Legislature(2019 - 2020)BELTZ 105 (TSBldg)

04/15/2019 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SJR 3 CONST. AM: MEMBERSHIP OF JUDICIAL COUNCIL TELECONFERENCED
Heard & Held
-- Public Testimony --
+= SJR 4 CONST. AM: STATE TAX; INTIATIVE TELECONFERENCED
Scheduled but Not Heard
+= SJR 5 CONST. AM.:PERMANENT FUND & DIVIDEND TELECONFERENCED
Moved CSSJR 5(JUD) Out of Committee
          SJR  5-CONST. AM.:PERMANENT FUND & DIVIDEND                                                                       
                                                                                                                                
2:19:15 PM                                                                                                                    
CHAIR HUGHES announced that the  final order of business would be                                                               
SENATE  JOINT  RESOLUTION  NO. 5,  Proposing  amendments  to  the                                                               
Constitution  of  the State  of  Alaska  relating to  the  Alaska                                                               
permanent fund and the permanent fund dividend.                                                                                 
                                                                                                                                
[Before the committee was the CSSJR 5(STA), Version U.]                                                                         
                                                                                                                                
2:19:48 PM                                                                                                                    
SENATOR  KIEHL  moved  to  adopt  Amendment  1,  work  order  31-                                                               
GS1072\A.1, Nauman, 4/2/19.                                                                                                     
                                                                                                                                
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE              BY SENATOR KIEHL                                                                        
          TO:  CSSJR 5 (STA)                                                                                                    
                                                                                                                                
     Page 1, line 2, following "dividend":                                                                                    
          Insert ", establishing the earnings reserve                                                                         
     account,  and  relating   to  appropriations  from  the                                                                  
     earnings reserve account"                                                                                                
                                                                                                                                
     Page 1, lines 9 - 11:                                                                                                      
          Delete "Except as provided under (b) of this                                                                      
     section,  all  [ALL]  income from  the  permanent  fund                                                                
     shall  be   deposited  in   the  general   fund  unless                                                                    
     otherwise provided by law."                                                                                                
          Insert   "The   earnings    reserve   account   is                                                                
     established as  a separate account in  the fund. Income                                                                
     from  the fund  shall  be deposited  into the  earnings                                                                
     reserve account  as soon as  it is received and  may be                                                                
     invested   as  authorized   for   investments  of   the                                                                
     principal. Money  in the  earnings reserve  account may                                                                
     be  appropriated  only  as  provided  in  (b)  of  this                                                                
     section [ALL  INCOME FROM THE  PERMANENT FUND  SHALL BE                                                                
     DEPOSITED   IN  THE   GENERAL  FUND   UNLESS  OTHERWISE                                                                    
     PROVIDED BY LAW]."                                                                                                         
                                                                                                                                
     Page 1, line 14, through page 2, line 13:                                                                                  
          Delete all material and insert:                                                                                       
          "(b)  Each fiscal year, an amount                                                                                     
               (1)  equal to one and one-fourth percent of                                                                      
     the average market value of  the fund, as calculated in                                                                    
     (c)  of this  section,  shall be  transferred from  the                                                                    
     earnings  reserve  account  for  use in  a  program  of                                                                    
     dividend  payments to  State residents  as provided  by                                                                    
     law; and                                                                                                                   
               (2)  not to exceed three and three-fourths                                                                       
     percent of  the average  market value  of the  fund, as                                                                    
     calculated in (c) of this  section, may be appropriated                                                                    
     by the  legislature from  the earnings  reserve account                                                                    
     to the general fund.                                                                                                       
          (c)  For purposes of (b) of this section, the                                                                         
     average market value of the  fund is the average market                                                                    
     value  of  the  fund, including  the  earnings  reserve                                                                    
     account,  for  the  first five  of  the  preceding  six                                                                    
     fiscal  years, including  the fiscal  year just  ended,                                                                    
     computed annually  at the  end of  each fiscal  year in                                                                    
     accordance    with   generally    accepted   accounting                                                                    
     principles, excluding any unrealized gains or losses."                                                                     
                                                                                                                                
     Page 2, lines 16 - 22:                                                                                                     
          Delete all material and insert:                                                                                       
          "Section    30.    Permanent   Fund    Amendments:                                                                  
     Transition.  The earnings  reserve account  established                                                                  
     in  the 2020  amendments to  the Alaska  permanent fund                                                                    
     (art.  IX,  sec.  15) replaces  the  existing  earnings                                                                    
     reserve  account  established  by  law.  Money  in  the                                                                    
     existing  earnings  reserve  account on  the  effective                                                                    
     date  of the  2020 amendments  to the  Alaska permanent                                                                    
     fund (art.  IX, sec.  15) shall  be deposited  into the                                                                    
     earnings   reserve   account   established   by   those                                                                    
     amendments."                                                                                                               
                                                                                                                                
CHAIR HUGHES objected for discussion purposes.                                                                                  
                                                                                                                                
SENATOR KIEHL  explained that  Amendment 1  would do  two things.                                                               
First, it  would bring us  to a constitutional Percent  of Market                                                               
Value (POMV). The market value  would be calculated based on both                                                               
the corpus  and the earnings  reserve. It uses  previously tested                                                               
language that sets  a five percent maximum market  draw, based on                                                               
an average  of the  preceding five  years. At  the same  time, it                                                               
would maintain  the earnings  reserve structure  and place  it in                                                               
the Constitution of  the State of Alaska. If Alaska  had a series                                                               
of bad financial  years, it would not allow  accessing the corpus                                                               
of the permanent fund. While the  POMV would be calculated on the                                                               
total value, it protects the principal of the permanent fund.                                                                   
                                                                                                                                
