05/02/2002 09:05 AM House RLS
| Audio | Topic |
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RULES STANDING COMMITTEE
May 2, 2002
9:05 a.m.
MEMBERS PRESENT
Representative Pete Kott, Chair
Representative Brian Porter
Representative Vic Kohring
Representative Carl Morgan
Representative Lesil McGuire
Representative Ethan Berkowitz
Representative Reggie Joule
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 20
"An Act relating to state aid to municipalities and certain
other recipients, and for the village public safety officer
program; relating to municipal dividends; relating to the public
safety foundation program; and providing for an effective date."
- MOVED CSHB 20(RLS) OUT OF COMMITTEE
HOUSE BILL NO. 303
"An Act relating to the levy and collection of a sales tax; and
providing for an effective date."
- MOVED CSHB 303(RLS) OUT OF COMMITTEE
HOUSE BILL NO. 304
"An Act relating to disposition of income of the permanent fund;
and providing for an effective date."
- MOVED CSHB 304(2d RLS) OUT OF COMMITTEE
HOUSE BILL NO. 464
"An Act relating to statewide school district correspondence
study programs."
- MOVED CSHB 464(RLS) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 20
SHORT TITLE:MUNICIPAL DIVIDEND: AID TO MUNIS & OTHERS
SPONSOR(S): REPRESENTATIVE(S)MOSES
Jrn-Date Jrn-Page Action
01/08/01 0029 (H) PREFILE RELEASED 12/29/00
01/08/01 0029 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0029 (H) CRA, STA, FIN
03/20/01 (H) CRA AT 8:00 AM CAPITOL 124
03/20/01 (H) Moved CSHB 20(CRA) Out of
Committee
03/20/01 (H) MINUTE(CRA)
03/20/01 0669 (H) COSPONSOR(S): DAVIES
03/22/01 0679 (H) CRA RPT CS(CRA) 3DP 1DNP 2NR
03/22/01 0679 (H) DP: KERTTULA, MURKOWSKI,
MORGAN;
03/22/01 0679 (H) DNP: MEYER; NR: GUESS, SCALZI
03/22/01 0679 (H) FN1: ZERO(CED)
03/22/01 0679 (H) FN2: ZERO(REV)
04/05/01 (H) STA AT 8:00 AM CAPITOL 102
04/05/01 (H) Scheduled But Not Heard
04/10/01 (H) STA AT 8:00 AM CAPITOL 102
04/10/01 (H) Heard & Held
04/10/01 (H) MINUTE(STA)
04/12/01 (H) STA AT 8:00 AM CAPITOL 102
04/12/01 (H) Scheduled But Not Heard
04/18/01 1052 (H) COSPONSOR(S): FOSTER
04/26/01 (H) STA AT 8:00 AM CAPITOL 102
04/26/01 (H) Moved CSHB 20(CRA) Out of
Committee
04/26/01 (H) MINUTE(STA)
04/26/01 1228 (H) STA RPT CS(CRA) 4DP 3NR
04/26/01 1228 (H) DP: WILSON, STEVENS, JAMES,
HAYES;
04/26/01 1228 (H) NR: CRAWFORD, FATE, COGHILL
04/26/01 1228 (H) FN1: ZERO(CED)
04/26/01 1228 (H) FN2: ZERO(REV)
04/26/01 1256 (H) COSPONSOR(S): WILSON
02/04/02 2152 (H) COSPONSOR(S): HUDSON
02/08/02 2191 (H) COSPONSOR(S): MULDER
02/11/02 2208 (H) COSPONSOR(S): BUNDE, STEVENS
02/13/02 2256 (H) COSPONSOR(S): JOULE
02/15/02 2292 (H) COSPONSOR(S): LANCASTER
02/20/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
02/20/02 (H) Heard & Held
MINUTE(FIN)
02/20/02 2350 (H) COSPONSOR(S): JAMES
02/22/02 2369 (H) COSPONSOR(S): KAPSNER
02/25/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
02/27/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
02/27/02 (H) <Bill Postponed>
03/20/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
03/20/02 (H) Heard & Held
MINUTE(FIN)
03/22/02 (H) FIN AT 9:00 AM HOUSE FINANCE
519
03/22/02 (H) Moved CSHB 20(FIN) Out of
