Legislature(1999 - 2000)
05/14/1999 08:12 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 76
"An Act authorizing an advisory vote on whether
appropriations of income from the permanent fund
should be restricted; and providing for an effective
date."
This was the second hearing for this bill in the Senate
Finance Committee. A committee substitute, 1-LS0493\M, was
adopted as a Workdraft in the previous hearing.
Co-Chair John Torgerson reminded the Committee there had
been discussion in the bill's previous hearing regarding an
updated Governor's plan. Because of the discussion, he had
invited a Cabinet member to address that plan. He noted
that in-depth information showing assumptions and how the
plan works was not available at this time.
WILSON CONDON, Commissioner, Department of Revenue, came to
the table to explain the Governor's plan to the Committee.
He referred to a spreadsheet entitled, "Comparison of
Financial Plans" [Copy on File]. The handout showed
comparisons of the plans to address the State's financial
situation that had been suggested by the Governor, the
House Majority and the Senate Majority.
Wilson Condon felt it is important when doing comparisons
to use a consistent set of assumptions. He stated that the
assumptions used in this spreadsheet are different than
assumptions on the handouts referenced during the first
Senate Finance Committee hearing on the bill. He thought
that one of the assumptions needing to be consistent for
comparison is the "rate of return". The rate of 8.25
percent is too risky, in his opinion. However, in looking
at the Senate Majority's proposed plan, he suggested that a
payout of 5.25 percent could be used within an 8.1 percent
return strategy. He stipulated that in order to do that,
the five-year average pay-out formula included in the plan
must be maintained. He defined five-year payout formula as,
"the value of the assets of the fund four years ago.
averaging the value two years ago, three years ago, four
years ago, five years ago and six years ago." He continued
saying that those 20 quarters are used to determine the
base that is then multiplied by 5.25 percent. Over time, he
said, the value will always be adequately lower than the
average value of the fund today and that a 5.25 percent
payout probably will work. He cautioned that it would be
close and that he would be more comfortable if the payout
was lower.
Wilson Condon stated that the spreadsheet uses both and 8.1
percent projected median case over time rate of return
strategy and a 5.1 percent payout, which is different than
proposed in the Senate Majority plan. He commented that if
he had more time, he would have prepared a comparison for
the Committee using an 8.1 percent return strategy and a
5.25 percent payout strategy. He thought that comparison
would have honored the provisions of the Senate Majority
proposed plan and provided an accurate comparison to the
Governor's proposed plan.
Wilson Condon noted that he and the Committee had discussed
the elements of the different plans. He reiterated that the
Governor's plan is to make a one-time transfer of the
earnings from the permanent fund into the Constitutional
Budget Reserve (CBR) fund to pay for public services. He
projected that in order to make the plan work at a median
case over time, additional transfers would have to be made
in the future. Under the median case, the CBR would run out
of money sometime around 2012-13, so the transfer would
need to be made in 2010, according to Wilson Condon.
Senator Randy Phillips wanted to know if the Governor's
plan includes a $4 billion immediate transfer from the
permanent fund to the CBR for 1999 or 2000 expenditures.
Wilson Condon responded that the Governor's plan, announced
in the State of the State address, would have made the
transfer at the end of this fiscal year, 1999.
Senator Randy Phillips continued his questioning, asking if
the plan then requests another transfer, and if so, when.
Wilson Condon restated the year for the next transfer would
be 2010. Senator Randy Phillips then asked if and when a
third transfer would be requested. Wilson Condon replied it
would probably be in 2020.
Senator Randy Phillips summarized his understanding of the
Governor's plan is to make three transfers of $4 billion
each from the permanent fund into the CBR in the years
1999, 2010 and 2020. Wilson Condon agreed, pointing out the
information is shown on the spreadsheet.
Senator Randy Phillips wanted to get the facts on the table
for the purpose of drafting ballot language for the
advisory vote.
Wilson Condon continued his presentation listing another
element of the Governor's plan as the broad-based tax that
would raise $350 million a year beginning in fiscal year
2001.
Wilson Condon stated that the target rate of return on the
CBR is 8.1 percent under the Governor's plan. He noted that
initially the target rate of return for the permanent fund
would not change. However, under reconsideration, he stated
that a change made sense.
Senator Sean Parnell noted the spreadsheet indicates a 25-
percent reduction of permanent fund dedication and
corrected additional oil revenue. He asked if this
information was based on legislation sponsored by
Representative Norm Rokeburg, HB 96. Wilson Condon answered
the inclusion of the data on the spreadsheet is not an
endorsement of the bill by the Governor, but rather an
effort to use a common set of assumptions to compare the
plans.
Senator Sean Parnell clarified that the Governor did not
support, nor oppose HB 96. Therefore, he surmised that the
spreadsheet does not reflect the Governor's plan. Wilson
Condon reiterated that the spreadsheet was prepared to
compare the three plans using a common set of assumptions.
He admitted that all parties had not necessarily used the
same set of assumptions when drafting plans, but stressed
that common assumptions must be used to accurately compare
the plans.
Senator Sean Parnell asked if because of the common
assumptions, the permanent fund dividend data shown on the
spreadsheet does not necessarily reflect the predictions
made in the Governor's plan. Wilson Condon replied that the
data is very close.
Senator Randy Phillips asked when the income tax component
of the Governor's plan begins. Wilson Condon referred to
the State of the State speech, where the Governor proposed
the income tax would be imposed beginning in the calendar
year 2000.
Co-Chair John Torgerson commented that the witness, in past
testimony repeatedly stressed that an 8.25 rate of return
is not achievable. However, the spreadsheet before the
Committee today uses that rate. He asked for an
explanation. Wilson Condon responded that is the target
rate of return used in the House Majority plan. He believed
it to be the same target rate used in the Senate Majority
plan as well. He again cited the need for common
assumptions.
Wilson Condon stated there would need to be a trade off
between the size of the dividend and other revenue, taxes
or otherwise. The level of the dividend would be a function
of the decision of whether or not to impose a tax, he
explained. He pointed out that the Governor offered a
policy choice of a tax with a higher dividend. Wilson
Condon expressed that another choice could be made to have
no taxes and a lower dividend. He noted this option was
represented in all three plans although he was unsure what
the new revenue source in the Senate Majority plan was. It
looked to him that two separate line items were included to
accommodate new oil revenue but he didn't know if the two
line items reflected a double accounting of the revenue.
He noted additional cuts to public services but he didn't
know if those services had been identified. To summarize
his comments on the Senate Majority plan, he felt 8.25 was
too risky. However he believed the plan's payout rule of
5.25 percent would work without such an aggressive earnings
target.
Senator Sean Parnell was concerned "because one day the
Governor's plan seems to have spots, the next day it seems
to have stripes." He referred to the comparisons made at
this meeting using the 25-percent dedication proposed in HB
96 and discrepancies with the acceptability of the 8.25
percent rate of return. He asked, "Where do we go for a
definitive view of the Governor's proposal?" He stressed
that if the advisory vote is to give an accurate portrayal
of each plan, the Committee needs information, such as an
updated spreadsheet.