He said that  Amendment 1 provides assurances  that the permanent                                                               
fund  is  safe from  inflation  and  from  overdraw by  a  future                                                               
legislature.  It would  also place  a minimum  split between  the                                                               
funding  the   permanent  fund  dividend  (PFD)   and  government                                                               
services. Amendment 1 proposes no less  than one part for the PFD                                                               
and no  more than three parts  for public services. If  the state                                                               
did not need  the three parts for public services,  in years when                                                               
oil prices  or production  was high, more  funding could  be used                                                               
for the PFD and still  maintain the current statutory formula. In                                                               
this way, the  state ensures that the Alaskan  voters always have                                                               
a PFD they can  count on, yet still meet the  needs of the public                                                               
throughout the services the state provides.                                                                                     
                                                                                                                                
2:22:31 PM                                                                                                                    
CHAIR HUGHES  asked whether it  would essentially establish  a 25                                                               
to 75 split of the POMV draw.                                                                                                   
                                                                                                                                
SENATOR KIEHL answered  that the PFD would never be  less than 25                                                               
percent. In  further response, he  clarified that  the historical                                                               
statutory formula would be followed  under Amendment 1 because 50                                                               
percent for dividends is not less than 25 percent.                                                                              
                                                                                                                                
                                                                                                                                
CHAIR HUGHES related  her understanding that 25  percent shall be                                                               
transferred.  She  asked for  further  clarification  on how  the                                                               
state could still pay the historical formula.                                                                                   
                                                                                                                                
SENATOR  KIEHL referred  to  lines 18-21  of  Amendment 1,  which                                                               
states that "   one and one-fourth percent of  the average market                                                               
value of  the fund ?."  Thus, of the  five percent draw,  one and                                                               
one-fourth  percent would  be constitutionally  mandated for  the                                                               
program  of dividend  payments.  The remaining  three and  three-                                                               
fourths percent  of the average market  value of the fund  may be                                                               
appropriated  by   the  legislature,   he  said.  In   fact,  the                                                               
legislature could  place 100 percent into  PFDs without violating                                                               
the  Constitution of  the  State of  Alaska.  However, the  state                                                               
could never put less than one  and one-fourth percent of the five                                                               
percent draw into PFDs.                                                                                                         
                                                                                                                                
CHAIR  HUGHES related  her understanding  that under  SJR 5,  the                                                               
earnings would be  transferred to the dividends  according to the                                                               
historical formula.  However, Amendment 1 would  only guarantee a                                                               
quarter of the draw, which  would give the legislature the option                                                               
to bring it  up to the historical formula. She  asked for further                                                               
clarification  that  [SJR  5]   would  guarantee  the  historical                                                               
formula, but Amendment 1 would not.                                                                                             
                                                                                                                                
SENATOR  KIEHL  agreed.  He  said  that  SJR  5  would  lock  the                                                               
legislature into the way the  PFD is calculated whereas Amendment                                                               
1 is cleaner and  requires 25 percent of the draw  to be used for                                                               
the  PFDs. The  governor's version  would "tie  the legislature's                                                               
hands"  at   50  percent   and  the   old  formula.   It  creates                                                               
difficulties when a need to adjust eligibility occurs, he said.                                                                 
                                                                                                                                
2:26:29 PM                                                                                                                    
CHAIR HUGHES  referred to page  2, line  2, to subsection  (c) of                                                               
Amendment   1.  She   asked   whether   this  would   essentially                                                               
constitutionalize the POMV  and if it is  structured similarly to                                                               
current statute or if it is different.                                                                                          
                                                                                                                                
SENATOR  KIEHL explained  that it  would create  a constitutional                                                               
POMV, which is  similar in structure since it  would consider the                                                               
average  value of  the first  five  of the  preceding six  fiscal                                                               
years. The value  of corpus of the fund and  the earnings reserve                                                               
would  be evaluated.  He  said the  corpus  and earnings  reserve                                                               
split would be  maintained in the event of a  long string of down                                                               
years  in the  investment  markets.  He said  he  thought it  was                                                               
valuable to  not erase the  distinctions of the  earnings reserve                                                               
and corpus of the fund, but to otherwise go to a full POMV.                                                                     
                                                                                                                                
CHAIR HUGHES related  her understanding that the  five percent is                                                               
arrived at by adding the one  and one-fourth and three and three-                                                               
fourths percent. She said that this  year the draw is set at 5.25                                                               
percent,  which will  drop to  five percent.  She asked  when the                                                               
five percent drop is scheduled to occur.                                                                                        
                                                                                                                                
SENATOR KIEHL  offered his belief  that it would be  effective in                                                               
2021, since [SJR 5] would go before the voters in 2020.                                                                         
                                                                                                                                
CHAIR HUGHES said it would align with the statutes.                                                                             
                                                                                                                                
2:28:30 PM                                                                                                                    
SENATOR  SHOWER  expressed  concern that  the  legislature  would                                                               
likely stick with  25 percent. He suggested  that the legislature                                                               
is still holding  discussions on the POMV so  this language might                                                               
have  unintended consequences.  He  said he  was not  necessarily                                                               
opposed to  the concept being  part of the  conversation separate                                                               
from SJR 5.                                                                                                                     
                                                                                                                                
CHAIR  HUGHES  expressed  concern  that  the  language  is  "may"                                                               
appropriate, especially since this would  not have a spending cap                                                               
or appropriation limit.                                                                                                         
                                                                                                                                
SENATOR KIEHL pointed  out that the Constitution of  the State of                                                               
Alaska  currently  does  not identify  any  minimum  PFD  amount.                                                               
Further, the legislature  can draw 100 percent of  the balance in                                                               
the  earnings  reserve account  in  a  single  year. He  said  he                                                               
appreciated  that everyone  is trying  to  find the  best way  to                                                               
protect  the  PFD  and  where the  floor  belongs.  However,  the                                                               
history is  that there is  not currently  a requirement to  pay a                                                               
PFD.                                                                                                                            
                                                                                                                                
