Legislature(1993 - 1994)
03/21/1994 01:40 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 21, 1994
1:40 P.M.
TAPE HFC 94 - 73, Side 1, #000 - end.
TAPE HFC 94 - 73, Side 2, #000 - end.
TAPE HFC 94 - 74, Side 1, #000 - #527.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee meeting
to order at 1:40 P.M.
PRESENT
Co-Chair Larson Representative Hoffman
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Grussendorf Representative Therriault
Representative Foster
ALSO PRESENT
Representative Joe Green; Jeffery C. Ottesen, Chief, Right-
of-Way & Environment, Department of Transportation and
Public Facilities; Mead Treadwell, Deputy Commissioner,
Department of Environmental Conservation; Darrel Rexwinkel,
Commissioner, Department of Revenue; Thomas Williams,
Director, Permanent Fund Division, Department of Revenue;
Robert Store, Chief Investment Officer, Department of
Revenue; Bill Corbus, Chairman, Alaska State Pension Board
(ASPIB), Anchorage; Gail Oba, Vice Chair, ASPIB, Anchorage.
SUMMARY
HB 330 An Act relating to the use of natural gas as a
motor vehicle fuel in state owned vehicles.
CS HB 330 (TRS) was reported out of Committee with
"no recommendations" and with a zero fiscal note
by the Department of Transportation and Public
Facilities dated 3/16/94.
HB 364 An Act relating to allowable absences from the
state for purposes of eligibility for permanent
fund dividends; and providing for an effective
date.
HB 364 was HELD in Committee for further
consideration.
1
HB 494 An Act changing the Alaska State Pension
Investment Board to the Alaska Pension Investment
Authority and relating to the authority; and
providing for an effective date.
CS HB 494 (STA) was reported out of Committee with
a "do pass" recommendations and with two fiscal
notes by the Department of Revenue and a zero
fiscal note by the Department of Administration
dated 3/14/94.
HOUSE BILL 330
"An Act relating to the use of natural gas as a motor
vehicle fuel in state owned vehicles."
REPRESENTATIVE JOE GREEN stated that natural gas is being
used as vehicle fuel in several states and provinces across
the continent. He pointed out that the supply of natural
gas is abundant in the world, although Alaska appears to be
waiting for that supply to arrive.
Representative Green remarked that private sector fleet
managers have expressed interest in utilizing natural gas,
which would offer a number of advantages. The State
currently uses natural gas in a few cars. The barrier to
more widespread use would be refueling. Presently, the
range of natural gas vehicles is limited and there are few
refueling stations. HB 330 would dedicate a minimum number
of state vehicles to compressed natural gas (CNG) use. By
establishing the critical mass in the NGV fleet, investors
would then have the confidence to build refueling stations.
He concluded that with the development of the refueling
infrastructure, the private sector fleet managers could then
utilize CNG.
Representative Brown asked if DOTPF had evaluated cost
efficiency use of natural gas. Representative Green stated
they had not.
JEFFERY C. OTTESEN, CHIEF, RIGHT-OF-WAY & ENVIRONMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF),
testified that the Department would support the legislation
and monitor air quality and cost benefits. He stressed that
the legislation would be "good business".
Representative Martin asked the number of vehicles in the
DOTPF fleet. Mr. Ottesen responded there are 900 hundred
vehicles in the fleet, and 150 new vehicles are purchased
each year. Currently, there are three vehicles dedicated to
using natural gas.
2
Representative Brown questioned the cost difference between
a natural gas run vehicle and a conventional vehicle. Mr.
Ottesen noted that the difference would be approximately
$2.0 thousand dollars depending on the size of the vehicle.
Representative Martin MOVED to report CS HB 330 (TRS) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Brown OBJECTED.
She asked the changes within the Department of Environmental
Conservation's (DEC) air plan which would allow that
Department to use federal funds.
MEAD TREADWELL, DEPUTY COMMISSIONER, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, remarked that the State
Implementation Plan (SIP) for air quality will be enacted
shortly, and once it is signed, that option will be
available to the Department. He added that SEAMAC funds are
DOTPF budget allocations designated for air quality and that
they are required to be spent for air quality under federal
law. Representative Brown asked if those funds would
require matching state funds. Mr. Ottesen replied that they
would require matching state funds, although there is $8
million dollars which will lapse at the end of this year if
not used.
