Legislature(2025 - 2026)GRUENBERG 120
05/05/2025 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HJR10 | |
| HB209 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HJR 10 | TELECONFERENCED | |
| *+ | HB 209 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
May 5, 2025
1:01 p.m.
DRAFT
MEMBERS PRESENT
Representative Andrew Gray, Chair
Representative Chuck Kopp, Vice Chair
Representative Ted Eischeid
Representative Genevieve Mina
Representative Sarah Vance
Representative Mia Costello
Representative Jubilee Underwood
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 10
Proposing amendments to the Constitution of the State of Alaska
relating to the Alaska permanent fund and to appropriations from
the Alaska permanent fund.
- HEARD & HELD
HOUSE BILL NO. 209
"An Act relating to the Alaska permanent fund; relating to
income of the Alaska permanent fund; relating to the amount
available for appropriation and appropriations from the earnings
reserve account; relating to the permanent fund dividend; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HJR 10
SHORT TITLE: CONST AM: PERMANENT FUND; POMV;EARNINGS
SPONSOR(s): REPRESENTATIVE(s) SCHRAGE
02/21/25 (H) READ THE FIRST TIME - REFERRALS
02/21/25 (H) STA, JUD, FIN
03/20/25 (H) STA AT 3:15 PM GRUENBERG 120
03/20/25 (H) -- MEETING CANCELED --
04/24/25 (H) STA AT 3:15 PM GRUENBERG 120
04/24/25 (H) Heard & Held
04/24/25 (H) MINUTE(STA)
04/29/25 (H) STA AT 3:15 PM GRUENBERG 120
04/29/25 (H) Heard & Held
04/29/25 (H) MINUTE(STA)
05/01/25 (H) STA AT 3:15 PM GRUENBERG 120
05/01/25 (H) Moved HJR 10 Out of Committee
05/01/25 (H) MINUTE(STA)
05/02/25 (H) STA RPT 4DP 3DNP
05/02/25 (H) DP: HOLLAND, HIMSCHOOT, STORY, CARRICK
05/02/25 (H) DNP: VANCE, MCCABE, MOORE
05/05/25 (H) JUD AT 1:00 PM GRUENBERG 120
BILL: HB 209
SHORT TITLE: PERMANENT FUND DIVIDEND: INCOME THRESHOLD
SPONSOR(s): REPRESENTATIVE(s) FIELDS
04/28/25 (H) READ THE FIRST TIME - REFERRALS
04/28/25 (H) JUD, FIN
05/05/25 (H) JUD AT 1:00 PM GRUENBERG 120
WITNESS REGISTER
REPRESENTATIVE CALVIN SCHRAGE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HJR 10.
DEVEN MITCHELL, Executive Director
Alaska Permanent Fund Corporation
Juneau, Alaska
POSITION STATEMENT: Gave invited testimony on HJR 10.
BENJAMIN COOK, representing self
Anchor Point, Alaska
POSITION STATEMENT: Gave testimony unrelated to the bill.
MIKE COONS, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HJR 10.
CARRIE HARRIS, representing self
Anchor Point, Alaska
POSITION STATEMENT: Testified in opposition to HJR 10.
EMILY NAUMAN, Director
Legislative Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on
HJR 10.
REPRESENTATIVE ZACK FIELDS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 209.
EVAN ANDERSON, Staff
Representative Zack Fields
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for HB 209
on behalf of Representative Fields, prime sponsor.
SEAN MILLS, House Majority Staff
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
209.
ACTION NARRATIVE
1:01:43 PM
CHAIR ANDREW GRAY called the House Judiciary Standing Committee
meeting to order at 1:01 p.m. Representatives Underwood,
Costello, Mina, Eischeid, Vance, and Gray were present at the
call to order. Representative Kopp arrived as the meeting was
in progress.
HJR 10-CONST AM: PERMANENT FUND; POMV;EARNINGS
1:02:32 PM
CHAIR GRAY announced that the first order of business would be
HOUSE JOINT RESOLUTION NO. 10, Proposing amendments to the
Constitution of the State of Alaska relating to the Alaska
permanent fund and to appropriations from the Alaska permanent
fund.