CHAIR HUGHES said that she  appreciated that it is an improvement                                                               
since the Constitution of the  State of Alaska currently does not                                                               
mandate a  PFD be paid. She  said that the committee  should look                                                               
at  achieving  the  historical   formula.  She  said  significant                                                               
discussion  has been  held to  protect and  constitutionalize the                                                               
earnings reserve account because it  could erode. She offered her                                                               
belief that  that discussion is  more appropriate for  the Senate                                                               
Finance Standing Committee.                                                                                                     
                                                                                                                                
2:31:52 PM                                                                                                                    
SENATOR REINBOLD asked  whether the sponsor of  Amendment 1 would                                                               
consider an amendment on line 18 for 50 percent.                                                                                
                                                                                                                                
SENATOR KIEHL said that he thought it  was too high, but it is up                                                               
to the committee.                                                                                                               
                                                                                                                                
2:32:22 PM                                                                                                                    
SENATOR REINBOLD  offered a Conceptual Amendment  to Amendment 1,                                                               
on lines 18 and 22 to read "2.5 percent."                                                                                       
                                                                                                                                
CHAIR HUGHES restated Conceptual Amendment 1 to Amendment 1.                                                                    
                                                                                                                                
SENATOR REINBOLD withdrew Conceptual Amendment 1 Amendment 1.                                                                   
                                                                                                                                
2:33:18 PM                                                                                                                    
SENATOR SHOWER acknowledged  that a number of  plans are floating                                                               
around. He said he likes the  direction it is going but putting a                                                               
minimum of  a 50 percent split  in the Constitution of  the State                                                               
of Alaska  might create unintended  consequences. He said  he was                                                               
not  prepared to  support Amendment  1.  He said  that the  right                                                               
protection for  the Alaska Permanent Fund  and the PFD will  be a                                                               
well-thought out battle.                                                                                                        
                                                                                                                                
2:35:24 PM                                                                                                                    
CHAIR  HUGHES appreciated  the sponsor's  willingness  to make  a                                                               
change to the Constitution of the  State of Alaska related to the                                                               
language in Amendment 1.                                                                                                        
                                                                                                                                
2:35:45 PM                                                                                                                    
MIKE BARNHILL, Policy Director,  Office of Management and Budget,                                                               
Office of  the Governor,  Juneau, stated that  SJR 5  would amend                                                               
the  Constitution  of the  State  of  Alaska  to do  two  primary                                                               
things. First, it  would guarantee payment of  the permanent fund                                                               
dividend (PFD) as set out in  statute. Currently, the state has a                                                               
statute to  address the  PFD, but the  payment is  not guaranteed                                                               
because it  is subject to  appropriation. Amendment 1  would wipe                                                               
that  purpose out  of  this resolution,  so  a statutory  formula                                                               
would  not be  guaranteed. Instead,  it would  be subject  to the                                                               
legislature  making  ad  hoc decisions  every  year.  The  second                                                               
purpose of  SJR 5 is to  give the people the  ability to consider                                                               
any changes to the statutory  formula going forward. This process                                                               
allows  the legislature  to change  the formula,  but the  people                                                               
must  approve  it by  a  vote.  However,  that purpose  would  be                                                               
eliminated  in Amendment  1. He  reiterated  that the  governor's                                                               
purposes are removed so the  administration prefers the committee                                                               
not adopt it.                                                                                                                   
                                                                                                                                
2:37:41 PM                                                                                                                    
CHAIR HUGHES maintained her objection.                                                                                          
                                                                                                                                
2:37:44 PM                                                                                                                    
A  roll call  vote was  taken. Senator  Kiehl voted  in favor  of                                                               
Amendment 1  and Senators Micciche, Reinbold,  Shower, and Hughes                                                               
voted against it. Therefore, Amendment 1 failed by a 1:4 vote.                                                                  
                                                                                                                                
2:38:24 PM                                                                                                                    
SENATOR  MICCICHE moved  to  adopt Amendment  2,  work order  31-                                                               
GS1072\U.3, Nauman, 4/15/19.                                                                                                    
                                                                                                                                
                          AMENDMENT 2                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE              BY SENATOR MICCICHE                                                                     
          TO:  CSJJR 5(STA)                                                                                                     
                                                                                                                                
     Page 1, line 15:                                                                                                           
          Delete "a program of"                                                                                                 
                                                                                                                                
     Page 2, lines 2 - 3:                                                                                                       
          Delete "An appropriation under Section 13 of this                                                                     
       article is not necessary for a transfer under this                                                                       
     subsection."                                                                                                               
          Insert "The transfer of income for the payment of                                                                     
       dividends to State residents under this subsection                                                                       
     does not require an appropriation under Section 13 of                                                                      
     this article."                                                                                                             
                                                                                                                                
     Page 2, line 5:                                                                                                            
          Delete "program of dividend payments"                                                                                 
          Insert "amount transferred for the payment of                                                                         
     dividends"                                                                                                                 
                                                                                                                                
     Page 2, lines 6 - 7:                                                                                                       
          Delete ", including the amount of the dividend                                                                        
     and eligibility requirements,"                                                                                             
                                                                                                                                
CHAIR HUGHES objected for discussion purposes.                                                                                  
                                                                                                                                
SENATOR  MICCICHE  said  that  Amendment  2  was  co-authored  by                                                               
Senator  Shower and  himself primarily  as clean-up  language. He                                                               
reviewed the language, relating that  the first change on page 1,                                                               
line 15,  read, "Each fiscal year,  a portion of the  income from                                                               
the permanent fund  shall be transferred solely for  a program of                                                               
dividend payments ?.                                                                                                            
                                                                                                                                
