Legislature(1997 - 1998)

05/02/1998 04:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
           HOUSE FINANCE COMMITTEE                                             
              May 2, 1998                                                      
                 4:50 P.M.                                                     
                                                                               
TAPE HFC 98 - 144, Side 1                                                      
TAPE HFC 98 - 144, Side 2                                                      
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Gene Therriault called the House Finance Committee                    
meeting to order at 4:50 p.m.                                                  
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Therriault   Representative Kohring                                   
Representative Davies  Representative Martin                                   
Representative Davis   Representative Moses                                    
Representative Grussendorf Representative Mulder                               
Representative Kelly                                                           
                                                                               
Co-Chair Hanley  and Representative Foster were absent from                    
the vote.                                                                      
                                                                               
ALSO PRESENT                                                                   
                                                                               
Representative Joe Green; Jeff Logan, Staff, Representative                    
Green; Alison Elgee, Deputy Commissioner, Department of                        
Administration; Keith Gerken, Division of General Services,                    
Department of Administration; Jack Kreinheder, Senior Policy                   
Analyst, Office of Management and Budget, Office of the                        
Governor.                                                                      
                                                                               
SUMMARY                                                                        
                                                                               
HB 452 "An Act relating to registration, disclosures, and                      
reports by certain nonprofit corporations."                                    
                                                                               
CSHB 452 (JUD) was REPORTED out of Committee with                              
"no recommendation" and with a zero fiscal note by                             
the House Judiciary Committee.                                                 
                                                                               
HB 463 "An Act establishing the Alaska public building                         
fund; and providing for an effective date."                                    
                                                                               
 HB 463 was REPORTED out of Committee with a "no                               
recommendation" and with Office of the Governor,                               
3/19/98.                                                                       
HOUSE BILL NO. 452                                                             
                                                                               
"An Act relating to registration, disclosures, and                             
reports by certain nonprofit corporations."                                    
                                                                               
JEFF LOGAN, STAFF, REPRESENTATIVE GREEN stated that HB 452                     
would require foreign or domestic public benefit                               
corporations that receives an aggregate of $5.0 thousand                       
dollars from other corporations to list all payments                           
received.  This information would be on a form provided by                     
the Department of Commerce and Economic Development.  It                       
would include the amount and purpose of the contributions.                     
If a corporation fails to comply the commissioner can                          
dissolve the corporation, or revoke their certificate of                       
authority to conduct business in the state of Alaska.  He                      
maintained that a large amount of money is coming into the                     
state of Alaska and that it is targeted for participation in                   
public policy decisions.  The form would only be a couple of                   
lines or boxes.                                                                
                                                                               
REPRESENTATIVE JOE GREEN explained that organizations that                     
receive less than $5.0 thousand dollars a year would have to                   
file.                                                                          
                                                                               
Representative Martin questioned if the legislation would                      
distinguish between charities and nonprofit groups.  Mr.                       
Logan stated that the legislation does differentiate between                   
public benefit corporations and mutual benefit corporations.                   
Representative Martin expressed concern that reporting                         
requirements would negatively impact charities.  Mr. Logan                     
observed that only corporations that receive contributions                     
from another corporation are required to report.                               
                                                                               
Representative Grussendorf expressed concern that the                          
legislation impacts first amendment rights.  Representative                    
Green emphasized that the legislation would make more                          
readily available information that would be available to the                   
public in a few years.  He maintained that the legislation                     
would not be an invasion of the right of privacy.  Mr. Logan                   
pointed out that the legislative drafter did not raise                         
concerns regarding the legislation's constitutionality.                        
                                                                               
Representative Kelly did not think that the legislation was                    
onerous.                                                                       
                                                                               
In response to a question by Representative Martin, Mr.                        
Logan clarified that not all 501C3 corporations will have to                   
file the form developed by the Department.  The legislation                    
defines a public benefit corporation on page 3, line 4.                        
                                                                               
Mr. Logan discussed page 3.  He observed that "a public                        
benefit corporation that is a domestic corporation or that                     
is a foreign corporation transacting business in the state,                    
and that received an aggregate of $5,000 or more during the                    
18 calendar year of the corporation from other corporations                    
shall file with the department."  He clarified that the                        
Department of Commerce and Economic Development, Division of                   
Corporations will handle the information.  The Division of                     
Corporations worked on the legislation.                                        
                                                                               
Co-Chair Therriault observed that the legislation states:                      
"The report required under this section that is due the same                   
year as the public benefit corporation's biennial report may                   
be included in the biennial report."  He questioned if a                       
mailing would be done in preparation for the biennial                          
report.  Mr. Logan noted that the nonprofit corporations are                   
divided into two portions.  Half of the corporations get a                     
mailing one-year and the other half would receive a mailing                    
the next year.  He estimated that it would cost $1,172.74                      
dollars to mail notifications.                                                 
                                                                               
Representative Martin suggested that the Department of                         
Revenue review the legislation.  Mr. Logan noted that 4,756                    
nonprofit corporations have filed with the Division.  He                       
estimated that only 10 percent of this number would have to                    
file with the legislation.                                                     
                                                                               
Representative Kohring questioned the need for the                             
legislation.  Mr. Logan maintained that there is a large                       
amount of cash flowing into the state of Alaska from outside                   
private nonprofit foundations.                                                 
                                                                               
