Legislature(2019 - 2020)GRUENBERG 120
05/11/2019 11:30 AM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HR11 | |
| HB132 | |
| HR11 | |
| HB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HR 11 | TELECONFERENCED | |
| += | HB 132 | TELECONFERENCED | |
| *+ | HB 141 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
May 11, 2019
11:38 a.m.
MEMBERS PRESENT
Representative Jonathan Kreiss-Tomkins, Co-Chair
Representative Grier Hopkins
Representative Andi Story
Representative Adam Wool
Representative Sarah Vance
MEMBERS ABSENT
Representative Zack Fields, Co-Chair
Representative Laddie Shaw
COMMITTEE CALENDAR
HOUSE RESOLUTION NO. 11
Supporting the renaming of Saginaw Bay as Skanax Bay.
- MOVED HR 11 OUT OF COMMITTEE
HOUSE BILL NO. 132
"An Act relating to the Alaska permanent fund; relating to the
earnings reserve account; relating to the permanent fund
dividend; relating to deposits into the permanent fund; relating
to appropriations to the dividend fund and general fund; and
providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 141
"An Act relating to disbursement of the permanent fund dividend;
relating to transfers of permanent fund dividends into the
restorative justice account; and relating to contributions from,
claims against, and assignments of permanent fund dividends."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HR 11
SHORT TITLE: RENAME SAGINAW BAY AS SKANAX BAY
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS
05/08/19 (H) READ THE FIRST TIME - REFERRALS
05/08/19 (H) STA
05/09/19 (H) STA AT 3:00 PM GRUENBERG 120
05/09/19 (H) Heard & Held
05/09/19 (H) MINUTE(STA)
05/11/19 (H) STA AT 11:30 AM GRUENBERG 120
BILL: HB 132
SHORT TITLE: PERM. FUND:DEPOSITS;DIVIDEND;EARNINGS
SPONSOR(s): REPRESENTATIVE(s) WOOL
04/15/19 (H) READ THE FIRST TIME - REFERRALS
04/15/19 (H) STA, FIN
04/25/19 (H) STA AT 3:00 PM GRUENBERG 120
04/25/19 (H) Heard & Held
04/25/19 (H) MINUTE(STA)
05/11/19 (H) STA AT 11:30 AM GRUENBERG 120
BILL: HB 141
SHORT TITLE: PFD PAYMENT SCHEDULE
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS
04/22/19 (H) READ THE FIRST TIME - REFERRALS
04/22/19 (H) STA, JUD
05/11/19 (H) STA AT 11:30 AM GRUENBERG 120
WITNESS REGISTER
NATHANIEL GRABMAN, Staff
Representative Adam Wool
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on HB 132, on behalf of
Representative Wool, prime sponsor.
SIDHYA BALAKRISHNAN, Director of Research
Jain Family Institute
New York, New York
POSITION STATEMENT: Provided information during the hearing on
HB 141.
BRUCE TANGEMAN, Commissioner
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Provided information during the hearing on
HB 141.
ACTION NARRATIVE
11:38:42 AM
CO-CHAIR JONATHAN KREISS-TOMKINS called the House State Affairs
Standing Committee meeting to order at 11:38 a.m.
Representatives Hopkins, Story, Wool, Vance, and Kreiss-Tomkins
were present at the call to order.
HR 11-RENAME SAGINAW BAY AS SKANAX BAY
11:39:36 AM
CO-CHAIR KREISS-TOMKINS announced that the first order of
business would be HOUSE RESOLUTION NO. 11, Supporting the
renaming of Saginaw Bay as Skanax Bay.
11:39:52 AM
REPRESENTATIVE VANCE asked for the meaning of the name "Skanax."
CO-CHAIR KREISS-TOMKINS replied that he would provide her with
that information.
11:40:38 AM
REPRESENTATIVE STORY moved to report HR 11 out of committee with
individual recommendations and the accompanying zero fiscal
note. There being no objection, HR 11 was reported from the
House State Affairs Standing Committee.
HB 132-PERM. FUND:DEPOSITS;DIVIDEND;EARNINGS
11:41:05 AM
CO-CHAIR KREISS-TOMKINS announced that the next order of
business would be HOUSE BILL NO. 132, "An Act relating to the
Alaska permanent fund; relating to the earnings reserve account;
relating to the permanent fund dividend; relating to deposits
into the permanent fund; relating to appropriations to the
dividend fund and general fund; and providing for an effective
date."