Committee
MINUTE(FIN)
03/25/02 2664 (H) FIN RPT CS(FIN) NT 9DP 2AM
03/25/02 2664 (H) DP: BUNDE, WHITAKER, HARRIS,
03/25/02 2664 (H) LANCASTER, HUDSON, MOSES,
FOSTER,
03/25/02 2664 (H) MULDER, WILLIAMS; AM: CROFT,
DAVIES
03/25/02 2665 (H) FN(S): FORTHCOMING
03/25/02 2668 (H) RULES TO CALENDAR 3/25/02
03/25/02 2668 (H) RETURNED TO RLS COMMITTEE
03/26/02 2690 (H) FN3: (COR)
03/26/02 2690 (H) FN4: (CED); FN5: (CED); FN6:
(CED)
03/27/02 2719 (H) RETURNED TO RLS COMMITTEE
03/27/02 2719 (H) RULES TO CALENDAR 3/27/02
05/02/02 (H) RLS AT 9:00 AM BUTROVICH 205
BILL: HB 303
SHORT TITLE:INDIVIDUAL INCOME TAX
SPONSOR(S): REPRESENTATIVE(S)WHITAKER
Jrn-Date Jrn-Page Action
01/14/02 1954 (H) PREFILE RELEASED 1/4/02
01/14/02 1954 (H) READ THE FIRST TIME -
REFERRALS
01/14/02 1954 (H) STA, FIN
01/16/02 1992 (H) COSPONSOR(S): FATE
02/04/02 2152 (H) COSPONSOR(S): LANCASTER
02/12/02 (H) STA AT 8:00 AM BUTROVICH 205
02/12/02 (H) Heard & Held -- Location
Change --
02/12/02 (H) MINUTE(STA)
02/26/02 (H) STA AT 8:00 AM CAPITOL 102
02/26/02 (H) Heard & Held
02/26/02 (H) MINUTE(STA)
03/07/02 (H) STA AT 8:00 AM CAPITOL 102
03/07/02 (H) Heard & Held
03/07/02 (H) MINUTE(STA)
03/14/02 (H) STA AT 8:00 AM CAPITOL 102
03/14/02 (H) Moved CSHB 303(STA) Out of
Committee
03/14/02 (H) MINUTE(STA)
03/15/02 2541 (H) STA RPT CS(STA) NT 2DP 4DNP
1NR
03/15/02 2541 (H) DP: STEVENS, FATE; DNP:
WILSON,
03/15/02 2541 (H) CRAWFORD, JAMES, HAYES; NR:
COGHILL
03/15/02 2541 (H) FN1: (REV)
03/20/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
03/20/02 (H) Heard & Held
MINUTE(FIN)
03/22/02 (H) FIN AT 9:00 AM HOUSE FINANCE
519
03/22/02 (H) Heard & Held
MINUTE(FIN)
03/25/02 (H) FIN AT 9:00 AM HOUSE FINANCE
519
03/25/02 (H) Moved CSHB 303(FIN) Out of
Committee
MINUTE(FIN)
03/26/02 2679 (H) FIN RPT CS(FIN) NT 4DP 5DNP
2NR
03/26/02 2679 (H) DP: BUNDE, WHITAKER,
LANCASTER, MULDER;
03/26/02 2679 (H) DNP: CROFT, DAVIES, MOSES,
HUDSON,
03/26/02 2679 (H) FOSTER; NR: HARRIS, WILLIAMS
03/26/02 2679 (H) FN2: (REV)
03/27/02 2715 (H) ADOPTED Y23 N13 E1
03/27/02 2713 (H) TECH AM 1 TO AM 3 TO AM 2 AS
AM UC
03/27/02 2713 (H) TECH AM 2 TO AM 3 TO AM 2 AS
AM
03/27/02 2715 (H) TECH AM 1 TO AM 4 TO AM 2 AS
AM
03/27/02 2716 (H) TECH AM 2 TO AM 4 TO AM 2 AS
AM
03/27/02 2703 (H) RULES TO CALENDAR 3/27/02
03/27/02 2703 (H) READ THE SECOND TIME
03/27/02 2703 (H) FIN CS ADOPTED UNAN CONSENT
03/27/02 2703 (H) AM NO 1 FAILED Y7 N32 E1
03/27/02 2705 (H) AM NO 2 OFFERED
03/27/02 2711 (H) AM 2 TO AM 2 AS AM FAILED Y17
N22 E1
03/27/02 2712 (H) AM 3 TO AM 2 AS AM OFFERED
03/27/02 2713 (H) FAILED Y17 N22 E1
03/27/02 2714 (H) AM 3 TO AM 2 AS AM FLD Y15
N24 E1
03/27/02 2714 (H) AM 4 TO AM 2 AS AM OFFERED
03/27/02 2716 (H) RULED OUT OF ORDER
03/27/02 2717 (H) AM NO 3 FAILED Y7 N31 E1 A1
03/27/02 2716 (H) AM 4 TO AM 2 AS AM FAILED Y15
N23 E1 A1
03/27/02 2717 (H) AM 2 AS AM FAILED Y17 N22 E1
03/27/02 2719 (H) HELD IN SECOND READING
03/27/02 2719 (H) RETURNED TO RLS COMMITTEE
03/27/02 2711 (H) AM 1 TO AM 2 ADOPTED UNAN
CONSENT
05/02/02 (H) RLS AT 9:00 AM BUTROVICH 205
BILL: HB 304
SHORT TITLE:PERM. FUND INCOME/ DIVIDENDS/ FUNDS
SPONSOR(S): REPRESENTATIVE(S)WHITAKER
Jrn-Date Jrn-Page Action
