CSSB 53(JUD): "An Act relating to use of income of the Alaska permanent fund; relating to the amount of the permanent fund dividend; relating to the duties of the commissioner of revenue; and providing for an effective date."
00 CS FOR SENATE BILL NO. 53(JUD) 01 "An Act relating to use of income of the Alaska permanent fund; relating to the amount 02 of the permanent fund dividend; relating to the duties of the commissioner of revenue; 03 and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 06 to read: 07 LEGISLATIVE INTENT. It is the intent of the legislature to 08 (1) implement the recommendations of the 2021 Comprehensive Fiscal Plan 09 Working Group; 10 (2) harmonize the calculation under AS 37.13.140(a) of net income available 11 for distribution and net income available for appropriation under AS 37.13.140(b); 12 (3) temporarily change the mechanism used to draw money from the earnings 13 reserve account to leverage the unprecedented earnings currently available in the account, so 14 that the legislature has adequate time to debate, analyze, and implement the revenue measures
01 and cost reductions required for the long-term financial stability of the state; 02 (4) reverse the changes made by this Act if the recommendations of the 2021 03 Comprehensive Fiscal Plan Working Group are not adopted and implemented in their entirety. 04 * Sec. 2. AS 37.13.140 is amended to read: 05 Sec. 37.13.140. Income. (a) [NET INCOME OF THE FUND INCLUDES 06 INCOME OF THE EARNINGS RESERVE ACCOUNT ESTABLISHED UNDER 07 AS 37.13.145.] Net income of the fund shall be computed annually as of the last day 08 of the fiscal year in accordance with generally accepted accounting principles, 09 excluding any unrealized gains or losses. [INCOME AVAILABLE FOR 10 DISTRIBUTION EQUALS 21 PERCENT OF THE NET INCOME OF THE FUND 11 FOR THE LAST FIVE FISCAL YEARS, INCLUDING THE FISCAL YEAR JUST 12 ENDED, BUT MAY NOT EXCEED NET INCOME OF THE FUND FOR THE 13 FISCAL YEAR JUST ENDED PLUS THE BALANCE IN THE EARNINGS 14 RESERVE ACCOUNT DESCRIBED IN AS 37.13.145.] 15 (b) The corporation shall determine the amount available for appropriation 16 each year. The amount available for appropriation is five percent of the average 17 market value of the fund for the first five of the preceding six fiscal years, including 18 the fiscal year just ended, computed annually for each fiscal year in accordance with 19 generally accepted accounting principles. In this subsection, "average market value of 20 the fund" includes the balance of the earnings reserve account established under 21 AS 37.13.145, but does not include that portion of the principal attributed to the 22 settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First 23 Judicial District). The amount available for appropriation may not exceed the 24 balance in the earnings reserve account described in AS 37.13.145. 25 * Sec. 3. AS 37.13.140, as amended by sec. 2 of this Act, is amended to read: 26 Sec. 37.13.140. Income. (a) Net income of the fund includes income of the 27 earnings reserve account established under AS 37.13.145. Net income of the fund 28 shall be computed annually as of the last day of the fiscal year in accordance with 29 generally accepted accounting principles, excluding any unrealized gains or losses. 30 Income available for distribution equals 21 percent of the net income of the fund 31 for the last five fiscal years, including the fiscal year just ended, but may not
01 exceed net income of the fund for the fiscal year just ended plus the balance in 02 the earnings reserve account described in AS 37.13.145. 03 (b) The corporation shall determine the amount available for appropriation 04 each year. The amount available for appropriation is five percent of the average 05 market value of the fund for the first five of the preceding six fiscal years, including 06 the fiscal year just ended, computed annually for each fiscal year in accordance with 07 generally accepted accounting principles. In this subsection, "average market value of 08 the fund" includes the balance of the earnings reserve account established under 09 AS 37.13.145, but does not include that portion of the principal attributed to the 10 settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First 11 Judicial District). [THE AMOUNT AVAILABLE FOR APPROPRIATION MAY 12 NOT EXCEED THE BALANCE IN THE EARNINGS RESERVE ACCOUNT 13 DESCRIBED IN AS 37.13.145.] 