Legislature(2007 - 2008)BARNES 124
03/22/2007 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB185 | |
| HB152 | |
| HB202 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 185 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 152 | TELECONFERENCED | |
| += | HB 202 | TELECONFERENCED | |
HB 202-COMMUNITY REVENUE SHARING 9:09:00 AM CO-CHAIR FAIRCLOUGH announced that the final order of business would be HOUSE BILL NO. 202, "An Act relating to the community revenue sharing program; and providing for an effective date." 9:09:24 AM CO-CHAIR LEDOUX moved, for discussion purposes, that the committee adopt Conceptual Amendment 1, labeled 25-LS0489\K.2, Cook, 3/21/07, which read: Page 1, lines 1 - 2: Delete all material and insert: ""An Act relating to the community dividend income program, to the community dividend income account, and to transfers of money from the earnings reserve to the community dividend income account; and providing for an effective date."" Page 1, line 4, through page 4, line 2: Delete all material and insert: "* Section 1. AS 29.60 is amended by adding new sections to read: Article 11. Community Dividend Income Program. Sec. 29.60.850. Amount of community dividend income payments. (a) Each fiscal year, the department shall distribute the amount appropriated under AS 37.13.147(b) from the community dividend income account for the community dividend income program as community dividend income payments under this section. The basic community dividend income payment for a fiscal year equals (1) $250,000 for a borough or unified municipality; (2) $75,000 for a reserve eligible under AS 29.60.860(a) or a city; (3) $25,000 for an unincorporated community in a borough or unified municipality eligible under AS 29.60.860; and (4) $25,000 for an unincorporated community in the unorganized borough eligible under AS 29.60.860(a). (b) If the amount appropriated for a fiscal year under AS 37.13.147(b) from the community dividend income account (1) exceeds $60,000,000, but is not more than $70,000,000, each payment (A) under (a)(1) of this section is increased by $50,000; (B) under (a)(2) of this section is increased by $15,000; and (C) under (a)(3) of this section is increased by $5,000; (2) exceeds $70,000,000, each payment under (a)(1) - (3) of this section is further increased by the amounts specified in (1)(A) - (C) of this subsection for each increment of at least $10,000,000 in excess of $70,000,000. (c) If the amount appropriated for a fiscal year is not sufficient to fully fund all the basic community dividend income payments under (a) of this section, the amount paid to each recipient shall be reduced on a pro rata basis so that the entire amount appropriated is distributed. Sec. 29.60.860. Unincorporated community eligibility. (a) The department, with advice from the Department of Law, shall determine whether there is, in each reserve or unincorporated community, an incorporated nonprofit entity or a Native village council that will agree to receive and spend the community revenue sharing payment for the benefit of the reserve or unincorporated community. The department may make the payment for an unincorporated community located in a borough or unified municipality only to the municipality as provided in (b) of this section. If there is more than one qualified entity in a reserve or unincorporated community located in the unorganized borough, the department shall pay the dividend to the entity that the department finds most qualified to receive and spend the money. The department may not make a payment for a reserve or an unincorporated community unless the incorporated nonprofit entity or Native village council waives immunity from suit for claims arising out of activities of the corporation or council related to the payment. A waiver of immunity from suit under this subsection must be on a form provided by the Department of Law. If there is not a qualified incorporated nonprofit entity or Native village council in a reserve or unincorporated community that is willing to receive and spend the community revenue sharing payment for the benefit of the reserve or unincorporated community, that reserve or unincorporated community is not eligible for the payment, and the payment may not be made. (b) The department may make a community revenue sharing payment on behalf of an unincorporated community in a borough or unified municipality only to the municipality for payment by the municipality to an incorporated nonprofit entity or Native village council that has been approved by the assembly. The department must have written evidence of the assembly approval. The assembly may only approve an incorporated nonprofit entity or Native village council that provides at least three of the