Legislature(2003 - 2004)
04/01/2003 08:20 AM House CRA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
April 1, 2003
8:20 a.m.
MEMBERS PRESENT
Representative Carl Morgan, Chair
Representative Kelly Wolf, Vice Chair
Representative Pete Kott
Representative Tom Anderson
Representative Ralph Samuels
Representative Sharon Cissna
Representative Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 194
"An Act creating a tax credit under the Alaska Net Income Tax
Act for contributions to regional development organizations; and
providing for an effective date."
- MOVED HB 194 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 194
SHORT TITLE:REGIONAL DEVELOPMENT ORG TAX CREDIT
SPONSOR(S): REPRESENTATIVE(S)ANDERSON
Jrn-Date Jrn-Page Action
03/14/03 0541 (H) READ THE FIRST TIME -
REFERRALS
03/14/03 0541 (H) CRA, L&C, FIN
04/01/03 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
MARK GRABER, Audit Manager Group 1
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions with regard to HB 194.
TIM ROGERS, Legislative Program Coordinator
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 194.
EDWARD LAMB, CEO
Alaska Regional Hospital;
Board Member, Anchorage Economic Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 194.
LARRY CRAWFORD, President
Anchorage Economic Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Encouraged the committee to pass HB 194
from committee.
ACTION NARRATIVE
TAPE 03-11, SIDE A
Number 0001
CHAIR CARL MORGAN called the House Community and Regional
Affairs Standing Committee meeting to order at 8:20 a.m.
Representatives Morgan, Wolf, Kott, Anderson, and Samuels were
present at the call to order. Representatives Cissna and
Kookesh arrived as the meeting was in progress.
HB 194-REGIONAL DEVELOPMENT ORG TAX CREDIT
CHAIR MORGAN announced that the only order of business would be
HOUSE BILL NO. 194, "An Act creating a tax credit under the
Alaska Net Income Tax Act for contributions to regional
development organizations; and providing for an effective date."
Number 0107
REPRESENTATIVE ANDERSON, speaking as the sponsor of HB 194,
began by saying that HB 194 is about being pro business. He
informed the committee that there are 18 Alaska Regional
Development Organizations (ARDOR), of which the largest is the
Anchorage Economic Development Council (AEDC). This legislation
enhances the desire to contribute to ARDORs by giving a tax
credit to corporations that do so. However, the established tax
credit limit of $150,000 is maintained and thus the budget isn't
directly impacted under the $150,000 tax credit cap.
Representative Anderson directed attention to page 3 of HB 194
which illustrates other tax credits that can be given when
corporations give to certain entities and HB 194 merely adds
[ARDORs] to the list.
REPRESENTATIVE ANDERSON pointed out that the committee packet
should include a zero fiscal note from the Department of
Community & Economic Development (DCED). He noted that the
Department of Revenue hasn't provided a fiscal note yet. He
reviewed various entities that will be positively impacted,
including the Municipality of Anchorage, Providence [Hospital],
Copper Valley Economic Development Council, and Chugach
Electric. There is a diverse range of entities that will
benefit from HB 194. This legislation induces businesses to
contribute [to ARDORs] and encourage the growth of ARDORs, which
is a catalyst into regional economic development.
REPRESENTATIVE SAMUELS inquired as to what entities can utilize
[this tax credit].
Number 0535
MARK GRABER, Audit Manager Group 1, Tax Division, Department of
Revenue, said that he doesn't have a complete list. However, he
identified the education credit and the mining exploration
credits as probably the two largest credits.
REPRESENTATIVE KOTT inquired as to how much revenue the state
loses in taxes by virtue of the tax credit provided in statute.
MR. GRABER said that he could provide that answer after
reviewing the [Department of Revenue's] annual report. However,
he identified the most significant tax credit as the education
credit. In response to Chair Morgan, Mr. Graber informed the
committee that the department did prepare a fiscal note late
Friday and it was a zero fiscal note. However, the analysis
questioned what a regional development organization is the
department was interested in being precise with regard to who
the credit would go to. After hearing the earlier statements
today, Mr. Graber surmised that a regional development
organization is a fairly specific term of art.
REPRESENTATIVE ANDERSON explained that the legislation [creates]
a tax credit for contributions to regional development
organizations.
MR. GRABER explained that when he first reviewed the
legislation, he didn't understand who would qualify for the
credit. However, the opening remarks seem to indicate that
[ARDORs] are a sort of sanctioned organization and thus the
department will know which organizations these are.
REPRESENTATIVE ANDERSON specified that it would be a statutory
business, a corporate business, or partnership.
