Legislature(2003 - 2004)
03/22/2004 01:42 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 22, 2004
1:42 P.M.
TAPE HFC 04 - 62, Side A
TAPE HFC 04 - 62, Side B
TAPE HFC 04 - 63, Side A
TAPE HFC 04 - 63, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:42 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
None
ALSO PRESENT
Bob Bartholomew, Chief Operating Officer, Alaska Permanent
Fund Corporation, Department of Revenue; Bruce Tangeman,
Fiscal Analyst, Legislative Finance Division; Cheryl Frasca,
Director, Division of Management & Budget, Office of the
Governor; Pete Ecklund, Staff to Representative Williams;
Tom Wright, Staff to Representative Harris; Kim Garnero,
Director, Division Of Finance, Department Of Administration;
Sue Stancliff, Staff to Representative Pete Kott; Tamara
Cook, Director, Legislative Legal and Research Services; Mr.
Bill Sherrill, Transportation & Infrastructure Committee,
U.S. Congress.
PRESENT VIA TELECONFERENCE
Billie Jo Han, Wasilla
SUMMARY
HB 494 An Act relating to the disbursement of money by
the state, including employment compensation,
unemployment payments, and permanent fund
dividends, and to bank investments and deposits by
the state; and providing for an effective date.
CSHB 494(FIN) was REPORTED out of Committee with a
"do pass" recommendation and seven new fiscal
impact notes.
HJR 26 Proposing amendments to the Constitution of the
State of Alaska relating to and limiting
appropriations from and inflation proofing the
Alaska permanent fund by establishing a percent of
market value spending limit.
HJR 26 was heard and HELD in Committee for further
consideration.
HB 298 An Act relating to the distribution of
appropriations from the Alaska permanent fund
under art. IX, sec. 15(b), Constitution of the
State of Alaska, and making conforming amendments;
and providing for an effective date.
HB 298 was heard and HELD in Committee for further
consideration.
HJR 9 Proposing amendments to the Constitution of the
State of Alaska relating to an appropriation limit
and a spending limit
HJR 9 was heard and HELD in Committee for further
consideration.
HB 236 An Act imposing a tax on employment; and providing
for an effective date.
HB 236 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 494
An Act relating to the disbursement of money by the
state, including employment compensation, unemployment
payments, and permanent fund dividends, and to bank
investments and deposits by the state; and providing
for an effective date.
Co-Chair Harris MOVED to ADOPT Work Draft Version Q of HB
494 dated 3-17-04. Co-Chair Williams OBJECTED for purposes
of discussion.
MS. SUE STANCLIFF, STAFF TO REPRESENTATIVE PETE KOTT,
explained the changes in Version Q. She noted that there
was discussion during the last hearing of the provision in
Section 19 that required the departments to do electronic
disbursements. This version makes it optional and suggests
that the departments use electronic disbursement. The change
in Section 14 relates to stale dating and unclaimed property
and it was recommended by the Department of Administration.
Ms. Stancliff continued, Version Q deletes the section that
repealed the word "warrant" and inserts "warrant" because
warrants would be issued and should be kept in statute. The
Alaska Railroad recommended the last change. She explained
that the Railroad is not required to do electronic
disbursements because it is exempt under current statutes,
so the work draft removed the Railroad to avoid changing two
other parts of the bill.
Co-Chair Harris noted that every year at budget time the
Legislature takes up the stale dated warrants, and he asked
if the bill addresses that issue. Ms. Stancliff deferred to
the Department of Administration.
MS. KIM GARNERO, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT
OF ADMINISTRATION, stated that last year the Legislature
amended Title 37.05.180 that affects stale dated warrants.
She explained that starting last year the warrants became
part of unclaimed property. The unclaimed property program
holds the money until the claim has come forward instead of
letting it lapse into the General Fund and waiting to get a
new appropriation in the stale date process. She said that
it works well, and that there wouldn't be further stale
dated warrant legislation.
Ms. Garnero also noted that last year the Legislature
amended the miscellaneous claims portion that is the two-
year-old bills. She said that these currently only come
before the Legislature if they are large and the agency
couldn't pay for them out of the current budget.
Representative Foster MOVED to report CSHB 494 out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSHB 494(FIN) was REPORTED out of Committee with a "do pass"
recommendation and seven new fiscal impact notes.
HOUSE JOINT RESOLUTION NO. 26
Proposing amendments to the Constitution of the State
of Alaska relating to and limiting appropriations from
and inflation proofing the Alaska permanent fund by
establishing a percent of market value spending limit.
Co-Chair Harris MOVED to ADOPT Work Draft Version U of HJR
26 dated 3/19/04. There being NO OBJECTION, it was so
ordered.
PETE ECKLUND, STAFF TO REPRESENTATIVE WILLIAMS, explained
the incorporation of Representative Stoltze's Amendment #1
in Version U. He said that it simply shortened and amended
the title of the resolution.
In response to a question by Co-Chair Williams, Mr. Ecklund
commented that Amendment #2 is not in Version U.
Co-Chair Williams announced that he would move HJR 26 to the
bottom of the agenda until Representative Stoltze arrived to
address it.
HOUSE BILL NO. 298
An Act relating to the distribution of appropriations
from the Alaska permanent fund under art. IX, sec.
15(b), Constitution of the State of Alaska, and making
conforming amendments; and providing for an effective
date.
Co-Chair Harris MOVED to ADOPT Work Draft Version V for HB
298 dated 3/19/04. There being NO OBJECTION, it was so
ordered.
MR. PETER ECKLUND, STAFF TO REPRESENTATIVE WILLIAMS,
explained the changes by comparing Version V with the
previous version, House Special Committee on Ways & Means
Version U. In Version U, on page 3, lines 5 and 8, the word
"average" was changed to "annualized," at the request of the
Permanent Fund Corporation. On page 3, line 6, "10 calendar
years" was changed to "10 fiscal years" to match the other
calculations based on fiscal years.
On page 3, line 21, after the word "inflation" the remainder
of that subsection (1) and (2) is deleted after the words
"for a specific fiscal year by," The new language was
inserted in Version V, page 3, lines 20- 26 was a change
requested by the Permanent Fund Corporation.
MR BOB BARTHOLOMEW, CHIEF OPERATING OFFICER, ALASKA
PERMANENT FUND CORPORATION (PFC), DEPARTMENT OF REVENUE
explained the change in Version V starts on line 24 of page
3. The PFC has recommended a simpler way to calculate the
annual inflation rate, using the Consumer Price Index (CPI).
