Legislature(2007 - 2008)SENATE FINANCE 532

02/28/2008 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 273 EDUCATION FUNDING TELECONFERENCED
Moved CSHB 273(FIN) Out of Committee
+= SB 230 FILM OFFICE/ FILM PRODUCTION TAX CREDIT TELECONFERENCED
Moved CSSSSB 230(FIN) Out of Committee
+= HB 61 TAX CREDIT FOR CONTRIBUTIONS TO VOC ED TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR HOUSE BILL NO. 61(FIN)                                                                                                 
                                                                                                                                
     "An Act relating  to tax credits for  cash contributions                                                                   
     by taxpayers  that are accepted for  certain educational                                                                   
     purposes,  including vocational  education programs  and                                                                   
     courses  at  the  secondary  school  level  and  to  tax                                                                   
     credits for  cash contributions  by tax payers  that are                                                                   
     accepted  by   a  state-operated  vocational   technical                                                                   
     education  and training  school;  and  providing for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
REPRESENTATIVE  MARK NEUMAN,  SPONSOR, explained  that  HB 61                                                                   
amends  the current  provision for  educational tax  credits.                                                                   
The  provision adds  to statute  that  contributions made  to                                                                   
school districts  for secondary  school vocational  education                                                                   
programs  are  eligible  for   a  corporate  tax  credit.  In                                                                   
essence,  the provision  allows  a corporate  tax credit  for                                                                   
direct cash contribution  to a school.  The  limitations are;                                                                   
a 50 percent  corporate tax credit on the first  $100,000 and                                                                   
a 100 % credit on the second $100,000.   He felt it important                                                                   
to provide  the high schools  with an opportunity  to receive                                                                   
funds from  private industry and  to help incent  industry to                                                                   
do so.                                                                                                                          
                                                                                                                                
10:27:02 AM                                                                                                                   
Representative   Neuman  shared   dropout  rate   statistics:                                                                   
60percent graduation  rate, 40 percent drop out  rate, and 25                                                                   
percent in  the native  population.  Of  the 60 percent  that                                                                   
graduate, approximately  48 percent attempt  higher education                                                                   
but only  28 percent  actually complete degree  requirements.                                                                   
Of the 28  percent, 12-14 percent enters four  year programs.                                                                   
He concluded that  only 7 percent pursue and  complete a four                                                                   
year college program.   He used the information  to point out                                                                   
the  high percentage  of students  who could  benefit from  a                                                                   
vocational education program.                                                                                                   
                                                                                                                                
10:28:38 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  MOVED  to   ADOPT  Amendment  #1  to  CSSB
61(FIN):                                                                                                                        
                                                                                                                                
Page 3, lines 2 - 3:                                                                                                            
     Delete "the lesser of                                                                                                      
               (1) an amount equal to"                                                                                          
                                                                                                                                
Page 3, line 4:                                                                                                                 
     Delete "(A)"                                                                                                               
     Insert "(1)"                                                                                                               
                                                                                                                                
Page 3, line 5:                                                                                                                 
     Delete "(B)"                                                                                                               
     Insert "(2)"                                                                                                               
                                                                                                                                
Page 3, lines 5 - 6:                                                                                                            
     Delete "; or                                                                                                               
               (2) 50 percent of the taxpayer's tax                                                                             
     liability under this title"                                                                                                
                                                                                                                                
Page 3, lines 21 - 22:                                                                                                          
     Delete ", in current or emerging employment sectors"                                                                       
                                                                                                                                
Page 7, line 28:                                                                                                                
     Delete "2008"                                                                                                              
     Insert "2009"                                                                                                              
                                                                                                                                
                                                                                                                                
Co-Chair Stedman objected.                                                                                                      
                                                                                                                                
REX SHATTUCK, STAFF TO REPRESENTATIVE  NEUMAN, explained that                                                                   
there was a drafting anomaly and  the amendment is offered to                                                                   
address that.                                                                                                                   
                                                                                                                                
Mr. Shattuck reference  the portion of the amendment  on Page                                                                   
3, lines 5-6.   He explained that prior to  1991 this section                                                                   
was repealed  from statute.   The  section was  inadvertently                                                                   
put into the  draft.  The language in the  amendment conforms                                                                   
to existing statute  by removing the section.   He added that                                                                   
on  page  3, line  21-22  the  language  deletion is  due  to                                                                   
conversations  with the Department  of Revenue regarding  the                                                                   
difficulties of  administrating.  On  page 7, line  28 delete                                                                   
"2008",  insert  "2009".   He  explained  that the  bill  was                                                                   
introduced last year  and was uncertain of the  time it would                                                                   
take to move through the legislature.                                                                                           
                                                                                                                                
Co-Chair Stedman  WITHDREW his  OBJECTION to adopt  Amendment                                                                   
1.                                                                                                                              
                                                                                                                                
There being NO OBJECTION, Amendment 1 was adopted.                                                                              
                                                                                                                                
