Legislature(2021 - 2022)GRUENBERG 120
04/30/2021 01:00 PM House JUDICIARY
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| Audio | Topic |
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| Start | |
| HJR1 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HJR 1 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 30, 2021
1:03 p.m.
DRAFT
MEMBERS PRESENT
Representative Matt Claman, Chair
Representative Liz Snyder, Vice Chair
Representative Harriet Drummond
Representative Jonathan Kreiss-Tomkins
Representative David Eastman
Representative Christopher Kurka
Representative Sarah Vance
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 1
Proposing amendments to the Constitution of the State of Alaska
relating to the Alaska permanent fund and to appropriations from
the Alaska permanent fund.
- MOVED CSSSHJR 1(JUD) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HJR 1
SHORT TITLE: CONST AM: PERMANENT FUND; POMV;EARNINGS
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS
02/18/21 (H) PREFILE RELEASED 1/8/21
02/18/21 (H) READ THE FIRST TIME
02/18/21 (H) SPONSOR SUBSTITUTE INTRODUCED
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) STA, JUD, FIN
03/10/21 (H) W&M REPLACES STA REFERRAL
03/10/21 (H) BILL REPRINTED
04/13/21 (H) W&M AT 11:30 AM DAVIS 106
04/13/21 (H) Heard & Held
04/13/21 (H) MINUTE(W&M)
04/20/21 (H) W&M AT 11:30 AM DAVIS 106
04/20/21 (H) Moved CSSSHJR(W&M) 1 Out of Committee
04/20/21 (H) MINUTE(W&M)
04/22/21 (H) W&M RPT CS(W&M) 5DP 2DNP
04/22/21 (H) DP: WOOL, JOSEPHSON, SCHRAGE, STORY,
SPOHNHOLZ
04/22/21 (H) DNP: EASTMAN, PRAX
04/26/21 (H) JUD AT 1:00 PM GRUENBERG 120
04/26/21 (H) Heard & Held
04/26/21 (H) MINUTE(JUD)
04/30/21 (H) JUD AT 1:00 PM GRUENBERG 120
WITNESS REGISTER
JEFF STEPP, Staff
Representative Jonathan Kreiss-Tomkins
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SSHJR 1 on behalf of
Representative Kreiss-Tomkins, prime sponsor.
EMILY NAUMAN, Deputy Director
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on
SSHJR 1.
ACTION NARRATIVE
1:03:26 PM
CHAIR MATT CLAMAN called the House Judiciary Standing Committee
meeting to order at 1:03 p.m. Representatives Kurka, Vance,
Drummond, Snyder, Kreiss-Tomkins, Eastman, and Claman were
present at the call to order.
HJR 1-CONST AM: PERMANENT FUND; POMV;EARNINGS
1:04:08 PM
CHAIR CLAMAN announced that the only order of business would be
SPONSOR SUBSTITUTE FOR HOUSE JOINT RESOLUTION NO. 1 "Proposing
amendments to the Constitution of the State of Alaska relating
to the Alaska permanent fund and to appropriations from the
Alaska permanent fund."
1:05:02 PM
REPRESENTATIVE KREISS-TOMKINS moved Amendment 1 to CSSSHJR
1(W&M), labeled 32-LS0167\I.1, Nauman, 4/24/21, which read as
follows:
Page 2, lines 7 - 8:
Delete "June 30, 2022,"
Insert "June 30, 2023, an amount equal to"
Page 2, line 8, following "balance":
Insert "on November 8, 2022,"
REPRESENTATIVE EASTMAN objected for the purpose of discussion.
REPRESENTATIVE KREISS-TOMKINS invited his staff to provide an
explanation of Amendment 1.
1:05:36 PM
JEFF STEPP, Staff, Representative Jonathan Kreiss-Tomkins,
Alaska State Legislature, on behalf of Representative Kreiss-
Tomkins, prime sponsor, presented an explanation document
[included in the committee packet], entitled " HJR 1 v. I
Amendment #1 HJUD Explanation 4.30.2021," which read, in part,
as follows [original punctuation provided]:
1. Page 2, Line 8: delete [2022] and insert 2023 The
date of the deposit needs to be after
the election of November, 2022.