14 * Sec. 4. AS 37.13.145(b) is amended to read: 15 (b) Each [AT THE END OF EACH] fiscal year, the legislature may 16 appropriate [CORPORATION SHALL TRANSFER] from the earnings reserve 17 account to the 18 (1) dividend fund established under AS 43.23.045, not less than 50 19 percent of the amount [INCOME] available for appropriation [DISTRIBUTION] 20 under AS 37.13.140(b); and 21 (2) general fund, up to 50 percent of the amount available for 22 appropriation under AS 37.13.140(b) [AS 37.13.140]. 23 * Sec. 5. AS 37.13.145(b), as amended by sec. 4 of this Act, is amended to read: 24 (b) At the end of each [EACH] fiscal year, the corporation shall transfer 25 [LEGISLATURE MAY APPROPRIATE] from the earnings reserve account to the 26 [(1)] dividend fund established under AS 43.23.045, [NOT LESS 27 THAN] 50 percent of the income [AMOUNT] available for distribution 28 [APPROPRIATION] under AS 37.13.140 [AS 37.13.140(b); AND 29 (2) GENERAL FUND, UP TO 50 PERCENT OF THE AMOUNT 30 AVAILABLE FOR APPROPRIATION UNDER AS 37.13.140(b)]. 31 * Sec. 6. AS 37.13.145(c) is amended to read:
01 (c) After the appropriations [TRANSFER] under (b) [AND AN 02 APPROPRIATION UNDER (e)] of this section, the legislature may appropriate 03 [CORPORATION SHALL TRANSFER] from the earnings reserve account to the 04 principal of the fund an amount sufficient to offset the effect of inflation on the 05 principal of the fund during that fiscal year. However, none of the amount transferred 06 shall be applied to increase the value of that portion of the principal attributed to the 07 settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First 08 Judicial District) on July 1, 2004. The corporation shall calculate the amount to 09 transfer to the principal under this subsection by 10 (1) computing the average of the monthly United States Consumer 11 Price Index for all urban consumers for each of the two previous calendar years; 12 (2) computing the percentage change between the first and second 13 calendar year average; and 14 (3) applying that rate to the value of the principal of the fund on the 15 last day of the fiscal year just ended, including that portion of the principal attributed 16 to the settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, 17 First Judicial District). 18 * Sec. 7. AS 37.13.145(c), as amended by sec. 6 of this Act, is amended to read: 19 (c) After the transfer [APPROPRIATIONS] under (b) and an appropriation 20 under (g) of this section, the corporation shall transfer [LEGISLATURE MAY 21 APPROPRIATE] from the earnings reserve account to the principal of the fund an 22 amount sufficient to offset the effect of inflation on the principal of the fund during 23 that fiscal year. However, none of the amount transferred shall be applied to increase 24 the value of that portion of the principal attributed to the settlement of State v. 25 Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First Judicial District) on 26 July 1, 2004. The corporation shall calculate the amount to transfer to the principal 27 under this subsection by 28 (1) computing the average of the monthly United States Consumer 29 Price Index for all urban consumers for each of the two previous calendar years; 30 (2) computing the percentage change between the first and second 31 calendar year average; and
01 (3) applying that rate to the value of the principal of the fund on the 02 last day of the fiscal year just ended, including that portion of the principal attributed 03 to the settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, 04 First Judicial District). 05 * Sec. 8. AS 37.13.145(d) is amended to read: 06 (d) Notwithstanding (b) of this section, income earned on money awarded in 07 or received as a result of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior 08 Court, First Judicial District), including settlement, summary judgment, or adjustment 09 to a royalty-in-kind contract that is tied to the outcome of this case, or interest earned 10 on the money, or on the earnings of the money shall be treated in the same manner as 11 other income of the Alaska permanent fund, except that it is not available for 12 appropriation [DISTRIBUTION] to the dividend fund under AS 37.13.140(b) or [, 13 FOR TRANSFERS] to the principal under (c) of this section [, OR FOR AN 14 APPROPRIATION UNDER (e) OF THIS SECTION,] and shall be annually 15 deposited into the Alaska capital income fund (AS 37.05.565). 