Legislature(2017 - 2018)ADAMS ROOM 519

03/13/2018 01:30 PM FINANCE

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01:34:39 PM Start
01:35:58 PM HB267
02:17:10 PM HJR23
02:23:30 PM Public Testimony
02:52:46 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Scheduled but Not Heard
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 267(RES) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 13, 2018                                                                                            
                         1:34 p.m.                                                                                              
1:34:39 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:34 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Tim   Clark,  Staff,   Representative  Bryce   Edgmon;  Sara                                                                    
Chambers,   Deputy  Director,   Division  of   Corporations,                                                                    
Business   and   Professional   Licensing,   Department   of                                                                    
Commerce,     Community     and    Economic     Development;                                                                    
Representative Paul Seaton,  Sponsor; Arnold Liebelt, Staff,                                                                    
Representative   Paul   Seaton;   Jasmine   Levemia,   Self,                                                                    
Petersburg; Representative Andy Josephson.                                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
Tom  Brookover, Division  Director, Department  of Fish  and                                                                    
Game; Nathan Hill, Borough  Manager, Lake Peninsula Borough,                                                                    
King  Salmon; George  Pierce, Self,  Kasilof; Tim  Federico,                                                                    
Self,  Anchorage;  Brenda   Rhodes,  Self,  Anchorage;  Ella                                                                    
Lubin, Self,  Sitka; Gary  McDonald, Self,  Anchorage; Laura                                                                    
Bonner, Self, Anchorage; Liz  Vazquez, Self, Anchorage; Fred                                                                    
Sturman, Self, Kenai.                                                                                                           
HB 267      RELEASE HUNTING/FISHING RECORDS TO MUNI                                                                             
            CSHB  267 (RES  was  REPORTED  out of  committee                                                                    
            with  a "do  pass" recommendation  and with  one                                                                    
            new  fiscal impact  note  by  the Department  of                                                                    
            Fish and Game and  with two previously published                                                                    
            notes, one  with a fiscal impact:  FN2(CED); and                                                                    
            one zero note: FN1(DFG).                                                                                            
HB 285      APPROP: MENTAL HEALTH BUDGET                                                                                        
            HB 285 was SCHEDULED but not HEARD.                                                                                 
HB 286      APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                
            HB 286 was SCHEDULED but not HEARD.                                                                                 
HJR 23      CONST AM: PERMANENT FUND; POMV; DIVIDEND;                                                                           
            HJR 23 was HEARD and HELD in committee for                                                                          
            further consideration.                                                                                              
Co-Chair  Foster  reviewed  the   agenda  for  the  day.  He                                                                    
intended  to move  HB 267  out of  committee. The  committee                                                                    
would continue to take public  testimony on HJR 23 and would                                                                    
take up HB 285 and HB 286, if time allowed.                                                                                     
HOUSE BILL NO. 267                                                                                                            
     "An  Act  requiring  the  release  of  certain  records                                                                    
     relating to big game  hunters, guided hunts, and guided                                                                    
     sport   fishing   activities  to   municipalities   for                                                                    
     verification  of taxes  payable; and  providing for  an                                                                    
     effective date."                                                                                                           
1:35:58 PM                                                                                                                    
Co-Chair Foster  reported that the  last time  the committee                                                                    
heard  the bill  was on  February  27, 2018,  at which  time                                                                    
public testimony was heard. He  reported that his office had                                                                    
not received  any amendments  for the  bill. He  invited Mr.                                                                    
Clark,  aide  to  Speaker  Edgmon, to  the  table.  He  also                                                                    
reviewed the list of available testifiers.                                                                                      
TIM CLARK, STAFF, REPRESENTATIVE  BRYCE EDGMON, relayed that                                                                    
HB 267 gave municipalities that  levy taxes on fish and game                                                                    
guiding  activities access  to  records  submitted to  state                                                                    
agencies    by   hunting    and   fishing    sport   guides.                                                                    
Municipalities  would use  the  records  to cross  reference                                                                    
such activities within their  jurisdiction to verify payable                                                                    
Representative  Wilson asked  which  specific documents  the                                                                    
bill encompassed. She was aware  of the transporter activity                                                                    
report and some  log books. She wondered  what reports would                                                                    
be turned over  by the Department of Fish and  Game (DFG) to                                                                    
the  municipalities. Mr.  Clark responded  that for  hunting                                                                    
activities hunt reports submitted by  guides to the Big Game                                                                    
Commercial   Services  Board   within   the  Department   of                                                                    
Commerce, Community  and Economic Development  (DCCED) would                                                                    
be  turned  over.  He  continued   that  for  sport  fishing                                                                    
activities  sport fish  log books  from sport  fishing guide                                                                    
operations would be released.                                                                                                   
Representative  Wilson  clarified  that Mr.  Clark  was  not                                                                    
talking  about commercial  fisherman, just  sport fishermen.                                                                    
She  asked  for the  name  of  the  hunt report.  Mr.  Clark                                                                    
replied  that he  thought the  report was  referred to  as a                                                                    
hunt  report.  He  suggested  that there  might  be  a  more                                                                    
technical  term used  within DCCED.  There were  transporter                                                                    
