Legislature(2003 - 2004)
10/29/2003 07:00 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SJR 19-CONST. AM: PERMANENT FUND INCOME CHAIR SEEKINS noted that Senator Lincoln, sponsor of SJR 19, has asked Representative Croft to present SJR 19 to the committee at this time. REPRESENTATIVE ERIC CROFT told members that Senator Lincoln was tending to an emergency in Rampart and asked him to address the committee because he is the sponsor of companion legislation in the House, HJR 3. He said when he and Senator Lincoln presented to the Senate Judiciary Committee during session, the main discussion was about an asserted potential tax difficulty with SJR 19 He noted the permanent fund is tax exempt at this time but SJR 19 would constitutionally protect the dividend. Whether doing that would affect the public purpose of the fund and imperil its tax-free status is in question. His review of recent cases over the last two years led him to believe that a change in the tax status was not within the realm of possibility. Attorney General Renkes recently commissioned an outside firm to research the question and has sent a letter to legislators confirming that constitutionally protecting the dividend will not imperil the fund's tax status. REPRESENTATIVE CROFT submitted that SJR 19 provides a spending limit that makes the most sense from an individual taxpayer's perspective. He wants the spending limit to reflect the limit on how much legislators can take out of his pocket. He said limiting either input or output could create a spending limit. It makes the most sense to him to limit input - how much government can take from his pocket and to require government to live within that limit. He said the output limits can have unintended consequences and stated: The one used now is a suit that's way, way too big. It doesn't fit and you could guess wrong and fit a suit for the next 20 or 30 or 40 years that unnecessarily constrained what we spent on education and roads or police officers. It's really hard to predict those things. REPRESENTATIVE CROFT said what is predictable is the amount you do not want government to take from individuals. SJR 19 is a way to constrain the size of government and, more importantly, the amount it can take from individuals. He said making sure the Legislature cannot touch the dividend is crucial to the oncoming debate of whether or not the structure of calculating the earnings of the fund is changed. He pointed out there is a large mistrust of the Legislature on this issue, some of that mistrust is warranted. He said so many politicians have promised not to use the dividend without a vote of the people. Many Alaskans are concerned that the POMV, despite its merits, will become a Trojan horse. It could become the justification vote for legislators to say a vote was taken and they can now use the dividend. Legislators can prove they don't intend to use people's dividends by enacting SJR 19, the companion legislation that enshrines the dividend in the Constitution. REPRESENTATIVE CROFT summarized by saying SJR 19 will not create tax problems, it creates a real spending limit in terms of how much it can take from people's pockets, and it will be vital to convincing Alaskans that the POMV or any other change to the permanent fund is appropriate. SENATOR OGAN asked if AS 37 and AS 43, as cited in the resolutions, would constitutionally protect the hold harmless agreement. REPRESENTATIVE CROFT said he would get an answer to that question to Senator Ogan. He then said he meant to mention the provisions in the statute that directly relate to how the dividend would be calculated. He was not sure if the hold harmless provision is in that same provision, but offered to get that information to the committee. SENATOR OGAN said the [hold harmless provision] is not something he wants to constitutionally protect; he would prefer to eliminate it. CHAIR SEEKINS noted that no one was present to testify so he closed testimony on SJR 19. He announced that the committee would meet the following day at 7:00 p.m. at the Anchorage Legislative Information Office and would take testimony at that time. He then adjourned the meeting.