Representative Brown emphasized that there are costs
associated with the legislation although the fiscal note
indicates no impact. Representative Brown WITHDREW HER
OBJECTION to move the bill from Committee. There being NO
OBJECTION, it was so ordered.
CS HB 330 (TRS) was reported out of Committee with "no
recommendation" and with a zero fiscal note by the
Department of Public Facilities dated 3/16/94.
HOUSE BILL 494
"An Act changing the Alaska State Pension Investment
Board to the Alaska Pension Investment Authority and
relating to the authority; and providing for an
effective date."
Co-Chair MacLean stated that HB 494 is the final building
block in creating an organization focused on managing over
$7 billion dollars in financial assets belonging to the
State's retirement systems. The legislation is important to
the State, political subdivisions, school districts and all
beneficiaries of the retirement systems. It would represent
the culmination of an extensive effort to ensure the best
financial returns on the assets of the retirement system in
3
an organizational structure responsible to participating
interests.
She pointed out that the bill would establish an investment
authority as the structural framework for the responsive and
efficient operations of the Alaska State Pension Investment
Board (ASPIB). The Board is an eight member board of
trustees created in 1992 by SB 329. The ASPIB has fiduciary
responsibility for assets of the State's defined benefit
pension programs including the Public Employees' Retirement
System (PERS), Teachers' Retirement System (TRS), and
Judicial and Military Retirement Systems, and assets of the
Supplemental Benefits System (SBS) and the deferred
compensation program.
Co-Chair MacLean added that a separate investment authority
would be in the best interest of the State. The proposed
authority would continue to meet in public, report to the
Governor and the Legislature, use the same budget process
and have the Attorney General provide legal assistance in
the same manner that currently exists. HB 494 would create
a structure consistent with the way large public pension
plans are managed.
Co-Chair MacLean concluded that HB 494 would create an
investment authority that allows the ASPIB to hire an
executive director and staff to assist in the management of
pension assets and implementation of policy for the
retirement systems. The bill would create more efficiency
in the organization while clearly defining the
responsibility and accountability for management of those
pension assets.
BILL CORBUS, CHAIRMAN, ALASKA STATE PENSION BOARD (ASPIB),
ANCHORAGE, testified in support of the legislation and
explained the duties of the Board. [Testimony on file].
He commented that in 1992, SB 329 created the Alaska State
Pension Board and pointed out that the staff of that board
works for the Commissioner of the Department of Revenue.
The Board would prefer to staff without the consent of the
Commissioner of Revenue. The solution would be to create a
separate and independent authority which would be able to
address the staffing needs of the Board.
GAIL OBA, VICE CHAIR, ALASKA STATE PENSION BOARD (ASPIB),
ANCHORAGE, spoke in support of HB 494 stating that the
legislation does not provide a pension increase to any of
the beneficiaries of the system. There would be no
additional costs to employers if the legislation was passed.
She added that the current program would be improved by
creating a better structure. The legislation would continue
4
to grant the Board's authority over the pension fund and
would also grant supervisory authority over the staff.
Representative Martin indicated his concern over losing the
legislative link to the accountability of the Pension Board.
Ms. Oba advised that when the legislation is passed, there
will be greater accountability. Currently, the staff
reports to the Commissioner of the Department of Revenue,
whereas through the legislation, the staff would report to
any one of the eight trustees.
DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE,
provided a brief history of the Alaska State Pension Board
(ASPIB) legislation. He reiterated that the Board was
created in 1992, leaving the staff in the Department of
Revenue. With the fiduciary responsibility given the board,
they must oversee $8 billion dollars. He stated that since
the Board is held responsible for the funds, they should
have complete authority to administer those assets. The
proposed legislation would provide that authority.
Commissioner Rexwinkel referenced the fiscal notes
associated with the legislation stating that they do not
indicate a revenue change, although the Board understands
that with the authority to manage the staff, they will be
able to achieve more substantial returns. The fiscal notes
would cover cash-debt management of twenty-nine (29) staff
increasing the staff by eight (8) positions. Discussion
followed among Committee members and Commissioner Rexwinkel
regarding the transfer of responsibilities through the
proposed legislation.
Representative Brown asked the financial effect on treasury
management if the fiscal note was not approved for the eight
(8) new positions. Commissioner Rexwinkel advised that
currently, there is shared staffing between the Board and
the Department.
(Tape Change, HFC 94-73, Side 2).
Staff would have to be replaced in order to continue the
accounting capabilities. The addition of employees would
cover those lost or left within the Department.
Commissioner Rexwinkel added that two new investment
management staff are needed in order to increase pension
funds.
ROBERT STORE, CHIEF INVESTMENT OFFICER, DEPARTMENT OF
REVENUE, advised that currently, the Department of Revenue
provides staff to the State Pension Investment Board as well
as responsibility for managing a number of their funds. In
managing fixed income securities, the yield curve is
5
generally positive. If a security has a longer investment,
a higher rate of return on the investment would be expected.
Staff feels with increased cash flow analysis the yield
curve could be expanded which would allow less cash to be
kept on hand and would provide greater comfort to move the
aggregate portfolio on the yield curve. The enhanced cash
flow analysis would include education and greater
communication with the various agencies to allow them to
understand the focus and control of that flow. Mr. Store
thought with more investment officers, the low case scenario
expectation for the pension fund would be $10 million
dollars.
Representative Brown asked for further clarification of the
capital expenditure request for the $388 thousand dollars.
Commissioner Rexwinkel elaborated that the note would cover
costs of start-up equipment and furniture for the new
employees. Discussion followed among Committee members
regarding the expenditures itemized in the fiscal note.
Representative Martin recommended that the fiscal note be
changed to program receipts rather than the general fund
source. Commissioner Rexwinkel stated that the general fund
treasury component requires payment for additional staff in
order that the Board can maintain its own functioning
fiduciary division. He added that the Board's ability to
create additional interest earnings for the general fund
would be enhanced through the proposed legislation.
Co-Chair MacLean MOVED to report CS HB 494 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Martin OBJECTED.
Representative Martin MOVED that the fiscal note be changed
to program receipts from general funds. Commissioner
Rexwinkel pointed out that the Department of Revenue has
been very careful not to mix the components of various
funds. Representative Navarre clarified that the investment
will make at a minimum, $10 million dollars for the State.
Representative Martin thought that the investment board
should be responsible for their own costs. Representative
Hanley pointed out that the program receipts from the
Pension Board Account would be used to manage non-pension
funds. Representative Martin WITHDREW THE MOTION. There
being NO OBJECTIONS, it was removed.
Representative Brown MOVED to delete $388 thousand dollars
from the capital expenditures and insert $200 thousand
dollars. She pointed out that at the current
recommendation, $19 thousand dollars would be allocated for
each employee for equipment and furniture. To provide $200
thousand dollars for capital expenditures would allocate $10
6
thousand dollars per employee for equipment costs. Co-Chair
MacLean OBJECTED.
A roll call vote was taken on the MOTION.
IN FAVOR: Grussendorf, Hanley, Parnell,
Therriault, Brown, Larson.
OPPOSED: Hoffman, Martin, Navarre, Foster,
MacLean.
The MOTION PASSED (6-5).
Co-Chair MacLean MOVED to report CS HB 494 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 494 (STA) was reported out of Committee with
"individual recommendations" and with two fiscal notes by
the Department of Revenue and a zero fiscal note by the
Department of Administration dated 3/14/94.
HOUSE BILL 364
"An Act relating to allowable absences from the state
for purposes of eligibility for permanent fund
dividends; and providing for an effective date."
Representative Parnell advised that the subcommittee had
addressed concerns of expanding the number of recipients for
the permanent fund dividend. He stressed that the original
intention of the fund was to encourage persons to maintain
their residence in the State and to reduce a population
turnover.
Representative Parnell MOVED to adopt work draft #8-
LS1378\0, Cook, 3/14/94 which would explain "allowable
absences" as the version before the Committee.
Representative Martin OBJECTED for purposes of discussion
and stated that the Public Health Service Corp should not be
given a special dispensation.
Representative Martin MOVED to delete to Page 2, Lines 28 -
29, Section (I). Representative Martin WITHDREW HIS
OBJECTION on the motion to adopt the work draft. There
being NO OBJECTION, it was adopted.
(Tape Change, HFC 94-74, Side 1).