reports, but he did not  believe they had the same relevance                                                                    
to the needs of the municipalities.                                                                                             
Representative   Wilson   asked  whether   the   transporter                                                                    
activity report  would be disclosed.  Mr. Clark  deferred to                                                                    
Nathan  Hill  of the  Lake  and  Peninsula Borough  who  was                                                                    
available  online. It  was his  understanding that  the hunt                                                                    
reports  provided  the  needed  cross-referencing  tool  for                                                                    
municipalities.   Representative  Wilson   thought  it   was                                                                    
important to know exactly what reports would be disclosed.                                                                      
1:39:47 PM                                                                                                                    
TOM  BROOKOVER, DIVISION  DIRECTOR, DEPARTMENT  OF FISH  AND                                                                    
GAME (via teleconference), was available for questions.                                                                         
Representative Wilson had a copy  of the fish guide log book                                                                    
and vessel registration and the  2018 salt water charter log                                                                    
book  and vessel  registration. She  asked what  information                                                                    
would be  used from these  documents. She wondered  how much                                                                    
of  the   information  from  the  documents   would  not  be                                                                    
necessary for the purpose of collecting taxes.                                                                                  
Mr.   Brookover   assumed   each  municipality   would   tax                                                                    
differently.  The   information  requested  might   vary  by                                                                    
municipality.  He suspected  that  certain base  information                                                                    
would be useful such as  number of guides, number of fishing                                                                    
days,  and  number of  clients  by  area. He  assumed  other                                                                    
information  would vary.  The Department  of  Fish and  Game                                                                    
would provide  different pieces of information  depending on                                                                    
the detail  needed. In some instances,  the department might                                                                    
see  very   detailed  requests.  In  other   instances,  the                                                                    
department  might  see  much  less  detailed  requests.  The                                                                    
department's approach at the onset  would be to provide only                                                                    
the information  requested rather than  a blanket of  all of                                                                    
the information collected.                                                                                                      
Representative  Wilson suggested  that the  department would                                                                    
not  be turning  over the  log  books as  it received  them.                                                                    
Instead,  the municipalities  would have  to make  a written                                                                    
request for specific information.                                                                                               
Mr. Brookover suggested that  initially the department would                                                                    
provide only  the requested information rather  than the log                                                                    
book  pages in  their entirety.  However, the  bill language                                                                    
would  not  prevent the  department  from  turning over  the                                                                    
information  in its  entirety especially  for municipalities                                                                    
requesting  a high  level of  detail.  The department  would                                                                    
start out providing only the information needed.                                                                                
Representative  Wilson suggested  that it  was possible,  if                                                                    
the  municipalities  did  not believe  the  information  was                                                                    
sufficient, that log  book pages in their  entirety would be                                                                    
Mr.  Brookover replied  that it  was his  understanding that                                                                    
the  bill would  not prevent  the department  from supplying                                                                    
the log  book sheets  in their  entirety. If  a municipality                                                                    
requested all  of the information,  he believed  there would                                                                    
be some discussion about the  level of specificity. However,                                                                    
in the  end, if the  municipality requested a high  level of                                                                    
detail, the  department would  tend to  provide it  once the                                                                    
municipality demonstrated the information was needed.                                                                           
1:43:55 PM                                                                                                                    
Representative   Pruitt  thought   it   sounded   as  if   a                                                                    
significant amount of information  could be transferred to a                                                                    
municipality. He  asked if the information  transferred to a                                                                    
municipality could  potentially be  shared its  assembly. He                                                                    
wondered if the information would become public record.                                                                         
Mr. Clark responded that municipalities  would be subject to                                                                    
the same confidentiality provisions  as state officials. The                                                                    
municipalities  he  spoke  with  had very  strict  chain  of                                                                    
custody  systems  in  place in  their  operations.  He  also                                                                    
pointed out  that a municipal  official would be  subject to                                                                    
criminal prosecution if they  were to breach confidentiality                                                                    
according to existing state law.                                                                                                
Representative  Pruitt  relayed  that initially  when  there                                                                    
were  conversations about  the gasline,  legislators had  to                                                                    
sign   a  non-disclosure   agreement  (NDA)   in  order   to                                                                    
participate. If  they breached the agreement,  they would be                                                                    
in trouble. He wondered how  information would not be leaked                                                                    
out by municipal officials.                                                                                                     
Mr. Clark  deferred to Nathan  Hill to answer  the question.                                                                    
