Legislature(2009 - 2010)HOUSE FINANCE 519

02/23/2010 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 180 SCHOOL CONSTRUCTION FUNDING TELECONFERENCED
Heard & Held
+ HB 315 PUBLIC ACCOUNTING TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 23, 2010                                                                                          
                         1:36 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:36:52 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the House Finance Committee meeting                                                                     
to order at 1:36 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None.                                                                                                                           
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Kurt  Olsen;  Julie  Olsen;  Christine  Hess,                                                                   
Chief of  Staff, Representative  Reggie Joule; Sam  Kito III,                                                                   
School  Facilities  Engineer,  Department  of  Education  and                                                                   
Early Childhood Development;                                                                                                    
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Lisa Rogers, Alaska Society of Certified Public Accountants,                                                                    
Anchorage; Dr. Norman Eck, Northwest Arctic Borough                                                                             
Superintendent of Schools, Kotzebue;                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
1:37:00 PM                                                                                                                    
                                                                                                                                
HB 180    SCHOOL CONSTRUCTION FUNDING                                                                                           
                                                                                                                                
          HB 180 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 315    PUBLIC ACCOUNTING                                                                                                     
                                                                                                                                
          HB 315 was REPORTED OUT of committee with a "do                                                                       
          pass" recommendation and accompanying fiscal note.                                                                    
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 315                                                                                                            
                                                                                                                                
     "An Act relating to public accounting; and providing                                                                       
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  KURT OLSEN, SPONSOR,  introduced his  support                                                                   
staff.                                                                                                                          
                                                                                                                                
JENNIFER   SENETTE,   STAFF,   REPRESENTATIVE   KURT   OLSEN,                                                                   
described  the creation and  intent of  the bill. House  Bill                                                                   
315 was  crafted with the help  of the Alaska State  Board of                                                                   
Public  Accountancy  and  the  Alaska  Society  of  Certified                                                                   
Public  Accountants (CPA).  She  stated that  the bill  would                                                                   
bring  Alaska in  line with  the  45 states  that had  passed                                                                   
similar versions of the legislation.                                                                                            
                                                                                                                                
1:38:47 PM                                                                                                                    
                                                                                                                                
Ms. Senette relayed that HB 315  would give CPAs mobility, or                                                                   
the ability of a licensee to gain  practice privilege outside                                                                   
his  principal  place  of  jurisdiction,  without  additional                                                                   
licensing and  fees. This would  allow licensed CPAs  and CPA                                                                   
firms in Alaska  to practice across state  jurisdictions with                                                                   
greater  ease. The  bill would  provide  for simple  majority                                                                   
ownership. Under current state  laws Alaskan accounting firms                                                                   
must  be owned  100  percent by  CPAs,  which discounted  the                                                                   
evolution  of  the  accounting  profession  over  the  years;                                                                   
accounting   firms  were   not  only   employing  CPAs,   but                                                                   
Information  Technology  professionals,  lawyers,  and  other                                                                   
non-CPA professionals.  The legislation  would dial  down the                                                                   
stringent   requirements  to   allow   for  simple   majority                                                                   
ownership.  The change  would  be helpful  in attracting  and                                                                   
retaining  new talent  in the  state.  The legislation  would                                                                   
also enhance  the board  of public  accountancies ability  to                                                                   
protect the  public interest. Under  HB 315 the  Alaska State                                                                   
Board   of   Public   Accountancy    would   have   automatic                                                                   
jurisdiction over any CPAs practicing in the state.                                                                             
                                                                                                                                
1:40:48 PM                                                                                                                    
                                                                                                                                
Ms. Senette  explained that  if a  CPA from out-of-state  was                                                                   
working in Alaska, the state board  of public accountancy had                                                                   
the jurisdiction to address any violations of the standard.                                                                     
                                                                                                                                