11:41:45 AM
REPRESENTATIVE WOOL, as prime sponsor of HB 132, explained that
HB 132 would change the formula for calculating the permanent
fund dividend (PFD). He stated that since the statutory formula
for the PFD has not been followed for several years, the
proposed legislation would replace it with one that the
legislature can follow. He mentioned discussions among
legislators regarding using a percentage of the percent of
market value (POMV) to calculate the PFD. He relayed that his
disagreement with that method is based on his belief that the
POMV will increase in value over the next decades, as it is
based on the performance of the [stock] market; whereas, the
legislation he is proposing would derive the amount of the PFD
from oil revenues, which he maintained would be safer. He said
that when oil revenues are up, state revenue is healthy and the
state can afford a dividend check of a set value; however, when
oil revenue is down, POMV money is needed to fund state
operations. The PFD amount would depend on oil revenues. He
maintained that if oil revenues were to decrease precipitously,
the state would not be obligated to pay out a large PFD check
based on the performance of "Wall Street." He offered that oil
prices tend move in the opposite direction than the U.S. and
global economies; therefore, there exists an inverse
relationship between the Alaska economy and the market economy.
He reiterated his belief that the PFD amount should be tied to
oil revenues. He mentioned that currently the proposed
legislation specifies the appropriation for the PFD to be the
lesser of 33 percent of oil revenues or $1,800; there is a
forthcoming amendment to change that percentage to 40 percent.
He offered that as oil revenues increase, the PFD check would
increase as well.
11:45:27 AM
REPRESENTATIVE STORY referred to the PowerPoint presentation,
entitled "HB 132: A New Approach to the PFD," [slide 7,
entitled "PFD Values, HB 132 vs. Proposed POMV Splits"], and
asked whether based on current projections of oil revenue, the
PFD would be about $1,200-$1,400 per year in the next few years.
REPRESENTATIVE WOOL deferred the question to staff.
11:46:33 AM
NATHANIEL GRABMAN, Staff, Representative Adam Wool, Alaska State
Legislature, on behalf of Representative Wool, prime sponsor of
HB 132, responded that based on the revenue projections from the
Revenue Sources Book Fall 2018 [Department of Revenue (DOR)],
under the 33 percent, the PFD would continue to rise over time
but would be a steady climb from about $1,500 in 2020 to close
to $2,000 a decade later.
CO-CHAIR KREISS-TOMKINS indicated that HB 132 would be held
over.
HR 11-RENAME SAGINAW BAY AS SKANAX BAY
11:47:49 AM
[CO-CHAIR KREISS-TOMKINS returned to HR 11 to explain the
meaning of "Skanax."]
CO-CHAIR KREISS-TOMKINS recited from the application sent to the
U.S. Board on Geographic Names, as follows: The recommended
name, Skanax, has been used in the region since time immemorial.
Skanax refers to the name of the village on the eastern shore of
the bay - a village that no longer exists. It was one of three
villages bombed in 1869.
HB 141-PFD PAYMENT SCHEDULE
11:48:32 AM
CO-CHAIR KREISS-TOMKINS announced that the final order of
business would be HOUSE BILL NO. 141, "An Act relating to
disbursement of the permanent fund dividend; relating to
transfers of permanent fund dividends into the restorative
justice account; and relating to contributions from, claims
against, and assignments of permanent fund dividends."
CO-CHAIR KREISS-TOMKINS, as prime sponsor, introduced HB 141 -
relating to the permanent fund dividend (PFD) payment schedule.
He expressed his desire to air the concept of quarterly
disbursements of the PFD; there is rising interest in the idea;
and the Senate Judiciary Standing Committee incorporated
quarterly disbursements into SJR 5 [4/14/19 committee meeting].
11:49:57 AM
SIDHYA BALAKRISHNAN, Director of Research, Jain Family
Institute, relayed that she performs research on the social
science perspective of quarterly payments versus annual payments
of guaranteed income. She said that the ideal scenario is that
a person would anticipate the annual payment and plan
accordingly; however, in poor households - ones constrained with
savings and credit - people cannot anticipate how to spend the
payment. She mentioned that literature is not conclusive in
supporting more frequent payments; however, literature suggests,
and it is her conclusion, that more frequent disbursements are
needed for poor households to smooth out their consumption. For
those lacking credit, money is needed more often in order to
make ends meet. She recommended an "opt-in" option for
frequency of payments. She emphasized the importance of people
receiving money when they need it most.
CO-CHAIR KREISS-TOMKINS restated Ms. Balakrishnan's perspective:
from the body of academic research, it is ambiguous that a more
frequent disbursement schedule is recommended; however, she
recommends giving PFD recipients the discretion for frequency of
payments.
MS. BALAKRISHNAN clarified that research results are ambiguous
inasmuch as the population is widely heterogenous and has a
variety of restraints; people who have large investments to make
can benefit from a single disbursement. She maintained that to
create a policy to help the most people, an option for frequency
of disbursements is best.