His   understanding  was   that   there  would   not  be   a                                                                    
circumstance where  a borough assembly member  would need to                                                                    
be privy to  the information. It would be dealt  with by the                                                                    
municipal's  financial  advisor responsible  for  collecting                                                                    
taxes. He  was aware of  a lock and  key system at  the Lake                                                                    
and Peninsula Borough. He encouraged Mr. Hill to elaborate.                                                                     
1:47:33 PM                                                                                                                    
NATHAN HILL,  BOROUGH MANAGER, LAKE PENINSULA  BOROUGH, KING                                                                    
SALMON (via  teleconference), did  not have  much to  add to                                                                    
Mr. Clark's  response. The finance  department took  care of                                                                    
the  hunt   reporting  records.  He  would   be  subject  to                                                                    
prosecution if he relayed confidential information.                                                                             
Representative  Pruitt  asked   why  additional  information                                                                    
would be needed. He indicated  hunt dates and locations were                                                                    
the  main pieces  of information  needed.  Mr. Hill  replied                                                                    
that he was  unsure. The information the  Lake and Peninsula                                                                    
Borough was  interested in was  contained in the  hunt guide                                                                    
reports, specifically  the number of days  hunted, the dates                                                                    
hunted, and the locations hunted.                                                                                               
Representative Pruitt  asked if  basic information  could be                                                                    
provided without  releasing other information  and suggested                                                                    
a  summary  of  information.  He wondered  if  there  was  a                                                                    
necessity  to send  all  of the  information  that the  bill                                                                    
allowed.  Mr.  Hill  relayed that  the  borough  needed  the                                                                    
location,  the area,  the number  of guests,  the number  of                                                                    
guides, the number of days, and the dates of the hunt.                                                                          
Representative Wilson  asked if  there was someone  from the                                                                    
big game commercial board. Mr.  Brookover relayed the he was                                                                    
from the Division of Sport Fish at DGF.                                                                                         
SARA  CHAMBERS, DEPUTY  DIRECTOR, DIVISION  OF CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND ECONOMIC  DEVELOPMENT,  introduced                                                                    
Representative  Wilson asked  about  camping information  on                                                                    
the  state's  form. Ms.  Chambers  responded  that the  hunt                                                                    
report did not  require the places where  hunters made camp.                                                                    
The location of  where the game was taken  was required. The                                                                    
department  would be  working with  municipalities regarding                                                                    
the needed information.                                                                                                         
Representative Wilson asked  if the intent of  DCCED was not                                                                    
to  send  the  actual  hunt  record,  but  rather  just  the                                                                    
requested information. She  wondered if municipalities would                                                                    
be asking for the transporter activity report.                                                                                  
Ms.  Chambers responded  that her  understanding of  the way                                                                    
the bill was  written was that hunt  records and transporter                                                                    
activity reports could be  made available to municipalities.                                                                    
However, she thought the  municipalities would be requesting                                                                    
the records  verifying taxes  payable. The  department would                                                                    
only be  obliged to provide  information relevant  to taxes.                                                                    
The  department's fiscal  note and  intent was  to create  a                                                                    
report that  could be generated from  its licensing database                                                                    
to provide  municipalities with the information  needed. The                                                                    
information might  need to be customized  somewhat depending                                                                    
on  a municipalities  request for  information. The  goal of                                                                    
the  department  was  to  provide  the  municipalities  with                                                                    
everything they needed but only what they needed.                                                                               
Representative Wilson  had heard  concerns about  people not                                                                    
completing   the   sport   fishing   reports   because   the                                                                    
information might be used for  something other than DFG. She                                                                    
wondered if Mr. Brookover shared that concern.                                                                                  
Mr. Brookover  responded that  the purpose  of the  log book                                                                    
was  for  managing  the  sport  fishery,  a  very  different                                                                    
purpose than  helping municipalities to verify  tax records.                                                                    
The  department had  questions and  possible concerns  about                                                                    
using the  information for a  different purpose  which could                                                                    
lead  to  different  levels  in   reporting  or  changes  in                                                                    
reporting.  The  data was  used  by  area managers  to  gage                                                                    
effort,  catch,   and  harvest   of  various   species  from                                                                    
year-to-year. The  department also  used the  information to                                                                    
provide  comments and  analysis  to the  Board of  Fisheries                                                                    
regarding  board  proposals   affecting  sport  fishing  and                                                                    
guided  sport fishing.  The  department  had concerns  about                                                                    
guides  reporting differently  or not  reporting because  of                                                                    
their data being used  differently and potentially impacting                                                                    
their operations.  He opined that the  department needed the                                                                    
