Legislature(2019 - 2020)ADAMS ROOM 519

07/08/2019 02:00 PM FINANCE

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Audio Topic
02:02:36 PM Start
02:03:32 PM HB2001
02:13:01 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB2001 APPROP: ERA FOR PERMANENT FUND DIVIDENDS TELECONFERENCED
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                  SECOND SPECIAL SESSION                                                                                        
                       July 8, 2019                                                                                             
                         2:02 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
2:02:36 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Foster called the House Finance Committee meeting                                                                      
to order at 2:02 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Vice-Chair                                                                                    
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Tammie Wilson, Co-Chair                                                                                          
Representative Ben Carpenter                                                                                                    
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Brodie   Anderson,   Staff,  Representative   Neal   Foster;                                                                    
Representative Grier Hopkins;  Representative Louise Stutes;                                                                    
Representative  Sarah  Hannan;  Representative  Andi  Story;                                                                    
Representative   Harriet    Drummond;   Representative   Ivy                                                                    
Spohnholz; Representative Adam Wool.                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 2001     APPROP: ERA FOR PERMANENT FUND DIVIDENDS                                                                            
                                                                                                                                
            HB 2001 was HEARD and HELD in committee for                                                                         
            further consideration.                                                                                              
                                                                                                                                
Co-Chair   Foster   reviewed    the   meeting   agenda.   He                                                                    
acknowledged   Representatives  Louise   Stutes  and   Grier                                                                    
Hopkins in the audience.                                                                                                        
                                                                                                                                
HOUSE BILL NO. 2001                                                                                                           
                                                                                                                                
     "An Act making a special appropriation from the                                                                            
     earnings reserve account for the payment of permanent                                                                      
     fund dividends; and providing for an effective date."                                                                      
                                                                                                                                
2:03:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  asked his staff  to provide an  overview of                                                                    
the bill.                                                                                                                       
                                                                                                                                
Representative Knopp  asked if a  roll call should  be taken                                                                    
to establish a quorum to do business.                                                                                           
                                                                                                                                
Co-Chair Foster noted that a quorum present.                                                                                    
                                                                                                                                
BRODIE   ANDERSON,   STAFF,  REPRESENTATIVE   NEAL   FOSTER,                                                                    
explained  that the  bill  would appropriate  $1,028,509,500                                                                    
from the  Permanent Fund Earnings  Reserve Account  (ERA) to                                                                    
pay  a  $1,600  Permanent  Fund Dividend  (PFD).  Section  2                                                                    
designated that the  funds would not lapse because  it was a                                                                    
capitalization of  a fund. Section  3 included  an immediate                                                                    
effective date clause.                                                                                                          
                                                                                                                                
2:06:03 PM                                                                                                                    
                                                                                                                                
Representative  Knopp   asked  how  the  numbers   had  been                                                                    
determined. He asked  if the total $1.028  billion was based                                                                    
on the  number of  individuals who had  applied for  the PFD                                                                    
the previous year.                                                                                                              
                                                                                                                                
Mr. Anderson  replied that  the $1.028  billion came  from a                                                                    
calculation made  by Legislative Legal Services  at the time                                                                    
of the  bill's drafting. The number  had fluctuated slightly                                                                    
based off of calculations from  the Office of Management and                                                                    
Budget (OMB). He shared that  there had been discussion that                                                                    
it may  be necessary to  amend the amount to  $1.071 billion                                                                    
based  off of  information  received from  OMB  late in  the                                                                    
special session.                                                                                                                
                                                                                                                                
Co-Chair  Foster asked  for verification  that the  proposed                                                                    
$1,600 PFD was the same amount as the one paid in 2018.                                                                         
                                                                                                                                
Mr. Anderson replied affirmatively.                                                                                             
                                                                                                                                
Representative Josephson  stated that before  the governor's                                                                    
recent  vetoes, the  surplus had  been around  $600 million,                                                                    
which would  have resulted in  a PFD of  approximately $900.                                                                    
He observed that  a $1,600 PFD would have  exceeded the 5.25                                                                    
percent set in SB 26  [legislation passed in 2018 pertaining                                                                    
to the PFD].                                                                                                                    
                                                                                                                                
Mr. Anderson  replied in the affirmative.  He confirmed that                                                                    
$1,600  exceeded the  percent  of market  value (POMV)  draw                                                                    
[from the ERA].                                                                                                                 
                                                                                                                                
Co-Chair Foster recognized  Representatives Sarah Hannan and                                                                    
Andi Story in the audience.                                                                                                     
                                                                                                                                
2:08:13 PM                                                                                                                    
                                                                                                                                
Representative Knopp  asked for  more information  about the                                                                    
statement that  the $1,600  PFD would  exceed the  POMV draw                                                                    
established  under SB  26. He  noted that  the governor  had                                                                    
vetoed a portion of the draw.                                                                                                   
                                                                                                                                
Mr. Anderson thought  the question may be  better suited for                                                                    
the Legislative  Finance Division.  He detailed that  in the                                                                    
governor's veto  process, $1  billion had  been left  in the                                                                    
ERA for the payment of  the PFD. He elaborated that anything                                                                    
above the  surplus was an  additional ad hoc draw.  The bill                                                                    
would exceed the POMV by $28 million.                                                                                           
                                                                                                                                
Co-Chair Foster  recognized Representative  Harriet Drummond                                                                    
in the audience.                                                                                                                
                                                                                                                                
Vice-Chair Ortiz  considered resources to pay  a $1,600 PFD.                                                                    
He  referred  to  Representative  Josephson's  reference  to                                                                    
roughly  $600 million  left  over based  on  the budget  the                                                                    
legislature  sent to  the governor.  He wondered  if another                                                                    
$550 million would be needed  to cover the $1.028 billion in                                                                    
the bill if the budget remained the same.                                                                                       
                                                                                                                                
Mr.  Anderson  replied  that  he  would  follow  up  on  the                                                                    
question.                                                                                                                       
                                                                                                                                
Co-Chair Foster agreed that his office would follow up.                                                                         
                                                                                                                                
Representative  LeBon calculated  that  a  draw of  slightly                                                                    
below 6.25 percent would be needed.                                                                                             
                                                                                                                                
Co-Chair  Foster  recognized Representatives  Ivy  Spohnholz                                                                    
and Adam Wool in the audience.                                                                                                  
                                                                                                                                
HB  2001  was  HEARD  and  HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Foster  noted that HB  2001 had been  introduced on                                                                    
the  House floor  earlier in  the  day. The  intent for  the                                                                    
following day was  to address some of  the governor's vetoes                                                                    
and determine  how they interplayed  with the PFD  level. He                                                                    
reviewed the agenda for the following meeting.                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:13:01 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:12 p.m.                                                                                          

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