1:02:57 PM
REPRESENTATIVE CALVIN SCHRAGE, Alaska State Legislature, as
prime sponsor, presented HJR 10. He paraphrased the sponsor
statement [included in the committee packet], which read as
follows [original punctuation provided]:
When the Permanent Fund was created, it was structured
as two accounts: the Principal and the Earnings
Reserve Account (ERA). The Alaska Constitution
prohibits the spending of the Principal without a vote
of the people. However, profits generated by the fund
are deposited into the ERA, which is entirely
available for the Legislature to appropriate and
spend. The current value of the ERA is approximately
$16 billion. Overdraw of the ERA depletes the value of
the entire Permanent Fund and leaves Alaska worse off.
In 2018 the Legislature adopted statutes that allow
appropriation up to an amount that maintains the
growth of the fund. This plan is commonly known as the
"Percent of Market Value" ("POMV") draw. Still, those
statutes do not stop the Legislature from passing
budgets that spend Permanent Fund earnings beyond than
those sustainable limits. This resolution would send a
proposed amendment to Alaska voters to enshrine this
policy in the constitution.
The proposed constitutional amendment would combine
the Permanent Fund Principal and the Permanent Fund
Earnings Reserve Account into a single
constitutionally protected account. Under this
proposed amendment, the Legislature would be allowed
to appropriate each year a maximum of five percent
(5%) of the market value of that new constitutionally
safeguarded account as calculated over the first five
of the preceding six fiscal years. Experts have told
the Legislature that these limits make that spending
rate sustainable.
The Permanent Fund's Board of Trustees have
recommended this change since 2003, and this
constitutional amendment was also urged by the Fiscal
Policy Working Group, a bipartisan and bicameral group
of legislators that issued a report in 2021.
This measure is not and should not deal with the size
of the Permanent Fund Dividend or what specific
percentage of this appropriation is spent on state
services. It neither encourages nor prevents
legislators from pursuing those plans in the future.
This merely prevents the state from overspending our
renewable financial resource which ensures the
permanence of our Permanent Fund.
1:06:12 PM
DEVEN MITCHELL, Executive Director, Alaska Permanent Fund
Corporation (APFC), referred to a PowerPoint, titled "Trustees'
Paper Volume 10 Modernizing the Alaska Permanent Fund: A Single-
Fund Endowment Model." He summarized slide 2, "A Legacy of
Intergenerational Resource Contribution," which read as follows
[original punctuation provided]:
In 1976
Alaskans chose to permanently forgo immediate use of
at least 25% of oil and mineral revenues, saving
instead to create a renewable financial resource for
generations the Alaska Permanent Fund.
Today, the Fund -
• Leads the Nation
The largest U.S. sovereign wealth fund, globally
recognized as a model for converting finite
natural resources into lasting wealth.
• Supports Alaska
Provides over 50% of the state's unrestricted
general fund revenue for dividends and essential
services through the annual Percent of Market
Value (POMV) draw.
MR. MITCHELL said the structural change before the committee has
been advocated for since the Knowles administration in the
1990s, and each iteration of the APFC Board of Trustees since
then. He said the primary reason for considering HJR 10 is to
ensure that the percent of market value (POMV) draw is
transferred each year and eliminate the ability for one
generation to spend more than its fair share.
1:11:57 PM
The committee took an at-ease from 1:11 p.m. to 1:13 p.m.
1:13:17 PM
CHAIR GRAY questioned the major opposition to this proposal and
why it has never been enacted.
MR. MITCHELL said change is hard. He shared his belief that
there's been a legacy of concern about impact to other things,
like the permanent fund dividend (PFD) program, and fear that
the POMV transfer may result in a gradual drain on the Alaska
Permanent Fund ("the fund"). He said there's been a lack of
ability to adequately educate policy makers and allow them to
embrace the idea and its strengths.
1:15:02 PM
MR. MITCHELL explained that the benefits of switching to a
single-fund endowment structure is to ensure the ability for the
state to provide for a dividend and its operating needs, and
avoid a potential overdraw by the legislature or governor. It
would also eliminate the need for inflation proofing, as all
earnings would be retained and reinvested in the single fund.
He referenced the historical performance of the fund in 10-year
lookbacks. The takeaway, he said, is that the target rate of
return is a challenge to hit on a long-term basis, but
achievable at 5 percent.