01/14/02 1954 (H) PREFILE RELEASED 1/4/02
01/14/02 1954 (H) READ THE FIRST TIME -
REFERRALS
01/14/02 1954 (H) STA, FIN
01/16/02 1992 (H) COSPONSOR(S): FATE
02/16/02 (H) STA AT 10:00 AM BUTROVICH 205
02/16/02 (H) -- Meeting Postponed to
2/23/02 --
02/23/02 (H) STA AT 10:00 AM HOUSE FINANCE
519
02/23/02 (H) Heard & Held
02/23/02 (H) MINUTE(STA)
03/19/02 (H) STA AT 8:00 AM CAPITOL 102
03/19/02 (H) Moved Out of Committee
03/19/02 (H) MINUTE(STA)
03/19/02 2600 (H) STA RPT 3DP 1DNP 2NR 1AM
03/19/02 2600 (H) DP: FATE, WILSON, STEVENS;
DNP: JAMES;
03/19/02 2600 (H) NR: HAYES, COGHILL; AM:
CRAWFORD
03/19/02 2600 (H) FN1: ZERO(REV)
03/21/02 (H) FIN AT 9:00 AM HOUSE FINANCE
519
03/22/02 (H) FIN AT 9:00 AM HOUSE FINANCE
519
03/22/02 2654 (H) COSPONSOR(S): MULDER
03/25/02 (H) FIN AT 9:00 AM HOUSE FINANCE
519
03/25/02 (H) Moved CSHB 304(FIN) Out of
Committee
MINUTE(FIN)
03/26/02 2679 (H) FIN RPT CS(FIN) NT 5DP 1DNP
2NR 3AM
03/26/02 2679 (H) DP: BUNDE, WHITAKER,
LANCASTER, HUDSON,
03/26/02 2679 (H) MULDER; DNP: FOSTER; NR:
HARRIS,
03/26/02 2679 (H) MOSES; AM: CROFT, DAVIES,
WILLIAMS
03/26/02 2680 (H) FN(S): FORTHCOMING
03/27/02 2719 (H) FN2: (REV)
03/27/02 2719 (H) RULES TO CALENDAR 3/27/02
03/27/02 2719 (H) RETURNED TO RLS COMMITTEE
04/15/02 (H) RLS AT 9:00 AM BUTROVICH 205
04/15/02 (H) Failed To Move Out Of
Committee -- Recessed to a
call of the Chair --
04/15/02 (H) MINUTE(RLS)
04/17/02 (H) RLS AT 5:30 PM BUTROVICH 205
BILL: HB 464
SHORT TITLE:CORRESPONDENCE STUDY PROGRAMS
SPONSOR(S): REPRESENTATIVE(S)JAMES
Jrn-Date Jrn-Page Action
02/19/02 2313 (H) READ THE FIRST TIME -
REFERRALS
02/19/02 2313 (H) EDU, HES
02/22/02 2370 (H) COSPONSOR(S): DYSON
02/27/02 2416 (H) REFERRALS CHANGED TO HES, EDU
03/07/02 (H) HES AT 3:00 PM CAPITOL 106
03/07/02 (H) Heard & Held
03/07/02 (H) MINUTE(HES)
03/13/02 2530 (H) COSPONSOR(S): COGHILL,
KOHRING, GREEN,
03/13/02 2530 (H) FOSTER
03/14/02 (H) HES AT 3:00 PM CAPITOL 106
03/14/02 (H) Heard & Held
03/14/02 (H) MINUTE(HES)
03/19/02 (H) HES AT 3:00 PM CAPITOL 106
03/19/02 (H) -- Meeting Canceled --
03/21/02 (H) HES AT 3:00 PM CAPITOL 106
03/21/02 (H) -- Meeting Canceled --
03/22/02 2655 (H) COSPONSOR(S): FATE
03/26/02 (H) HES AT 3:00 PM CAPITOL 106
03/26/02 (H) Heard & Held
03/26/02 (H) MINUTE(HES)
04/02/02 (H) HES AT 3:00 PM CAPITOL 106
04/02/02 (H) <Bill Canceled>
04/11/02 (H) HES AT 3:00 PM CAPITOL 106
04/11/02 (H) Moved CSHB 464(HES) Out of
Committee
04/11/02 (H) MINUTE(HES)
04/15/02 2924 (H) HES RPT CS(HES) NT 5DP
04/15/02 2924 (H) DP: COGHILL, KOHRING, WILSON,
04/15/02 2924 (H) STEVENS, DYSON
04/15/02 2924 (H) FN1: ZERO(H.HES/EED)
04/17/02 (H) EDU AT 8:00 AM HOUSE FINANCE
519
04/17/02 (H) Heard & Held
MINUTE(EDU)
04/24/02 (H) EDU AT 8:00 AM HOUSE FINANCE
519
04/24/02 (H) Moved CSHB 464(EDU) Out of
Committee
MINUTE(EDU)
04/24/02 3117 (H) COSPONSOR(S): WILSON
04/25/02 3132 (H) EDU RPT CS(EDU) NT 3DP 3NR
04/25/02 3132 (H) DP: WILSON, STEVENS, GREEN;
04/25/02 3132 (H) NR: JOULE, GUESS, BUNDE
04/25/02 3132 (H) FN2: (EED)
04/25/02 3150 (H) FIN REFERRAL ADDED AFTER HES
04/29/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
04/29/02 (H) Scheduled But Not Heard
04/29/02 (S) HES AT 1:30 PM BUTROVICH 205