The Corporation has always used the CPI, and would now look
at the change in one 12-month period instead of from month
to month. It is a technical simplification.
Mr. Ecklund addressed Representative Croft's questions from
the last hearing on the bill, referring to page 3, lines 17-
18 of the Ways & Means Version U. The language states, "50
percent may be appropriated to the general fund" and "50
percent may be appropriated to the dividend fund". The new
Version V states: "not more than 50% may be appropriated to
the general fund" and "not more than 50% may be appropriated
to the dividend fund." He explained it was in response to
questions of whether "may be appropriated," meant that 60%
or 40% could be appropriated. The new language sets more of
an upper cap. The way it is written allows future
legislatures to decide a cap of zero to 50% on either the
general fund or the dividend.
Mr. Ecklund referred to page 3, line 14, Work Draft V
subsection (b), "The legislature may appropriate from the
fund for each fiscal year the amount for costs of the
corporation associated with operating and investing the
fund." The current costs of operating the Fund are between
$45 and $50 million annually. Those operating costs would
be taken off the top, and then 50% would be distributed to
dividends, and 50% to the General Fund.
Mr. Ecklund referred to page 3, line 22, subsection (d)
noting that the previous version was silent on when the
transfer of money would occur from the Permanent Fund to the
dividend fund and the General Fund. The new language states
that the transfer would occur "within 14 days after the
effective date of the appropriation."
Mr. Ecklund referred to a change in Version V on page 4,
Sec. 5, which now states, "The operating budget of the
corporation shall be included in the state's operating
budget under AS 37.07 (Executive Budget Act)." He said the
Corporation is agreeable to the language change.
Representative Chenault asked if the Corporation has any
problem with the change to 14 days.
Mr. Bartholomew commented on the timing of the
distributions. The dividend distribution historically ranges
from a $500 million to $1 billion lump sum distribution
that is needed within the first week of October. It is a
policy call if the money resides in the General Fund or the
Permanent Fund for that period. It has been transferred in
July, so this change is in line with how the Corporation
handled the dividend this year. The new language providing
an allocation for state services would require discussion on
whether to pay a lump sum at the beginning of the fiscal
year, or on a quarterly or monthly basis. He said that when
there is a steady cash flow, it is easier for the Fund to
plan to do a recurring payment rather than a lump sum. A
lump sum requires determining how many securities to sell or
how to raise the cash. However, Mr. Bartholomew said that
the Fund could make it work as written for a $1.2 billion
transfer on that date. He asked the committee to consider
approaching the state services portion from a cash flow
standpoint with either a quarterly or monthly distribution.
He said it would work as written.
In response to a question by Co-Chair Harris, Mr. Ecklund
explained that language was removed from Section 10 of the
previous Version U, and confirmed it now provides one
effective date of January 1, 2005 if voters approve the
constitutional amendment.
Co-Chair Harris MOVED to amend Amendment #1 by adding the
words "not more than" before (1) and (2) to incorporate the
change in Version V. Co-Chair Williams OBJECTED.
Co-Chair Harris explained that his Amendment #1 would change
the 50-50 allocations to the General Fund to not more than a
40% appropriation to public education, and not more than a
60% appropriation to the dividend. He said that his
reasoning is to ensure that the public would accept the
measure, and would understand that the Legislature wouldn't
take any more of the dividend money than is necessary for
the operation of the public education portion of general
government. He remarked that education is the most highly
supported service by the public. He submitted the amendment
hoping that it would help to pass the bill and the
constitutional amendment.
The amendment to Amendment #1 reads:
Page 3, lines 19-20:
Delete all material and insert:
"(1) not more than 40 percent may be appropriated for
public education;
(2) not more than 60 percent may be appropriated to
the dividend fund"
Vice-Chair Meyer commented that the 60-40 split is closer to
what the "Conference of 55" had recommended. He agreed that
40% is appropriate for public education, but expressed
concern that 50% could also be appropriated for education in
the 50-50 split. He thought that 50% would get the
Legislature closer to the amount needed for education. He
thought the discussion would center on the 40-60 split or
50-50 split. He indicated that he's inclined to leave it at
50-50 but would agree to change public education to 50% in
(1) of Amendment #1.
Representative Hawker agreed with Vice-Chair Meyer's
thinking. He drew attention to the new fiscal note from the
Department of Revenue, dated 3/22/04 at 12:30 pm. The
analysis gives current projections of appropriations
available to the Legislature's discretion under the adoption
of the 5% POMV in a constitutional amendment. He noted that
in FY 2006, the 50-50 split breaks out Public Services and
Per Capita Dividend at $641 million each. It climbs to
about $800 million each in FY 2011. Combining the two
figures totals about $1.2 billion in FY 06 and $1.6 billion
in FY 11. Looking at immediate need, the proposed amendment
would increase the amount appropriated by 10% from 50% to
60% for an approximate additional $120 million into
dividends and away from public services, and perhaps
education.
Representative Hawker discussed the attempt to increase
education funding by about $90 million a year for all future
years, asking where it will come from. He doubted that the
current $30 per barrel oil price would be sustained. As that
price declines, he said the state would have to "scratch" to
meet the recurring budget requirements. He voiced reluctance
to designate that extra 10% or $120 million to dividends
when it is needed for schools. He noted that the schools
need an additional $30 million to $40 million above the $90
million each year. He calculated that $120 million in a per
capita dividend for 600,000 residents has a net effect of
$200 each. He noted that public testimony this year
predominantly asked the Legislature to pay for schools first
and expressed support for using some of the state wealth for
state programs. He was not inclined to support the
amendment.
Representative Croft spoke against Amendment #1 for
different reasons. He said that it would amend a statute,
and it doesn't matter what those two sections are because
they give a false perception to the public as long as the
words "may be appropriated" are used. It's a statement that
these percentages could be used for public education or
dividends or for anything, and different numbers could also
be used. The language doesn't put any substantive
restrictions on what the Legislature can and cannot do.
Different percentages wouldn't guarantee the result, or
restrict the power of appropriation. He doubted that the
amendment makes the difference the sponsor intended, and
said that it gives a false impression.
Co-Chair Williams asked how the change from 50% to 40% for
state services, amounting to about a $200 million reduction,
would affect the cash flow for payout.