1:19:58 PM
MR. MITCHELL referred to slide 3, which showed the current two-
account structure, which is far more complex than the proposed
solution and involves more risk. He explained that there is
significant levels of unrealized gains in the fund's portfolio
that cannot be spent under the current construct without selling
an investment that's increased in value or receive revenue from
a stock or bond in the form of interest, which illustrates the
concern about the ability to provide for the POMV transfer on an
ongoing basis. He recalled that the Division of Legislative
Finance ("LFD")) had modeled a scenario that showed insufficient
money in the Earnings Reserve Account (ERA) to provide for the
POMV draw.
1:22:33 PM
REPRESENTATIVE VANCE asked Mr. Mitchell to respond to the
concern that transitioning to a single model would take away the
flexibility to draw from the ERA in a tight year.
MR. MITCHELL said the question encapsulate the current
discussion about overdrawing the fund for one generation's
benefit at the expense of others. He indicated that the
inability to impose fiscal restraint is made harder with more
options, so from a conservative fiscal perspective, the proposal
would eliminate the ability to overspend from this resource.
1:25:25 PM
REPRESENTATIVE VANCE asked whether LFD and APFC had provided an
assessment on the status of the ERA and how it might change in
the coming years, given the state of the economy.
MR. MITCHELL said Callan's market assumptions are extrapolated
to project future balances, but it's difficult to predict. He
acknowledged that HJR 10 would limit the state's flexibility and
force the state to maintain fiscal discipline. However, he
shared his belief that if boundaries are never set, available
resources will always be used.
REPRESENTATIVE KOPP asked about the risk to the state in a
volatile market with a single-fund endowment. He shared his
understanding that under the current structure, the ERA absorbs
the losses, as well as the gains, for the entire fund.
MR. MITCHELL clarified that it used to be that way; however,
during the 2008 financial crisis, it was modified so that gains
losses are pro-rata allocated between the two accounts.
REPRESENTATIVE KOPP asked whether the single-fund endowment
model would better protect the state against a volatile market.
MR. MITCHELL said shifting to a single fund could have marginal
benefits; however, it would not significantly adjust the risk
tolerance. He reiterated that the goal of investment staff is
to maximize total return for the long-term benefit of the state
and worry less about unrealized or realized gains.
1:34:51 PM
REPRESENTATIVE KOPP surmised that the greater fear is
overdrawing the fund. He posited that the single-fund endowment
would allow for more control over risk and increase the state's
safety by prohibiting an overdraw.
MR. MITCHELL agreed that, although not verbatim, that is
generally APFC's sentiment.
1:36:20 PM
MR. MITCHELL resumed the presentation on slide 4, which gave a
comparative look at the fund's value in a two-account structure
and the proposed endowment model as of January 31, 2025. Slide
6 charted the volatility of oil revenue, the dividend payment,
and POMV transfer. It's intended to show the stability of the
POMV draw on revenue and its benefit to the state. Slide 7 show
the story of the ERA and the declining realized earnings from
almost $13 billion in Fiscal Year 2019 (FY 19) to a deficit of
$400 million in FY 25. He summarized slide 9, "Proposed:
Single-Fund Endowment Model," which read as follows [original
punctuation provided]:
Adopting this model, which would include a
Constitutionally established spending limit, would
strengthen the Fund's long-term stability and
purchasing power for future generations.
• Merge the Principal and the ERA into a Single-
Fund.
• Limit annual distributions through a
Constitutional POMV Rule.
• Ensure automatic inflation proofing by adhering
to a long-term sustainable withdrawal rate.
MR. MITCHELL continued to slide 10, "Benefits of the Single-Fund
Endowment Model," which read as follows [original punctuation
provided]:
Aligned with global best practices, strengthening
Alaska's financial position through sustainable
withdrawals & limited to the Fund's long-term real
return.
Alignment with Prudent Investor Standards
Follows best fiduciary and prudent practices for
endowments and trusts.
Total-Return Investing
Maximizes long-term growth without liquidity
constraints.
Predictable & Sustainable Spending
A maximum draw POMV rule prevents overspending.
Automatic Inflation Proofing
Eliminates the need for manual and ad hoc legislative
adjustments.
MR. MITCHELL advanced to slide 11, "Constitutional Amendment,"
which read as follows [original punctuation provided]:
The Board of Trustees has been on record for more than
twenty years supporting the transition to a Single-
Fund endowment to protect its intergenerational
sustainability and ensure that it provides for all
generations.
Board Resolutions 2000-13, 2003-05, 2004-09
• Supporting a constitutional amendment to limit
the annual Fund payout to not more than a 5% POMV
averaged over a period of 5 years.