04/29/02 (S) Scheduled But Not Heard
04/30/02 (H) FIN AT 1:30 PM HOUSE FINANCE
519
04/30/02 (H) Moved CSHB 464(EDU) Out of
Committee
MINUTE(FIN)
05/01/02 3255 (H) FIN RPT CS(EDU) NT 7DP 3NR
05/01/02 3255 (H) DP: WHITAKER, HARRIS, DAVIES,
05/01/02 3255 (H) LANCASTER, FOSTER, MULDER,
WILLIAMS;
05/01/02 3255 (H) NR: BUNDE, MOSES, HUDSON
05/01/02 3255 (H) FN2: (EED)
05/01/02 3266 (H) COSPONSOR(S): MEYER
05/02/02 3335 (H) COSPONSOR(S): MASEK, MORGAN
05/02/02 (H) RLS AT 9:00 AM BUTROVICH 205
WITNESS REGISTER
TIM BENINTENDI, Staff
to Representative Carl Moses
Alaska State Legislature
Capitol Building, Room 500
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the sponsor of HB
20.
SALLY SADDLER, Business Development
Specialist/Legislative Liaison
Division of Community and Business Development
Department of Community & Economic Development
PO Box 110801
Juneau, Alaska 99811-0801
POSITION STATEMENT: Testified on HB 20, Version P.
BILL ROLFZEN, State Revenue Sharing Municipal Assistance,
National Forest Receipts, Fish Tax
Division of Community and Business Development
Department of Community & Economic Development
PO Box 110801
Juneau, Alaska 99811-0801
POSITION STATEMENT: Testified on HB 20, Version P.
REPRESENTATIVE JOHN DAVIES
Alaska State Legislature
Capitol Building, Room 415
Juneau, Alaska 99801
POSITION STATEMENT: Presented CSHB 303, Version I.
REPRESENTATIVE BILL HUDSON
Alaska State Legislature
Capitol Building, Room
Juneau, Alaska 99801
POSITION STATEMENT: Presented CSHB 304, Version G.
RICHARD SCHMITZ, Staff
to Representative Jeannette James
Alaska State Legislature
Capitol Building, Room 214
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the sponsor of HB
464.
ACTION NARRATIVE
TAPE 02-8, SIDE A
Number 0001
CHAIR PETE KOTT called the House Rules Standing Committee
meeting to order at 9:05 a.m. Representatives Kott, Porter,
Kohring, Morgan, McGuire, Berkowitz, and Joule were present at
the call to order. Representatives Croft and Guess were also in
attendance.
HB 20-MUNICIPAL DIVIDEND: AID TO MUNIS & OTHERS
CHAIR KOTT announced that the first order of business would be
HOUSE BILL NO. 20, "An Act relating to state aid to
municipalities and certain other recipients, and for the village
public safety officer program; relating to municipal dividends;
relating to the public safety foundation program; and providing
for an effective date."
Number 0072
REPRESENTATIVE McGUIRE moved to adopt Version 22-LS0008\P, Cook,
5/1/02, as the working document. There being no objection,
Version P was before the committee.
Number 0058
TIM BENINTENDI, Staff to Representative Carl Moses, Alaska State
Legislature, testified on behalf of the sponsor. Mr. Benintendi
explained that Version P merely addresses a concern that the
Department of Community & Economic Development (DCED) had
regarding the provision for aide to unincorporated communities
within boroughs. Basically, the qualification criteria was
tightened so that nonmunicipal and nongovernmental entities
couldn't access the program. He directed attention to page 3,
Section 4, which specifies a list of services from which any
three must provided in order to access the funding programs.