10:31:55 AM                                                                                                                   
                                                                                                                                
Senator  Elton informed  the Committee  that the  partnership                                                                   
with  the  Alaska  Homebuilders  Association  at  the  Juneau                                                                   
Douglas High  School is a  great example of private  industry                                                                   
support  of vocational  programs.   The  Juneau Douglas  High                                                                   
School students' participating  in the building program won a                                                                   
national contest in Orlando Florida last year.                                                                                  
                                                                                                                                
Representative  Neuman said the  example by Senator  Elton is                                                                   
exactly what  HB 61 supports through  the incentive of  a tax                                                                   
credit for industry.                                                                                                            
                                                                                                                                
10:34:27 AM                                                                                                                   
                                                                                                                                
BOB   HAMMER,   PRESIDENT,   ALASKA   STATE   HOME   BUILDERS                                                                   
ASSOCIATION   (Testified  via   teleconference),  in   strong                                                                   
support  of HB  61.  He  said Alaska  will soon  be facing  a                                                                   
critical shortage  of qualified workers in many  of the trade                                                                   
and  construction related  areas.   Sustainable  funding  for                                                                   
vocational education is critical  to the future of our state.                                                                   
Future Alaskans will be called  upon to fill the jobs vacated                                                                   
by our  aging workforce as  well as the  new jobs  created by                                                                   
the future  gas line project.   "It is imperative  that these                                                                   
Alaskans  have   access  to  quality,  well-funded   training                                                                   
programs that  will teach them  the skills they will  need to                                                                   
help build Alaska's future."   He further maintained that not                                                                   
only can students be trained,  but establishing incentive for                                                                   
the industry, a partnership is created for all to benefit.                                                                      
                                                                                                                                
Co-Chair  Stedman noted  the indeterminate  fiscal notes  and                                                                   
quoted from the analysis:                                                                                                       
     We  anticipate that  this  bill will  have a  negligible                                                                   
     effect on revenue.  The education  tax credit is little-                                                                   
     used.  In  2005, the most recent year for  which data is                                                                   
     available,  26  companies  took  education  tax  credits                                                                   
     amounting  to approximately  $2.5 million.   We  have no                                                                   
     data to assess the amount  of additional donations under                                                                   
     the provision.   It is  anticipated that  the additional                                                                   
     amount will be a small fraction  of the current credits.                                                                   
                                                                                                                                
10:36:57 AM                                                                                                                   
                                                                                                                                
Senator  Thomas asked  if  there were  any  changes from  the                                                                   
original statute  regarding the removal of 50  percent of the                                                                   
tax liability.                                                                                                                  
                                                                                                                                
Mr. Shattuck  replied  that the percentage  has not  changed.                                                                   
The provision  repeals and reenacts the existing  language in                                                                   
statute for  the university.   He  further clarified  that at                                                                   
the suggestion of legislative  legal, conforming language was                                                                   
added for continuity.                                                                                                           
                                                                                                                                
Senator  Thomas  referred  to  page  3,  and  asked  why  the                                                                   
language regarding  50 percent is removed.  He  also asked if                                                                   
there  was   a  list  of  Regional  Education   Accreditation                                                                   
facilities (REA).  Mr. Shattuk  reported that the  reason for                                                                   
settling  on  municipal  school  districts and  REAs  was  to                                                                   
ensure  that  public  funds  were  contributed  to  a  public                                                                   
purpose.   He further noted that  the 50 percent suggested to                                                                   
be removed was present in Sec.  21.89.070.  When the bill was                                                                   
drafted  it was inadvertently  added  in Sec. 43.20.014.  The                                                                   
language repeals  the redundancy  and extends the  50 percent                                                                   
tax credit to contributions made to vocational education.                                                                       
                                                                                                                                
Representative  Neuman clarified  that the  funding would  go                                                                   
through the Department of Education  and Early Development to                                                                   
solely fund public education.                                                                                                   
                                                                                                                                
10:40:53 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman   questioned  if  private   and  non-profit                                                                   
vocational education programs would qualify for the credit.                                                                     
                                                                                                                                
Representative Nueman  did not think that  private facilities                                                                   
were eligible as it would be difficult to track the funds.                                                                      
                                                                                                                                
Senator  Olson asked  if technical  educational programs  had                                                                   
commented on HB 61. Representative  Neuman responded that the                                                                   
legislation  was amended  in the House  Finance Committee  to                                                                   
assure  that technical  programs  would  be  allowed to  take                                                                   
advantage of the provisions.                                                                                                    
                                                                                                                                
Representative Neuman  provided closing comments,  noting the                                                                   
importance of providing opportunities  to the high percentage                                                                   
of  students  who  do  not attend  college.    He  felt  that                                                                   
allowing  private industry  to assist  in the effort  through                                                                   
training and funds is the best way to help students.                                                                            
                                                                                                                                
CSHB  61(FIN) was  HEARD and  HELD in  Committee for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                

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