HB 144-REPEAL EDUCATION TAX CREDITS SUNSET  9:31:56 AM CO-CHAIR RUFFRIDGE announced that the final order of business would be HOUSE BILL NO. 144, "An Act relating to education tax credits; and providing for an effective date by repealing the effective date of secs. 1, 2, and 21, ch. 61, SLA 2014." 9:32:34 AM BUD SEXTON, Staff, Representative Justin Ruffridge, Alaska State Legislature, presented HB 144, via PowerPoint presentation [hard copy included in the committee packet], on behalf of Representative Ruffridge, prime sponsor. He discussed the bill's background, as shown on slides 2 and 3, titled "Background," which read as follows [original punctuation provided]: The Education Tax Credit program was first established in 1987 by the Legislature. Goal is to encourage private businesses to make charitable contributions to schools in Alaska. The education tax credit is a credit for qualifying contributions to Alaska universities and accredited nonprofit Alaska two-or four-year colleges for facilities, direct instruction, research and educational support purposes; Donations to a school district or a state-operated technical and training school for vocational education courses, programs and facilities; Donations for Alaska Native cultural or heritage programs for public school staff and students, and a facility in the state that qualifies as a coastal ecosystem learning center under the Coastal American Partnership 9:33:49 AM MR. SEXTON moved to slide 4, titled "Recent Education Tax Credit Legislation," which read as follows [original punctuation provided]: HB 278 in 2014 expanded the list of eligible recipients for donations. HB 223 in 2018 created the allowance for cash or equipment contributions. HB 223 established the current sunset expiration date of December 31, 2024 9:34:42 AM MR. SEXTON proceeded to slide 5, titled "Credits offset taxes," which read as follows [original punctuation provided]: State net income tax (Corporate) Mining License tax Fisheries Business Tax Fishery Resource Landing Tax Oil and Gas Production tax Oil and Gas Property tax and Insurance tax 9:35:02 AM MR. SEXTON continued to slide 6, titled "2011-2022 Contributions & Credits," which featured a spreadsheet. He pointed out that the contents of the spreadsheet were available online as well. He said that the "Credits Claimed" column shows the amount that has impacted the state budget, and the "Total of Contributions" column represents the following four columns: "U of A," "APU," "Secondary/Vocational," and "Other." 9:36:22 AM MR. SEXTON moved to slide 7, titled "HB 223 - lowered tax credits in phases," which read as follows [original punctuation provided]: Up to $100K $100K-$300K >$300K CAP 2018 50% 100% 50% $5m 2019 50% 75% 50% $1m 2021 50% 50% 50% $1m 9:37:42 AM REPRESENTATIVE PRAX observed that there was a strong correlation between the reduction in the amount of contributions and the percentage that could be claimed. MR. SEXTON explained that to answer that question, he could look at the figure in the summary total. He added that there were years in which the amount of donations was significant compared to other years; however, he said it was hard to suggest one way or the other. 9:39:11 AM REPRESENTATIVE HIMSCHOOT suggested including a column that showed how many total donors there were by year. MR. SEXTON responded that some information is not made public. 9:39:46 AM MR. SEXTON continued on slide 8, titled "HB 144," which read as follows [original punctuation provided]: Proposed legislation to remove the sunset date for the Education Tax Credit. HB 144 strikes a reasonable level of deductions which impact State budget Proposes to leave tax deduction levels at the 2021 levels Up to $100K $100K-$300K >$300K CAP 2021 50% 50% 50% $1m MR. SEXTON stressed that removing the sunset provision also allowed various companies the ability to plan their donations further ahead. 9:41:13 AM REPRESENTATIVE STORY asked whether Mr. Sexton surveyed the districts to find out if different entities were donating to them at different levels. MR. SEXTON replied he had, but only to a small number of districts. He noted the challenge of pinpointing any one causal or correlating factor. REPRESENTATIVE STORY revisited a point on the third slide and asked for clarification on the entities that qualify for tax credits. MR. SEXTON directed attention to the second bullet point on the same slide which read "donations to a school district or a state-operated technical and training school for vocational education courses, programs and facilities," and said whether a specific entity does qualify is an answer he does not have at this time. REPRESENTATIVE STORY suggested adding "tribal" to the language. 9:44:37 AM CO-CHAIR RUFFRIDGE explained that as the bill sponsor, the purpose behind the bill was exclusively to eliminate the sunset date. He added that some of the more detailed aspects could be examined further if it was the will of the committee. 9:45:27 AM CHAD HUTCHISON, Director of State Relations, University of Alaska System, presented a PowerPoint, titled "University of Alaska Education Tax Credits - Overview" [hard copy included in the committee packet]. He moved to slide 2, titled "Education Tax Credits (ETC)," and explained that the photo on the slide depicts a $1 million check with education and industry partners gathered around. He explained that the tax credit program is a popular program that averages 20 to 30 participants. 9:47:50 AM MR. HUTCHISON proceeded to slide 3, titled "Overview," which builds off the earlier presentation on Alaska education tax credits, focusing on a summary of calendar year 2022. 9:48:25 AM MR. HUTCHISON concluded the presentation on slide 4, titled "A Few Tax Paying Entities that Historically Contribute to the University of Alaska." He added that cash and equipment is used in many ways towards many programs. He shared the examples of donating equipment to a mining program so students could learn in a "very real way." 9:49:45 AM CO-CHAIR RUFFRIDGE invited questions or comments from committee members. 9:50:18 AM REPRESENTATIVE PRAX reflected on an earlier comment regarding the objective of HB 144 to extend the expiration date of the tax credit. He stressed the importance of that objective. 9:51:45 AM REPRESENTATIVE STORY supported the idea of extending the education tax credit; however, she noted that there were other entities, particularly tribal entities, that were offering good educational programs. The language in the bill, she said, "would not be that hard." 9:52:30 AM [CO-CHAIR RUFFRIDGE announced that HB 144 was held over.]