following services within the unincorporated community that are generally available to all residents of the unincorporated community: (1) fire protection; (2) emergency medical; (3) water and sewer; (4) solid waste management; (5) public road or ice road maintenance; (6) public health; (7) search and rescue. Sec. 29.60.879. Definitions. In AS 29.60.850 - 29.60.879, (1) "reserve" means a place that is organized under federal law as an Indian reserve that existed before enactment of 43 U.S.C. 1618(a) and is continued in existence under that subsection; (2) "unincorporated community" means a place that is not incorporated as a city, is not a reserve, and in which 25 or more persons reside as a social unit. * Sec. 2. AS 37.13.140 is amended to read: Sec. 37.13.140. Income. Net income of the fund includes income of the earnings reserve account established under AS 37.13.145, but does not include income of the community dividend income account established under AS 37.13.147. Net income of the fund shall be computed annually as of the last day of the fiscal year in accordance with generally accepted accounting principles, excluding any unrealized gains or losses. Income available for distribution equals 21 percent of the net income of the fund for the last five fiscal years, including the fiscal year just ended, but may not exceed net income of the fund for the fiscal year just ended plus the balance in the earnings reserve account described in AS 37.13.145. * Sec. 3. AS 37.13 is amended by adding a new section to read: Sec. 37.13.147. Community dividend income account. (a) The community dividend income account is established as a separate account in the fund. Money in the account shall be invested in investments authorized under AS 37.13.120 and the income shall be retained in the fund. (b) The corporation shall calculate and request an appropriation for each fiscal year from the community dividend income account of an amount that equals five percent of the year-end market values of the account, averaged over the preceding three fiscal years. The amount requested may be appropriated from the account to the Department of Commerce, Community, and Economic Development for community dividend income payments under AS 29.60.850 - 29.60.879, or money may be appropriated in any amount for any public purpose. Nothing in this subsection creates a dedicated fund. * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION. (a) After the transfers under AS 37.13.145(b) and (c), on July 1, 2007, the Alaska Permanent Fund Corporation shall transfer $1,000,000,000 from the earnings reserve account to the community dividend income account (AS 37.13.147) established in sec. 3 of this Act. (b) Notwithstanding AS 37.13.147(b), the Alaska Permanent Fund Corporation may not request an appropriation from the community dividend income account for fiscal year 2008. The amount the corporation requests for fiscal year 2009 equals the year-end market value of the account for fiscal year 2008. The amount the corporation requests for fiscal year 2010 equals the year-end market value of the account averaged over the preceding two fiscal years. * Sec. 5. This Act takes effect July 1, 2007." CO-CHAIR LEDOUX related that she has offered Representative Seaton, sponsor of Conceptual Amendment 1, the ability to discuss Conceptual Amendment 1. However, she announced that she doesn't support Amendment 1. 9:10:46 AM REPRESENTATIVE PAUL SEATON, Alaska State Legislature, related that he is very supportive of revenue sharing and community dividends. However, he expressed concern that the mechanism for funding is problematic since Legislative Finance is predicting that the state will be in a deficit situation next year and in a deficit situation in the state's cash account through 2017 when the gasline is anticipated. He opined that it's unlikely that the legislature will divert approximately 6 percent of its total revenue stream. Therefore, Conceptual Amendment 1 provides a different revenue stream to fund the community dividend program. The idea is to utilize the Amerada Hess fund, which is within the permanent fund but can't be used for personal dividends. The notion is to add more money to the Amerada Hess fund that could be "streamed out" on a 5 percent of market value (POMV), "which the House passed by two-thirds to put it on a constitutional amendment several years ago, but that was to do the entire permanent fund. This amendment simply looks at the Amerada Hess fund as well as some additional funds. However, there was some resistance to utilizing Amerada Hess funds because some members feel that revenue stream is necessary for capital expenditures. This [amendment] takes money from the earnings reserve and leaves it there, while establishing a new account within the permanent fund to generate revenue with a spin off of 5 POMV to fund the community dividend program. Representative Seaton said this is important because the governor has included $48 million in her budget, but it hasn't been included in the House's budget. 