Wilson Condon offered to provide a spreadsheet. He
commented that the 8.25 percent comparison was prepared for
presentation to the House Finance Committee earlier in the
week. At that hearing, he carefully explained that the 8.25
percent did not reflect the Governor's plan and was simply
and effort to put the plans on a common basis. He did not
feel it was fair to characterize the use of a spreadsheet
using the 8.25 percent figures as an inability to "land on
a particular square."
Co-Chair John Torgerson commented that the last permanent
fund earning figure was 8.13 and he asked why that figure
was not used. Wilson Condon had not seen that number so he
could not comment, except to say that a figure of
approximately 8.1 is what he believed an earnings target
ought to be. Co-Chair John Torgerson asked if the witness
used the earnings estimates of the Permanent Fund Division
or if he changed the numbers. Wilson Condon replied that he
looked at numbers prepared for the division to make his 8.1
percent recommendation. There was further debate if the
Commissioner had actually seen the 8.13 figure.
Senator Randy Phillips asked if the Committee would get
different numbers than those presented on the spreadsheet
before the members today. He ascertained that the
information was not actually the Governor's plan. Wilson
Condon said that he would provide a backup spreadsheet.
Senator Randy Phillips wanted to know what the dividend
would be for the year 2001 under the Governor's plan.
Wilson Condon replied the amount would be between $1750 and
$1800. He noted that the spreadsheet indicated the amount
would be $1796, but that the actual amount would be
different. Senator Randy Phillips wanted an exact number.
He also wanted a projected dividend amount for the year
2010 using the official Governor's plan. Wilson Condon
stated that he would provide those projected figures
according to what the Governor proposed in his State of the
State address.
Co-Chair John Torgerson asked if it would be a fair
statement to say that in the plan before the Committee, the
Governor is instituting a personal income tax in order to
keep the dividend higher. Wilson Condon didn't think it
was an exact portrayal, but it was close, because
collecting a broad based tax permits a higher dividend.
Co-Chair John Torgerson thought the Governor's original
plan showed a substantial decline in the dividend to below
$1000 in the year 2001 after the sale of realized gains.
Wilson Condon didn't remember how far the dividend declined
but noted that if assets were sold in order to transfer
funds to the CBR, the dividend would spike up
substantially. At the time the Governor made the original
proposal, Wilson Condon said they were uncertain whether or
not the transfer to the CBR could be made without selling
assets. Therefore, to be conservative, the original plan
did not reflect the spike. He noted that the transfer could
be made which will result in a fairly level stream of
dividends, rather than a spike up and then a big decline.
Co-Chair John Torgerson asked if for each of the years
having the $4 billion transfer, the dividend spike would
not happen. Wilson Condon affirmed.
Senator Randy Phillips wanted to know what other taxes
would be used for the broad-based tax other than personal
income. Wilson Condon responded that the Governor would
welcome any broad-based tax that the legislature enacted,
including a sales tax. Senator Randy Phillips wanted to
know what other tax the Governor actually proposed. He
asked if the proposed gasoline tax was considered a broad-
based tax and was part of the plan. Wilson Condon said it
was included but that it would not generate the needed
income.
Senator Gary Wilken noted an earlier request from the
Committee for a reconciliation of the number of employees
needed to administration the personal income tax. That
information had not been provided to him. Wilson Condon
apologized for the oversight.
ANNALEE MCCONNELL, Director, Office of Management and
Budget, Office of the Governor, did not want to miss the
opportunity to say that the Administration applauds the
Senate for making a commitment to a public vote on the use
of the permanent fund earnings. She felt that is an
important element of the process to find the best way to
achieve long term plan.
In terms of specific language, Annalee McConnell realized
it would need to reflect the proposed plan and need
"movement and adjustment" as it goes through the
discussion. She thought the agreement on a common set of
assumptions was a positive step.
Annalee McConnell noted there are a number of issues to
consider when framing the question on the ballot. She said
the Administration continues to believe that the best
outcome of this session would be a consensus plan that
could be supported by the Legislature and the
Administration; by the Majority and the Minority; by the
House of Representatives and the Senate.
Annalee McConnell stated that the basis element of concern
is if the public agrees that the use of permanent fund
earnings is appropriate at this time. She was sensitive
that the ballot question needs to be framed in such a way
that the public perceives it as being objective, clear, not
confusing and also that the public not feel that there is
any political agenda or attempt to "pull one over." She
stressed the need to be conscious of how the public views
the question before them.
Senator Randy Phillips said he was working on two options
for the voter to chose between and to have a balanced and
fair portrayal of Plan A and Plan B so that hopefully the
people of Alaska could trust it.
Senator Randy Phillips asked if the Governor plans on any
further spending reductions over the next three years and
if so, how much.
Annalee McConnell responded that she hopes there would be a
common plan that all parties can support and said the
Administration was willing to work toward reasonable budget
projections. She said the projection should inform the
public of any additional cuts plus the needed increases in
the future. She noted that the Senate Majority' plan
acknowledges the need for some increase in the future.
Annalee McConnell stressed that there was still a basic
question of whether the best way to approach the ballot
issue is with a choice of two plans or to focus on the
element of permanent fund earnings. She relayed the
question raised by some as to the degree with which the
Legislature should be seeking public votes on every aspect
of plans, such as budget cuts or types of revenue.
Annalee McConnell noted that the plan the Governor proposed
in January had evolved and included the possible passage of
HB 96. She urged that any plan not be pinned down, but to
leave room for elements that everyone could be comfortable
with.
Senator Randy Phillips asserted that his constituents are
demanding, not asking, for budget cuts. Therefore, he
wanted to make the ballot question fair. He noted that Plan
A includes over $100 million in reductions over the next
three fiscal years. Plan B, he noted has no plans for
further reductions in state spending. He stressed that the
public is saying "show us the cuts" before coming to them
with new taxes. He said that the public wants to know where
the reductions are made and how they are affected.
Therefore, he wanted to know the Administration's plans for
further reductions.
Tape: SFC - 99 #137, Side B 10:30AM
Co-Chair John Torgerson wanted to know if the spreadsheets
the Commissioner of Department of Revenue was preparing
would reflect the Governor's modified plan. Annalee
McConnell stated the Administration prefers a plan that all
parties agree upon. She believed that it is in the best
interest of the state to have a plan to present to the
public that has joint support. She suggested that to put a
plan on the ballot that claims $100 million of cuts does
not tell the public what the cuts will look like. She
predicted that the public will have a much different view
of how far the cuts are going today then they had earlier.
She wanted the ballot language to include information about
what the proposed budget reductions will be, so the voters
can make an appropriate decision whether they want the cuts
to go that far.
Annalee McConnell emphasized that the simplest area to
focus on is the use of permanent fund earnings. She did not
think the demand was for a vote on the level of funding for
the operating and capital budgets, but rather on the
permanent fund earnings.