The services of fire protection, emergency, and medical services
were merged into one category. Therefore, an unincorporated
community would have to provide more of those services in order
to access capital matching grants and revenue sharing. Mr.
Benintendi pointed out that the other change is in Section 3
where the language was tightened in order to ensure that the
service areas are more tightly identified for funding through
either the borough or directly from the program. Mr. Benintendi
related his belief that the committee should have a letter from
[DCED] in acceptance of these changes.
Number 0276
REPRESENTATIVE JOULE related his understanding that search and
rescue services are [now] included in the emergency services
category.
MR. BENINTENDI agreed with Representative Joule's understanding.
REPRESENTATIVE BERKOWITZ inquired as to how many communities
would be impacted by changing the list.
MR. BENINTENDI deferred to Sally Saddler, DCED. He estimated
that the number of communities impacted [under this new list] is
probably around 70-80 communities.
Number 0372
SALLY SADDLER, Business Development, Specialist/Legislative
Liaison, Division of Community and Business Development,
Department of Community & Economic Development, emphasized that
there is no clear list of the number of communities that would
or would not qualify. However, the best estimate is probably
about 30 communities would qualify [under Version P].
REPRESENTATIVE JOULE asked whether those 30 communities that
would not be able to participate currently participate in safe
communities and revenue sharing.
MS. SADDLER deferred to Bill Rolfzen, DCED.
Number 0435
BILL ROLFZEN, State Revenue Sharing Municipal Assistance,
National Forest Receipts, Fish Tax; Division of Community and
Business Development; Department of Community & Economic
Development; explained that [Version P] expands the program to
include unincorporated communities within organized boroughs
that currently don't participate in revenue sharing or capital
matching grants. Therefore, there would be 30 new communities
within organized boroughs that would be able to [utilize the
program].
REPRESENTATIVE JOULE clarified that he had misheard.
MR. ROLFZEN noted that the first year those communities would
qualify would be 2004, and therefore the department would put
out the applications in the next application cycle and review
the applications in order to make a determination.
MR. BENINTENDI, in response to Representative Berkowitz,
answered that he believes [HB 20] is over and above the
provisions of HB 304.
CHAIR KOTT informed the committee that the effective date of HB
20 had to be changed in order to conform with HB 304.
Number 0559
TAMARA COOK, Director, Legal and Research Services Division,
Legislative Affairs Agency, pointed out that HB 20 and HB 304
have been evolving on separate paths. In HB 304, there was a
decision made to make distributions from the permanent fund at
the beginning of the fiscal year, while HB 20 has been drafted
to [make distributions], per existing statutes, from the
earnings reserve account on the last day of the fiscal year. If
HB 304 were to pass, Ms. Cook said that she wanted to make sure
that HB 20 wouldn't conflict with the change in the way the
money would flow. Therefore, on page 3, line 29, of Version P
the language "On or after July 1 and after all other transfers
under this section" was inserted. That language was inserted
because there is no knowledge as to what transfers will exist
under the section. If HB 304 doesn't pass, HB 20 needs to work
with the existing statutes. The existing statutes specify that
money is to be transferred for the dividend payment and
inflation-proofing on June 30. Therefore, she felt that the
language "On or after July 1" was safe language. Furthermore,
the language "and after all other transfers under this section"
was inserted in case there are different transfers upon the
passage of HB 304. At this point, the money paid to the
municipal dividend will be paid last, whatever other money is
paid, and the payment will be made some time after July 1. She
clarified that the reason the language doesn't specify "on July
1" is because there is no knowledge what effective date these
bills will have. She estimated that these bills probably
wouldn't take effect until some time in September of the next
fiscal year, assuming there are no effective dates.
MS. COOK expressed her hope that [Version P] is drafted such
that the municipal dividend takes effect the beginning of fiscal
year 2003 and applies to that year and thereafter. This
mechanism would avoid an effective date entirely.
Number 0804
REPRESENTATIVE BERKOWITZ related his hope that if the
[legislature] does move to a 5 percent percent of market value
(POMV) payout, 50 percent to the general fund (GF) and 50
percent to dividends, then the dividend in HB 20 wouldn't come
from the personal dividend side of the 50 percent payout but
rather from the GF side. Representative Berkowitz said, "I
don't think that we ought to be going above total expenditures
of 5 percent on the market value." Under the current
[language], [HB 20] seems to be a separate expenditure above,
which seems fiscally imprudent.
REPRESENTATIVE PORTER said he didn't disagree with
Representative Berkowitz's comments. However, the problem is
that no one knows the fate of either bill. If it appears that
both bills will pass, then that issue can be faced.
