Legislature(2019 - 2020)GRUENBERG 120

05/03/2019 01:00 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 25 Minutes Following Session --
+ HB 123 ELECTRIC-ASSISTED BICYCLES TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 110 VEHICLES/BOATS: TRANSFER ON DEATH TITLE TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HJR 18 CONST AM: PERMANENT FUND; POMV;EARNINGS TELECONFERENCED
Failed to Move Out of Committee
+= HB 115 ABSENTEE VOTING TELECONFERENCED
Scheduled but Not Heard
         HJR 18-CONST AM: PERMANENT FUND; POMV;EARNINGS                                                                     
                                                                                                                                
1:49:59 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN announced  that the next order of  business would be                                                               
HOUSE  JOINT  RESOLUTION NO.  18,   Proposing  amendments to  the                                                               
Constitution  of  the State  of  Alaska  relating to  the  Alaska                                                               
permanent fund  and to appropriations  from the  Alaska permanent                                                               
fund.                                                                                                                           
                                                                                                                                
1:50:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    JONATHAN     KREISS-TOMKINS,    Alaska    State                                                               
Legislature, said  HJR 18 would do  two things.  First,  he said,                                                               
it would roll  the Permanent Fund earnings  reserve account (ERA)                                                               
into the principal  so that the entirety of  the Alaska Permanent                                                               
Fund  is constitutionally  protected. Second,  he said,  it would                                                               
provide for an annual 5 percent  of market value (POMV) draw from                                                               
the new, combined, and  constitutionally protected Permanent Fund                                                               
that  cannot   be  broken   and  cannot   be  overdrawn   by  the                                                               
legislature.                                                                                                                    
                                                                                                                                
1:51:10 PM                                                                                                                    
                                                                                                                                
KEVIN  MCGOWAN,  Staff, Representative  Jonathan  Kreiss-Tomkins,                                                               
Alaska  State  Legislature, said  it  is  worth noting  that  the                                                               
Alaska  Permanent Fund  Corporation has  issued four  resolutions                                                               
that mention  support for a constitutionalized  POMV: Resolutions                                                               
00-13,  03-05, 04-09,  and 18-04.   He  quoted Resolution  04-09:                                                               
"Now, therefore,  be it  resolved by the  Board of  Trustees that                                                               
the Board reaffirms its commitment  to a constitutional amendment                                                               
that  provides for  protection of  the Fund  by application  of a                                                               
POMV payout mechanism."                                                                                                         
                                                                                                                                
1:51:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN  asked why this  is being presented  as an                                                               
amendment to the Constitution of the State of Alaska.                                                                           
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS said  there are  two reasons,  the                                                               
first of  which is  that the current  structure of  the Permanent                                                               
Fund  is susceptible  to risk.   He  said a  "rough patch  in the                                                               
economy  or the  markets"  could cause  the  ERA to  dramatically                                                               
contract and  potentially hit  zero.  He  noted that  this nearly                                                               
happened during the Great Recession.   He said that, under Senate                                                               
Bill 26  [Passed during the Thirtieth  Alaska State Legislature],                                                               
a  zeroed-out ERA  would mean  an inability  to fully  distribute                                                               
Permanent  Fund dividends  (PFDs) and/or  pay for  certain public                                                               
services.   He opined that  HJR 18 would resolve  the unnecessary                                                               
risk of  having a volatile ERA  and simply hoping it  can survive                                                               
market downturns.   He said  the second reason for  introducing a                                                               
constitutional amendment is for  the legislature to resolve never                                                               
to draw more  than a sustainable amount from  the permanent fund.                                                               
He  said 5  percent  would  be the  cap  and  this would  forever                                                               
protect the Permanent Fund.                                                                                                     
                                                                                                                                
REPRESENTATIVE EASTMAN  asked what  he anticipates the  impact of                                                               
the constitutional amendment to be on the PFD.                                                                                  
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  said  there would  be  no  direct                                                               
impact on the PFD and noted that  the PFD is not mentioned in the                                                               
amendment.  He stated he does  not mean to pretend that there are                                                               
not indirect  impacts to the PFD.   He said, "When  we talk about                                                               
the  Permanent Fund  [and] ...  the state  budget, everything  is                                                               
interconnected."   He said that,  ultimately, HJR 18  would leave                                                               
it  to the  Legislature to  decide what  the PFD  should be.   He                                                               
said, if it  were the will of the legislature,  it could continue                                                               
to pay the full statutory amount of  the PFD.  He noted that this                                                               
year's dividend  amount is approximately  $1.9 billion and  the 5                                                               
percent POMV draw is approximately $2.9  billion.  He said HJR 18                                                               
intentionally  does not  address the  question  of the  PFD.   He                                                               
stated it  is not his intent  to promote a dividend  of a certain                                                               
size through the amendment.  He  said his primary concern is that                                                               
there might not  be dividends in coming decades  if the Permanent                                                               
Fund is not fully constitutionally protected.                                                                                   
                                                                                                                                
