Commissioner: Wilson Condon
Tel: (907) 465-2300   Fax: (907) 465-2389  

Administrative Services Director: Mike E. Maher
Tel: (907) 465-2312   Fax: (907) 465-1685

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The Department of Revenue's mission is to collect, manage, invest and distribute taxes, revenues and child support payments; to oversee the state's charitable gaming laws; and to provide administrative support to the boards, corporations and authorities within the department by statute.

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Major North Slope oil and gas property taxpayers have notified the department that they will contest the state's assessment of their oil and gas production and transportation facilities at the Kuparuk and Prudhoe Bay fields.  The department's job is to ensure that the state's interests in assessing the property at full and fair market value are protected.

Streamline the oil and gas severance tax process, including a goal of achieving total electronic filing by taxpayers and reducing the time and resources required for audits.

The division has embarked on a program of revising its regulations and changing its process for determining the accuracy of each return.  The goals are to provide clear, up-to-date instructions to enable taxpayers to correctly calculate their returns, resulting in lowering the personnel resources required to solve routine issues.  The goals also include retaining the department's ability to thoroughly review the business of any taxpayer to determine the accuracy of their tax assessment.

The electronic filing project is a critical part of this program.  The existing system of severance tax returns generates a stack of paper close to a foot thick each month.  The department will work with taxpayers to accept returns on a monthly CD disk.

The first phase of the new regulations is slated to take effect January 1, 2000.  This will allow us to provide frequent, contemporaneous benchchecks for severance taxpayers rather than waiting for audit issues several years down the road.  We have started the next phase of regulatory rewriting, and hope to complete it in time to take effect January 1, 2001.
 

Continue to increase compliance and monitoring of state motor fuel taxes and tobacco taxes.

  The department will continue its initiative to notify purchasers of untaxed cigarettes of their state tobacco tax liability in Alaska.  We will use public awareness campaigns to educate consumers about their tax liability for purchasing untaxed cigarettes from out-of-state vendors.

Using partial funding from the federal government, the department will step up its compliance monitoring efforts of diesel fuel sales believed to be erroneously claimed for untaxed, off-road use.

Increase the use of Internet technology to better serve the public.

The department in 2000 will begin offering Alaskans the option of filing for their Permanent Fund Dividends on line, with only a signature required on a form mailed to the department to complete their application.  The department is exploring options for eliminating the need for a paper signature and accepting the entire application on line with an electronic signature.

The department also will start storing dividend application files as electronic images for the 2000 dividend year, eliminating the need to store paper files.  We will continue building on the imaging project in 2001 by using optical character recognition technology to eliminate the need to manually key in applicants' information from their forms.

Eliminate all case backlogs at the Child Support Enforcement Division.

By redirecting staff assignments, adopting streamlined procedures and setting up teams of temporary workers (which will probably be requested in a FY2000 supplemental appropriation for a special backlog project), the department plans to eliminate the backlog of casework that has plagued the child support division for years. 
 

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Child Support Enforcement

Continued to improve the CSED computer system, including implementing electronic transfer of receipts and payments.
Initiated automatic withholding orders.
Initiated the Review and Adjustment System Demonstration Project.
Expanded the new hire-reporting program to comply with federal requirements.
Funded a visitation and custody program through the court system to provide mediation in child support and custody issues.
Began a program to prosecute parents who are not paying child support even though they have the means.
Linked up to the Federal Case Registry to help locate parents nationwide.
Began a program with local police departments where they call CSED when they have arrested someone to see if the prisoner has a child support case. If there is a case, CSED will send an order to withhold property to the police department.

Alcoholic Beverage Control Board

Resolved 100% of civil accusations by imposing ABC Board sanctions.
Conducted inspections in remote areas of Alaska and conducted 244 premise inspections with limited travel and personnel resources.
Processed license applications within the 90-day statutory window 100% of the time.
Prepared Policy and Procedures Manual for ABC Enforcement operations.

Municipal Bond Bank Authority

Sold four bond issues.

Permanent Fund Corporation

Produced over $2.5 billion in net income resulting in a Fund valued at $26.5 billion.
Achieved a real total rate of return of 7.95%.
Increased investment diversification by funding of emerging markets mandate and restructuring of equity and real estate portfolios.

Alaska Housing Finance Corporation

Received a 100% score for the fourth year in a row for HUD's Public Housing Management Assessment Program (PHMAP).
Received awards from the U.S. Departments of Housing and Urban Development and Energy, the National Council of State Housing Agencies, the Pacific Northwest Regional Council and the National Association of Housing & Redevelopment Officials.
Finished 45 units at Riverbend.
Received a STRONG ranking with STABLE outlook from Standard & Poor's Public Housing Authority Evaluation.
Expanded website to include more information and notices, applications, and financial statements. The website received the highest possible rating (4*) from MuniNet Guide & Review.
Reduced required documentation and streamlined procedures for loan commitments and purchases and worked toward implementing electronic submission of loan files.