2. Page 2, Line 8: after "2023" add an amount equal to
This, along with #3 below,
provides protection from a post-election withdrawal
from the ERA.
3. Page 2, Line 8 after "balance" add on November 8,
2022 "An amount equal to" on
the day of the election, would prevent a withdrawal
from the ERA between the election
(November 8, 2022) and the deposit on June 30, 2023
or, if there was a withdrawal
from the ERA, there would be a requirement to deposit
"an amount equal to" what the
unencumbered balance had been on November 8, 2022.
This protects the ERA between
the election on November 8, 2022, and the deposit on
the following June 30, 2023.
Timeline:
November 8, 2022: Election
June 30, 2023: The unencumbered balance of the ERA
shall be deposited in the Alaska permanent fund.
If amended, Section 30(a) of HJR 1 would look like
this:
Section 30. Permanent Fund Amendments: Transition. (a)
On June 30, 2023 [2022] an amount equal to the
unencumbered balance on November 8, 2022 of the
earnings reserve account established by law shall be
deposited in the Alaska permanent fund and become part
of the principal of the fund.
MR. STEPP explained that there existed an error in HJR 1 in
which the unencumbered balance of the earnings reserve account
(ERA) would not have been deposited into the permanent fund
following the [2022] election. The correction of the date
addressed in the amendment would remedy this oversight. He
added that the intent of the amendment was to discourage a raid
on the ERA between the election and the time of the deposit.
1:07:50 PM
REPRESENTATIVE KREISS-TOMKINS added that "the amount equal to"
language had been conceived due to the occurrence of a
legislative session timed between the potential ratification [of
HJR 1] by the voters during which the legislature would maintain
the authority to make withdrawals from the ERA. He suggested
that such a raid, while legal, would go against the will of the
voters should the constitutional amendment be passed by voters
in November 2022.
1:09:04 PM
REPRESENTATIVE VANCE referred to the last line of the
explanation [of the amendment] before the committee and asked
the sponsor or his staff to define the "part L" referenced.
MR. STEPP suggested that formatting in the document may have
resulted in a typo.
1:10:07 PM
REPRESENTATIVE EASTMAN referenced the June 30, 2023 [deposit]
date and asked for an explanation of the reasoning for the
timing.
REPRESENTATIVE KREISS-TOMKINS answered that the date was
associated with the fiscal year and would allow the legislature
adequate time to understand the budget implications should the
constitutional amendment be passed by voters.
REPRESENTATIVE EASTMAN asked about the legality of [voters]
compelling the legislature to pass an appropriation bill within
a certain timeframe.
REPRESENTATIVE KREISS-TOMKINS prefaced his answer by stating
that he does not maintain specific expertise regarding
constitutionality of the proposed bill and said that Legislative
Legal and Research Services had not contacted his office with
notification that any constitutional conflict existed. He
opined that [the nature of voters passing a constitutional
amendment] would result in the constitutionality of the bill.
CHAIR CLAMAN invited Legislative Legal and Research Services to
address Representative Eastman's question.
1:12:57 PM
EMILY NAUMAN, Deputy Director, Legislative Legal and Research
Services, Legislative Affairs Agency, stated that the proposed
legislation would require that the ERA balance be deposited into
the permanent fund. She added that the permanent fund may not
be appropriated except in accordance with the permanent fund
section of the constitution; however, the balance of the ERA
would remain available for appropriation by the legislature in
its entirety. She added that the legislation, if passed, would
not limit the legislature from appropriating in a future year.
1:13:57 PM
REPRESENTATIVE EASTMAN raised a concern that the state might
encounter difficulties in meeting its constitutional obligations
such as pensions should less money remain available [for
appropriation]. He hypothesized a scenario in which [funds]
could be drawn from the corpus of the permanent fund in order to
meet obligations.
