Sponsor Statement for SB 241

In 1991, the Legislature expanded the tax credit program for contributions to post-secondary institutions. This program is applicable primarily to the state's largest taxpayers, such as, oil companies and banks.

The credit available is 50% of the first $100,000 contributed and 100% of the next $100,000. The maximum tax credit is therefore, $150,000 per tax year.

In limiting the educational institutions eligible for the contributions, the Legislature stipulated that the institution must be regionally accredited, which is common among educational institutions. The regional association for Alaska is the Northwest Association of Schools & Colleges (NASC). The Alaska institutions accredited by this organization are the University of Alaska, Alaska Pacific University, and Sheldon Jackson College.

Unfortunately, the tax credit law excludes many potential donors and institutions from participation, due to the requirement of regional instead of national accreditation. Several institutions in Alaska have national but not regional accreditation. The Alaska Commission on Post-Secondary Education (ACPE) considers these institutions to be the same as regionally accredited institutions in the administration of the student loan program. Accrediting standards are comparable. However, the Department of Revenue will not allow the claim for tax credit for donations made to nationally accredited institutions unless existing law is changed.

According to the Department of Revenue, 29 taxpayers claimed the credit in 1996 and 28 in 1997. The filings have not been completed for 1998. The total credits allowed for 1996 and 1997 were $3,249,812 and $3,001,335, respectively.

Revising the restrictions on accreditation probably will not affect the total amount of the credit claimed against potential state revenues; it will simply allow additional institutions to qualify.

SB 241 creates greater equity in the tax credit program; encourages contributions by new contributors; and still protects legislative intent for limiting credits to qualifying institutions.