Legislature(2021 - 2022)BUTROVICH 205

04/09/2021 01:30 PM JUDICIARY

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Audio Topic
01:33:42 PM Start
01:34:34 PM SJR1
01:58:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
          SJR 1-CONST AM: GUARANTEE PERM FUND DIVIDEND                                                                      
1:34:34 PM                                                                                                                    
CHAIR  REINBOLD  announced the  consideration  of  SJR 1,  SENATE                                                               
JOINT RESOLUTION NO. 1, Proposing  amendments to the Constitution                                                               
of the State of Alaska relating  to the Alaska permanent fund and                                                               
appropriations from the Alaska permanent fund.                                                                                  
CHAIR  REINBOLD asked  if  Section 1  would  remove the  Earnings                                                               
Reserve Account on June 30, 2023.                                                                                               
1:34:52 PM                                                                                                                    
SONJA KAWASAKI,  Staff, Senator  Bill Wielechowski,  Alaska State                                                               
Legislature,  Juneau,   Alaska,  agreed  that  Section   1  would                                                               
eliminate the Earnings Reserve Account  by collapsing it into the                                                               
corpus of the Permanent Fund.                                                                                                   
1:35:36 PM                                                                                                                    
CHAIR   REINBOLD    referred   to   Section   2,    which   would                                                               
constitutionalize five percent of market value (POMV).                                                                          
MS. KAWASAKI agreed that is correct.                                                                                            
CHAIR  REINBOLD related  her understanding  that the  payments of                                                               
dividends could be calculated in two ways.                                                                                      
1:35:51 PM                                                                                                                    
MS. KAWASAKI  explained that SJR  1 establishes that  payments of                                                               
dividends to  Alaskans will be  either by the calculation  set by                                                               
the historic  statutory formula, as constitutionalized,  or fifty                                                               
percent  of  the POMV,  whichever  would  produce a  dividend  of                                                               
greater  value. In  that sense,  the people  would get  the first                                                               
call.  The remaining  amount  could be  used  to fund  government                                                               
CHAIR REINBOLD explained  that SJR 1 would require  50 percent to                                                               
go to  the people and  50 percent of the  POMV would be  spent on                                                               
MS. KAWASAKI reiterated the calculation  was a comparison between                                                               
the historic statutory formula and 50 percent of POMV.                                                                          
1:37:21 PM                                                                                                                    
SENATOR SHOWER offered  his view that under  the current formula,                                                               
in 2021, about $2 billion would  fund PFDs and the remaining $1.5                                                               
billion would be  left for government and  inflation proofing. It                                                               
would not quite be a 50:50 split.                                                                                               
CHAIR  REINBOLD stated  that SJR  1  would constitutionalize  the                                                               
five percent  POMV. She offered  her view  that this will  give a                                                               
large portion of  the permanent fund earnings  to government. She                                                               
asked if it would require a two-thirds vote by the legislature.                                                                 
MS. KAWASAKI answered yes. The  legislature would need to approve                                                               
SJR 1 by a two-thirds vote.                                                                                                     
CHAIR REINBOLD related her understanding  that the question would                                                               
be  on  the  November  8,   2022,  general  election  ballot.  If                                                               
approved, the  earnings reserve account  would be  transferred to                                                               
the principal of the fund on  June 30, 2023. She referred to page                                                               
2, lines 15 through 18. She read:                                                                                               
     (a) On June  30, 2023, the unencumbered  balance of the                                                                    
     earnings reserve  account established  by law  shall be                                                                    
     deposited in the Alaska permanent  fund and become part                                                                    
     of the principal of the fund.                                                                                              
1:40:22 PM                                                                                                                    
CHAIR REINBOLD opened public testimony on SJR 1.                                                                                
1:41:05 PM                                                                                                                    
KATHERINE  UEI, representing  self,  Soldotna,  Alaska, spoke  in                                                               
support of SJR  1. She stated her support for  the legislature to                                                               
cut  the budget.  She expressed  an interest  in constitutionally                                                               
protecting the PFD.                                                                                                             
1:42:19 PM                                                                                                                    
WILLY KEPPEL,  representing self,  Quinhagak, Alaska,  stated his                                                               
support for  SJR 1 since it  will provide a means  for the public                                                               
to have a voice.  He encouraged the Senate to pass  it and put it                                                               
