HOUSE FINANCE COMMITTEE March 25, 2026 1:39 p.m. 1:39:36 PM CALL TO ORDER Co-Chair Foster called the House Finance Committee meeting to order at 1:39 p.m. MEMBERS PRESENT Representative Neal Foster, Co-Chair Representative Andy Josephson, Co-Chair Representative Calvin Schrage, Co-Chair Representative Jamie Allard Representative Jeremy Bynum Representative Alyse Galvin Representative Sara Hannan Representative Nellie Unangiq Jimmie Representative Elexie Moore Representative Will Stapp Representative Frank Tomaszewski MEMBERS ABSENT None ALSO PRESENT Brodie Anderson, Staff, Representative Neal Foster; Representative Andi Story, Sponsor. SUMMARY HB 21 VOTER PREREGISTRATION FOR MINORS CSHB 21(STA) was REPORTED out of committee with five "do pass" recommendations, one "do not pass" recommendation, and five "no recommendation" recommendations, and with one new fiscal impact note from the Department of Administration, and one new fiscal impact note from the Office of the Governor. HB 280 APPORTION TAXABLE INCOME;DIGITAL BUSINESS CSHB 280(FIN) was REPORTED out of committee with five "do pass" recommendations, one "do not pass" recommendation, two "no recommendation" recommendations, and three "amend" recommendations, and with one new fiscal impact note from the Department of Revenue. Co-Chair Foster reviewed the meeting agenda. HOUSE BILL NO. 280 "An Act relating to the Multistate Tax Compact; relating to apportionment of income to the state; relating to highly digitized businesses subject to the Alaska Net Income Tax Act; and providing for an effective date." 1:40:49 PM Co-Chair Foster noted that the committee had heard HB 280 six times and had taken invited and public testimony, reviewed the fiscal note, and received three amendments. He invited his staff to provide a brief recap of the bill. BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER, stated that the current bill version before the committee was version I. He explained that the bill incorporated recommendations from the Multistate Tax Compact (MTC) and changed Alaska's corporate tax structure to include market- based sourcing rather than the existing cost-of-performance model. He stated that market-based sourcing defined taxable activity based on sales of tangible property, intangible property, and services that were purchased by Alaskan consumers and delivered or used within the state. The bill included an effective date allowing the Department of Revenue (DOR) to adopt necessary regulations before implementation. 1:42:53 PM Co-Chair Schrage MOVED to ADOPT Amendment 1, 34-LS1349\I.1 (Nauman, 3/24/26) (copy on file): Page 1, line 2, following "state": Insert", including the apportionment of income of financial institutions" Page 20, following line 26: Insert a new bill section to read: "* Sec. 2. AS 43.20 is amended by adding a new section to article 2 to read: Sec. 43.20.147. Financial institutions. The department shall adopt regulations that require a taxpayer that is a financial institution to allocate and apportion income in accordance with, and that define "financial institution" in accordance with, the Formula for the Apportionment and Allocation of Net Income of Financial Institutions, as adopted by the Multistate Tax Commission on November 17, 1994, and as amended July 29, 2015." Renumber the following bill sections accordingly. Page 20, line 29: Delete "AS 43.19.010, as amended by sec. l of this Act," Insert "This Act" Co-Chair Foster OBJECTED for discussion. Co-Chair Schrage explained the amendment. He relayed that the bill aimed to modernize Alaska's corporate income tax system by capturing revenue from digital businesses with a limited physical presence in the state. He thought that the bill risked negatively affecting businesses that were already operating in Alaska and subject to the corporate income tax. He stated that the amendment addressed the concern by ensuring that certain financial activities, such as interest and investment income, would be treated appropriately within the sales factor calculation. He explained that the amendment directed DOR to adopt regulatory language consistent with approaches used in more than 20 other states, which would create a more nuanced framework for financial institutions. He emphasized that the amendment would allow the state to capture new revenue from digital businesses while avoiding unintended impacts on existing businesses in the state. He added that DOR had indicated during testimony that such an approach could be implemented through regulation. 1:45:20 PM Representative Stapp spoke in support of the amendment and noted that he was a co-sponsor of the amendment. He relayed that the amendment aligned the bill with requests from financial institutions, incorporated definitions from MTC into statute, and directed DOR to adopt corresponding regulations. Representative Galvin stated that she was not opposed to the amendment but questioned why the language was being placed in statute rather than left to regulation, given that the department had indicated it could address the issue administratively. She noted that the amendment appeared to have a minimal fiscal impact, reducing projected revenue by only a small amount, and asked for clarification on the rationale for codifying the change. Co-Chair Schrage agreed that DOR said it could accomplish the changes through regulation but the department needed guidance in order to do so. The amendment provided the necessary guidance by directing DOR to use language from MTC as the basis for regulatory changes. He emphasized that the amendment aligned with prior testimony and would have only a minimal impact on projected revenue. Co-Chair Foster WITHDREW the OBJECTION. There being NO further OBJECTION, Amendment 1 was ADOPTED. 