HB 245: "An Act relating to the Alaska permanent fund; relating to appropriations to the dividend fund; relating to income of the Alaska permanent fund; relating to the earnings reserve account; relating to the Alaska permanent fund dividend; making conforming amendments; and providing for an effective date."
00 HOUSE BILL NO. 245 01 "An Act relating to the Alaska permanent fund; relating to appropriations to the 02 dividend fund; relating to income of the Alaska permanent fund; relating to the 03 earnings reserve account; relating to the Alaska permanent fund dividend; making 04 conforming amendments; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 37.13.010(a) is amended to read: 07 (a) Under art. IX, sec. 15, of the state constitution, there is established as a 08 separate fund the Alaska permanent fund. The Alaska permanent fund consists of 09 (1) 25 percent of all mineral lease bonuses, rentals, royalties, royalty 10 sale proceeds, net profit shares under AS 38.05.180(f) and (g), and federal mineral 11 revenue sharing payments received by the state [FROM MINERAL LEASES ISSUED 12 ON OR BEFORE DECEMBER 1, 1979, AND 25 PERCENT OF ALL BONUSES 13 RECEIVED BY THE STATE FROM MINERAL LEASES ISSUED ON OR 14 BEFORE FEBRUARY 15, 1980];
01 (2) unless required to maintain the target balance of the earnings 02 reserve account under AS 37.13.145, an additional 24.5 [50] percent of all mineral 03 lease bonuses, rentals, royalties, royalty sale proceeds, net profit shares under 04 AS 38.05.180(f) and (g), and federal mineral revenue sharing payments received by 05 the state; 06 (3) except as otherwise provided under art. IX, sec. 17, 07 Constitution of the State of Alaska and unless required to maintain the target 08 balance of the earnings reserve account under AS 37.13.145, 100 percent of oil 09 and gas production taxes collected by the Department of Revenue under 10 AS 43.55.011 - 43.55.180 may be appropriated to the Alaska permanent fund 11 [FROM MINERAL LEASES ISSUED AFTER DECEMBER 1, 1979, AND 50 12 PERCENT OF ALL BONUSES RECEIVED BY THE STATE FROM MINERAL 13 LEASES ISSUED AFTER FEBRUARY 15, 1980]; and 14 (4) [(3)] any other money appropriated to or otherwise allocated by 15 law or former law to the Alaska permanent fund. 16 * Sec. 2. AS 37.13.010 is amended by adding a new subsection to read: 17 (d) In this section "target balance" is calculated under AS 37.13.145(l). 18 * Sec. 3. AS 37.13.140 is amended to read: 19 Sec. 37.13.140. Income. Net income of the fund includes income of the 20 earnings reserve account established under AS 37.13.145. Net income of the fund shall 21 be computed annually as of the last day of the fiscal year in accordance with generally 22 accepted accounting principles, excluding any unrealized gains or losses. [INCOME 23 AVAILABLE FOR DISTRIBUTION EQUALS 21 PERCENT OF THE NET 24 INCOME OF THE FUND FOR THE LAST FIVE FISCAL YEARS, INCLUDING 25 THE FISCAL YEAR JUST ENDED, BUT MAY NOT EXCEED NET INCOME OF 26 THE FUND FOR THE FISCAL YEAR JUST ENDED PLUS THE BALANCE IN 27 THE EARNINGS RESERVE ACCOUNT DESCRIBED IN AS 37.13.145.] 28 * Sec. 4. AS 37.13.145(b) is amended to read: 29 (b) At the beginning [END] of each fiscal year, and subject to 30 appropriation, the corporation shall transfer from the earnings reserve account to the 31 dividend fund established under AS 43.23.045, an amount equal to 50 percent of all
01 mineral lease bonuses, rentals, royalties, royalty sale proceeds, net profit shares 02 under AS 38.05.180(f) and (g), and federal mineral revenue sharing payments 03 received by the state during the prior fiscal year [THE INCOME AVAILABLE 04 FOR DISTRIBUTION UNDER AS 37.13.140]. 05 * Sec. 5. AS 37.13.145(c) is amended to read: 06 (c) If, following the transfer under (b) of this section, the balance of the 07 earnings reserve account exceeds the target balance, [AFTER] the corporation, 08 subject to appropriation, shall transfer from the earnings reserve account to the 09 principal of the fund an amount equal to the difference between the balance of the 10 earnings reserve account and the target balance [SUFFICIENT TO OFFSET THE 11 EFFECT OF INFLATION ON THE PRINCIPAL OF THE FUND DURING THAT 12 FISCAL YEAR]. However, none of the amount transferred shall be applied to 13 increase the value of that portion of the principal attributed to the settlement of State v. 14 Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First Judicial District) on 15 July 1, 2004. [THE CORPORATION SHALL CALCULATE THE AMOUNT TO 16 TRANSFER TO THE PRINCIPAL UNDER THIS SUBSECTION BY 17 (1) COMPUTING THE AVERAGE OF THE MONTHLY UNITED 18 STATES CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS FOR 19 EACH OF THE TWO PREVIOUS CALENDAR YEARS; 20 (2) COMPUTING THE PERCENTAGE CHANGE BETWEEN THE 21 FIRST AND SECOND CALENDAR YEAR AVERAGE; AND 22 (3) APPLYING THAT RATE TO THE VALUE OF THE 23 PRINCIPAL OF THE FUND ON THE LAST DAY OF THE FISCAL YEAR JUST 24 ENDED, INCLUDING THAT PORTION OF THE PRINCIPAL ATTRIBUTED TO 25 THE SETTLEMENT OF STATE V. AMERADA HESS, ET AL., 1JU-77-847 CIV. 26 (SUPERIOR COURT, FIRST JUDICIAL DISTRICT).] 27 * Sec. 6. AS 37.13.145 is amended by adding new subsections to read: 28 (e) Except as otherwise provided under art. IX, sec. 17, Constitution of the 29 State of Alaska, if, following the transfer in (b) of this section, the balance of the 30 earnings reserve account is less than the target balance, up to 100 percent of the 31 money collected by the Department of Revenue, within the fiscal year, under the oil