Representative  Fairclough  wondered  if accountants  in  the                                                                   
state could  expand multi-nationally. Ms.  Senette redirected                                                                   
the question to the CPAs present for questioning.                                                                               
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
LISA ROGERS, ALASKA SOCIETY OF  CERTIFIED PUBLIC ACCOUNTANTS,                                                                   
ANCHORAGE (via  teleconference), testified in support  of the                                                                   
legislation.  She stated  that  the bill  had generated  from                                                                   
conversations among  accountants who had worked  to draft the                                                                   
legislation.                                                                                                                    
                                                                                                                                
Representative Fairclough  wondered about push  back from the                                                                   
state  of  New York,  as  similar  legislation had  not  been                                                                   
enacted there.                                                                                                                  
                                                                                                                                
1:45:02 PM                                                                                                                    
                                                                                                                                
Ms.  Rogers replied  that New  York  had been  slow to  adopt                                                                   
changes in  the area of public  accounting. She did  not know                                                                   
why.                                                                                                                            
                                                                                                                                
JULIE OLSEN,  PRESIDENT, ALASKA  SOCIETY OF CERTIFIED  PUBLIC                                                                   
ACCOUNTANTS, urged support for the legislation.                                                                                 
                                                                                                                                
1:46:40 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  reiterated her earlier  questions.                                                                   
Ms. Olsen deferred the questions to Max Mertz.                                                                                  
                                                                                                                                
1:47:29 PM                                                                                                                    
                                                                                                                                
MAX MERTZ, BOARD  OF PUBLIC ACCOUNTING, JUNEAU,  replied that                                                                   
the  legislation pertained  only  to CPAs  within the  United                                                                   
States and U.S.  territories. He furthered that  the State of                                                                   
New York had laws on the book  relating to public accountancy                                                                   
that dated back  to the 19th century that had  yet to change.                                                                   
He reiterated  that  New York  had been very  slow to  change                                                                   
practices concerning public accounting.                                                                                         
                                                                                                                                
Representative Fairclough asked  for explanation of "practice                                                                   
privilege". Mr.  Mertz replied that "practice  privilege" was                                                                   
distinguishable from "practice  permit". Mr. Mertz explained:                                                                   
                                                                                                                                
"When  there  is  a  CPA  in  Alaska  practicing  in  another                                                                   
mobility  state, or from  another state  practicing here,  if                                                                   
they are  serving a client that  does not have a  home office                                                                   
in Alaska, that  might have some incidental  operations here,                                                                   
and they  are based out-of-state,  so it's really  incidental                                                                   
practices.  They can come  to Alaska,  or over the  internet,                                                                   
provide those services  without having to come  to Alaska and                                                                   
get a practice permit, which is  currently required, and will                                                                   
continue  to be required,  if  the client either  has a  home                                                                   
office here,  or the practice  is other than  incidental. The                                                                   
premise  of mobility  is to  allow  this interstate  practice                                                                   
without  having  to  go  through the  process  of  getting  a                                                                   
permit."                                                                                                                        
                                                                                                                                
1:51:47 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
Representative  Austerman wondered  if  there was  a way  the                                                                   
bill  could  allow  the  state  to  access  out-of-state  CPA                                                                   
licensing information,  before allowing them to  practice in-                                                                   
state.                                                                                                                          
                                                                                                                                
Mr. Mertz said there was a companion  bill circulating called                                                                   
the Accountants Licensing Database,  which would focus on the                                                                   
issue.                                                                                                                          
                                                                                                                                
1:53:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Co-Chair  Stoltze   recognized  the  zero  fiscal   note  and                                                                   
solicited amendments.                                                                                                           
                                                                                                                                
1:54:12 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  MOVED  to  REPORT   HB315  26-LS130\A  from                                                                   
committee. There being no OBJECTION it was so ordered.                                                                          
                                                                                                                                
HB  315  was REPORTED  OUT  of  committee  with a  "do  pass"                                                                   
recommendation and accompanying fiscal note.                                                                                    
                                                                                                                                
1:55:44 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 180                                                                                                            
                                                                                                                                
     "An Act amending the percentages  required to be paid by                                                                   
     a   municipal  school   district   receiving  a   school                                                                   
     construction  or  major   maintenance  grant;  making  a                                                                   
     conforming  amendment  to   a  bond  debt  reimbursement                                                                   
     provision  referencing  the percentages;  and  providing                                                                   
     for an effective date."                                                                                                    
                                                                                                                                
