Legislature(2017 - 2018)HOUSE FINANCE 519
04/04/2017 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB144 | |
| HB137 | |
| HB146 | |
| HB31 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 146 | TELECONFERENCED | |
| += | HB 31 | TELECONFERENCED | |
| + | HB 144 | TELECONFERENCED | |
| += | HB 137 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 4, 2017
9:07 a.m.
9:07:39 AM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 9:07 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
Representative Scott Kawasaki
ALSO PRESENT
Representative Sam Kito III, Sponsor; Kris Kris Curtis,
Legislative Auditor, Alaska Division of Legislative Audit;
Janey Hovenden, Director, Division of Corporations,
Business and Professional Licensing, Department of
Commerce, Community and Economic Development; Rachel
Bergngartt, Doctor of Vetrinary Medicine and Board Member;
Ms. Kranendonk, Staff, Representative Harriet Drummond;
Alexei Painter, Analyst, Legislative Finance Division; Ben
Brown, Chairman, Alaska State Council on the Arts;
Representative Matt Claman, bill sponsor; Owen Phillips,
staff, Representative Claman; Ken Alper, Director, Tax
Division, Department of Revenue; Representative Geran Tarr,
Sponsor; Kelly Howell, Director, Division of Administrative
Services, Department of Public Safety; Representative
Colleen Sullivan-Leonard.
PRESENT VIA TELECONFERENCE
Eric Jayne, Doctor of Veterinarian, Hawaii; Brandon S.
Spanos, Deputy Director, Tax Division, Department of
Revenue; Paul Kendall, Self, Anchorage.
SUMMARY
HB 31 SEXUAL ASSAULT EXAMINATION KITS
CSHB 31(FIN) was REPORTED out of committee with a
"do pass" recommendation and with a new zero
fiscal note by the House Finance Committee for
the Department of Public Safety and with a new
zero fiscal note.
HB 137 ST. COUNCIL ON THE ARTS: PUBLIC CORP.
HB 137 was REPORTED out of committee with a "do
pass" recommendation and with two new fiscal
impact notes by the House Finance Committee for
the Department of Education and Early
Development.
HB 144 EXTEND BOARD OF VETERINARY EXAMINERS
HB 144 was HEARD and HELD in committee for
further consideration.
HB 146 SCHOOL TAX; PFD PAYMENT FOR SCHOOL TAX
HB 146 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the agenda for the meeting.
HOUSE BILL NO. 144
"An Act extending the termination date of the Board of
Veterinary Examiners; and providing for an effective
date."
9:09:29 AM
REPRESENTATIVE SAM KITO III, SPONSOR, read the sponsor
statement:
House Bill 144 extends the termination date for the
Board of Veterinary Examiners until June 30, 2025.
Legislative Audit conducted their review of this board
and determined that "the board is serving in the
public's interest by effectively licensing and
regulating veterinarians and veterinary technicians.
The board monitors licensees and works to ensure only
qualified individuals practice. Furthermore, the board
develops and adopts regulations to improve the
veterinarian and veterinary technician occupations in
Alaska. In accordance with AS 08.03.010(c) (22), the
board is scheduled to terminate on June 30, 2017. We
recommend that the legislature extend the board's
termination date to June 30, 2025."
The board currently oversees 784 active licensees and
is made up of five members. State law requires four
board positions be filled by licensed veterinarians
that have been engaged in the practice of veterinary
medicine in the state for at least five years prior to
appointment. The remaining position is to be filled by
an individual from the general public.
The continuation of the Board of Veterinary Examiners
is important to the health and safety of Alaska's pets
and livestock.
Thank you for your support of House Bill 144.
Representative Kito reported that an issue regarding lack
of rural veterinary care was identified in the audit. The
issue was indirectly related to the board and was not a
primary function. He indicated that providing veterinary
care in rural areas was fiscally difficult for
veterinarians. The House Labor and Commerce Committee
committed to meet during the interim to address possible
options and formulate recommendations for improving rural
veterinary care. The board sunset June 30, 2017 and needed
approval to continue its licensing functions in the state.