CHAIR KOTT closed public testimony.
Number 0907
REPRESENTATIVE PORTER moved to report CSHB 20, Version 22-
LS0008\P, Cook, 5/1/02, out of committee with individual
recommendations and the accompanying fiscal notes.
REPRESENTATIVE KOHRING objected and stated his fundamental
disagreement with the concept of HB 20. He noted that he didn't
believe it's prudent for the legislature to move down the path
of starting to spend money from the [earnings reserve of the
permanent dividend] fund because it could eventually lead to
spending the [permanent dividend] fund [itself].
REPRESENTATIVE McGUIRE countered with her belief that HB 20 is a
great bill because municipal revenue sharing has been reduced to
the point at which it is virtually nonexistent. Therefore, HB
20 provides one way in which to continue to support
municipalities. She remarked that taking a small portion of the
earnings reserve of the permanent fund dividend and transferring
to the municipalities is fiscally prudent and responsible.
A roll call vote was taken. Representatives Morgan, McGuire,
Berkowitz, Joule, Porter, and Kott voted to report CSHB 20,
Version 22-LS0008\P, Cook, 5/1/02, from committee.
Representative Kohring voted against reporting CSHB 20 from
committee. Therefore, CSHB 20(RLS) was reported out of the
House Rules Standing Committee by a vote of 6:1.
HB 303-INDIVIDUAL INCOME TAX
CHAIR KOTT announced that the next order of business would be
HOUSE BILL NO. 303, "An Act relating to the levy and collection
of a sales tax; and providing for an effective date."
Number 1032
REPRESENTATIVE PORTER moved to adopt CSHB 303, Version 22-
LS1206\I, Kurtz, 5/1/02, as the working document. There being
no objection, Version I was adopted.
Number 1054
REPRESENTATIVE JOHN DAVIES, Alaska State Legislature, explained
that Version I amends HB 303 such that it implements the fair
tax idea that has been discussed over the last few weeks. This
is an income tax that is structured to impact those at the upper
end of the income spectrum in the approximate manner those folks
would've been impacted under a sales tax. Representative Davies
characterized Version I as a hybrid [between a] sales tax and an
income tax. This tax is slightly progressive at the lower end
and significantly regressive at the higher end. This tax is
advantageous in that it doesn't impact municipalities in the way
a sales tax would. Furthermore, approximately 10 percent of the
income obtained is paid by those workers in Alaska who live
outside the state and about 15 percent of it can be [written
off] as a credit against the taxable income with the federal
government. Therefore, Alaskans end up only paying about 75
percent of the total amount that is raised. Representative
Davies viewed Version I as a compromise.
CHAIR KOTT closed public testimony.
Number 1158
REPRESENTATIVE PORTER expressed the advisability to refer to
[Version I] as an individual income tax. Therefore, he moved
that the committee adopt Amendment 1, which reads:
Page 1, line 1, after "of",
Insert "individual"
There being no objection, Amendment 1 was adopted.
REPRESENTATIVE BERKOWITZ mentioned the need to have protections
in terms of privacy for whatever forms are filed.
REPRESENTATIVE DAVIES related his understanding that individual
taxpayer information is confidential. He recalled having to go
into executive session to consider even lumped tax returns from
corporations.
REPRESENTATIVE PORTER noted that the representative for the
Department of Revenue was nodding his head in confirmation.
Number 1248
REPRESENTATIVE BERKOWITZ highlighted the trust industry's
concern that any income tax not interfere with its business.
REPRESENTATIVE DAVIES said that he believes this proposal
includes all income that is derived in the state. He further
clarified that this proposal would include personal income from
trusts. The reporting requirements for trusts was removed. All
income an individual derives from a trust must be reported [by
the] individual.
CHAIR KOTT closed public testimony.
Number 1321
REPRESENTATIVE PORTER moved to report CSHB 303, Version 22-
LS1206\I, Kurtz, 5/1/02, as amended out of committee with
individual recommendations and the accompanying fiscal note.
REPRESENTATIVE KOHRING objected, and related his belief that the
legislature should work on more spending reductions and reforms
to the government bureaucracy. There is much more that can be
done to explore efficiencies in government.
REPRESENTATIVE JOULE expressed the need to keep in mind the
diversity of Alaska. Although he acknowledged that legislators
are responding to their constituencies, he believes that
Alaskans are at the point of recognizing the need to raise
revenue and agree with a personal income tax. Therefore, he
said he spoke in favor of the bill.
REPRESENTATIVE KOHRING mentioned his desire to include a sunset
provision and a vote of the public before becoming effective.
He informed the committee that he would offer such amendments on
the House floor.
