02/17/2022 11:30 AM House WAYS & MEANS
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): How Alaska's State Spending Compares to Other States | |
| HB259 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 259 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
February 17, 2022
11:53 a.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Adam Wool, Vice Chair (via teleconference)
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story
Representative Mike Prax
Representative David Eastman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): HOW ALASKA'S STATE SPENDING COMPARES TO OTHER
STATES
- HEARD
HOUSE BILL NO. 259
"An Act relating to use of income of the Alaska permanent fund;
relating to the amount of the permanent fund dividend; relating
to the duties of the commissioner of revenue; relating to
funding for state aid for school districts, the state boarding
school, centralized correspondence study, and transportation of
pupils; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 259
SHORT TITLE: PERMANENT FUND DIVIDEND; 25/75 POMV SPLIT
SPONSOR(s): REPRESENTATIVE(s) SPOHNHOLZ
01/18/22 (H) PREFILE RELEASED 1/7/22
01/18/22 (H) READ THE FIRST TIME - REFERRALS
01/18/22 (H) EDC, W&M, FIN
02/04/22 (H) EDC AT 8:00 AM DAVIS 106
02/04/22 (H) Heard & Held
02/04/22 (H) MINUTE(EDC)
02/14/22 (H) EDC RPT 3DP 3DNP 1NR
02/14/22 (H) DP: HOPKINS, STORY, DRUMMOND
02/14/22 (H) DNP: PRAX, GILLHAM, CRONK
02/14/22 (H) NR: ZULKOSKY
02/14/22 (H) EDC AT 8:00 AM DAVIS 106
02/14/22 (H) Moved HB 259 Out of Committee
02/14/22 (H) MINUTE(EDC)
02/15/22 (H) W&M AT 11:30 AM DAVIS 106
02/15/22 (H) Heard & Held
02/15/22 (H) MINUTE(W&M)
02/17/22 (H) W&M AT 11:30 AM DAVIS 106
WITNESS REGISTER
DR. MARY KOPRIVA, Assistant Professor of Health Care Economics
University of Alaska
Institute of Social and Economic Research
Anchorage, Alaska
POSITION STATEMENT: Delivered a PowerPoint presentation about
how Alaska's State Spending Compares to other states.
CARRIE HARRIS, representing self
Anchor Point, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
DIANNE MACRAE, representing self
Kasilof, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
APRIL ORTH, representing self
Kenai, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
GAIL LIMBAUGH-MOORE, representing self
Soldotna, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
TERRI LYONS, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
ED MARTIN, representing self
Kenai, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
BERT HOUGHTALING, representing self
Big Lake, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
MICHAEL GARHART, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
ALAPAK MOORE, representing self
Manikopak, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
JEN GUNDERSON, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 259.
KATHY SWANSON, representing self
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
TIM DORAN, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 259.
DAVID HURN, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 259.
JOHN LARSON, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 259.
PETE HOEPFNER, Vice President
Cordova School Board
Cordova, Alaska
POSITION STATEMENT: Testified in support of HB 259.
ACTION NARRATIVE
11:53:35 AM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 11:53 a.m. Representatives Story,
Josephson, and Spohnholz were present at the call to order.
Representatives Prax, Schrage, Eastman, and Wool (via
teleconference) arrived as the meeting was in progress.
^PRESENTATION(S): How Alaska's State Spending Compares to Other
States
PRESENTATION(S): How Alaska's State Spending Compares to Other
States
11:54:45 AM
CHAIR SPOHNHOLZ announced that the first order of business would
be a presentation on How Alaska's State Spending Compares to
Other States.
11:55:17 AM
DR. MARY KOPRIVA, Assistant Professor of Health Care Economics,
University of Alaska, Institute of Social and Economic Research,
provided a PowerPoint presentation, titled "Alaska State and
Local Spending Trends and Comparisons." She began on slide 2
and said that according to state and local expenditure data from
the census in 2019, Alaska state and local spending was about
$9,000 more per person than the national average.
11:57:15 AM
DR. KOPRIVA, in reference to slide 3, said that Alaska state
spending in 2019 was $15,729 per person and local spending was
$7,175 per person. State spending was more than twice as much
as local spending. Comparatively, the U.S. average state
spending was $7,630 and local spending was $6,266 dollars per
person. Based on these numbers, for the US average, state
spending was about 20 percent higher than local spending. Dr
Kopriva agreed in response to Chair Sponholz's observation that
an explanation for the discrepancy could be because Alaska lacks
counties and therefore would have less local spending in that
capacity.
11:59:12 AM
DR. KOPRIVA, in reference to slide 4, mentioned that permanent
fund dividend (PFD) payments of $700 million are transferred
from the Permanent Fund earnings reserve. Federal funds account
for $5.2 billion of the state budget. State and local decision
makers don't have control over all the pieces of the pie; state
and local revenues don't have to support all the pieces of the
pie. Some adjustments may need to be made to census bureau
expenditure numbers to better reflect the part of the budget
over which the Alaska legislature has control and for which
state and local revenues are needed to fund.
