Legislature(2021 - 2022)SENATE FINANCE 532
09/12/2021 02:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB53 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 53 | TELECONFERENCED | |
SENATE BILL NO. 53
"An Act relating to use of income of the Alaska
permanent fund; relating to the amount of the
permanent fund dividend; relating to the duties of the
commissioner of revenue; relating to an advisory vote
on the permanent fund; providing for an effective date
by repealing the effective date of sec. 8, ch. 16, SLA
2018; and providing for an effective date."
2:04:59 PM
Co-Chair Stedman MOVED to ADOPT the committee substitute
for SB 53, Work Draft 32-GS1693\W (Nauman, 9/11/21).
Co-Chair Bishop OBJECTED for discussion.
2:05:29 PM
ERIN SHINE, STAFF, SENATOR CLICK BISHOP, discussed the
committee substitute (CS). The CS would replace the current
Permanent Fund Dividend (PFD) formula with a "stepped up"
formula for a $1,100 PFD in FY 22 and FY 23, a $1,200 PFD
in FY 24, a $1,300 PFD in FY 25, and a $1,300 PFD adjusted
for inflation starting in FY 26. The CS also provided
conditional language to pay for a 50 percent of the percent
of market value (POMV) PFD if $700 million of new revenues
were enacted by December 15, 2024. The stepped approach and
revenues outlined in the CS removed the need for the 1.5
percent overdraw of the Earnings Reserve Account (ERA) and
was no longer in the proposed version of the bill.
Ms. Shine explained that there were multiple technical and
conforming changes in the CS compared to the version of the
bill that had come from the Judiciary Committee due to the
difference in when the 5 percent POMV was enacted.
2:07:04 PM
Ms. Shine discussed the Sectional Analysis (copy on file):
Section 1 Legislative Intent
Establishes the following legislative intent to:
(1) Implement the recommendations of the 2021
Comprehensive Fiscal Plan Working Group; and
(2) Allow for adequate time to debate, analyze, and
implement the revenue measures and cost reductions
required for the long-term financial stability of the
state.
Section 2 AS 37.13.140
? Amends AS 37.13.140(a) to delete language that
describes a formula to determine the amount of income
of the fund that is available for distribution.
Provides that the amount available for appropriation
from the earnings reserve account is 5% of the average
market value of the fund for the first five of the
preceding six fiscal years including the fiscal year
just ended.
Amends AS 37.13.140(b) to clarify that the amount
available for appropriation from the earnings reserve
account may not exceed the balance in the earnings
reserve account.
Section 3 AS 37.13.145(b)
Amends AS 37.13.145(b) to provide that the amount
appropriated each year from the earnings reserve
account to the dividend fund (AS 43.23.045) is as
follows:
(1) $1,100 in fiscal year 2022
(2) $1,100 in fiscal year 2023
(3) $1,200 in fiscal year 2024
(4) $1,300 in fiscal year 2025
(5) $1,300 adjusted for inflation each fiscal
year after fiscal year 2025 by
(A) computing the Consumer Price Index for the two
previous calendar years
(B) computing the percentage change between the first
and second calendar year averages; and
(C) applying that rate to the value of the dividend
paid for the fiscal year just ended.
(Section 9 provides a cap of 50 percent of the percent
of market value)
Section 4 AS 37.13.145(b) Conditional Effect (Section
14)
Amends AS 37.13.145(b) to provide that of the amount
appropriated each year from the earnings reserve
account under AS 37.13.140(b):
(1) 50 percent may be appropriated to the dividend
fund for dividends and
(2) 50 percent may be appropriated to the general
fund.
Section 5 AS 37.13.145(c)
Amends AS 37.13.145(c) to authorize an appropriation,
after the appropriation to the dividend fund (AS
37.13.145(b)) and the general fund (AS 37.13.145(e)),
to the principal of the permanent fund for inflation
proofing.
Section 6 AS 37.13.145(c) Conditional Effect (Section
14)
Amends AS 37.13.145(c) by removing the reference to AS
37.13.145(e) to conform to changes in section 13.
Section 7 AS 37.13.145(d)
Amends to clarify that the permanent fund income
earned as a result of the State v. Amerada Hess case
is not available for appropriation to the dividend
fund or the principal and that it shall be deposited
into the capital income fund.
Section 8 AS 37.13.145(d) Conditional Effect (Section
14)
Amends AS 37.13.145(c) by removing the reference to AS
37.13.145(e) to conform to changes in section 13.
Section 9 AS 37.13.145(f)
? Amends AS 37.13.145(f) to limit the appropriation
from the earnings reserve account to the dividend fund
(AS 37.13.145(b)) so that it may not exceed 50 percent
of the amount available for appropriation under AS
37.13.140(b)
? Limits the combined total for appropriation from the
earnings reserve account to the dividend fund (AS
37.13.145(b)) and the appropriation from the earnings
reserve to the general fund (AS 37.13.145(e)) to the
amount available for appropriation under AS
37.13.140(b).