guides   to   support   the  program   by   providing   good                                                                    
information. He  was uncertain whether  the quality  of data                                                                    
would change as a result  of the legislation. He relayed the                                                                    
importance of guide reporting and licensing.                                                                                    
Representative  Wilson  was concerned  and  had  not put  an                                                                    
amendment  forward.  She was  sympathetic  to  the needs  of                                                                    
municipalities.  However,  she  was  particularly  concerned                                                                    
with interfering with the management of Alaska's fisheries.                                                                     
Mr. Clark  mentioned there were  several letters  of support                                                                    
from several  fishing guide operations.  He also  noted that                                                                    
municipalities were  asking for a  modest tax of $3  per day                                                                    
per  person.  He did  not  believe  guides would  jeopardize                                                                    
their license.                                                                                                                  
Vice-Chair Gara did not have a concern with the bill.                                                                           
Mr. Hill  agreed with what  was being voiced  about members'                                                                    
concerns. The borough was not  seeking more information than                                                                    
Representative  Guttenberg thought  the  issues of  security                                                                    
and  confidentiality were  consistent with  the departments'                                                                    
and the  municipalities'. He thought that  any business that                                                                    
would  change  their  behavior because  of  the  release  of                                                                    
information would highlight a larger problem.                                                                                   
Co-Chair Foster  asked Vice-Chair Gara to  review the fiscal                                                                    
2:02:08 PM                                                                                                                    
Vice-Chair Gara  reported that  HB 267  had 3  fiscal notes.                                                                    
There was  a zero  fiscal note from  the Department  of Fish                                                                    
and  Game with  an appropriation  of wildlife  conservation.                                                                    
The fiscal  note had an allocation  of wildlife conservation                                                                    
and  an  Office of  Management  and  Budget (OMB)  component                                                                    
number of 473. The second  fiscal note was by the Department                                                                    
of  Commerce, Community  and  Economic  Development with  an                                                                    
appropriation  and allocation  of corporations,  businesses,                                                                    
and  professional licensing.  The OMB  component number  was                                                                    
2360 and  had a  one-time expenditure  of $7,700  in receipt                                                                    
services  for  regulations  drafting and  minor  information                                                                    
technology needs.  The third fiscal  note by  the Department                                                                    
of  Fish and  Game had  an appropriation  and allocation  of                                                                    
sport fisheries  with an  OMB component  number of  464. The                                                                    
fiscal note  reflected a one-time expenditure  of $9,100 for                                                                    
personal services  in FY  19. He  relayed that  $6,100 would                                                                    
come  from the  general  fund, and  $3,000  would come  from                                                                    
program  receipts to  process and  tabulate information  for                                                                    
Representative  Kawasaki had  a  question  about the  fiscal                                                                    
note with component  number 464. It noted  $3,000 would come                                                                    
from  receipts received  by 3  municipalities -  about $1,00                                                                    
each.  He did  not understand  the expense  to the  state of                                                                    
Mr.  Brookover  responded  that the  amount  would  pay  for                                                                    
initial  set-up  costs for  the  log  book program  and  the                                                                    
associated database.  It would  provide the ability  for the                                                                    
department to respond to  requests from municipalities based                                                                    
on area.  For example,  there were certain  geographic areas                                                                    
delineated in  the reporting  processes in  which businesses                                                                    
and  guides reported.  A number  of  them spanned  municipal                                                                    
boundaries.  The department  would have  to do  some initial                                                                    
work  to identify  municipal boundaries  in DFG's  database,                                                                    
then    associate    reporting    areas    with    different                                                                    
municipalities.  There would  likely be  other modifications                                                                    
to  the   database  similar  to   his  example.   Also,  the                                                                    
department might  have to make  changes to the log  book. An                                                                    
example would  be adding  a check box  on pages  to identify                                                                    
the municipality in  which a guide operated  for a reporting                                                                    
day.  The  department  estimated  that  it  would  take  one                                                                    
employee two  weeks to implement  changes that  would enable                                                                    
the department to field requests from municipalities.                                                                           
Representative  Wilson asked  about  game  areas. She  asked                                                                    
about  a similar  cost within  the  Department of  Commerce,                                                                    
Community and  Economic Development. Ms.  Chambers responded                                                                    
that  that DCCED's  fiscal note  reflected about  $5,000 for                                                                    
information technology upgrades  and changes. The department                                                                    
expected to face the same challenges as DFG.                                                                                    
2:06:07 PM                                                                                                                    
Co-Chair  Seaton MOVED  to report  Committee Substitute  for                                                                    
HB 267    (RES)   out    of   Committee    with   individual                                                                    
recommendations and the accompanying fiscal notes.                                                                              