Co-Chair John Torgerson took from her statement that the
public does not care how much is drawn from the permanent
fund. By leaving out the issues of potential revenues and
spending cuts, which has an effect on how much money needs
to be transferred from the permanent fund, the public can
only say whether or not they want the fund tapped. He
disagreed that the public is not interested in more
involvement. Annalee McConnell clarified that she did not
hear the public demanding to vote on the level of budget
reductions. The responsibility for appropriations lay with
the legislature, she stressed, and therefore the public
should not be required to vote on the amount of reductions.
The most critical place for public approval is whether or
not it is time to use permanent fund earnings, she
concluded.
Senator Sean Parnell remarked that agreeing on a single
plan would be difficult because of the basic philosophical
differences with regard to taxes and spending reductions.
He stated that these matters are intertwined and the
question is not isolated into "should we use the earnings
reserve?" He asserted that the voters need to know from a
fiscal standpoint why additional revenue and additional
reductions are necessary, noting that some voters prefer
taxes, others prefer further cuts and still others prefer
using the earnings reserve. In order for the Legislature
and the Governor to arrive at one common plan, Senator Sean
Parnell stressed that there would have to be agreement on
those basic elements.
Senator Sean Parnell asked if the Governor's insistence on
a broad-based tax is a requirement that must be included
before the Administration could agree on a plan. Annalee
McConnell continued to hold out hope that the wrestling of
the policy issues happens as a normal part of the
legislative process and that ultimately agreement will be
reached on a plan that balances those issues. In the best
of worlds, she believed a plan would be made that was
supported by all involved parties. She emphasized that the
power of that plan could not be underestimated in its
message to the public.
Annalee McConnell continued by acknowledging that there are
some differences of opinion on what is a fair balance
between the permanent fund dividend and other kinds of
revenue. She noted that neither the House Majority plan nor
the Senate Majority plan specifies the additional sources
of revenue. She said there is disagreement about whether
there should be an income tax or sales tax as opposed to
strictly using the permanent fund dividend. These taxes
would treat everyone equally regardless of their income
level, in her opinion.
Annalee McConnell felt it was appropriate that the Senate
Majority detail the elements of its plan to the public with
regard to the spending cuts. She said that making $100
million in reductions would be very difficult for the
finance committees. On the other side, she believed there
should be further definition of the additional revenues and
how realistic they are. Then, she stressed, the public
could decide whether they think it is fair that a family of
four earning $30,000 be impacted by the plan the same as a
family of four earning $300,000. She stated that currently,
with no broad-based tax, the impact of the plan hits people
at the same flat dollar amount regardless of the percentage
of their income.
Senator Randy Phillips asked if the witness is looking for
a long-term balanced budget plan. Annalee McConnell
responded that is everyone's plan.
Senator Randy Phillips then asked if the witness was
insisting on a vote addressing only the use the earnings
account. Annalee McConnell answered that was incorrect, and
that choices need to be made during these discussions, such
as should the ballot propose an "either/or" or a "yes/no"
choice on the element of using the permanent fund earnings.
The Administration did not have a final recommendation at
this point, but she felt all involved need to think it
through keeping in mind how the public would perceive the
ballot question. Some people have said to her they are
afraid that an either-or choice is going to make the public
even more frustrated because they don't like either choice
and want to vote against both options. She thought there
needed to be more discussion to find the best way to
communicate the issue to the public and show why a plan is
necessary.
Senator Al Adams wished the Administration would listen to
the Majority's intention to make additional budget cuts and
that the Administration would simply eliminate 1000
positions or an equal amount of goods and services in
Anchorage. He stressed that Anchorage is the area of the
state asking for the cuts.
Senator Pete Kelly disagreed with the statement that to
reduce the permanent fund dividend is unfair because it
takes a larger percentage of some incomes than from others.
He stressed that the dividend is not distributed based on
income and therefore, everyone is treated equally when
receiving the dividend. He recommended that if the
Committee is going to entertain the idea of reducing the
dividend, then it should be done on the same level, not
looking at income. He believed the dividend is distributed
in the fairest manner and any reductions should also be
done fairly.
Annalee McConnell repeated her comment on working together.
Amendment #1: This amendment inserts into the Plan A
description, "Permanent fund dividends in 2001 will be
approximately $1250, a reduction which will yield
approximately $254 million in additional revenue available
for government operations." Senator Al Adams moved for
adoption stating that the intent of the Senate Minority is
to make the ballot language as informative as possible.
Senator Randy Phillips objected. Senator Al Adams explained
the language shows the amount of revenue created by the
dividend reduction and will allow voters a better plan
comparison. He noted that Plan B yields $350 million from a
personal income tax. He thought the comparison defines the
difference in the underlying principle of the two plans.
Plan A is a "flat tax", which taxes children as well as
adults and will have a bigger impact on low income
Alaskans, he emphasized. He added that Plan B includes a
personal income tax for resident and nonresident workers
and taxes low-income Alaskans less than the wealthy ones.
Co-Chair John Torgerson asked which version of the
Governor's plan did this amendment address. Senator Al
Adams replied it applies to the most current plan. Co-Chair
John Torgerson noted that in his mind the only plan the
Governor had endorsed was the one introduced in January,
which was represented in Plan B of the committee substitute
and did not show an estimated dollar amount of income tax
revenue. He said if a corresponding amendment to insert
that amount were offered, he would consider supporting the
amendment currently before the Committee.
Senator Sean Parnell noted the amendment's sponsor
indicated the intent is to bring forth information for the
public. However, Senator Randy Phillips had another
amendment that would address the amounts so he would
maintain his objection.
Senator Loren Leman advised that a graphical presentation
of the impacts showing not only the dividend but also all
revenues and spending should be part of the information
packet sent to all voters. He thought the voters would
want to see the short-term and the long-term impacts and
that the legislature needs to make sure the graphic
information is clear and accurate. He believed that by
simply listing numbers would only confuse voters.
Senator Al Adams pointed out that under the Governor's
plan, a personal income tax would generate $350 million and
that information should be provided to the voters as well.
The amendment FAILED to be adopted by a vote of 1-8.
Senator Al Adams cast the yea vote.
Amendment #2: This amendment changes the description of
Plan A, New Revenues, deleting, "An income tax would not be
enacted" and inserting, "or taxes" after "Use at least
$100,000,000 in new revenues". Senator Al Adams moved for
adoption. Senator Sean Parnell objected. Senator Al Adams
explained that the Minority did not know what the new
revenue would be, but that it could actually be taxes. He
referred to other pending legislation that would tax
certain kinds of investments and advised the language
should be flexible since a tax could be imposed in the
future.
The amendment FAILED to be adopted by a vote of 1-8.
Senator Al Adams cast the yea vote.