He  referred  to  Page  2,  lines 2-3,  which  would  delete  "An                                                               
appropriation under Section  13 of this article  is not necessary                                                               
for a transfer  under this subsection." It would  replace it with                                                               
the  language,  "The  transfer  of  income  for  the  payment  of                                                               
dividends  to  state residents  under  this  subsection does  not                                                               
require an appropriation under Section 13 of this article."                                                                     
                                                                                                                                
SENATOR MICCICHE  said that under  SJR 5, an  appropriation would                                                               
no  longer  be necessary.  It  would  simply  be a  transfer  and                                                               
Amendment  2   would  rearrange  the  language   to  reflect  the                                                               
sponsor's intent.                                                                                                               
                                                                                                                                
He referred  to page 2  line 5 of SJR  5, which would  delete the                                                               
language,  "program  of  dividend  payments"  and  change  it  to                                                               
"amount transferred  for the payment  of dividends."  Finally, on                                                               
page  2, lines  6-7, Amendment  2  would delete  the language  ",                                                               
including   the   amount   of  the   dividend   and   eligibility                                                               
requirements."  He  said  that  since  this  language  refers  to                                                               
dividend  payments, that  it eliminates  this  section, and  goes                                                               
right to the language, "shall  not take effect unless approved by                                                               
the voters ?." He said  it would substantively remove eligibility                                                               
requirements from [SJR  5], which should be under  the purview of                                                               
the legislature.                                                                                                                
                                                                                                                                
2:40:42 PM                                                                                                                    
SENATOR SHOWER said that one of  the things he was concerned with                                                               
was  that if  people said  they had  met eligibility  for certain                                                               
programs  within the  state,  it might  be  perceived as  setting                                                               
precedent. The legislature needs to  retain the ability to change                                                               
eligibility  requirements  if  it  decides to  "tighten  up"  the                                                               
program. For  example, he is  eligible for any number  of things,                                                               
he said.                                                                                                                        
                                                                                                                                
SENATOR  KIEHL asked  for  clarification on  page  2, lines  4-6,                                                               
which   states   that   the  transfer   does   not   require   an                                                               
appropriation. He  was unsure  what law  changes the  amount that                                                               
gets transferred.                                                                                                               
                                                                                                                                
SENATOR  MICCICHE   responded  that  if  [Amendment   2  and  the                                                               
resolution] were to pass, it  would require that a ballot measure                                                               
go to  the voters to  change the constitutional language  and the                                                               
amount  that  would be  transferred.  He  said that  Amendment  2                                                               
supports  the  original  statutory  payment in  existence  as  of                                                               
December 31, 2018. If that amount  is changed, it would go before                                                               
the voters.  He said  that the statutory  payment as  of December                                                               
31, 2018  is in SJR  5 and if  the legislature decides  to change                                                               
it, that amount must go before the voters for approval.                                                                         
                                                                                                                                
SENATOR KIEHL  recalled the legislature  had a list  of allowable                                                               
investments, which is  what the state anticipates it  can earn on                                                               
the  fund. He  asked whether  that would  have an  effect on  the                                                               
amount to be transferred and if  that would need to go before the                                                               
voters.                                                                                                                         
                                                                                                                                
SENATOR  MICCICHE answered  that in  his interpretation,  it does                                                               
not. He  suggested the administration  may wish to weigh  in, but                                                               
this amendment would support the  five-year trailing earnings and                                                               
the  traditional statutory  calculation  for  the permanent  fund                                                               
dividend  (PFD).  It  would  not   change  how  earnings  can  be                                                               
invested.                                                                                                                       
                                                                                                                                
SENATOR  KIEHL appreciated  the intent  but he  expressed concern                                                               
whether Amendment 2 would accomplish it.                                                                                        
                                                                                                                                
2:44:13 PM                                                                                                                    
MR.  BARNHILL responded  that the  investment list  statutes were                                                               
set  out in  Title  37,  which governed  how  the Permanent  Fund                                                               
Corporation  invests  the  assets  of  the  permanent  fund.  The                                                               
program  for the  permanent fund  dividend  (PFD) is  set out  in                                                               
Title 43, so  it is completely separate. He said  that nothing in                                                               
SJR 5 relates to issues governed by statute in Title 37.                                                                        
                                                                                                                                
2:44:58 PM                                                                                                                    
SENATOR KIEHL said Amendment 2 deletes the word "program."                                                                      
                                                                                                                                
MR. BARNHILL answered  that the program of dividends  is in Title                                                               
43  and  a program  of  investments  is  in  Title 37.  They  are                                                               
completely separate. He said that  to make it patently clear, the                                                               
governor does  not intend this  to touch anything related  to the                                                               
management  of  permanent  fund  assets.  In  response  to  Chair                                                               
Hughes,  he  said the  administration  supports  Amendment 2.  It                                                               
would provide  a little cleanup  and substantively  it eliminates                                                               
"dividend and eligibility [requirements]."                                                                                      
                                                                                                                                
2:45:59 PM                                                                                                                    
CHAIR  HUGHES  said  that  the   committee  held  discussions  on                                                               
eligibility.  She offered  her belief  that the  voters are  more                                                               
concerned about  PFD itself and  the voters are  already eligible                                                               
so she did not think Alaskans would mind.                                                                                       
                                                                                                                                
2:46:31 PM                                                                                                                    
CHAIR HUGHES removed her objection.                                                                                             
                                                                                                                                
2:46:36 PM                                                                                                                    
SENATOR KIEHL remarked that he  still has concerns and would like                                                               
to work on this question going  forward but he will not object to                                                               
Amendment 2.                                                                                                                    
                                                                                                                                
There being no further objection, Amendment 2 was adopted.                                                                      
                                                                                                                                
