The Alaska Legislature is to be commended for passing a bill this past session that will provide positive and long-lasting benefits to our state.
Senate Bill 236 increases incentives for state taxpayers to invest in Alaska's colleges, universities and vocational programs. Effective Jan. 1, 2011, state income tax payers will be eligible for a tax credit of 50 percent for contributions up to $100,000, a 100 percent credit for contributions between $100,000 and $300,000, and a 50 percent credit for contributions between $300,000 and $10 million. The bill also clarifies something that had not been clear in statute up to now, that contributions to facilities are eligible for the tax credit.
The bill produces a lot of winners. Alaska's students benefit from increased funding from and connections with future employers. Our educational institutions -- including the University of Alaska, APU, and a wide variety of public vocational/technical programs across the state -- benefit from increased financial support from the private sector. Businesses benefit from incentives to invest in the development of Alaskans for jobs in our companies. And the state benefits from increased private sector participation in funding important educational programs and facilities here in Alaska. At least 34 states across the country provide similar financial incentives for corporate contributions to higher education.
The bill amends current law, which caps a contributor's tax credits at just $150,000. The current program has been helpful, but the cap has resulted in relatively low participation by Alaska's major corporations. Whether the donor gives $200,000 or $20 million, the maximum tax credit is $150,000. Contrast this with some of the state's successful oil and gas exploration incentive tax credits, which approach 50 percent of the investment.
Supporters of the bill -- in government, higher education and the business community -- are confident that by making these improvements, we can leverage the state's investment in higher education programs and facilities with more private funds, build our workforce in Alaska to reduce the high cost of importing skilled labor to the state, diversify the revenues of our educational institutions, strengthen the application of research to the development of new businesses in Alaska and build stronger partnerships between employers and postsecondary institutions. We are confident that SB 236 will make a major contribution to our state's economic future.
The bill was sponsored in the Senate by the Education Committee -- co-chaired by Sens. Kevin Meyer (Anchorage) and Joe Thomas (Fairbanks) -- and in the House side by Reps. Kathy Munoz (Juneau), Mike Kelly (Fairbanks), Jay Ramras (Fairbanks), and Peggy Wilson (Southeast). The bill enjoyed nearly unanimous support from legislators representing every part of Alaska.
If SB 236 does indeed get enacted into law -- it is now on the governor's desk for final approval -- it will be up to our businesses and our education institutions to make this incentive work. We will need to come together to share interests, develop programs, provide resources, and deliver results that step-by-step will build our state's economy well into the future.
Jim Johnsen, Ed.D., is a senior vice president at Doyon Ltd., an Alaska Native regional corporation based in Fairbanks. He previously served in several executive positions at the University of Alaska and continues to serve higher education in Alaska as a member of the State Committee on Research and numerous other academic advisory councils.
By JIM JOHNSEN