• Implementing a constitutional POMV spending limit
has the accompanying benefit of assuring
permanent inflation-proofing of the Fund.
MR. MITCHELL summarized the Trustees' Paper Volume 10 on slide
10, which highlighted the benefits of moving to a single account
structure.
1:43:15 PM
CHAIR GRAY expressed some concern that moving to an endowment
model would take away the flexibility that the ERA provides;
however, he expressed opposition to a spending cap. For someone
who wants to maintain flexibility without a spending cap, he
said he supports the bill because he wouldn't want to be in a
situation where there's nothing in the ERA.
1:44:43 PM
CHAIR GRAY opened public testimony on HRJ 10.
1:45:13 PM
BENJAMIN COOK, representing self, gave testimony unrelated to
the bill.
1:46:41 PM
MIKE COONS, representing self, testified in opposition to HJR
10. Commented on his disapproval of the 5 percent draw, and the
75/25 dividend split.
1:49:57 PM
CARRIE HARRIS, representing self, gave testimony unrelated to
the bill.
CHAIR GRAY closed public testimony on HJR 10.
1:53:50 PM
REPRESENTATIVE VANCE asked why Legislative Legal Services
included the language on page 2, lines 1-5, to be included in
the Constitution of the State of Alaska ("the Alaska
Constitution").
REPRESENTATIVE SCHRAGE reasoned that it would allow certain
expenses associated with the management of the fund to be
considered outside that 5 percent because it's related to the
sustainability of the fund.
REPRESENTATIVE VANCE sought to confirm that the [appropriation
to pay for management expenses] would happen before the money is
deposited into the general fund (GF).
REPRESENTATIVE SCHRAGE deferred the line of questioning to
Legislative Legal Services.
1:57:13 PM
CHAIR GRAY said some of the value of the Alaska Constitution is
its broadness. He expressed concern about constitutionalizing
specific numbers that may need to be changed in the future.
REPRESENTATIVE SCHRAGE expressed concern that about the
legislature taking a disproportionate share of the ERA given the
sacrifice of past generations. He acknowledged that HJR 10
would put a specific cap on the draw; however, he opined that a
limit needs to be implemented to prevent today's generation from
overdrawing the fund. He said 5 percent is viewed as being on
the high end of sustainable while still allowing the legislature
the flexibility to draw less.
2:01:12 PM
CHAIR GRAY said he fundamentally disagreed with the notion of
trusting the market more than "ourselves." He asked why the
legislature would take away its decision-making power to be
governed by the market.
2:02:00 PM
REPRESENTATIVE KOPP pointed out that specific numbers were used
in 1976 and opined that [5 percent] is reasonable.
CHAIR GRAY raised the concern about the legislature not being
able to bail itself out in an emergency situation.
REPRESENTATIVE KOPP contended that in an emergency, the Alaska
Constitution would allow the governor to break any spending
rule.
2:05:18 PM
REPRESENTATIVE SCHRAGE agreed that the legislature has
historically shown discipline in building up the Constitutional
Budget Reserve (CBR), but on the flip side, it also spent down
the CBR. He reiterated that a 5 percent cap would allow
flexibility in spending while avoiding the erosion of the fund's
value.
2:07:42 PM
REPRESENTATIVE VANCE asked about the impact of the language on
page 2, lines 2-5.
2:08:27 PM
EMILY NAUMAN, Director, Legislative Legal Services, Legislative
Affairs Agency (LAA), said currently, Article IX, Section 15, of
the Alaska Constitution does not provide for costs associated
with the investments made by APFC to come out of the corpus or
Principal of the fund. HJR 10 makes a policy decision that
would allow the legislature to appropriate from the Principal to
pay those [administrative] costs associated with investments.
REPRESENTATIVE SCHRAGE referred to page 2, line 3, and asked
whether the appropriations for those expenses would fall outside
the 5 percent limit.
MS. NAUMAN answered yes.
2:10:49 PM
REPRESENTATIVE VANCE asked why the legislature would want to pay
these costs from the corpus and not the GF.
REPRESENTATIVE SCHRAGE said either would be appropriate and a
policy call for the legislature to make.
REPRESENTATIVE VANCE sought to confirm that it's keeping with
current practices.
REPRESENTATIVE SCHRAGE answered yes.