CHERYL FRASCA, DIRECTOR, DIVISION OF MANAGEMENT & BUDGET,
OFFICE OF THE GOVERNOR replied that she perceived the issue
to be the amount of shortfall over the next 5 to 6 years.
She said if the assumption is flat spending, it averages
between $700 and $800 million in each of the next 5 or 6
fiscal years based on the fall forecast. The pending
increase in K-12 funding raises it by another $85 million.
She said that 50% helps a lot in filling the gap, and 40%
helps "not quite as much."
Co-Chair Harris agreed with Ms. Frasca if the intention is
to fill the gap only with Permanent Fund earnings. He
argued that 40% plus other revenues from the gas line or an
income tax would achieve the goal. The budget could easily
be balanced on 100% of the earnings of the Fund. Ms. Frasca
responded that is correct but she said that she "based it on
what has been passed so far."
Co-Chair Williams agreed with Representative Croft that the
split can be "dressed," but he observed that spending on
education is a selling point for the public. He expressed
that the state can't afford a "wish list" of a gas line, an
income tax or high oil prices with a fiscal gap of $600-700
million a year. He said, the Permanent Fund is a rainy day
fund, and "It's raining out there, and I don't want to get
wet." He spoke for taking care of state services, and said
that he strongly opposed the amendment.
Co-Chair Harris questioned adding "shall" rather than "may"
and asked if it would cause a legal problem.
MS. TAMARA COOK, DIRECTOR, LEGISLATIVE LEGAL AND RESEARCH
SERVICES, explained that fundamentally it wouldn't matter in
the context of the two provisions. The lead-in language is
mandatory, which states "appropriations for a specific
fiscal year are limited as follows." With the insertion of
the language, "not more than," some discretion is built in,
whether "shall" or "may" is used. The language says the
Legislature can go up to a certain percentage for a certain
purpose. In any case, statutorily the Legislature cannot
dedicate revenue. Ms. Cook said, from that point of view, it
may be that this provision would not be enforceable,
depending on the form of the constitutional amendment when
it's adopted. She hastened to remind the committee that the
current allocation in AS 37.13.145 repealed in this bill is
also not enforceable as a dedication. She expressed that it
has been very potent in explaining the behavior of the
Legislature with respect to the use of Permanent Fund
income. To that extent, she concluded, there is no reason to
suspect that the new provision 143 [Sec. 37.13.143] would
have less political force.
Co-Chair Williams asked for clarification that currently the
Legislature may use the Permanent Fund in any way it wishes.
Ms. Cook affirmed, saying that the Legislature is restricted
to the use of the Fund income, but there is currently no
restriction in the Constitution regarding how that income
can be used. The Legislature statutorily has elected to
distribute it under a formula providing for dividends and
inflation proofing. She said it has mathematically resulted
over the years in an accumulation of additional money in the
earnings reserve account. She noted that that statute also
could not be enforced as a dedication, and it has been
adhered to by the Legislature because of the public policy
decision it makes every year.
Co-Chair Williams asked if the Legislature has ever used any
part of the Permanent Fund earnings for state services. Ms.
Cook thought that once or twice small amounts from the
earnings reserve or income account were used to reimburse
litigation expenditures of the Department of Law when it was
at fault in litigation. She said there might have been other
isolated instances involving very small amounts.
Representative Hawker noted that over the last 8 years since
1996, the Legislature has appropriated over $238 million
from Permanent Fund earnings for other purposes.
Appropriations to the Department of Corrections through
provisions in statute allow taking dividends from felons to
use for the department's operations. Supplemental social
service benefits are paid to recipients who also receive
dividends. The Legislature has also funded administrative
costs of the Departments of Revenue, Public Safety, and Law.
In response to a question by Representative Stoltze,
Representative Hawker affirmed that it is money already
appropriated for dividends that has been redirected.
Ms. Cook agreed that Representative Hawker is correct. She
cited AS 37.13.145, the distribution system that puts a set
formula amount into the dividend fund. She clarified that
in the dividend fund statutes, the Legislature also
identified some appropriations that are taken out of the
dividend fund, not for the distribution, but for the
purposes Representative Hawker has itemized. It is part of
the dividend program.
Co-Chair Harris commented that constitutionally, 25% of oil
royalties go into the Permanent Fund automatically, so it
was felt that 25% or more can toward the operations of oil
and gas to help perpetuate and build up the Fund.
Co-Chair Williams noted that the Legislature hasn't used the
Permanent Fund earnings since enactment. Ms. Cook agreed
that it is fundamentally true. As the earnings have
accumulated, the Legislature has swept the additional
earnings back into the principal of the Permanent Fund
through a special act of appropriation.
Co-Chair Williams commented that if this measure passed
right now, it would be difficult to change the numbers up or
down. He recommended that the Legislature can always pay
more to the dividend distribution, but it can't lower the
dividend amount.
A roll call vote was taken on the motion to adopt the
amendment to Amendment #1.
IN FAVOR: Chenault, Foster, Harris
OPPOSED: Stoltze, Croft, Fate, Hawker, Joule, Meyer, Moses,
Williams
The MOTION FAILED (3-8). Amendment #1 was not adopted.
Vice-Chair Meyer agreed with Co-Chair Harris in dedicating
money to education in statute. He proposed a conceptual
Amendment #2 using the 50-50 split that would state, "50%
may be appropriated for public education."
Amendment #2 reads:
Page 3, line 19:
(1) not more than 50 percent may be appropriated for
public education;
Amendment #2 was adopted without objection.
HB 298 was heard and HELD in Committee for further
consideration.
HOUSE JOINT RESOLUTION NO. 9
Proposing amendments to the Constitution of the State
of Alaska relating to an appropriation limit and a
spending limit.
Co-Chair Harris MOVED to ADOPT Work Draft 23-LS0435, Version
Z dated 3/19/04. There being NO OBJECTION, it was so
ordered.
MR. PETER ECKLUND, STAFF TO CO-CHAIR WILLIAMS, explained
that line 7 in Section 16, would change the average to three
of four fiscal years from an average of two of four fiscal
years in the previous version. He said that it is an
attempt to smooth out the starting point between fiscal
years, which Mr. Tangeman could explain, and he noted the
chart (copy on file) showing it in visual format.
MR. BRUCE TANGEMAN, FISCAL ANALYST, LEGISLATIVE FINANCE
DIVISION stated that the previous version included one base
year two years prior in order to get an accurate base year.
He explained that it was because last year, or our current
FY 04, does not yet include supplemental appropriations.