CHRISTINE HESS, CHIEF OF STAFF,  REPRESENTATIVE REGGIE JOULE,                                                                   
stated  that  the  legislation   proposed  a  change  in  the                                                                   
participation  share of  local governments  in grant  funding                                                                   
for   school   districts.   Currently,    A.S.   14.11.008(b)                                                                   
established the required participating  chair for a municipal                                                                   
school  district  for  a construction  or  maintenance  grant                                                                   
project based on the district's  full value per average daily                                                                   
membership (ADM). In 2008, SCS  HB 373 passed the legislature                                                                   
on April  11th, near the  end of the  session. On  the senate                                                                   
side a  change was  made, which the  house concurred  with on                                                                   
the  same day.  The change  placed  the participating  shares                                                                   
into  four  categories;  5,  10, 30,  35  percent.  For  most                                                                   
participating  governments,  the  local  participating  share                                                                   
went  down,  but  for several  local  governments  the  share                                                                   
jumped from  10 percent to 30  percent. The bill  proposed to                                                                   
stair-step those  local governments with a 20  percent share.                                                                   
The fiscal note  attached was for $2.6 million.  The impacted                                                                   
communities  were;  Kake, Dillingham,  The  Northwest  Arctic                                                                   
Borough,  Klawock, Nome,  and  Kodiak. The  list of  proposed                                                                   
projects  was  located  on the  sponsor  statement  (copy  on                                                                   
file).                                                                                                                          
                                                                                                                                
1:59:53 PM                                                                                                                    
                                                                                                                                
SAM  KITO  III, SCHOOL  FACILITIES  ENGINEER,  DEPARTMENT  OF                                                                   
EDUCATION AND  EARLY CHILDHOOD  DEVELOPMENT, testified  as to                                                                   
how  the legislation  would affect  his  district. He  stated                                                                   
that  concerning  ADMs;  the  department  was  examining  the                                                                   
average  daily  membership,  which   was  the  count  of  the                                                                   
students on an  annual basis, but the full  assessed value of                                                                   
the property for the given district  divided by the number of                                                                   
student in the district.                                                                                                        
                                                                                                                                
Representative  Gara   asked  if  the  equation   applied  to                                                                   
regional  education attendance  area (REAAs).  He queried  if                                                                   
there was a  contribution requirement for REAA  villages. Mr.                                                                   
Keno replied  that REAAs  had a limited  amount of  2 percent                                                                   
participating  share,  the  participating  share  table  only                                                                   
applied to municipal governments.                                                                                               
                                                                                                                                
Representative Doogan  understood that the  legislation would                                                                   
reduce the participating share  for districts between 275,000                                                                   
and 500,000  by 10 percent. He  wondered what the  benefit of                                                                   
the change would be. Ms. Hess  replies that the increase from                                                                   
10 to  30 percent, instituted  in 2008, had been  too extreme                                                                   
for the affected communities.                                                                                                   
                                                                                                                                
Representative  Doogan  understood  that the  assumption  was                                                                   
that   larger   districts   had  more   resources,   so   the                                                                   
participating  share should  be higher.  Ms. Hess replied  in                                                                   
the affirmative.                                                                                                                
                                                                                                                                
                                                                                                                                
2:03:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  added that rural schools had  a limited tax                                                                   
base. He acknowledged the difficulty  of funding schools with                                                                   
a weak municipal economy.                                                                                                       
                                                                                                                                
Representative  Foster  asked   if  the  legislation  was  an                                                                   
attempt to create parity across  the board for all schools in                                                                   
the state. Ms.  Hess replied that ultimately it  was a policy                                                                   
call  where  the  participating  share would  fall  for  each                                                                   
district.  The smaller  communities  would  be receiving  the                                                                   
reduced share.                                                                                                                  
                                                                                                                                
Representative Foster expressed support for the bill.                                                                           
                                                                                                                                