2:11:53 PM
REPRESENTATIVE MINA pointed out that HJR 10 had been a unanimous
recommendation from the 2021 Fiscal Policy Working Group in
conjunction with numerous other policy solutions for addressing
the structural deficit. This is not the only lever for
addressing state funding, she added.
2:12:33 PM
REPRESENTATIVE UNDERWOOD asked whether HJR 10 would be
considered a constitutional amendment or a revision.
MS. NAUMAN opined that it would not constitute a revision, which
would require a constitutional convention, because it meets the
four-pronged test for constitutional amendments: the proposal is
simple and easy to understand, complete within itself, relates
to one subject, and substantially affects only one section of
the Alaska constitution.
2:14:51 PM
REPRESENTATIVE UNDERWOOD asked whether the 5 percent draw is a
spending cap, and if so, why not change the constitutional
spending cap instead of the POMV draw.
REPRESENTATIVE SCHRAGE said it's a revenue cap, which he
characterized as one of the best forms of spending cap because
it limits the amount available for appropriation. He said
adjusting the spending cap would not protect the fund from
overdraw, which is the aim of the resolution.
REPRESENTATIVE VANCE asked whether the inclusion of more than 25
percent of all mineral lease rentals, royalties, royalty sale
proceeds, federal mineral revenue sharing payments, and bonuses
received by the State, as well as a portion of renewable
resources, into the Alaska Permanent Fund had been discussed in
the Fiscal Policy Working Group.
REPRESENTATIVE SCHRAGE said not that he recalled.
2:18:31 PM
REPRESENTATIVE VANCE said she would appreciate a fiscal analysis
on the impact of this proposal.
2:20:35 PM
CHAIR GRAY announced that HJR 10 was held over.
HB 209-PERMANENT FUND DIVIDEND: INCOME THRESHOLD
2:20:47 PM
CHAIR GRAY announced that the final order of business would be
HOUSE BILL NO. 209, "An Act relating to the Alaska permanent
fund; relating to income of the Alaska permanent fund; relating
to the amount available for appropriation and appropriations
from the earnings reserve account; relating to the permanent
fund dividend; and providing for an effective date."
2:21:04 PM
The committee took a brief at-ease at 2:21 p.m.
2:22:28 PM
REPRESENTATIVE ZACK FIELDS, Alaska State Legislature, as prime
sponsor, presented HB 209. He said many people in the public
are not aware of how dire Alaska's fiscal situation is becoming
with declining oil prices. He stated that paying a $1,000
dividend will become impossible without significant new taxes,
means-testing, or wholesale elimination of programs. He said
there are hard choices ahead and HB 209 provides one more option
on the table for those Alaskans who see value in having a
meaningful permanent fund dividend (FPD). He referred to a
PowerPoint presentation on HB 209 [included in the committee
packet] that shared the history of the Alaska Permanent Fund,
the establishment of the dividend, historic dividend averages,
and Legislative Finance Division (LFD) models. He shared that
the bill would set the PFD at $1,000, which is in line with the
historical average. In comparing the LFD models, he indicated
that paying a full statutory dividend, a 50/50 dividend, or a
75/25 dividend would not be possible without a significant tax
increase. He stated that a $1,000 dividend would be achievable
if its means-tested with minor to no taxes, or modest taxes.
2:32:20 PM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, on behalf of Representative Fields, prime sponsor,
presented the sectional analysis for HB 209 [included in the
committee packet], which read as follows [original punctuation
provided]:
Section 1: This section amends AS 37.13.140 to
authorize the Department to compute the net income of
the Permanent Fund annually on the last day of the
fiscal year, excluding any unrealized gains or losses.
It removes the statutory calculation that income
available for distribution equal 21% of the net income
of the fund for the last five fiscal years.
Section 2: This section amends AS 37.13.145(b) to
authorize the legislature to appropriate funds from
the earnings reserve account to the dividend fund and
to pay out a dividend of $1,000 to each eligible
individual per fiscal year.
Section 3: This section amends AS 37.13.145(c) to give
the legislature the ability to appropriate additional
funds from the earnings reserve account to the
principal of the Permanent Fund in order to offset the
effect of inflation during that fiscal year.
Section 4: This section amends AS 37.13.145(d)
replacing the words "distribution" and "transfer" with
"appropriation" to conform with previous sections.