1:47:41 PM AT EASE 1:48:00 PM RECONVENED Co-Chair Schrage MOVED to ADOPT Amendment 2, 34-LS1349\I.2 (Nauman, 3/23/26) (copy on file): Page 1, line 2, following "state": Insert ", including the apportionment of income of telecommunications service providers" Page 20, following line 26: Insert a new bill section to read: "* Sec. 2. AS 43.20 is amended by adding a new section to article 2 to read: Sec. 43.20.147. Telecommunications service providers. (a) All business 9 income of a taxpayer that is a telecommunications service provider shall be apportioned to this state in accordance with AS 43.19 (Multistate Tax Compact) as modified by this section. (b) For the purposes of calculating the sales factor for a telecommunications service provider, sales of the telecommunications service provider, other than sales of tangible personal property described in art. IV, sec. 16 of AS 43.19 (Multistate Tax Compact), are in this state if (1) the income-producing activity is performed in this state; or (2) the income-producing activity is performed both in and outside of 18 this state and a greater portion of the income- producing activity is performed in this state than in any other state based on costs of performance. (c) In this section, "telecommunications service provider" includes a mobile telecommunications service provider." Renumber the following bill sections accordingly. Page 20, line 29: Delete "AS 43.19.010, as amended by sec. l of this Act," Insert "This Act" Co-Chair Foster OBJECTED for discussion. Co-Chair Schrage explained that Amendment 2 addressed similar concerns as Amendment 1 but focused on the telecommunications industry. He noted that telecommunications companies currently operating in Alaska relied on the cost-of-performance method under the existing tax structure. He stated that the shift to market-based sourcing could have unintended negative impacts on companies. He explained that Amendment 2 also directed DOR to adopt regulatory language based on MTC to facilitate a more tailored and appropriate treatment of telecommunications activities. He emphasized that the goal was to avoid unintended consequences while still modernizing the tax system. Representative Stapp spoke in support of the amendment and noted that it aligned telecommunications definitions with MTC in a streamlined manner. He added that he had also co- sponsored Amendment 2. Co-Chair Foster WITHDREW the OBJECTION. There being NO further OBJECTION, Amendment 2 was ADOPTED. 1:50:12 PM Representative Hannan MOVED to ADOPT Amendment 3, 34- LS1349\I.3 (Nauman, 3/24/26) (copy on file): Page 1, line 2, following "state": Insert ", including the apportionment of income of broadcasters" Page 20, following line 26: Insert a new bill section to read: "* Sec. 2. AS 43.20 is amended by adding a new section to article 2 to read: Sec. 43 .20.147. Broadcasters. (a) All business income of a taxpayer that is a broadcaster shall be apportioned to this state in accordance with AS 43.19 (Multistate Tax Compact) as modified by this section. (b) For the purposes of calculating the sales factor for a broadcaster, income from the sale of advertising or licensing fees that arises from the broadcast or distribution of film programming are in this state if the domicile of the broadcast customer is in the state. The domicile of a commercial broadcast customer is the principal place from which the trade or business of the customer is directed or managed. The domicile of a noncommercial broadcast customer is the address of the customer listed in the records of the broadcaster. (c) In this section, (1) "broadcaster" means a taxpayer that is a television broadcast network, a cable program network, or a platform distribution company; (2) "income from the sale of adve1iising" means income resulting from the sale of advertising content in the film programming of the broadcaster." Renumber the following bill sections accordingly. Page 20, line 29: Delete "AS 43.19.010, as amended by sec. 1 of this Act," Insert "This Act" Co-Chair Foster OBJECTED for discussion. Representative Hannan explained that Amendment 3 addressed the broadcasting industry and was similar in intent to the previous amendments. She stated that the amendment aimed to prevent unintended impacts on existing taxpayers while aligning with MTC principles. She relayed that current law used an audience-based method to apportion income for broadcasters. The amendment would transition to a customer location method, which would produce more accurate information. She outlined three types of customers in the broadcasting industry: direct-to-consumer subscribers, third-party distributors licensing content, and advertisers purchasing commercial space. The customer location method would provide a more precise basis for taxation. She noted that 14 other states had already adopted similar approaches. She added that the change would also improve auditability for DOR and make it easier for the tax division to conduct audits. Co-Chair Foster WITHDREW the OBJECTION. 1:52:20 PM Representative Stapp OBJECTED. He was not swayed by the previous testimony by the broadcasters and he did not fully understand the issue related to location. He questioned why market-based sourcing would not already address concerns regarding audience and advertising definitions. He remarked that when he did not understand an issue, his default position was to oppose it, although he indicated he would not be concerned if the amendment ultimately passed. Co-Chair Foster asked whether there was further discussion. Representative Allard stated that she would wait to comment until after Representative Stapp withdrew his objection. Co-Chair Foster indicated that he did not think Representative Stapp intended to withdraw his objection. Representative Stapp MAINTAINED the OBJECTION. 