The problem was that it could allow a stair-step of the
appropriation: if the Legislature doesn't appropriate the
full limit one year, but does the following year, there
would be a gap causing a stair step in future years.
TAPE HFC 04 - 62, SIDE B
Mr. Tangeman continued stating that the change smoothes out
the low years when less than the full limit is appropriated.
Mr. Ecklund continued discussing the changes in Work Draft
Version Z. The change to Section 16(b) on page 1, line 16,
would provide that if a future Legislature desired to exceed
the spending limit, it could do so by two methods.
Exceeding by 2% would require a 2/3 vote of both houses, and
exceeding by a further 2%, for a total of 4%, would require
a ¾ vote of both houses.
Mr. Ecklund explained that the change on page 2, line 7, in
the last part of (b) states that any exceeding of the limit
must be done in a separate appropriation bill. A future
Legislature wishing to exceed the spending limit by, or up
to, 2% or 4% would have to introduce separate legislation
and get a 2/3 vote for 2%, and a ¾ vote for 4% increases.
Representative Croft questioned whether the change on page 1
would recreate the supplemental problem in the new draft by
using the earliest 3 of the 4 preceding fiscal years. Mr.
Tangeman clarified that FY 04 would be skipped, and FY 01,
FY 02 and FY 03 would be averaged.
Representative Croft asked how the "anti-log rolling"
section would work if the operating and capital budgets both
passed but exceed the limit by 4%, and which of the two
would require the 2/3 vote. He asked if it would be similar
to the Constitutional Budget Reserve special vote
provisions. Mr. Ecklund replied, with a limit that used the
prior three fiscal years averaged and adjusted for half of
the population and the income increase, that would be the
limit for the operating and capital budgets. To exceed that
limit- to go over 3.5%- for capital or operating spending, a
separate piece of legislation would have to be introduced
and voted on.
Representative Croft continued discussing a hypothetical
situation and reiterated his question of which appropriation
would stand alone. Mr. Ecklund clarified through example
that if the cap were $3.5 million, the operating and capital
budgets could not exceed it. As the budgets were developed,
if it appeared that they would exceed the cap, items would
be pulled and put in a separate piece of legislation. The
intent was to highlight and separate the exceeding of the
limit instead of burying it in the operating and capital
budgets requiring a lot of successive votes. The intent was
to make it less confusing.
Representative Croft questioned how it would work in
practical effect, if the budgets run up to the cap in every
fiscal year. He said that a separate appropriation might be
needed each year to assure the gap in the operating budget
would be filled. Mr. Ecklund replied that it is hard to
anticipate future events, but the concept is based on a hard
limit that can't be exceeded. The intent is to build in a
safety valve to highlight what the percentage exceeding the
limit is, and to conduct separate votes on separate pieces
of legislation.
Co-Chair Williams commented that he and Representatives
Stoltze and Hawker, and Mr. Ecklund worked with Ms. Frasca
to draft the changes.
Mr. Ecklund continued discussing the changes. On page 2,
line 21, the debt service of General Obligation (GO) Bonds
was added to the exemptions from the limit. On page 3, line
1, (12) the new language mirrors that in statute, in order
to include an exception such as the Kodiak Launch Facility.
He explained this is intended not to penalize the Facility
for getting more business income. In Section 30 on page 3,
the language stating the ballot proposition would come up
again in 2010 wasn't changed. He explained that a "yes"
vote means the voter wants to keep the spending limit, and a
"no" vote means the voter rejects it.
Representative Hawker commented that the base indexing is
the average annual percentage rate change for state
population and personal income. One factor that is not in
the index is the inflation factor or Consumer Price Index
(CPI). He asked the sponsor's and committee's thoughts on
whether the CPI ought to be in the base indexing. He
referred to a chart by Legislative Finance (copy on file)
which shows that population and income projected from the
base year of 1996 is a higher number than combining
population and the CPI.
Representative Stoltze offered that his original intent was
not to have any indexing at all. He agreed to use the
Governor's Office formula of personal income. He was open
to hearing the committee's thoughts.
Representative Hawker MOVED to ADOPT Amendment #1. Co-Chair
Williams OBJECTED for purposes of discussion.
Amendment #1 reads:
Page 2, line 12:
Delete "of Alaska permanent fund income"
Insert "from the Alaska permanent fund"
Representative Hawker explained that the amendment involves
an addition to the exemptions not subject to the spending
limit. The Permanent Fund money dedicated to dividends
should be exempted. On page 2, line 12, the language
reflects the current statute in which dividends are paid
from Permanent Fund income, and Amendment #1 would make the
language more encompassing: to appropriations from the
Permanent Fund for payments of dividends. He believed that
the language would accommodate either a POMV or the current
statute, depending on what the public decides.
Representative Stoltze asked if the spending limit would
allow for money to come out of the Permanent Fund principal
by the nature of this language. He asked for guidance from
legal counsel.
Ms. Cook did not think it would create the concern that
Representative Stoltze articulated. She did not see
subsection (c) as granting authority to make any particular
type of appropriation. It simply states that an
appropriation would not be counted toward the spending
limit. She said that the extent of the power of the
Legislature to make an appropriation will be handled under
the constitutional provision for the Permanent Fund in
Section 15, whether it is amended or not. Ms. Cook pointed
out that if it is not amended, and HJR 9 were to pass,
obviously any appropriation from the Fund would have to be
from income. She continued, if it is amended, and HJR 9
were to pass, obviously there would be no distinction
between income and principal, but any appropriation made
would be subject to a limit based on Percent of Market
Value.
Representative Stoltze expressed that if HJR 9 were to pass,
the legislative record would be very important. He asked Ms.
Cook to provide her comments as a legal opinion to the
committee. Ms. Cook replied that she would.
There being NO further OBJECTION, Amendment #1 was adopted.
Co-Chair Williams MOVED to adopt Amendment #2.
Representative Stoltze OBJECTED for the purposes of
discussion.
Amendment #2 reads:
Page 3, line 7, following "Section 30.":
Insert "Contingent Effect and Effective Date;"
Page 3, line 7:
Delete "(a) The"
Insert "(a) The 2004 amendment relating to an
appropriation limit (art. IX, sec. 16) takes effect only if
a 2004 amendment relating to and limiting appropriations
from the Alaska permanent fund based on an averaged percent
of the fund market value (art. IX, sec. 15) is approved by
the voters and takes effect. If the 2004 amendment relating
to an appropriation limit (art. IX, sec. 16) under this
subsection takes effect, it takes effect on the effective
date of the 2004 amendment relating to and limiting
appropriations from the Alaska permanent fund based on an
averaged percent of the fund market value (art. IX, sec.
