Legislature(2017 - 2018)BUTROVICH 205

01/30/2018 03:30 PM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 8 PFD CONTRIBUTIONS TO TRIBAL GOVERNMENTS TELECONFERENCED
Moved CSSB 8(STA) Out of Committee
*+ SB 154 PFD CONTRIBUTIONS TO GENERAL FUND TELECONFERENCED
Moved SB 154 Out of Committee
*+ SB 130 VOTER APPROVAL FOR NEW TAXES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
            SB 154-PFD CONTRIBUTIONS TO GENERAL FUND                                                                        
                                                                                                                                
3:44:42 PM                                                                                                                    
CHAIR MEYER called the committee  back to order and announced the                                                               
consideration of SB 154.                                                                                                        
                                                                                                                                
3:45:06 PM                                                                                                                    
SENATOR   WILSON,  Alaska   State   Legislature,  bill   sponsor,                                                               
explained that  SB 154 would  allow Alaskans  to donate all  or a                                                               
portion of  their PFD  directly to the  state's general  fund. He                                                               
said  the bill  would provide  those Alaskans  who would  like to                                                               
donate to  the state's general  fund a method and  an opportunity                                                               
to do so  through the Pick.Click.Give program.  He explained that                                                               
the  Alaska  Department  of  Administration   has  said  the  PFD                                                               
donation process  to the state would  be tax exempt and  could be                                                               
used to provide tax relief, reduce  the rates, and allow to "Only                                                               
tax  the other  portion of  their items."  He disclosed  that any                                                               
other cash donation to the general  fund would be exempt from the                                                               
7-percent coordination or  would not be required to  pay the $250                                                               
fee. He  added that the  "children protection piece" for  the PFD                                                               
already exists in statute.                                                                                                      
                                                                                                                                
3:46:53 PM                                                                                                                    
GARY  ZEPP,  Staff,  Senator Wilson,  Alaska  State  Legislature,                                                               
Juneau,  Alaska, provided  a  sectional analysis  for  SB 154  as                                                               
follows:                                                                                                                        
                                                                                                                                
     Section 1:                                                                                                             
     Amends AS  43.23.062(a) by adding  to the  general fund                                                                    
     and "the  general fund" to allow  contribution from the                                                                    
     electronic Alaska Permanent Fund  dividend to the state                                                                    
     general fund.                                                                                                              
                                                                                                                                
     Section 2:                                                                                                             
     Amends  AS 43.23.062(b)  to add  "general fund"  to the                                                                    
     list   of  organizations,   community  foundations   or                                                                    
     charitable organizations  eligible to  be added  to the                                                                    
     contributions list.                                                                                                        
                                                                                                                                
     Section 3:                                                                                                             
     Amends AS  43.23.062(m) by adding "general  fund" or to                                                                    
     the  list   of  organizations   that  do  not   have  a                                                                    
     coordination fee withheld.                                                                                                 
                                                                                                                                
MR.  ZEPP  noted  that  a  zero  fiscal  note  was  submitted  by                                                               
Centralized Administrative  Services-Finance Division, Department                                                               
of Administration.  He detailed the  second fiscal note  from the                                                               
Permanent   Fund  Dividend   Division,  Taxation   and  Treasury,                                                               
Department of Revenue as follows:                                                                                               
                                                                                                                                
   • FY2019: $20300 for programming to establish and administer                                                                 
     new process.                                                                                                               
 • FY2020 and beyond: $10000 annually to administer program.                                                                    
                                                                                                                                
3:51:15 PM                                                                                                                    
SENATOR WILSON emphasized  that the intent of  the legislation is                                                               
not to politicize the Pick.Click.Give program.                                                                                  
                                                                                                                                
CHAIR MEYER asked  if the bill should have a  fiscal note showing                                                               
some revenue to the general fund.                                                                                               
                                                                                                                                
SENATOR  WILSON  explained  that   the  statute  does  not  allow                                                               
donations to be  used to help offset the cost  of the program. He                                                               
said his  office has met with  the Department of Revenue  to look                                                               
at ways  to offset the ongoing  cost. He noted that  an amendment                                                               
could  be  introduced  where  a percentage  fee  from  the  first                                                               
donation could be used to offset some of the reoccurring cost.                                                                  
                                                                                                                                
CHAIR MEYER assumed  that somebody could write a  $1,500 check to                                                               
the State of Alaska if they wanted too.                                                                                         
                                                                                                                                
SENATOR WILSON answered correct.                                                                                                
                                                                                                                                
CHAIR  MEYER asked  if the  legislation would  save the  taxes by                                                               
having it taken off the PFD.                                                                                                    
                                                                                                                                