Amendment #3: This amendment adds Plan C, which uses the
permanent fund earnings reserve to inflation-proof the
principal of the permanent fund, pay dividends under the
current method for calculation and provide approximately
$900 million to fund education, including the University of
Alaska. Plan C requires no budget reductions or income tax.
Senator Al Adams moved for adoption. Co-Chair John
Torgerson objected. Senator Al Adams referred to
legislation sponsored by Senator Tim Kelly, SB 75 that
proposes using $900 million from the earnings reserve to
fund education. Senator Al Adams detailed how Plan C could
enact that funding, allow continued dividends, require no
additional budget cuts or impose any new taxes.
Senator Randy Phillips questioned the validity of having
three plans. He rhetorically asked if this plan received
30-percent of the votes, would it prevail even though 60-
percent voted against it by casting their vote for another
plan. He suggested there could be need for a run off
election to settle the matter.
The amendment FAILED to be adopted by a vote of 1-8.
Senator Al Adams voted in favor.
Amendment #4: This amendment changes the language on the
ballot. Senator Randy Phillips did NOT OFFER this amendment
deferring to Amendment #6.
Amendment #5: This amendment changes the language of the
preamble to read, "Alaska's declining oil production and
erratic world oil prices produce an unsustainable state
budget system. The legislature and governor seek the
public's input in choosing a long-term budget plan. Please
select the plan you believe Alaska should implement for a
balanced budget." Senator Randy Phillips moved for
adoption. He then detailed proposed amendments to the
amendment as follows. First sentence: delete "system"
insert "plan". Second sentence: delete "the public's" and
insert "[seek]s Alaskan's"; delete "choosing" and insert
"selecting"; after "long-term" insert "balanced".
The amended amendment, and thus the preamble, would read,
"Alaska's declining oil production and erratic world oil
prices produce an unsustainable state budget plan. The
legislature and governor seeks Alaskan's input in choosing
a long-term budget plan. Please select the plan you believe
Alaska should implement for a long-term balanced budget."
Co-Chair John Torgerson asked if the amendment retains the
sentence instructing each voter to "Please mark "yes" or
"no" beside one or both plans that you believe the
legislature or governor should proceed to implement as a
balanced budget plan." Senator Randy Phillips affirmed the
sentence does remain. Senator Sean Parnell informed the
Committee that he had talked to Senator Randy Phillips
earlier and expressed an interest in taking up that
question separate from the other amendments. Senator Sean
Parnell assured this language change does not affect the
intent of the committee substitute.
Co-Chair John Torgerson pointed out that technically, this
amendment deletes the "yes or no" sentence in stating,
"delete preamble and replace with:". Senator Sean Parnell
moved to amend the amendment to retain the sentence located
on page 1 line 12, the "yes or no" sentence, of the
committee substitute. Because another motion to amend the
amendment was on the table, this motion was out of order
and not acted upon.
Senator Loren Leman liked the changes proposed for the
second and third sentences but did not like the proposed
first sentence, preferring the original language instead.
He said he did not think the statement was accurate,
stressing that the oil production situation did not produce
an unstable plan, although he did attribute the low prices
to an unstable budget and revenue generation.
Senator Randy Phillips countered that the previous year,
the Legislature did not project oil prices would drop to
ten dollars per barrel. Senator Loren Leman did not argue
that point, but suggested removing the change of "system"
to "plan" in the amendment to the amendment. Co-Chair John
Torgerson commented that Senator Loren Leman's suggestion
would be cleaner.
Senator Loren Leman stated he supported the idea of having
voters chose between two plans.
Senator Loren Leman moved to divide the question. There was
discussion as to the proper procedure.
AT EASE 10:57AM / 11:07AM
It was determined that an amendment to the amendment to the
amendment was not allowed under the Uniform Rules.
Therefore the motion was out of order.
Senator Randy Phillips moved to WITHDRAW the motion to
amend Amendment #5. He then moved to WITHDRAW the motion to
adopt Amendment #5 and to HOLD it until the other
amendments had been taken up. There were no objections.
Amendment #6: This amendment changes the language
describing Plan A and Plan B as follows:
Plan A
Summary of Plan A: Plan A has further spending
reductions. Dividends are a percentage of the value of
the Alaska Permanent Fund. This plan has no personal
income tax.
(1) Spending Reductions/Spending Limits
Continue state general fund budget reductions of
at least $100 million over the next three fiscal
years.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is inflation-
proofed to protect the value of the principal of
the fund for all Alaskans, including future
generations.
(3) Permanent Fund Dividends
Guarantee a dividend is paid to qualified Alaska
residents at a minimum of $1,700 in 1999 and
$1,700 in 2000. Thereafter, the annual dividend
is based on a rate of 2.75 percent of the market
value of the Alaska Permanent Fund, including the
Alaska Permanent Fund Earnings Reserve Account.
These dividends are projected to be $1,250 in
2001 to $1,430 in 2010.
(4) Permanent Fund Earnings Reserve
Guarantees inflation-proofing the Alaska
Permanent Fund and pays Permanent Fund Dividends,
then prioritizes remaining funds in the Alaska
Permanent Fund Earnings Reserve Account for
education, public safety, and transportation.
(5) New Revenues
Use at least $100 million in new revenues. No new
broad-based taxes.
Plan B
Summary of Plan B: Plan B has no further state
spending reductions. Dividends from the Alaska
Permanent Fund are calculated under the current
method. This plan includes a personal income tax.
(1) Spending Reductions
No further reductions to state spending.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is inflation-
proofed to protect the value of the principal of
the fund for all Alaskans, including future
generations.
(3) Permanent Fund Dividends
Dividend will not be changed from the current
formula and method of calculation.
(4) Permanent Fund Earnings Reserve
Immediately transfer $4 billion from the
permanent fund earnings to the Constitutional
Budget Reserve Fund with an additional $4 billion
dollars in 2011, and $4 billion dollars in 2020.
Spend the Constitutional Budget Reserve Fund
earnings for state government services.
(5) Income Tax
Impose a personal income tax on all wage earners
projected to be 31 % of a person's federal income
tax, collecting $350 million.
Senator Randy Phillips moved for adoption. Senator Pete
Kelly objected. Senator Randy Phillips noted that because
of information just received in this hearing, he would have
changes to propose to this amendment. He shared his intent
with this amendment to explain both plans in brief language
and then label what each plan does side-by-side for easier
comparison.
Senator Pete Kelly voiced his intention to amend the
amendment during this discussion.
In Senator Randy Phillips view, the Administration brought
up a good point in advising that Plan A should describe the
effects of the $100 million spending reductions. He thought
that the ballot language needed to say what would be cut.
Senator Randy Phillips next suggested changing the listed
amount of the permanent fund dividends in Plan A for the
years 2001 and 2010 to $1258 and $1417 respectively, based
on the new information provided by the Department of
Revenue.
Senator Randy Phillips then stated he thought there should
be discussion about education, public safety and
transportation in the Permanent Fund Earnings Reserve
paragraph under Plan A.