2:47:02 PM                                                                                                                    
SENATOR  MICCICHE moved  to  adopt Amendment  3,  work order  31-                                                               
GS1072\U.4, Nauman, 4/15/19.                                                                                                    
                                                                                                                                
                          AMENDMENT 3                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR MICCICHE                                                                
          TO:  CSJJR 5(STA)                                                                                                     
                                                                                                                                
     Page 2, line 3, following "subsection.":                                                                                   
          Insert "Dividend payments under this subsection                                                                       
     shall be distributed in four equal quarterly payments                                                                      
     over the calendar year."                                                                                                   
                                                                                                                                
CHAIR HUGHES objected for discussion purposes.                                                                                  
                                                                                                                                
SENATOR MICCICHE  explained that Amendment  3 was brought  to him                                                               
by  Mr.  Clem  Tillion,  who  is one  of  the  defenders  of  the                                                               
Permanent  Fund.  He said  that  this  would distribute  dividend                                                               
payments in four equal payments.  He said that currently about 10                                                               
percent  of  dividends stay  in  the  state.  He said  that  four                                                               
smaller payments  are more likely to  end up in the  economy at a                                                               
much higher  proportion. He offered  his belief that it  would be                                                               
at a lower  cost to the state because the  remaining dollars will                                                               
continue  to  earn over  the  course  of  the year.  Finally,  he                                                               
believes it will  reduce some of the more  negative behavior that                                                               
occurs by  a small segment of  residents who receive a  big check                                                               
and  often  do not  use  it  for what  is  best  for them,  their                                                               
families, or  their communities.  He recapped  that it  would pay                                                               
the same amount of the dividend over four quarters.                                                                             
                                                                                                                                
2:49:14 PM                                                                                                                    
SENATOR  SHOWER  said he  supports  Amendment  3. He  echoed  the                                                               
sponsor's  rationale in  support of  the amendment.  He said  the                                                               
University of  Alaska, Institute of Social  and Economic Research                                                               
conducted a study  and a big bump in economic  impact occurs, but                                                               
then  it has  no  effect in  the  economy. He  said  a number  of                                                               
positive aspects could occur if  people receive quarterly checks.                                                               
He characterized this as a really good thing for the state.                                                                     
                                                                                                                                
2:51:31 PM                                                                                                                    
SENATOR KIEHL asked  how the executive branch  would handle child                                                               
support or garnishments.                                                                                                        
                                                                                                                                
SENATOR MICCICHE answered that it  would be relatively unchanged.                                                               
Most  recipients receive  their  checks by  electronic means.  He                                                               
suggested  that   some  minor   administrative  costs   might  be                                                               
incurred, but the same garnishments would apply.                                                                                
                                                                                                                                
2:53:20 PM                                                                                                                    
MR. BARNHILL said the administration  has looked at this in terms                                                               
of  monthly  payments.  He related  his  understanding  that  the                                                               
Permanent Fund  Division would have  an increased burden,  but he                                                               
was unsure that it was  sufficient enough to warrant setting this                                                               
aside  since it  would  result  in many  benefits.  He offered  a                                                               
friendly  amendment to  read, shall  be distributed  in "no  less                                                               
than" to  allow the state the  option to go to  monthly payments.                                                               
He said that  the administration was considering  a statutory fix                                                               
rather than  a constitutional one,  but it is within  the purview                                                               
of the committee to decide.                                                                                                     
                                                                                                                                
2:54:41 PM                                                                                                                    
CHAIR HUGHES  asked if she  could assume that  the administration                                                               
has no objection to Amendment 3.                                                                                                
                                                                                                                                
MR.  BARNHILL answered  that the  administration  was neutral  on                                                               
Amendment 3.                                                                                                                    
                                                                                                                                
CHAIR HUGHES  asked whether  the administration  preferred adding                                                               
the language "no less than."                                                                                                    
                                                                                                                                
MR.  BARNHILL  said if  the  administration  chose to  distribute                                                               
monthly dividends,  adding Amendment 3 to  the constitution could                                                               
prohibit it.                                                                                                                    
                                                                                                                                
2:55:22 PM                                                                                                                    
SENATOR MICCICHE  said that quarterly payments  are significantly                                                               
different  than  the  minimum basic  income  concept  of  monthly                                                               
payments.  He thought  it  would get  into  a "Zuckerberg  model,                                                               
which  is  an extremely  leftist  model"  and  is  one he  has  a                                                               
difficult time supporting.  He said that Amendment  3 would break                                                               
the PFD  into quarterly payments.  He said the monthly  aspect is                                                               
different than his vision.                                                                                                      
                                                                                                                                
2:56:05 PM                                                                                                                    
SENATOR  SHOWER   reported  that  the  Permanent   Fund  Division                                                               
garnishments  always  take priority  and  the  process would  not                                                               
change.                                                                                                                         
                                                                                                                                
SENATOR  KIEHL  asked  whether  this  would  trigger  income  tax                                                               
withholding. He asked how that would work.                                                                                      
                                                                                                                                
MR. BARNHILL responded that he pleads ignorance.                                                                                
                                                                                                                                
SENATOR MICCICHE  said that  withholding is  based on  the amount                                                               
and not  on the  frequency of distribution.  It would  remain the                                                               
same.                                                                                                                           
                                                                                                                                
2:57:33 PM                                                                                                                    
CHAIR HUGHES removed her objection.                                                                                             
                                                                                                                                
There being no further objection, Amendment 3 was adopted.                                                                      
                                                                                                                                
2:57:54 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  4,  work  order  31-                                                               
GS1072\U.1, Nauman, 4/9/19.                                                                                                     
                                                                                                                                
                          AMENDMENT 4                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR HUGHES                                                                  
          TO:  CSJJR 5(STA)                                                                                                     
                                                                                                                                