16 * Sec. 9. AS 37.13.145(d), as amended by sec. 8 of this Act, is amended to read: 17 (d) Notwithstanding (b) of this section, income earned on money awarded in 18 or received as a result of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior 19 Court, First Judicial District), including settlement, summary judgment, or adjustment 20 to a royalty-in-kind contract that is tied to the outcome of this case, or interest earned 21 on the money, or on the earnings of the money shall be treated in the same manner as 22 other income of the Alaska permanent fund, except that it is not available for 23 distribution [APPROPRIATION] to the dividend fund, for transfers [UNDER 24 AS 37.13.140(b) OR] to the principal under (c) of this section, or for an 25 appropriation under (g) of this section, and shall be annually deposited into the 26 Alaska capital income fund (AS 37.05.565). 27 * Sec. 10. AS 37.13.145 is amended by adding new subsections to read: 28 (g) The legislature may not appropriate from the earnings reserve account to 29 the general fund a total amount that exceeds the amount available for appropriation 30 under AS 37.13.140(b) in a fiscal year. 31 (h) The combined total of the transfer under (b) of this section and an
01 appropriation under (g) of this section may not exceed the amount available for 02 appropriation under AS 37.13.140(b). 03 * Sec. 11. AS 37.13.300(c) is amended to read: 04 (c) Net income from the mental health trust fund may not be included in the 05 computation of the amount [NET INCOME OR MARKET VALUE] available for 06 [DISTRIBUTION OR] appropriation under AS 37.13.140(b) [AS 37.13.140]. 07 * Sec. 12. AS 37.13.300(c), as amended by sec. 11 of this Act, is amended to read: 08 (c) Net income from the mental health trust fund may not be included in the 09 computation of net income or market value [THE AMOUNT] available for 10 distribution or appropriation under AS 37.13.140 [AS 37.13.140(b)]. 11 * Sec. 13. AS 37.14.031(c) is amended to read: 12 (c) The net income of the fund shall be determined by the Alaska Permanent 13 Fund Corporation and shall be computed annually as of the last day of the fiscal 14 year in accordance with generally accepted accounting principles, excluding any 15 unrealized gains or losses [IN THE SAME MANNER THE CORPORATION 16 DETERMINES THE NET INCOME OF THE ALASKA PERMANENT FUND 17 UNDER AS 37.13.140]. 18 * Sec. 14. AS 37.14.031(c), as amended by sec. 13 of this Act, is amended to read: 19 (c) The net income of the fund shall be determined by the Alaska Permanent 20 Fund Corporation in the same manner the corporation determines the net income 21 of the Alaska permanent fund under AS 37.13.140 [AND SHALL BE 22 COMPUTED ANNUALLY AS OF THE LAST DAY OF THE FISCAL YEAR IN 23 ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, 24 EXCLUDING ANY UNREALIZED GAINS OR LOSSES]. 25 * Sec. 15. AS 43.23.025(a) is amended to read: 26 (a) By October 1 of each year, the commissioner shall determine the value of 27 each permanent fund dividend for that year by 28 (1) determining the total amount available for dividend payments, 29 which equals 30 (A) the amount appropriated [OF INCOME OF THE 31 ALASKA PERMANENT FUND TRANSFERRED] to the dividend fund
01 under AS 37.13.145(b) during the current year; 02 (B) plus the unexpended and unobligated balances of prior 03 fiscal year appropriations that lapse into the dividend fund under 04 AS 43.23.045(d); 05 (C) less the amount necessary to pay prior year dividends from 06 the dividend fund in the current year under AS 43.23.005(h), 43.23.021, and 07 43.23.055(3) and (7); 08 (D) less the amount necessary to pay dividends from the 09 dividend fund due to eligible applicants who, as determined by the department, 10 filed for a previous year's dividend by the filing deadline but who were not 11 included in a previous year's dividend computation; 12 (E) less appropriations from the dividend fund during the 13 current year, including amounts to pay costs of administering the dividend 14 program and the hold harmless provisions of AS 43.23.240; 15 (2) determining the number of individuals eligible to receive a 16 dividend payment for the current year and the number of estates and successors 17 eligible to receive a dividend payment for the current year under AS 43.23.005(h); and 18 (3) dividing the amount determined under (1) of this subsection by the 19 amount determined under (2) of this subsection. 