15).
(b) If the"
Page 3, line 8, following "(art. IX, sec. 16)":
Insert "takes effect under (a) of this section,
it"
Page 3, line 10:
Delete "(b) Notwithstanding Section 1 of Article
XIII,"
Insert "(c) If it takes effect under
(a) of this section,"
Page 3, following line 15:
Insert "(d) To the extent this section conflicts
with Section 1 of Article XIII, this section prevails."
Co-Chair Williams explained that Amendment #2 basically
states that if the POMV doesn't pass, this measure doesn't
pass.
Representative Joule commented that it would be asking the
voters to approve two constitutional amendments, but
Amendment #2 would link one to the other. He questioned what
would happen if the voters chose only one, and he asked if
their votes don't count.
Vice-Chair Meyer agreed with Representative Joule. He
suggested that the spending limit should move forward
because if some new sources of revenue were passed, the
Legislature would want to guarantee a limit to spending. If
the voters were to approve HJR 9, that is also what they
would want, regardless of passage of the POMV. He objected
to the amendment.
Representative Hawker agreed that the spending limit
amendment would stand on its own merits. The real impetus
for the sponsorship of HJR 9 was to avail of some of the
Permanent Fund earnings for general government so that the
public would have confidence that future legislatures would
not spend the money frivolously. He stated that HJR 9 was
originally brought forth as part of a fiscal legislation
package, and he felt that there is strong merit to having
them linked. Representative Hawker said that he didn't feel
this disrespects the individual voter who might adamantly
prefer one to the other. He has listened to the counsel
from the Minority Leadership who require a comprehensive
fiscal package that will work for future years. He
concluded that he supports Amendment #2.
Representative Stoltze expressed that passage of the POMV
will require building the trust of the voters. He did not
think that tying HJR 9 with the POMV would build that public
confidence. He thought that both measures should prevail or
fall on their own merits. He did not want to lose votes on
his measure. He stated that he did not support Amendment #2
although he respected the motivations of its sponsor.
Representative Croft commented that it prohibits the
dividend protection as a spending cap. He thought that a
logical approach would be to spend no more money than is
available and not touch the revenue source, which is the
type of limit that individuals impose on themselves. He
voiced concern with the proposed approach while commending
the process presented by Representative Stoltze. He said
that Amendment #2 precludes the people from choosing the
alternative form of spending cap. He stated that if the
public rejects dividend protection, they don't get a
spending cap, and the public will get neither if they vote
down the POMV.
Representative Croft pointed out the tenor in Amendment #2
is that the Legislature can be trusted to manage the
Permanent Fund, but it cannot be trusted on spending in
future years. He expressed concern that the POMV and the
spending cap should not be tied together. He felt that
constitutional amendments must be done thoughtfully and
carefully because they remain in effect for a long time. He
worried that it is inappropriate to say, "if you don't let
us take half your dividend, we won't promise to be good with
your money."
Co-Chair Williams commented that he has heard talk that the
only way he would support the POMV is if a spending cap was
put on it. He stated he has been, and remains, opposed to a
spending cap because he believes it goes against the
Constitution to give up the Legislature's right to
appropriate. He expressed concern that the way the bill is
currently written, a 2% increase requires 27 votes, and a ¾
vote on 4% would put the Legislature in the same position
that it's in at the end of session with the ¾ vote [CBR].
He expressed that he does not distrust the electorate and he
supports the amendment,
A roll call vote was taken on the motion to adopt Amendment
#2.
IN FAVOR: Fate, Foster, Hawker, Williams
OPPOSED: Chenault, Croft, Joule, Meyer, Moses, Stoltze,
Harris
The MOTION FAILED (4-7). Amendment #2 was not adopted.
HJR 9 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 236
An Act imposing a tax on employment; and providing for
an effective date.
Co-Chair Harris MOVED to ADOPT Work Draft 23-LS0921, Version
X dated 3/19/04. There being NO OBJECTION, it was so
ordered.
Representative Hawker announced that Representative Wilson
was unable to attend the hearing and that Mr. Ecklund would
explain the changes in the proposed committee substitute.
MR. PETER ECKLUND, STAFF TO REPRESENTATIVE WILLIAMS, noted
that Version X deletes from Version W the lines 13-28 on
page 2, subsection (d). He explained that this deletes two
triggers: one where the tax would go into effect if the CBR
is less than $1 billion, and the other where the trigger
goes off when the CBR goes higher than $2.5 billion.
Mr. Ecklund noted a change adding new language requested by
the Department of Revenue on page 2, lines 30-31. It states
"The Department of Revenue may, if it will result in cost
savings for the state in the administration of the tax, for
employers in the administration of the tax, or for both."
Mr. Ecklund explained that the Department of Labor receives
federal funds with restrictions on how the monies can be
used, and the department wanted to ensure that the
Legislature would not require it to cooperate in ways that
didn't make sense.
Representative Hawker expressed that the sponsor,
Representative Wilson, is in concurrence with the proposed
changes.
Representative Croft asked what difference the word "may"
makes when the department can do whatever it wants. Mr.
Ecklund affirmed that the Department of Revenue asked for
the language. Representative Croft also questioned the
meaning of the words, "or for both."
Representative Croft asked why the trigger was removed from
Version X. He noted that the billion dollar minimum amount
in the Constitutional Budget Reserve has been important in
the discussions of both Governor Murkowski and the
Conference of 55.
Co-Chair Williams replied that this would generate $42
million a year, and to start up a process and then stop it
would cost more. The people of the state are asking for this
type of tax.
Representative Croft MOVED to ADOPT Amendment #1. Co-Chair
Harris OBJECTED.
Representative Croft explained that his office talked to the
National Conference of State Legislatures (NCSL) about every
state's income tax structure. He noted that 35 states have
some kind of income tax that is graduated, but none have
graduated it downward, or charged a higher percentage for
poorer people. These 35 states adopted the concept that
wealthier people should pay a higher percentage of their
income on an income tax. If each person was taxed $100, as
you go up in income level, it becomes a smaller and smaller
percentage of that income. If a person is extremely wealthy,
it is a miniscule percentage of that income. He is not
proposing any substantive amendments to the bill but feels
it should be titled correctly. He said it should be known
as the only regressive income tax in the nation.
