Legislature(1999 - 2000)
05/18/1999 01:21 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 18, 1999
1:21 AM
TAPES
SFC-99 #145, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 1:21 A.M.
PRESENT
In addition to Co-Chair John Torgerson, Co-Chair Sean
Parnell, Senator Dave Donley, Senator Loren Leman, Senator
Gary Wilken, Senator Al Adams, Senator Pete Kelly, Senator
Lyda Green and Senator Randy Phillips were present when the
meeting was convened.
Also Attending: Senator ROBIN TAYLOR; Representative PETE
KOTT; JUANITA HENSLEY, Director, Division of Motor
Vehicles, Department of Administration; ANNE CARPENETI,
Assistant Attorney General, Legal Services Section,
Criminal Division, Department of Law; TAM COOK, Director,
Division of Legal and Research Services, Legislative
Affairs Agency; PHIL OKESON, Fiscal Analyst, Division of
Legislative Finance; aides to committee members and other
members of the Legislature..
SUMMARY INFORMATION
HB 87-UNEMPLOYMENT TRUST FUND
The Committee reviewed information provided by the
Department of Labor and reported the bill out.
HB 151-REVOCATION OF MINOR DRIVER'S LICENSE
The Committee heard from the Chair of the Senate Judiciary
Committee, the bill's sponsor, the Department of Law and
the Department of Administration. A committee substitute
was adopted and reported out with forthcoming fiscal notes.
HB 231-AK.INCOME ACCT/PERM FUND/FINANCE PLAN
The Committee heard from the Division of Legal and Research
Services and the Division of Legislative Finance. Two
amendments were considered, with one adopted. The bill was
reported from Committee.
HOUSE BILL NO. 87
"An Act relating to money credited to the account of
the state in the unemployment trust fund by the
Secretary of the Treasury of the United States; and
providing for an effective date."
This was the second hearing for this bill in the Senate
Finance Committee. The bill was held awaiting information
to be provided by Rebecca Gamez, Director, Division of
Employment Security, Department of Labor, regarding the
Reed Act. That information was now before the members.
(Copy on file.)
Co-Chair John Torgerson briefly overviewed the answers to
the Committee's earlier questions posed to Ms. Gamez. The
first question asked if the Reed Act funds need to be
appropriated annually to cover the three year (1999, 2000,
2001) distributions. Ms. Gomez answered, "No. The bill
provides for an effective date when it is signed into law
and a sunset date of September 30, 2000. The fiscal note
indicates should Alaska accept the federal Reed Act
distribution, it will go into capital expenditures. We
expect to expend the Reed Act distributions over a three-
year period on our $2.6 million CIP project (UI Tax
Redesign) that was approved by both legislative bodies this
session. Should the distributions not cover the entire CIP
project, the remainder will be covered by our operations
budget."
Co-Chair John Torgerson referred to another question he had
asking if other unemployment insurance program funds would
be available for re-appropriation if this bill passes. To
answer, he quoted from a Directive issued by the US
Department of Labor entitled "Unemployment Insurance
Program Letter No. 44-97", which was provided by Ms. Gamez.
(Copy on file.) The directive states, "States will need to
amend their laws to implement the special Reed Act
transfers.." Co-Chair John Torgerson continued quoting
elsewhere in the directive, "Reed Act moneys transferred
with respect to these fiscal years may be used only to pay
expenses incurred by the state for the administration of
its UC law. Unlike previous Reed Act transfers, states are
prohibited from using the amounts transferred with respect
to these three years for the payment of UC or the
administration of state public employment offices."
There was no further discussion on the bill.
Co-Chair Sean Parnell offered a motion to report HB 87 from
Committee. There was no objection and the bill was
REPORTED OUT with individual recommendations and
accompanying zero fiscal note from the Department of Labor.
SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE
FOR HOUSE BILL NO. 151(JUD)
"An Act relating to possession, control, or
consumption of alcohol by a person under 21 years of
age; relating to revocation and reinstatement of the
driver's license of a person at least 14 years of age
but not yet 21 years of age; and relating to offenses
involving operating a motor vehicle by a person not
yet 21 years of age."
This was the second hearing for this bill in the Senate
Finance Committee. Co-Chair John Torgerson noted that in
the earlier hearing, a proposed committee substitute was
submitted by the Chair of the Senate Judiciary Committee.
