HB 167-GOLD AND SILVER SPECIE AS LEGAL TENDER  8:06:22 AM CO-CHAIR HANNAN announced that the first order of business would be HOUSE BILL NO. 167, "An Act relating to specie as legal tender in the state; and relating to borough and city sales and use taxes on specie." 8:06:56 AM REPRESENTATIVE KEVIN MCCABE, Alaska State Legislature, as prime sponsor, paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: The purpose of HB 167 is to recognize Alaska's constitutional duty, power and right under Section 10, Article I, of the United States Constitution, and the Tenth Amendment of the United States Constitution to make gold and silver legal tender in the payment of debt. HB 167 will secure the rights of citizens of this state under the Ninth and Tenth Amendments of the United States Constitution to tender gold and silver in the payment of a debt should the merchant or payee agree to accept it. This bill will bring Alaska into full compliance with the United States Constitution with the policies, practices, and procedures of this State with respect to the use of gold, silver and specie as legal tender in the payment of debt. In these unprecedented times, this bill will preserve, protect, and promote the state and its economic security, safety, health, and welfare of the people of this state; and protect this state and its citizens in the acquisition and possession of gold and silver and their use as legal tender in the payment of debt. REPRESENTATIVE MCCABE remarked that "it sounds dangerous." He noted many states have done this. He said there is interest in the bill, which would create a study in the House Finance Committee on "the possibility of establishing an alternative form of legal tender for the payment of debts, public charges, taxes, and other money owed to the state." 8:11:43 AM JULIE MORRIS, Staff, Representative Kevin McCabe, Alaska State Legislature, on behalf of Representative McCabe, prime sponsor of HB 167, read the sectional analysis [included in the committee packet]. 8:14:07 AM REPRESENTATIVE MCCABE, in response to Representative McCarty's query as to the trustworthiness of gold specie, said he thinks it is as trustworthy as any other legal tender. In response to a follow-up question regarding changes in the value of gold, said he cannot say what the value of the gold, in terms of carats, is in the specie, but he could find out. He said other states just look up the value of gold; he acknowledged that the value fluctuates. REPRESENTATIVE MCCARTY said, "I think this is a great idea." 8:18:59 AM REPRESENTATIVE PRAX suggested the problem is that many years ago U.S. Congress abandoned "the constitutionally required manner of establishing a currency." It is the value of the federal reserve note that fluctuates. He indicated it is the public that will have to accept it. 8:20:21 AM REPRESENTATIVE DRUMMOND observed that "this appears to be applied to plastic" and said she is used to "gold or ... metallic foils, in printing, being stamped onto paper." She asked, "How do you know there's gold in this, and how do you recover it from plastic, which melts when you apply heat to it?" REPRESENTATIVE MCCABE said he did not know, but was assured from a dealer that [the specie samples he had brought for the committee to view] were legitimate. In response to a follow-up question, he said the states that issue these accept them as legal tender. REPRESENTATIVE DRUMMOND noted the words "should the merchant or payee agree to accept it" in the sponsor statement and considered that since the value fluctuates, the burden to determine the value would fall on the merchant. REPRESENTATIVE MCCABE likened that to setting gas prices. 8:24:59 AM PAMELA LEARY, Director, Treasury Division, Department of Revenue, in response to a question from Representative McCarty regarding tax reporting in relation to species, said she does not know the tax ramifications but guessed that the value tendered would be the reported income value, as with any other currency. She said she would need to do some research to provide a definite answer to that question. 8:27:57 AM CO-CHAIR HANNAN asked Ms. Leary to also find out whether the states using species accept them for state tax purposes and how states are dealing with this within the states' treasuries. MS. LEARY responded that some of the states have gold repositories, so that may be how they are able to "accept that." She said she could do further research. 8:29:00 AM REPRESENTATIVE PRAX suggested Ms. Leary research Epperly v. Alaska. He said the federal reserve notes are "accepted" but "not constitutionally authorized." 8:30:44 AM REPRESENTATIVE DRUMMOND said she sensed this could present a problem to the recreational marijuana industry, which currently cannot be served by Alaska's financial institutions because of federal laws. 8:31:54 AM REPRESENTATIVE MCCABE countered that making species be legal tender would actually benefit the marijuana industry, because currently it cannot put its dollars in a bank, and dollars lose value. He said, "These wouldn't lose value because they're tied to gold." To Representative McCarty's question about taxes, he surmised that if [a merchant] brings in one dollar's worth in gold, and at the end of the year it is worth $20, then the merchant would have to [report that as taxable income] "much the same as you would with interest." He offered his understanding that the value of the dollar has gone down 30 percent in the last three years. In closing, he asked for the committee's support of HB 167 and indicated upcoming testimony and receipt of letters of report. 8:34:25 AM CO-CHAIR HANNAN announced that HB 167 was held over.