REPRESENTATIVE KREISS-TOMKINS said that, should the state
encounter a conflict among constitutional mandates, he predicted
that an interested party could litigate and that there would
occur judicial interpretation. He postulated that the judiciary
would take into consideration legislative intent and stated that
the intent of the amendment would in no way be to jeopardize the
corpus of the fund during the transition language offered in the
amendment. He suggested that there exist hierarchies in
interpretation of constitutional language that addresses
prioritization of expenditures and deferred to Legislative Legal
and Research Services to provide additional context for the
hypothetical scenario posed by Representative Eastman.
CHAIR CLAMAN summarized the hypothetical scenario to be that, if
the constitutional amendment were to be approved by voters in
2022, and should the next legislature entirely empty the ERA, he
asked then what the constitutional impact and what possible
remedy of such an action would be.
MS. NAUMAN suggested that Representative Kreiss-Tomkins'
summation that judicial intervention would likely occur. She
stated that the proposed constitutional amendment is structured
in a way that, should the legislature raid the ERA, then the
legislature would be obligated to determine an alternate source
of funding. She suggested one such source could be an
obligation to [restore the fund] with future earnings until the
obligation was satisfied. She agreed with his assertion that
the judiciary would take into consideration legislative intent.
She added that there exist judicial rules that would compel the
judiciary to take into consideration more recent and more
specific language [to determine legislative intent].
1:19:05 PM
REPRESENTATIVE EASTMAN asked what would be the legal impact of a
scenario in which a market crash would leave the ERA with funds
insufficient to cover the obligation that would be mandated
under Section 2 of the proposed legislation.
MS. NAUMAN offered that the proposed amendment to CSSSHJR 1
(W&M) specifies that the amount [determined for deposit] would
be the higher of either the balance on the date of the election
or the balance on the date of the deposit. She answered that,
should a market crash occur, the legislature could face a
scenario where there could be insufficient funds to meet the
"greater of" test. She further suggested that funds would be
required from alternate sources, or a lawsuit would likely
occur. She said that the constitutional language remains clear
that funds may not be withdrawn from the corpus despite the
existence of financial difficulty.
REPRESENTATIVE EASTMAN asked Ms. Nauman to explain how the
"higher amount" in the proposed amendment is calculated.
MS. NAUMAN suggested that the amount would be calculated to be
the amount equal to [the balance] on November 8, 2022.
CHAIR CLAMAN affirmed that the amendment prescribes that the
amount that shall be deposited on June 30, 2023, would be equal
to the unencumbered balance on November 8, 2022.
CHAIR CLAMAN suggested a scenario in which a market reduction
resulting in $ 1 million less in the ERA on June 30, 2023, than
on November 8, 2022, and asked whether the legislature would be
obligated to identify an alternate source for the $1 million
difference.
MS. NAUMAN answered that her interpretation of the amendment
would result in such an obligation.
1:24:15 PM
REPRESENTATIVE EASTMAN asked whether the intent of the amendment
would be, in the case the ERA was to realize a surplus, that the
[deposit] would capture that surplus.
REPRESENTATIVE KREISS-TOMKINS suggested that a potential surplus
as described, such as $1 million, would be nominal to the entire
amount of the fund, and the intent of the legislation is to
protect the bulk sums [in excess of] $70 billion. He welcomed
further discussion.
1:25:54 PM
REPRESENTATIVE EASTMAN withdrew his objection to the motion to
adopt Amendment 1 to CSSSHJR 1 (W&M). There being no further
objection, Amendment 1 was adopted.
1:26:22 PM
REPRESENTATIVE DRUMMOND offered that the legislature would be
allowed to appropriate an amount lower than 5 percent and not to
exceed 5 percent. She expressed her support for CSSSHJR 1
(W&M), as amended.
1:26:56 PM
REPRESENTATIVE VANCE expressed her support for CSSSHJR 1 (W&M),
as amended in that it would wisely cap spending; however, she
stated that she would like to examine models depicting a higher
royalty deposit rate and had sought such models from Legislative
Finance Division. She noted that constituents in her district
have advocated to include language that would enshrine the
dividend in the constitution with any amendment pertaining to
the permanent fund. She suggested that an amendment to address
the amount of royalty deposits and the dividend may be
forthcoming.