THOMAS WILLIAMS, DIRECTOR, PERMANENT FUND DIVISION,
DEPARTMENT OF REVENUE, stated that the number of Alaska
Public Health Service officers claiming Alaska residence is
7
296, and that the number of individuals living in other
states claiming Alaska residency is 200, which does not
include spouses and children.
Representative Brown advised that determination of
exemptions should be fair. Discussion followed among
Committee members regarding the differences between merchant
marines and the public health service corp.
A roll call vote was taken on the MOTION to delete Section
IN FAVOR: Hanley, Hoffman, Martin, Therriault,
Grussendorf, MacLean, Larson.
OPPOSED: Parnell, Navarre, Brown, Foster.
The MOTION PASSED (7-4).
Representative Therriault MOVED to delete Section 2, Page 2,
Lines 9-27. Representative Martin OBJECTED.
A roll call vote was taken on the MOTION.
IN FAVOR: Hoffman, Therriault, Brown, Grussendorf,
Hanley, Larson.
OPPOSED: Martin, Navarre, Parnell, Foster,
MacLean.
The MOTION PASSED (6-5).
Representative Therriault MOVED a title change to HB 364,
Page 1, Lines 2-3, deleting "and to allowable absences from
the state for purposes of eligibility for dividends;".
There being NO OBJECTION, it was adopted.
Mr. Williams stated that adoption of Section 1 would have a
minimal amount of change except for those individuals who
were gone longer than 180 days per year. An out of state
college student would be required to come back to Alaska for
the summer in order to continue to qualify for the permanent
fund dividend. Discussion followed among Committee members
regarding college student's permanent fund dividends.
Representative Parnell stated that there are a group of
people in the State who are gone more than 180 days per year
on State business. He MOVED a conceptual amendment to
exempt a category of persons from Section 1.
1. Those who are serving the U.S. Congress as a
representative or senator for the State of Alaska.
2. Those serving on the staff of a representative or
8
senator from Alaska.
3. Those serving as an employee of the State of
Alaska including employment in a field office.
Following discussion regarding fully allowable absences
Representative Parnell WITHDREW THE MOTION. There being NO
OBJECTION, it was so ordered.
HB 364 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:30 P.M.
HOUSE FINANCE COMMITTEE
March 21, 1994
1:40 P.M.
TAPE HFC 94 - 73, Side 1, #000 - end.
TAPE HFC 94 - 73, Side 2, #000 - end.
TAPE HFC 94 - 74, Side 1, #000 - #527.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee meeting
to order at 1:40 P.M.
PRESENT
Co-Chair Larson Representative Hoffman
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Grussendorf Representative Therriault
Representative Foster
ALSO PRESENT
Representative Joe Green; Jeffery C. Ottesen, Chief, Right-
of-Way & Environment, Department of Transportation and
Public Facilities; Mead Treadwell, Deputy Commissioner,
Department of Environmental Conservation; Darrel Rexwinkel,
Commissioner, Department of Revenue; Thomas Williams,
Director, Permanent Fund Division, Department of Revenue;
Robert Store, Chief Investment Officer, Department of
Revenue; Bill Corbus, Chairman, Alaska State Pension Board
(ASPIB), Anchorage; Gail Oba, Vice Chair, ASPIB, Anchorage.
SUMMARY
9
HB 330 An Act relating to the use of natural gas as a
motor vehicle fuel in state owned vehicles.
CS HB 330 (TRS) was reported out of Committee with
"no recommendations" and with a zero fiscal note
by the Department of Transportation and Public
Facilities dated 3/16/94.
HB 364 An Act relating to allowable absences from the
state for purposes of eligibility for permanent
fund dividends; and providing for an effective
date.
HB 364 was HELD in Committee for further
consideration.
HB 494 An Act changing the Alaska State Pension
Investment Board to the Alaska Pension Investment
Authority and relating to the authority; and
providing for an effective date.
CS HB 494 (STA) was reported out of Committee with
a "do pass" recommendations and with two fiscal
notes by the Department of Revenue and a zero
fiscal note by the Department of Administration
dated 3/14/94.
HOUSE BILL 330
"An Act relating to the use of natural gas as a motor
vehicle fuel in state owned vehicles."
REPRESENTATIVE JOE GREEN stated that natural gas is being
used as vehicle fuel in several states and provinces across
the continent. He pointed out that the supply of natural
gas is abundant in the world, although Alaska appears to be
waiting for that supply to arrive.