                                                                                                                                
     Page 2, line 18:                                                                                                           
          Delete "Transition."                                                                                                
          Insert "Transition; Conditional Effect. (a)"                                                                        
                                                                                                                                
     Page 2, following line 24:                                                                                                 
          Insert a new subsection to read:                                                                                      
          "(b)  The 2020 amendments to the Alaska permanent                                                                     
     fund (art. IX, sec. 15) take effect only if, in 2020,                                                                      
         the voters approve an amendment relating to an                                                                         
     appropriation limit (art. IX, sec. 16)."                                                                                   
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
CHAIR  HUGHES  said  Amendment  4 stems  from  her  concern.  She                                                               
related  a scenario  in which  oil prices  dropped substantially,                                                               
and the  legislature did not have  a spending limit in  place but                                                               
had set  a PFD amount.  She said this contingency  language would                                                               
not add SJR  5 to the Constitution of the  State of Alaska unless                                                               
SJR  6,  which sets  the  spending  limit,  was approved  by  the                                                               
voters.                                                                                                                         
                                                                                                                                
2:59:04 PM                                                                                                                    
                                                                                                                                
MR.  WHITT  said  that  Amendment  4  would  tie  SJR  5  to  the                                                               
constitutional  spending  cap  in  SJR  6.  He  referred  to  the                                                               
language  on page  2 line  24. He  said that  if the  language in                                                               
[Section 1 and  2 of Article IX, Section 15  were to pass without                                                               
passage of  [the resolution] relating to  an appropriation limit,                                                               
it would raise  a number of constitutional issues.  One issue was                                                               
to tie an Alaskan's vote on  one ballot initiative to another. He                                                               
said Chair Hughes wanted to start  the conversation and work on a                                                               
second approach to address this issue.                                                                                          
                                                                                                                                
3:00:24 PM                                                                                                                    
CHAIR  HUGHES withdrew  Amendment 4.  She said  that she  did not                                                               
want to  set up the  legislature on  legal issues. She  said that                                                               
she  did not  want  to put  the legislature  in  the position  of                                                               
needing to  raise taxes to  meet the state's obligation.  This is                                                               
why the spending limit is so crucial.                                                                                           
                                                                                                                                
3:01:03 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  5,  work  order  31-                                                               
GS1072\U.2, Nauman, 4/15/19.                                                                                                    
                                                                                                                                
                          AMENDMENT 5                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR HUGHES                                                                  
          TO:  CSJJR 5(STA)                                                                                                     
                                                                                                                                
                                                                                                                                
     Page 1, line 2, following "dividend":                                                                                    
          Insert ", relating to an appropriation limit, and                                                                   
     relating to the budget reserve fund"                                                                                     
                                                                                                                                
     Page 2, following line 15:                                                                                                 
     Insert new resolution sections to read:                                                                                    
      "* Sec. 3. Article IX, sec. 16, Constitution of the                                                                   
     State of Alaska, is repealed and readopted to read:                                                                        
          Section 16. Appropriation Limit. (a) Except as                                                                      
     provided in  (b) of  this section,  appropriations made                                                                    
     for a fiscal  year shall not exceed the  average of the                                                                    
     appropriations made in the  previous three fiscal years                                                                    
     by more  than the  average change  in inflation  in the                                                                    
     previous  five fiscal  years. In  this subsection,  the                                                                    
     change  in inflation  shall be  based  on the  Consumer                                                                    
     Price  Index for  Anchorage, Alaska,  as prescribed  by                                                                    
     law.   This   subsection   does   not   apply   to   an                                                                    
     appropriation                                                                                                              
               (1)     to  the   principal  of   the  Alaska                                                                    
     permanent  fund  and  from the  Alaska  permanent  fund                                                                    
     income for  the administration  of the fund  or payment                                                                    
     of permanent fund dividends;                                                                                               
               (2)  to meet a  state of disaster declared by                                                                    
     the governor as prescribed by law;                                                                                         
               (3)     to  pay  obligations  or   spend  the                                                                    
     proceeds or  revenue of State general  obligation bonds                                                                    
     and revenue bonds;                                                                                                         
               (4)  that is a  reappropriation of a previous                                                                    
     unobligated appropriation;                                                                                                 
               (5)   that  is duplicating  the authorization                                                                    
     to expend funds from another appropriation;                                                                                
               (6)  from  a non-State source in  trust for a                                                                    
     specific  purpose,  including   revenues  of  a  public                                                                    
     enterprise  or public  corporation  of  the State  that                                                                    
     issues revenue bonds; and                                                                                                  
               (7)  of  money to a State  savings account or                                                                    
     fund  that  requires  a subsequent  appropriation  from                                                                    
     that account or fund as prescribed by law.                                                                                 
          (b)  The legislature may appropriate an                                                                               
     additional amount in excess  of the appropriation limit                                                                    
     under  (a) of  this section  for capital  improvements,                                                                    
     except that  the amount  for capital  improvements made                                                                    
     in excess of  the appropriation limit in  a fiscal year                                                                    
     shall   not   exceed   ten   percent   of   the   total                                                                    
     appropriation    limit    for   that    fiscal    year.                                                                    
     Appropriations  for  capital improvements  that  exceed                                                                    
     the   appropriation  limit   shall  not   be  used   in                                                                    
     calculating  the  appropriation   limit  in  subsequent                                                                    
     fiscal years.                                                                                                              
          (c)       Any    unexpended,   unobligated,    and                                                                    
     unappropriated balance  in the general fund  at the end                                                                    
     of a fiscal year shall  be deposited into the following                                                                    
     funds in the priority order listed:                                                                                        
               (1)   the permanent fund under  Section 15 of                                                                    
     this article  in an amount not  to exceed fifty-percent                                                                    
     of the  income produced from the  permanent fund during                                                                    
     the fiscal year just ended;                                                                                                
               (2)   the budget  reserve fund  under Section                                                                    
     17 of this article in  an amount necessary to bring the                                                                    
     budget reserve fund balance  equal to the appropriation                                                                    
     limit for the next fiscal year;                                                                                            
               (3)  the permanent fund under Section 15 of                                                                      
     this article.                                                                                                              
          (d)  Section 7 of this article does not apply to                                                                      
     deposits made under (c) of this section.                                                                                   
        * Sec.  4. Article  IX, sec. 17(a),  Constitution of                                                                  
     the State of Alaska, is amended to read:                                                                                   
          (a) There is established as a separate fund in                                                                        
     the State treasury the budget  reserve fund. Except for                                                                    
     money deposited  into the permanent fund  under Section                                                                    
     15 of  this article,  all money  received by  the State                                                                    
     [AFTER JULY 1,  1990], as a result  of the termination,                                                                    
     through settlement  or otherwise, of  an administrative                                                                    
     proceeding  or  of litigation  in  a  State or  federal                                                                    
     court   directly  involving   mineral  lease   bonuses,                                                                
     rentals,  royalties,  royalty  sale  proceeds,  federal                                                                    
     mineral  revenue   sharing  payments  or   bonuses,  or                                                                    
     involving taxes imposed  on mineral income, production,                                                                    
     or property,  shall be deposited in  the budget reserve                                                                    
     fund.  Money  in  the  budget  reserve  fund  shall  be                                                                    
     invested  so as  to yield  competitive market  rates to                                                                    
     the fund. Income  of the fund shall be  retained in the                                                                    
     fund.  Section 7  of  this article  does  not apply  to                                                                    
     deposits made to the fund  under this subsection. Money                                                                    
     may be  appropriated from the  fund only  as authorized                                                                    
     under (b) [OR (c)] of this section.                                                                                        
        * Sec.  5. Article  IX, sec. 17(b),  Constitution of                                                                  
     the State of Alaska, is amended to read:                                                                                   
          (b) If the amount in the general fund available                                                                   
     for appropriation  for a fiscal  year is less  than the                                                                    
     appropriation limit  under Section  16 of  this article                                                                
     [AMOUNT APPROPRIATED FOR THE  PREVIOUS FISCAL YEAR], an                                                                    
     appropriation  may  be  made from  the  budget  reserve                                                                    
     fund. However,  the amount  appropriated from  the fund                                                                    
     under  this  subsection  may   not  exceed  the  amount                                                                    
     necessary,  when added  to other  funds in  the general                                                                
     fund available for appropriation,  to provide for total                                                                
     appropriations equal  to the appropriation  limit under                                                                
     section 16  of this  article [AMOUNT  OF APPROPRIATIONS                                                                
     MADE  IN THE  PREVIOUS CALENDAR  YEAR FOR  THE PREVIOUS                                                                    
     FISCAL YEAR]."                                                                                                             
                                                                                                                                