Co-Chair John Torgerson added that previous testimony from
the departments stated that with the adoption of the
committee substitute, the fiscal notes would be zeroed out.
Senator ROBIN TAYLOR, Chair, Senate Judiciary Committee,
indicated that he was distributing information provided by
GLAD, an organization working on this legislation. (Copy
not provided for the record.) He qualified that the bill's
prime sponsor, Representative Pete Kott does not support
the committee substitute. He apologized, but argued that
the Department of Law advised there was not adequate
support for repealing the entire statute as the original
version of the bill proposed.
Senator Robin Taylor stated that the committee substitute
solves the problem of individuals being prohibited from
receiving a driver's license until they are in their
forties or fifties. Changes in the proposed committee
substitute, he explained allows the department to review
those cases and issue a license if the individual's
behavior has improved.
Senator Robin Taylor then directed the Committee's
attention to page four of his proposed committee
substitute, saying that this version accomplishes a goal
that couldn't be worked out in the House of
Representatives. He explained the new provision as, "if a
court either finds you not guilty or the case is dismissed
by a court of law; that automatically dismisses the
administrative action that was based upon the same facts."
This eliminates the situation where cases have been
dismissed, but individuals still have their driver's
licenses revoked by an administrative action, according to
Senator Robin Taylor.
Representative PETE KOTT stressed that he still has
concerns with the establishment of the punishment in
relationship to the violation committed and the intended
results of the statute. He said that statistics suggest
this current law that revokes licenses for underage miners
in possession of alcohol is not working. His intent was to
establish legislation that will focus on those who posses
and/or consume alcohol while driving. He referred to a
Supreme Court case challenging the nexus of the existing
law that resulted in a non-binding, tied vote.
Senator Loren Leman asked Representative Pete Kott if he
was satisfied with the revocation penalties of 30 days, 60
days, 90 days and one-year periods as stipulated in Section
3 of the proposed committee substitute.
Representative Pete Kott responded that without the nexus
argument in the bill, he was satisfied. However, he was
hesitant to fully support the lowered penalties.
For Representative Pete Kott's benefit, Senator Loren Leman
repeated comments he made in the last hearing. His
preference is to increase the penalties but also to provide
a mechanism for juveniles to "buy back" some of that time
through community service and treatment programs. He wanted
to "encourage their good behavior through their positive
actions." Because of the late date, he noted that he would
not propose such an amendment unless there was full
concurrence. He suggested the matter could be addressed
during the interim.
Representative Pete Kott replied that the issue had been
discussed through an earlier version of the bill. However,
he said that the Department of Law advised that there are
"due process" problems and that court hearings would be
required, resulting in a fiscal note. He would have liked
to see that provision included in the final bill, he said.
In the interest of producing legislation that has at least
some benefit, Senator Loren Leman announced that he would
not offer an amendment at this meeting. He qualified that
he did want to revisit the matter later.
ANNE CARPENETI, Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law had reviewed
the proposed committee substitute at the request of Co-
Chair John Torgerson. She testified that the department was
comfortable with the changes.
JUANITA HENSLEY, Director, Division of Motor Vehicles,
Department of Administration relayed statistics supplied by
the Division of Public Health, Community Health and
Emergency Medical Services. She stressed that the
statistics show alcohol-related injuries involving youths
between ages fourteen and twenty from 1995-1997 decreased
by 9.5 percent. The alcohol-related motor vehicle injuries
had dropped twelve-percent for the same age group, she
stated. She also noted alcohol-related assault injuries for
this age group had decreased overall by thirty-three
percent.
Juanita Hensley was unsure if the reductions could be tied
directly to the "Use It-Lose It" law, and suggested it
could be a combination of all the juvenile laws passed in
the last several years. However, she believed this law has
had an impact.
Juanita Hensley also referred to information supplied by
the Highway Safety Planning Agency showing that the number
of alcohol related motor-vehicle fatalities for this age
group has dropped.
Co-Chair Sean Parnell moved for adoption of HB 151, Version
"P" as a Workdraft. It was adopted as a Workdraft without
objection.