1:56:10 PM                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN  opened   public  testimony  on  HJR   18.    After                                                               
ascertaining  that  no one  else  wished  to testify,  he  closed                                                               
public testimony.                                                                                                               
                                                                                                                                
1:57:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN highlighted language  located in section 3                                                               
on page  2, line  8 of  HJR 18.   He  observed that  the proposed                                                               
constitutional amendment  would take the unencumbered  balance of                                                               
the ERA, which pays dividends, and  deposit it in the corpus.  He                                                               
asked why.                                                                                                                      
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS    said   that    section   would                                                               
effectively  roll the  ERA into  the principal  of the  Permanent                                                               
Fund.   He said  it is worth  mentioning that  the constitutional                                                               
amendment proposed  in HJR  18 would not  take effect  until June                                                               
30, 2022.  He said this  means the Permanent Fund would remain as                                                               
currently  structured  for   a  few  more  years,   so  a  future                                                               
legislature could  elect to  transfer funds from  the ERA  to the                                                               
principal or another account.                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN said  there is about $18.4  billion in the                                                               
ERA.  He asked, assuming that  amount moves to the corpus and the                                                               
state operating budget remains similar  in size, whether the POMV                                                               
draw restriction  would effectively  reduce the  size of  the PFD                                                               
during a down year.                                                                                                             
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS said there  are two answers to that                                                               
question: one political, the other  mechanical.  Mechanically, he                                                               
said, the answer is no, as HJR  18 would do nothing to affect the                                                               
size of  the dividend.   He  noted that  Representative Eastman's                                                               
question   is  premised   on  the   operating  budget   remaining                                                               
unchanged.   He said that is  a question of what  the legislature                                                               
does and what Alaskans want.   He spoke to the difference between                                                               
his  personal  priorities  and   those  of  Governor  Michael  J.                                                               
Dunleavy.   "But," he continued, "nothing  changes from present,"                                                               
as the legislature  is currently determining how  much money goes                                                               
to state  services and how  much goes to  PFDs.  He  stated that,                                                               
should HJR 18 pass, it would  mean that the legislature could not                                                               
draw an unsustainable  amount of money out of  the Permanent Fund                                                               
for  any reason     not  for dividend  funds  and  not for  state                                                               
services.   He  said  HJR 18  is agnostic  in  its reasoning;  it                                                               
simply seeks to protect the  Permanent Fund from an unsustainable                                                               
draw.                                                                                                                           
                                                                                                                                
2:02:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN  said  the PFD  is  currently  calculated                                                               
based on  a 5-year  rolling average  so one  bad year  flanked by                                                               
good years would be averaged out.   He suggested that, should HJR                                                               
18 pass  and PFDs be limited  by a sustainable draw,  then a down                                                               
year could  result in  a small  dividend or  no dividend  at all,                                                               
regardless of  political will, as  the rolling average  could not                                                               
be factored.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS deferred  to  Alexei Painter  from                                                               
the Legislative  Finance Division.  He  said, "HJR 18 looks  at a                                                               
5-year average ...  [and would not] change  the statutory formula                                                               
for the dividend, so that would also remain a 5-year average."                                                                  
                                                                                                                                
ALEXEI  PAINTER, Fiscal  Analyst,  Legislative Finance  Division,                                                               
Alaska State Legislature, said it  is theoretically possible that                                                               
the dividend  calculation would exceed the  5-year moving average                                                               
of 5  percent, though  observed, "I  think you  would have  to be                                                               
stretching  the bounds  of realistic  investment growth,  so that                                                               
you would have so much  realized income that the dividend formula                                                               
exceeded that 5  percent."  He opined that it  would be extremely                                                               
difficult for  the Permanent  Fund to grow  quick enough  so that                                                               
the  5-year  average  would  be  insufficient.    He  noted  that                                                               
previous  down  years  caused  the  PFD  to  decrease  much  more                                                               
drastically  than  the  moving  average  of  the  balance.    For                                                               
example, he  said, during the  2008-2009 recession,  the dividend                                                               
calculation  decreased from  approximately $1,800  to about  $800                                                               
because the  one bad year  brought the average  down so far.   He                                                               
noted  that the  value of  the Permanent  Fund decreased  by less                                                               
than 20 percent  during that bad year, so a  calculation based on                                                               
the POMV would be  more than adequate to pay for  the PFD even if                                                               
there was  a down year.   He observed  that the dividend  will be                                                               
more volatile than the POMV will  be, so bad market issues should                                                               
not cause any issues.                                                                                                           
                                                                                                                                