9:14:06 AM REPRESENTATIVE NEUMAN surmised that Representative Seaton's proposal would still take money from the earnings reserve of the permanent fund dividend. REPRESENTATIVE SEATON noted his agreement that all previous programs said that money would be taken from the earnings reserve to be placed in the general fund. However, Conceptual Amendment 1 doesn't do that as it merely establishes an account within the earnings reserve from which money generated from that account could be utilized by the legislature. The aforementioned would be decided by the legislature each year, although it wouldn't remove a significant amount of money to be placed in the general fund. Representative Seaton pointed out that his proposal would remain in the permanent fund and be managed by the permanent fund, but the 5 POMV structure would be used on the account. In further response to Representative Neuman, Representative Seaton clarified that his proposal doesn't take $1 billion out of the earnings reserve but rather establishes an account within the earnings reserve of the permanent fund from which spin off funds would be calculated and could be appropriated by the legislature. "This deposit does not remove money from the earnings reserve, it simply establishes another account similar to Amerada Hess within the permanent fund," he clarified. 9:16:45 AM CO-CHAIR LEDOUX surmised that this proposed account does impact the permanent fund dividend. REPRESENTATIVE SEATON replied yes, and noted that he has a spreadsheet from the Permanent Fund Corporation relating the impact. He offered to review it for the committee. 9:17:09 AM REPRESENTATIVE DAHLSTROM recalled that the governor has made statements pertaining to funding for various municipal issues while being clear on her position with regard to the permanent fund dividend. Therefore, Representative Dahlstrom said that she doubted that the legislature would receive the governor's support for [the proposal embodied in Conceptual Amendment 1]. Although there are various feelings and interpretations regarding Amerada Hess, the previous legislature found it to be a revenue stream. However, she opined that creating what's proposed in Conceptual Amendment 1 is troubling and probably won't be supported by this administration. Furthermore, Representative Dahlstrom said that she can't support Conceptual Amendment 1 because of her commitment to not spend permanent fund money without a vote of the people. 9:19:08 AM REPRESENTATIVE CISSNA recalled the years in which the legislature has been reviewing how to finance state government in the face of deficits. For a number of years, endowments were considered. She asked if that's essentially what Conceptual Amendment 1 proposes in that it takes the increases in value of a percentage of funds [within the permanent fund]. She related her understanding that the corpus of the account wouldn't be touched. REPRESENTATIVE SEATON said Representative Cissna is basically correct. In the past, the [legislature] reviewed taking the entire permanent fund and creating a POMV endowment, which would've utilized a portion of the principle and that would've required voter [approval]. However, the earnings are available to the legislature for appropriation and by statute the legislature appropriates up to 50 percent of the earnings, averaged over five years, to pay for the permanent fund dividend. The legislature hasn't utilized the earnings, although there have been times when it has taken the earnings and re-deposited that into the principle. Conceptual Amendment 1 doesn't propose any of those and doesn't eliminate a future legislature's option because it can always remove the account or appropriate the account. Generally, when the legislature establishes a program that spins off money, it reappropriates the funds if the program is working well. Representative Seaton pointed out that this [proposed] fund isn't sweepable. He characterized this proposal as the most protected manner in which to have something without having a dedicated fund, which is prohibited by Alaska's constitution. REPRESENTATIVE CISSNA related her experience that the legislature has continually declined to put monies aside for revenue sharing. She asked in what way this would be an improvement over other revenue sharing suggestions. REPRESENTATIVE SEATON opined that he didn't believe most legislators would set aside 6 percent of the state's revenue stream when facing predictions of 10 years of deficit spending. Under the proposal embodied in Conceptual Amendment 1 money can be appropriated by the legislature, but it doesn't take the deposit out of the permanent fund and thus continues to be managed by the Permanent Fund Corporation. 