Representative Hawker stated that this bill is known as a
head tax, and he asked the sponsor of the amendment to
consider changing his proposed language to "We've All Got a
Stake in the Future of Alaska Act." He said that's the
point of this bill. It is not designed as a comprehensive
income tax, but as an ante up for participating in the
bounty of Alaska.
Co-Chair Harris asked Representative Croft when the state
passed a school tax and if it was $10 per year for everyone
regardless of income level. Representative Croft affirmed
that it was $10 for everyone. Co-Chair Harris asked if he
thought this is different. Representative Croft said that
at the time, there was a progressive income tax included, so
this is an alternative minimum.
Co-Chair Williams commented that he had suggested a $100
school tax last year when this was introduced.
Representative Croft commented on "class responsibility."
He felt that there is nothing fundamentally unfair about the
idea of upper incomes paying proportionately more.
Conservatives make the argument for a flat tax. He noted
that only regressive ideas are on the table--proposals that
would take from the poorest members of society. He said
that this title is at least honest about what this bill
does. He didn't want this measure to be a "trick" for some
later tax. He thought that this is the only regressive tax
in the nation and it deserves further discussion.
Co-Chair Harris agreed that there's no doubt that the bill
is based on people who earn income. He discussed current
user fees and taxes, noting that poor people pay the same
amount as do rich people. Everyone benefits from education;
he expressed concern that the Legislature can't mandate that
this will go to education, just as it can't dedicate the
Permanent Fund to education. It can be called an education
fund but Co-Chair Harris said that it doesn't guarantee it
will be appropriated to education. It's a user fee.
Representative Hawker commented that the characterization of
this as a regressive device intrigued him. He pointed out
that the bill was crafted to create a huge exemption for
folks who have no jobs and exist purely by subsistence or
public welfare or retirement income. The State is looking at
a basis to generate earnings to support public institutions,
and in this case, the base is the people who are working.
TAPE HFC 04 - 63, Side A
Representative Hawker continued, in aggregate it is a
substantial contribution to education. It seems a reasonable
approach and looks at value for value. It asks working
people to give a small amount back to the state.
A roll call vote was taken on the motion to adopt Amendment
#1.
IN FAVOR: Croft
OPPOSED: Fate, Foster, Hawker, Joule, Meyer, Moses, Stoltze,
Chenault, Williams, Harris
The MOTION FAILED (1-10). Amendment #1 was not adopted.
Vice-Chair Meyer said he would not make an amendment without
the bill sponsor being present. He noted on page 5, line 6
where it says, "the legislature may appropriate the
estimated amounts to be collected and separately accounted
for" under this section for education. He appreciated that
this would go to education. The Legislature has talked
about inflation proofing education for some time, and he
spoke in favor of a source of money to inflation-proof the
Foundation Formula. He said he would like to change the
word "may" to "shall" because it is a little stronger, even
though money can't be dedicated. He would wait to discuss
it with the sponsor.
Discussion ensued regarding whether the language change
would carry any weight.
Vice-Chair Meyer stated his understanding that there would
be legal concerns in charging out-of-state workers twice the
amount charged to in-state workers, or $200.
Representative Stoltze introduced Mr. Bill Sherrill, who
works for the Transportation & Infrastructure Committee in
the U.S. Congress.
BILLIE JO HANSEN, REPRESENTING SELF, VIA TELECONFERENCE,
WASILLA, voiced opposition to the bill because she felt that
it would penalize the retired person who moves off of social
security to work part-time to make ends meet. She thought it
would also penalize motivated youth in the workforce who may
work only one day a week for eight hours. She felt there
are other ways to do this, and it is not appropriate to call
it an education tax. She suggested calling it a work permit
tax and setting it on a percentage rate of income for the
year. She would rather give $100 to a school for her son's
education than to the General Fund when it's not
specifically appropriated to education.
HB 236 was heard and HELD in Committee for further
consideration.
HOUSE JOINT RESOLUTION NO. 26
Proposing amendments to the Constitution of the
State of Alaska relating to and limiting
appropriations from and inflation proofing the
Alaska permanent fund by establishing a percent of
market value spending limit.
Co-Chair Williams again brought HJR 26 before the committee
to discuss Work Draft Version U that was adopted earlier in
the meeting. He noted that Amendment #1 by Representative
Stoltze was adopted and incorporated into Version U.
Representative Stoltze MOVED to ADOPT Amendment #2.
Representative Hawker OBJECTED.
Representative Stoltze explained the amendment reflects his
concern about protecting the principal from invasion in the
event a POMV is implemented in the Constitution. He had the
amendment drafted after listening to testimony from the
Mental Health Trust and Permanent Fund Corporation staff.
Amendment #2 reads:
Page 2, line 3:
Delete "five"
Insert "four"
In response to a question by Co-Chair Harris,
Representative Stoltze explained that the amendment changes
the percentage, on line 2, page 3 of the new version. It
proposes to make it 4% of the value.
Representative Hawker agreed with the intent of the
amendment to ensure protection of the value of the Permanent
Fund over time. The issue has been given a great deal of
technical analysis and consideration, but he was personally
convinced that 5% would protect Fund over time. He discussed
the ten-year rolling real rate of return for the Permanent
Fund and why 5% is appropriate. He reminded the committee
of statutory enabling language in HB 298 that provides that
if the 10-year real rate of return drops below 5%, the
Legislature would be limited to that lower number for draws.
He concluded that there is a compelling argument to keep it
at 5%. He noted that the constitutional amendment states
"up to 5%." He could not support Amendment #2.
Vice-Chair Meyer commented that in the community meetings on
POMV, people constantly returned to the 5%. He is
comfortable with 5% and up to the 5%. He expressed that
adequate safeguards are already in place.
Representative Croft commented that 4% is a more prudent
number. He supported erring on the side of caution and
conserving more for Alaska's children and grandchildren. He
said 5% is defensible, but "on the outer edge of what most
endowments take."
Co-Chair Harris expressed support for Amendment #2.
Co-Chair Williams stated that he objected to Amendment #2
for the reasons that Vice-Chair Meyer and Representative
Croft expressed. After working on the Percent of Market
Value for the past six years, he believes that 5% is a good
and proven payout. He would vote against the amendment.
A roll call vote was taken on the motion.
IN FAVOR: Joule, Stoltze, Chenault, Croft, Harris
OPPOSED: Fate, Foster, Hawker, Meyer, Williams
Representative Moses was absent.