Co-Chair Sean Parnell offered a motion to report from
Committee, SCS CSHB 151(FIN) with individual
recommendations and forthcoming zero fiscal notes from the
Department of Health and Social Services, Department of
Corrections and the Department of Law. There was no
objection and the bill was REPORTED OUT.
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 231(FIN) am
"An Act relating to deposits to the Alaska permanent
fund from mineral lease rentals, royalties, royalty
sale proceeds, net profit shares under AS 38.05.180(f)
and (g), federal mineral revenue sharing payments
received by the state from mineral leases, and bonuses
received by the state from mineral leases, and
limiting deposits from those sources to the 25 percent
required under art. IX, sec. 15, Constitution of the
State of Alaska; relating to income of the Alaska
permanent fund, to the Alaska Income Account, and to
permanent fund dividends; authorizing an advisory vote
on a long term financial plan for the state; and
providing for an effective date."
This was the first hearing for this bill in the Senate
Finance Committee.
Co-Chair John Torgerson advised the Committee that he had a
committee substitute, 1-LS0960/M, 5/17/99, drafted to
incorporate the advisory vote ballot language of SB 76 as
reported from the Senate Finance Committee at an earlier
meeting. He noted that the committee substitute also
incorporates the provisions contained in HB 96: returning
to the ratio of oil revenue deposits of 25-percent to the
permanent fund and 75-percent to the general fund.
TAM COOK, Director, Division of Legal and Research
Services, Legislative Affairs Agency detailed the committee
substitute as follows.
Section 1 amends the name of the "Statutory Budget
Reserve Fund" making it the "Alaska Income Account."
Co-Chair John Torgerson interjected, saying this change is
necessary in order for the committee substitute to conform
to the title of the bill. Tam Cook affirmed and added that
this change also clears up the confusion of having two
funds with the same name. Tam Cook continued detailing the
sections.
Section 2 is a technical amendment to correct a
reference to the Statutory Budget Reserve Fund in
another provision and to change the name to the Alaska
Income Account.
Section 3 is a technical change reflecting the repeal
of AS 37.13.010(a)(2) in Section 4.
Section 4 relates to the provision in SB 96, limiting
the amount of money that goes into the permanent fund.
Section 5 is the heart of the financial plan. It
rewrites the statutory provision on income that is
retained in the Earnings Reserve Account.
Section 6 rewrites the disposition of income and is
substantially different from current law. This
section establishes a formula for distributions out of
the Earnings Reserve Account.
Subsection (a) addresses the transfer of money
from the Earnings Reserve Account to the general fund
and is based on the average quarter-end market value
of the last 20 fiscal year quarters before the fiscal
year just ended. This applies to both the permanent
fund itself and also the Constitutional Budget Reserve
(CBR) fund. The proposed amount to be transferred in
this committee substitute is 2.5 percent of that
formula.
Subsection (b) provides an additional transfer
that would occur each year similar to the one above
but is an amount based on 2.75 percent of the quarter-
end market value of the last 20 fiscal year quarters
before the fiscal year just ended. This transfer goes
directly to the dividend fund.
Subsection (c) is similar to the wording
contained in the House version of the bill.
Section 7 is a technical correction to address the
concept that there is no longer money available in the
permanent fund for distribution.
Section 8 is similar to Section 7.
Section 9 is also technical.
Section 10 is the transition provision that phases-in
the number of quarters that are averaged to determine
the first distributions at the end of fiscal years
2001 and 2002.
Section 11 is the advisory vote and is similar to the
language the Senate proposed in SB 76. There is a
change to subparagraph (3) on page 8, lines 5 and 6 of
the committee substitute. Language has been inserted
to say that the annual dividend will be based both on
the market value of the permanent fund and the CBR as
a combined figure. The description of Plan B is
unchanged from the Senate version.
Section 12 provides that the bulk of bill does not
take effect until January 1, 2001. This means that the
permanent fund distribution provision in existence
today is applicable to the 1999 and 2000
distributions. The date in 2001 is selected because it
coincides with the beginning of the dividend year,
which is a calendar year.
Section 13 provides and immediate effective date only
for the advisory vote.
Co-Chair Sean Parnell asked for further clarification of
the effective date for the new calculations on the market
value.