Representative Wilson OBJECTED.                                                                                                 
Representative Wilson elaborated that  she thought the state                                                                    
would  be providing  unnecessary information  to be  able to                                                                    
take care  of the  concerns of municipalities.  She believed                                                                    
both  departments could  provide  the necessary  information                                                                    
without  providing  copies  of   log  books.  She  was  more                                                                    
concerned  about   other  negative   impacts  of   the  bill                                                                    
including a change in reporting or a lack of reporting.                                                                         
Representative Wilson WITHDREW her OBJECTION.                                                                                   
Co-Chair Seaton OBJECTED for  discussion. He understood that                                                                    
normally there  would be a  report. However, if there  was a                                                                    
discrepancy in  a guide's report, municipalities  might need                                                                    
to see  the actual reports  that were submitted.  He thought                                                                    
that  both departments  had indicated  they would  be making                                                                    
changes to  their computer systems  to generate  reports. He                                                                    
presumed  that  the only  request  for  individual log  book                                                                    
entries would be if a discrepancy was found.                                                                                    
Representative  Wilson asked  if an  investigation would  be                                                                    
requested  by  the  municipalities, Boroughs,  or  DFG.  She                                                                    
wondered  about a  borough's authority  if an  investigation                                                                    
was deemed necessary.                                                                                                           
Co-Chair Seaton  suggested that if a  discrepancy was found,                                                                    
the original report might need  to be examined. He thought a                                                                    
municipality would take  up a discrepancy with  DCCED or DFG                                                                    
on  a case-by-case  basis. He  assumed that  if guides  were                                                                    
aware  that  reports were  going  from  DFG  or DCCED  to  a                                                                    
municipality,  they  would  submit  the same  numbers  to  a                                                                    
municipality. He provided some additional details.                                                                              
2:11:08 PM                                                                                                                    
Representative Wilson  asked what would happen  when the log                                                                    
books  went away.  It  was her  understanding  that the  log                                                                    
books  would  sunset.  Mr.  Clark  responded  that  she  was                                                                    
correct.  If   the  sports  fish  program   went  away,  the                                                                    
information would  no longer be available.  However, hunting                                                                    
records would continue to be available.                                                                                         
Representative Tilton asked if the  borough would be able to                                                                    
request  a log  book  page. She  asked  about a  discrepancy                                                                    
between  the agency  and  the borough.  She  wondered if  an                                                                    
agency  would have  to provide  the  information. Mr.  Clark                                                                    
understood,  that   when  the   borough  was   provided  the                                                                    
information from DFG,  it would follow-up with  a phone call                                                                    
to  a guiding  operation about  their hunting  activities if                                                                    
they  had  not  submitted  a   tax  filing.  They  would  be                                                                    
encouraged to  make good  on their  taxes. He  reported that                                                                    
Lake and  Peninsula Borough had about  130 registered guides                                                                    
that routinely  carried on  activities within  the borough's                                                                    
jurisdiction.  Nearly all  of  them  were non-residents  and                                                                    
nearly  a third  resided in  Alaska. The  state and  borough                                                                    
resources had  been commodified  by the  guiding businesses.                                                                    
The boroughs  felt that a  modest benefit was only  fair. He                                                                    
continued  that  because   many  boroughs  constituted  many                                                                    
thousands of  square acres and  because there was  access of                                                                    
many different means, it was  impossible to keep tabs on who                                                                    
was coming and  going. The bill provided a  way of accessing                                                                    
information that documented who was coming and going.                                                                           
Representative Tilton  understood the concept.  She wondered                                                                    
about the difference  of opinion between the  agency and the                                                                    
borough  and whether  the agency  would have  to supply  the                                                                    
actual   log  book   page.  Mr.   Clark  responded   in  the                                                                    
affirmative. He noted that the  borough would be required to                                                                    
keep the information confidential.                                                                                              
Co-Chair Seaton WITHDREW his OBJECTION.                                                                                         
There being NO OBJECTION, it was so ordered.                                                                                    
CSHB  267 (RES  was REPORTED  out  of committee  with a  "do                                                                    
pass" recommendation and with one  new fiscal impact note by                                                                    
the  Department of  Fish and  Game and  with two  previously                                                                    
published  notes, one  with a  fiscal impact:  FN2(CED); and                                                                    
one zero note: FN1(DFG).                                                                                                        
2:15:58 PM                                                                                                                    
AT EASE                                                                                                                         
2:17:08 PM                                                                                                                    
HOUSE JOINT RESOLUTION NO. 23                                                                                                 
     Proposing amendments  to the Constitution of  the State                                                                    