11:53:50 AM
REPRESENTATIVE STORY asked what the effect [of quarterly
payments] would be on the Alaska Permanent Fund Corporation
(APFC).
CO-CHAIR KREISS-TOMKINS answered that APFC has been clear that
it does not have a position or predilection of the payment
schedule; it needs certainty regarding the amount to be
disbursed and when it is to be disbursed.
REPRESENTATIVE VANCE asked whether there will be a formal
presentation on the proposed legislation before invited
testimony.
CO-CHAIR KREISS-TOMKINS replied that the invited testimony is on
the general question of disbursement frequency, and Ms.
Balakrishnan has studied the literature of disbursement of cash
transfers. He added that a formal presentation on HB 141 may be
forthcoming.
REPRESENTATIVE VANCE expressed that a formal presentation on HB
141 could inform the public; it is big issue among Alaskans; and
they will want input.
11:55:56 AM
REPRESENTATIVE HOPKINS asked Ms. Balakrishnan whether she is
aware of other social safety net programs in which a one-time
large distribution was replaced with smaller more frequent
distributions.
MS. BALAKRISHNAN mentioned guaranteed income literature and the
universal basic income (UBI) experiment in Stockton, California
disbursing monthly payments. She relayed that there have been
various proposals for the frequency of money transfers. She
reiterated that the evidence is different for different people.
She stated that giving people frequent payments helps smooth
consumption, especially in poor households, which relates to
Alaska villages.
REPRESENTATIVE HOPKINS asked whether quarterly payments of the
PFD would make it more like guaranteed income payments.
MS. BALAKRISHNAN explained that most people define guaranteed
income as frequent unconditional payments - enough to sustain a
certain standard of living. She said a lump sum payment is
close to a guaranteed income payment; however, assumptions are
made as to how people will spend that money and plan accordingly
depending on the size and frequency of the payment. She
maintained that it is a difficult question; guaranteed income is
regarded as high frequency yet is still discussed in terms of
the amount of money, not the frequency of the payment.
11:59:34 AM
CO-CHAIR KREISS-TOMKINS asked for a definition of consumption
smoothing.
MS. BALAKRISHNAN responded: An individual receiving income must
decide how to spend it; if it is an anticipated transfer - the
amount and time of payment is known - the person may plan. The
goal is to consume, save, or invest at the same levels in order
to avoid shocks or volatilities in income or consumption and by
doing this, spread consumption across a lifetime. This is
consumption smoothing.
12:01:37 PM
REPRESENTATIVE HOPKINS referred to a guaranteed income
guaranteeing a quality of life. He asked whether a payment of
$3,000 or $3,200 per year is enough to qualify as a guaranteed
income.
MS. BALAKRISHNAN replied no. She stated that Alaska's PFD
program has been mentioned in guaranteed income literature
because it is the most long-standing unconditional payment. She
stated that Alaska's PFD can be referred to as guaranteed income
but not universal basic income. She maintained that guaranteed
income does not refer to "minimum standard of living." Alaska's
PFD is included in the guaranteed income literature because it
serves as a proxy to understanding the unconditionality and the
long-term effects of payments, but it is not appropriate in UBI
literature.
12:03:15 PM
REPRESENTATIVE WOOL mentioned that a PFD check of $3,000 would
give a family with two adults and four children $18,000. He
suggested that this amount might be considered basic income in a
rural community.
MS. BALAKRISHNAN agreed, but said she would need to look at the
minimum standard of living for a household to make that
assessment. She said that typically UBI is discussed in terms
of $500-$1,000 per month payments; and Alaska's PDF amount falls
short of that threshold.
12:07:06 PM
REPRESENTATIVE WOOL expressed his belief that the concept of
payments over time stemmed from a desire to curb certain
spending habits of recipients and activities causing social
problems. He mentioned missed work, substance abuse, and
domestic violence. He referred to the mention of an opt-in
option and opined that the people who would best benefit from a
timed payment would be the ones not to choose a timed payment.
He asked whether under UBI, recipients are given the option of a
monthly payment versus a lump sum.
MS. BALAKRISHNAN relayed that there is ample evidence that
people in extremely constrained households do not use money
unwisely. She maintained that her reasoning in recommending an
opt-in option is not to change how people spend money, but
because she cannot know the constraints and needs of the
recipient. As a policy maker, she is looking for ways to help
people. She expressed her belief that people are the best
judges of their own lives and should be allowed to make the
choice of payment schedule.
REPRESENTATIVE WOOL relayed that Ms. Balakrishnan stated that
lump sum payments don't increase temptation purchases. He asked
whether she has looked at Alaska statistics. He mentioned that
certain behaviors are documented to have spiked shortly after
check disbursements, and anecdotally, there are stories of
increases in certain behaviors.