MR. GRABER inquired as to how the department would determine
which entities would qualify for this tax credit.
Number 0860
MITCH BRAVO, Lobbyist for the Anchorage Economic Development
Corporation, pointed out that there are 13 ARDORs recognized by
the DCED and those organizations are organized under Alaska
Statute. However, the Department of Revenue has no reason to
know that these organizations are organized as [ARDORs].
MR. GRABER asked if it would be appropriate to specify that in
statute as a qualification for the tax credit, which is done
with some other credits.
Number 0972
REPRESENTATIVE CISSNA related her assumption that this would
apply to a broader group than just the ARDORs and suggested
[changing the language] to do so.
REPRESENTATIVE ANDERSON referred to Section 7 which specifies
the definition of "regional development organization" as found
in AS 44.33.895. He then referred to the second paragraph of
the sponsor statement, which in part says "The definition used
in HB 194 for 'regional development organization' is from
statutory language used to define an Alaska Regional Development
Organization (ARDOR)." Therefore, this would only apply to the
13 ARDORs. He noted that he was nervous with the notion of
[broadening the legislation] too much.
MR. GRABER remarked that if there is legislative intent on the
record, then [the applicable entities could be identified] in
regulation.
REPRESENTATIVE CISSNA asked whether it would be outside the
boundaries of the sponsor's thoughts to broaden the legislation
a bit so that other groups conforming with the definition can
[utilize this tax credit].
REPRESENTATIVE ANDERSON commented that would be a great idea in
another piece of legislation. Representative Anderson said he
didn't know the fiscal implications were the legislation to be
expanded.
Number 1287
TIM ROGERS, Legislative Program Coordinator, Municipality of
Anchorage, testified in support of HB 194. He noted that the
committee packet should include a letter of support for HB 194
from the Municipality of Anchorage's Mayor, Mayor George Wuerch.
Mr. Rogers informed the committee that the Anchorage Economic
Development Corporation has been a key tool for economic
development within Anchorage. This legislation would provide
another tool to that organization in its mission to provide
resources to existing businesses as well as attract new
businesses into Anchorage. In conclusion, he urged the passage
of HB 194 from committee.
Number 1360
EDWARD LAMB, CEO, Alaska Regional Hospital; Board Member,
Anchorage Economic Development Corporation, testified in support
of HB 194. Economic development is critical for the future of
Alaska and anything that would encourage businesses to
contribute to these ARDORs would be helpful, he said.
Number 1431
LARRY CRAWFORD, President, Anchorage Economic Development
Corporation, highlighted that there are two caps. One cap is
the $150,000 cap and the other is the $10,000 cap for this type
of tax credit. He encouraged the committee pass HB 194 from
committee. He characterized this legislation as bringing the
private sector closer to economic development, which he viewed
as positive.
CHAIR MORGAN, upon determining no one else wished to testify,
closed public testimony.
Number 1554
REPRESENTATIVE KOTT requested that Mr. Graber forward the
information he requested earlier to his office.
REPRESENTATIVE ANDERSON pointed out that HB 194 has referrals to
the House Labor and Commerce Standing Committee and the House
Finance Committee. He assured committee members that any
commerce issues would be addressed in the House Labor and
Commerce Standing Committee, which he chairs.
REPRESENTATIVE KOTT requested that Mr. Graber explain how he
arrived at a zero fiscal note. He surmised that Mr. Graber was
basing the fiscal note on the number of entities that currently
have a tax incentive without considering that other entities
might come on board to specifically contribute to ARDORs.
MR. GRABER said that it's difficult for the Department of
Revenue to know which entities not already taking advantage of
this credit would do so. Mr. Graber explained, "We were looking
at it from the standpoint that you still have that $150,000 cap
and to the extent a corporation or a taxpayer is going to
continue with the same level of contributions, it will just be a
reclassification of one contribution to the other." He related
that the department would probably recognize that [this tax
credit] would stimulate additional contributions, although he
didn't know of any way to measure it.
REPRESENTATIVE KOTT noted his agreement and confidence that [HB
194] will stimulate additional contributions.
REPRESENTATIVE ANDERSON explained that the assumption is that
some of the companies that currently give up to the $150,000 cap
would continue to do so, although some may take $10,000 and give
it to an ARDOR rather than another entity. Therefore, the
fiscal note would be zero due to the transfer.
Number 1773
REPRESENTATIVE KOTT moved to report HB 194 out of committee with
individual recommendations and the accompanying zero fiscal note
and forthcoming fiscal note [from the Department of Revenue].
There being no objection, HB 194 was reported from the House
Community and Regional Affairs Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:45 p.m.
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