Legislature(2021 - 2022)BUTROVICH 205

09/01/2021 09:00 AM JUDICIARY

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09:07:55 AM Start
09:08:33 AM SB53
10:48:13 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Rescheduled from 8/31/21 --
+= SB 53 PERM FUND; ADVISORY VOTE TELECONFERENCED
Moved CSSB 53(JUD) Out of Committee
**Streamed live on AKL.tv**
                 SB 53-PERM FUND; ADVISORY VOTE                                                                             
                                                                                                                                
9:08:33 AM                                                                                                                    
CHAIR HOLLAND  announced the consideration  of SB 53  SENATE BILL                                                               
NO. 53 "An Act relating to  use of income of the Alaska permanent                                                               
fund;  relating to  the amount  of the  permanent fund  dividend;                                                               
relating to the  duties of the commissioner  of revenue; relating                                                               
to  an advisory  vote on  the  permanent fund;  providing for  an                                                               
effective date  by repealing  the effective date  of sec.  8, ch.                                                               
16, SLA 2018; and providing for an effective date."                                                                             
                                                                                                                                
[SB  53 was  previously heard  on 4/21/21,  4/26/21, 8/27/21  and                                                               
8/30/21. Public testimony was open and closed on 4/26/21.]                                                                      
                                                                                                                                
CHAIR HOLLAND  stated his intention to  finish hearing amendments                                                               
and report the bill from committee.                                                                                             
                                                                                                                                
CHAIR  HOLLAND  recognized that  Senator  Shower  had joined  the                                                               
meeting telephonically.                                                                                                         
                                                                                                                                
9:09:10 AM                                                                                                                    
SENATOR KIEHL moved Amendment 7, work order 32-GS1693\A.16,  as                                                                 
a  conceptual amendment.  He explained  he it  is a  conceptual                                                                 
amendment because the  first four and three-quarter pages  were                                                                 
addressed in an earlier amendment. It read:                                                                                     
                                                                                                                                
                                                  32-GS1693\A.16                                                                
                                                         Nauman                                                                 
                                                        8/30/21                                                                 
                                                                                                                                
                          AMENDMENT 7                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                     BY SENATOR KIEHL                                                                 
                                                                                                                                
                                                                                                                                
     Page 1, lines 3 - 4:                                                                                                       
          Delete "relating to an advisory vote on the                                                                         
       permanent fund; providing for an effective date by                                                                     
      repealing the effective date of sec. 8, ch. 16, SLA                                                                     
     2018;"                                                                                                                   
                                                                                                                                
     Page 2, line 6:                                                                                                            
          Delete "five [5.25]"                                                                                              
          Insert "five"                                                                                                         
                                                                                                                                
     Page 2, following line 14:                                                                                                 
          Insert a new bill section to read:                                                                                    
        "* Sec.  2. AS 37.13.140,  as amended  by sec.  1 of                                                                
     this Act, is amended to read:                                                                                              
          Sec. 37.13.140. Income. (a) Net income of the                                                                   
     fund includes  income of  the earnings  reserve account                                                                
     established under AS 37.13.145. Net  income of the fund                                                                
     shall be  computed annually as  of the last day  of the                                                                    
     fiscal  year  in  accordance  with  generally  accepted                                                                    
     accounting principles,  excluding any  unrealized gains                                                                    
     or losses. Income available  for distribution equals 21                                                                
     percent  of the  net income  of the  fund for  the last                                                                
     five  fiscal  years,  including the  fiscal  year  just                                                                
     ended, but  may not exceed  net income of the  fund for                                                                
     the  fiscal year  just ended  plus the  balance in  the                                                                
     earnings reserve account described in AS 37.13.145.                                                                    
          (b)  The corporation shall determine the amount                                                                       
     available  for  appropriation  each  year.  The  amount                                                                    
     available  for appropriation  is  five  percent of  the                                                                    
     average market value of the  fund for the first five of                                                                    
     the preceding  six fiscal  years, including  the fiscal                                                                    
     year  just ended,  computed  annually  for each  fiscal                                                                    
     year in  accordance with generally  accepted accounting                                                                    
     principles. In  this subsection, "average  market value                                                                    
     of  the  fund" includes  the  balance  of the  earnings                                                                    
     reserve  account  established under  AS 37.13.145,  but                                                                    
     does  not   include  that  portion  of   the  principal                                                                    
     attributed to the settlement of  State v. Amerada Hess,                                                                    
     et   al.,  1JU-77-847   Civ.  (Superior   Court,  First                                                                    
     Judicial   District).   [THE   AMOUNT   AVAILABLE   FOR                                                                    
     APPROPRIATION  MAY  NOT  EXCEED   THE  BALANCE  IN  THE                                                                    
     EARNINGS RESERVE ACCOUNT DESCRIBED IN AS 37.13.145.]"                                                                    
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 2, following line 23:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 4. AS 37.13.145(b), as  amended by sec. 3 of                                                                
     this Act, is amended to read:                                                                                              
          (b)  At the end of each [EACH] fiscal year, the                                                                   
     corporation    shall    transfer    [LEGISLATURE    MAY                                                                
     APPROPRIATE] from the earnings reserve account to the                                                                      
               [(1)]  dividend fund established under                                                                           
     AS 43.23.045,  50   percent  of  the   income  [AMOUNT]                                                                
     available   for   distribution  [APPROPRIATION]   under                                                                
     AS 37.13.140 [AS 37.13.140(b); AND                                                                                     
               (2)  GENERAL FUND, 50 PERCENT OF THE AMOUNT                                                                      
     AVAILABLE FOR APPROPRIATION UNDER AS 37.13.140(b)]."                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 10:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 6. AS 37.13.145(c), as  amended by sec. 5 of                                                                
     this Act, is amended to read:                                                                                              
          (c)  After the transfer [APPROPRIATIONS] under                                                                    
     (b)  and an  appropriation under  (g) of  this section,                                                                
     the   corporation  shall   transfer  [LEGISLATURE   MAY                                                                
     APPROPRIATE] from  the earnings reserve account  to the                                                                    
     principal of  the fund an  amount sufficient  to offset                                                                    
     the effect  of inflation on  the principal of  the fund                                                                    
     during that  fiscal year. However,  none of  the amount                                                                    
     transferred shall  be applied to increase  the value of                                                                    
     that  portion  of  the   principal  attributed  to  the                                                                    
     settlement of  State v. Amerada  Hess, et  al., 1JU-77-                                                                    
     847 Civ.  (Superior Court, First Judicial  District) on                                                                    
     July 1,  2004.  The  corporation  shall  calculate  the                                                                    
     amount  to   transfer  to  the  principal   under  this                                                                    
     subsection by                                                                                                              
               (1)  computing the average of the monthly                                                                        
     United  States  Consumer  Price  Index  for  all  urban                                                                    
     consumers for each of the two previous calendar years;                                                                     
               (2)  computing the percentage change between                                                                     
     the first and second calendar year average; and                                                                            
               (3)  applying that rate to the value of the                                                                      
     principal of  the fund  on the last  day of  the fiscal                                                                    
     year  just   ended,  including  that  portion   of  the                                                                    
     principal  attributed to  the  settlement  of State  v.                                                                    
     Amerada Hess, et al.,  1JU-77-847 Civ. (Superior Court,                                                                    
     First Judicial District)."                                                                                                 
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 21:                                                                                                 
     Insert new bill sections to read:                                                                                          
        "* Sec. 8. AS 37.13.145(d), as  amended by sec. 7 of                                                                
     this Act, is amended to read:                                                                                              
          (d)  Notwithstanding (b) of this section, income                                                                      
     earned on money  awarded in or received as  a result of                                                                    
     State  v.   Amerada  Hess,  et  al.,   1JU-77-847  Civ.                                                                    
     (Superior  Court, First  Judicial District),  including                                                                    
     settlement,  summary  judgment,   or  adjustment  to  a                                                                    
     royalty-in-kind contract  that is  tied to  the outcome                                                                    
     of this  case, or interest  earned on the money,  or on                                                                    
     the earnings of the money  shall be treated in the same                                                                    
     manner as  other income of  the Alaska  permanent fund,                                                                    
     except  that  it  is  not  available  for  distribution                                                                
     [APPROPRIATIONS]  to the  dividend fund,  for transfers                                                                
     [UNDER AS 37.13.140(b)  OR] to the principal  under (c)                                                                    
     of this section,  or for an appropriation  under (g) of                                                                
     this section, and shall be  annually deposited into the                                                                
     Alaska capital income fund (AS 37.05.565).                                                                                 
        *  Sec. 9.  AS 37.13.145  is amended  by adding  new                                                                  
     subsections to read:                                                                                                       
          (g)  The legislature may not appropriate from the                                                                     
     earnings reserve  account to  the general fund  a total                                                                    
     amount   that   exceeds   the  amount   available   for                                                                    
     appropriation under AS 37.13.140(b) in a fiscal year.                                                                      
          (h)  The combined total of the transfer under (b)                                                                     
     of this section and an  appropriation under (g) of this                                                                    
     section  may  not  exceed   the  amount  available  for                                                                    
     appropriation under AS 37.13.140(b)."                                                                                      
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 25:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec.  11. AS 37.13.300(c), as amended  by sec. 10                                                                
     of this Act, is amended to read:                                                                                         
          (c)  Net income from the mental health trust fund                                                                     
     may not  be included in  the computation of  net income                                                                
     or   market   value    [THE   AMOUNT]   available   for                                                                
     distribution   or   appropriation  under   AS 37.13.140                                                            
     [AS 37.13.140(b)]."                                                                                                        
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                              
     Page 4, following line 1:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Sec.  13. AS 37.14.031(c), as amended  by sec. 12                                                                
     of this Act, is amended to read:                                                                                           
          (c)  The net income of the fund shall be                                                                              
     determined by the Alaska  Permanent Fund Corporation in                                                                
     the  same manner  the  corporation  determines the  net                                                                
     income of the Alaska  permanent fund under AS 37.13.140                                                                
     [AND SHALL BE  COMPUTED ANNUALLY AS OF THE  LAST DAY OF                                                                    
     THE FISCAL  YEAR IN ACCORDANCE WITH  GENERALLY ACCEPTED                                                                    
     ACCOUNTING PRINCIPLES,  EXCLUDING ANY  UNREALIZED GAINS                                                                    
     OR LOSSES]."                                                                                                               
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 4, following line 27:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec.  15. AS 43.23.025(a), as amended  by sec. 14                                                                
     of this Act, is amended to read:                                                                                           
          (a)  By October 1 of each year, the commissioner                                                                      
     shall  determine  the  value  of  each  permanent  fund                                                                    
     dividend for that year by                                                                                                  
               (1)   determining the total  amount available                                                                    
     for dividend payments, which equals                                                                                        
               (A)    the amount  of  income  of the  Alaska                                                                
     permanent  fund   transferred  [APPROPRIATED]   to  the                                                                
     dividend fund under  AS 37.13.145(b) during the current                                                                    
     year;                                                                                                                      
               (B)    plus  the unexpended  and  unobligated                                                                    
     balances  of  prior  fiscal  year  appropriations  that                                                                    
     lapse into the dividend fund under AS 43.23.045(d);                                                                        
               (C)   less the amount necessary  to pay prior                                                                    
     year dividends  from the dividend  fund in  the current                                                                    
     year    under     AS 43.23.005(h),    43.23.021,    and                                                                    
     43.23.055(3) and (7);                                                                                                      
               (D)    less  the   amount  necessary  to  pay                                                                    
     dividends  from  the  dividend  fund  due  to  eligible                                                                    
     applicants who, as determined  by the department, filed                                                                    
     for a  previous year's dividend by  the filing deadline                                                                    
     but  who  were  not   included  in  a  previous  year's                                                                    
     dividend computation;                                                                                                      
               (E)   less  appropriations from  the dividend                                                                    
     fund during the current  year, including amounts to pay                                                                    
     costs  of administering  the dividend  program and  the                                                                    
     hold harmless provisions of AS 43.23.240;                                                                                  
               (2)   determining  the number  of individuals                                                                    
     eligible to receive a dividend  payment for the current                                                                    
     year and the number  of estates and successors eligible                                                                    
     to  receive a  dividend  payment for  the current  year                                                                    
     under AS 43.23.005(h); and                                                                                                 
               (3)   dividing  the  amount determined  under                                                                    
     (1) of  this subsection by the  amount determined under                                                                    
     (2) of this subsection."                                                                                                   
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 4, line 29, through page 5, line 15:                                                                                  
          Delete all material and insert:                                                                                       
        "*  Sec. 17.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          CONDITIONAL EFFECT; NOTIFICATION. (a) Sections 2,                                                                     
     4, 6,  8, 9,  11, 13,  and 15 of  this Act  take effect                                                                    
     only if, before July 1,  2022, revenue laws anticipated                                                                    
     to generate  at least an estimated  $160,000,000 of new                                                                    
     revenue each year  have not been passed  by the Thirty-                                                                    
     Second Alaska State Legislature and enacted into law.                                                                      
          (b)  The commissioner of revenue shall notify the                                                                     
     revisor of  statutes if,  before July 1,  2022, revenue                                                                    
     laws  anticipated to  generate  at  least an  estimated                                                                    
     $160,000,000  of new  revenue each  year have  not been                                                                    
     passed  by the  Thirty-Second Alaska  State Legislature                                                                    
     and enacted into law.                                                                                                      
        * Sec. 18.  If, under sec. 17 of this  Act, secs. 2,                                                                  
     4, 6,  8, 9, 11,  13, and 15  of this Act  take effect,                                                                    
     they take effect July 1, 2023."                                                                                            
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete "sec. 12"                                                                                                      
          Insert "sec. 18"                                                                                                      
                                                                                                                                