before the  voters. The budget  and deficit need to  be resolved,                                                               
he said.                                                                                                                        
MIKE COONS,  representing self, Palmer, Alaska,  spoke in support                                                               
of SJR 1.  He said he liked  the provisions in SJR  1. He offered                                                               
his  view  that  large  numbers  of  Alaskans  will  support  the                                                               
resolution. If  a fiscal  note is required,  it should  be added.                                                               
SJR 1 and the  spending cap in SJR 5 at  2.5 percent would create                                                               
a  barrier  that the  legislature  could  not breach.  This  will                                                               
protect  the  permanent fund  dividend  (PFD)  and keep  spending                                                               
under realistic control. SJR 1  would establish a five percent of                                                               
market value (POMV) but prefers four percent.                                                                                   
1:45:47 PM                                                                                                                    
KRISTA  BURTON, representing  self, Anchorage,  Alaska, spoke  in                                                               
support of SJR 1. She asked members to please pass SJR 1.                                                                       
1:46:26 PM                                                                                                                    
BERT HOUGHTALING,  representing self, Big Lake,  Alaska, spoke in                                                               
support of SJR 1. He said that  SJR 1 was the only measure before                                                               
the  legislature to  protect the  PFD by  constitutionalizing the                                                               
statutory  formula.  He  expressed concern  about  combining  the                                                               
corpus  and  the  ERA.  He  stated  that  the  POMV  draw  seemed                                                               
reasonable, but  it could  be lower. He  suggested the  POMV draw                                                               
should  be   set  at  four   percent  to  guarantee   the  fund's                                                               
sustainability.  He urged  the committee  to add  a provision  to                                                               
inflation-proof the fund. He offered  his view that the Permanent                                                               
Fund rightfully belongs  to Alaskans and giving a  share to state                                                               
departments does not  meet the original purpose  of the Permanent                                                               
1:47:56 PM                                                                                                                    
SENATOR HUGHES joined the meeting.                                                                                              
1:49:03 PM                                                                                                                    
KATHLEEN  SHOOP,  representing  self, Palmer,  Alaska,  spoke  in                                                               
support of SJR 1.                                                                                                               
1:50:28 PM                                                                                                                    
KEVIN  HALL,  representing  self,   Sterling,  Alaska,  spoke  in                                                               
support of SJR  1. He said he has been  watching this issue since                                                               
Governor Walker  decided not to  issue a PFD. The  Permanent Fund                                                               
belongs to the people and that is how it should remain, he said.                                                                
1:51:37 PM                                                                                                                    
At ease                                                                                                                         
1:52:09 PM                                                                                                                    
CHAIR REINBOLD reconvened the meeting.  She said she would accept                                                               
public testimony via email at Senate.Judiciary@akleg.gov.                                                                       
CHAIR REINBOLD closed public testimony on SJR 1.                                                                                
1:52:57 PM                                                                                                                    
SENATOR  SHOWER  offered his  view  that  many legislators  would                                                               
prefer not  to combine  the earnings  reserve account  (ERA) with                                                               
the  corpus  of  the  Permanent  Fund.  One  issue  is  that  the                                                               
legislature has  spent $16.5  billion from  the CBR.  As revenues                                                               
decline, the legislature could decide  to deplete it, he said. He                                                               
cautioned  members that  leaving  funds in  the earnings  reserve                                                               
account  means that  the legislature  can access  the funds  by a                                                               
simple majority vote.                                                                                                           
1:53:59 PM                                                                                                                    
CHAIR REINBOLD  said she  struggles with SJR  1 because  she does                                                               
not like  the POMV  provisions, but  she would like  SJR 1  to go                                                               
before the people  for a vote. She maintained her  concern that a                                                               
large portion of the draw would  be deposited in the general fund                                                               
for government  spending. She stated  her previous support  for a                                                               
full statutory PFD.                                                                                                             
1:56:58 PM                                                                                                                    
MELISSA  GUDOBBA, representing  self, Wasilla,  Alaska, spoke  in                                                               
support  of SJR  1 as  a means  to protect  the Alaska  Permanent                                                               
[SJR 1 was held in committee.]                                                                                                  

Document Name Date/Time Subjects
SJR1 Combined Public Testimony 4.3-9.pdf SJUD 4/9/2021 1:30:00 PM
SJR1 ALL Public Testimony Combined April 9 2021.pdf SJUD 4/9/2021 1:30:00 PM