Representative Green remarked that private sector fleet
managers have expressed interest in utilizing natural gas,
which would offer a number of advantages. The State
currently uses natural gas in a few cars. The barrier to
more widespread use would be refueling. Presently, the
range of natural gas vehicles is limited and there are few
refueling stations. HB 330 would dedicate a minimum number
of state vehicles to compressed natural gas (CNG) use. By
establishing the critical mass in the NGV fleet, investors
would then have the confidence to build refueling stations.
He concluded that with the development of the refueling
infrastructure, the private sector fleet managers could then
utilize CNG.
10
Representative Brown asked if DOTPF had evaluated cost
efficiency use of natural gas. Representative Green stated
they had not.
JEFFERY C. OTTESEN, CHIEF, RIGHT-OF-WAY & ENVIRONMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF),
testified that the Department would support the legislation
and monitor air quality and cost benefits. He stressed that
the legislation would be "good business".
Representative Martin asked the number of vehicles in the
DOTPF fleet. Mr. Ottesen responded there are 900 hundred
vehicles in the fleet, and 150 new vehicles are purchased
each year. Currently, there are three vehicles dedicated to
using natural gas.
Representative Brown questioned the cost difference between
a natural gas run vehicle and a conventional vehicle. Mr.
Ottesen noted that the difference would be approximately
$2.0 thousand dollars depending on the size of the vehicle.
Representative Martin MOVED to report CS HB 330 (TRS) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Brown OBJECTED.
She asked the changes within the Department of Environmental
Conservation's (DEC) air plan which would allow that
Department to use federal funds.
MEAD TREADWELL, DEPUTY COMMISSIONER, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, remarked that the State
Implementation Plan (SIP) for air quality will be enacted
shortly, and once it is signed, that option will be
available to the Department. He added that SEAMAC funds are
DOTPF budget allocations designated for air quality and that
they are required to be spent for air quality under federal
law. Representative Brown asked if those funds would
require matching state funds. Mr. Ottesen replied that they
would require matching state funds, although there is $8
million dollars which will lapse at the end of this year if
not used.
Representative Brown emphasized that there are costs
associated with the legislation although the fiscal note
indicates no impact. Representative Brown WITHDREW HER
OBJECTION to move the bill from Committee. There being NO
OBJECTION, it was so ordered.
CS HB 330 (TRS) was reported out of Committee with "no
recommendation" and with a zero fiscal note by the
Department of Public Facilities dated 3/16/94.
11
HOUSE BILL 494
"An Act changing the Alaska State Pension Investment
Board to the Alaska Pension Investment Authority and
relating to the authority; and providing for an
effective date."
Co-Chair MacLean stated that HB 494 is the final building
block in creating an organization focused on managing over
$7 billion dollars in financial assets belonging to the
State's retirement systems. The legislation is important to
the State, political subdivisions, school districts and all
beneficiaries of the retirement systems. It would represent
the culmination of an extensive effort to ensure the best
financial returns on the assets of the retirement system in
an organizational structure responsible to participating
interests.
She pointed out that the bill would establish an investment
authority as the structural framework for the responsive and
efficient operations of the Alaska State Pension Investment
Board (ASPIB). The Board is an eight member board of
trustees created in 1992 by SB 329. The ASPIB has fiduciary
responsibility for assets of the State's defined benefit
pension programs including the Public Employees' Retirement
System (PERS), Teachers' Retirement System (TRS), and
Judicial and Military Retirement Systems, and assets of the
Supplemental Benefits System (SBS) and the deferred
compensation program.
Co-Chair MacLean added that a separate investment authority
would be in the best interest of the State. The proposed
authority would continue to meet in public, report to the
Governor and the Legislature, use the same budget process
and have the Attorney General provide legal assistance in
the same manner that currently exists. HB 494 would create
a structure consistent with the way large public pension
plans are managed.
Co-Chair MacLean concluded that HB 494 would create an
investment authority that allows the ASPIB to hire an
executive director and staff to assist in the management of
pension assets and implementation of policy for the
retirement systems. The bill would create more efficiency
in the organization while clearly defining the
responsibility and accountability for management of those
pension assets.
