Legislature(2015 - 2016)SENATE FINANCE 532
04/11/2016 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB101 | |
| SB201 | |
| SJR12 | |
| SB196 | |
| SB210 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 101 | TELECONFERENCED | |
| += | SB 200 | TELECONFERENCED | |
| += | SB 201 | TELECONFERENCED | |
| += | SJR 12 | TELECONFERENCED | |
| += | SB 196 | TELECONFERENCED | |
| += | SB 210 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 196
"An Act relating to the use of certain unexpended
earnings from the power cost equalization endowment
fund."
9:53:34 AM
Co-Chair MacKinnon discussed SB 196. She noted that the
public hearing had been opened and closed on March 16,
2016.
Vice-Chair Micciche discussed the fiscal note (OMB
component 2602) from the Department of Commerce, Community
and Economic Development (DCCED). He stated that it was a
zero fiscal note with no added capital or added employees.
Vice-Chair Micciche discussed the fiscal note (OMB
component 0) for various departments from the Senate
Finance Committee. He informed that the note was for
informational purposes only, and had to do with the
dividend funds from the PCE Endowment Fund. He read from
the bottom of the fiscal note:
Why this fiscal note differs from previous version:
Initial version. This fiscal note for information
purposes only. Beginning in FY16, it assumes a six
percent earnings rate and two percent program growth
rate for each fiscal year. In FY18 through FY22, Power
Cost Equalization Endowment funds (DGF) would be
available to replace Unrestricted General Funds
(UGF) expenditures for Community Assistance and
Rural Energy Programs. Depending on actual earnings
in a fiscal year the amount available to replace UGF
will vary from zero to $55 million.
Vice-Chair Micciche specified that the fiscal note showed a
$17 million displacement in FY 18, with no impact in FY 17.
He continued that there was a $17.2 million displacement in
FY 19, a $17.5 million displacement in FY 20, a $17 million
displacement in FY 21, and a $16.6 million displacement in
FY 22.
Co-Chair MacKinnon asked if Vice-Chair Micciche had been
referring to the dividend coming from the PCE Endowment
Fund.
Vice-Chair Micciche answered in the affirmative.
Senator Hoffman stated that he had introduced the
legislation primarily to reflect the original intent of
funding the PCE program. He clarified that the endowment
was never meant to have additional funds for any other
purpose. He explained that the bill would stipulate that
any additional earnings would be used for other state
purposes.
Senator Dunleavy commented on the $4 billion budget
deficit, and wondered why the state would not use the fund
to backfill some of the deficit. He understood that the
fund gave assistance to some Alaskan communities, and asked
if anyone wanted to comment on the matter.
9:57:15 AM
Senator Hoffman thought that the purpose of the PCE
Endowment Fund was discussed and brokered prior to his
tenure in the legislature. He recounted that the fund had
been in existence for well over 30 years. He mentioned that
the funds were split when the Four Dam Pool [four
hydroelectric facilities (dams and lake tap projects) built
by the State of Alaska in the early 1980s] was being built.
The fund was intended to address the high electricity costs
(for heating) in rural Alaska, and was an attempt to
equalize the power throughout the state of Alaska. He
thought by keeping the funds in the endowment it was not a
drain on the GF, but rather a long-term solution to address
higher costs throughout the state. Conversely, if the funds
were taken it would be a one-time use, and people in rural
Alaska would end up paying substantially more in electrical
costs. He noted that the PCE program only gave credit for
the first 500 kilowatt hours (kWhs) of electricity use per
month. He discussed electricity use in rural and urban
areas of the state. He saw the bill as a commitment to
lower costs and make the state a more affordable place to
live.