Section 10 AS 37.13.300(c)
Amends to clarify that the net income of the mental
health trust fund is not included in the computation
of the amount available for appropriation from the
permanent fund earnings reserve account under AS
37.13.140(b).
Section 11 AS 37.14.031(c)
Amends to clarify that the Alaska Permanent Fund
Corporation shall calculate annually the net income of
the mental health trust fund according to generally
accepted accounting principles and excluding any
unrealized gains or losses.
Section 12 AS 43.23.025(a)
Amends to state that the legislature places money in
the dividend fund by appropriation.
2:12:13 PM
Ms. Shine continued to outline the Sectional Analysis:
Section 13 AS 37.13.145(e) and (f) Conditional Effect
(Section 14)
Repeals AS 37.13.145(e) and (f) which relate to total
appropriations from the earnings reserve.
Section 14 Conditional Effect
Provides a conditional effect for sections 4, 6, 8,
and 13 of this act to take effect only if, by December
15, 2024, the commissioner of revenue and the director
of the legislative finance division jointly agree, and
notify the revisor of statutes before December 15,
2024, that revenue measures anticipated to generate at
least $700 million of new annually recurring general
fund revenues, when compared to annual revenue
generated from the statutes as they read on June 30,
2021 have been passed by the legislature and enacted
into law.
In this section "general fund revenue" does not
include revenue from the permanent fund.
Section 15 Conditional Effective Date
Provides a July 1, 2025 effective date for sections 4,
6, 8, and 13, if the requirements outlined in section
14 have been met.
Section 16 Effective Date
Except for section 15, provides an immediate effective
date under AS 01.10.070(c),
2:13:55 PM
Co-Chair Stedman looked at page 7 of the CS regarding the
"conditional effect" and stressed that the measures to
generate revenue would be new annual reoccurring General
Fund revenue. He referenced section C on page 7, line 23,
which made clear that General Fund revenue did not include
revenue from the Permanent Fund.
Co-Chair Bishop asked if the members had questions. He
noted that the director of the Legislative Finance Division
was available for questions.
Senator Wielechowski noted that in Section 3 it stated that
the legislature "may appropriate funds." He asked if the
legislature could choose to appropriate for a smaller
dividend under the proposed CS.
Ms. Shine understood that the legislature could appropriate
any amount for the PFD, as the statute stipulated
currently. She referenced an Alaska Supreme Court decision
in the case of Wielechowski v. State of Alaska that
indicated the legislature's use of Permanent Fund income is
subject to normal appropriation and veto budgetary
processes.
2:16:24 PM
Senator Wielechowski asked whether there was contemplation
of a constitutional amendment to go along with the proposed
bill.
Ms. Shine replied that the CS did not contemplate tying the
statute change to constitutional amendment. She knew that
the previous version of the bill had a conditional affect
that tied the legislation to a constitutional amendment
being passed or not passed by a vote of the people. She
noted that the CS did not preclude the legislature from
passing a constitutional amendment in conjunction with the
legislation.
Senator Wilson queried whether there was a plan for
deficits. He wondered if the funds would be paid out of the
Constitutional Budget Reserve or the ERA. He asked if there
was language in the bill that addressed the concern.
Ms. Shine responded that the CS did not identify deficits
within the bill itself. She thought each legislature would
have to weigh each expenditure as it approached the
operating budget process.
Co-Chair Stedman recalled that under the proposed bill the
appropriation for the PFD would go from the ERA to the
dividend fund and then to the dividend process.
Ms. Shine agreed.
Senator von Imhof believed that Section 2 of the proposed
CS described that the appropriation would not exceed the 5
percent POMV draw. She noted that if the source of the
funds was the ERA, the amount was capped at 5 percent.
Ms. Shine agreed. She cited that AS 37.13.145 (e) and (f)
provided caps as to what could be transferred from the ERA
to the dividend fund and the general fund. The provisions
required that the draw from the ERA stay within the 5
percent POMV draw in a year.
Senator Wilson noted that the provisions would not stop the
legislature from using a different fund source to do a
transfer in order to pay out dividends.
Ms. Shine agreed and noted that the legislature had the
power of appropriation. She noted that the bill proposed
that the PFD would come from the ERA.
Co-Chair Bishop WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for SB 53 was
ADOPTED.
SB 53 was HEARD and HELD in committee for further
consideration.
2:20:20 PM
RECESSED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 53 CS SB 53 (FIN) ver. W Sectional Analysis.pdf |
SFIN 9/12/2021 2:00:00 PM |
SB 53 |
| SB 53 CS SB 53 (FIN) ver. W.pdf |
SFIN 9/12/2021 2:00:00 PM |
SB 53 |
| 091121 Fiscal Modeling SFIN 9-11-21 edited.pdf |
SFIN 9/12/2021 2:00:00 PM |