Section 5: This section amends AS 37.13.145(f), which
gives the legislature the authority to appropriate
funds from the earnings reserve account to the general
fund. This is a conforming change.
Section 6: This section amends AS 37.13.300(c), making
conforming changes to the statute that disallows the
legislature from including income from the mental
health trust fund in the funds available for
appropriation.
Section 7: This section amends AS 43.23.005(a), to
establish a new income threshold for Permanent Fund
Dividend eligibility. Individuals who earn $50,000 or
less annually, or married couples who earn $100,000 or
less of combined income are eligible to receive a
dividend. Individuals who are exempt from filing a
federal income tax return are also eligible.
Section 8: This section amends AS 43.23.028(a) to
remove the annual public notice requirement for the
Permanent Fund Dividend amount and instead replace it
with a similar disclosure that each recipient of the
PFD will receive.
Section 9: This section is a conforming change to AS
43.23.045(d) to delete the phrase "determining the
amount of" because the PFD is capped at $1000.
Section 10: This section repeals AS 43.23.025(a) which
directs the Department to calculate the amount of the
dividend annually. This section also repeals AS
43.23.028(b), which directs the Department to transfer
the amount that would have been owed to ineligible
applicants to the restorative justice fund.
Section 11: This section adds new language to
uncodified law to clarify that the provisions of this
bill apply to the dividend qualifying year 2025 for
the 2026 dividend.
Section 12: This section sets an immediate effective
date for the bill.
2:35:20 PM
CHAIR GRAY sought questions from committee members.
2:35:34 PM
REPRESENTATIVE KOPP spoke to the importance of talking honestly
about the state's fiscal situation and thanked the sponsor for
initiating this conversation. He commented on the volatility in
the price of oil and said paying a full statutory dividend in
this year's budget would result in a $1.6 billion deficit. He
added that paying the full statutory dividend in years past
stretched communities so thin and almost resulted in a recall of
the governor. He added that whether this is the right solution
or not, putting parameters around the dividend is an important
conversation.
2:38:50 PM
REPRESENTATIVE MINA expressed appreciation for the bill sponsor
for educating the public on the structural deficit. She asked
whether there are instances in which a corporation would
exclusively limit who receives a dividend.
REPRESENTATIVE FIELDS responded yes, the dividend has been used
as a universal basic income program but as the Alaska Supreme
Court opined, it could be based on a rational income test that
wouldn't discriminate Equal Protection laws.
CHAIR GRAY asked Mr. Mills to comment.
2:40:55 PM
SEAN MILLS, House Majority Staff, Alaska State Legislature, said
the Zobel v. Williams case offers legal guidance on designing a
system for a PFD distribution. He explained that similarly
situated people cannot be treated differently under Equal
Protection rights in the U.S. Constitution. He described the
Zobel case in greater detail, which struck down a prior system
of distributing the dividend based on years of residency;
however, a means test based on current income would not be
considered permanent classification and would avoid a similar
Equal Protection issue. He opined that there would not be Equal
Protection issues with HB 209.
2:45:33 PM
CHAIR GRAY asked whether the Alaska Supreme Court "got it right"
with regard to the Zobel case.
MR. MILLS said the most significant question raised is whether
the Alaska Supreme Court used a more lenient standard than what
was appropriate at the time. There was a dissent in the case by
Justice William Rehnquist who believed that a stricter standard
should have been applied, which is also reflected in some of the
concurring opinions. Nonetheless, the law failed under the
lowest rational basis standard.
2:48:19 PM
REPRESENTATIVE MINA pointed out that in the bill, the PFD is
means tested at $1,000. She referred to the PowerPoint
presentation and asked whether the historic dividend averages
were adjusted for inflation.
REPRESENTATIVE FIELDS answered no.
REPRESENTATIVE MINA estimated that $1,000 in 1982 would be
$3,300 when adjusted for inflation in today's dollars. In that
sense, she asked whether $1,000 is an accurate average.
REPRESENTATIVE FIELDS stated that the fund is a renewable
resource, most of which has been generated by investment and is
consistent with the voter's original intent in 1976. He opined
that "good legislation" must honor that original intent and grow
that renewable resource. For that reason, he said he would
never vote for overspending beyond the 5 percent POMV cap.
2:51:20 PM
REPRESENTATIVE VANCE asked why the legislature should turn the
dividend into welfare.