2:06:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN established  a  hypothetical scenario  in                                                               
which  a  market crash  results  in  no  positive return  on  the                                                               
Permanent  Fund.   He  asked  how  much  would be  available  for                                                               
payment  of a  dividend and  where the  legislature would  go for                                                               
that money.                                                                                                                     
                                                                                                                                
MR. PAINTER asked  him to clarify whether he is  referring to the                                                               
current constitutional construct or--                                                                                           
                                                                                                                                
REPRESENTATIVE EASTMAN interjected that  he meant his scenario to                                                               
occur after the passage of HJR 18.                                                                                              
                                                                                                                                
MR.  PAINTER said  the 5-year  average balance  would still  be a                                                               
positive number even  if there is one year with  no earnings.  He                                                               
commented  that  changes  in earnings  should  not  significantly                                                               
affect the POMV draw because the  draw would be based on balances                                                               
and not earnings.                                                                                                               
                                                                                                                                
REPRESENTATIVE EASTMAN said, "Let's say  we have a year like this                                                               
year  [except] we're  not  making any  money  because the  market                                                               
crashed."    He  asked  how   much  would  be  available  to  the                                                               
legislature to  spend on  the budget "and  still draw  a dividend                                                               
from that amount."                                                                                                              
                                                                                                                                
MR. PAINTER said, if HJR 18  were in effect, even if the earnings                                                               
were zero, the  POMV draw would be based on  balances through the                                                               
end of  fiscal year 2018, so  the full POMV draw  of $2.9 billion                                                               
could still be  spent.  He said that represents  the stability of                                                               
a POMV  draw because there is  still a balance available  even if                                                               
there is a downturn in earnings.                                                                                                
                                                                                                                                
2:09:20 PM                                                                                                                    
                                                                                                                                
CHAIR   CLAMAN  asked   for  verification   that  HJR   18  would                                                               
essentially  eliminate the  ERA  and that  earnings would  simply                                                               
roll into the  Permanent Fund.  He continued, "Then  ... if there                                                               
were $100  billion in  the fund  and the rate  was 5  percent ...                                                               
then  there   would  be  $5   billion  for  the   legislature  to                                                               
appropriate  as it  sees fit."    He added  that the  legislature                                                               
would also have  revenue to spend, and from that  sum would issue                                                               
dividends of a value based on its own determination.                                                                            
                                                                                                                                
MR. PAINTER  said that is correct.   He said the  earnings amount                                                               
would not be the controlling factor,  rather it would be the POMV                                                               
calculation.                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN   asked  whether   other  accounts   including  the                                                               
Constitutional  Budget  Reserve  Fund (CBRF)  and  the  Statutory                                                               
Budget  Reserve  (SBR)  Fund  would  be  counted  into  the  POMV                                                               
calculation, or  if the  draw only  relates to  the funds  in the                                                               
Permanent Fund.                                                                                                                 
                                                                                                                                
MR. PAINTER said  it would only be the balances  in the Permanent                                                               
Fund.                                                                                                                           
                                                                                                                                
CHAIR  CLAMAN  asked  if  it   is  true  that  the  current  POMV                                                               
calculation includes  the "amounts in  some of those  other funds                                                               
that the Permanent Fund is managing"                                                                                            
                                                                                                                                
MR. PAINTER  said no, Senate  Bill 26 specifically  excludes from                                                               
the calculation "the  Mental Health Trust money"  and others that                                                               
are managed by the Permanent Fund.                                                                                              
                                                                                                                                
2:11:21 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease from 2:11 p.m. to 2:12 p.m.                                                                  
                                                                                                                                
2:11:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  noted that she  heard HJR 18 in  the House                                                               
State  Affairs  Standing  Committee.   She  said  she  would  not                                                               
support any legislation relating to  the Permanent Fund until the                                                               
size of the dividend is determined.                                                                                             
                                                                                                                                
2:12:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN  opined that  HJR 18 attempts  to enshrine                                                               
"budget  strategy"  and puts  off  determining  the size  of  the                                                               
dividend "until everything else has  been decided."  He said that                                                               
is concerning to him, as it  makes the dividend the lowest of the                                                               
legislature's   spending  priorities.     He   stated  that   his                                                               
constituents believe it should be a high priority.                                                                              
                                                                                                                                
2:13:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE Stutes  moved to  report HJR  18 out  of committee                                                               
with individual recommendations and the attached fiscal notes.                                                                  
                                                                                                                                
REPRESENTATIVE EASTMAN objected.                                                                                                
                                                                                                                                
