Legislature(1999 - 2000)
05/13/1999 05:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S): HB 231 And HB 232 STATEWIDE TELECONFERENCE The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 21st Legislative Session, contact 465-2156. After the 21st Legislative Session they will be available through the Legislative Library at 465- 3808. Time Meeting Convened: 5:50 P.M. TAPE HFC 99 - 136, Side 1. HFC 99 - 136, Side 2 HFC 99 - 137, Side 1. PRESENT: X Representative G. Davis X Co-Chair Therriault X Representative Foster X Co-Chair Mulder X Representative Grussendorf X Representative Austerman X Representative Kohring X Representative Bunde X Representative Moses X Representative J. Davies X Representative Williams ALSO PRESENT: REPRESENTATIVE SHARON CISSNA; REPRESENTATIVE GAIL PHILLIPS; SPEAKER BRIAN PORTER; BOB MIKOL, FAIRBANKS. TESTIFIED VIA TELECONFERENCE: ANN LOHREY, ANCHORAGE; MARK FISH, ANCHORAGE; RANDY RUEDNICH, ANCHORAGE; JAMES CRARY, ANCHORAGE; ERIC WOHLFORTH, ANCHORAGE; REX SHATTUCK, ANCHORAGE; SCOTT THORSON, ANCHORAGE; APRIL GHALAMI, DILLINGHAM; ERYNN BOTTLER, DILLINGHAM; RITA LEAKE, FAIRBANKS; JOHN FIELDS, FAIRBANKS; CARL BENSON, FAIRBANKS; KATHY DIETRICH, FAIRBANKS; ED MARTIN, KENAI; EARL COPELAND, KENAI; HARRIET MORAVEC, KENAI; ROBERTA SUTLEY, KENAI; BAB REILLY, KENAI; PAT REILLY, KENAI; ANNE GENTRY, KENAI; WILL JOSEY, KENAI; GERALD BOWEN, KENAI; GARVAN BUCARIA, MATSU; ART KOHANNES, MATSU. LOG SPEAKER DISCUSSION 000 Co-Chair Mulder Convened the House Finance Committee meeting at 5:50 P.M. to take public testimony on HB 231 & HB 232. 154 ANNA LOHREY, ANCHORAGE Spoke in support of HB 231. She spoke against taking the permanent fund dividend. The dividend cap is the best decision. 365 MARK FISH, ANCHORAGE Spoke in opposition of the proposed legislation. The people created the PERMANENT FUND DIVIDEND, and is an investment that belongs to the citizens and not the government. He stated that there is no needed urgency. A vote of the people is required. 556 Co-Chair Mulder Stated that ballot measure was a constitutional amendment put forth by the Legislature. 605 Representative J. Davies Clarified that was not intended to be any more than a fund. 630 RANDY RUEDNICH, ANCHORAGE Spoke in favor of the effort being done in regard to the proposed legislation. The problem is very real and things have changed. This type of concept should be taken forward in an advisory vote context. All Alaskans will need to contribute or there will be another fiscal gap. Encouraged moving forward with the process. 780 ERIC WOHLFORTH, ANCHORAGE Spoke to the change in the bill based on the pay off. By law the distributable income of the fund is actual income and is not longer appropriate to a modern endowment fund. This would put the PPERMANENT FUND DIVIDEND with the needs of the State. Voiced support with the legislation which is an improvement to the statutory scheme. 1004 Representative J. Davies Asked for comments regarding the payout rate. 1026 Mr. Wohlforth Did not want to comment on that topic. 1041 JAMES CRARY, ANCHORAGE Asked that the increase should be made to the excise tax on alcohol rather than taking the permanent fund dividend from the Alaskan people. He spoke to the damage done by alcohol abuse and fetal alcohol syndrome. Pleaded to increase that tax by $.25 per drink which would bring in $55 million dollars to the State. No new employees would need to be hired. The impact would be dramatic. 1281 Co-Chair Mulder Asked if the Legislature increased this, would he support the legislation? 1299 Mr. Crary Replied that he would voice support with that tax. He was aware of the work being done on this initiative. The State needs to go after alcohol. No where is alcohol paying its fair share. 1364 APRIL GHALAMI, DILLINGHAM Spoke in support of an alcohol tax. Additionally, she stated that there are many families that are dependent on the permanent fund dividend. The costs to live in the village area are very high. To take that money would be devastating. 1467 Vice-Chair Bunde Asked how to address the fiscal problem. 1480 Ms. Ghalami Responded that the best way would be to restore services to those people in the education system. By limiting educational resources is in the long run not a good measure. Long term wisdom is to invest in education and support knowledgeable citizens in our children. 1635 ERYNN BOTTLER, DILLINGHAM Spoke in opposition to the proposed legislation as an upcoming college student. She spoke to the difference that the permanent fund dividend would make to her as a student. 1708 Co-Chair Mulder Asked if there was enough money put into colleges in Alaska. 1710 Ms. Bottler Replied yes. 1733 Co-Chair Therriault Noted that somewhere the state will have to cut the costs. Should the people receive the permanent fund dividend or fund the university system. 1763 REPRESENTATIVE GAIL PHILLIPS Asked if she would be working this school year. 1781 Ms. Bottler Hoped that she would not need to work. 1792 R. Phillips Spoke to the proposed income tax to meet a portion of the fiscal gap. She questioned which would cause the least impact. 