     of Alaska relating to the Alaska permanent fund.                                                                           
2:17:10 PM                                                                                                                    
Co-chair  foster indicated  the committee  would be  hearing                                                                    
public  testimony on  HJR 23.  He  reminded testifiers  that                                                                    
testimony  was  limited  to  2 minutes.  He  gave  the  bill                                                                    
sponsor the  opportunity to make comments  before opening up                                                                    
public testimony.                                                                                                               
REPRESENTATIVE  PAUL SEATON,  SPONSOR, relayed  that in  the                                                                    
previous   public   testimony   hearing   there   was   some                                                                    
misinformation. He  noted there  was a  fact sheet  that had                                                                    
been  distributed  to  all of  the  Legislative  Information                                                                    
Office. He read the fact sheet:                                                                                                 
     The  Permanent   Fund  includes  two  portions      the                                                                    
     Principal and the Earnings  Reserve Account (ERA). Once                                                                    
     money  is deposited  into the  Principal, it  cannot be                                                                    
     appropriated   out.   The    ERA   is   available   for                                                                    
     appropriation  by any  Legislature for  any purpose  at                                                                    
     any time  by simple  majority vote.  As of  January 31,                                                                    
     2018,  the balance  of the  Principal is  $49.2 billion                                                                    
     and $16.8  billion for the  ERA for a total  "value" of                                                                    
     $66 billion.                                                                                                               
     As it is now in law  (not the constitution), the PFD is                                                                    
     based on the  average "earnings" over the  past 5 years                                                                    
     of the fund, with 50% of  that amount going to the PFD.                                                                    
     The  Percent of  Market Value  (POMV) proposes  to base                                                                    
     the PFD  on the  total "value" of  the fund  versus the                                                                    
     "earnings" of  the fund. CS HJR  23 (otherwise referred                                                                    
     to as  the CS)  proposes a POMV  draw of  4.75 percent.                                                                    
     The  total  draw would  come  from  the ERA  since  the                                                                    
     Principal cannot  be touched.  33 percent of  this draw                                                                    
     ($813 million)  would be  used for  PFD and  67 percent                                                                    
     ($1.65  billion) for  essential  public services.  This                                                                    
     would result in a PFD this October of approximately                                                                        
     $1,258 per qualified Alaskan.                                                                                              
     Facts about the Permanent Fund and the CS:                                                                                 
            Alaskans  would  vote   on  this  resolution  in                                                                  
             November if the  CS passes  both the  House and                                                                    
             the Senate.                                                                                                        
            The PFD is only  in law (Alaska Statute) and not                                                                  
             in the Alaska Constitution.                                                                                        
            The current formula for  calculating the PFD was                                                                  
             passed in 1982.                                                                                                    
            The  Principal of the  Permanent Fund  cannot be                                                                  
            The PFD is currently  paid from the ERA (and the                                                                  
             same for the CS).                                                                                                  
            The ERA can be used  for any purpose. If the ERA                                                                  
             goes away, so does the PFD.                                                                                        
            Alaskans have  never voted  to constitutionalize                                                                  
             the PFD.                                                                                                           
            Without  protection,   future  Legislatures  can                                                                  
             appropriate  the  full   amount  of   the  ERA,                                                                    
             draining the  fund,  and  thus eliminating  the                                                                    
            CS  HJR 23  would  protect the  ERA by  limiting                                                                  
             appropriations to a  sustainable level  of 4.75                                                                    
             percent annually.                                                                                                  
            The  Legislature  "shall" appropriate  the  4.75                                                                  
             percent draw to the general fund.                                                                                  
            The Legislature "may"  appropriate 33 percent of                                                                  
             the 4.75 percent draw to  dividends, leaving 67                                                                    
             percent for public services.                                                                                       
            "Shall"  implies  mandated,  and  "may"  implies                                                                  
             subject to  appropriation  by the  Legislature.                                                                    
             Mandating the amount or percentage  to PFD will                                                                    
             likely trigger lawsuits.                                                                                           
            The total fund is  estimated to earn 6.5 percent                                                                  
             annually, so the amount  for the PFD  under the                                                                    
             CS would increase over time.                                                                                       
Co-Chair further explained that  a House Joint Resolution on                                                                    
a constitutional  amendment had to  go before the  people at                                                                    
the first  general election  following a  resolution passing                                                                    
by a  two-thirds vote of  the House  and the Senate.  It did                                                                    
not require any  action by the governor. It  would appear on                                                                    
a general election ballot if passed.                                                                                            
Co-Chair Foster  reiterated that  if the resolution  were to                                                                    