MS. BALAKRISHNAN responded that her citations are from social
science literature and research globally.
12:13:16 PM
BRUCE TANGEMAN, Commissioner, Department of Revenue (DOR),
relayed that that Alaska has distributed the PFD for 37 years -
from 1982-2018; the low was $331 in 1984 and the high was $2,017
in 2015. There was no discussion about when the check would be
distributed; it always was done in October. He speculated that
October was chosen because of the need for money for heating
fuel. He stated that from the department's perspective, cost
and technical challenges must be considered. He asked, "What's
the goal?" He acknowledged different opinions on the topic. He
relayed that a great deal of work goes into issuing the PFDs and
some of the biggest concerns are the cost of distributing four
times as many checks. He mentioned staff reductions in the PFD
Division and streamlining procedures. During PFD application
and distribution, it is "all hands on deck." Disbursement four
times per year would require a substantial reinforcement of the
division.
12:18:19 PM
REPRESENTATIVE WOOL suggested that applications would still be
once per year; disbursements would increase to four.
MR. TANGEMAN agreed. He stated that the other issue relates to
the thousands of PFD garnishments. He mentioned that
Pick.Click.Give. would be affected as well. He suggested that
the opt-in system would entail substantial costs for
reprogramming the computer system. He offered that APFC is
neutral on this issue; its main concern is with the percent of
market value (POMV) and the cash requirements. How the money is
spent is not its concern.
12:22:03 PM
REPRESENTATIVE HOPKINS asked whether quarterly disbursements
would mean money stays in the earnings reserve account (ERA)
longer; therefore, there would be greater earnings power over
the nine months of the year before the full amount is disbursed.
MR. TANGEMAN agreed. He maintained that the way the legislature
designed the POMV draw last year was very elegant; it gave DOR
and APFC the latitude to determine the most efficient method of
withdrawing cash as the needs arise. The APFC drew down from
the Constitutional Budget Reserve (CBR) first, in the beginning
of fiscal year 2019 (FY 19), then made the POMV draw from the
permanent fund in the fall of that year after the dividend was
paid. If the legislature does not vote to spend from the CBR,
then the cash withdrawals must be made sooner from the ERA.
REPRESENTATIVE HOPKINS stated that Ed King [chief economist for
DOR] discussed a jump in jobs in October, when the dividend was
disbursed, but they were short-term. He asked whether Mr.
Tangeman believed that quarterly PFD disbursements would result
in those jobs lasting longer, therefore, stabilizing the
economy.
MR. TANGEMAN acknowledged that one theory is that with quarterly
payments, more money would stay in state. He offered that the
consequences of a quarterly versus a yearly PFD disbursement
would be interesting to study, especially if the dividend were
as much as $3,000.
12:25:38 PM
REPRESENTATIVE WOOL asked whether the impetus of the proposed
legislation is to change behaviors and prevent binge spending.
He referred to the administrative difficulties of making
quarterly disbursements. He attested to a certain spike in
negative activities when dividends are paid out once a year and
asked whether there might be four spikes in this behavior under
this legislature. He asked, "What is the goal of having
quarterly payments?"
CO-CHAIR KREISS-TOMKINS maintained that he does not have a
predetermined goal for the proposed legislation and is not
convinced that a quarterly payment is good public policy given
the size of the dividend at present. He expressed that HB 141
is a vehicle for conversation and inquiry.
REPRESENTATIVE WOOL responded that there have been concerns
about disbursing a large check and the resulting spending
behaviors. He expressed that he does not know whether the
negative behaviors - increase in domestic violence and other
criminal activity - is anecdotal or supported by research. He
mentioned that he would be interested in hearing more about the
behavioral aspect.
CO-CHAIR KREISS-TOMKINS agreed and cited experts and studies
both at the Institute of Social and Economic Research (ICER)
[University of Alaska Anchorage (UAA)] and Stanford University.
He offered that he is also interested in the testimony of
[former Alaska state legislator] Clem Tillion, who supports more
frequent PFD disbursements.
REPRESENTATIVE WOOL mentioned that Ms. Balakrishnan relayed that
her studies have shown no increase in temptation spending. He
said that he has witnessed otherwise.
[HB 141 was held over.]
12:31:27 PM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 12:31
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB0141 Sponsor Statement 5.10.19.pdf |
HSTA 5/11/2019 11:30:00 AM |
HB 141 |
| HB0141 ver M 5.10.19.PDF |
HSTA 5/11/2019 11:30:00 AM |
HB 141 |
| HB132 Opposing Document - Letter of Opposition 4.25.19.pdf |
HSTA 5/11/2019 11:30:00 AM |
HB 132 |