Legislature(2003 - 2004)
06/23/2004 03:43 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JOINT RESOLUTION NO. 102
Proposing amendments to the Constitution of the State
of Alaska relating to and limiting appropriations from
the Alaska permanent fund based on an averaged percent
of the fund market value and relating to permanent fund
dividend payments.
Representative Foster MOVED to report HJR 102 out of
Committee with individual recommendations and with the
accompanying fiscal notes. There was objection for purpose
of discussion.
CHERYL FRASCA, DIRECTOR, DIVISION OF MANAGEMENT & BUDGET,
OFFICE OF THE GOVERNOR, explained the bill, which would
provide a constitutional distribution of 5 Percent of the
Market Value (POMV) of the Permanent Fund: 50% to dividends,
45% to education and 5% as a community dividend. There would
be a ten-year sunset provision. Ms. Frasca noted, "it would
be up to a legislature a decade from now to decide what it
wanted to bring back to the voters."
Representative Stoltze stated that he had a problem putting
a sunset provision into the Alaska Constitution. He felt
that it would erode public confidence and pointed out that
any Committee Chair could "obliterate" all the plans and
protections [provided under the legislation] through the
legislative process.
Representative Joule MOVED to ADOPT a conceptual amendment
changing the distribution to: 60% to dividends, 32.5% to
state functions, and 7.5% to municipalities. Co-Chair
Williams OBJECTED.
Co-Chair Williams referred to the constitutional approach
and noted that it would take two years to implement due to
voting requirement.
In response to a question by Representative Croft, Ms.
Frasca clarified that the legislation was drafted with a
sunset. A future legislature would have to place on the
ballot either the same proposal or a new proposal. "The idea
was, is that, when we look forward over a decade, in ten
years we don't know what Alaska is going to be like." Future
revenues are anticipated from resource development. The
Administration felt it was important to give a future
legislature the latitude to determine what is the best fit
for the circumstances at that time. A ratification approach
would only allow the continuation of the process that was in
place in 2004.
Representative Croft concluded that the entire committee
process would have to [be repeated] in 2014 [under the
constitutional approach].
Representative Hawker pointed out that the ballot initiative
to establish the Permanent Fund stressed that the Fund would
be used to establish stable state funding when oil and gas
revenues were gone. He observed that the proposal would take
50% of these funds off the table for dividends.
Ms. Frasca responded that the creation of the dividend
expanded the use of the Fund. The interpretation that a use
of the Fund should be for dividends is supported by the
statutory actions of the legislature. The legislation would
put into the Constitution what has become practice in terms
of dividends and education.
Representative Hawker questioned if the Administration was
comfortable in placing dividends as the top priority of
state funding.
Ms. Frasca noted that the Administration is comfortable with
the use of funds for dividends and education. The 5 percent
payout for municipalities establishes a new program.
REPRESENTATIVE ETHAN BERKOWITZ questioned if anyone had
looked at increasing the 25 percent [deposit into the Fund]
from mineral leases to 50 to 100 percent.
ROBERT D. STORER, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND
CORPORATION, DEPARTMENT OF REVENUE, stated that he could
provide the information, but speculated that the Fund size
and income from the Fund would increase.
In response to a question by Representative Berkowitz, Ms.
Frasca was not aware of any proposals by the Administration
to increase the deposit amount [from mineral leases]. She
questioned if the suggestion by Representative Berkowitz
would be for all revenues to go into the Permanent Fund.
Representative Berkowitz stated that he wanted to consider a
change and asked for additional information, which Mr.
Storer promised to provide.
Representative Joule reiterated his conceptual amendment for
distribution of a 5 percent POMV: 60 personal dividend, 35.2
percent to state spending, and 7.5 for municipalities.
Representative Hawker stated that he would be in favor of an
increased municipal dividend with a 50 percent dividend
payout.
Representative Joule noted that constituents seem to favor a
distribution of 60 percent to dividends. He spoke in support
of the amendment.
Vice-Chair Meyer spoke in support of a 50 percent dividend
and a 10 percent municipal dividend.
Representative Croft spoke in support of the amendment. He
noted that a third of the payout would be upwards of $425
million dollars [for state spending]. Communities would
receive approximately $105 million dollars, which is close
to the amount paid by the municipal assistance program
before reductions.
A roll call vote was taken on the motion by Representative
Joule to change the distribution amounts.
IN FAVOR: Croft, Foster, Joule, Moses, Stotlze
OPPOSED: Fate, Hawker, Meyer, Chenault, Williams
Co-Chair Harris was absent from the vote.
The MOTION FAILED (5-5).
Representative Foster MOVED to report HJR 102 out of
Committee with the accompanying fiscal notes. Representative
Fate OBJECTED. He spoke against eroding the power of the
legislature.
Vice-Chair Meyer stressed the importance of the POMV
approach. He felt that it merited further debate on the
House Floor.
Representative Stoltze and Representative Hawker agreed with
the remarks of Vice-Chair Meyer.
Representative Joule noted that the public needs to be
convinced of the importance of the POMV.
REPRESENTATIVE NICK STEPOVICH pointed out that the public is
wary of the way the legislature spends its money.
A roll call vote was taken on the motion to move the bill
from Committee.
IN FAVOR: Foster, Hawker, Joule, Meyer, Stoltze, Williams
OPPOSED: Fate, Chenault, Croft, Moses
Co-Chair Harris was absent from the vote.
The MOTION PASSED (6-4).
HJR 102 was REPORTED out of Committee with a "do not pass"
recommendation and with a zero fiscal note by the Department
of Revenue and a fiscal impact note by the Office of the
Lieutenant Governor.
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