9:24:01 AM CO-CHAIR FAIRCLOUGH observed that there is a great divide on this issue and the funding stream. She asked if the committee is interested in hearing a point-by-point review of the amendment. REPRESENTATIVE NEUMAN said that he can't support Conceptual Amendment 1 without voter approval. REPRESENTATIVE DAHLSTROM related that she doesn't believe it would be worth the committee's time to review Conceptual Amendment 1. She reiterated that she can't support the amendment. 9:24:55 AM CO-CHAIR LEDOUX withdrew Conceptual Amendment 1. There being no objection, it was so ordered. REPRESENTATIVE SEATON thanked the committee for allowing him to bring the proposal forward. He then drew attention to page 1, line 22 through page 2, line 8, [of Conceptual Amendment 1] and noted the lack of indexing the base community allotments to increase funding. 9:26:25 AM REPRESENTATIVE CISSNA opined that revenue sharing just has to happen. Although touching the general fund never seems to fly, she hoped that people will remember that there are other alternatives. 9:27:20 AM REPRESENTATIVE NEUMAN related his belief that considerable amounts from the general fund have been spent on revenue sharing programs throughout the state. He specified that such funds have come through discretionary funds and capital funds. 9:28:35 AM CO-CHAIR LEDOUX moved to report HB 202 out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE OLSON objected, noting that the legislation has the following two problems: the funding source and the fiscal note. Representative Olson related his support for revenue sharing, but opined that HB 202 isn't the appropriate vehicle. He mentioned that he had provided an amendment to the sponsor that would've had a $32-$34 million fiscal note, but that he wouldn't offer it. 9:29:52 AM REPRESENTATIVE CISSNA asked if Representative Olson is thinking of introducing legislation on this matter. REPRESENTATIVE OLSON answered, "Not at this time, no." In further response to Representative Cissna, Representative Olson indicated that he wouldn't offer his alternative as an amendment on the House floor, but offered to provide it to Representative Cissna. 9:30:16 AM REPRESENTATIVE DAHLSTROM related her understanding that the House Finance Committee is reviewing other avenues [to fund revenue sharing]. 9:30:40 AM REPRESENTATIVE NEUMAN said that he will allow HB 202 to pass from the House Community and Regional Affairs Standing Committee for discussion in the House Finance Committee, although he doesn't totally agree with the funding sources and amounts. CO-CHAIR LEDOUX related her understanding that the House Finance Committee is studying the issue of revenue sharing and a vehicle is necessary. The funding source and percentage, she opined, will be left to the House Finance Committee. 9:31:45 AM REPRESENTATIVE OLSON commented that he won't be offering his amendment or alternative legislation because he doesn't have the time to do it correctly. 9:32:07 AM CO-CHAIR FAIRCLOUGH related her understanding that [the House Finance Committee members] are looking for a vehicle for revenue sharing, but it doesn't mean that it will be from the operational side of the budget. As pointed out earlier, it's difficult to find a dedicated revenue stream when 80 percent or more of the state's budget is based on oil prices and declining oil production. She mentioned her great empathy for the desire to create a stabilized stream and will support HB 202 moving forward. However, she noted her agreement with Representative Olson regarding the percentage. She highlighted that 2 percent is much more in line with the revenue sharing brought forward by the House Finance Committee in a previous year. 9:34:10 AM CO-CHAIR LEDOUX said that the 6 percent sends a strong message and the House Finance Committee can do what it will based on the financial information it has. 9:34:31 AM REPRESENTATIVE SALMON related his support for HB 202. 9:34:54 AM REPRESENTATIVE DAHLSTROM noted her agreement with Co-Chair Fairclough as the intent of HB 202 is worthy, although she anticipated changes in the House Finance Committee. REPRESENTATIVE OLSON maintained his objection. 9:35:24 AM A roll call vote was taken. Representatives Dahlstrom, Neuman, Cissna, Salmon, LeDoux, and Fairclough voted in favor of reporting HB 202 from committee. Representative Olson voted against it. Therefore, HB 202 was reported out of the House Community and Regional Affairs Standing Committee by a vote of 6-1.
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