9:09:26 AM                                                                                                                    
SENATOR HUGHES objected for discussion purposes.                                                                                
                                                                                                                                
9:09:36 AM                                                                                                                    
SENATOR  KIEHL  explained  Conceptual Amendment  7.  He  directed                                                               
attention to  the last three  lines of page 5  and to page  6. He                                                               
explained that  the Fiscal Policy  Working Group  (FPWG) strongly                                                               
recommended that  the legislature  pass a  comprehensive solution                                                               
to the  state's fiscal  policy. This amendment  would make  SB 53                                                               
conditional on the  enactment of laws prior to July  1, 2022 that                                                               
would establish new annual revenue  of $160 million, which is not                                                               
as much as  he would like to see raised.  Amendment 7 was written                                                               
to be  broad and permissive.  New revenue  could be raised  by an                                                               
increase to the Oil and Gas  Property Tax, changes to the oil and                                                               
gas per  barrel credits that  the commissioner of  the Department                                                               
of Revenue (DOR)  presented, or a broad-based tax  like income or                                                               
sales taxes, he said. He characterized  it as a good faith effort                                                               
to move a comprehensive proposal forward.                                                                                       
                                                                                                                                
9:11:14 AM                                                                                                                    
SENATOR HUGHES stated  that she was also a  FPWG participant. The                                                               
FPWG stressed the importance of  moving the components forward as                                                               
a package.  She acknowledged that  FPWG members  compromised. She                                                               
highlighted that she  has a history of urging  the legislature to                                                               
reduce  state government  spending but  the legislature  does not                                                               
have the votes  for those kinds of reductions at  this point. One                                                               
of the  primary constitutional  duties of  the legislature  is to                                                               
pass the budget  each year. The legislature must be  able to fund                                                               
its services and it cannot  accrue debt as the federal government                                                               
can do.  She said it  is hard  to support Conceptual  Amendment 7                                                               
but she  will do  so as  a good  faith effort  to settle  the PFD                                                               
issue and move forward on other issues.                                                                                         
                                                                                                                                
9:12:42 AM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
9:13:28 AM                                                                                                                    
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
9:13:40 AM                                                                                                                    
SENATOR HUGHES recapped comments she  made prior to the committee                                                               
break.                                                                                                                          
                                                                                                                                
9:15:10 AM                                                                                                                    
SENATOR HUGHES removed her objection.                                                                                           
                                                                                                                                
CHAIR HOLLAND asked  Senator Shower to comment but  he was unable                                                               
to do so due to audio difficulties.                                                                                             
                                                                                                                                
9:16:52 AM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
9:19:53 AM                                                                                                                    
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
9:20:05 AM                                                                                                                    
SENATOR SHOWER acknowledged that he  could now hear the committee                                                               
(via teleconference).                                                                                                           
                                                                                                                                
9:20:34 AM                                                                                                                    
SENATOR SHOWER asked for a  recap of Conceptual Amendment 7 since                                                               
he missed some comments due to audio difficulties.                                                                              
                                                                                                                                
9:20:59 AM                                                                                                                    
CHAIR HOLLAND  noted the committee was  experiencing some ongoing                                                               
audio difficulties.                                                                                                             
                                                                                                                                
9:21:06 AM                                                                                                                    
SENATOR  KIEHL  stated  that  the   core  changes  of  Conceptual                                                               
Amendment 7 are on page 6,  which would add one more condition to                                                               
SB 53.  It would require the  legislature to enact into  law $160                                                               
million  in  new annual  revenue.  Although  he was  unsure  $160                                                               
million was sufficient,  it would provide a good  faith effort to                                                               
pass   a   comprehensive   fiscal   policy  as   per   the   FPWG                                                               
recommendations.                                                                                                                
                                                                                                                                
CHAIR  HOLLAND   objected  for  discussion  purposes   since  the                                                               
objection was previously removed.                                                                                               
                                                                                                                                
9:22:15 AM                                                                                                                    
SENATOR SHOWER  said he agreed  with Senator Kiehl that  the FPWG                                                               
developed  a  comprehensive  plan.  He  noted  FPWG  members  had                                                               
different ideas on  solutions to solve each  component, the group                                                               
supported  a comprehensive  plan. He  said  he does  not want  to                                                               
raise taxes, but  he acknowledged the need to  provide a balanced                                                               
approach. He offered his support  for Conceptual Amendment 7 as a                                                               
good  faith effort  to  adopt the  FPWG's  recommendations for  a                                                               
balanced approach. It's time for the Senate to lead, he said.                                                                   
                                                                                                                                
9:23:39 AM                                                                                                                    
SENATOR MYERS  stated it  was important to  note for  members who                                                               
represent conservative parts  of the state that the  point is not                                                               
to provide  the state with  revenue but to establish  a different                                                               
source  of  revenue.  He  remarked that  the  state  will  obtain                                                               
revenue  even if  nothing is  done. The  state will  either raise                                                               
revenue  or obtain  it from  the permanent  fund dividend  funds,                                                               
which  would be  unacceptable to  him. The  goal is  not to  grow                                                               
taxes  or government  but to  alter  the structure,  he said.  He                                                               
offered his view  that the state has  experienced some structural                                                               
issues  in revenue  collection for  the past  forty years,  which                                                               
ensures that  government will continue  to grow. For a  number of                                                               
years, revenue was related to  North Slope oil activities, but as                                                               
the state moves away from  oil revenues and towards funding state                                                               
government  from its  investments, it  loses that  connection. He                                                               
vowed  to review  the tax  structure to  make the  government tie                                                               
back  to the  economy  and  be more  accountable  to the  voters,                                                               
taxpayers  and businesses.  The private  sector should  drive the                                                               
economy not the government, he said.                                                                                            
                                                                                                                                
9:25:55 AM                                                                                                                    
SENATOR HUGHES  remarked that the  public should  understand that                                                               
the  state  will be  making  some  adjustments due  to  declining                                                               
annual  revenue  from oil.  She  offered  her assurance  that  as                                                               
revenue proposals come before the  legislature language will link                                                               
them to  the spending cap in  an effort to halt  runaway spending                                                               
and provide checks and balances in state government.                                                                            
                                                                                                                                
9:27:07 AM                                                                                                                    
SENATOR SHOWER  said Conceptual Amendment  7 is  a comprehensive,                                                               
balanced  bipartisan approach,  one in  which the  FPWG addressed                                                               
proposed  taxes but  also reductions  in  spending. Although  the                                                               
$200 million in reductions is not as much as he would like, it                                                                  
acknowledges that the state must continue to reduce spending.                                                                   
                                                                                                                                
9:28:07 AM                                                                                                                    
CHAIR HOLLAND removed his objection.                                                                                            
                                                                                                                                
CHAIR HOLLAND heard no further objection, so Conceptual                                                                         
Amendment 7 was adopted.                                                                                                        
                                                                                                                                
9:28:17 AM                                                                                                                    
SENATOR KIEHL moved Amendment 8, work order 32-GS1693\A.9.                                                                      
                                                                                                                                
                                              32-GS1693\A.9                                                                     
                                                    Nauman                                                                      
                                                   8/26/21                                                                      
                          AMENDMENT 8                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                     BY SENATOR KIEHL                                                                 
                                                                                                                                
                                                                                                                                
     Page 2, lines 15 - 23:                                                                                                     
          Delete all material and insert:                                                                                       
        "* Sec. 2. AS 37.13.145(b) is amended to read:                                                                      
          (b)  Except as provided in (g) of this section,                                                                   
     [AT THE END  OF] each fiscal year,  the legislature may                                                                
     appropriate  [CORPORATION  SHALL   TRANSFER]  from  the                                                                
     earnings   reserve  account   to   the  dividend   fund                                                                    
     established  under AS 43.23.045,  the amount  necessary                                                                
     to distribute the following  amounts for permanent fund                                                                
     dividends to  each eligible individual for  each of the                                                                
     following fiscal years:                                                                                                
               (1)  $1,100 in fiscal year 2022;                                                                             
               (2)  $1,500 in fiscal year 2023;                                                                             
              (3)  $2,000 in fiscal year 2024; and                                                                          
               (4)  $2,250 in fiscal year 2025 [50 PERCENT                                                                  
     OF   THE  INCOME   AVAILABLE  FOR   DISTRIBUTION  UNDER                                                                    
     AS 37.13.140].                                                                                                             
        * Sec. 3.  AS 37.13.145(b), as amended by  sec. 2 of                                                                  
     this Act, is amended to read:                                                                                              
          (b)  Each [EXCEPT AS PROVIDED IN (g) OF THIS                                                                      
     SECTION,  EACH]   fiscal  year,  the   legislature  may                                                                    
     appropriate from the earnings reserve account to the                                                                       
               (1)  dividend fund established under                                                                         
     AS 43.23.045, 50  percent of  the amount  available for                                                                
     appropriation under AS 37.13.140(b); and                                                                               
               (2)  general fund, 50 percent of the amount                                                                  
     available for appropriation  under AS 37.13.140(b) [THE                                                                
      AMOUNT NECESSARY TO DISTRIBUTE THE FOLLOWING AMOUNTS                                                                      
         FOR PERMANENT FUND DIVIDENDS TO EACH ELIGIBLE                                                                          
     INDIVIDUAL FOR EACH OF THE FOLLOWING FISCAL YEARS:                                                                         
               (1)  $1,100 IN FISCAL YEAR 2022;                                                                                 
               (2)  $1,500 IN FISCAL YEAR 2023;                                                                                 
              (3)  $2,000 IN FISCAL YEAR 2024; AND                                                                              
               (4)  $2,250 IN FISCAL YEAR 2025]."                                                                               
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 21:                                                                                                 
          Insert a new bill section to read:                                                                                    
       "* Sec. 6. AS 37.13.145 is amended by adding a new                                                                   
     subsection to read:                                                                                                        
          (g)  The amount appropriated for permanent fund                                                                       
     dividends each  year under (b)  of this section  may be                                                                    
     reduced  if  the  amount necessary  to  distribute  the                                                                    
     dividends for  that year  exceeds the  amount available                                                                    
     for appropriation under AS 37.13.140(b)."                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 4, line 28:                                                                                                           
          Delete "and 37.13.145(f)"                                                                                             
          Insert ", 37.13.145(f), and 37.13.145(g)"                                                                             
                                                                                                                                
     Page 5, line 15:                                                                                                           
          Delete "Section 9 of this Act takes"                                                                                  
          Insert "Sections 2, 6, and 11 of this Act take"                                                                       
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete "sec. 12"                                                                                                      
          Insert "sec. 14"                                                                                                      
          Delete "July 1, 2021"                                                                                                 
          Insert "July 1, 2025"                                                                                                 
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
9:28:32 AM                                                                                                                    
SENATOR  KIEHL explained  Amendment 8.  He stated  that the  FPWG                                                               
unanimously  agreed that  the PFD  and  fiscal gap  could not  be                                                               
solved  in  one year.  Amendment  8  would stair-step  the  50:50                                                               
proposal  over  four fiscal  years  (FY)  rather than  using  the                                                               
current PFD  funding of spending  available cash. The  50:50 plan                                                               
would  divide the  state's revenue  available for  appropriation,                                                               
with 50 percent for state  government services and 50 percent for                                                               
the   PFD.  Under   Amendment  8,   the  PFD   amount  would   be                                                               
approximately  $1,100 for  this year's  PFD and  reach the  50:50                                                               
plan by  FY 2026. This  would allow  the legislature to  phase in                                                               
revenue  and  budget cuts  envisioned  by  the FPWG,  which  will                                                               
protect  the  long-term  value  of  the  Alaska  Permanent  Fund.                                                               
Amendment 8 would provide a $1,500  PFD in FY 2023, $2,000 PFD in                                                               
FY 2024, and  reach a $2,250 PFD in FY  2025 and thereafter. This                                                               
would  provide  a  50:50  split of  the  sustainable  draw.  This                                                               
approach would  allow the legislature  to follow the  law without                                                               
overdrawing the permanent fund. He  said he understood the Alaska                                                               
Constitution  recognizes  that  appropriations are  binding  law.                                                               
However, the  legislature should  follow the statutes  it enacts.                                                               
At the same time, it is  important to protect the long-term value                                                               
of the state's  endowment fund. Markets surge up  and decline and                                                               
are unpredictable. Amendment  8 will allow the  state to maintain                                                               
a 5  percent POMV draw even  when markets surge, which  will move                                                               
the state forward.                                                                                                              
                                                                                                                                
9:31:38 AM                                                                                                                    
SENATOR  MYERS  stated  that  SB  53  is  tied  to  the  proposed                                                               
constitutional  amendment [SJR  6], which  would include  a 50:50                                                               
PFD. The problem  is that it would  go into effect in  FY 2024 if                                                               
approved  by the  voters. He  expressed concern  that this  would                                                               
fall in year  three of the stair-step approach in  Amendment 8 so                                                               
it would be overridden by the proposed constitutional amendment.                                                                
                                                                                                                                
9:32:27 AM                                                                                                                    
SENATOR KIEHL  recalled that the conditional  effect [Amendment 3                                                               
A.11] adopted  by the  committee on 9/27/21  was not  specific to                                                               
the effective  date of the  constitutional amendment so  it would                                                               
not necessarily create a conflict.                                                                                              
                                                                                                                                
SENATOR MYERS  said the effective date  of SJR 6 is  July 1, 2023                                                               
or FY 2024.                                                                                                                     
                                                                                                                                
9:33:07 AM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
9:33:12 AM                                                                                                                    
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
9:33:42 AM                                                                                                                    
CHAIR HOLLAND explained  that his overriding concern  is that the                                                               
approach taken in  Amendment 8 will require Alaskans  to bear the                                                               
brunt   while  the   legislature  attempts   to  achieve   fiscal                                                               
stability. He said he preferred the  5 percent POMV 50:50 plan be                                                               
enacted this year.  He advised members that  a different approach                                                               
will be taken  up in a subsequent amendment.  That approach would                                                               
use a  bridge fund or  an alternate  funding option to  achieve a                                                               
$2,300  PFD,  he  said.  He  stated  that  he  will  not  support                                                               
Amendment 8.                                                                                                                    
                                                                                                                                
9:34:39 AM                                                                                                                    
SENATOR HUGHES expressed  concern that Amendment 8  would put the                                                               
proposed constitutional  amendment at  risk. She opined  that the                                                               
public is frustrated  because the legislature has  not solved the                                                               
PFD  and fiscal  issues.  Currently,  the legislature's  approval                                                               
ratings  are very  low,  she said.  She  advocated solving  these                                                               
issues  in a  manner  that  could regain  the  public's trust  by                                                               
passing legislation  to settle the PFD  calculation and providing                                                               
solutions to achieve a sustainable budget.                                                                                      
                                                                                                                                
9:35:50 AM                                                                                                                    
SENATOR  HUGHES expressed  concern  that if  the  amount of  this                                                               
year's PFD is as  low as those issued in the  last six years, the                                                               
public  will  likely vote  no  at  the  polls in  November  2022.                                                               
Further,  voters might  vote against  a constitutional  amendment                                                               
solely because of  the delayed effective date of FY  2025 and not                                                               
due to  a lack of  support for the 50:50  plan embodied in  SB 53                                                               
and  SJR 6.  If the  constitutional amendment  were to  fail, the                                                               
legislature would  need to  start the  process over,  which would                                                               
put the  state in a  real bind, she  said. Although she  said she                                                               
appreciated the math and logic  used in Amendment 8, members must                                                               
consider  not only  what will  pass in  the legislature  but what                                                               
will  pass muster  with  the voters.  She  highlighted that  some                                                               
members have  expressed concern about  taking an  additional draw                                                               
from the  permanent fund.  She has  heard conversations  from the                                                               
Senate  majority  and  House  majority  and  minority  expressing                                                               
support. The  Speaker of the  House said she  would be open  to a                                                               
package on a temporary basis  if it contained revenues that could                                                               
close the  fiscal gap.  She cautioned  against assuming  that the                                                               
stair-step  approach  is  the  only   one  that  could  pass  the                                                               
legislature. Since the  approach in Amendment 8  could derail the                                                               
constitutional  amendment, she  said she  cannot support  it. The                                                               
public  needs to  feel  as though  the  legislature truly  solved                                                               
this. She offered her belief that  if the legislature could pay a                                                               
50:50 split  this year and  next year, the public  would strongly                                                               
support  the   constitutional  amendment.  It  would   allow  the                                                               
legislature to address  other issues that have  been shoved aside                                                               
in recent years.                                                                                                                
                                                                                                                                
9:38:10 AM                                                                                                                    
CHAIR HOLLAND recognized Representative McCarty.                                                                                
                                                                                                                                
9:38:20 AM                                                                                                                    
SENATOR SHOWER pointed out that  three committee members serve on                                                               
the FPWG. The  group considered multiple approaches  to solve the                                                               
problem. He said  he favors a different approach than  the one in                                                               
Amendment 8.  He recalled a  floor speech made earlier  this year                                                               
in which  a long-serving  legislator stated  that the  reason the                                                               
legislature  was  considering  raising   taxes  was  to  pay  for                                                               
government and  not to provide funding  for the PFD. In  2016 and                                                               
2017, changes were made to the  PFD process by a former governor.                                                               
Until then,  funding the  PFD was considered  the first  call and                                                               
any remaining  revenue was available to  fund government services                                                               
or were redeposited to the  permanent fund. He questioned whether                                                               
the  laws were  really in  conflict since  the legislature  could                                                               
decide to adhere to the  statutory formula and follow Senate Bill                                                               
26. He  said he  did not  believe the laws  are in  conflict. The                                                               
issue  only  arises  when  funds are  insufficient  to  fund  the                                                               
dividend  and government  services and  which one  has the  first                                                               
priority, he said.                                                                                                              
                                                                                                                                
9:40:08 AM                                                                                                                    
SENATOR SHOWER maintained that the  50:50 plan will work although                                                               
he  acknowledged  that  some legislators  have  issues  with  it.                                                               
However, there  are different approaches  to arrive at  the 50:50                                                               
plan.  Since  the permanent  fund  has  enjoyed good  growth,  he                                                               
stated his  preference was to  use some permanent fund  monies to                                                               
provide bridge funding. It might make  it a little easier to pass                                                               
this. He offered his view that  a good plan is available. He said                                                               
it would show good faith to  the people that the legislature does                                                               
not  take  a  stair-step  approach  but go  right  to  the  50:50                                                               
approach.  He indicated he would not support Amendment 8.                                                                       
                                                                                                                                
