HOUSE FINANCE COMMITTEE May 2, 1998 4:50 P.M. TAPE HFC 98 - 144, Side 1 TAPE HFC 98 - 144, Side 2 CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 4:50 p.m. PRESENT Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Moses Representative Grussendorf Representative Mulder Representative Kelly Co-Chair Hanley and Representative Foster were absent from the vote. ALSO PRESENT Representative Joe Green; Jeff Logan, Staff, Representative Green; Alison Elgee, Deputy Commissioner, Department of Administration; Keith Gerken, Division of General Services, Department of Administration; Jack Kreinheder, Senior Policy Analyst, Office of Management and Budget, Office of the Governor. SUMMARY HB 452 "An Act relating to registration, disclosures, and reports by certain nonprofit corporations." CSHB 452 (JUD) was REPORTED out of Committee with "no recommendation" and with a zero fiscal note by the House Judiciary Committee. HB 463 "An Act establishing the Alaska public building fund; and providing for an effective date." HB 463 was REPORTED out of Committee with a "no recommendation" and with Office of the Governor, 3/19/98. HOUSE BILL NO. 452 "An Act relating to registration, disclosures, and reports by certain nonprofit corporations." JEFF LOGAN, STAFF, REPRESENTATIVE GREEN stated that HB 452 would require foreign or domestic public benefit corporations that receives an aggregate of $5.0 thousand dollars from other corporations to list all payments received. This information would be on a form provided by the Department of Commerce and Economic Development. It would include the amount and purpose of the contributions. If a corporation fails to comply the commissioner can dissolve the corporation, or revoke their certificate of authority to conduct business in the state of Alaska. He maintained that a large amount of money is coming into the state of Alaska and that it is targeted for participation in public policy decisions. The form would only be a couple of lines or boxes. REPRESENTATIVE JOE GREEN explained that organizations that receive less than $5.0 thousand dollars a year would have to file. Representative Martin questioned if the legislation would distinguish between charities and nonprofit groups. Mr. Logan stated that the legislation does differentiate between public benefit corporations and mutual benefit corporations. Representative Martin expressed concern that reporting requirements would negatively impact charities. Mr. Logan observed that only corporations that receive contributions from another corporation are required to report. Representative Grussendorf expressed concern that the legislation impacts first amendment rights. Representative Green emphasized that the legislation would make more readily available information that would be available to the public in a few years. He maintained that the legislation would not be an invasion of the right of privacy. Mr. Logan pointed out that the legislative drafter did not raise concerns regarding the legislation's constitutionality. Representative Kelly did not think that the legislation was onerous. In response to a question by Representative Martin, Mr. Logan clarified that not all 501C3 corporations will have to file the form developed by the Department. The legislation defines a public benefit corporation on page 3, line 4. Mr. Logan discussed page 3. He observed that "a public benefit corporation that is a domestic corporation or that is a foreign corporation transacting business in the state, and that received an aggregate of $5,000 or more during the 18 calendar year of the corporation from other corporations shall file with the department." He clarified that the Department of Commerce and Economic Development, Division of Corporations will handle the information. The Division of Corporations worked on the legislation. Co-Chair Therriault observed that the legislation states: "The report required under this section that is due the same year as the public benefit corporation's biennial report may be included in the biennial report." He questioned if a mailing would be done in preparation for the biennial report. Mr. Logan noted that the nonprofit corporations are divided into two portions. Half of the corporations get a mailing one-year and the other half would receive a mailing the next year. He estimated that it would cost $1,172.74 dollars to mail notifications. Representative Martin suggested that the Department of Revenue review the legislation. Mr. Logan noted that 4,756 nonprofit corporations have filed with the Division. He estimated that only 10 percent of this number would have to file with the legislation. Representative Kohring questioned the need for the legislation. Mr. Logan maintained that there is a large amount of cash flowing into the state of Alaska from outside private nonprofit foundations. Representative Kohring expressed concern with the affect of the legislation on business. Representative Kelly stressed that outside environmental groups have influenced regulations that affect Alaskan businesses. Representative G. Davis emphasized that the legislation is narrowly written. Co-Chair Therriault stated that if there are groups that are influencing or shaping Alaska policy that it is legitimate that Alaskans know where the funding is coming from. Representative Kelly MOVED to report CSHB 452 (JUD) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 452 (JUD) was REPORTED out of Committee with "no recommendation" and with a zero fiscal note by the House Judiciary Committee. HOUSE BILL NO. 463 "An Act establishing the Alaska public building fund; and providing for an effective date." ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION spoke in support of HB 463. She explained that the Department has been working to create a methodology that would allow them to charge agencies that occupy state owned buildings rent on the program level. The legislation would create the Alaska Public Building Fund. Collected rents would be deposited in the Fund. Operations and maintenance of state facilities would be appropriated by the legislature from the Fund. Monies in the Alaska Public Building Fund would not lapse at the end of the year. Renewal and replacement costs would be collected through the depreciation of the facility. This would allow a rent structure that can be collected over a period of years and spent in a capital fashion for items such as roof replacements. She stressed that rent on a program level will encourage accountability and allow other fund sources to be utilized. The federal government would need to approve the rent methodology for federal agencies through the Department of Health and Human Services. The Department would phase in the program. She explained that more money would be collected if federal programs were billed on the program level as a direct cost of operation. Co-Chair Therriault questioned if funding would be diverted from programs to pay the rent in cases where federal funding is capped. Ms. Elgee stated that it is a policy question that has not been resolved. (Tape Change, HFC 98 - 144, Side 2) Ms. Elgee stated that the Information Services Fund, which charges back computer operations, runs on a similar manner. Co-Chair Therriault expressed concern that the funds would be raided for other uses. Ms. Elgee stated that the problem has not occurred with the Information Services Fund. The Information Services Fund is set up with a three-year life expectancy. If money is not expended within the three-year period the Department is required to reduce charges in the subsequent year. The Alaska Public Building Fund would be setup in a similar manner. She estimated that the Fund would be created with a five-year turnaround. She explained that a rental charge would be budgeted for at the program level in the operating budget. Operation and maintenance costs would be shown under the Department of Transportation and Public Facilities or Department of Administration; depending on whom is managing the space. The funding source for these appropriations would be the Alaska Public Building Fund as the fund source. Capital projects would be proposed in the capital budget with the Alaska Public Building Fund as the fund source. These funds would fall under the other funds category. In response to a question by Representative G. Davis, Ms. Elgee explained that rent has three components. Operations and maintenance are annual expenditures. Renewal and replacement is collected in a rent structure by depreciating the building. There is also a component for administrative costs. The three components are combined into a rental rate. The agency would be billed based on their space allocation. Charges to the agencies would be deposited in the Alaska Public Building Fund. The legislature has to authorize appropriations from the Fund. The first expenditure that would be authorized is for rent. Then expenditures would be authorized for operations and maintenance in the operating budget. Authorization for capital replacement of building components would be shown in the capital budget. KEITH GERKEN, DIVISION OF GENERAL SERVICES, DEPARTMENT OF ADMINISTRATION observed that the legislation was modeled on other internal service funds in the state of Alaska. He observed that the Deferred Maintenance Task Force recommended program rent as a way to stabilize the fund source. He observed that other western states utilize the same concept. Co-Chair Therriault observed that Ms. McConnell indicated, in her letter dated 4/30/98, that the only time the State Equipment Fleet Fund was tapped by the legislature was in the mid 1980's when the price of oil crashed. There has not been a problem with raiding since the establishment of the Constitutional Budget Reserve Fund. Representative G. Davis MOVED to report HB 463 out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 463 was REPORTED out of Committee with a "no recommendation" and with Office of the Governor, 3/19/98. ADJOURNMENT The meeting adjourned at 5:45 p.m. House Finance Committee 5