SB 92-PFD CONTRIBUTIONS TO GENERAL FUND  3:37:13 PM CHAIR SHOWER announced the consideration of SENATE BILL NO. 92 "An Act relating to contributions from permanent fund dividends to the general fund." He recapped that the bill was first heard on 4/4/19 and public testimony was heard and closed. He noted there was a proposed committee substitute. 3:37:28 PM SENATOR COGHILL moved to adopt the committee substitute (CS) for SB 92, work order 31-LS0703\M, as the working document. CHAIR SHOWER objected for discussion purposes. 3:38:04 PM SENATOR DAVID WILSON, Alaska State Legislature, Juneau, sponsor of SB 92 explained that the CS intends to clarify the intent of the bill. It removes language from AS 43.23.130 dealing with Pick.Click.Give. and adds Sec. 43.23.135 relating to contributions to the general fund and creates a mechanism for donations to the general fund. He explained that Title 43 is the revenue and taxation statute and chapter 23 deals with the permanent fund dividend (PFD). He said the CS creates a separate button on the electronic application to clarify that this option is not intended to compete with any charitable donations of the Pick.Click.Give program. SENATOR WILSON reviewed the following "Explanation of Proposed Changes Version A to Version M.": Section 1: All material from Page 1, line 3, through page 3, line 6, is deleted. It is replaced with a new section of law "Sec. AS 43.23.135. Contributions to the General Fund" • Part (a) o Defines the parameters and increments for contributing to the general fund, o Establishes that donations through Pick.Click.Give. take priority over donations to the general fund if there is a shortfall, and; o Requires a seven percent administration fee is deducted from donations to the general fund. • Part (b) o Notes that a public agency that claims a dividend on an individual's behalf is not permitted to make contributions from that dividend. • Part (c) o Explicitly states that this is separate from the Pick.Click.Give. "button" or mechanism in the dividend application. 3:40:51 PM CHAIR SHOWER removed his objection. Finding no further objection, version M was adopted. 3:41:19 PM SENATOR COGHILL asked for confirmation that returning all or part of one's dividend to the state general fund would not be tax free. SENATOR WILSON agreed that at this time there is no escaping the tax. He noted the Legislative Legal opinion last year. 3:41:49 PM At ease 3:42:40 PM CHAIR SHOWER reconvened the meeting. SENATOR WILSON said the Legislative Legal Services memo last year advised that there is no simple solution to make dividend contributions to the general fund nontaxable. He suggested contacting a tax professional on the best way to proceed. SENATOR COGHILL said he wanted the record to be clear that this donation would not be tax free. He also expressed appreciation that the sponsor addressed the confusion associated with the Pick.Click.Give program. 3:44:00 PM SENATOR REINBOLD stated support for the statutory PFD and emphasized the importance of understanding that Alaskans receive the dividend because the state holds the subsurface rights in Alaska. She said most of the people in her district want their dividend if they don't have subsurface rights. She offered her perspective that teachers and public employees typically say, "take my permanent fund dividend and tax me." SB 92 provides that opportunity. She described the bill as a good compromise and said she would probably be a [cosponsor]. 3:45:48 PM SENATOR MICCICHE referenced the Legislative Legal Services memo and observed that it appears that this donation could be tax free. He said he'll look at that further as the bill moves on to the finance committee. His interest is keeping all the money in the state instead of sending 30 percent of the donation to the federal government in tax. [That assumes the 30 percent tax bracket.] CHAIR SHOWER stated support for the bill. Based on public testimony he expects people to donate between $400 million and $500 million of their dividends to the general fund. SENATOR WILSON commented on a conversation he had with a committee member about having the same idea at the same time. 3:48:44 PM SENATOR COGHILL moved to report [CSSB 92(STA)], version M, from committee with individual recommendations and [forthcoming] fiscal note(s). CHAIR SHOWER stated that without objection, CSSB 92(STA) moved from the Senate State Affairs Standing Committee.