REPRESENTATIVE DAVIES pointed out that were this bill to pass,
there are triggers that as the constitutional budget reserve
(CBR) rises, the amount of the tax decreases. The bill
establishes a $2 billion CBR [limit] that is ratcheted down to
$175 million total and $3 billion ratchets it down to $100
million total.
A roll call vote was taken. Representatives McGuire, Berkowitz,
Joule, Porter, Morgan, and Kott voted to report CSHB 303 as
amended from committee. Representative Kohring voted against
reporting CSHB 303 as amended from committee. Therefore, CSHB
303(RLS) was reported from the House Rules Standing Committee by
a vote of 6:1.
HB 304-PERM. FUND INCOME/ DIVIDENDS/ FUNDS
CHAIR KOTT announced that the next order of business would be
HOUSE BILL NO. 304, "An Act relating to disposition of income of
the permanent fund; and providing for an effective date." [The
committee had previously reported from committee CSHB 304(RLS),
Version X.]
Number 1536
REPRESENTATIVE PORTER moved to adopt CSHB 304, Version 22-
LS1207\G, Cook, 5/1/02, as the working document. There being no
objection, Version G was before the committee.
REPRESENTATIVE BILL HUDSON, Alaska State Legislature, explained
that Version G incorporates the Alaska Permanent Fund
Corporation Board of Trustees' recommendation. Version G
changes the method in which the annual distribution on income of
the permanent fund [dividend] is calculated to method used by
most large managed funds. Therefore, the income would
distributed as a percentage of market value (POMV) as opposed to
average or annual income, which fluctuates such that one never
knows how much will be available to distribute. The POMV also
impacts the investment of the basic portfolio. In Version G a
POMV of the fund is averaged over five years with an expected
average rate of return of 7.95, and 5 percent of those earnings
would be available for distribution. In doing so, the annual
inflation-proofing of the principle of the entire permanent fund
would be around 3 percent. The Board of Trustees recommended
the 5 percent payout, and therefore [Version G] statutorily
fixes a distribution stream of that 5 percent payout to be 50
percent to the permanent fund dividend program and 50 percent to
the general fund (GF).
Number 1656
REPRESENTATIVE HUDSON pointed out that the language creates a
special education fund and an infrastructure and economic
development fund, [both of which] are distributed subject to
legislative appropriation on a 30:20 basis. Of the 50 percent
that would go to the GF, 30 percent would go into education and
20 percent would go into infrastructure and economic
development. The language in [Version G] is always subject to
legislative appropriation. Representative Hudson explained that
[these two funds] were left in Version G because of the belief
that people feel comfortable allowing some of the earnings from
the permanent fund to flow to government, although they want to
know what that money will be used for, in general terms.
REPRESENTATIVE HUDSON continued by explaining that the balance
of the bill simply adjusts the Mental Health Trust Fund, which
is managed by the Permanent Fund [Division] and the Alaska
Science & Technology Fund under the aforementioned income payout
method. This has no bearing on the management or use of the
funds, which remains in existing statutes. The legislation does
retain all of the inflation-proofing dollars in the earnings
reserve and thus allows the earnings reserve to grow from about
$2.7 billion to in excess of $8 billion. However, since it's
all part of the market value, the market value is estimated to
grow from the current $24.6 billion to almost $33 billion by
2010. Therefore, with the adoption of Version G, there should
almost be the guarantee of economic growth and development of
the permanent fund. Representative Hudson opined that [Version
G] would guarantee that the permanent fund dividend won't be
capped. The permanent fund dividend will grow in proportion to
the 50 percent that's available for distribution by the
methodology [in Version G]. In the first few years there
wouldn't be any significant difference in the amount of dividend
that would ordinarily be paid and then the dividend would drop a
bit and eventually begin growing in the end years.
Representative Hudson related his belief that [Version G] would
fill the fiscal gap [by] about half, in conjunction with HB 303.
REPRESENTATIVE HUDSON recalled the interim meetings on the
fiscal gap during which people seemed to recognize that there is
a fiscal gap. The question became in regard to how the gap
would be filled in order to avoid the loss of the permanent fund
dividend, which is what [Version G] accomplishes. If the
legislature fails to take action in a timely manner, the
constitutional budget reserve fund will be consumed in between
2-2.5 years and leave the legislature and the governor to either
cut the budget by a billion dollars or begin to consume the
earnings reserve of the permanent fund which predicates the
dividend. Once the money that pays the dividend is utilized,
[it is problematic]. In closing, Representative Hudson urged
the committee's adoption of Version G.
CHAIR KOTT closed public testimony.