Senator Randy Phillips's final recommendation on Plan A
language was to switch the two sentences in the New
Revenues paragraph so the paragraph begins with "No new
broad-based taxes." and ends with, "Use at least $100
million in new revenues." He wanted examples of the new
revenues listed on the ballot.
Senator Randy Phillips then suggested the language
describing Plan B include the projected dollar amounts of
the permanent fund dividend of approximately $1750 in the
year 2001 and $1800 in the year 2010.
Senator Al Adams asked if dividend amounts projected under
Plan B should be listed for the years 1999 and 2000 as
well. Senator Randy Phillips responded that he wanted to
make the language for both plans correspond.
Senator Randy Phillips next recommended changing language
in the Permanent Fund Earnings Reserve paragraph of Plan B
to read, "followed by $4 billion in 2011 and $4 billion in
2020.
Senator Randy Phillips wanted to also change the final
paragraph heading of Plan B to "New Revenues" to conform to
Plan A.
Senator Sean Parnell requested that these items be acted
upon as amendments to the amendment as they are proposed.
Senator Randy Phillips concluded his suggestions by saying
he wanted to insert specific dates to indicate when the
income tax and the gasoline tax begin.
Senator Lyda Green asked if the Committee didn't already
question the accuracy of some of the information presented
by the Administration and proposed for insertion into this
amendment. Co-Chair John Torgerson stated he could not
support much of what was before the Committee at this time.
He stressed that if a "side-by-side" approach is taken,
detailed spreadsheets must be provided by the Governor
detailing the Governor's plan.
Senator Dave Donley suggested assigning a subcommittee to
work out the details.
AT EASE 11:19AM / 11:23AM
Senator Randy Phillips moved to amend Amendment #6 (1) to
delete "Spending Limits" from the first paragraph heading
of Plan A. He explained that he originally had included the
language due to discussions about a proposed constitutional
spending limit. However, since there would be no such
constitutional amendment, he wanted the heading to be
clearly labeled as spending reductions. Senator Dave Donley
objected. Senator Randy Phillips pointed out that there is
no mention of a spending limit in either plan. Senator Dave
Donley argued that the amendment itself deleted language
relating to spending limits and that language should be
added to support a constitutional amendment requiring
spending limits.
Senator Randy Phillips WITHDREW his motion. There was no
objection.
Senator Randy Phillips moved to amend Amendment #6 (2) to
insert, "and enact a spending limit" at the end of the
sentence in the first paragraph of Plan A. Senator Gary
Wilken asked what was a "spending limit". Senator Dave
Donley explained the state constitution already contains a
spending limit, but that it has never worked. He wanted to
make it clear to voters that an effective constitutional
spending limit must be enacted in order for a balanced
budget to be successful. He wanted the voters to give that
direction to the legislature during this advisory vote.
Co-Chair John Torgerson advised that the word "enact" could
not be used in this ballot question. He suggested "place
before voters" instead.
Senator Gary Wilken cautioned that there are different
understandings in the legislature of what a spending limit
stands for, suggesting that some take it to mean "tax cap".
He stated that he had no problem with the intent, but had
concerns with the wording and trying to defend it
unprepared. He recommended against a constitutional
amendment until the definition of "spending limit" is
agreed upon.
The motion to amend Amendment #6 (2) FAILED by a vote of 1-
8. Senator Randy Phillips cast the yea vote.
Senator Randy Phillips reintroduced his motion to amend
Amendment #6 (3) to delete "Spending Limits" from the first
paragraph heading of Plan A. He WITHDREW his motion to
defer to Senator Dave Donley.
Senator Dave Donley moved to amend Amendment #6 (4) to
insert, "that is placed before the voters an effective
constitutional spending limit" at the end of the sentence
in the first paragraph of Plan A. Senator Pete Kelly
objected. Senator Dave Donley repeated his comment that the
original committee substitute has a spending limit
provision. He surmised that the only way to enact a
spending limit is through a constitutional amendment. He
stated that the existing constitutional spending limit is
ineffective. He thought it would be fair to suggest to
voters that the constitution should be functional and
amended to include a usable spending limit. He understood
Senator Gary Wilken's concerns regarding the meaning of a
spending limit but noted that most of the implementation of
this plan would be left up to future legislatures. He
speculated that future legislators could draft a proposal
to place before voters to enact an effective spending
limit.
Senator Gary Wilken pointed out the proposed plan has
spending limits that are implied in the numbers shown on
the spreadsheets. He wanted to follow that plan. He
reminded the Committee that a new constitutional spending
limit could be something that future legislatures will not
want. He stressed, "Until we know exactly what we're asking
for, I suggest we not ask for it."
Senator Pete Kelly spoke to his objection saying he
believed the amendment to be too nebulous.
Tape: SFC - 99 #138, Side A 11:32AM
By a vote of 4-5, the amendment to Amendment #6 (4) FAILED
to be adopted. Senator Randy Phillips, Senator Dave Donley,
Senator Sean Parnell and Co-Chair John Torgerson voted in
favor.
Senator Randy Phillips moved to amend Amendment #6 (5) to
delete "Spending Limits" from the first paragraph heading
of Plan A. (This is the same as Amendment #6 (1) and (3).)
Senator Pete Kelly objected. Senator Randy Phillips again
explained his reason for the change is to reflect the
absence of spending limit language in the description. He
noted that there is nothing in the ballot language stating
that reductions would be made after the three years
indicated.
Senator Gary Wilken commented that the plan does contain
spending limits that are implied by the dollar amounts set
for in the plan.
The amendment to Amendment #6 (5) FAILED to be adopted by a
vote of 3-6. Senator Randy Phillips, Senator Dave Donley
and Senator Sean Parnell voted in favor.
Senator Gary Wilken voiced confusion over the language
stating, "at least $100 million over the next three fiscal
years." He referenced the Legislative Majority's existing
five-year budget reduction plan calling for reductions of
$40 million in the year 2000 and $30 million in 2001, the
final year of the plan. He asked if the correct
interpretation of the $100 million reductions retains the
same amount of reductions for those two years plus an
additional $30 million reduction in the year 2002. Senator
Randy Phillips replied that in a prior draft, he had the
amounts specified as $33.3 million reductions for each of
the next three years.
Senator Sean Parnell commented that the intent of the plan
is not to "straight-jacket" future legislatures into one
particular number. Rather, the intent is to give direction
to make $100 million in general fund reductions over the
next three years. He noted that the plan calls for $40
million the first year and $30 million each of the
remaining two years, but he qualified that the reductions
don't have to follow those amounts exactly.
AT EASE 11:36AM / 11:37AM
Senator Gary Wilken moved to amend Amendment #6 (6) to
replace "$100 million" with "$70 million" and replace
"three fiscal years" with "two fiscal years" in the first
paragraph of Plan A. He explained his intent is to
maintain the goal of $40 million in reductions for the year
2000 and $30 million in reductions for the year 2001.
Senator Dave Donley objected, saying he supported
additional reductions.