Tam Cook responded this is a delayed effective date
stipulating that the entire financial plan contained in the
bill is delayed until the year 2001. She stressed that
existing law stays in place, with respect to the functions
of the Earnings Reserve Account and the calculation of the
distributions, until then. She explained that dividends
would be paid according to existing statute for the years
1999 and 2000.
Co-Chair John Torgerson asked for further clarification of
subparagraph (c) on page 5 beginning line 19.
Tam Cook replied that this language states that once the
financial plan goes into effect, the amount of a
distribution from the Earnings Reserve Account is
determined at the end of the fiscal year. However, she
noted the provision also states the actual movement of
funds into the general fund or the dividend fund could be
made in installments. She explained that the dividend fund
does not need the funds until the dividends are ready to be
paid although it is necessary to know the amount of the
transfer earlier. This provision, she explained, enables
the permanent fund to retain the income for investment
purposes for a portion of the fiscal year.
Co-Chair Sean Parnell referred to the same subsection
beginning on line 22 reading, "Transfers following the end
of a fiscal year that are required under this section may
not exceed the entire balance that is in the earnings
reserve account during the fiscal year in which the
installments are transferred." He assumed this is a
protection mechanism and wanted to know if the language is
in current law or if it is new to this committee
substitute.
Tam Cook answered that the language was included in the
original version of the bill although it is not current
law. Under current law, she explained the matter of what
happens if the fund itself is too low is not addressed.
Instead, current law has a tier system that stipulates what
is to be done with excess funds, according to Tam Cook. She
affirmed that the purpose of the new language is to ensure
that only the income of the permanent fund could actually
be spent. She added that the language also serves the
function of enabling payment in installments by limiting
any single payment to the amount of the balance of the
earnings reserve account. She explained that this allows
the fund to earn interest.
Co-Chair Sean Parnell asked if in this committee
substitute, the earnings reserve includes both unrealized
and realized gains. Tam Cook directed the Member's
attention to Section 5, which directs that all the income
of the fund is to go to the earnings reserve account and
that the balance of the account will be determined
according to generally accepted accounting principles. She
did not know if generally accepted accounting principles
include unrealized income.
Co-Chair John Torgerson referred to a rule called "GASB 31"
that addresses unrealized income and said he thought this
rule would be followed in determining what gains would be
included.
Senator Al Adams asked for further clarification of the
advisory vote and the effective dates and wanted to know
what happens if the people vote "no".
Tam Cook responded that if the Legislature does not take
action before January 1, 2000, the formula changes would
still become law.
Co-Chair John Torgerson stressed his understanding that a
law cannot be automatically triggered by an advisory vote.
Tam Cook replied that there is debate as to whether that is
possible. She stated that the Attorney General is
optimistic that it could be done. However she was not,
saying that the legislature cannot delegate its legislative
power to the people. She allowed that it had been done once
before in this state, referring to a binding vote held in
1968 with no evidence the resulting statute has been
challenged. Therefore, she concluded it is an "unknown
territory."
Co-Chair Sean Parnell asked the possibility of inserting a
repealer date of March 15, 2000 on the bill. He answered
his own question and said it would not work.
Tam Cook suggested if a repealer is used then a shorter
time-period of only one day would be necessary. At that
point, she explained it would be up to the legislature to
repeal either the effective date section or the section
containing the repealer itself. She stated that if no
action was taken, the repealer section would control the
legislation.
Senator Lyda Green wanted the ballot language to stipulate
what kind of tax there would be if in fact there would be a
tax. She used income, sales and motor fuel as examples of
types of taxes.
[Tape Malfunction - possibly some discussion lost]
If the advisory voted failed, Co-Chair Sean Parnell wanted
the opportunity to revisit to the legislation.
Senator Gary Wilken asked if the CBR fund is "collapsed" in
Section 1 of the committee substitute.
According to Tam Cook there are actually two CBRs. She
explained that the Statutory Budget Reserve funds pre-
existed the Constitutional Budget Reserve and the two funds
operate independently from each other. She understood that
very little, if any money is currently held in the
Statutory Budget Reserve fund and the fund has not been
used for the past few years.
Senator Gary Wilken asked if the Statutory Budget Reserve
Account would now be called the Alaska Income Account. Tam
Cook affirmed.