20 * Sec. 16. AS 43.23.025(a), as amended by sec. 15 of this Act, is amended to read: 21 (a) By October 1 of each year, the commissioner shall determine the value of 22 each permanent fund dividend for that year by 23 (1) determining the total amount available for dividend payments, 24 which equals 25 (A) the amount of income of the Alaska permanent fund 26 transferred [APPROPRIATED] to the dividend fund under AS 37.13.145(b) 27 during the current year; 28 (B) plus the unexpended and unobligated balances of prior 29 fiscal year appropriations that lapse into the dividend fund under 30 AS 43.23.045(d); 31 (C) less the amount necessary to pay prior year dividends from
01 the dividend fund in the current year under AS 43.23.005(h), 43.23.021, and 02 43.23.055(3) and (7); 03 (D) less the amount necessary to pay dividends from the 04 dividend fund due to eligible applicants who, as determined by the department, 05 filed for a previous year's dividend by the filing deadline but who were not 06 included in a previous year's dividend computation; 07 (E) less appropriations from the dividend fund during the 08 current year, including amounts to pay costs of administering the dividend 09 program and the hold harmless provisions of AS 43.23.240; 10 (2) determining the number of individuals eligible to receive a 11 dividend payment for the current year and the number of estates and successors 12 eligible to receive a dividend payment for the current year under AS 43.23.005(h); and 13 (3) dividing the amount determined under (1) of this subsection by the 14 amount determined under (2) of this subsection. 15 * Sec. 17. AS 37.13.145(e) and 37.13.145(f) are repealed. 16 * Sec. 18. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 USE OF THE EARNINGS RESERVE ACCOUNT. For the fiscal years ending 19 June 30, 2022, and June 30, 2023, in addition to the amount available for appropriation 20 calculated under AS 37.13.140(b), the legislature may appropriate from the earnings reserve 21 account to the general fund an additional 1.5 percent of the average market value of the fund 22 for the first five of the preceding six fiscal years, including the fiscal year just ended, 23 computed annually for each fiscal year in accordance with generally accepted accounting 24 principles. In this section, "average market value of the fund" has the meaning given in 25 AS 37.13.140(b). 26 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 CONDITIONAL EFFECT. (a) Sections 3, 5, 7, 9, 10, 12, 14, and 16 of this Act take 29 effect only if, by November 30, 2022, 30 (1) the voters have not approved a resolution that appears on a statewide 31 election ballot that amends the Constitution of the State of Alaska to
01 (A) specify that the amount that may be appropriated from the Alaska 02 permanent fund is a draw based on the average fiscal-year-end market value of the 03 permanent fund and that half of the amount of the draw shall be used for permanent 04 fund dividends; and 05 (B) require deposit of the unencumbered balance of the earnings 06 reserve account established under AS 37.13.145 into the Alaska permanent fund to 07 become part of the principal of the fund; or 08 (2) revenue laws anticipated to generate at least an estimated $160,000,000 of 09 new revenue each year have not been passed by the Thirty-Second Alaska State Legislature 10 and enacted into law. 11 (b) The commissioner of revenue shall notify the revisor of statutes if, before 12 November 30, 2022, revenue laws anticipated to generate at least an estimated $160,000,000 13 of new revenue each year have not been passed by the Thirty-Second Alaska State Legislature 14 and enacted into law. 15 * Sec. 20. If, under sec. 19 of this Act, secs. 3, 5, 7, 9, 10, 12, 14, and 16 of this Act take 16 effect, they take effect July 1, 2023. 17 * Sec. 21. Except as provided in sec. 20 of this Act, this Act takes effect immediately under 18 AS 01.10.070(c).