The MOTION FAILED (5-5) and Amendment #2 was not adopted.
Co-Chair Harris MOVED to ADOPT Amendment #3. Co-Chair
Williams OBJECTED for purposes of discussion.
TOM WRIGHT, STAFF TO REPRESENTATIVE HARRIS, explained that
Amendment #3 would establish an earnings reserve account to
ensure that the corpus of the Fund would not be touched and
would be a separate entity. Language was inserted on page
2, beginning on line 4, to provide a mechanism within this
amendment to appropriate funds for the operation of the
Permanent Fund Corporation. There is also language providing
to distribute a program of dividend payments for state
residents and public education after paying the costs of
operation. Conforming language on page 2, subsection (b),
line 19, provides that after the effective date, the costs
up to June 30, 2004 prior to the passage of this amendment
will be appropriated.
Co-Chair Harris asked if this constitutional language
protecting the corpus of the Fund provides that if the
earnings are less than 5%, the payout would be less than 5%
for the first five of six fiscal years. Mr. Wright
affirmed.
Amendment #3 reads:
23-LS1006\V
Cook
3/22/04
CS FOR HOUSE JOINT RESOLUTION NO. 26( )
IN THE LEGISLATURE OF THE STATE OF ALASKA
TWENTY-THIRD LEGISLATURE - SECOND SESSION
BY
Offered:
Referred:
Sponsor(s): HOUSE RULES COMMITTEE BY REQUEST OF THE LEGISLATIVE BUDGET AND
AUDIT COMMITTEE
A RESOLUTION
Proposing amendments to the Constitution of the State of
Alaska relating to the Alaska permanent fund, establishing
the earnings reserve account, and permitting distribution
from the account only for permanent fund dividends, costs of
administering the permanent fund, and public education.
BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF ALASKA:
* Section 1. Article IX, sec. 15, Constitution of the State of Alaska, is
amended to read:
Section 15. Alaska Permanent Fund. (a) At least twenty-five per cent
of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral
revenue sharing payments and bonuses received by the State shall be placed in a
permanent fund, the principal of which shall be used only for those income-
producing investments specifically designated by law as eligible for permanent
fund investments. The earnings reserve account is established as a separate
account in the fund. All income from the permanent fund shall be deposited in
the earnings reserve account as soon as it is received. Appropriations may
only be made from the earnings reserve account as provided in (b) of this
section [GENERAL FUND UNLESS OTHERWISE PROVIDED BY LAW].
* Sec. 2. Article IX, sec. 15, Constitution of the State of Alaska, is amended by adding
a new subsection to read:
(b) Appropriations from the earnings reserve account for a fiscal year may
not exceed five percent of the average of the market values of the fund on June 30
for the first five of the six fiscal years immediately preceding that fiscal year.
Appropriations from the earnings reserve account may be made only for the
following purposes:
(1) costs of administering the permanent fund;
(2) a program of dividend payments for State residents established
by law together with costs of administering that program; and
(3) public education.
* Sec. 3. Article XV, Constitution of the State of Alaska, is amended by adding a
new section to read:
Section 30. Transition. (a) On the effective date of the 2004
amendments relating to the Alaska permanent fund (art. IX, sec. 15), the
unencumbered, unappropriated balance of the earnings reserve account
established under AS 37.13.145(a) is added to the earnings reserve account
established in the Alaska permanent fund.
(b) Section 15(b) of Article IX first applies to appropriations for fiscal
year 2006. Appropriations from the permanent fund for fiscal year 2005 are
subject to Section 15 of Article IX as that section read on June 30, 2004.
* Sec. 4. The amendments proposed by this resolution shall be placed before the
voters of the state at the next general election in conformity with art. XIII, sec. 1,
Constitution of the State of Alaska, and the election laws of the state.
Representative Croft asked if the language on page 2, lines
9-10 protects the current dividend structure in law. Mr.
Wright clarified that it states a program of dividend
payments for state residents, and it doesn't prescribe a
percentage or an amount. In response to a question by
Representative Croft, Mr. Wright said it would apply to the
current statute.
Representative Croft asked if the Legislature could change
the current statute on the dividend program under this
language. Mr. Wright pointed out that the Legislature
always has the authority to change the dividend program.
Co-Chair Harris explained that Amendment #3 would establish
in the Constitution three things that the Legislature can do
with the earnings of the Permanent Fund: pay the costs of
administering the Fund, pay the dividend, and appropriate
for public education. It doesn't give percentages.
Representative Croft commented that the amendment language
looks like a dividend protection but it could be anything
established by law.
Co-Chair Harris observed that the Legislature could spend
all the earnings of the Permanent Fund if it so chose, but
this amendment provides some small protection to the
dividend.
Co-Chair Williams asked if Amendment #3 changes everything
and gives a new direction to HJR 26. Co-Chair Harris replied
that it's not a complete change, but it is a lot more
specific.
Co-Chair Williams requested that the committee not vote on
Amendment #3 at this time in order to have time to review it
before the next hearing.
Representative Hawker asked Co-Chair Harris to consider
dividing Amendment #3 into the two distinct issues embodied
in Section 1 and Section 2 of the amendment.
Representative Joule commented that there is currently an
earnings reserve account and he asked how this would be
different. Mr. Wright pointed out the only difference is
that this amendment states there is a separate earnings
reserve account and places it in the Constitution.
Representative Fate MOVED to ADOPT Amendment #4. Co-Chair
Williams OBJECTED for purposes of discussion.
Representative Fate expressed concern over the ability of
the Legislature to fulfill its prime purpose of
appropriating money. He expressed that any percentage is
subject to a warranted change, and the ten-year rolling
average has been well researched. He said he is one of the
few members who can recall the Great Depression that lasted
12 years, with double-digit inflation. He reiterated that
the prime responsibility of the Legislature is to
appropriate, and if it can't, its function has been eroded.
Representative Fate explained that Amendment #4 changes six
words. On line 2, instead of saying a percentage of 5%, it
codifies in the Constitution that there will be a percentage
determined by law.
Amendment #4 reads:
*Sec.2. Article IX, sec. 15, Constitution of the State of
Alaska, is amended by adding a 01 new subsection to read:
02(b)Appropriations from the permanent fund for a fiscal year shall be
03 a percentage of[on may not exceed five percent of] the average of the
04 market values of the fund on June 30 for the first five of the six
fiscal years
05 immediately preceding that fiscal year as determine[d] by law.