9:42:11 AM                                                                                                                    
SENATOR KIEHL  offered his view  that $160 million is  not enough                                                               
to  achieve the  50:50 plan,  which would  require at  least $500                                                               
million or more in new  revenues. Without new revenue sources the                                                               
legislature must drastically cut  government services. He pointed                                                               
out that the last effort  to drastically cut government in Alaska                                                               
led  to a  recall petition.  He  said he  shared Senator  Hughes'                                                               
concern  that  the  voters might  not  support  a  constitutional                                                               
amendment but that  vote cannot be predicted  with any certainly.                                                               
In  fact,  he has  learned  to  never underestimate  the  voters'                                                               
ability to make  the right decisions. He  cautioned against using                                                               
a proposal that would make  radical changes that would debilitate                                                               
the economy and to Alaskans who  depend on plowed roads and other                                                               
services provided  by government. He  offered his view  that with                                                               
the  stair-step  approach  coupled   with  ensuring  voters  have                                                               
sufficient information  to understand that a  steadily rising PFD                                                               
will lead to  a 50:50 split, it can work.  Amendment 8 represents                                                               
a responsible approach to achieve the 50:50 plan over a few                                                                     
years.                                                                                                                          
                                                                                                                                
9:44:28 AM                                                                                                                    
CHAIR HOLLAND maintained his objection.                                                                                         
                                                                                                                                
A roll call vote was taken. Senator Kiehl voted in favor of                                                                     
Amendment 8 and Senators Hughes, Myers, Shower and Holland voted                                                                
against it. Therefore, Amendment 8 failed by a 1:4 vote.                                                                        
                                                                                                                                
9:45:05 AM                                                                                                                    
CHAIR HOLLAND moved Amendment 6, work order 32-1693\A.6, which                                                                  
was previously tabled [at the August 27, 2021 meeting].                                                                         
                                                                                                                                
                                                32-GS1693\A.14                                                                  
                                                       Nauman                                                                   
                                                      8/27/21                                                                   
                          AMENDMENT 6                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                BY SENATOR HOLLAND                                                                    
     TO:  SB 53                                                                                                                 
                                                                                                                                
     Page 4, following line 28:                                                                                                 
          Insert a new bill section to read:                                                                                    
        "*  Sec.  9. The  uncodified  law  of the  State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          USE    OF    THE   EARNINGS    RESERVE    ACCOUNT.                                                                    
     Notwithstanding  AS 37.13.145(e)   and  (f),   for  the                                                                    
     fiscal years  ending June 30, 2022, and  June 30, 2023,                                                                    
     in addition  to the amount available  for appropriation                                                                    
     calculated under  AS 37.13.140(b), the  legislature may                                                                    
     appropriate from  the earnings  reserve account  to the                                                                    
     general fund  an additional 1.5 percent  of the average                                                                    
     market  value of  the fund  for the  first five  of the                                                                    
     preceding six  fiscal years, including the  fiscal year                                                                    
     just ended,  computed annually for each  fiscal year in                                                                    
     accordance    with   generally    accepted   accounting                                                                    
     principles. In  this section, "average market  value of                                                                    
     the fund" has the meaning given in AS 37.13.140(b)."                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 5, line 15:                                                                                                           
          Delete "Section 9 of this Act takes"                                                                                  
          Insert "Sections 9 and 10 of this Act take"                                                                           
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete "sec. 12"                                                                                                      
     Insert "sec. 13"                                                                                                           
                                                                                                                                
9:45:27 AM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
9:45:55 AM                                                                                                                    
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
9:46:05 AM                                                                                                                    
CHAIR  HOLLAND explained  that Amendment  6 would  provide a  1.5                                                               
percent  POMV draw  with  the same  five year  lag  used for  the                                                               
annual draw. This would produce $1  billion per year for the next                                                               
two  years  from the  Earnings  Reserve  Account (ERA)  to  cover                                                               
projected budget  shortfalls. He characterized it  as sustainable                                                               
and  reliable  draw.  The  permanent fund  has  experienced  a  9                                                               
percent annual  growth in the  last 40  years, a 12  percent over                                                               
the  last five  years, and  25 percent  growth over  the last  12                                                               
months. He  offered his belief  that the  1.5 percent draw  is in                                                               
the safety zone for draws from the permanent fund.                                                                              
                                                                                                                                
9:47:39 AM                                                                                                                    
SENATOR KIEHL objected for discussion purposes.                                                                                 
                                                                                                                                
9:48:02 AM                                                                                                                    
SENATOR KIEHL  noted that the timing  on the returns makes  a big                                                               
difference. The projected  growth of the fund over  5-10 years is                                                               
estimated at  an average  of 6.2  percent. However,  averages are                                                               
deceiving and  it makes an  even bigger difference for  draws. In                                                               
the process of reviewing how  to stress test its projections, the                                                               
FPWG considered a flat 6.2  percent growth rate. It also reviewed                                                               
growth during  several historic periods: from  2000-2008 and from                                                               
2009-2017, in which  the permanent fund performed at  6.3 and 6.5                                                               
percent, respectively. He noted that  both periods started with a                                                               
recession and by the end of  the timeframe the permanent fund was                                                               
substantially  reduced  because  it   started  with  a  draw.  He                                                               
expressed concern that  the oversize draw for  two years proposed                                                               
in  Amendment 6  could coincide  with a  drop in  the market  and                                                               
damage the permanent fund. He maintained his objection.                                                                         
                                                                                                                                
9:49:51 AM                                                                                                                    
CHAIR HOLLAND recognized Representative Kronk's presence.                                                                       
                                                                                                                                
9:49:59 AM                                                                                                                    
SENATOR HUGHES  said she understood Senator  Kiehl's concern. She                                                               
stated that the FPWG stress tested  the 6.2 percent rate, but did                                                               
not  use the  five-year  lag.  Amendment 6  would  provide a  1.5                                                               
percent POMV  draw this  year based on  $83 billion,  which would                                                               
bring it up to a 5  percent POMV effective rate. Dr. Rietveld, an                                                               
international   sovereign  wealth   fund   advisor,  provided   a                                                               
PowerPoint  to  the committee  yesterday.  Dr.  Rietveld did  not                                                               
think a 5  percent draw was reckless. Instead, he  found it to be                                                               
a reasonable  draw. Recently,  the House passed  a budget  with a                                                               
$1,100 PFD, which  is not fully funded. Since the  5 percent draw                                                               
is  used  to  fund  government services,  there  is  only  enough                                                               
funding  available for  a $600  PFD this  year. It  would require                                                               
additional funds  drawn from the  ERA. The legislature  would not                                                               
even  be able  to  reach the  stair-step  approach Senator  Kiehl                                                               
proposed, she said.                                                                                                             
                                                                                                                                
9:52:36 AM                                                                                                                    
SENATOR  HUGHES  argued  that the  legislature  cares  about  the                                                               
strength of  the fund. However,  the permanent fund  has exceeded                                                               
predictions.  In  2019,  the Alaska  Permanent  Fund  Corporation                                                               
predicted the  fund would reach $80  billion in 2028, but  it has                                                               
already reached nearly  $83 billion. She maintained  that if this                                                               
proposal   package   were  to   pass   the   legislature  and   a                                                               
constitutional amendment  is adopted by  a vote of the  people in                                                               
November 2022 to  address the PFD, it would  garner public trust.                                                               
She highlighted  that the legislature  always has the  ability to                                                               
reduce the  amount of the  draw. She  said she wants  to preserve                                                               
the  fund for  her children  and grandchildren.  She acknowledged                                                               
that  the  Senate  Finance co-chairs  share  concerns  about  the                                                               
permanent  fund's growth.  However, many  Alaskans could  use the                                                               
PFD right now  and a $600 PFD is simply  inadequate to regain the                                                               
public trust, she said.                                                                                                         
                                                                                                                                
9:54:48 AM                                                                                                                    
SENATOR  SHOWER  said  he  agrees  philosophically  with  Senator                                                               
Hughes.   He  acknowledged   the   math,   logic  and   political                                                               
considerations  with the  PFD draw.  Not only  did the  endowment                                                               
expert say  it is  reasonable to take  draws but  other countries                                                               
are  drawing  from  their endowment  funds  to  address  economic                                                               
problems related  to COVID-19. He  advocated for  the legislature                                                               
to use  the windfall earnings  now to  provide 1 percent  or more                                                               
funding from  the permanent  fund windfall  to bridge  the fiscal                                                               
gap for a year or two in order to help Alaskans.                                                                                
                                                                                                                                
SENATOR SHOWER acknowledged the  importance of the legislature to                                                               
express empathy to show people  that the legislature cares. After                                                               
cutting  the  PFDs  for  six years,  passing  Amendment  6  would                                                               
express  the  legislature's good  faith  and  the additional  1.5                                                               
percent  will  provide   a  bridge  and  help   the  economy.  He                                                               
acknowledged  that taxes  will need  to be  raised. In  fact, the                                                               
legislature currently does  not have the ability to  fund the PFD                                                               
according to the  provisions adopted in Senate Bill  26 unless it                                                               
takes  an additional  percentage  draw from  the permanent  fund.                                                               
Otherwise, as Senator Kiehl mentioned,  the legislature must find                                                               
another  $500 million  to fund  this year's  PFD, likely  through                                                               
taxes.  He  reminded  members  that the  50:50  plan  would  also                                                               
provide $750  million more to fund  government services. Further,                                                               
future draws  can be adjusted  down since the legislature  is not                                                               
required to take  the entire 5 percent POMV  draw. Currently, the                                                               
50:50 plan  is a  balanced proposal.  He cautioned  against going                                                               
too far  one way  or the other  on the PFD  size because  it will                                                               
affect legislative  support for the  overall plan. He  viewed the                                                               
50:50  plan as  a compromise  plan.  He offered  his belief  that                                                               
simply  having a  plan  in  place to  help  people  and help  the                                                               
economy that  is ready to  be implemented could help  sway public                                                               
opinion.                                                                                                                        
                                                                                                                                
9:58:40 AM                                                                                                                    
CHAIR HOLLAND  related some  statistics related  to the  POMV for                                                               
permanent fund  earnings. He said for  the first 20 years  of the                                                               
permanent fund,  it bounced around  4 percent, the next  10 years                                                               
it  fluctuated  around  3  percent  and the  next  10  years,  it                                                               
fluctuated around 2  percent. In fact, even  though the permanent                                                               
fund continues  to grow every  year, the legislature  tweaks down                                                               
the percentage of the PFD.  Currently, the proposed $1,100 PFD is                                                               
1.1 percent  POMV. The 50:50  proposal under  consideration today                                                               
would bring the  PFD up to 2.5 percent. This  effort would make a                                                               
commitment  to  Alaskans this  year  and  in future  years.  Some                                                               
members  advocate saving  the permanent  fund for  their children                                                               
and  grandchildren.  However,  children and  grandchildren  today                                                               
need the  full PFD.  He questioned  what assurance  Alaskans will                                                               
have that  the legislature will  ever provide a full  dividend if                                                               
it will not do so now.  He advocated for providing the additional                                                               
1.5 percent POMV in Amendment 6 now.                                                                                            
                                                                                                                                