Senator Dunleavy acknowledged the history of the PCE
program and supported the concept of helping people in
rural Alaska with energy costs. He hoped that the state
would be able to drive down the overall cost of state
government so that it could continue to have funds such as
the PCE endowment fund. He referred to proposed use of the
permanent fund and potential new taxes, and thought that it
was important to have discussions about all potential
sources of funding. He thought the issues were complex and
was not sure the legislature would be able to come up with
a complete financial package to address the deficit by the
end of session. He wanted to use care in examining all
funds to see how each might help with the $4 billion
deficit. He had lived in rural Alaska and experienced the
cost differential. He thought the legislature needed to be
prepared to answer questions about the PCE Fund as well as
the Higher Education Fund.
10:01:02 AM
Senator Olson stated that the PCE Fund was put together at
a time when natural gas and hydro-electric power were being
developed in the state. In order for rural Alaska to reap
benefits of the natural gas investments and pricing, as
well as the Four Dam Pool; the compromise was the creation
of the PCE Endowment Fund. He discussed the idea of adding
a surcharge on natural gas coming out of Cook Inlet, which
was semi-subsidized by the state, to help pay for the
budget deficit. He discussed the difference in power cost
between his residences in Anchorage and Golovin.
Senator Dunleavy did not disagree. He thought there were
people in the state who did not benefit from Cook Inlet gas
subsidization (through tax credits) by the state; and there
were people in the state who did not benefit from PCE. He
believed the points being addressed were important to
feature in ongoing conversations.
Vice-Chair Micciche pointed out that it was the first time
the state had asked the PCE Fund to help offset costs in
other areas. For the purposes of the legislation, the aid
would be for community assistance and rural energy
programs. He noted that there were discussions about the
level of subsidy in Cook Inlet. He was relatively
supportive of the bill.
10:05:10 AM
Senator Bishop stated that if there was a PCE Endowment
Fund dividend, the excess earnings would be split between
the community assistance program (50 percent), the
renewable energy grant fund (30 percent), and the PCE
Endowment Fund (20 percent). He recalled that the previous
year the committee had strengthened the PCE Fund by using
the prudent investor rule. He thought the committee was
doing its job working towards maximizing state assets. He
agreed with Senator Dunleavy that it would take continued
work to solve the budget problem.
Co-Chair MacKinnon recalled a PCE bill from the previous
year, in which more prudent investment was implemented. She
thought the bill went an additional step in reducing the
draw from 7 percent to 5 percent, in aid of trying to keep
the corpus of the fund whole. She recalled priorities that
were articulated in a Senate Majority press conference that
included how to positively impact the bottom line of the
state budget, which she thought the bill accomplished. She
pointed out that the bill left all of the PCE Fund
available for appropriation in a future year. She asserted
that the House had proposed accessing the fund for the
University, and she did not concur with the idea. She
explained that there were excess earnings above the funding
to the PCE program, after which the funds would roll off to
different areas and reduce the call on cash to the GF. The
bill would reduce GF spending, and she thought it was worth
consideration by both bodies. She thought if the bill was
not passed, the PCE Fund would be at risk. She discussed a
reduction in tax credits that would result in an increase
in gas bills.
10:09:26 AM
AT EASE
10:16:34 AM
RECONVENED
Vice-Chair Micciche MOVED to report CSSB 196(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes.
CSSB 196(FIN) was REPORTED out of committee with a "do
pass" recommendation with one new fiscal impact note from
the Senate Finance Committee, and one new zero fiscal note
from Department of Commerce, Community and Economic
Development.
10:17:15 AM
AT EASE
10:21:30 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 200 Public Testimony Nees.pdf |
SFIN 4/11/2016 9:00:00 AM |
SB 200 |
| SB 200 NEA Alaska Letter.pdf |
SFIN 4/11/2016 9:00:00 AM |
SB 200 |
| SB 210 Community Revenue Sharing Estimates.pdf |
SFIN 4/11/2016 9:00:00 AM |
SB 210 |
| SB 201 Responses to questions during SB 201 hearing SFIN 4.pdf |
SFIN 4/11/2016 9:00:00 AM |
SB 201 |
| SB 210 with $38.2 million vs Status Quo with $60 million.pdf |
SFIN 4/11/2016 9:00:00 AM |
SB 210 |