1820 RITA LEAKE, FAIRBANKS Spoke about land use. She agreed that the state needs to consider long-term use and suggested that people have the ability to own land. Ms. Leake pointed out that less than 1% of the land is privately owned. She proposed that the state provide more land for private ownership. 1962 Co-Chair Therriault Agreed that land resources should be held in private hands. A lot of the acreage that the State owns is far off the road system and who would pay for those services. 1995 Ms. Leake Spoke to homesteading. She spoke to small business and the difference that the oil and industry companies get in relationship to what the individual person receives. She reiterated that many people really need to get their permanent fund dividend. 2100 Co-Chair Mulder If the legislature does nothing the permanent fund dividend will go away. 2116 JOHN FIELDS, FAIRBANKS Spoke against the capping of the permanent fund dividend. 2134 Co-Chair Therriault All plans still call for additional cuts. 2161 CARL BENSON, FAIRBANKS Spoke to the merging the Constitutional Budget Reserve and the earnings reserve account. He added that the State does need an upper limit to the permanent fund dividend. If the dividend is cut and not impose an income tax, it would be unfair. A graduating income tax would be the fairest move to make. The current system has been a free loading system. The state is attracting a lot of dependent people to receive the goodies. He reiterated that a State income tax would be the best move to make. TAPE CHANGE HFC 99-136, SIDE 2. 009 ED MARTIN, KENAI People do not want the dividend touched in any way. SB 172 is the answer to the question. It should require a vote in the next general election. Lower the standard of living should not be the goal. He rejected the Alaska Plan as the answer. The current system is spending over $10 thousand dollars per person in the State. The State needs better management. 285 Co-Chair Mulder Noted all the things that are available to state residents by paying the $10 thousand dollars per year. 326 Mr. Martin Maintained that too much money is going to government and away from people. 375 Co-Chair Therriault Explained that of $10,000 per person 20 percent goes to inflation proofing and dividends. 428 Mr. Martin Reiterated that government costs too much. He added that the percentage should be brought down. 521 Vice-Chair Bunde Observed that the state has provided a lot of opportunities. He questioned if the speaker recognized that there is a $1 billion dollar gap. 603 Mr. Martin Asserted that government can be run cheaper. 620 Vice-Chair Bunde Pointed out that the managers of the permanent fund have given good advice. The managers are recommending that some needs to be done. 673 Representative G. Davis Observed that the petition drive has generated discussion. 698 EARL COPELAND, KENAI Testified via teleconference. He maintained that government has lost touch and that government is overreaching. He stated that there should be a vote of the public. 878 Representative Austerman Noted that speakers are recommending a vote of the people. He emphasized that there has to be something on the table to vote on. 912 Mr. Copeland Stated that voters should receive various options. 952 Co-Chair Mulder Clarified that the legislature did not vote a pay raise. The per diem rate is tied to the federal rate. The rate goes up and down. He emphasized that the size and scope of government has gone down over the last years. 1043 HARRIET MORAVEC, KENAI Spoke against HB 231 and HB 232. She maintain that consultants should be reduced. She questioned why the state cannot run its own oil company and keep all the revenues for the state and its people. 1114 Vice-Chair Bunde Stressed that their state believes in free enterprise. 1139 Co-Chair Therriault Explained that the state reviewed state ownership of an oil company. He observed that the state may play a role in ownership of a gas pipeline. He maintained that government should not own and operate business enterprises. He pointed out that the citizens did not support a state owned oil company. 1224 Representative Phillips Pointed out that it would take a huge state investment for a state owned oil or gas. She noted that funding would have to come from the permanent fund. 1272 BOB REILLY, KENAI Spoke against reductions to permanent fund dividend. He recommended further public input and a vote. 1359 ANNE GENTRY, KENAI Stated that she agrees with some of the Healthy Alaska Plan. She observed that the permanent fund dividend checks pay Alaskans more than Alaskans pay for taxes. She felt that the Healthy Alaska Plan is workable. 1432 WILL JOSEY, KENAI Noted that the state of Florida meets for 60 days every other year. He suggested that there should be only one-school superintendents, operating in a military fashion. He spoke in support of more roads. He maintained that all of the oil revenue belongs to the people. He stated that the permanent fund should not be touched. 1572 Co-Chair Therriault Pointed out that the state of Florida utilizes county governments that administer policy, court and jail powers. He noted that the state of Alaska has areas that do not have any local government. 