Co-Chair John Torgerson said he thought the intent of the
amendment is to conform to the Senate Majority's budget
reduction plan, although he understood Senator Dave
Donley's argument as well.
Senator Gary Wilken affirmed Co-Chair John Torgerson's
assessment. He noted that $10 million per year in
reductions are included in the Senate Majority's plan
beginning in 2003.
Senator Al Adams stated he would be voting against the
amendment to the amendment as he believed the reductions
are too broad.
Senator Randy Phillips made inaudible comments.
Senator Dave Donley understood one of the proposed plans
does not have the same level of reductions. He stressed
that one of the things learned from the model is that these
kinds of reductions in the earlier years of the plan make a
tremendous impact later. He believed it is good public
policy to prescribe to this level of reductions because of
the positive future impact.
Senator Sean Parnell thought that his comments regarding to
the $100 million in reductions was causing confusion among
the members. When he referred to the $100 million total, he
was including reductions being made this year plus the next
two. He pointed out that Senator Gary Wilken's amendment to
the amendment only applies to the two years after this
year. The resulting reductions still equal $100 million
after three years.
Senator Lyda Green wanted to know if it is implied there
would be no further spending reductions after the year
2002. Co-Chair John Torgerson noted the language specifies
"at least" so additional reductions could be made.
Amendment #6 (6) was AMENDED by a vote of 6-3. Senator Dave
Donley, Senator Loren Leman and Senator Al Adams voted
against the motion.
Senator Randy Phillips wondered if the ballot language
should specify general areas where the cuts would be made.
Senator Pete Kelly moved to amend the amended Amendment #6
(7) to delete the heading of paragraph 5 of Plan A, "New
Revenues" and insert "No Income Tax". The amended amendment
also changes the description of paragraph 5 by replacing
"No new broad-based taxes" with, "instead of implementing
new broad-based taxes." The two description sentences are
combined into one separated by a comma to be grammatically
correct. He felt using consistent paragraph headings
properly reflects both Plan A and Plan B. Senator Dave
Donley objected to the motion.
Senator Dave Donley was uncertain of the word "use" that
began the description sentence. He wanted to know where the
new revenues are coming from. He suggesting replacing "use"
with "adopt measures to create". In his opinion, that
language would parallel the description given in Plan B.
Senator Pete Kelly had no objection to Senator Dave Donley'
recommendation, but noted that to amend the amendment to
the amendment while it is on the table would be out of
order.
Senator Randy Phillips suggested titling paragraph 5 as,
"Income Tax" and leaving out, "No".
By a vote of 5-4, the amendment to the amended Amendment #6
(7) was ADOPTED. Senator Al Adams, Senator Randy Phillips,
Senator Loren Leman and Co-Chair John Torgerson voted in
opposition.
Senator Loren Leman had drafted language that he felt
reflects the consensus of the members and would be easier
to work from. The new amendment was being copied and he
advised waiting until the copies were ready for
distribution. Co-Chair John Torgerson stated that if the
language was similar to the amendment before the Committee,
the same process would have to be done.
Senator Pete Kelly commented that as a voter, he knew what
he was looking for and that was an option that does not
include taxes. He speculated that the plans would become
known as "the one with no income tax" and "the one with an
income tax." He therefore suggested moving paragraph 5 to
the top of each of the plans, making the income tax item
the first description.
Senator Randy Phillips stressed that the language is to be
drafted objectively, then paragraph five is mislabeled and
should read "Income Tax" on both plans.
Senator Randy Phillips moved to amend the amended Amendment
heading of paragraph 5 of Plan A.
There was no discussion on the motion and no voiced
objection.
The motion to amend the amended Amendment #6 (8) FAILED by
a 2-7 vote. Senator Al Adams and Senator Randy Phillips
cast votes in favor of adoption.
Senator Pete Kelly moved to amend the amended Amendment #6
(9), which moves paragraph 5, NO INCOME TAX to the
beginning of both Plan A and Plan B and renumber the
paragraphs accordingly. Senator Randy Phillips objected,
saying this change slants the language and would sway the
voters. He stressed that this is a biased question and
leads voters in one direction without them considering the
entirety of both plans. He continued to argue in support of
naming this paragraph "Income Tax" in both plans.
Co-Chair John Torgerson noted that the inclusion of "No"
was no longer before the Committee.
Senator Pete Kelly countered that the reordering of the
paragraphs is not biased. He stressed that saying one plan
implements an income tax and the other does not, is not
unfair.
Senator Gary Wilken opposed the motion and hoped the whole
effort does not "boil down" to whether or not there is an
income tax. He felt there was much more to the matter than
just the tax. He used an example of a grocer placing milk
at the back of the store to get shoppers to walk by the
other items. He suggested the income tax description should
be placed at the end of each plan for the same reason; to
get voters to read the other substances of the plans.
Senator Pete Kelly countered that past ballot initiatives
showed him that voters have not "taken that stroll through
the store." As a result, in his opinion, matters have been
brought back before the legislature for repair because the
voters did not have all the information laid-out properly.
He did not think the question was only about an income tax,
but felt the debate would emerge that way.
The motion to amend the amended Amendment #6 FAILED by a
vote of 4-5. Senator Pete Kelly, Senator Lyda Green,
Senator Dave Donley and Co-Chair John Torgerson voted in
favor of the motion.
Senator Gary Wilken moved to amend the amended Amendment #6
(10) to delete the last sentence of paragraph 3 in Plan A
reading, "These dividends are projected to be $1250 in 2001
to $1430 in 2010." Senator Dave Donley objected. Senator
Gary Wilken explained his intent was to make the two plans
comparable. He noted that Plan B does not contain
projections of future dividend payments. He viewed the
dividend amount language in Plan A as a promise and should
not be included.
Senator Randy Phillips planned to offer a new amendment to
insert projected dividends in Plan B after the spreadsheets
were received by the Governor's office. He felt that the
public has the right to know what the plans do to their
dividends to help them make a decision.
Senator Dave Donley felt balance between the two plans was
important, but felt the change should be made to Plan B.
Co-Chair John Torgerson stated that there is no Plan B
because the Governor has not been consistent in detailing
his plan.
Senator Dave Donley remarked that the ballot should state
that the legislature has idea of the projected dividend
under the Governor's plan.
Senator Gary Wilken's pointed out that the voter would not
get the necessary information only on Election Day because
there would be plenty of discussion beforehand. He
described the third paragraph of Plan A, Permanent Fund
Dividends, as making three promises. The first is to
guarantee a dividend, the second promises how the dividends
will be calculated and the third projects the amount of the
dividend. He didn't think the projection fit the ballot
language.
Senator Randy Phillips stated that he disagreed with
Senator Gary Wilken's assessment.
By a vote of 5-4, the amendment to the amended Amendment #6
(10) was ADOPTED. Senator Randy Phillips, Senator Dave
Donley, Senator Al Adams and Senator Sean Parnell cast nay
votes.