Number 1877
REPRESENTATIVE BERKOWITZ referred to page 2, line 1, and
suggested that the following language be inserted: "The items
listed in the municipal dividend program, as contemplated in HB
20, will be part of the 20 percent as well as the cost of
administering the permanent fund and the permanent fund dividend
program." Representative Berkowitz clarified that his intent is
to ensure that the aggregate total payout is no more than 5
percent.
REPRESENTATIVE PORTER objected, and asked whether this
conceptual amendment can be folded in painlessly or would it be
difficult.
REPRESENTATIVE BERKOWITZ related Ms. Cook's concern with the
contingency of including HB 20 without knowing whether either HB
20 or HB 304 will pass. Ms. Cook also relayed that paying for
the corporation [should be] done out of the earnings, which has
historically been calculated separately. However,
Representative Berkowitz felt that if the choice is to have a 5
percent limitation, it should be absolute and anything for HB 20
should be over and above that 5 percent.
REPRESENTATIVE PORTER said that he didn't necessarily disagree.
However, he explained that his reluctance is in relation to the
lack of knowledge with regard to whether any of these bills [HB
20, HB 303, and HB 304] will pass. He expressed reluctance in
striking out on new ground at this point [in the negotiations].
REPRESENTATIVE JOULE asked whether a letter of intent
accompanying the legislation would be more appropriate.
REPRESENTATIVE PORTER remarked that a letter of intent would be
easier to accomplish.
REPRESENTATIVE JOULE stated that if it appears that the Senate
will allow both pieces of legislation to be part of the
negotiations, then that language could be worked into the bill.
Number 2077
REPRESENTATIVE BERKOWITZ withdrew his conceptual amendment and
moved the letter of intent. There being no objection, the
letter of intent was adopted.
Number 2094
REPRESENTATIVE PORTER moved to report CSHB 304, Version 22-
LS1207\G, Cook, 5/1/02, out of committee with individual
recommendations and the accompanying fiscal note and letter of
intent.
REPRESENTATIVE KOHRING objected.
A roll call vote was taken. Representatives Porter, Morgan,
McGuire, Berkowitz, Joule, and Kott voted to report Version G
from committee. Representative Kohring voted against reporting
Version G from committee. Therefore, CSHB 304(2d RLS) was
reported out of the House Rules Standing Committee by a vote of
6:1.
HB 464-CORRESPONDENCE STUDY PROGRAMS
CHAIR KOTT announced that the final order of business would be
HOUSE BILL NO. 464, "An Act relating to statewide school
district correspondence study programs."
Number 2158
REPRESENTATIVE PORTER moved to adopt Version 22-LS1494\X as the
working document. There being no objection, Version X was
before the committee.
Number 2164
RICHARD SCHMITZ, Staff to Representative Jeannette James, Alaska
State Legislature, explained that HB 464 provides guidance to
the Department of Education in regard to writing regulations
regarding statewide correspondence study programs. Version X
includes a small technical change located on page 2, lines 3-5,
which in part specifies "the district is not required to submit
a new application more frequently than every five years unless
the program is designated as deficient or in crisis under AS
14.03.123(a)". He stated that the five years was a compromise
between the ten year approval process that charter schools
currently go through and the annual approval that the department
proposed correspondence study programs go through. Because the
designators are being delayed, the thought was that it would be
better to use the aforementioned language in order to ensure
that the department won't require that these programs are
reapproved every year until the designators come into force.
Therefore, the parameters remain available for deficiency or
crisis and if the department could show that those programs were
deficient or in crisis under the parameters, then the programs
would have to be reapproved every year until corrected.
REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature,
testified as the sponsor of HB 464, which she characterized as a
good piece of legislation. She urged the committee to pass
Version X.
REPRESENTATIVE McGUIRE requested that Representative James speak
to the [troublesome] fiscal note.
REPRESENTATIVE JAMES agreed that the fiscal note is troublesome.
This bill [Version X] doesn't create any new liability or
expense but rather is almost the same as the draft regulations.
To that, the department said that the bill expands the
[correspondence school] program and thus two more people are
necessary to manage the program. If that is the case and the
bill doesn't do that, Representative James suggested that [the
funding for those two positions] should be included in the
department's budget. The department informed her that those
positions were in their budget, but that funding wasn't obtained
and thus this attempts to obtain the money with this bill. In
conversations with the co-sponsor of the House Finance
Committee, the recommendation was to move the bill forward with
the fiscal note which will probably not be funded.
CHAIR KOTT closed public testimony.
Number 2305
REPRESENTATIVE KOHRING moved to report CSHB 464, Version 22-
LS1494\X, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, CSHB
303(RLS) was reported from the House Rules Standing Committee.
ADJOURNMENT
The House Rules Standing Committee meeting was recessed to the
call of the chair. [This meeting did not reconvene.]
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