BILL CORBUS, CHAIRMAN, ALASKA STATE PENSION BOARD (ASPIB),
ANCHORAGE, testified in support of the legislation and
explained the duties of the Board. [Testimony on file].
12
He commented that in 1992, SB 329 created the Alaska State
Pension Board and pointed out that the staff of that board
works for the Commissioner of the Department of Revenue.
The Board would prefer to staff without the consent of the
Commissioner of Revenue. The solution would be to create a
separate and independent authority which would be able to
address the staffing needs of the Board.
GAIL OBA, VICE CHAIR, ALASKA STATE PENSION BOARD (ASPIB),
ANCHORAGE, spoke in support of HB 494 stating that the
legislation does not provide a pension increase to any of
the beneficiaries of the system. There would be no
additional costs to employers if the legislation was passed.
She added that the current program would be improved by
creating a better structure. The legislation would continue
to grant the Board's authority over the pension fund and
would also grant supervisory authority over the staff.
Representative Martin indicated his concern over losing the
legislative link to the accountability of the Pension Board.
Ms. Oba advised that when the legislation is passed, there
will be greater accountability. Currently, the staff
reports to the Commissioner of the Department of Revenue,
whereas through the legislation, the staff would report to
any one of the eight trustees.
DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE,
provided a brief history of the Alaska State Pension Board
(ASPIB) legislation. He reiterated that the Board was
created in 1992, leaving the staff in the Department of
Revenue. With the fiduciary responsibility given the board,
they must oversee $8 billion dollars. He stated that since
the Board is held responsible for the funds, they should
have complete authority to administer those assets. The
proposed legislation would provide that authority.
Commissioner Rexwinkel referenced the fiscal notes
associated with the legislation stating that they do not
indicate a revenue change, although the Board understands
that with the authority to manage the staff, they will be
able to achieve more substantial returns. The fiscal notes
would cover cash-debt management of twenty-nine (29) staff
increasing the staff by eight (8) positions. Discussion
followed among Committee members and Commissioner Rexwinkel
regarding the transfer of responsibilities through the
proposed legislation.
Representative Brown asked the financial effect on treasury
management if the fiscal note was not approved for the eight
(8) new positions. Commissioner Rexwinkel advised that
currently, there is shared staffing between the Board and
the Department.
13
(Tape Change, HFC 94-73, Side 2).
Staff would have to be replaced in order to continue the
accounting capabilities. The addition of employees would
cover those lost or left within the Department.
Commissioner Rexwinkel added that two new investment
management staff are needed in order to increase pension
funds.
ROBERT STORE, CHIEF INVESTMENT OFFICER, DEPARTMENT OF
REVENUE, advised that currently, the Department of Revenue
provides staff to the State Pension Investment Board as well
as responsibility for managing a number of their funds. In
managing fixed income securities, the yield curve is
generally positive. If a security has a longer investment,
a higher rate of return on the investment would be expected.
Staff feels with increased cash flow analysis the yield
curve could be expanded which would allow less cash to be
kept on hand and would provide greater comfort to move the
aggregate portfolio on the yield curve. The enhanced cash
flow analysis would include education and greater
communication with the various agencies to allow them to
understand the focus and control of that flow. Mr. Store
thought with more investment officers, the low case scenario
expectation for the pension fund would be $10 million
dollars.
Representative Brown asked for further clarification of the
capital expenditure request for the $388 thousand dollars.
Commissioner Rexwinkel elaborated that the note would cover
costs of start-up equipment and furniture for the new
employees. Discussion followed among Committee members
regarding the expenditures itemized in the fiscal note.
Representative Martin recommended that the fiscal note be
changed to program receipts rather than the general fund
source. Commissioner Rexwinkel stated that the general fund
treasury component requires payment for additional staff in
order that the Board can maintain its own functioning
fiduciary division. He added that the Board's ability to
create additional interest earnings for the general fund
would be enhanced through the proposed legislation.
Co-Chair MacLean MOVED to report CS HB 494 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Martin OBJECTED.
Representative Martin MOVED that the fiscal note be changed
to program receipts from general funds. Commissioner
Rexwinkel pointed out that the Department of Revenue has
been very careful not to mix the components of various
14
funds. Representative Navarre clarified that the investment
will make at a minimum, $10 million dollars for the State.