9:12:22 AM
Representative Wilson ascertained that the board was in
arrears for $25.8 thousand and noted the audit
recommendation to reduce fees. She wondered how the deficit
was created. Representative Kito spoke to the bi-annual
license renewal cycle affecting the board's balance each
year. The Department of Commerce, Community and Economic
Development (DCCED) were required to review a board's
accounting each year and adjust fees every other year, or
each biennium, to keep reserves close to zero.
Representative Wilson asked whether increasing fees was one
of the audit findings. Representative Kito deferred the
answer to the department.
9:14:22 AM
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, summarized the findings of the audit.
She reported that "the board is serving in the public's
interest by effectively licensing and regulating
veterinarians and veterinary technicians" and recommended
the maximum allowable extension of 8 years. She referred to
page 7 of the audit and cited the only recommendation:
"The board chair should review the annual report for
accuracy and completeness before final submission to
the Department of Commerce, Community and Economic
Development."
Ms. Curtis indicated that the department staff examiner
erroneously included information from a different board in
the board's annual report and submitted the report on the
board's behalf without review by the board chair. She
referred to a chart on page 5 of the audit (copy on file)
that depicted the total licenses issued from FY 13 through
February 2016 and noted a 57 percent increase in licensees.
She directed attention to a chart on page 6 containing the
schedule of revenues and expenditures from FY 13 through
February 29, 2016. She explained that at the end of FY 13
the board was running a surplus of $108.8 thousand,
resulting in a fee reduction. Conversely, the board was
currently running a deficit of $25.8 thousand. She
determined that "overall" the board was well-run.
Representative Wilson asked about a prior sunset audit that
recommended the governor fill vacant board seats in a
timely manner. Ms. Curtis responded that Legislative Audit
did not discover any extended vacancies.
Co-Chair Foster noted that Co-Chair Seaton joined the
meeting.
Representative Wilson requested an answer from the
department about how the deficit was being handled. She
thought that the significant increase in licensees would
result in a surplus rather than a deficit.
9:18:07 AM
JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, reported that
fees were substantially increased for the last renewal
period. The veterinary license fees increased from $300 to
$500 and the fees for technicians increased from $50 to
$100. The current FY 17 second quarter report ending on
December 13, 2017 reported a surplus of $25.3 thousand.
Co-Chair Foster noted that Representative Coleen Sullivan
Leonard, Representative Kito and Representative Claman were
present.
9:19:19 AM
Co-Chair Foster OPEND Public Testimony for HB 144.
9:19:41 AM
RACHEL BERGNGARTT, DOCTOR OF VETRINARY MEDICINE AND BOARD
MEMBER, related that the board engaged in "extensive"
discussions over the past year on ways to improve services
and remedy the budgetary issues. She reminded the committee
that the board existed to license veterinarians and
technicians and not dictate where licensees needed to
practice. She voiced that options for rural veterinary
services existed. She pointed out that the board's job was
to enable licensees to practice in the areas of their
choosing and the board never denied a license to anyone
appropriately qualified regardless of what area of the
state they worked in. The board did not track where Alaskan
veterinarians practiced. She communicated that private non-
profits like the The Alaska Veterinary Rural Outreach
offered spay, neuter, and well pet services in over 200
Alaskan communities. She furthered that the board offered a
courtesy license for out-of-state veterinarians for
approximately $75 to veterinarians who travel to Alaska to
assist Alaskan veterinarians on a temporary basis. She
indicated there were over 30 out-of-state veterinarians
that helped with the Iditarod.
9:24:24 AM
ERIC JAYNE, DOCTOR OF VETERINARIAN, HAWAII (via
teleconference), asserted that the board had attempted to
control veterinary services in rural Alaska through the
provisions that allowed non-profit groups to work in the
state. He communicated that the board offered two types of
temporary licenses that allowed out-of-state veterinarians
to practice in Alaska. One type, good for a period of 60
days, was called "a temporary permit" used for relief
veterinarians. The temporary permit was offered at a low
cost, easy to apply for, did not require board approval,
and did not limit the scope of practice. The other was a
"special event courtesy license." He maintained that the
board inserted a provision that allowed veterinarians from
non-profit spay neuter groups from out-of-state to perform
services in communities off the road system under the
license. He contended that the courtesy licensing process
was very arduous, and he discovered that only two
veterinarians applied for the license. He reported that the
fee was large, the license was subject to board approval,
and limited to only spay and neuter services. He currently
worked for 8 spay-neuter clinics. He ascertained that many
other veterinarians from out-of-state would volunteer their
services in rural Alaska if they felt welcomed by the
board. He believed the board's special event license
provisions inhibited non-profits from operating in rural
Alaska and that the board wanted to protect the financial
interest of Alaskan veterinarians. He also pointed out that
the cost for the lack of rural veterinary care was
"tremendous" and "spent unnecessarily." He cited that 7
children were mauled to death since 1994 in the Yukon
Kuskokwim Delta. He spoke of hundreds of bite wounds and
the associated costs that were treated using Medicaid
dollars. He maintained that there were several different
policy changes the board could implement to mitigate the
problem. He recommended allowing a rural member on the
board.