9:59:57 AM                                                                                                                    
SENATOR  KIEHL  said  he  did  not  fact  check  Chair  Holland's                                                               
statistics but  offered corrections.  First, during the  first 30                                                               
years  of the  program, the  legislature did  not tweak  down the                                                               
PFD, he said. However, the  changes Chair Holland described might                                                               
be  related to  how the  permanent  fund was  invested, he  said.                                                               
Initially,  the permanent  fund  investments were  for bonds  and                                                               
money markets but  eventually the permanent fund  invested in the                                                               
mix  of  investments  it  uses  today.  He  emphasized  that  the                                                               
statutory  net income  is statutory  income. The  formula is  the                                                               
formula. Any change  in the POMV of the fund  distributed in PFDs                                                               
was not due to actions of  the legislature. There was not a shift                                                               
in equity  from what Alaskans received  as a direct PFD  from the                                                               
PFD  program. Second,  he indicated  he  reviewed Dr.  Rietveld's                                                               
slides  from yesterday's  presentation. He  referred to  a bullet                                                               
point   [on  slide   13],  which   read,  "Moving   averaging  is                                                               
essential." Dr.  Rietveld indicated  that the  legislature should                                                               
not look  at today's value but  must smooth the fund  over years.                                                               
Dr.  Reitveld  specifically  said  on his  last  slide  that  the                                                               
legislature  must ensure  unanticipated future  revenue windfalls                                                               
aren't immediately  spent but  rather grow  the APF  or replenish                                                               
other fiscal buffers.  Dr. Rietveld's advice to Alaska  was to be                                                               
careful. That was his guidance, he said.                                                                                        
                                                                                                                                
10:02:00 AM                                                                                                                   
SENATOR KIEHL said he appreciated the  needs in a state where the                                                               
governor turned down additional  unemployment benefits for people                                                               
who lost  their jobs because of  the pandemic. He said  he shared                                                               
the public's  frustrations since certainly there  are needs-based                                                               
programs that  should be increased.  He indicated he  was opposed                                                               
considering overdrawing the permanent fund.                                                                                     
                                                                                                                                
10:02:40 AM                                                                                                                   
SENATOR HUGHES  suggested that  one of  the reasons  the governor                                                               
acted was  due to the  state's need  for employees. She  said she                                                               
just  realized she  had  not finished  her  earlier remarks.  She                                                               
recapped her remarks, that the  additional 1.5 percent draw would                                                               
provide an effective  rate of about 5 percent.  However, she said                                                               
she had failed  to relate the stress testing  the FPWG conducted.                                                               
The stress  test reviewed  two recessions, yet  the fund  grew by                                                               
6.3 percent. Even in a downturn  taking an effective rate draw of                                                               
5  percent  would   still  allow  a  1.3   percent  fund  growth.                                                               
Therefore, a temporary  5 percent draw would not  erode the fund.                                                               
She pointed out  Dr. Reitveld said in 2010  the Harvard Endowment                                                               
Fund drew  out a  6.1 percent effective  rate during  a downturn.                                                               
However, this proposal  consists of a 5 percent  draw during this                                                               
good market  uptick. Lastly,  under the  50:50 plan  the proposed                                                               
PFD amount would  be $2,300, which in 1982 dollars  was $830. She                                                               
offered  her view  that the  PFD amount  being proposed  is quite                                                               
reasonable.                                                                                                                     
                                                                                                                                
10:05:12 AM                                                                                                                   
SENATOR MYERS said in January 2021  he was hesitant to take money                                                               
out of  the permanent  fund to  fill the  funding gap  unless the                                                               
legislature had  a fiscal plan  in place moving forward.  Now the                                                               
legislature has  that plan in  place. Passing  the constitutional                                                               
amendment is the way to  address any concerns about the potential                                                               
that  ad  hoc draws  might  take  out  too  much money  from  the                                                               
permanent fund  for dividends or to  fund government. Legislative                                                               
Legal Services has been advising  the committee that technically,                                                               
per Wielechowski v. State, the  legislature already has the legal                                                               
authority to  do everything  proposed in  SB 53.  He acknowledged                                                               
that this bill  is somewhat redundant but it would  create a plan                                                               
to put the  PFD formula in the Alaska  Constitution so violations                                                               
of  the 5  percent statutory  formula cannot  occur. He  asserted                                                               
that even without  passing Amendment 6 or SB  53, the legislature                                                               
could decide  to draw 6-7  percent from the permanent  fund until                                                               
the CBR is down to zero.                                                                                                        
                                                                                                                                
10:07:24 AM                                                                                                                   
SENATOR MYERS said  he did not think anyone wants  that to happen                                                               
but   the  political   pressure  to   keep  spending   without  a                                                               
constitutional amendment  could make that occur.  This discussion                                                               
reinforces   the  importance   of   passing  the   constitutional                                                               
amendment.                                                                                                                      
                                                                                                                                
10:08:00 AM                                                                                                                   
SENATOR  SHOWER  agreed  with  Senator Kiehl  that  the  lack  of                                                               
additional  unemployment  insurance  funds  hurts.  However,  the                                                               
legislature could take  some of the state's funds  to help people                                                               
and   Alaska's  economy   rather   than  using   federally-funded                                                               
unemployment   benefits.  He   acknowledged  that   Dr.  Reitveld                                                               
cautioned  the legislature  about  using  windfalls. He  recalled                                                               
asking Dr. Reitveld  if it was reasonable to  use endowment funds                                                               
during  the pandemic  and his  response was  yes, that  it was  a                                                               
reasonable draw.  Finally, everyone  agrees that  the legislature                                                               
must solve the  problem. Each proposal that has  been put forward                                                               
has been  stress tested for  the worst conditions.  Each proposal                                                               
could  solve the  problem moving  forward. Although  he does  not                                                               
favor  drawing down  the permanent  fund  without a  plan, he  is                                                               
willing to accept  some risk. He concluded that  it is reasonable                                                               
to  provide  bridge  funding  because a  long-term  fix  for  the                                                               
permanent fund is planned with the constitutional amendment.                                                                    
                                                                                                                                
SENATOR HOLLAND said he agreed with Senator Shower's remarks.                                                                   
                                                                                                                                
10:11:28 AM                                                                                                                   
SENATOR KIEHL maintained his objection.                                                                                         
                                                                                                                                
10:11:32 AM                                                                                                                   
A roll call  vote was taken. Senators Myers,  Shower, Hughes, and                                                               
Holland voted  in favor  of Amendment 6  and Senator  Kiehl voted                                                               
against it. Therefore, Amendment 6 passed by a 4:1 vote.                                                                        
                                                                                                                                
CHAIR HOLLAND  announced Amendment 6 was  adopted by a vote  of 4                                                               
yeas and 1 nay.                                                                                                                 
                                                                                                                                
10:12:07 AM                                                                                                                   
CHAIR HOLLAND moved Amendment 9, work order 32-GS1693\A.21.                                                                     
                                                                                                                                
                                                32-GS1693\A.21                                                                  
                                                       Nauman                                                                   
                                                      8/31/21                                                                   
                         AMENDMENT 9                                                                                        
                                                                                                                                
                                                                                                                                
OFFERED IN THE SENATE                        BY SENATOR HOLLAND                                                                 
     TO:  SB 53                                                                                                                 
                                                                                                                                
     Page 1, lines 3 - 4:                                                                                                       
          Delete "providing for an effective date by                                                                          
     repealing the  effective date  of sec.  8, ch.  16, SLA                                                                  
     2018;"                                                                                                                   
                                                                                                                                
     Page 2, line 6:                                                                                                            
          Delete "five [5.25]"                                                                                              
          Insert "five"                                                                                                         
                                                                                                                                
     Page 2, following line 14:                                                                                                 
          Insert new bill sections to read:                                                                                     
        "* Sec. 2. AS 37.13.140(b), as  amended by sec. 1 of                                                                
     this Act, is amended to read:                                                                                              
          (b)  The corporation shall determine the amount                                                                       
     available  for  appropriation  each  year.  The  amount                                                                    
     available for  appropriation is  4.5 [FIVE]  percent of                                                                
     the  average market  value of  the fund  for the  first                                                                    
     five of  the preceding six fiscal  years, including the                                                                    
     fiscal  year just  ended,  computed  annually for  each                                                                    
     fiscal  year  in  accordance  with  generally  accepted                                                                    
     accounting  principles.  In this  subsection,  "average                                                                    
     market value of  the fund" includes the  balance of the                                                                    
     earnings    reserve     account    established    under                                                                    
     AS 37.13.145, but does not include  that portion of the                                                                    
     principal  attributed to  the  settlement  of State  v.                                                                    
     Amerada Hess, et al.,  1JU-77-847 Civ. (Superior Court,                                                                    
     First  Judicial  District).  The amount  available  for                                                                    
     appropriation  may  not  exceed   the  balance  in  the                                                                    
     earnings reserve account described in AS 37.13.145.                                                                        
        *  Sec. 3.  AS 37.13.140(b), as  amended by  secs. 1                                                                  
     and 2 of this Act, is amended to read:                                                                                     
          (b)  The corporation shall determine the amount                                                                       
     available  for  appropriation  each  year.  The  amount                                                                    
     available for  appropriation is  five [4.5]  percent of                                                                
     the  average market  value of  the fund  for the  first                                                                    
     five of  the preceding six fiscal  years, including the                                                                    
     fiscal  year just  ended,  computed  annually for  each                                                                    
     fiscal  year  in  accordance  with  generally  accepted                                                                    
     accounting  principles.  In this  subsection,  "average                                                                    
     market value of  the fund" includes the  balance of the                                                                    
     earnings    reserve     account    established    under                                                                    
     AS 37.13.145, but does not include  that portion of the                                                                    
     principal  attributed to  the  settlement  of State  v.                                                                    
     Amerada Hess, et al.,  1JU-77-847 Civ. (Superior Court,                                                                    
     First  Judicial  District).  The amount  available  for                                                                    
     appropriation  may  not  exceed   the  balance  in  the                                                                    
     earnings reserve account described in AS 37.13.145."                                                                       
                                                                                                                              
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 5, lines 13 - 14:                                                                                                     
          Delete all material and insert:                                                                                       
        "*  Sec. 12.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          CONDITIONAL EFFECT. Sections 2 and 3 of this Act                                                                      
     take effect  only if, by November 30,  2022, the voters                                                                    
     have  not  approved  a resolution  that  appears  on  a                                                                    
     statewide election ballot  that amends the Constitution                                                                    
     of the State of Alaska to                                                                                                  
               (1)  specify that the amount that may be                                                                         
     appropriated from  the Alaska permanent fund  is a draw                                                                    
     based on  the average  fiscal-year-end market  value of                                                                    
     the permanent fund; and                                                                                                    
               (2)  require deposit of the unencumbered                                                                         
     balance  of the  earnings  reserve account  established                                                                    
     under AS 37.13.145  into the  Alaska permanent  fund to                                                                    
     become part of the principal of the fund."                                                                                 
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 5, line 15:                                                                                                           
          Delete "Section 9"                                                                                                    
          Insert "Section 11"                                                                                                   
                                                                                                                                
