Lawmakers' office accounts practice under review
JUNEAU (AP) — The practice of Alaska lawmakers being paid whatever remains in their office accounts is under review by a legislative committee, while two bills have been introduced that would dictate that any leftover money be returned to the state's general fund.
Previously, lawmakers had the option of letting the Legislative Affairs Agency administer the funds under an accountable plan, do it themselves in a non-accountable option or use a mixture.
In December, the Legislative Council decided all legislative accounts in 2013 would be administered as non-accountable after concerns were raised by a tax attorney and auditor.
Allowable expenses under accountable plans include travel for business, mailings, computers and office furnishings, cellphones for legislative business and membership or club dues. There are no rules about what is covered in unaccountable accounts beyond the expectation that lawmakers use the money for such expenses.
Rep. Mike Hawker, R-Anchorage, is the new chairman of the Legislative Council and is reviewing the December policy, made when he wasn't a committee member.
Hawker, who last year had the blended approach, said he's investigating options for office accounts and will bring those before the committee this year.
Jessica Geary, finance manager for Legislative Affairs, said historically a small number of lawmakers, maybe eight a year, wound up running the full amount through her office in the accountable plan. Some would cash-out early, request non-accountable draws through the year or have left-over money issued to them at the end of the year.
In an October memo, legislators were told that when expenses are run through accounting and any remaining funds after taxes are paid out, that could be viewed by the IRS as a "recharacterization of income," and cause "even the substantiated amounts to be taxable." A survey of lawmakers before the December meeting found the highest number, 25, choosing a non-accountable plan, with payments paid in a lump sum or quarterly and taxes and deductions taken out. Seventeen lawmakers favored an accountable plan, with any leftover going to the general fund. Six went with the third, blended option.
The Fairbanks Daily News-Miner, in a December editorial, called on the council to reverse its decision and go with the accountable option.
"Instead of adding the office allowance money to their paychecks, legislators should be required to submit bills or receipts for office expenses. At the end of each year, the money not spent should be returned to the general fund," the editorial states.
Bills to that effect have been introduced in the House and Senate. A sponsor of one of the bills, Rep. Scott Kawasaki, D-Fairbanks, ran all $16,000 he received last year through an accountable plan.
"When it's accountable, the public gets to see exactly what you're spending your money on, 100 percent," he said. "And if a person takes that money and says that they spend it on things, the only way you can compel that person to get that information about whether they're spending it on constituent work is to see their tax returns. And I don't know how many people are willing to release their tax returns."
Alaska representatives can get either $8,000 or $16,000 for their office accounts and senators, $10,000 or $20,000, their choice. Seven of the state's 60 lawmakers — five representatives and two senators — opted for the lesser amounts last year.
Rep. Les Gara, D-Anchorage, was among those, but took the higher amount this year because of the tax hit. By one estimate, as much as one-third of the total can go toward taxes, leaving legislators with less money to work with. Business cards can cost several hundred dollars, legislators say, and mailings, several thousand. Legislators themselves decide what kind of constituent outreach they have.
"I don't really think lots of people around here are cheating but it just creates a terrible public perception," Gara said.
Geary said she's heard the concerns that the policy change is amount to a pay increase for legislators. "There's no police officer going around and checking what they're actually spending the money on because, how would you? You can't do that," she said.
According to Legislative Affairs, eight lawmakers opted for non-accountable plans in 2012, while seven had all expenses run through the office. The rest had a blend and were allowed to cash-out early or take non-accountable draws during the year. The agency said 31 received non-accountable checks at the end of the year.
Some legislators who took non-accountable plans say it seems easier to manage the funds themselves. Sen. Kevin Meyer, R-Anchorage, said he has used his funds and some leftover campaign money to maintain communication with constituents.
Sen. John Coghill, R-North Pole, had about $16,700 left over last year, before taxes and withholding, which he said amounted to a "bump in my pay."
Currently, there's no option to return extra money to the state, said Coghill, who favors an accountable plan.
"I won't lie, it's nice to have a bump at the end of the year, but that's not the intention of this whole thing," said Coghill, who said he also had campaign money he used for business costs. "So get it under its intention and live with it."