Representative Martin thought that the investment board
should be responsible for their own costs. Representative
Hanley pointed out that the program receipts from the
Pension Board Account would be used to manage non-pension
funds. Representative Martin WITHDREW THE MOTION. There
being NO OBJECTIONS, it was removed.
Representative Brown MOVED to delete $388 thousand dollars
from the capital expenditures and insert $200 thousand
dollars. She pointed out that at the current
recommendation, $19 thousand dollars would be allocated for
each employee for equipment and furniture. To provide $200
thousand dollars for capital expenditures would allocate $10
thousand dollars per employee for equipment costs. Co-Chair
MacLean OBJECTED.
A roll call vote was taken on the MOTION.
IN FAVOR: Grussendorf, Hanley, Parnell,
Therriault, Brown, Larson.
OPPOSED: Hoffman, Martin, Navarre, Foster,
MacLean.
The MOTION PASSED (6-5).
Co-Chair MacLean MOVED to report CS HB 494 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 494 (STA) was reported out of Committee with
"individual recommendations" and with two fiscal notes by
the Department of Revenue and a zero fiscal note by the
Department of Administration dated 3/14/94.
HOUSE BILL 364
"An Act relating to allowable absences from the state
for purposes of eligibility for permanent fund
dividends; and providing for an effective date."
Representative Parnell advised that the subcommittee had
addressed concerns of expanding the number of recipients for
the permanent fund dividend. He stressed that the original
intention of the fund was to encourage persons to maintain
their residence in the State and to reduce a population
turnover.
Representative Parnell MOVED to adopt work draft #8-
LS1378\0, Cook, 3/14/94 which would explain "allowable
15
absences" as the version before the Committee.
Representative Martin OBJECTED for purposes of discussion
and stated that the Public Health Service Corp should not be
given a special dispensation.
Representative Martin MOVED to delete to Page 2, Lines 28 -
29, Section (I). Representative Martin WITHDREW HIS
OBJECTION on the motion to adopt the work draft. There
being NO OBJECTION, it was adopted.
(Tape Change, HFC 94-74, Side 1).
THOMAS WILLIAMS, DIRECTOR, PERMANENT FUND DIVISION,
DEPARTMENT OF REVENUE, stated that the number of Alaska
Public Health Service officers claiming Alaska residence is
296, and that the number of individuals living in other
states claiming Alaska residency is 200, which does not
include spouses and children.
Representative Brown advised that determination of
exemptions should be fair. Discussion followed among
Committee members regarding the differences between merchant
marines and the public health service corp.
A roll call vote was taken on the MOTION to delete Section
IN FAVOR: Hanley, Hoffman, Martin, Therriault,
Grussendorf, MacLean, Larson.
OPPOSED: Parnell, Navarre, Brown, Foster.
The MOTION PASSED (7-4).
Representative Therriault MOVED to delete Section 2, Page 2,
Lines 9-27. Representative Martin OBJECTED.
A roll call vote was taken on the MOTION.
IN FAVOR: Hoffman, Therriault, Brown, Grussendorf,
Hanley, Larson.
OPPOSED: Martin, Navarre, Parnell, Foster,
MacLean.
The MOTION PASSED (6-5).
Representative Therriault MOVED a title change to HB 364,
Page 1, Lines 2-3, deleting "and to allowable absences from
the state for purposes of eligibility for dividends;".
There being NO OBJECTION, it was adopted.
Mr. Williams stated that adoption of Section 1 would have a
minimal amount of change except for those individuals who
16
were gone longer than 180 days per year. An out of state
college student would be required to come back to Alaska for
the summer in order to continue to qualify for the permanent
fund dividend. Discussion followed among Committee members
regarding college student's permanent fund dividends.
Representative Parnell stated that there are a group of
people in the State who are gone more than 180 days per year
on State business. He MOVED a conceptual amendment to
exempt a category of persons from Section 1.
1. Those who are serving the U.S. Congress as a
representative or senator for the State of Alaska.
2. Those serving on the staff of a representative or
senator from Alaska.
3. Those serving as an employee of the State of
Alaska including employment in a field office.
Following discussion regarding fully allowable absences
Representative Parnell WITHDREW THE MOTION. There being NO
OBJECTION, it was so ordered.
HB 364 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:30 P.M.
17
| Document Name | Date/Time | Subjects |
|---|