Senator Randy Phillips moved to amend the amended Amendment
public safety and transportation" and insert "state
government services". He questioned why the earnings
reserve account was dedicated for just the three services.
Senator Sean Parnell objected.
Senator Dave Donley pointed out that even if permanent fund
earnings are only used for education, public safety and
transportation, the effect still frees general funds for
other uses. Therefore, he believed Senator Randy Phillips's
proposal is a more honest statement, since the current
language implies that only the three departments would be
allowed to increase. He supported the amendment to the
amended amendment
Senator Sean Parnell disagreed, saying that the proposed
language gives the impression that the earnings reserve
would be spent on all government services with no
stipulation. He argued that the current language in the
committee substitute tells the public what the
prioritization will be in a way that can be accounted for.
Because of this, he opposed the amendment to the amended
amendment.
Senator Randy Phillips suggested that it is inconsistent to
specify the spending but not specify the reductions. His
goal is to make the language consistent.
Senator Gary Wilken commented that during his time on the
Committee, he has learned the importance of priorities. He
said he asks his constituents what services they feel are
most important, because they cannot have everything in
times of limited resources. Therefore, he believed this
statement is very important since it clearly lists the
priorities as education, public safety and transportation,
which are the same priorities his constituents value the
most. He noted that available funds would be first claimed
by those three items, but that the plan does not preclude
funding for other services after the priorities are
addressed.
Senator Dave Donley remarked that education, public safety
and transportation are his priorities also, but wanted the
language to state that once the earnings reserve is used to
fund the three, general funds are freed to be used for
other items.
Senator Lyda Green asked if the language implies that there
is an endowment. Co-Chair John Torgerson responded that
the word "endowment" is not used but he did not know if the
implication would be made.
Senator Lyda Green asked if the plan dictates that the
earnings reserve account could be used only for the three
services. She also asked if this is this is the first step
toward using the earnings reserve account. Co-Chair John
Torgerson felt anything could be read into the language.
In his opinion, the three priorities would be the last of
all reductions that would be made.
Senator Gary Wilken said the language did not speak to him
as an endowment, it just gave a very strong commitment to
the priority. He spoke to the projected growth allowed for
the three services while the rest of state government would
be held flat. He surmised that this language backs up the
plan and the inclusion of growth allowance on the
spreadsheets.
Senator Loren Leman didn't disagree that these services are
high priority items. However, the noted that there is a
big difference between identifying something as a high
priority and not scrutinizing expenditures to find better
ways to deliver services. He stated he would support the
amendment but felt the high priority services should be
scrutinized as high as the others would.
The amendment to the amended Amendment #6 (11) FAILED to be
adopted by a vote of 4-5. Senator Lyda Green, Senator Randy
Phillips, Senator Dave Donley and Senator Loren Leman voted
in favor of the motion.
Senator Randy Phillips moved to conceptually amend the
amended Amendment #6 (12) to insert projected dividend
amounts for the years 2001 and 2010 from spreadsheets
detailing Plan A and Plan B with the language, "these
dividends are projected to be. " He noted that the
projected numbers were not yet available yet, he wanted to
tell the public what the projected dividends would be under
each plan.
Senator Sean Parnell objected and pointed out that the only
plan adopted by the Governor was that portrayed in the
State of the State address. However, the spreadsheet
provided by the Department of Revenue at this meeting
detailing the Governor's plan, reflected a different plan.
He surmised that the projections would not be accurate
since there is not a clear understanding of the Governor's
plan. He did not want to make projections based on anything
but the plan detailed in January since that is the only
plan the Governor has ratified.
Co-Chair John Torgerson agreed but noted that the sponsor
of the motion did not agree.
Senator Al Adams suggested using the numbers from the
spreadsheet before the members today and inserting those
projections for the Governor's plan.
There was further discussion about what the Governor's plan
currently was, where the information detailed on the
spreadsheets came from and whether the Governor had seen
those figures
By a vote of 3-6, the amendment to the amended amendment
FAILED to be adopted. Senator Randy Phillips, Senator Dave
Donley and Senator Al Adams cast votes in favor of
adoption.
Senator Randy Phillips moved to withdraw his name as the
sponsor of the amended Amendment #6 (13). There was
clarification as to the intent of the motion. Senator Al
Adams objected, noting the Committee had spent time on this
amendment. He withdrew his objection and Senator Randy
Phillips's name was removed as the sponsor of Amendment #6
as amended.
AT EASE 12:18PM / 12:24PM
Senator Pete Kelly moved for adoption of Amendment #6 as
amended. There was objection (inaudible). The amended
amendment read as follows:
Plan A
Summary of Plan A: Plan A has further spending
reductions. Dividends are a percentage of the value of
the Alaska Permanent Fund. This plan has no personal
income tax.
(1) Spending Reductions/Spending Limits
Continue state general fund budget reductions of
at least $70 million over the next two fiscal
years.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is inflation-
proofed to protect the value of the principal of
the fund for all Alaskans, including future
generations.
(3) Permanent Fund Dividends
Guarantee a dividend is paid to qualified Alaska
residents at a minimum of $1,700 in 1999 and
$1,700 in 2000. Thereafter, the annual dividend
is based on a rate of 2.75 percent of the market
value of the Alaska Permanent Fund, including the
Alaska Permanent Fund Earnings Reserve Account.
(4) Permanent Fund Earnings Reserve
Guarantees inflation-proofing the Alaska
Permanent Fund and pays Permanent Fund Dividends,
then prioritizes remaining funds in the Alaska
Permanent Fund Earnings Reserve Account for
education, public safety, and transportation.
(5) No Income Tax
Use at least $100 million in new revenues,
instead of implementing new broad-based taxes.
Plan B
Summary of Plan B: Plan B has no further state
spending reductions. Dividends from the Alaska
Permanent Fund are calculated under the current
method. This plan includes a personal income tax.
(1) Spending Reductions
No further reductions to state spending.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is inflation-
proofed to protect the value of the principal of
the fund for all Alaskans, including future
generations.
(3) Permanent Fund Dividends
Dividend will not be changed from the current
formula and method of calculation.
(4) Permanent Fund Earnings Reserve
Immediately transfer $4 billion from the
permanent fund earnings to the Constitutional
Budget Reserve Fund with an additional $4 billion
dollars in 2011, and $4 billion dollars in 2020.
Spend the Constitutional Budget Reserve Fund
earnings for state government services.
(5) Income Tax
Impose a personal income tax on all wage earners
projected to be 31 % of a person's federal income
tax, collecting $350 million.
Senator Dave Donley voiced a conceptual concern with the
deletion of the projected dividend amounts under Plan B.
He felt the current description of Plan B is misleading
because ordinary citizens would not see either plan as
having an effect on the dividend, since they would not
understand the methods of calculation. He believed a
disclaimer should be placed in the ballot language that
identifies the fact that the legislature does not know the
impact on the dividends under Plan B. He suggested
conceptual language to indicate, "because of withdrawals of
$4 billion from the permanent fund, the dividends may drop
as low as." He could not support the amended amendment on
the table without an explanation of the possible impact.