1:30:42 PM
REPRESENTATIVE EASTMAN suggested that all pending legislation
[related to the permanent fund] be taken into consideration due
to many potential impacts on statutes. He noted that changes to
statutes have a different process than that of constitutional
amendments and that a "surgical" approach be taken to avoid any
potential constitutional crisis. He added that he did not
support CSSSHJR 1 (W&M), as amended without a clear
understanding of all the impacts of pending legislation and
without it addressing the dividend.
1:32:22 PM
REPRESENTATIVE KURKA echoed some of the concerns expressed by
Representative Vance and stated that he remained uncertain as to
how he would vote when the proposed legislation came before the
full body. He stated his assumption that statutes are
subservient to [constitutional amendments] and that statutes
would be required to be changed should a constitutional
amendment pass.
1:33:15 PM
REPRESENTATIVE KREISS-TOMKINS expressed his interest in the
models that Representative Vance had sought from the Legislative
Finance Division [pertaining to royalty deposits] to determine
if additional revisions to CSSSHJR 1 (W&M), as amended, would be
warranted. He recalled comments made during the floor session
had been among many comments with which he would agree.
1:34:24 PM
CHAIR CLAMAN echoed the comments made by Representative
Drummond. He stated that he had a background in municipal
government and the Municipality of Anchorage [had enacted] a tax
cap which he described as working well, despite its criticisms.
He added that CSSSHJR 1 (W&M), as amended, would function better
than a tax cap or spending cap due to the limitations it would
impose. He addressed the concerns brought forward by
Representative Eastman and stated that it could not be assumed
that additional constitutional amendments would appear on a
particular ballot, and that he would take into consideration the
merits of the proposed legislation before the committee and not
other potential or pending legislation. He characterized
Representative Kurka's comments that statutory language would be
subservient to a constitutional amendment as correct. He stated
his belief that a cause of ongoing concern would be the debate
of taxes versus dividends going forward. He postulated that
there existed a potential that taxes would become necessary in
order to pay a dividend and that public sentiment should be
sought to continue meaningful discussion.
1:36:40 PM
REPRESENTATIVE SNYDER moved to report CSSSHJR 1 (W&M), as
amended, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection,
CSSSHJR 1(JUD) was reported out of the House Judiciary Standing
Committee.
1:37:10 PM
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 1:37 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR 1 v. I 4.22.2021.PDF |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 Sponsor Statement v. I 4.26.2021.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 Sectional Analysis v. I 4.26.2021.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 Background - APFC Trustees’ Paper Volume 9 1.15.2020.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM HW&M 4/13/2021 11:30:00 AM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Background - Institute of the North Position Paper.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM HW&M 4/13/2021 11:30:00 AM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Background - APFC Resolution POMV 2020-01.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM HW&M 4/13/2021 11:30:00 AM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Background - APFC Resolution POMV 2004-09.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM HW&M 4/13/2021 11:30:00 AM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Background - APFC Resolution POMV 2003-05.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM HW&M 4/13/2021 11:30:00 AM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Supporting Document - Testimony as of 4.20.2021.pdf |
HJUD 4/30/2021 1:00:00 PM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Opposing Document - Testimony as of 4.28.2021.pdf |
HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 Additional Document - APFC POMV Statement.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM HW&M 4/13/2021 11:30:00 AM HW&M 4/20/2021 11:30:00 AM |
HJR 1 |
| HJR 1 Additional Document - APFC Response to HJUD Committee Questions on April 26, 2021 4.28.2021.pdf |
HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 v. I Amendment #1 HJUD 4.30.2021.pdf |
HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 v. I Amendment #1 HJUD Explanation 4.30.2021.pdf |
HJUD 4/30/2021 1:00:00 PM |
HJR 1 |
| HJR 1 Fiscal Note OOG-DOE 4.8.2021.pdf |
HJUD 4/26/2021 1:00:00 PM HJUD 4/30/2021 1:00:00 PM |
HJR 1 |