12:00:18 PM
DR. KOPRIVA referenced slide 5 and compared Alaska to states
that are similarly "oil rich" with low population levels - North
Dakota and Wyoming with the U.S. average. Adjustments include
subtracting "other expenditures" [the PFD] from state spending
because the state only serves as a conduit for the money to
reach Alaska residents. Other adjustments included cost of
living and spending federal grants. As of 2019 Alaska receives
twice the U.S. average for federal grants.
12:06:27 PM
DR. KOPRIVA spoke about the bar charts in slides 6-7 which show
spending over the last three decades. In the 1990s, Alaska
spent less than the U.S. average; in the early 2000s Alaska
spending and growth outpaced the US average; and from 2011-2019
growth has slowed overall, but more so in Alaska than the U.S.
average.
12:07:35 PM
DR. KOPRIVA referenced slides 8-10 and said that percent change
in nominal per capital state and local spending, 1990 to 2019
shows that Alaska has had the lowest overall growth in spending
when compared with the other 49 states. Spending increased
roughly 87 percent in nominal dollars per capital during this
period, while North Dakota and Wyoming increased by 220 percent
and 260 percent, respectively. Dr. Kopriva also verified an
observation by Representative Josephson that Arkansas,
"considered a conservative state," has quadrupled its state and
local spending while Alaska's has only doubled.
12:10:14 PM
DR. KOPRIVA, in reference to slide 11, described a graph which
shows real per-capita state and local spending among Alaska and
the US state and local average. After adjusting for inflation,
this graph shows that spending growth has increased, but only
modestly when compared with the unadjusted numbers. United
States average state spending has increased 70 percent and U.S.
average local spending has increased 38 percent. Comparatively,
Alaska has seen almost no real growth in either state or local
spending across the last three decades.
12:11:09 PM
DR. KOPRIVA, in response to a committee question, affirmed that
while other states have increased their spending and in
Representative Josephson's words "solved problems with money"
and "invested in their state," Alaska has just kept up with
inflation. She also clarified that these numbers represent
state spending as a whole in relation to inflation, not
necessarily an individual category or program like education.
12:20:10 PM
DR. KOPRIVA, in reference to slides 12 & 13, mentioned that 1982
and 2013 saw high oil revenues and high levels of state
spending. Comparatively in 2004, 2018, and 2021 there are lower
petroleum revenues and less spending.
12:22:39 PM
DR. KOPRIVA showed in slides 14 & 15 that U.S. average per
capita tax revenue in 2019 was $2,959, while Alaska's tax
revenue was significantly below this due to the lack of sales
tax and individual income tax. In comparison with other oil-
rich states the per capital tax revenue is 3 times that of
Alaska.
12:24:45 PM
DR. KOPRIVA concluded that per-capita spending in Alaska is
high; most of the gap can be explained by the high cost of
living, rural setting, the PFD, and federal spending levels in
Alaska. Alaska has high levels of state spending relative to
local spending compared with other states and the U.S. average.
While expenditures have increased in the past three decades, in
nominal terms, once inflation is accounted for, state and local
spending has in real terms remained unchanged.
DR. KOPRIVA, in response to a question about a standard measure
of happiness among economists from Representative Prax, referred
to measures of happiness that are used at the national scale,
but not among the states.
HB 259-PERMANENT FUND DIVIDEND; 25/75 POMV SPLIT
12:28:59 PM
CHAIR SPOHNHOLZ announced that the final order of business would
be HOUSE BILL NO. 259, "An Act relating to use of income of the
Alaska permanent fund; relating to the amount of the permanent
fund dividend; relating to the duties of the commissioner of
revenue; relating to funding for state aid for school districts,
the state boarding school, centralized correspondence study, and
transportation of pupils; and providing for an effective date."
12:29:12 PM
CHAIR SPOHNHOLZ opened public testimony on HB 259.
12:29:59 PM
CARRIE HARRIS argued that putting money in the hands of the
people creates jobs, and that the PFD payouts create more jobs.
She urged that public officials should read written testimony
sent to their emails. She emphasized that she is against HB 259
and mentioned that she plans to vote for a constitutional
convention. She reiterated that a traditional PFD should be put
forth so "the people" can use the money to create jobs and keep
it in our local economies. She opined that the judicial council
should be abolished.
12:32:23 PM
DIANNE MACRAE Emphasized that the private sector cannot compete
against the government "doing everything for everyone." She
mentioned that Alaska's schools are fully funded and yet are
ranked towards the bottom when compared to other states which
could exemplify that money does not always solve problems. She
stressed that we are "destroying our children with lack of an
education and more of an indoctrination." She declared her
disgust with the idea of comparing Alaska's budget with other
states state and local spending. She remarked that budget cuts
should be made to programs that provide needles to drug users
[Syringe Service Programs are non-government affiliated
nonprofits].
CHAIR SPOHNHOLZ reminded testifiers that the testimony is not
about the previous presentation, but instead about HB 259.
12:34:56 PM
APRIL ORTH testified in opposition to HB 259 and mentioned that
the PFD was not intended to be used to fund the government and
is meant to be used for the people. She reminded the committee
that the PFD is meant to be shared wealth that is
constitutionally mandated.