Co-Chair Foster CLOSED Public Testimony.
Co-Chair Foster indicated that amendments were due on
Friday, April 7, 2017.
HB 144 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 137
"An Act redesignating the Alaska State Council on the
Arts as a public corporation and governmental
instrumentality of the state; defining the powers and
duties of the Alaska State Council on the Arts;
providing exemptions from certain statutes for the
Alaska State Council on the Arts; making conforming
amendments; and providing for an effective date."
9:32:11 AM
MS. KRANENDONK, STAFF, REPRESENTATIVE HARRIET DRUMMOND,
provided a brief summary of the bill by reading from the
sponsor statement as follows:
House Bill 137 quasi-privatizes the Alaska State
Council on the Arts (ASCA) by restructuring it as a
public corporation in order to help the ASCA to
continue its work with self-employed Alaskan artists
and art businesses during these challenging fiscal
times. This new status will allow the ASCA to increase
its ability to leverage funds from non-governmental
contributors and better adapt to the shifting economic
climate. This effort responds to the widespread
interest in governmental entities, as much as they are
able, to at least partially privatize their operations
and increase their operating efficiency.
Representative Wilson wanted confirmation that no
additional state funding was appropriated for the bill. Ms.
Kranendonk replied that the bill reallocated the funds but
did not add any funding. She noted that current employees
would be reclassified as exempt.
Co-Chair Foster indicated there were no amendments from
committee members.
9:34:23 AM
Vice-Chair Gara reviewed the associated fiscal note from
Department of Education and Early Development (DEED): FN2
(EED). He noted that the appropriation was in the amount of
$2.768 million in FY 2018. He read the breakdown of funding
sources and noted that he was unfamiliar with the AAIP
fund.
9:36:17 AM
AT EASE
9:38:31 AM
RECONVENED
Vice-Chair Gara clarified that AIPP stood for Art in Public
Places. He moved to the second new fiscal note from DEED
allocated to ASCA. He related that the fiscal note
transferred the funding to the new Alaska State Council on
the Arts' public corporation.
Co-Chair Foster invited Mr. Painter to clarify the fiscal
notes.
ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
explained that creating a public corporation meant ASCA was
a separate legal entity from the state, which required that
the appropriation had its own component. The administration
was prohibited from transferring money to and from a
corporation. Fiscal note number 2: FN2 (EED) deleted the
funding from the existing appropriation and moved the same
funding to the new appropriation. He stated that there was
no net change in the funding.
9:38:31 AM
Representative Wilson asked whether the money could be
reappropriated or if the fund was dedicated. Mr. Painter
responded that the fund was not dedicated, but a transfer
of any money within the appropriation was restricted. The
legislature retained the ability to appropriate the funding
as it desired.
9:39:19 AM
BEN BROWN, CHAIRMAN, ALASKA STATE COUNCIL ON THE ARTS,
confirmed that it would remain the legislature's
prerogative, under the Executive Budget Act whether to
appropriate funding for the council.
Co-Chair Seaton MOVED to report HB 137 out of Committee
with individual recommendations and the accompanying fiscal
notes.
There being NO OBJECTION, it was so ordered.
HB 137 was REPORTED out of committee with a "do pass"
recommendation and with two new fiscal impact notes by the
House Finance Committee for the Department of Education and
Early Development.
9:41:12 AM
AT EASE
9:41:34 AM
RECONVENED
Co-Chair Foster indicated that Representative Guttenberg
had joined the meeting.
HOUSE BILL NO. 146
"An Act imposing a school tax on net earnings from
self-employment and wages; relating to a payment
against the school tax from the permanent fund
dividend disbursement; and providing for an effective
date."
9:41:52 AM
REPRESENTATIVE MATT CLAMAN, BILL SPONSOR, read the sponsor
statement:
Good morning members of the Committee, for the record,
my name is Matt Claman, and I am the State
Representative for House District 21 in West
Anchorage. I would like to thank you all for hearing
House Bill 146.
Alaska faces major financial challenges. Our goal in
proposing House Bill 146, a School Tax, is a
responsible action plan to meet those challenges. The
Alaska Constitution, Article VII, Sec. 1 requires the
legislature to "establish and maintain a system of
public school." The public supports a strong public
school system, and an investment in our students is an
investment in our future.
When asked about the possibility of a broad-based
school tax, many people wanted to know what such a tax
would look like. The School Tax in HB 146 sets a tax
based on adjusted gross income on federal tax returns
for every person who earns income in Alaska. All
Alaskans and out-of-state residents who work in Alaska
would help solve our financial challenges. The minimum
tax would be $100 a year, for those who make $20,000
or less. In this way, the school tax is similar to the
school head tax-everyone contributes. The tax then
increases on a graduated scale based on income. Those
making between $50,000 and $75,000 a year would pay a
school tax of $750. The revenue collected from the
school tax would be designated to support public
education in Alaska. It is not a dedicated tax fund,
which would violate our constitution. (Because it is
well below the budget amount, there would be no need
to argue the designation as well.)
The values of the tax range from 1% in the lowest
bracket to 3.4% at the uppermost bracket. There is
also a cap on the uppermost level, allowing the
highest earners to reinvest in the economy and support
a positive investment climate.
We based our values off a $1000 permanent fund
dividend. Everyone is able to contribute, while
individuals who depend on the PFD still receive a
reasonable portion. To make payment of the tax simple,
the bill includes a provision allowing use of future
Permanent Fund Dividends to pay the tax.
I would like to close by saying that this school tax
bill responds to public concern about the funding of
education in challenging times. It is a transparent
way to produce new revenue and create a responsible
action plan for Alaska. At full implementation, the
school tax bill is projected to raise $540 million-
approximately one third of the state funding for
education. We believe that if the public has a more
direct investment in funding education, they will
become more involved in the education that we deliver.
The school tax is not a proposal to increase education
funding. The intent is to raise revenue to help close
the budget deficit, designate those funds to support
education, and reduce the undesignated general fund
appropriation for education on a dollar-for-dollar
basis.
9:44:49 AM
OWEN PHILLIPS, STAFF, REPRESENTATIVE CLAMAN, noted that the
only change between the sponsor substitute and the original
bill was in the title. He relayed that the old title did
not include out-of-state residents or specify income.
Mr. Phillips reviewed the sectional analysis:
Section 1:
Section 2: AS 43.45.011 School tax imposed; payment by
dividend:
Adds new chapter: Chapter 45. School Tax.
Adds new section AS 43.45.011:
a) Tax imposed on adjusted gross income (AGI) of:
(1) residents and (2) non-residents with income
from in-state source
b) Lists tax liability for individuals based on
tiered AGI levels
c) Stipulates that
(1) the AGI of
(A) a resident is the total AGI of the
resident
(B) a nonresident or part-year resident is
the amount attributable to a source in the
state
(2) the DOR shall assess the tax due on the AGI
of
(A) individuals, for individual returns
(B) 2+ individuals for joint filing
(including dependents)
(C) individual, if return is not filed
d) Tasks the DOR with adopting procedures to
allow use of PFD to pay the school tax,
including refunding amounts exceeding the
tax
e) Defines regulations for the tax payer
f) The department shall adopt regulations:
(1) Delinquent payment annual interest
rate is 18%
(2) Establish fee of up to $2,500 for
the cost of collecting delinquent tax
(3) Allow for a 90-day extension past
due date (at the DOR's discretion)
(4) Determine AGI subject to tax for
joint filers if one of the filers is
not a resident of the state
g) Tax penalties shall be deposited
into the general fund
h) "adjusted gross income" has the
meaning given in 26 U.S.C. 62
Section 3: Uncodified Law: Amended: REGULATIONS. DOR
may adopt regulations to implement section 2
Section 4: Effective Date: Section 3 - Immediately
Section 5: Effective Date: All other sections - Jan 1,
2018
Mr. Phillips delineated that the effective date in Section
5 included the tax component of the bill.
9:48:10 AM
Co-Chair Seaton cited page 2, line 26 and read the
following:
…an individual if the individual does not file a tax
return…
Co-Chair Seaton wondered how adjusted gross income was
determined for someone who did not file a federal tax
return. Representative Claman responded that the provision
would be subject to Department of Revenue (DOR)
regulations.
Representative Guttenberg asked what the House Education
Committee's feedback or actions were regarding the bill.
Representative Claman responded that there were no
amendment made in the education committee.
9:49:26 AM
Representative Pruitt mentioned that another revenue
measure was being considered in the House. He asked whether
the bill would be an addition to an income tax.
Representative Claman responded that the legislation was
intended as an alternative to an income tax. Representative
Pruitt asked whether the bill was another version of an
income tax. Representative Claman responded in the
negative. He clarified that the school tax combined a
capped head tax with graduated rates between the low and
high ends of income. He delineated that the tax included a
mandatory minimum on the low end and a cap on the maximum
payment and was not considered an income tax.
Representative Pruitt countered that the tax fell within
the definition of an income tax but included the language
that the revenue "may" be appropriated for education. Rep.
Claman declined to "argue the policy question."
Representative Grenn cited page 2, lines 4 through 13 of
the bill. He asked what formula was used to create the
income brackets. Representative Claman replied that he
began with the premise to establish a minimum tax, from the
desire that everyone should be part of the solution. He
assumed that based on a $1000 PFD (Permanent Fund Dividend)
it was reasonable to request a $100 minimum payment. The
other brackets were developed similarly; with the
consideration that, certain income levels should receive a
certain portion of their income and retain the ability to
also contribute above the limit. He considered "economic
levels of income at which the statistical likelihood that
the PFD was critical to their family economics became less
important."
9:52:33 AM
Representative Wilson asked about using a percentage of
income versus a flat fee. She provided an example from the
tax brackets. Representative Claman responded that the goal
of the bracket fees was to create clarity and make it
easier for the public to understand what they were expected
to pay versus calculating percentages. He agreed that by
using step increments a taxpayer at the lower limits of a
higher bracket would pay much more in relation to the
previous bracket versus using a percentage of income but at
the expense of clarity and a straightforward approach.
Representative Wilson asked whether the representative had
information regarding the "correlation between the public
paying the fee and how it would impact what was happening
in the schools." Representative Claman did not understand
her question. Representative Wilson wondered if he had
accessed information from other states that employed a
similar tax on correlation between the tax and educational
outcomes. Representative Claman responded that that he
concluded from anecdotal information that the community
felt that the more they invested in education the more they
would become interested in outcomes. Representative Wilson
did not agree because the system was not the same for all;
not all children go to public school and she doubted the
correlation. She asked for further data from other states.
Representative Claman remarked that no other state had a
school tax similar to the proposal in HB 146 and doubted he
could provide any further information. He believed that all
segments of the community were concerned about how the
state invested in public education.
9:56:26 AM
Vice-Chair Gara thanked the sponsor for introducing the
bill. He asked whether Rep. Claman supported an alternative
way to raise revenue without taxing the PFD as part of
income. Representative Claman replied that the PFD was
included in adjusted gross income on the federal level. He
expressed concerns about complicating the bill for the
public as exceptions and "layers" were added. Vice-Chair
Gara asked whether the income and tax levels in the bill
were adjusted over time. Representative Claman wondered if
he was asking about inflation adjustments. Vice-Chair Gara
responded affirmatively. Representative Claman answered in
the negative.
Co-Chair Foster noted Representative Thompson had joined
the meeting.
Vice-Chair Gara asked whether single and joint tax payers
with or without dependents all paid the same tax.
Representative Claman responded that the tax was based on
the return versus on an individual basis.
9:59:22 AM
Co-Chair Seaton referred to page 2 lines 26 through 30 and
read the following:
(C) an individual, if the individual does not file a
federal income tax return.
(d) The department shall adopt regulations
establishing procedures for an individual eligible for
a dividend under AS 43.23.005 to direct the department
to hold all or a part of the amount of the dividend to
pay the tax due under this section.
Co-Chair Seaton asked whether an individual who did not
file income tax had an adjusted gross income and wondered
how much money would be generated under the $100 minimum
tax from individuals who only get a PFD for income purposes
and do not file a federal form. Representative Claman
responded that the fiscal note was prepared by the
department using proprietary information regarding how many
tax returns were filed for each income bracket. He deferred
to DOR for additional information. He furthered that the
department had information regarding who filed for a PFD.
Therefore, it would be known to the department if a person
had not filed a tax return but filed for a PFD.
10:01:59 AM
Representative Wilson ascertained that the state would take
$100 minimum tax from everyone even children.
Representative Claman answered that it depended on how the
family chose to manage their children's PFD income. He
furthered that if parents included their children's PFD
income on their return the only school tax due was based on
the parent's tax return. Representative Wilson responded
that the bill did not reference tax returns; only adjusted
gross income. Representative Claman pointed to page 2,
lines 24 and 25 and read the following:
(B) two or more individuals, including dependents, if
those individuals file one federal income tax return
together;
Representative Claman specified that the language applied
to the scenario in question. Representative Wilson
referenced page 2, lines 26 and 27 and read the following:
(C) an individual, if the individual does not file a
federal income tax return.
Representative Wilson guessed that most individuals not
filing had a disability or incomes so low they were not
required to file a return and would be difficult to track
if not for the PFD data base. She deemed that individuals
who did not file a return or file for a PFD would be
"almost impossible" to track. Representative Claman was
unfamiliar with the area of tax law she was discussing
regarding disability benefits. He agreed that it would be
arduous to find people who did not file a return or file
for a PFD.
10:05:07 AM
Representative Pruitt asked whether the intent was for the
PFD to pay the tax or if an individual would "write a
check," since there was no withholding of funds.
Representative Claman replied that a payroll tax component
was not included to minimize the administrative expense. He
explained that non-payment of the tax was subject to a high
interest rate (18 percent) and fines up to $2.5 thousand to
incentivize timely payment for those in the higher income
brackets. He wanted the tax collected once a year to
provide an easier administrative process for the state. He
envisioned that the tax could be paid for with the PFD for
tax payers in lower income brackets. The goal was to
fashion the tax similar to a property tax. Representative
Pruitt thought that the assumption was made that people
could manage their money to have enough when the payment
was due. He thought a yearly payment was challenging for
people who didn't budget their money adequately.
10:08:36 AM
Vice-Chair Gara recognized that there were several
different policies under consideration. He liked that the
bill clearly defined how much people would be taxed versus
a tax based on percentages. Representative Claman provided
an example from personal experience to illustrate how the
fees and penalties would encourage payment compliance. He
hoped that the department would graduate the fines so that
those that owe more paid higher fines. He voiced that
collection issues occurred for any tax.
10:10:34 AM
Co-Chair Seaton asked Mr. Alper about the administration of
the tax and wondered whether the bill provided enough
guidance.
10:10:55 AM
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
explained that the bill had a blanket authorization to
write regulations. He stated that many technical issues
were not addressed in the bill but could be dealt with in
regulation. He spoke to the issue of non-resident income
generated in the state and requested more definition and
additional language should the bill advance in the
legislative process. He believed that lawsuits would ensue,
if the bill was adopted, regarding what was effectively
definable through regulation versus statute. He noted that
enough guidance was contained in the bill concerning tax
forms, tax rates, and defining tax payers. The department
would fill in the details through regulations.
Co-Chair Seaton reiterated his question regarding page 2,
line 26 of the bill, dealing with an individual who did not
file a federal tax return but had adjusted gross income. He
asked how the department would administer the tax to
Alaskan residents. Mr. Alper guessed that all PFD
recipients not included in a filed tax return would owe the
$100 minimum tax. The threshold for a larger household
exempted from filing a tax return was under $20 thousand;
and these households could fall under the higher $250 tax.
He surmised that the department would rely on the 1040 form
for the administration of the tax and added that a process
would be necessary to identify non-filers.
10:14:42 AM
BRANDON S. SPANOS, DEPUTY DIRECTOR, TAX DIVISION,
DEPARTMENT OF REVENUE (via teleconference), noted that each
year, there were certain individuals that just refused to
file a tax return or did not for other reasons. However,
employers were required to file a W-2 that would act as
documentation of income for the department. The department
would use the W-2 information in coordination with the
Internal Revenue Service (IRS) to determine assessments.
10:15:49 AM
Co-Chair Seaton referenced the following language on page
2, lines 1 and 2 and page 2, lines 20 through 27 of the
bill:
(1) resident individual; and
(2) nonresident and part-year resident individual with
income from a source in the state.
(2) the department shall assess the tax due on the
adjusted gross income of
(A) an individual, if the individual files a
federal income tax return only on the
individual's own behalf;
(B) two or more individuals, including
dependents, if those individuals file one federal
income tax return together;
(C) an individual, if the individual does not
file a federal income tax return.
Co-Chair Seaton queried whether the language ensured that
the tax was applied to tax returns and not each individual
included in the tax return. Mr. Alper interpreted that the
first section allowed a joint filer to pay a single
household tax. He surmised that DOR would interpret the
language in the same manner.
Mr. Spanos added that federal rules required that a child
file their own return in some cases. He thought further
definitions would be beneficial clarifying when the state
would also require a dependent to pay their own school tax.
10:18:56 AM
Representative Guttenberg referred to line 2, page 2 and
inquired how crew shares fit into the definition of income.
He thought that the bill gave the department "a lot of
leeway to make decisions and write regulations." Mr. Alper
suggested that DOR would have to craft regulations
specifically for S Corporations, partnerships, sole
proprietorships, and contract work. He furthered that crew
shares qualified as a 1099 contractor when received for
work done in Alaska or paid by an Alaska owned business.
The department would have the non-resident crew member's
tax information, apply formulas from regulation to
determine the Alaskan portion of the adjusted gross income
for tax assessment purposes. He reiterated that the
question was whether the regulation language could
withstand a court challenge. Representative Guttenberg
wondered if the division would have enough authority and
guidance to make the decisions required to write the
regulations. Mr. Alper replied that enough guidance
existed, but he was uncertain whether DOR had the legal
authority. He wanted to consult with the state's attorneys.
He cautioned that taxes were prohibited from being imposed
via regulation and he was uncertain how specific the
regulations could be written.
10:22:08 AM
Co-Chair Seaton referred to Page 2, lines 12 and 13 of the
legislation and read the following:
(8) $200,000 or more, but less than $250,000, the tax
is $6,500 a year;
(9) $250,000 or more, the tax is $8,500 a year.
Co-Chair Seaton asked whether someone who made $5 million
per year would pay $8.5 thousand in tax. Representative
Claman confirmed that the statement was correct. Co-Chair
Seaton inquired if an individual with income at $251
thousand would pay $2 thousand more than an individual with
income of $248 thousand. Representative Claman answered in
the affirmative.
Vice-Chair Gara favored the provision that the revenue
would be deposited in the Education Fund. He noted that the
language in the bill used the word "may" versus "shall" due
to the constitutional prohibition on dedicated funds.
Representative Claman confirmed that the statement was
correct.
Co-Chair Foster OPENED Public Testimony.
10:23:42 AM
PAUL KENDALL, SELF, ANCHORAGE (via teleconference),
provided public testimony. He favored an "open" discussion
regarding the bill. He spoke against using property taxes
to pay for any public employee's salaries or compensation.
He spoke to items and beliefs outside of the context of the
legislation.
Co-Chair Foster interrupted to clarify that public
testimony was being heard on HB 146. Mr. Kendall continued
to provide testimony unrelated to HB 146.
Co-Chair Foster CLOSED Public Testimony.
HB 146 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 31
"An Act requiring the Department of Public Safety to
develop a tracking system and collection and
processing protocol for sexual assault examination
kits; requiring law enforcement agencies to send
sexual assault examination kits for testing within 18
months after collection; requiring an inventory and
reports on untested sexual assault examination kits;
and providing for an effective date."
10:30:02 AM
REPRESENTATIVE GERAN TARR, SPONSOR, explained that the
Committee Substitute (CS) accomplished three things: The
bill established mandatory sexual assault training for all
law enforcement officials. The legislation required a
statewide audit to determine the "true" inventory of
backlogged untested sexual examination kits. Third, HB 31
established a "gold standard" in reporting options for
sexual assault.
10:31:30 AM
Co-Chair Foster MOVED to ADOPT Amendment 1.
Page 1, line 9, following "and":
Insert "at least 12 hours of instruction regarding"
Page 1, line 9, following "assault":
Insert ":1."
Page 3, lines 2 - 3:
Delete "16 years of age or older"
Insert "18 years of age or older and not a vulnerable
adult"
Page 3, following line 24:
Insert a new bill section to read:
"* Sec. 5. AS 18.68.020 is amended by adding a new
subsection to read:
(c) In this section, "vulnerable adult" has the
meaning given in AS 47.24.900." 15
Renumber the following bill sections accordingly. 17
Page 4, line 21:
Delete "Section 5"
Insert "Section 6" 21
Page 4, line 22:
Delete "sec. 6"
Insert "sec. 7"
Representative Wilson OBJECTED for the purpose of
discussion.
Representative Tarr spoke to the amendment. She explained
that the amendment added more specificity to the bill and
contained three components. The first provision delineated
that the training was 12 hours for sexual assault and 12
hours for domestic violence. The Department of Public
Safety (DPS) supported the amount of training and the
fiscal note had factored in the 12-hour trainings. She
indicated that existing statute called for mandatory
reporting of sexual assault for anyone under the age of 18,
which was considered sexual abuse of a minor, and for
vulnerable adults. The second piece of the amendment made
age changes to clarify and conform to the existing statute.
Representative Wilson cited AS 47.24.900 regarding the
definition of vulnerable adults. She wondered who made the
determination that an individual was a vulnerable adult in
sexual assault cases. She asked for additional
clarification for when the classification of vulnerable was
established. Representative Tarr answered that a vulnerable
adult would have already been established by a court
process before the assault occurred.
10:34:20 AM
Representative Wilson asked about the other change
regarding a minimum of 12 hours of instruction. She
wondered whether the amendment clarified that the 12-hour
requirement was mandated for both domestic violence and
sexual assault. Representative Tarr responded
affirmatively.
Co-Chair Seaton asked whether the total hours of training
were 24 hours. Representative Tarr answered affirmatively.
Representative Wilson WITHDREW her OBJECTION.
There being NO OBJECTION, Amendment 1 was ADOPTED.
Vice-Chair Gara reviewed the new zero fiscal note from the
Department of Public Safety.
Representative Wilson asked about the 24 hours. She
wondered whether the state already offered the training.
10:36:46 AM
KELLY HOWELL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF PUBLIC SAFETY, indicated that the
training was already being provided by the Public Safety
training academy.
10:37:16 AM
Vice-Chair Gara MOVED to report CSHB 31(FIN) out of
Committee as amended with individual recommendations and
the accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSHB 31(FIN) was REPORTED out of committee with a "do pass"
recommendation and with a new zero fiscal note by the House
Finance Committee for the Department of Public Safety.
Co-Chair Foster reviewed the agenda for the following
meeting.
ADJOURNMENT
10:38:30 AM
The meeting was adjourned at 10:38 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB144 Legislative Audit.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 144 |
| HB144 Sponsor Statement.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 144 |
| HB144 Supporting Letters 032817.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 144 |
| HB146 Opposing Documents 3.27.17.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 146 |
| HB146 Opposing Document 3.27.17.PDF |
HFIN 4/4/2017 9:00:00 AM |
HB 146 |
| HB146 Sectional Analysis ver O 3.27.17.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 146 |
| HB146 Supporting Documents 3.27.17.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 146 |
| HB146 Sponsor Statement 3.27.17.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 146 |
| HB 31 Amendment 1.PDF |
HFIN 4/4/2017 9:00:00 AM |
HB 31 |
| Testimony Jayne HB 144 April 3.pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 144 |
| HB31 - Supporting (040617).pdf |
HFIN 4/4/2017 9:00:00 AM |
HB 31 |