09:11 PM
REPRESENTATIVE MCCABE said that he was fine with Amendment 2 and
remarked that he thinks this type of study is what the Joint
Legislative Budget and Audit Committee would typically conduct;
the amendment would clarify what was being requested.
5:09:36 PM
REPRESENTATIVE VANCE said that perhaps when conducting this
study, cryptocurrencies such as Bitcoin could be evaluated as
well.
CHAIR CARRICK removed her objection to the motion to adopt
Amendment 2. There being no further objection, Amendment 2 was
adopted.
5:10:11 PM
The committee took an at-ease from 5:10 p.m. to 5:13 p.m.
5:13:08 PM
CHAIR CARRICK noted that HB 1, as amended, was before the
committee.
5:13:28 PM
REPRESENTATIVE STORY sought clarification regarding the timeline
of the study. She explained that language on page 3,
[subsection (c), beginning on line 9], led her to think the
study would happen first; however, further review of the bill
indicated that "something would be enacted and then they're
studying it." Next, she inquired how much lost revenue due to
tax changes would impact municipalities. Finally, she asked for
feedback regarding the statements of previous testifiers:
elaboration on the premium that would be added depending on
daily pricing and any adverse impacts to municipalities there
may be with a value percentage and exemptions in place.
5:15:15 PM
REPRESENTATIVE MCCABE proffered that when running a previous
version of the bill, AML suggested that there would be several
million dollars in lost revenue to the state but did not provide
any data to support that. He said as sponsor, when collecting
data and speaking to several cities that had a sales tax, he
found that many cities like Wasilla could not "parse it out." He
said it is hard to distinguish the difference between a store
that sells teddy bears and one that sells gold coins. The tax
estimates were not that granular in detail and made impact
assessments difficult. He said that estimations were based on
other states that did have data and were of an equal population.
He said the result of this study was that $27,000 in lost tax
revenue across the state was estimated. He felt that this lost
tax revenue would be mitigated by gaining resilience to any
strong negative downturns of the USD. He said people would have
stable stored value and this would be a more important benefit
than the loss of $27,000 in tax revenue in a state of over
700,000 people. He said that he was happy to share these
calculations with the committee.
REPRESENTATIVE MCCABE, in response to previous comments from Mr.
Andreassen, said that nickels, dimes, and quarters are not made
from silver unless they were made prior to 1964. He urged
caution in making this kind of misclassification. He offered
his understanding that the State of Alaska would not be required
to accept this type of new payment and, thus, there would be no
assayer and need for additional staff. He said that the bill
would not create a repository, and this was not part of the
legislation. He said all that HB 1 would do is allow specie to
be used as legal tender, which he said was allowed under the
U.S. Constitution. He referred to legal codes previously
mentioned in testimony. He said that any Internal Revenue
Service (IRS) tax liability would be between the person and the
IRS.
CHAIR CARRICK said that she would like to see questions answered
regarding this legislation at an upcoming committee meeting.
CHAIR CARRICK announced that HB 1, as amended, was held over.