pass by two-thirds of both bodies,  it would go to a vote of                                                                    
the people.                                                                                                                     
Representative Thompson  asked if  the committee  would only                                                                    
be hearing  people that had not  already testified. Co-Chair                                                                    
Foster responded affirmatively.                                                                                                 
Co-Chair Foster OPENED Public Testimony.                                                                                        
^PUBLIC TESTIMONY                                                                                                               
2:23:30 PM                                                                                                                    
GEORGE PIERCE,  SELF, KASILOF (via  teleconference), opposed                                                                    
HJR 23. He  believed the resolution would  change the payout                                                                    
forever.  He  thought  the  resolution was  a  raid  of  the                                                                    
Permanent Fund  (PF) and the Permanent  Fund Dividend (PFD).                                                                    
He rejected the idea of  the legislature being able to spend                                                                    
more that the  percentage. He advocated for  looking out for                                                                    
Alaskans.  He  did  not believe  the  legislature  could  be                                                                    
trusted.   He   urged   members  to   avoid   changing   the                                                                    
2:25:38 PM                                                                                                                    
TIM  FEDERICO, SELF,  ANCHORAGE (via  teleconference), spoke                                                                    
in opposition  of HJR  23. He  thought the  bill was  out of                                                                    
sync with the people of Alaska.  He wanted to see the budget                                                                    
cut to the  bones. He spoke about the  money the legislature                                                                    
was paid. He mentioned  waste within various departments. He                                                                    
commented   that   commercial    fisheries   were   actually                                                                    
subsidized by  the state. He  suggested saving money  in the                                                                    
school system  by having only one  administrator. He thought                                                                    
government was out of control.                                                                                                  
2:29:04 PM                                                                                                                    
BRENDA RHODES,  SELF, ANCHORAGE (via  teleconference), spoke                                                                    
against HJR  23. She thought  the state needed to  return to                                                                    
the original  dividend formula. She urged  members to return                                                                    
to the task  of figuring out a fiscal plan.  She thanked the                                                                    
2:30:03 PM                                                                                                                    
ELLA  LUBIN,  SELF,  SITKA (via  teleconference),  spoke  in                                                                    
favor of HJR 23. She  believed that the resource wealth came                                                                    
from public land  which all Alaskans shared  and deserved to                                                                    
reach the benefits.  She thought it was in  the state's best                                                                    
interest to  maintain the PFD so  that it continued to  be a                                                                    
benefit - sustaining Alaska and  a benefit for young people.                                                                    
She  spoke  about  being  a   lifelong  Alaskan  and  having                                                                    
benefited from receiving  PFD's. She noted that  the PFD was                                                                    
a  vital income  source for  many Alaskans.  She provided  a                                                                    
statistic  by  Institute  of Social  and  Economic  Research                                                                    
(ISER). She mentioned  the importance of constitutionalizing                                                                    
the PFD.  She referred to  the PF  as a "rainy  day account"                                                                    
and  that  Alaska's  rainy  day was  the  present  day.  She                                                                    
thanked the committee.                                                                                                          
Representative Ortiz asked if  Ms. Lubin had participated in                                                                    
the recent  DDF [Drama, Debate, and  Forensics] competition.                                                                    
Ms. Lubin  responded in  the positive.  Representative Ortiz                                                                    
commented that she was likely as effective as her sisters.                                                                      
2:32:10 PM                                                                                                                    
GARY MCDONALD,  SELF, ANCHORAGE (via  teleconference), spoke                                                                    
against  HJR 23.  He  thought the  full  dividend should  be                                                                    
given to the people of Alaska. He thanked the committee.                                                                        
2:33:00 PM                                                                                                                    
LAURA   BONNER,   SELF,  ANCHORAGE   (via   teleconference),                                                                    
supported the  concept of enshrining  the PFD in  the Alaska                                                                    
Constitution.  She argued  that because  paying the  PFD was                                                                    
only in  statute, current or  future legislatures  could opt                                                                    
not  to  pay  the  PFD. However,  she  preferred  the  first                                                                    
proposed version of  the bill over the  work draft submitted                                                                    
by  the  House Finance  Committee.  She  suggested the  work                                                                    
draft could  be amended to  be more acceptable  to Alaskans.                                                                    
She recommended  changing the verbiage in  Section 2(c) from                                                                    
"may"  to "shall."  She also  recommended adding  the words,                                                                    
"at least"  or changing  to a  higher percentage.  She hoped                                                                    
the  resolution continued  to move  through the  legislative                                                                    
process.  She thanked  the committee  for re-opening  public                                                                    
Vice-Chair Gara agreed with Ms.  Bonner that the word should                                                                    
be "shall."  He thought the  sponsor wanted the  word "shall                                                                    
pay." However,  the legislature  received legal  advice that                                                                    
the word "shall " could not  be used in the constitution. He                                                                    
also  appreciated the  "at least"  language suggestion.  Ms.                                                                    