Tape: SFC - 99 #138, Side B 12:26PM
Senator Gary Wilken wanted the ballot language to include
projected dividend amounts. However, he did not support
having dividend amounts in one plan but not the other. He
suggested reporting the bill out of Committee and inserting
the projected dividend amounts into the ballot language
later.
Senator Gary Wilken asked if that would satisfy Senator
Dave Donley's concerns. Senator Dave Donley responded that
the Senate body was waiting for this bill. He didn't know
when that information would be available or if there would
be an opportunity to insert figures later. He restated he
could not support the amendment without the inclusion of
either the projected amounts or an explanation of why they
are not included.
Senator Gary Wilken clarified what would be before the
Senate if Amendment #6 as amended were not adopted.
Senator Dave Donley pointed out that Senator Loren Leman
had Amendment #8 that could accomplish his intentions.
Senator Pete Kelly stated the Committee was running out of
time and the body of the amendments is positive, reflects
the work of the Committee and that it is important the bill
passes. He suggested that Senator Dave Donley sign the
committee report and indicate the need for further
amendments. He noted that Senator Dave Donley would have
plenty of opportunities to voice his objections if the bill
is not amended to his satisfaction.
Senator Dave Donley was not asking the Committee to stop
actions because of him. He was just voicing his own
opinion.
Senator Pete Kelly remarked that if this amendment does not
pass, it would only slow the process. He believed it is
important that this amendment is incorporated into the
committee substitute.
Amendment #6 as AMENDED was ADOPTED by a vote of 5-4.
Senator Loren Leman, Senator Al Adams, Senator Randy
Phillips and Senator Dave Donley cast nay votes.
Amendment #7: This amendment inserts into the ballot
language, "Please select one: ___Plan A ___Plan B". The
amendment does not specify where on the ballot this is
placed. Senator Randy Phillips moved for adoption. Senator
Pete Kelly objected to ask whether the amendment asks the
voter to chose Plan A and/or Plan B. Senator Randy Phillips
clarified that the question is simply Plan A or Plan B. He
offered to change the question if the Committee preferred.
Senator Sean Parnell offered a technical amendment to
instruct the bill drafter to conform this amendment to the
remainder of the bill should it pass. He noted it would
require a change to the language in the preamble as well as
a change to language in the body of the bill. The current
committee substitute stipulates each plan has a "yes" or
"no" choice, thus allowing the voter to vote in opposition
to both plans.
Senator Pete Kelly removed his objection.
Senator Dave Donley objected. He believed it was important
to give the voters a choice to vote against both plans.
Senator Pete Kelly commented that in some respects, the
legislature was advocating its responsibility. However, he
believed these are special circumstances because the plan
is very large. He assessed the expectation of the public is
that balanced budget plans will be presented to them. He
warned that if the legislature further advocated its
responsibility by placing plans before voters that could
possibly give no direction, essentially nothing is
accomplished. He admonished that a year's worth of debate
will have been wasted. He noted that the current ballot
language presents four possibilities for the voters to
select with the yes or no option available for each plan.
He cautioned that the election could result in no winner or
a plan that wins with only 26-percent of the votes. He
stressed that the legislature needs to provide more
leadership than that. He noted that there has been a great
deal of public input in the matter already and that the
legislature has responded to the objections raised. "It is
now time to put before them a plan - A or B, and live with
the consequences."
Senator Dave Donley respected that opinion but disagreed
with it.
Senator Lyda Green wanted to know there was a possibility
that neither plan would be voted as acceptable.
By a vote of 4-5, the amendment FAILED to be adopted.
Senator Randy Phillips, Senator Loren Leman, Senator Gary
Wilken and Senator Pete Kelly voted in favor of the motion.
Amendment #5: No motion was made to reintroduce this
amendment so it was WITHDRAWN.
Amendment #8: This amendment changes the election date to
October 5, and changes the ballot language to the
following:
QUESTION
Preamble: The state treasury's reliance upon declining
Alaska oil production and volatile oil prices
constitutes an unsustainable state budget system. The
legislature and governor seek Alaskan's input in
selecting a long-term balanced budget plan. Please
mark `yes" beside the plan that you believe the
legislature and governor should implement
"Plan A" Description
Summary of Plan A: This plan proposes further spending
reductions and that dividends will be guaranteed at a
particular rate. This plan also proposes no personal
income tax. In more detail, the plan would provide as
follows:
(1) Spending Reductions/Spending Limit: Continue making
state general fund spending reductions of at least
$70,000,000 over the next two years and enact a
constitutional spending limit.
(2) Permanent Fund: Ensure the Alaska permanent fund is
inflation proofed to protect the value of its
principal for all Alaskans, including future
generations.
(3) Permanent Fund Dividends: Guarantee a dividend is
paid to qualified Alaska residents of at least $1,700
in 1999 and $1,700 in 2000, and thereafter at a rate
of 2.75 percent of the market value of the Alaska
permanent fund, including the Alaska permanent fund
earnings reserve account.
(4) Permanent Fund Earnings Reserve: After inflation
proofing the Alaska permanent fund and paying
permanent fund dividends, use additional funds in the
Alaska permanent fund earnings reserve account to
fund state government. The constitutional budget
reserve fund will be transferred to the Alaska
permanent fund earnings reserve account.
(5) New Revenues: Collect at least $100,000,000
in new revenues. A personal income tax would not
be enacted.
Plan A [ ]
"Plan B" Description
Summary of Plan: Plan B proposes no further state
spending reductions. Further, it proposes
implementation of a personal income tax, and
calculation of permanent fund dividends under the
current statutory method. In more detail, the plan
would provide as follows:
(1) Spending Reductions/Spending Limits: Make not
further state general fund spending reductions nor
enact a constitutional spending limit.
(2) Permanent Fund: Ensure the Alaska permanent fund is
inflation proofed to protect the value of its
principal for all Alaskans, including future
generations.
(3) Permanent Fund Earnings Reserve: Transfer
$4,000,000,000 from permanent fund earnings to the
constitutional budget reserve fund. Use
constitutional budget reserve fund earnings to fund
government operations.
(4) Permanent Fund Dividends: The formula for
calculating the dividend would not be changed from
the current method of calculation.
(5) New Revenues: Implement a personal income tax to
collect $350,000,000 in new revenues.
Plan B [ ]
Senator Loren Leman moved for adoption.
AT EASE 12:40PM / 12:44PM
Senator Loren Leman prepared this amendment in the interest
of saving time, but noted that the Committee had already
spent that time in debating Amendment #6.
Senator Loren Leman moved to WITHDRAW his motion to adopt
Amendment #8. There was no objection.
Senator Sean Parnell made a motion to report CS SB 76 (FIN)
as amended from Committee with accompanying fiscal note.
There was no objection and it was so ordered.
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