01 and gas production tax, AS 43.55.011 - 43.55.180, may be appropriated to the earnings 02 reserve account. Any portion of these funds not required to bring the earnings reserve 03 account balance to the target balance may be appropriated to the principal of the fund. 04 (f) If, following the transfer under (b) of this section, the balance of the 05 earnings reserve account is less than the target balance, up to 24.5 percent of all 06 mineral lease bonuses, rentals, royalties, royalty sale proceeds, net profit shares under 07 AS 38.05.180(f) and (g), and federal mineral revenue sharing payments received by 08 the state may be appropriated to the earnings reserve account. Any portion of these 09 funds not required to bring the earnings reserve account balance to the target balance 10 may be transferred to the principal of the fund. 11 (g) In addition to the funds appropriated under (f) of this section, 50 percent of 12 all mineral lease bonuses, rentals, royalties, royalty sale proceeds, net profit shares 13 under AS 38.05.180(f) and (g), and federal mineral resource sharing payments 14 received by the state may be appropriated to the earnings reserve account. 15 (h) Each fiscal year and subject to appropriation, the corporation shall transfer 16 from the earnings reserve account to the general fund the sustainable draw amount 17 under (i) of this section. 18 (i) The sustainable draw amount may not exceed $3,300,000,000 for a fiscal 19 year. Except that, beginning in fiscal year 2020, the sustainable draw amount may be 20 adjusted for inflation. The commissioner of revenue shall calculate the inflation rate 21 by computing the 22 (1) average of the monthly United States Consumer Price Index for all 23 urban consumers for each of the two previous calendar years; and 24 (2) percentage change between the first and second calendar year 25 average. 26 (j) The commissioner of revenue may recommend that the sustainable draw 27 under (i) of this section be adjusted based on a sufficiency of assets review conducted 28 in calendar year 2017, in calendar year 2020, and every four years thereafter. The 29 commissioner of revenue shall consult with the board in conducting the review. The 30 commissioner shall issue a report evaluating the sufficiency of assets in the earning 31 reserve account and anticipated revenue to meet the draw for the following four years
01 and whether it is more likely than not that the real value of the permanent fund assets 02 will be less in 20 years than at the beginning of fiscal year 2017. To calculate the 03 sufficiency of assets, the report shall use 04 (1) as adopted by the board, a 10-year forecast of net income of the 05 fund including income of the earnings reserve account, as defined in AS 37.13.140, 06 and a 10-year forecast of total income of the fund including the earnings reserve 07 account that includes unrealized gains or losses; 08 (2) a forecast of natural resource revenues by the Department of 09 Revenue; 10 (3) the balance of the earnings reserve of the Alaska permanent fund, 11 including unrealized gains and losses; 12 (4) the balance of the principal of the Alaska permanent fund, 13 including unrealized gains and losses; 14 (5) historical and forecasted inflation; and 15 (6) any additional factors the commissioner of revenue determines are 16 relevant. 17 (k) The commissioner of revenue shall submit the sufficiency of assets report 18 to the president of the senate and the speaker of the house of representatives. The 19 report, supporting modeling and calculations and data input, including the information 20 relied on by the board for the return forecasts, shall be made available to the public. 21 The supporting modeling shall be provided in its native file format, except that any 22 confidential tax information may be provided in aggregate form. 23 (l) In this section, 24 (1) "sustainable draw amount" means an amount of money to be 25 appropriated in a fiscal year from the earnings reserve account to the general fund; 26 (2) "target balance" is equal to four times the prior year's sustainable 27 draw from the earnings reserve account. 28 * Sec. 7. AS 37.13.300(c) is amended to read: 29 (c) Net income from the mental health trust fund may not be included in the 30 computation of net income [AVAILABLE FOR DISTRIBUTION] under 31 AS 37.13.140.
01 * Sec. 8. AS 43.55.080 is amended to read: 02 Sec. 43.55.080. Collection and deposit of revenue. (a) Except as otherwise 03 provided under art. IX, sec. 17, Constitution of the State of Alaska, the money 04 collected by the department [SHALL DEPOSIT IN THE GENERAL FUND THE 05 MONEY COLLECTED BY IT] under AS 43.55.011 - 43.55.180 may be 06 appropriated to the permanent fund under AS 37.13.010 and 37.13.145. 07 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 2016 PERMANENT FUND DIVIDEND. Notwithstanding any other provision in this 10 Act or other applicable law, the permanent fund dividend for each eligible individual for 11 calendar year 2016 shall be $1,000. 12 * Sec. 10. This Act takes effect July 1, 2016.