SENATOR WILSON specified that the  intent was to ease the process                                                               
for Alaskans. He  added that the transaction would also  be a tax                                                               
deduction.                                                                                                                      
                                                                                                                                
3:53:13 PM                                                                                                                    
MR. ZEPP  noted that Senator  Wilson's office will work  with The                                                               
Alaska  Community   Foundation  to  address   potential  concerns                                                               
regarding donor  competition and work  on messaging to  make sure                                                               
folks understand the difference of their donations.                                                                             
                                                                                                                                
SENATOR GIESSEL  pointed out that  a PFD  must be declared  on an                                                               
individual's  income report  to the  IRS. She  asked if  donating                                                               
directly to the general fund would bypass IRS notification.                                                                     
                                                                                                                                
MR. ZEPP  emphasized that he is  not a tax consultant  but opined                                                               
that  donating  a  PFD  to  the general  fund  would  bypass  IRS                                                               
notification.                                                                                                                   
                                                                                                                                
SENATOR  GIESSEL replied  that she  was surprised  by Mr.  Zepp's                                                               
answer.                                                                                                                         
                                                                                                                                
MR.  ZEPP  disclosed that  the  executive  branch classified  the                                                               
donation as charitable.                                                                                                         
                                                                                                                                
SENATOR GIESSEL  pointed out  that the  proper definition  is the                                                               
donation  is  tax  deductible but  nevertheless  income  that  an                                                               
individual will be taxed on.                                                                                                    
                                                                                                                                
MR. ZEPP answered that he believed so.                                                                                          
                                                                                                                                
3:54:53 PM                                                                                                                    
SARA  RACE, Director,  Permanent Fund  Dividend Division,  Alaska                                                               
Department of Revenue,  Juneau, Alaska, noted that she  was not a                                                               
tax professional  but opined  that once a  dividend is  issued it                                                               
becomes income; however, a contribution  back to the state can be                                                               
used  as an  itemized deduction  just  like a  contribution to  a                                                               
nonprofit.                                                                                                                      
                                                                                                                                
3:55:23 PM                                                                                                                    
CHAIR MEYER opened public testimony.                                                                                            
                                                                                                                                
SENATOR  WILSON  asked what  happens  if  an individual  declines                                                               
their PFD.                                                                                                                      
                                                                                                                                
MS.  RACE  assumed that  an  individual  would  not apply  for  a                                                               
voluntary program;  however, she  noted that  there is  an option                                                               
available for somebody  that decided to sign  over their dividend                                                               
or  write a  check  back to  the  state and  the  funds would  be                                                               
deposited into the  general fund. She disclosed that  there are a                                                               
couple  of individuals  every year  that call  the Department  of                                                               
Revenue and go through the process of returning their PFD.                                                                      
                                                                                                                                
CHAIR MEYER asked  Ms. Race if she had any  other comments on the                                                               
division's fiscal note.                                                                                                         
                                                                                                                                
MS. RACE  explained that the  administrative costs taken  on from                                                               
SB 154  ends up being different  because there is a  statute that                                                               
says  that the  department cannot  use operating  funds from  the                                                               
dividend  fund  to  administer the  Pick.Click.Give  program,  so                                                               
without the 7-percent fee being  taken off for an application fee                                                               
that is why a fiscal note was included.                                                                                         
                                                                                                                                
3:57:24 PM                                                                                                                    
NINA KEMPPEL,  President & CEO, The  Alaska Community Foundation,                                                               
Anchorage,  Alaska,  noted  the success  of  the  Pick.Click.Give                                                               
program   and  thanked   the  Legislature   for  developing   and                                                               
continually  refining the  program. She  disclosed that  over $20                                                               
million  has  been  raised  in charitable  giving  for  over  700                                                               
charitable organizations.                                                                                                       
                                                                                                                                
She remarked  that the  Pick.Click.Give program  faces challenges                                                               
due to the uncertainty around  the permanent fund and the state's                                                               
near-term  finances.   She  disclosed  that  the   program  finds                                                               
attracting  new  donors to  be  harder.  She explained  that  the                                                               
original intent of  the Pick.Click.Give program was to  be a tool                                                               
for  the   nonprofit  sector  to   be  able  to   increase  their                                                               
unrestricted  charitable donations.  She added  that the  program                                                               
was  also   intended  to   assist  charitable   organizations  in                                                               
cultivating new  and existing relationships with  their donors as                                                               
well as increasing the impact of Alaska's nonprofit sector.                                                                     
                                                                                                                                