Bonner  had  read  the  legal  opinion  and  understood  the                                                                    
possibility of constitutional issues.                                                                                           
2:36:18 PM                                                                                                                    
LIZ VAZQUEZ,  SELF, ANCHORAGE (via  teleconference), opposed                                                                    
HJR 1. The  resolution did not protect the PFD.  It would be                                                                    
up  to  the  legislature  to determine  the  amount  of  the                                                                    
dividend  or whether  it would  be distributed  at all.  She                                                                    
provided a  brief history about  the fund. She  relayed that                                                                    
the makers of the  PF set up the PFD in  order to ensure the                                                                    
people  had  a voice  about  how  the  fund was  spent.  She                                                                    
thought HJR  23 reflected  the opposite  of what  the makers                                                                    
intended. She  spoke of the  current economic  recession and                                                                    
the challenges  the state  faced. She  thought HJR  23 would                                                                    
inflict  greater  damage  by tampering  with  the  PFD.  She                                                                    
encouraged members to vote against the resolution.                                                                              
2:40:20 PM                                                                                                                    
Vice-Chair Gara  commented that  the previous  year's budget                                                                    
was  lower than  the  last year  that she  had  been in  the                                                                    
legislature. He  relayed that the legislature  had been told                                                                    
by the  legal department that  "shall" could not be  used in                                                                    
the constitution. The word "may"  could be used. He wondered                                                                    
if she  had a legal  opinion on  the issue. Ms.  Vasquez was                                                                    
interested  in seeing  the  legal  opinion. Co-Chair  Foster                                                                    
relayed that the opinion could be found online.                                                                                 
Vice-Chair Gara clarified that it  was the express testimony                                                                    
from  the lead  legislative attorney.  He was  still looking                                                                    
into the  issue. He thought  committees were trying  to find                                                                    
something  more  enforceable  than  what  was  currently  in                                                                    
Representative  Wilson asked  in a  constitutional amendment                                                                    
whether Ms. Vasquez  would use the formula  that had worked,                                                                    
or whether  she would use  a Percent of Market  Value (POMV)                                                                    
giving less to  Alaskans. Ms. Vasquez would have  to look at                                                                    
some  of the  opinions of  the economists.  She thought  the                                                                    
4.75  percent  draw  was  too   aggressive.  She  noted  the                                                                    
variable returns on the fund.                                                                                                   
Representative Wilson asked if  Ms. Vasquez would enshrine a                                                                    
percentage as  outlined in  the resolution  of 66/33  or use                                                                    
the current  calculation. Ms. Vasquez  would keep  the 50/50                                                                    
split.  She added  that the  POMV might  work. However,  the                                                                    
suggested  percentage  might  be too  aggressive  and  could                                                                    
potentially hurt  the fund in  the long run. She  would have                                                                    
to study the historical yield.                                                                                                  
2:45:16 PM                                                                                                                    
FRED  STURMAN,  SELF,  KENAI (via  teleconference),  opposed                                                                    
HJR 23.  He  wanted  to  see   a  50/50  split.  He  thought                                                                    
additional   reductions  were   necessary.  He   recommended                                                                    
closing the DMV. He thought  several things could be cut. He                                                                    
opposed  taking the  PFD.  He spoke  to  having children  in                                                                    
college.  He  thought  additional cuts  were  necessary  and                                                                    
encouraged  legislators  to  be focusing  on  the  important                                                                    
2:47:36 PM                                                                                                                    
JASMINE  LEVEMIA,  SELF,  PETERSBURG, spoke  in  support  of                                                                    
HJR 23.  She  supported  constitutionalizing  the  PFD.  She                                                                    
wanted   to  see   the  PFD   continue  to   support  future                                                                    
2:49:20 PM                                                                                                                    
Co-Chair Foster CLOSED Public Testimony.                                                                                        
HJR  23  was  HEARD  and   HELD  in  committee  for  further                                                                    
2:50:04 PM                                                                                                                    
AT EASE                                                                                                                         
2:51:41 PM                                                                                                                    
Co-Chair  Foster  called  the  meeting  back  to  order.  He                                                                    
relayed that the  committee would not be hearing  HB 285 and                                                                    
HB 286. Amendments  for HJR 23 were due by  5:00 p.m. in the                                                                    
current afternoon.                                                                                                              
Representative  Wilson  emailed   all  finance  members  the                                                                    
written testimony she had received.                                                                                             
HB 285 was SCHEDULED but not HEARD.                                                                                             
HB 286 was SCHEDULED but not HEARD.                                                                                             
2:52:46 PM                                                                                                                    
The meeting was adjourned at 2:52 p.m.                                                                                          

Document Name Date/Time Subjects
HJR 23 - Letters of Support 3.13.2018 (2).pdf HFIN 3/13/2018 1:30:00 PM
HJR 23
HJR 23 - Letters of Opposition 3.13.2018 (2).pdf HFIN 3/13/2018 1:30:00 PM
HJR 23
CSHJR 23 Fact Sheet.pdf HFIN 3/13/2018 1:30:00 PM
HJR 23
HJR 23 - Letters of Support 3.14.2018.pdf HFIN 3/13/2018 1:30:00 PM
HJR 23
HJR 23 - Letters of Opposition 3.14.2018.pdf HFIN 3/13/2018 1:30:00 PM
HJR 23