MR. BOB BARTHOLOMEW, CHIEF OPERATING OFFICER, ALASKA
PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE, compared
Amendment #4 to Work Draft U. The proposed work draft puts a
spending limit on the Permanent Fund equal to the Board of
Trustees' recommendation of no more than 5%. The proposed
amendment maintains the concept of basing appropriations on
market value, but states that the spending limit would be
put into statute instead of the Constitution, on an annual
basis.
Representative Croft noted previous discussions of the limit
of 5%, which would allow lower appropriations but not
higher. This amendment would allow higher appropriations.
The trade-off for POMV is the spending limit discipline of
5% in good years in order to reserve for the bad. He
expressed concern that in a year when oil prices and the
market are up, the inclination to ignore an income tax or
oil tax and the pressure to spend up to 6% or 7% might be
irresistible. This amendment gets rid of the needed
discipline.
Representative Hawker agreed with Representative Croft and
expressed concern that Amendment #4 clearly allows
overspending in the good years. He pointed out that it
violates three of the five reasons the Permanent Fund
Corporation argues for Percent of Market Value: maintaining
the purchasing power of the Fund, preventing overspending in
good years, and making payout amounts more stable from year
to year. He observed that the purpose of the POMV set
percentage is to stabilize the amount of appropriation from
the Fund and give absolute guarantee of the long-term value
of the Fund. He respectfully did not concur with the
amendment.
Representative Fate informed the committee that his
amendment was drafted in concurrence with the spending limit
bill [HJR 9] before the Committee. For him, it does not
come down to a short, or even a 25-year term consideration
of the growth of corpus of the Fund. In his view, although
he agreed with the concept of the measure, passage of HJR 26
would erode the prerogative and responsibility to
appropriate by the Legislature. It is not his concern
whether the Fund even grows, but putting from zero to 5% in
the Constitution establishes an appropriation. He introduced
the amendment because of the basic question of the functions
and responsibilities of the Legislature, not in order to
allow 7% or 8% in the future.
Co-Chair Harris asked if the fiscal note for $700 thousand
dated 3-16-04 is still in effect with the bill. Mr.
Bartholomew affirmed, and explained that there are two
additions to the FY 05 budget that the Board of Trustees and
Permanent Fund staff is requesting. Once the Legislature
adopts the constitutional amendment, the Corporation would
fall under the restrictions of the Alaska Public Offices
Commission (APOC) on the authority to advocate. The requests
in the operating budget are for additional authority to
educate and advocate for Percent of Market Value; and if the
Legislature supported that request, to be able use radio,
television and print media to carry out those functions.
A roll call vote was taken on the motion to adopt Amendment
#4.
IN FAVOR: Foster, Fate
OPPOSED: Hawker, Joule, Meyer, Stoltze, Chenault, Croft,
Williams, Harris
Representative Moses was absent.
The MOTION to adopt Amendment #4 FAILED (2-8).
Representative Croft questioned if the Fund would educate in
a non-partisan manner or advocate for POMV. He asked how it
would be found in a fiscal note. Mr. Bartholomew stated that
in talking with the APOC, the definitions of education and
advocacy are unclear. He said that if there were specific
lines to draw, the PFC would work with legal counsel on the
authority to comply, as well as the authority language. He
noted that if the language in the operating budget did not
pass, the PFC couldn't spend the $700 thousand.
Co-Chair Harris thought that it would be a "slap in the
face" to the public for the Permanent Fund Corporation,
which is entrusted with the dividend to advocate for POMV.
He questioned using $700 thousand dollars of the Permanent
Fund on advocacy when another entity could assume that role.
Mr. Bartholomew agreed that it would be the preferred way.
He explained that the "feed-back" from the public on the
Percent of Market Value approach indicates that a broad
segment of the public does not understand it. The public is
educated through mass media. The Permanent Fund needs the
authority to speak publicly. To reach the public, you must
go after them, he said.
Co-Chair Harris voiced concern that the Just Say No campaign
gets the message out to many Alaskans who may not be
educated on the issue but are hearing the message. He asked
if people would be "turned off" by the use of $700 thousand
of Permanent Fund money to tell Alaskans what they need to
do. He asked if that had been considered.
Mr. Bartholomew replied that even as the request was written
up, the Board discussed a negative public reaction.
TAPE HFC 04 - 63, Side B
Mr. Bartholomew continued discussing the use of state money
for advocating for the POMV, expressing that the Board of
Trustees believes there is the obligation to educate and
that the benefits outweigh the risks.
Vice-Chair Meyer pointed out that $300 thousand is in the
Supplemental Budget and asked if the $700 thousand is
additional. Mr. Bartholomew addressed the $1.4 million
advocacy, pointing out that the amount could be determined
by campaign parameters. Costs would be split between FY 04-
FY 05, with $900 thousand in FY 05 and $700 thousand derived
from the fiscal note. He said that $200 thousand would come
from other parts of the budget. He expressed that the Board
was very sensitive to the potential negative reaction and it
urged the Corporation not to proceed without legislative
guidance.
Vice-Chair Meyer asked if there would be other than public
sources of funding available if there were only General Fund
money. Mr. Bartholomew answered that the Corporation had not
pursued other sources, and private groups had not contacted
it. The Board would not seek private funding, and as a
public entity, it wouldn't want to have "strings attached."
Vice-Chair Meyer noted that there are opposing groups
raising private money. He suggested a grassroots effort to
be a "Just Say Yes" group, but he acknowledged that it would
be a challenge.
Representative Hawker referred to the fiscal note. He
thought that the opposition groups would not be held to the
same standard of truthfulness and impartiality of the
Permanent Fund Corporation, and he commented that it is easy
to tell people what they want to hear. He voiced concern
over the Legislature's leadership role and responsibility,
and said that if the Legislature lacks faith in its own
convictions on the POMV being the right thing to do, an
inappropriate message could be sent to the public. He
expressed that the dialogue before the public should be
objective, factual and truthful.
Representative Stoltze felt that there is no legitimate
reason to use government money and it would erode public
confidence. He recommended looking at it from a strategy
point of view, and he lauded all the effort that has been
expended.
Co-Chair Williams noted that he agreed with the Permanent
Fund Corporation's approach. He stressed that this is an
important issue for the State of Alaska, and the public
needs to make an informed decision.
Co-Chair Williams stated that HJR 26 would be HELD in
Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 4:15 P.M.
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