4:00:08 PM                                                                                                                    
MS. KEMPPEL said The Alaska  Community Foundation sees the merits                                                               
of  SB  154   but  noted  the  foundation's   concerns  with  the                                                               
legislation  where the  charitable  intention of  Pick.Click.Give                                                               
will be "watering  down" as well as causing  confusion about what                                                               
is a  charitable organization by  bringing in a new  element into                                                               
the program.  She opined that  the legislation opens the  door to                                                               
anyone joining  the program outside of  charitable organizations.                                                               
She said the  foundation's final concern pertains  to the general                                                               
fund  not having  to contribute  towards the  program's 7-percent                                                               
administrative fee  and that may  lead to a  public misperception                                                               
regarding the program's low-overhead-number administrative fee.                                                                 
                                                                                                                                
SENATOR  GIESSEL asked  Ms. Kemppel  if charitable  organizations                                                               
are defined as 501(c)(3).                                                                                                       
                                                                                                                                
MS.   KEMPPEL   replied   yes,  except   for   some   educational                                                               
organizations such as the university.                                                                                           
                                                                                                                                
4:02:47 PM                                                                                                                    
PAMELA LEARY,  Director, Treasury Division, Alaska  Department of                                                               
Revenue, Juneau,  Alaska, said the  only impact from the  bill in                                                               
terms  of processes  is  that there  will be  more  money in  the                                                               
general fund to go towards the state's operating cost.                                                                          
                                                                                                                                
SENATOR GIESSEL  asked how many  people routinely give  their PFD                                                               
back,  how much  revenue is  generated, and  how many  more might                                                               
return their PFD if SB 154 is passed.                                                                                           
                                                                                                                                
MS.  LEARY replied  that she  did not  know. She  noted that  the                                                               
bill's intent will provide a  process should an individual decide                                                               
to return their PFD.                                                                                                            
                                                                                                                                
CHAIR  MEYER  asked if  a  person  could  write  a check  to  the                                                               
"treasury or  revenue" if a person  wanted to give $10000  to the                                                               
state government because Alaska does not have an income tax.                                                                    
                                                                                                                                
4:04:39 PM                                                                                                                    
MS. LEARY  answered yes. She  explained that an  individual could                                                               
write a check to the "State  of Alaska." She noted that the money                                                               
is sent to the general fund.                                                                                                    
                                                                                                                                
CHAIR MEYER  asked if  an individual can  request that  the money                                                               
specifically go to education.                                                                                                   
                                                                                                                                
MS. LEARY replied that she is  not sure the money can go anywhere                                                               
other than the general fund.                                                                                                    
                                                                                                                                
4:06:34 PM                                                                                                                    
CHAIR MEYER closed public testimony.                                                                                            
                                                                                                                                
SENATOR WILSON  noted that  he would like  to offer  an amendment                                                               
either  in  the  Senate  State  Affairs  Committee  or  the  next                                                               
committee of referral.  He explained that his intent  is to lower                                                               
the fiscal note's ongoing costs and  figure out ways to make sure                                                               
the  process  is  easy without  burdening  additional  charitable                                                               
giving.                                                                                                                         
                                                                                                                                
CHAIR MEYER  noted that Senate  Finance is the next  committee of                                                               
referral, an  appropriate venue for  Senator Wilson to  offer his                                                               
amendment. He remarked that SB 154  is a good mechanism for those                                                               
that want to give their PFD back to the state.                                                                                  
                                                                                                                                
4:08:11 PM                                                                                                                    
SENATOR GIESSEL moved to report  SB 154, version 30-LS0081\D from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
4:08:21 PM                                                                                                                    
CHAIR MEYER said there being no objection, the motion carried.                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB - 8 Sponsor Statement.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Version A.PDF SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Sectional Analysis.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Support Letter Native Village of Afognak.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Support Letter Woody Island Tribal Council.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 8 - Fiscal Note Updated 2018.pdf SSTA 1/30/2018 3:30:00 PM
SB 8
SB 154 - Sponsor Statement.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Version D.PDF SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Sectional Analysis, ver D.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Invited-Expert Testimony Summary.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Fiscal Note DOA.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - Fiscal Note DOR PFD.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 130 Sponsor Statement .pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Version A.PDF SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Legal Memo 11.20.2017.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Letter of Support NFIB.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 130 Fiscal Note DoE.pdf SSTA 1/30/2018 3:30:00 PM
SB 130
SB 154 - PickClickGive Flowchart.pdf SSTA 1/30/2018 3:30:00 PM
SB 154
SB 154 - PickClickGive Program Overview.pdf SSTA 1/30/2018 3:30:00 PM
SB 154