Representative  Gara summarized that  if the ADM  per student                                                                   
was over 800,000,  the municipality paid 35  percent, and the                                                                   
schools  on major  maintenance  projects were  placed on  the                                                                   
major maintenance  project list.   Mr. Kito replied  that the                                                                   
municipality  was  responsible  for the  participating  share                                                                   
percentage.                                                                                                                     
                                                                                                                                
Representative  Gara wondered  why  a district  would want  a                                                                   
project on the major maintenance  list, when bonding would be                                                                   
less expensive.  Mr. Kito responded that when  a municipality                                                                   
bonded for  a project,  the bonds need  to pay interest.  The                                                                   
municipality would  need to weigh the principal  and interest                                                                   
cost against  what the participating  share cost would  be on                                                                   
the major maintenance or the grant list.                                                                                        
                                                                                                                                
2:07:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked if the  community received  the money                                                                   
up front  if it was on the  major maintenance list.  Mr. Kito                                                                   
replied yes.                                                                                                                    
                                                                                                                                
Representative Salmon wondered who sponsored HB373 in 2008.                                                                     
                                                                                                                                
Representative   Fairclough   shared   that  the   bill   was                                                                   
introduced by the House Finance Committee in 2008.                                                                              
                                                                                                                                
Ms. Hess  added that  HB373 had  been changed  on the  senate                                                                   
side.                                                                                                                           
                                                                                                                                
DR. NORMAN  ECK, NORTHWEST  ARCTIC BOROUGH SUPERINTENDENT  OF                                                                   
SCHOOLS,  KOTZEBUE (via  teleconference), spoke  in favor  of                                                                   
the legislation.  He testified that the jump  from 10 percent                                                                   
to  30  percent  had  been  difficult  for  the  district  to                                                                   
reconcile.  He  informed  the committee  that  the  Northwest                                                                   
Arctic School District had done  a lot independently over the                                                                   
years to  provide for school  construction, rather  than wait                                                                   
in line  for grants. Schools  had been remodeled  and rebuilt                                                                   
with bonds.  The 30 percent  participating share  had stifled                                                                   
further school projects.  He stated the burden  that had been                                                                   
placed  on the region  had been  unfair, and  the 20  percent                                                                   
stair step would  make a positive difference in  the lives of                                                                   
the students.                                                                                                                   
                                                                                                                                
2:12:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Representative  Joule clarified that  the request was  not to                                                                   
return to the 10 percent, but  rather a mid-level percent. He                                                                   
hoped as  the session progressed  the bill would  continue to                                                                   
live.                                                                                                                           
                                                                                                                                
Representative Austerman  asked how much more  work needed to                                                                   
be done on the bill.                                                                                                            
                                                                                                                                
Co-Chair Stoltze wanted gather more debt reimbursement                                                                          
information for further discussions.                                                                                            
                                                                                                                                
2:14:09 PM                                                                                                                    
                                                                                                                                
HB 180 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Hawker discussed housekeeping.                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 2:15 PM                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
HB 315 Sponsor Statement.pdf HFIN 2/23/2010 1:30:00 PM
HB 315
HB 315 Sectional.pdf HFIN 2/23/2010 1:30:00 PM
HB 315
HB315 American Institute of CPAs FAQ.pdf HFIN 2/23/2010 1:30:00 PM
HB 315
HB315 ASCPA Resolution.pdf HFIN 2/23/2010 1:30:00 PM
HB 315
HB315 AICPA Mobility Table.pdf HFIN 2/23/2010 1:30:00 PM
HB 315
HB315 AICPA Mobility.pdf HFIN 2/23/2010 1:30:00 PM
HB 315
HB180SponsorStatementFinal Updated 2-23.pdf HFIN 2/23/2010 1:30:00 PM
HB 180
HB180-EED-ESS-2-22-10 NEW UPDATED.pdf HFIN 2/23/2010 1:30:00 PM
HB 180
HB180-EED-ESS-2-22-10 NEW UPDATED.pdf HFIN 2/23/2010 1:30:00 PM
HB 180