     Page 5, following line 15:                                                                                                 
          Insert new bill sections to read:                                                                                     
        "* Sec.  14. If, under sec.  12 of this Act,  sec. 2                                                                
     of  this  Act takes  effect,  it  takes effect  July 1,                                                                    
     2023.                                                                                                                      
        * Sec. 15. If, under sec.  12 of this Act, sec. 3 of                                                                  
     this Act takes effect, it takes effect July 1, 2028."                                                                      
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete "sec. 12"                                                                                                      
          Insert "secs. 13 - 15"                                                                                                
                                                                                                                                
SENATOR HUGHES objected for discussion purposes.                                                                                
                                                                                                                                
10:12:18 AM                                                                                                                   
CHAIR  HOLLAND explained  that Amendment  9 was  another idea  he                                                               
thought  was   important  to  bring  before   the  committee  for                                                               
discussion. He asked his staff to explain Amendment 9.                                                                          
                                                                                                                                
10:12:41 AM                                                                                                                   
ED KING, Staff, Senator Roger  Holland, Alaska State Legislature,                                                               
Juneau,  Alaska, on  behalf of  Senator  Holland, explained  that                                                               
Amendment 9 was  a good faith effort  especially considering that                                                               
Amendment  6  was adopted,  which  will  draw an  additional  1.5                                                               
percent from  the ERA for  a total  5 percent effective  rate. He                                                               
stated  that  there was  some  concern  that the  additional  1.5                                                               
percent draw  may be an  unstainable way to transition  towards a                                                               
long-term   stable  plan.   Amendment   9   would  provide   some                                                               
conditional language that would effectively  pay back the ERA for                                                               
the additional draw. He explained  that the 1.5 percent draw over                                                               
the  next two  years would  total  roughly $1.9  billion. In  the                                                               
event that the rest of the  fiscal plan fell apart, such that the                                                               
constitutional  amendment  failed  and   new  revenues  were  not                                                               
enacted, Amendment  9 would  reduce the  percent of  market value                                                               
(POMV) for  the next 5 years  from 5 percent to  4.5 percent. The                                                               
reduction  of  .5  percent  over   five  years  would  result  in                                                               
retaining an additional $1.9 billion in  the ERA, relative to a 5                                                               
percent draw.  He summarized  that this  would provide  a payback                                                               
provision.                                                                                                                      
                                                                                                                                
10:14:20 AM                                                                                                                   
SENATOR HUGHES  recalled that Senator Kiehl  previously expressed                                                               
concern  that  it  could  set  precedent  if  the  constitutional                                                               
amendment were to fail. This is  a concern, she said. Amendment 9                                                               
would  provide a  way to  address these  concerns some  have with                                                               
drawing out  additional funds  now. She pointed  out that  if the                                                               
constitutional amendment  failed in  2022, the  legislature could                                                               
do this in 2023 because the  statute does not require drawing out                                                               
the  full  5   percent.  Even  without  Amendment   9,  a  future                                                               
legislature could make that adjustment she said.                                                                                
                                                                                                                                
10:15:37 AM                                                                                                                   
CHAIR HOLLAND clarified that a  future legislature would have the                                                               
option to reduce the 5 percent POMV draw.                                                                                       
                                                                                                                                
SENATOR HUGHES agreed.                                                                                                          
                                                                                                                                
10:15:53 AM                                                                                                                   
SENATOR KIEHL  said Amendment  9 is  important since  Amendment 6                                                               
was just  adopted. He said he  was a little less  than optimistic                                                               
that a  future legislature  would stick to  this language  but it                                                               
was  important to  aspire to  it moving  forward. He  offered his                                                               
support for Amendment 9.                                                                                                        
                                                                                                                                
10:15:41 AM                                                                                                                   
CHAIR  HOLLAND  stated  his intention  to  withdraw  Amendment  9                                                               
because of his  concern that the legislature might  revert to the                                                               
statutory  formula  and  decide  to   pay  a  zero  dividend.  He                                                               
explained  that   he  brought  Amendment  9   up  for  discussion                                                               
purposes.                                                                                                                       
                                                                                                                                
10:18:14 AM                                                                                                                   
SENATOR SHOWER  agreed with  Senator Kiehl  that Amendment  9 was                                                               
intriguing  because  it  is  important   moving  forward  not  to                                                               
overspend the  fund. He said  he appreciated having  time outside                                                               
the meeting to consider the mechanics of Amendment 9.                                                                           
                                                                                                                                
10:19:38 AM                                                                                                                   
SENATOR HUGHES  offered her support  for Amendment 9.  She opined                                                               
that nothing  would prevent  the legislature  in 2023  from doing                                                               
what  Amendment  9 proposes.  For  those  concerned about  the  5                                                               
percent  draw, Amendment  9 highlights  the option  to draw  less                                                               
than the 5 percent POMV depending on its effect on the PFD.                                                                     
                                                                                                                                
10:20:51 AM                                                                                                                   
CHAIR HOLLAND said Amendment 9  appears to provide motivation for                                                               
a  fix  if  the  constitutional   amendment  does  not  pass.  He                                                               
expressed concern that  it might be dangerous to  reduce the POMV                                                               
to 4.5 percent today given the current economic situation                                                                       
                                                                                                                                
10:21:48 AM                                                                                                                   
CHAIR HOLLAND withdrew Amendment 9.                                                                                             
                                                                                                                                
10:22:08 AM                                                                                                                   
SENATOR MYERS moved Amendment 10, work order 32-GS1693\A.19.                                                                    
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
                                             32-GS1693\A.19                                                                     
                                                    Nauman                                                                      
                                                   8/31/21                                                                      
                          AMENDMENT 10                                                                                      
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                     BY SENATOR MYERS                                                                 
                                                                                                                                
                                                                                                                                
     Page 1, lines 3 - 4:                                                                                                       
          Delete "relating to an advisory vote on the                                                                         
     permanent  fund; providing  for  an  effective date  by                                                                  
     repealing the  effective date  of sec.  8, ch.  16, SLA                                                                  
     2018;"                                                                                                                   
                                                                                                                                
     Page 2, line 6:                                                                                                            
          Delete "five [5.25]"                                                                                              
          Insert "five"                                                                                                         
                                                                                                                                
     Page 2, following line 14:                                                                                                 
          Insert a new bill section to read:                                                                                    
        "* Sec.  2. AS 37.13.140,  as amended  by sec.  1 of                                                                
     this Act, is amended to read:                                                                                              
          Sec. 37.13.140. Income. (a) Net income of the                                                                   
     fund includes  income of  the earnings  reserve account                                                                
     established under AS 37.13.145. Net  income of the fund                                                                
     shall be  computed annually as  of the last day  of the                                                                    
     fiscal  year  in  accordance  with  generally  accepted                                                                    
     accounting principles,  excluding any  unrealized gains                                                                    
     or losses. Income available  for distribution equals 21                                                                
     percent  of the  net income  of the  fund for  the last                                                                
     five  fiscal  years,  including the  fiscal  year  just                                                                
     ended, but  may not exceed  net income of the  fund for                                                                
     the  fiscal year  just ended  plus the  balance in  the                                                                
     earnings reserve account described in AS 37.13.145.                                                                    
          (b)  The corporation shall determine the amount                                                                       
     available  for  appropriation  each  year.  The  amount                                                                    
     available  for appropriation  is  five  percent of  the                                                                    
     average market value of the  fund for the first five of                                                                    
     the preceding  six fiscal  years, including  the fiscal                                                                    
     year  just ended,  computed  annually  for each  fiscal                                                                    
     year in  accordance with generally  accepted accounting                                                                    
     principles. In  this subsection, "average  market value                                                                    
     of  the  fund" includes  the  balance  of the  earnings                                                                    
     reserve  account  established under  AS 37.13.145,  but                                                                    
     does  not   include  that  portion  of   the  principal                                                                    
     attributed to the settlement of  State v. Amerada Hess,                                                                    
     et   al.,  1JU-77-847   Civ.  (Superior   Court,  First                                                                    
     Judicial   District).   [THE   AMOUNT   AVAILABLE   FOR                                                                    
     APPROPRIATION  MAY  NOT  EXCEED   THE  BALANCE  IN  THE                                                                    
     EARNINGS RESERVE ACCOUNT DESCRIBED IN AS 37.13.145.]"                                                                    
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 2, following line 23:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 4. AS 37.13.145(b), as  amended by sec. 3 of                                                                
     this Act, is amended to read:                                                                                              
          (b)  At the end of each [EACH] fiscal year, the                                                                   
     corporation    shall    transfer    [LEGISLATURE    MAY                                                                
     APPROPRIATE] from the earnings reserve account to the                                                                      
               [(1)]  dividend fund established under                                                                           
     AS 43.23.045,  50   percent  of  the   income  [AMOUNT]                                                                
     available   for   distribution  [APPROPRIATION]   under                                                                
     AS 37.13.140 [AS 37.13.140(b); AND                                                                                     
               (2)  GENERAL FUND, 50 PERCENT OF THE AMOUNT                                                                      
     AVAILABLE FOR APPROPRIATION UNDER AS 37.13.140(b)]."                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 10:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 6. AS 37.13.145(c), as  amended by sec. 5 of                                                                
     this Act, is amended to read:                                                                                              
          (c)  After the transfer [APPROPRIATIONS] under                                                                    
     (b)  and an  appropriation under  (g) of  this section,                                                                
     the   corporation  shall   transfer  [LEGISLATURE   MAY                                                                
     APPROPRIATE] from  the earnings reserve account  to the                                                                    
     principal of  the fund an  amount sufficient  to offset                                                                    
     the effect  of inflation on  the principal of  the fund                                                                    
     during that  fiscal year. However,  none of  the amount                                                                    
     transferred shall  be applied to increase  the value of                                                                    
     that  portion  of  the   principal  attributed  to  the                                                                    
     settlement of  State v. Amerada  Hess, et  al., 1JU-77-                                                                    
     847 Civ.  (Superior Court, First Judicial  District) on                                                                    
     July 1,  2004.  The  corporation  shall  calculate  the                                                                    
     amount  to   transfer  to  the  principal   under  this                                                                    
     subsection by                                                                                                              
               (1)  computing the average of the monthly                                                                        
     United  States  Consumer  Price  Index  for  all  urban                                                                    
     consumers for each of the two previous calendar years;                                                                     
               (2)  computing the percentage change between                                                                     
     the first and second calendar year average; and                                                                            
               (3)  applying that rate to the value of the                                                                      
     principal of  the fund  on the last  day of  the fiscal                                                                    
     year  just   ended,  including  that  portion   of  the                                                                    
     principal  attributed to  the  settlement  of State  v.                                                                    
     Amerada Hess, et al.,  1JU-77-847 Civ. (Superior Court,                                                                    
     First Judicial District)."                                                                                                 
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 21:                                                                                                 
     Insert new bill sections to read:                                                                                          
        "* Sec. 8. AS 37.13.145(d), as  amended by sec. 7 of                                                                
     this Act, is amended to read:                                                                                              
          (d)  Notwithstanding (b) of this section, income                                                                      
     earned on money  awarded in or received as  a result of                                                                    
     State  v.   Amerada  Hess,  et  al.,   1JU-77-847  Civ.                                                                    
     (Superior  Court, First  Judicial District),  including                                                                    
     settlement,  summary  judgment,   or  adjustment  to  a                                                                    
     royalty-in-kind contract  that is  tied to  the outcome                                                                    
     of this  case, or interest  earned on the money,  or on                                                                    
     the earnings of the money  shall be treated in the same                                                                    
     manner as  other income of  the Alaska  permanent fund,                                                                    
     except  that  it  is  not  available  for  distribution                                                                
     [APPROPRIATIONS]  to the  dividend fund,  for transfers                                                                
     [UNDER AS 37.13.140(b)  OR] to the principal  under (c)                                                                    
     of this section,  or for an appropriation  under (g) of                                                                
     this section, and shall be  annually deposited into the                                                                
     Alaska capital income fund (AS 37.05.565).                                                                                 
        *  Sec. 9.  AS 37.13.145  is amended  by adding  new                                                                  
     subsections to read:                                                                                                       
          (g)  The legislature may not appropriate from the                                                                     
     earnings reserve  account to  the general fund  a total                                                                    
     amount   that   exceeds   the  amount   available   for                                                                    
     appropriation under AS 37.13.140(b) in a fiscal year.                                                                      
          (h)  The combined total of the transfer under (b)                                                                     
     of this section and an  appropriation under (g) of this                                                                    
     section  may  not  exceed   the  amount  available  for                                                                    
     appropriation under AS 37.13.140(b)."                                                                                      
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, following line 25:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec.  11. AS 37.13.300(c), as amended  by sec. 10                                                                
     of this Act, is amended to read:                                                                                         
          (c)  Net income from the mental health trust fund                                                                     
     may not  be included in  the computation of  net income                                                                
     or   market   value    [THE   AMOUNT]   available   for                                                                
     distribution   or   appropriation  under   AS 37.13.140                                                            
     [AS 37.13.140(b)]."                                                                                                        
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                              
     Page 4, following line 1:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Sec.  13. AS 37.14.031(c), as amended  by sec. 12                                                                
     of this Act, is amended to read:                                                                                           
          (c)  The net income of the fund shall be                                                                              
     determined by the Alaska  Permanent Fund Corporation in                                                                
     the  same manner  the  corporation  determines the  net                                                                
     income of the Alaska  permanent fund under AS 37.13.140                                                                
     [AND SHALL BE  COMPUTED ANNUALLY AS OF THE  LAST DAY OF                                                                    
     THE FISCAL  YEAR IN ACCORDANCE WITH  GENERALLY ACCEPTED                                                                    
     ACCOUNTING PRINCIPLES,  EXCLUDING ANY  UNREALIZED GAINS                                                                    
     OR LOSSES]."                                                                                                               
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 4, following line 27:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec.  15. AS 43.23.025(a), as amended  by sec. 14                                                                
     of this Act, is amended to read:                                                                                           
          (a)  By October 1 of each year, the commissioner                                                                      
     shall  determine  the  value  of  each  permanent  fund                                                                    
     dividend for that year by                                                                                                  
               (1)  determining the total amount available                                                                      
     for dividend payments, which equals                                                                                        
               (A)  the amount of income of the Alaska                                                                      
     permanent  fund   transferred  [APPROPRIATED]   to  the                                                                
     dividend fund under  AS 37.13.145(b) during the current                                                                    
     year;                                                                                                                      
               (B)  plus the unexpended and unobligated                                                                         
     balances  of  prior  fiscal  year  appropriations  that                                                                    
     lapse into the dividend fund under AS 43.23.045(d);                                                                        
               (C)  less the amount necessary to pay prior                                                                      
     year dividends  from the dividend  fund in  the current                                                                    
     year    under     AS 43.23.005(h),    43.23.021,    and                                                                    
     43.23.055(3) and (7);                                                                                                      
               (D)  less the amount necessary to pay                                                                            
     dividends  from  the  dividend  fund  due  to  eligible                                                                    
     applicants who, as determined  by the department, filed                                                                    
     for a  previous year's dividend by  the filing deadline                                                                    
     but  who  were  not   included  in  a  previous  year's                                                                    
     dividend computation;                                                                                                      
               (E)  less appropriations from the dividend                                                                       
     fund during the current  year, including amounts to pay                                                                    
     costs  of administering  the dividend  program and  the                                                                    
     hold harmless provisions of AS 43.23.240;                                                                                  
               (2)  determining the number of individuals                                                                       
     eligible to receive a dividend  payment for the current                                                                    
     year and the number  of estates and successors eligible                                                                    
     to  receive a  dividend  payment for  the current  year                                                                    
     under AS 43.23.005(h); and                                                                                                 
               (3)  dividing the amount determined under                                                                        
     (1) of  this subsection by the  amount determined under                                                                    
     (2) of this subsection."                                                                                                   
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 4, line 29, through page 5, line 15:                                                                                  
          Delete all material and insert:                                                                                       
        "*  Sec. 17.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          CONDITIONAL EFFECT. Sections 2, 4, 6, 8, 9, 11,                                                                       
     13,  and  15  of  this  Act take  effect  only  if,  by                                                                    
     November 30,  2023,  the  voters have  not  approved  a                                                                    
     resolution that appears on  a statewide election ballot                                                                    
     that amends the Constitution of the State of Alaska to                                                                     
               (1)  specify that the amount that may be                                                                         
     appropriated from  the Alaska permanent fund  is a draw                                                                    
     based on  the average  fiscal-year-end market  value of                                                                    
     the permanent fund  and that half of the  amount of the                                                                    
     draw shall be used for permanent fund dividends; and                                                                       
               (2)  require deposit of the unencumbered                                                                         
     balance  of the  earnings  reserve account  established                                                                    
     under AS 37.13.145  into the  Alaska permanent  fund to                                                                    
     become part of the principal of the fund.                                                                                  
        * Sec. 18.  If, under sec. 17 of this  Act, secs. 2,                                                                  
     4, 6,  8, 9, 11,  13, and 15  of this Act  take effect,                                                                    
     they take effect July 1, 2023."                                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete "sec. 12"                                                                                                      
          Insert "sec. 18"                                                                                                      
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
10:22:16 AM                                                                                                                   
SENATOR MYERS explained Amendment 10.  He pointed out there was a                                                               
drafting error in [Amendment 3  adopted on 8/27/21]. It indicated                                                               
SB 53 would  be automatically repealed if SJR 6  did not pass the                                                               
legislature  or was  not  approved in  a  statewide election  The                                                               
original language in the conditional  effect section of Amendment                                                               
3,  page   6  read,  "specify   that  the  amount  that   may  be                                                               
appropriated from  the Alaska permanent  fund is a draw  based on                                                               
the average  fiscal-year-end market value of  the permanent fund;                                                               
and.                                                                                                                            
                                                                                                                                
SENATOR  MYERS said  additional language  was needed  on page  6,                                                               
line 7. He read Amendment 10, page  6, line 7 would add, "half of                                                               
the  amount  of  the  draw  shall  be  used  for  permanent  fund                                                               
dividends; and".                                                                                                                
                                                                                                                                
10:23:42 AM                                                                                                                   
SENATOR MYERS  expressed concern that a  constitutional amendment                                                               
related to  the permanent fund would  not pass at the  ballot box                                                               
unless it  contains a 50:50 split  between the funding for  a PFD                                                               
and for state  government services. He suggested  that while this                                                               
is not necessary, it is important  in the interest of clarity and                                                               
to  restore  public  trust   by  highlighting  the  legislature's                                                               
intent.                                                                                                                         
                                                                                                                                
10:24:34 AM                                                                                                                   
SENATOR KIEHL  asked if Amendment  10 would effectively  say that                                                               
SB 53 only  takes effect if this  bill is not needed.  He said if                                                               
the constitutional amendment  related to the PFD were  to pass it                                                               
would not matter what the statute said.                                                                                         
                                                                                                                                
SENATOR MYERS answered that in  theory the legislature could pass                                                               
HJR 1 instead of SJR 6. HJR 1  includes a 5 percent POMV draw but                                                               
it does not include  any language on the PFD. If  so, SB 53 would                                                               
still stay in  effect, according to the language  in Amendment 3,                                                               
he said. However, he did not  think it would happen because HJR 1                                                               
would  not  likely pass  at  the  ballot  box  if it  passed  the                                                               
legislature. Still, it is important  to signal to voters that the                                                               
legislature is not just trying to  fix with a draw for government                                                               
but  to constitutionally  protect the  PFD. He  offered his  view                                                               
that  adopting it  could  help restore  the  public trust,  given                                                               
everything that happened in the last five or six years.                                                                         
                                                                                                                                
10:26:06 AM                                                                                                                   
SENATOR KIEHL commented that this answered his question.                                                                        
                                                                                                                                
10:26:17 AM                                                                                                                   
MR.  KING  explained  that Amendment  10  would  add  conditional                                                               
language,  such  that  if  the   50:50  split  for  the  PFD  and                                                               
government  funding  were  not in  the  constitutional  amendment                                                               
language, the PFD statutes would  revert to the original formula.                                                               
He  offered his  belief that  the intent  is consistent  with the                                                               
previous  committee  discussion,  that   if  the  fiscal  package                                                               
doesn't  pass  in  its  entirety,  that  all  of  the  provisions                                                               
currently being discussed will be reversed.                                                                                     
                                                                                                                                
10:27:03 AM                                                                                                                   
SENATOR MYERS said  he understood Senator Kiehl's  point was that                                                               
Amendment 10 was  redundant. He disagreed. For example,  if HJR 1                                                               
passed  without  any  language  related  to  the  PFD,  it  would                                                               
effectively  change  the  dividend  statute  to  50:50.  However,                                                               
according  to the  Alaska  Supreme Court,  the  statute would  be                                                               
unenforceable  because the  Alaska Constitution  did not  contain                                                               
language  requiring  that a  dividend  be  paid.  He said  it  is                                                               
important  to have  the statutory  language to  line up  with the                                                               
Alaska Constitution. However,  the constitutional amendment needs                                                               
to look a certain way and narrow the focus.                                                                                     
                                                                                                                                
10:28:10 AM                                                                                                                   
SENATOR KIEHL  expressed concern  that the language  in Amendment                                                               
10 is  so prescriptive  for the  constitutional language  that it                                                               
would  make  the bill  moot.  Other  approaches could  solve  the                                                               
problem without  a prescriptive approach.  Although the  FPWG did                                                               
not  reach consensus  on  the approach  the  group discussed  two                                                               
plans. One approach  the FPWG took was to place  a formula in the                                                               
Alaska Constitution. He  opined that it was unlikely  that such a                                                               
proposal would have sufficient legislative  support to make it to                                                               
the ballot. However, never say  never, he said. A second approach                                                               
would  explicitly require  the PFD  as  provided by  law with  an                                                               
exemption  from  the  dedicated funds  clause  that  would  allow                                                               
future legislatures to adjust the formula in an accountable way.                                                                
                                                                                                                                