     Renumber    the     following    resolution    sections                                                                    
     accordingly.                                                                                                               
                                                                                                                                
     Page 2, lines 16 - 17:                                                                                                     
          Delete "a new section"                                                                                                
          Insert "new sections"                                                                                                 
                                                                                                                                
     Page 2, following line 24:                                                                                                 
     Insert new material to read:                                                                                               
          "Section 31. Application of Appropriation Limit.                                                                    
     The  2020  amendment limiting  appropriation  increases                                                                    
     and   requiring   a    portion   of   the   unexpended,                                                                    
     unobligated, and unappropriated  balance in the general                                                                    
     fund to  go to  the permanent fund  (art. IX,  sec. 15)                                                                    
     applies  to appropriations  made  for  the fiscal  year                                                                    
     ending June 30, 2022, and thereafter.                                                                                      
          Section 32. Budget Reserve Fund Transition. The                                                                     
     repeal  of Section  17(d)  of Article  IX  in the  2020                                                                    
     amendments  eliminates  any  repayment  required  under                                                                    
     that   subsection  through   the  fiscal   year  ending                                                                    
     June 30, 2021.                                                                                                             
        *  Sec.  7.  Article  IX,  secs.  17(c)  and  17(d),                                                                  
     Constitution of the State of Alaska, are repealed."                                                                        
                                                                                                                                
     Renumber the following resolution section accordingly.                                                                     
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
CHAIR  HUGHES  explained  Amendment   5.  Since  the  contingency                                                               
language  was   problematic  the   Division  of   Legal  Services                                                               
suggested  this  would  provide   a  better  solution.  It  would                                                               
essentially take language from SJR 6  and roll it into SJR 5. One                                                               
question  was how  the courts  have ruled  on the  single subject                                                               
rule. She  said that the courts  have not yet had  a case related                                                               
to  a constitutional  amendment,  but the  courts  have ruled  on                                                               
legislative bills. She  said that the courts have  allowed it for                                                               
bills, so  long as an  overarching general topic exists,  such as                                                               
state finances.  Even though it  has not  yet been tested,  it is                                                               
likely to  stand up better  than the approach taken  in Amendment                                                               
4.                                                                                                                              
                                                                                                                                
3:02:08 PM                                                                                                                    
MR. WHITT agreed that Amendment 5  would take the language in SJR                                                               
6, the  appropriation limit, in the  form that passed out  of the                                                               
Senate Judiciary Standing Committee  and insert the language into                                                               
SJR  5,  related  to  the   permanent  fund  and  permanent  fund                                                               
dividend. This would tie both resolutions together.                                                                             
                                                                                                                                
CHAIR HUGHES  related her  understanding that  the administration                                                               
prefers  to  keep  the  vehicles  separate,  since  it  might  be                                                               
confusing. However,  she believes voters can  understand this and                                                               
would be concerned about potentially  incurring high tax rates in                                                               
the future. She  offered her belief that  voters would appreciate                                                               
the resolution and possibly support it.                                                                                         
                                                                                                                                