Alaska Mental Health Trust Authority

Used Trust land and income for a plan to downsize and build the new state psychiatric hospital while improving the Southcentral community-based services to absorb the downsized patient beds.
Used Trust income to leverage other funds and to make a coordinated effort at establishing or improving beneficiary housing, transportation services, quality assurance, community telepsychiatry, and employment initiatives. Trust dollars also leveraged funds for direct service provider training, the women's substance abuse treatment in the Department of Corrections, domiciliary care, fetal alcohol effects and syndrome, the children's care coordination services, and a mental health consumer affairs program.

Revenue Operations

Developed and implemented electronic filing for revenue tax collection through Automated Clearing House.
Increased compliance and audit coverage in the areas of motor fuel and tobacco tax.
Continued to expand the quality and quantity of tax forms and revenue projections on our Internet website.
Emphasized compliance in charitable gaming, specifically in the multiple beneficiary area.
Completed auditing all production tax returns for years through 1995.
Worked with Department of Law on extensive analysis of many aspects of proposed acquisition of Arco by BP.
Completed work on new regulations package concerning tax on gas and gas liquids (adopted in FY 2000).
Successfully negotiated a two year agreement on value for the Trans Alaska Pipeline system (TAPS) with the pipeline owners, and the municipalities and boroughs along TAPS.
Worked with the Office of Management and Budget and the Legislative Finance Division to rework the presentation of the total state revenue picture in the presentation of the Revenue Sources forecast.
Successfully resolved a number of small, older appeals cases; in addition, several newly issued audits were resolved shortly after the assessments were issued.
Successfully closed the final separate income tax case (AS 43.21; repealed 1981).
All invested funds met their target rates of return.
Financed $25 million revenue bond for the terminal redevelopment project at the Anchorage International Airport.
Continued progress on automation of collection of State receipts via Automated Clearing House.
ASPIB added an externally managed portfolio of domestic fixed income securities to the asset class mix.
ASPIB selected Tactical Asset Allocation and Global Balanced Fund managers.

Administration and Support

Continued assessment of the Permanent Fund Division's work processes and systems to improve service to the public and streamline workflow.
Installation of Firewall programs in Anchorage and Juneau to provide maximum security for the Department's computer system.
Continued work on the Gas Commercialization Team.
Identified and resolved several Y2K issues, defined goals and objectives, created Y2K alternate plan, installed software and hardware, consolidated computer software programs.
Used, and trained staff on the use of, the Automated Budget System for operating and capital budget preparation and presentation.
Performed a department-wide ADA self-assessment and made accommodations as necessary.

Permanent Fund Dividend

Finalized the design and implementation of the 1998 Dividend Application Status Inquiry Project.
Converted the data entry system from the WANG System to a Unibase System.
Accelerated dividend distribution.
Significantly reduced the inventory held in Appeals to less than 1,200 cases over an 18 month period.

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Tax Division

Dvision Merger -- The department is working to implement the legislature's direction in the 1999 session to merge the Income and Excise Audit Division and the Oil and Gas Audit Division effective April 1, 2000.  The department will spend a significant amount of time in FY2001 completing different aspects of the merger, with a goal of operational efficiencies. 

Electronic Filing -- The division in FY2001 will complete its conversion to electronic filing for oil and gas severance taxpayers.  In addition, the division will look for an excise tax program in FY2001 to designate as a pilot for electronic filing.  After selecting the excise tax type, the division will work with taxpayers to develop a reasonable, cost-effective system for filing tax returns electronically.

Child Support Enforcement Division

Welfare Reform -- The success of welfare reform continues to place increased pressure on the child support division to collect payments for thousands of families who have left the public assistance rolls. The children in those families risk falling behind in essential needs such as clothes, medical care, food and shelter unless child support is collected on time to help replace the loss of public assistance and to supplement the single parent's working income.

Public Service -- The critical need to serve these children, plus the division's growing caseload, make it all the more important to provide accurate and timely service to the public.  Custodial and non-custodial parents look to the child support division to settle payment disputes, adjust their child support orders and process visitation credits.  Each year the division gets more custodial parents' requests to locate and collect child support payments from absent parents.  Much of the division's efforts in FY2001 will be geared toward improving its public service, while always balancing its responsibility to collect as much as it can with its responsibility to treat all parents fairly.

Permanent Fund Dividend Division

On-Line Application -- Building on the on-line status inquiry provided to dividend applicants in 1998, the division continues to work on new programs to make it easier for the public to apply for their dividend and for the division to process the growing number of applications.  Dividend applications were available on line in 1999, and Alaskans in 2000 will actually be able to submit their applications on line instead of through the mail.  The only piece missing will be their signature, which they will have to send in the mail, but the division is looking at how it can accept electronic signatures in 2001.

Alaska Housing Finance Corporation

Finances -- It is essential for AHFC to maintain an equitable balance between its mission of ensuring quality and affordable housing opportunities for Alaskans, while also maintaining levels of net income sufficient to meet our financial obligations to the state.  AHFC intends to operate in a manner that both responds to the state's fiscal needs while meeting the requirements of the corporation's mission.  AHFC has played an active role in assisting the state with its deferred maintenance, capital construction and other financing needs and, to date, has been able to do so in a manner that preserves the physical assets and investment portfolio of the corporation.