A roll  call vote was  taken.  Representatives Shaw,  Stutes, and                                                               
Claman  voted in  favor of  reporting  HJR 18  out of  committee.                                                               
Representatives LeDoux  and Eastman  voted against it.   [Lacking                                                               
the required majority vote of  the full committee membership, HJR                                                               
18 failed to move  out of committee by a vote of  3-2; HJR 18 was                                                               
brought before the committee again at timestamp 3:07:36 PM.]                                                                    
                                                                                                                                
         HJR 18-CONST AM: PERMANENT FUND; POMV;EARNINGS                                                                     
                                                                                                                                
3:07:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STUTES  moved to rescind the  committee's previous                                                               
action on HJR 18.                                                                                                               
                                                                                                                                
REPRESENTATIVE EASTMAN objected.                                                                                                
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  for  clarification that  rescinding                                                               
action would mean the committee would vote again on HJR 18.                                                                     
                                                                                                                                
CHAIR CLAMAN answered yes.                                                                                                      
                                                                                                                                
REPRESENTATIVE  EASTMAN removed  his objection.   There  being no                                                               
further objection, HJR 18 was before the committee.                                                                             
                                                                                                                                
3:08:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STUTES  moved to  report HJR  18 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE EASTMAN objected.                                                                                                
                                                                                                                                
A roll  call vote was  taken.  Representatives Stutes,  Kopp, and                                                               
Claman  voted  in  favor  of  moving HJR  18  out  of  committee.                                                               
Representatives  LeDoux,  Eastman,  and Shaw  voted  against  it.                                                               
Therefore, HJR  18 failed to move  out of committee by  a vote of                                                               
3-3.                                                                                                                            

Document Name Date/Time Subjects
HB123 ver M 5.3.19.PDF HJUD 5/3/2019 1:00:00 PM
HJUD 5/10/2019 1:00:00 PM
HB 123
HB123 Sponsor Statement 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 123
HB123 Sectional Analysis ver M 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 123
HB123 Supporting Document-Letters 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 123
HB123 PowerPoint Presentation 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 123
HB123 Fiscal Note DOA-DMV 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 123
HB123 Fiscal Note DPS-COM 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 123
HB110 ver U 5.3.19.PDF HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Sponsor Statement 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Sectional Analysis ver U 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Explanation of Changes ver M to U 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-Affidavit for Collection of Personal Property, ACS 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-Senior Voice Article 4.24.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-DoA Boat Titles 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-Questions and Answers 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-Trusts, ACS 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-URPTODA Summary 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Supporting Document-Letters 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 PowerPoint Presentation (Updated) 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB110 Fiscal Note DOA-DMV 5.3.19.pdf HJUD 5/3/2019 1:00:00 PM
HB 110
HB115 ver A 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HJUD 5/10/2019 1:00:00 PM
HJUD 5/11/2019 9:30:00 AM
HB 115
HB115 Sponsor Statement 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Supporting Document-Alaska Absentee Ballot Application 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Supporting Document-Hawaii Permanent Absentee Application 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Supporting Document-Vote at Home Letter 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Additional Document-Alaska Permanent Absentee Voter Regulation 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Additional Document-Alaska Sample By-Mail Return Ballot Envelope 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Additional Document-Municipality of Anchorage Response to Security Questions 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Additional Document-Municipality of Anchorage Sample Ballot 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Additional Document-NCSL Absentee and Early Voting 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Supporting Document-Alaska Commission on Aging Letter 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Fiscal Note OOG-DOE 5.1.19.pdf HJUD 5/1/2019 1:00:00 PM
HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HB 115
HB115 Amendments #1-6.pdf HJUD 5/3/2019 1:00:00 PM
HJUD 5/6/2019 1:00:00 PM
HJUD 5/10/2019 1:00:00 PM
HJUD 5/11/2019 9:30:00 AM
HB 115
HJR018 ver S 5.1.19.PDF HJUD 5/3/2019 1:00:00 PM
HJR 18
HJR018 Sponsor Statement 5.1.19.pdf HJUD 5/3/2019 1:00:00 PM
HJR 18
HJR018 Sectional Analysis ver S 5.1.19.pdf HJUD 5/3/2019 1:00:00 PM
HJR 18
HJR018 Supporting Document-APFC Resolution 5.1.19.pdf HJUD 5/3/2019 1:00:00 PM
HJR 18
HJR018 Fiscal Note OOG-DOE 5.1.19.pdf HJUD 5/3/2019 1:00:00 PM
HJR 18
HJR018 Supporting Document-Public Comment 5.3.18.pdf HJUD 5/3/2019 1:00:00 PM
HJR 18
HB123 Supporting Document-Public Comment 5.3.18.pdf HJUD 5/3/2019 1:00:00 PM
HB 123