Representative Kohring expressed concern with the affect of                    
the legislation on business.                                                   
                                                                               
Representative Kelly stressed that outside environmental                       
groups have influenced regulations that affect Alaskan                         
businesses.                                                                    
                                                                               
Representative G. Davis emphasized that the legislation is                     
narrowly written.                                                              
                                                                               
Co-Chair Therriault stated that if there are groups that are                   
influencing or shaping Alaska policy that it is legitimate                     
that Alaskans know where the funding is coming from.                           
                                                                               
Representative Kelly MOVED to report CSHB 452 (JUD) out of                     
Committee with the accompanying fiscal note.  There being NO                   
OBJECTION, it was so ordered.                                                  
                                                                               
CSHB 452 (JUD) was REPORTED out of Committee with "no                          
recommendation" and with a zero fiscal note by the House                       
Judiciary Committee.                                                           
HOUSE BILL NO. 463                                                             
                                                                               
"An Act establishing the Alaska public building fund;                          
and providing for an effective date."                                          
                                                                               
ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF                               
ADMINISTRATION spoke in support of HB 463.  She explained                      
that the Department has been working to create a methodology                   
that would allow them to charge agencies that occupy state                     
owned buildings rent on the program level.  The legislation                    
would create the Alaska Public Building Fund.  Collected                       
rents would be deposited in the Fund.  Operations and                          
maintenance of state facilities would be appropriated by the                   
legislature from the Fund.  Monies in the Alaska Public                        
Building Fund would not lapse at the end of the year.                          
Renewal and replacement costs would be collected through the                   
depreciation of the facility.  This would allow a rent                         
structure that can be collected over a period of years and                     
spent in a capital fashion for items such as roof                              
replacements.  She stressed that rent on a program level                       
will encourage accountability and allow other fund sources                     
to be utilized.  The federal government would need to                          
approve the rent methodology for federal agencies through                      
the Department of Health and Human Services.  The Department                   
would phase in the program.  She explained that more money                     
would be collected if federal programs were billed on the                      
program level as a direct cost of operation.                                   
                                                                               
Co-Chair Therriault questioned if funding would be diverted                    
from programs to pay the rent in cases where federal funding                   
is capped.  Ms. Elgee stated that it is a policy question                      
that has not been resolved.                                                    
                                                                               
(Tape Change, HFC 98 - 144, Side 2)                                            
                                                                               
Ms. Elgee stated that the Information Services Fund, which                     
charges back computer operations, runs on a similar manner.                    
                                                                               
Co-Chair Therriault expressed concern that the funds would                     
be raided for other uses.  Ms. Elgee stated that the problem                   
has not occurred with the Information Services Fund.  The                      
Information Services Fund is set up with a three-year life                     
expectancy.  If money is not expended within the three-year                    
period the Department is required to reduce charges in the                     
subsequent year.  The Alaska Public Building Fund would be                     
setup in a similar manner.  She estimated that the Fund                        
would be created with a five-year turnaround.  She explained                   
that a rental charge would be budgeted for at the program                      
level in the operating budget.  Operation and maintenance                      
costs would be shown under the Department of Transportation                    
and Public Facilities or Department of Administration;                         
depending on whom is managing the space.  The funding source                   
for these appropriations would be the Alaska Public Building                   
Fund as the fund source.  Capital projects would be proposed                   
in the capital budget with the Alaska Public Building Fund                     
as the fund source.  These funds would fall under the other                    
funds category.                                                                
                                                                               
In response to a question by Representative G. Davis, Ms.                      
Elgee explained that rent has three components.  Operations                    
and maintenance are annual expenditures.  Renewal and                          
replacement is collected in a rent structure by depreciating                   
the building.  There is also a component for administrative                    
costs.  The three components are combined into a rental                        
rate.  The agency would be billed based on their space                         
allocation.  Charges to the agencies would be deposited in                     
the Alaska Public Building Fund.  The legislature has to                       
authorize appropriations from the Fund.  The first                             
expenditure that would be authorized is for rent.  Then                        
expenditures would be authorized for operations and                            
maintenance in the operating budget.  Authorization for                        
capital replacement of building components would be shown in                   
the capital budget.                                                            
                                                                               
KEITH GERKEN, DIVISION OF GENERAL SERVICES, DEPARTMENT OF                      
ADMINISTRATION observed that the legislation was modeled on                    
other internal service funds in the state of Alaska.  He                       
observed that the Deferred Maintenance Task Force                              
recommended program rent as a way to stabilize the fund                        
source.  He observed that other western states utilize the                     
same concept.                                                                  
                                                                               
Co-Chair Therriault observed that Ms. McConnell indicated,                     
in her letter dated 4/30/98, that the only time the State                      
Equipment Fleet Fund was tapped by the legislature was in                      
the mid 1980's when the price of oil crashed.  There has not                   
been a problem with raiding since the establishment of the                     
Constitutional Budget Reserve Fund.                                            
                                                                               
Representative G. Davis MOVED to report HB 463 out of                          
Committee with the accompanying fiscal note.  There being NO                   
OBJECTION, it was so ordered.                                                  
                                                                               
HB 463 was REPORTED out of Committee with a "no                                
recommendation" and with Office of the Governor, 3/19/98.                      
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 5:45 p.m.                                             
House Finance Committee 5                                                      

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