12:36:19 PM
GAIL LIMBAUGH-MOORE testified in opposition to HB 259. She
remarked that the 25/75 split is unacceptable to her and gave
her preference for a 50/50 split.
12:37:07 PM
TERRI LYONS testified in opposition to HB 259. She opined that
money will not solve problems in our education system. She
stated that, according to statute, the PFD cannot be used on
education. She postulated that attempting to use the PFD for
education is a front to take the PFD away from Alaska residents.
12:38:22 PM
ED MARTIN testified in opposition to HB 259. He recollected
paying a school tax of $10 in the 1970s. He argued that the PFD
currently benefits all Alaskans, and that the proposed bill
would instead benefit "some special interest teachers union."
He also mentioned the current rate of inflation.
12:40:43 PM
BERT HOUGHTALING testified in opposition to HB 259. He
suggested that the House Ways and Means Committee is attempting
to subvert the rights of Alaskans for the PFD. He commented on
past bills that have attempted to utilize the PFD in ways other
than directly paying Alaskans. He insisted that the PFD belongs
to the citizens of Alaskans. He claimed that the school
districts have 10 percent fewer students and that their budget
is not cut.
12:42:45 PM
MICHAEL GARHART testified in opposition to HB 259. He argued
that the proposed split does not benefit all Alaskans. He spoke
in favor of the current 50/50 split. He insisted that that the
state has stolen from the PFD and that it has negatively
impacted the state's economy. He alluded to Senator Shower's
bills to protect the PFD and expressed his disappointment that
those bills have not been spoken of in committee meetings.
12:44:00 PM
ALAPAK MOORE testified in opposition to HB 259.
12:45:55 PM
JEN GUNDERSON testified in support of HB 259. She noted the
necessity to find a sustainable way to fund our schools. She
commented that to have thriving schools, school districts must
have reliable and consistent funding. She mentioned that in
Fairbanks, Alaska they are facing a $19 million deficit, schools
are closing, the student to teacher ratio is increasing and
teachers are being offered contracts that reduce their pay and
healthcare coverage. She stated that we can't expect our
teachers to stay in a system where they are unfairly
compensated, especially given the recent difficulties of their
jobs due to the pandemic. She emphasized that it is the
constitutional duty of the committee to provide adequate funding
for Alaska's schools.
12:47:01 PM
KATHY SWANSON testified in opposition to HB 259. She commented
about her preference to return to the statutory formula. She
commented that spending money on education may not result in
improvements. She referenced that Alaska currently "spends the
most, with the worst results." She suggested spending money on
reading specialists instead of on schools as a whole. She
commented that PFD money as it is currently spent, goes "right
back into our economy." She suggested that household income has
a significant impact on children's proficiency in school.
12:49:18 PM
TIM DORAN testified in favor of HB 259. He declared that now is
the time to invest in Alaska's public education system and its
students. He referred to a degradation in the base allocation,
primarily due to inflation. He noted that in Fairbanks, three
schools had to close, and there have been reductions in support
staff and issues in recruitment and retention. He noted that HB
259 is a step towards fulfilling the state's constitutional
responsibility for education. He insured that investment in
education pays off.
12:52:29 PM
DAVID HURN testified in opposition to HB 259.
12:53:10 PM
JOHN LARSON testified in support of HB 259 and mentioned that
Alaska is falling behind in keeping up with inflation regarding
public education. He commented that HB 259 provides an eloquent
and equitable solution to the dual questions of funding the PFD
and funding public education. He remarked that the "P" in PFD
stands for "permanent" and includes all generations of future
Alaskans. He mentioned that providing more funding to the
schools will result in smaller classes which can lead to better
education and less crime. He concluded with the thought that
"if you think education is expensive, try ignorance."
12:55:44 PM
PETE HOEPFNER, Vice President of the Cordova School Board,
testified in support of HB 259. He listed many negative factors
that school districts face today including the cost shifting
from the state to communities, withdrawing the school bond debt
reimbursement, teacher retention/recruitment issues, the current
retirement system that incentivizes teachers to leave the state
after 5 years, declining base student allocation funding, and
the rising cost of health care. Mr. Hoepfner mentioned that HB
259 could help to stabilize education funding. HB 259 would
address the recommendations of the legislative fiscal working
group and create a workable solution to fund the PFD, allow a
stable source of revenue for education, and allow districts to
concentrate on education, innovation, and student achievement
rather than continuing to reduce programs and staff while
classroom sizes increase beyond capacity.
12:57:39 PM
CHAIR SPOHNHOLZ closed public testimony on HB 259.
[HB 259 was held over.]
12:58:20 PM
ADJOURNMENT
There being no further business before the committee, the House
Ways and Means Committee meeting was adjourned at 12:58 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| ISER Presentation - AK Stand and Local Spending Trends and Comparisons, 2.17.22.pdf |
HW&M 2/17/2022 11:30:00 AM |
|
| HB 259 Opposition received as of 2.17.22.pdf |
HW&M 2/17/2022 11:30:00 AM |
HB 259 |
| HB 259 Support received as of 2.17.22.pdf |
HW&M 2/17/2022 11:30:00 AM |
HB 259 |