1629 Representative Grussendorf Stated that he would like to meet every other year, but noted that the state's flow of revenue is volatile. 1685 Vice-Chair Bunde Noted that other states do a lot of their committee work when they are not in session. He emphasized that this reduces public input. He added that there each school districts wants its own superintendent to represents its needs. He stressed that the needs of the people of Alaska have diverse needs. 1754 Mr. Josey Stated that there is nothing to prevent the legislature setting a budget based on $12 dollars a barrel of oil. He stated that one person can know everything that is going on in the state. 1825 GERALD BOWEN, KENAI Spoke against HB 231 and HB 232. He added that upper level management should be reduced. 1888 Co-Chair Mulder Pointed out that the legislature is working to consolidate government and reduce management costs. 1905 BOB MIKOL, FAIRBANKS Stated that the earnings reserve should not be tapped. He spoke in support of an income tax. He felt that the income tax would be fairer. He suggested a vote on either an income tax or a cap on the dividend. 1975 Vice-Chair Bunde Observed that the income tax would generate $350 million dollars. The annuity plan would generate $1.8 billion dollars. 2011 Mr. Mikol Recognized the need to work for the future. He proposes the income tax first so that everyone shares the pain. 2067 Vice-Chair Bunde Felt that an income tax would hit the middle class the most. He maintained that the Healthy Alaska Plan would ask everyone to contribute. 2093 Co-Chair Therriault Asked if it is clear that the permanent fund dividend would crash if nothing is done. 2104 Mr. Mikol Replied that it is clear that the permanent fund dividend would be jeopardized. He acknowledged that something must be done. He maintained that some Alaskans would be more comfortable to see their permanent fund dividend go down from market forces. 2140 Co-Chair Therriault Emphasized that Alaska's oil wealth belong to all Alaskans, future and present. He stressed that today's generation could receive higher dividends at the expense of the future. 2178 GARVAN BUCARIA, MATSU Spoke in opposition to the Healthy Alaska Plan. He stated that a state income tax would be a fair opportunity. He stated that there should be a price of admission tax. TAPE CHANGE HFC 99 - 137, Side 1 167 ART KOHANNES, MATSU Spoke against changes to the permanent fund dividend. He pointed out that there is a lot of money floating through the State of Alaska. There are many citizens that are living on a very low income. He asked Committee members to consider these conditions. 366 Representative Phillips Asked what contract the Legislature is violating. 40 Mr. Kohannes Asked if the government worked on a checks and balances system. He did not see this working in this state. The government is not in true check. 464 REX SHATTUCK, ANCHORAGE Stated that many veterans of the U.S. want the Legislature to reduce the state spending while extending services. Should not be learned into the philosophies of the `80's. He spoke to close the fiscal gap in 5 years. He asked why the State is in a budget crisis.promises made, promises kept. General funds have been increased and there have been over 400 new positions statewide. 71% of the people of the State do not want the earnings of the permanent fund dividend spent. He urged the legislation to put the decision on the ballot. 793 Co-Chair Mulder There has been major changes made to government but did not anticipate the decline in oil funds. There is $800 million dollar deficit for next year. This body must take action soon or the entire permanent fund dividend will be in jeopardy. 875 Mr. Shattuck Agreed that the cost of expenditures have increased from other than general fund monies. There has been an increase too much spending. He noted that he would provide individual names from each district. 955 SCOTT THORSON, ANCHORAGE Need to reduce the size of government. Need to reduce the cost of government. Should there be vote to access the permanent fund dividend earnings. He believed that the dividends should be used. 20% of the dividend goes away in the federal income tax and is not staying in State. 1127 KATHY DIETRICK, FAIRBANKS Agreed that the permanent fund dividend is an entitlement. However, capping the permanent fund dividend without providing an income tax would be fairer. A plan that does not see grow in government services is not a viable plan. Government is the entity, which allows the State to provide services that citizens can not provide for themselves. She stated that she supported a combined force and that there should be a common resolution of an income tax and an earnings reserve tax. 1270 Co-Chair Therriault If the status quo is maintained and dissolves, what should happen? 1289 Ms. Dietrich She acknowledged that people has become dependent on it and agreed that it should be capped and combined with an income tax and excise tax. 1340 Co-Chair Mulder PUBLIC TESTIMONY WAS CONCLUDED. 1395 Co-Chair Mulder ADJOURNED: 7:45 p.m. HOUSE FINANCE COMMITTEE LOG NOTES April 13, 1999 H.F.C. Page 8 5/13/99 p.n.
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