REPRESENTATIVE FIELDS said he put the bill forward for voters to
inform the legislature of their preferences in a tough fiscal
climate. He said the legislature could choose not to means test
the dividend and let its value erode; however, he argued that he
would not consider means testing as welfare.
REPRESENTATIVE VANCE countered the idea that it's would not be
welfare by citing Section 7, which would specifically distribute
the dividend to low-income people. She asked how $50,000 per
individual and $100,000 for a couple was decided upon.
REPRESENTATIVE FIELDS stated that the bill is a compromise
between those who rely on the dividend and those who want to get
rid of it. He said the dividend could be means tested to
determine the right dollar figure and peg it to inflation. He
reiterated his belief that it doesn't make sense for his family
to receive a dividend when they make hundreds of thousand
dollars per year while essentially taking it away from someone
in Mountain View.
2:55:26 PM
REPRESENTATIVE UNDERWOOD shared an example of a person with
millions in assets who chose to earn a salary of less than
$50,000. She asked given the Wielechowski v. State of Alaska
decision, whether the legislature could still choose to
appropriate or not appropriate if the bill were to pass.
REPRESENTATIVE FIELDS reiterated that the dividend would
diminish to zero on its current path. He asked whether it would
be better to update the formula with something achievable and
pay $1,000 to those who need it most. In response to
Representative Underwood's first example, he said it would make
sense to ask the Department of Revenue (DOR) how to best capture
the high-net-worth low adjusted gross income individuals.
2:58:07 PM
REPRESENTATIVE COSTELLO said she struggled with the idea of
making the dividend program something other than a share in the
state's mineral wealth. She stated that the dividend is
sacrosanct to Alaskans and said she's not sure this bill is
something the public would ever support. She spoke to the
history of the dividend and asked the bill sponsor to respond to
her concerns.
REPRESENTATIVE FIELDS shared his understanding that the key
purpose of the PFD was to grow the fund, as established by
voters in the constitution, which was a new idea for states. He
added that the dividend gave people a stake in growing the fund
and was designed to be a means to that end. He posited that
although circumstances are different in today's fiscal climate,
fidelity to the fund must remain consistent.
REPRESENTATIVE COSTELLO argued that the dividend protects the
corpus of the fund, so making it means tested would stray from
its intended purpose.
3:03:57 PM
REPRESENTATIVE EISCHEID sought to clarify that the bill would
set the PFD at a max of $1,000 for eligible recipients.
REPRESENTATIVE FIELDS answered yes, it would update the PFD
formula to $1,000.
REPRESENTATIVE EISCHEID asked if the bill were to pass, whether
it would cut the PFD for those who qualify due to inflation.
REPRESENTATIVE FIELDS pointed out that most budget items are not
pegged to inflation.
REPRESENTATIVE EISCHEID asked whether as written, the dividend
would be an inflationary cut.
REPRESENTATIVE FIELDS responded no, because it would actually
increase the dividend for the people who need it relative to its
current path, which is on a rapid decline. He reiterated that
at projected oil prices, the dividend would be in the low
hundreds of dollars within the next 3 to 4 years.
REPRESENTATIVE EISCHEID expressed concern that a $1,00 dividend
would shrink each year when adjusting for inflation.
3:06:50 PM
CHAIR GRAY characterized the PFD as the most progressive fiscal
policy in America, which has resulted in much less income
equality in Alaska. He said the dividend is amazing because of
its benefit to the poorest in Alaska. He said he liked the bill
but it's too conservative because it's not tied to inflation,
the income cap is too low, and $1,000 is not enough. He
commended the bill sponsor for telling the truth and in that
spirit, he shared his own truths about HB 209: the income
thresholds would be raised, the dividend amount would be
doubled, and it would be tied to inflation. He announced that
HB 209 was held over.
3:08:58 PM
CHAIR GRAY gave closing remarks on future business.
3:09:44 PM
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR 10 Version A.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Sectional Analysis.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Fiscal Note Governor.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Presentation.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Invited Testimony.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10- Memo.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HB 209 Sponsor Statement.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 Version A.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 - Sectional Analysis.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 - JUD Bill Presentation 4.28.25.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 Supporting Document Sum of PFD Payments 1982-2024.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HJR 10 - Sponsor Statement 5.2.25.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 Supporting Document APFC presentation UPDATED.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HB 209 Supporting Doc Case Brief Zobel.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 - JUD Bill Presentation 5.5.25.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |