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SB 128: "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                             SENATE BILL NO. 128                                                                         
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.