1:53:20 PM A roll call vote was taken on the motion. IN FAVOR: Galvin, Moore, Hannan, Jimmie, Josephson, Foster OPPOSED: Allard, Stapp, Bynum, Tomaszewski, Schrage The MOTION PASSED (6/5). There being NO OBJECTION, Amendment 3 was ADOPTED. 1:54:17 PM Co-Chair Schrage MOVED to REPORT CSHB 280(FIN) out of committee with individual recommendations and the accompanying fiscal notes. Representative Allard OBJECTED. 1:54:55 PM A roll call vote was taken on the motion. IN FAVOR: Jimmie, Galvin, Hannan, Bynum, Josephson, Schrage, Foster OPPOSED: Allard, Stapp, Moore, Tomaszewski The MOTION PASSED (7/4). There being NO further OBJECTION, CSHB 280(FIN) was REPORTED out of committee with five "do pass" recommendations, one "do not pass" recommendation, two "no recommendation" recommendations, and three "amend" recommendations, and with one new fiscal impact note from the Department of Revenue. 1:56:06 PM HOUSE BILL NO. 21 "An Act relating to voter preregistration for minors at least 16 years of age; and relating to confidentiality of voter registration and preregistration records of minors at least 16 years of age." REPRESENTATIVE ANDI STORY, SPONSOR, gave an overview of the bill. She thought the legislature had a responsibility to protect democracy and take intentional steps to prepare the next generation for civic participation. She explained that HB 21 would allow 16-year-olds and 17-year-olds to preregister to vote with the goal of improving registration rates once individuals became eligible voters. The bill was similar to policies adopted in approximately 20 other states. Representative Story explained that the bill required the Division of Elections (DOE) to send a prepaid confirmation card to preregistered applicants three months prior to their eighteenth birthday. Once the address was confirmed, individuals would be automatically registered to vote upon turning 18. She emphasized that the bill included privacy protections by keeping minors' addresses and phone numbers confidential until they reached adulthood. Representative Allard asked Co-Chair Foster if it was his intent to move the bill from committee that day. Co-Chair Foster responded that the bill would be moved only if it was the will of the committee. He noted that the bill could be held if additional information was needed. 1:58:08 PM Co-Chair Schrage MOVED to REPORT HB 21 out of committee with individual recommendations and the accompanying fiscal notes. Representative Allard OBJECTED. Representative Stapp OBJECTED. Representative Stapp asserted that data supporting preregistration benefits was limited. He noted that the bill had a fiscal impact and questioned whether the bill was necessary. Representative Allard expressed concern regarding the cost of the bill and election system security. She emphasized that the bill applied to minors and expressed a lack of confidence in current systems to protect their information. Representative Hannan relayed that she was in support of the bill. She explained that minors could already register to vote within 90 days of turning 18 and emphasized the importance of civic engagement at a young age. She stated that preregistration could encourage long-term voting habits and help young people develop the knowledge and skills necessary for participation in a representative democracy. Representative Bynum stated that he was not in support of the bill. He acknowledged that the intent was to increase youth engagement but thought that existing efforts already addressed civic education and participation. Co-Chair Josephson spoke in support of the bill. He noted that two teenagers had recently provided testimony before the committee, which demonstrated to him that young people were engaging meaningfully with public issues. The testimony reminded him that there was wisdom in young people. He stated that preregistration could encourage earlier involvement in civic life, including following current events, discussing issues, and participating in community activities. He indicated that he would vote in favor of the bill. Representative Galvin agreed with Co-Chair Josephson's comments. She added that research out of the University of Chicago and Mississippi State University suggested that preregistration had a measurable impact on voter turnout. She emphasized that increased voter participation strengthened democracy and expressed support for the bill. Representative Stapp MAINTAINED the OBJECTION. 2:02:16 PM A roll call vote was taken on the motion. IN FAVOR: Hannan, Galvin, Jimmie, Schrage, Josephson, Foster OPPOSED: Tomaszewski, Bynum, Moore, Allard, Stapp The MOTION PASSED (6/5). There being NO further OBJECTION, CSHB 21(STA) was REPORTED out of committee with five "do pass" recommendations, one "do not pass" recommendation, and five "no recommendation" recommendations, and with one new fiscal impact note from the Department of Administration, and one new fiscal impact note from the Office of the Governor. 2:03:33 PM Co-Chair Foster invited the sponsor to make any closing comments. Representative Story thanked the committee and expressed appreciation for the questions raised during the process. She stated that she hoped the conversation regarding the bill would continue. 2:03:46 PM Co-Chair Foster reviewed the agenda for the following day. ADJOURNMENT 2:04:08 PM The meeting was adjourned at 2:04 p.m.