3:03:13 PM                                                                                                                    
SENATOR KIEHL  recalled that the  Legislative Legal  Services had                                                               
some concerns about  SJR 6, in terms of whether  it constituted a                                                               
constitutional amendment or a revision.                                                                                         
                                                                                                                                
MR. WHITT  answered that is  correct. He said the  committee held                                                               
discussions on  whether it  was a  constitutional amendment  or a                                                               
revision.  Ultimately,  the  governor's   position  is  that  the                                                               
administration could  effectively argue their position  on SJR 6.                                                               
The administration is  prepared to do so. It was  the will of the                                                               
committee  to  trust  the  governor   and  his  position  on  the                                                               
resolution. The committee moved SJR 6 out of committee.                                                                         
                                                                                                                                
SENATOR KIEHL said  it may not have been unanimous.  He said that                                                               
that  the  concern  does  not  diminish  but  would  increase  by                                                               
coupling  more   constitutional  sections  and  changes   to  the                                                               
legislature's power  to appropriate.  He said  that appropriation                                                               
is the fundamental  authority of the legislative  branch. He said                                                               
it begins  to look like a  significant rewrite. He said  that his                                                               
concern  about  a  constitutional   revision  grows  rather  than                                                               
shrinks.                                                                                                                        
                                                                                                                                
3:05:07 PM                                                                                                                    
SENATOR SHOWER removed his objection.                                                                                           
                                                                                                                                
3:05:18 PM                                                                                                                    
SENATOR KIEHL objected.                                                                                                         
                                                                                                                                
3:05:28 PM                                                                                                                    
At-ease.                                                                                                                        
                                                                                                                                
3:05:41 PM                                                                                                                    
CHAIR HUGHES reconvened the meeting.  A roll call vote was taken.                                                               
Senators  Shower,   Micciche,  and  Hughes  voted   in  favor  of                                                               
Amendment  5  and  Senator Kiehl  voted  against  it.  Therefore,                                                               
Amendment 5 passed by a 3:1 vote.                                                                                               
                                                                                                                                
3:06:20 PM                                                                                                                    
CHAIR HUGHES restated that on a  vote of three yeas, one nay, and                                                               
one absent, Amendment 5 was adopted.                                                                                            
                                                                                                                                
3:06:39 PM                                                                                                                    
SENATOR MICCICHE moved to report SJR 5, work order 31-GS1072/U                                                                  
as amended, from committee with individual recommendations and                                                                  
attached fiscal note(s).                                                                                                        
                                                                                                                                
There being no objection, CSSJR 5(JUD) was reported from the                                                                    
Senate Judiciary Standing Committee.                                                                                            

Document Name Date/Time Subjects
SJR 3 Version A.PDF SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SJR 3
SJR 3 - Sponsor Statement.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SJR 3
SJR3 Fiscal Note.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 3
SJR 3 - AJC Att -Non Att vote splits - highlighted.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 - Constitutional Convention Minutues about Judiciary_AJC.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 - AJC_Court System members and votes info.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 - Historical Roster of AJC members.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 - Vic Fisher Constitution book exerpts.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposition AFL-CIO.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposition Former Attorney General.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposition Justice not Politics.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposition - League of Women Voters of Alaska.pdf SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposition Resolution AFN.pdf SJUD 4/12/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposition - Vic Fischer.pdf SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 - League of Women Voters Opposition Position Statement.pdf SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 3 Opposistion - Kawerak 4-12-19.pdf SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR4 Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJUD 4/19/2019 1:30:00 PM
SJR 4
SJR 4 Transmittal Letter.pdf SJUD 4/15/2019 1:30:00 PM
SJUD 4/22/2019 6:00:00 PM
SSTA 3/26/2019 1:30:00 PM
SSTA 3/27/2019 6:00:00 PM
SSTA 3/28/2019 3:30:00 PM
SJR 4
SJR4 Sectional Analysis Version U.pdf SJUD 4/1/2019 1:30:00 PM
SJUD 4/3/2019 1:30:00 PM
SJUD 4/3/2019 6:00:00 PM
SJUD 4/15/2019 1:30:00 PM
SJUD 4/17/2019 6:00:00 PM
SJR 4
SJR 4 Fiscal Note GOV-DOE.pdf SJUD 4/15/2019 1:30:00 PM
SSTA 3/27/2019 6:00:00 PM
SSTA 3/28/2019 3:30:00 PM
SJR 4
SJR 4 Fiscal Note GOV-DOE.pdf SJUD 4/15/2019 1:30:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 4
SJR 4 Fiscal Note - DLWD.pdf SJUD 4/15/2019 1:30:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 4
SJR 4 - Legislative Legal Memo.pdf SJUD 4/15/2019 1:30:00 PM
SJR 4
CSSJR 5 Version U.PDF SJUD 4/8/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 - CSSJR 5(STA) ver U Sectional 4.8.19.pdf SJUD 4/8/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 - CSSJR 5(STA) - Comparison 4.8.19.pdf SJUD 4/8/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 5
Senate State Affairs - SJR 5 Written Testimony uploaded (04-08-19).pdf SJUD 4/15/2019 1:30:00 PM
SSTA 4/4/2019 1:30:00 PM
SJR 5
SJR 3 - Alaska Judicial Council vote tally stats by year.pdf SJUD 4/15/2019 1:30:00 PM
SJR 3
SJR 5 - Amendment 2 Adopted.pdf SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 - Amendment 3 Adopted.pdf SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 - Amendment 5 Adopted.pdf SJUD 4/15/2019 1:30:00 PM
SJR 5
Statutory $3000 PFD White Paper PFD Working Group 6-27-19 Final.pdf SJUD 4/15/2019 1:30:00 PM