SENATOR KIEHL said that approach  would avoid "crab walking" into                                                               
a universal  income or leaving  a small $2  PFD in 100  years. He                                                               
said language could ensure the PFD  is paid, but that voters have                                                               
access to a PFD formula via  the referendum process if they don't                                                               
like what  a legislature does.  Amendment 10 would put  the 50:50                                                               
formula  in the  Alaska Constitution.  He suggested  in terms  of                                                               
writing constitutional language and  good statutes, it makes more                                                               
sense  to require  a constitutional  amendment that  protects the                                                               
PFD rather than to require  one specific constitutional amendment                                                               
approach over  all others. He  said it  would be tough  to obtain                                                               
the 14 votes in the Senate and the  27 votes in the House for any                                                               
of  these proposals.  He suggested  this approach  may keep  from                                                               
"choking off the whole thing."                                                                                                  
                                                                                                                                
10:31:04 AM                                                                                                                   
SENATOR SHOWER agreed  that the FPWG discussed  two approaches to                                                               
address the  PFD formula: One  approach was to guarantee  the PFD                                                               
in the  Alaska Constitution. However, many  legislators expressed                                                               
angst about  placing the  formula in  the Alaska  Constitution in                                                               
accordance  with statute.  A  second approach  was  to place  the                                                               
formula in  statute. Although the  public can use  the referendum                                                               
process  to  overturn  a  statute,  that  process  is  expensive,                                                               
difficult and often unsuccessful.  The FPWG discussed inserting a                                                               
safeguard  if a  constitutional amendment  guaranteed the  PFD in                                                               
accordance with  the statute,  which was  to require  any changes                                                               
made must  be adopted  by a  vote of the  people. He  offered his                                                               
view  that  the PFD  issue  will  not  be resolved  without  some                                                               
"catch"  since  the  legislature  does not  have  to  follow  the                                                               
statutes. Further,  it's possible the  guarantee could be  met by                                                               
issuing a $1  PFD. He said these discussions didn't  make it into                                                               
the FPWG report but there must be some balance.                                                                                 
                                                                                                                                
10:34:08 AM                                                                                                                   
At ease                                                                                                                         
                                                                                                                                
10:36:23 AM                                                                                                                   
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
10:36:28 AM                                                                                                                   
SENATOR MYERS  moved Conceptual Amendment  1 to Amendment  10, on                                                               
page 6, line 3  to change the date to 2022  to address a drafting                                                               
error pointed out  by staff during the break. He  noted that 2022                                                               
is the election year, not 2023.                                                                                                 
                                                                                                                                
CHAIR HOLLAND  heard no objections  so Conceptual Amendment  1 to                                                               
Amendment 10 was adopted.                                                                                                       
                                                                                                                                
He reminded members that legislative  legal is authorized to make                                                               
conforming changes.                                                                                                             
                                                                                                                                
10:37:30 AM                                                                                                                   
SENATOR  MYERS  agreed  with Senator  Kiehl  theoretically,  that                                                               
formulas  should not  be  placed in  the  Alaska Constitution  in                                                               
order to retain flexibility  for changing circumstances. However,                                                               
the state  is at a  unique point in  its history. He  offered his                                                               
view that  the voters need to  know what formula the  courts will                                                               
enforce  before passing  a  constitutional  amendment. Thus,  the                                                               
formula needs  to be  as explicit  as possible  in order  to gain                                                               
voter trust.                                                                                                                    
                                                                                                                                
10:39:13 AM                                                                                                                   
SENATOR  HUGHES   stated  that   the  legislature  must   pass  a                                                               
constitutional  amendment. Senator  Shower spoke  about the  need                                                               
for  changes to  be approved  by voters  or providing  some other                                                               
safeguard. She  highlighted that the conditional  language in the                                                               
bill and  the constitutional amendment  needs to match.  She said                                                               
she did  not feel  comfortable making changes  "on the  fly." She                                                               
suggested  that  the  committee   could  pass  Amendment  10,  as                                                               
amended,  with  the  understanding  that  it  would  need  to  be                                                               
adjusted at some point. She solicited Senator Kiehl's opinion.                                                                  
                                                                                                                                
10:40:25 AM                                                                                                                   
SENATOR  KIEHL suggested  that the  conditional  clause could  be                                                               
less specific. He said he would  be amenable to use language such                                                               
as "ensures" or  "guarantees" rather than "half of  the amount of                                                               
the draw" on  page 6, line 7.  He stated that it did  not need to                                                               
be as specific  as his earlier suggestion that it  should "not be                                                               
subject  to  the  dedicated funds  clause"  or  Senator  Shower's                                                               
suggestion that it  require "a vote of the  people." He expressed                                                               
his willingness  to work  on the  language. He  acknowledged that                                                               
the constitutional amendment language  is critical. However, that                                                               
task is not before the  committee today. Instead, today's task is                                                               
to  decide  how tightly  to  connect  things together.  The  goal                                                               
should be  to ensure  that the legislative  package can  pass the                                                               
legislature.  However,  if  members   attempt  to  constrain  the                                                               
legislative package, it will be problematic.                                                                                    
                                                                                                                                
10:41:54 AM                                                                                                                   
SENATOR  HUGHES asked  Senator Kiehl  whether he  was comfortable                                                               
fixing it on the  floor or if he would prefer to  wait to see the                                                               
final form of the constitutional amendment and then amend SB 53.                                                                
                                                                                                                                
SENATOR KIEHL deferred to the sponsor of Amendment 10.                                                                          
                                                                                                                                
10:42:30 AM                                                                                                                   
SENATOR MYERS  offered his belief that  SJR 6 should stay  in the                                                               
form that was passed by  the Senate Judiciary Standing Committee.                                                               
Otherwise, it would  not likely gain the trust of  the voters, he                                                               
said. He said Mr. King  reminded him that the Alaska Constitution                                                               
[Art. IX, Sec.  15] already designates where the  income from the                                                               
permanent  fund   shall  be  deposited.  Wielechowski   v.  State                                                               
effectively  indicated that  the Alaska  Constitution allows  the                                                               
legislature to override statutory language  but he is hesitant to                                                               
go  that  route, he  said.  He  reiterated  that he  agrees  with                                                               
drafting standards for the constitution that provide a more                                                                     
general framework and less rigidity. However, in this case, he                                                                  
believes that the rigidity is necessary.                                                                                        
                                                                                                                                
10:43:58 AM                                                                                                                   
SENATOR KIEHL said he would not hold up the bill by objecting to                                                                
Amendment 10, but he acknowledged that additional work needs to                                                                 
be done.                                                                                                                        
                                                                                                                                
10:44:31 AM                                                                                                                   
CHAIR HOLLAND removed his objection.                                                                                            
                                                                                                                                
CHAIR HOLLAND heard no further objection so Amendment 10 was                                                                    
adopted.                                                                                                                        
                                                                                                                                
10:44:49 AM                                                                                                                   
CHAIR HOLLAND moved Amendment 11, work order 32-GS1693\A.15.                                                                    
                                                                                                                                
                                             32-GS1693\A.15                                                                     
                                                    Nauman                                                                      
                                                   8/27/21                                                                      
                          AMENDMENT 11                                                                                      
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR HOLLAND                                                                 
     TO:  SB 53                                                                                                                 
                                                                                                                                
     Page 1, following line 6:                                                                                                  
          Insert a new bill section to read:                                                                                    
        "* Section  1. The  uncodified law  of the  State of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          LEGISLATIVE INTENT. It is the intent of the                                                                           
     legislature to                                                                                                             
               (1)  implement the recommendations of the                                                                        
     2021 Comprehensive Fiscal Plan Working Group;                                                                              
               (2)  harmonize the calculation under                                                                             
     AS 37.13.140(a)   of    net   income    available   for                                                                    
     distribution    and    net   income    available    for                                                                    
     appropriation under AS 37.13.140(b);                                                                                       
               (3)  temporarily change the mechanism used                                                                       
     to  draw money  from  the earnings  reserve account  to                                                                    
     leverage    the   unprecedented    earnings   currently                                                                    
     available in  the account, so that  the legislature has                                                                    
     adequate  time to  debate, analyze,  and implement  the                                                                    
     revenue measures  and cost reductions required  for the                                                                    
     long-term financial stability of the state;                                                                                
               (4)  reverse the changes made by this Act if                                                                     
     the  recommendations of  the 2021  Comprehensive Fiscal                                                                    
     Plan Working  Group are not adopted  and implemented in                                                                    
     their entirety."                                                                                                           
                                                                                                                                
     Page 1, line 7:                                                                                                            
          Delete "Section 1"                                                                                                  
          Insert "Sec. 2"                                                                                                     
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 5, line 15:                                                                                                           
          Delete "Section 9"                                                                                                    
          Insert "Section 10"                                                                                                   
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete "sec. 12"                                                                                                      
          Insert "sec. 13"                                                                                                      
                                                                                                                                
10:45:09 AM                                                                                                                   
MR. KING explained that Amendment 11 would add intent language,                                                                 
beginning on lines 5-16, which he read:                                                                                         
                                                                                                                                
          LEGISLATIVE INTENT. It is the intent of the                                                                           
     legislature to                                                                                                             
               (1)  implement the recommendations of the                                                                        
     2021 Comprehensive Fiscal Plan Working Group;                                                                              
               (2)  harmonize the calculation under                                                                             
     AS 37.13.140(a)   of    net   income    available   for                                                                    
     distribution    and    net   income    available    for                                                                    
     appropriation under AS 37.13.140(b);                                                                                       
               (3)  temporarily change the mechanism used                                                                       
     to  draw money  from  the earnings  reserve account  to                                                                    
     leverage    the   unprecedented    earnings   currently                                                                    
     available in  the account, so that  the legislature has                                                                    
     adequate  time to  debate, analyze,  and implement  the                                                                    
     revenue measures  and cost reductions required  for the                                                                    
     long-term financial stability of the state;                                                                                
               (4)  reverse the changes made by this Act if                                                                     
     the  recommendations of  the 2021  Comprehensive Fiscal                                                                    
     Plan Working  Group are not adopted  and implemented in                                                                    
     their entirety."                                                                                                           
                                                                                                                                
10:46:31 AM                                                                                                                   
CHAIR HOLLAND heard no further objection so Amendment 11 was                                                                    
adopted.                                                                                                                        
                                                                                                                                
10:46:45 AM                                                                                                                   
SENATOR HUGHES moved to report  SB 53, work order 32-GS1693\A, as                                                               
amended,  from  committee  with  individual  recommendations  and                                                               
attached fiscal note(s).                                                                                                        
                                                                                                                                
10:47:18 AM                                                                                                                   
SENATOR KIEHL thanked  the committee for starting  the process to                                                               
move these  issues forward during  this special session.  He said                                                               
he did not  agree with everything in the bill  but he appreciated                                                               
the approach  taken by  members. He  said there  is more  work to                                                               
come.                                                                                                                           
                                                                                                                                
CHAIR HOLLAND stated that hearing  no objection, CSSB 53(JUD) was                                                               
reported from the Senate Judiciary Standing Committee.                                                                          

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