Home Mortgages -- AHFC's core business activity is to earn profits through the purchase of mortgage loans. To ensure consistent adequate profits, the corporation's management and board of directors have taken measures to improve AHFC's mortgage loan activity with programs that are driven by market conditions and established by working closely with the housing industry.  These efforts will continue both as a way to increase business activity and to offer Alaskans access to affordable mortgage financing.  For example, AHFC is continuing to develop a PC-based automated mortgage underwriting system to offer home buyers a faster closing process while at the same time maintaining strong underwriting standards.

Federal Programs -- Due to changes in federal housing programs, AHFC is able to take advantage of new program funding that becomes available.  AHFC will bring two new housing programs on-line in FY2001: the Welfare-to-Work program voucher and the Section 8 Project-Based Contract Administration program.  AHFC Housing Operations cannot absorb the increase in expenses at the current budget levels and has requested increments using available federal funds to cover these expenses. 

Senior Housing -- Senior housing remains a priority concern to the corporation.  This segment of our state's population remains the fastest growing age group.  Nonprofit senior organizations and development groups continue to work with the corporation to leverage funds and bring affordable housing and services to Alaska's senior citizens.  AHFC is working with the Alaska Commission on Aging toward developing a stable program that provides housing opportunities designed to meet the needs of our senior population.

Rural Outreach-- AHFC continues the development of its Rural Outreach program, which includes other industry partners in the process of increasing housing and finance options for Alaska's rural areas.  The needs for housing in rural areas remain high, with a corresponding level of obstacles in meeting those needs.

Mental Health Initiatives -- AHFC and the Mental Health Trust are combining their efforts in working toward finding and establishing the process and financing mechanisms to address "reasonable accommodation" for persons with disabilities.  Housing needs remain high and conventional financing methods are not a solution for this target group.

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FY2000 Performance Measure	Achieved	On Track	Too Soon  to Tell	Not Likely to Achieve	Needs Modification
CSED will increase the number of children receiving child support by increasing child support orders from 3,600 to 4,000.
IEAD will develop electronic payment/billing systems for 2 income or excise tax programs with a goal of 40% participation.
Treasury will review investment performance quarterly to ensure the goal of meeting or exceeding investment benchmarks.

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Capital Projects Listed by Department.

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Department Budget Summary
Funding Source Summary
Position Summary

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Child Support Enforcement:
Staff increment of 9 permanent full-time employees to meet federal compliance standards and better serve CSED customers; transfer in of 3 positions to provide in-house client file maintenance; additional federal authority of 50.0 for an increase in the federal access and visitation grant; additional federal authority for state facilities rent.

Alcohol Beverage Control Board:
Increment of 48.3 in general fund/program receipts for state facilities rent.

Permanent Fund Corporation:
Increment to (1) fund 4-month employment overlap period with incumbent Chief Investment Officer and his replacement; (2) fund 2% personal services increase in accordance with the performance-based merit system; (3) fund education opportunities to trustees on alternative investments component of HB156; (4) fund auditing service increase, additional investment consulting services, legal fees on issues pertaining to alternative investments, additional imaging of real estate documents, increased costs for maintenance agreements, and videoconference equipment upgrades as technology changes.  The PFC Custody and Management Fees BRU request includes an increment  for investment and custody fees due to fund growth and healthy fund management.

Alaska Housing Finance Corporation:
Increments in federal and CIP receipts to add federal Section 8 - Welfare to Work program, Federal Section 8 - Project-based Contract Administration program, and to provide funding for construction-related building inspectors.

Alaska Mental Health Authority:
Increment to bring vacancy factor to zero and provide funding for state facilities rent.

Income and Excise Audit:
Merger with Oil and Gas Audit into Tax Division.

Tax Division:
Transfer in of funds and positions from Income and Excise Audit and Oil and Gas Audit Divisions.  Decrement interagency receipts and excess CIP authority; increment for professional services cost increase, increment for interagency receipts for budgeted RSA with the Department of Transportation and Public Facilities; increment for state facilities rent; transfer of 3 positions to CSED.

Oil and Gas Audit:
Merger with Income and Excise Audit into Tax Division.

Treasury:
Increment for additional manager fees for international equities and other investment expenses; fund source change due to creation of new funding source for FY2001.

Alaska State Pension Investment Board:
Decrement for reduction in contractual expenses; increment for state facilities rent.  Fund source change in the ASPIB Custody and Management Fees component.

Commissioner's Office:
Transfer in of 1 PFT and partial funding from Administrative Services; increment for state facilities rent.

Administrative Services:
Transfer out of 1 PFT and partial funding to Commissioner's Office; increment for state facilities rent; decrement of interagency receipts and indirect cost reimbursement due to deletion of 1 PFT.

Permanent Fund Dividend:
Decrement of funding for one-time audit assessment and equipment; increment to increased RSA with the University of Alaska; increment for a mainframe transition project position; increment for state facilities rent.

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