Senator Gary Wilken next referred to the advisory vote
language addressing the Constitutional Budget Reserve fund
on page 8, line 27, and asked if this relates to the actual
CBR or the new account. Tam Cook answered this refers to
the CBR.
Senator Gary Wilken then wanted to know the benefit of the
Alaska Income Account.
Tam Cook responded that it would be easier to trace the two
funds. Also, the name change allows the committee
substitute to fit under the title of the original bill
passed out of the House of Representatives.
Senator Gary Wilken asked if the new Alaska Income Account
would then be used. Tam Cook was unsure if it would ever
serve a useful purpose.
Co-Chair John Torgerson clarified that the newly titled
fund would not be used under this bill.
PHIL OKESON, Fiscal Analyst, Division of Legislative
Finance came to the table to detail the financial plan as
contained in Section 5 of the committee substitute.
Phil Okeson confirmed Co-Chair John Torgerson's earlier
assumption that the GASB 31 rule would apply to this fiscal
plan. He explained that the goal of this legislation is to
comply with all GASB rules and thereby alleviate the
concerns with the definition of income. Under this plan, he
noted, the definition of income becomes less important
because dividends would no longer be calculated based on
income and would instead be based on a percentage of market
value.
Co-Chair John Torgerson asked if the language of the
committee substitute should stipulate that GASB accounting
rules must be followed or if the proposed language is
sufficient.
Phil Okeson responded that the current language is
satisfactory and that the matter had been discussed and
agreed upon with the Permanent Fund Corporation.
Phil Okeson continued saying that the "disposition of
income" is the core of how the proposed financial system
works. He explained that there are two distributions from
the combined accounts with the first being a 2.5 percent
rolling market quarterly five-year average that is
deposited into the general fund. The second distribution,
he said is 2.75 percent that is deposited into the
permanent fund dividend account to be paid out as
dividends.
Phil Okeson explained that subparagraph (c) refers to the
timing of transfers. He said the intent is to allow for
different amounts to be deposited into accounts at
different times and thus allow the permanent fund to earn
maximum interest. He envisioned that the deposit into the
permanent fund dividend account would be done late in the
year and the deposit into the general fund would be done in
the beginning of the fiscal year.
Phil Okeson addressed the transition language and said the
new plan is not implemented right away using the five-year
average. Instead, he explained the first year of
implementation uses a 12-quarter average, the second year
uses a 16-quarter average, and the amount of quarters
increases until the five-year average is reached in 2003.
He said the reason for this gradual phase is to allow the
distribution amount in the early years of the plan to be
adequate. He noted this is similar transitional language as
was included in the original House version of the financial
plan.
Phil Okeson referred to the earlier discussion about the
effective date. He stated that if the advisory vote is
negative, there is sufficient time for the legislature to
repeal the contingent language of the committee substitute
since the effective date is January 1, 2001. The dividend
would still be calculated using the existing method for the
next two years, he stressed.
Phil Okeson then referred to his earlier presentation on SB
76 showing the financial outcome of the balanced budget
plan.
Phil Okeson indicated he checked his figures against those
supplied by the Department of Revenue.
Senator Al Adams asked if the dividend would be the same
amount under both plans for the next two years.
Phil Okeson said the amount would be the same and estimated
that the dividend for the following year could be in excess
of $1800.
Senator Lyda Green referred to Section 4 on page 4 and
wanted to know if the inclusion of the 25-percent language
as proposed in HB 96 is necessary for the success of this
financial plan.
Phil Okeson answered that in the early years of the plan,
the provisions in HB 96 are not be necessary because the
percent change only amounts to about $8 million. However,
he stated it could become more important in later years. He
noted that the original Senate Balanced Budget Plan was
based on the assumption that HB 96 did not pass.
Senator Lyda Green asked if the ratio changes proposed in
HB 96 could be removed from this committee substitute.
Co-Chair John Torgerson responded that there could be
difficulties with compliance to the original bill title
relating to the provisions of HB 96 and therefore this
portion of the language should not be changed.
Co-Chair John Torgerson then referred to Section 8 on page
5 and read, "the endowment shall be held and invested by
the Alaska Permanent Fund Corporation." and noted that
"endowment" in this case only reflects existing language to
cover endowments the corporation is currently investing in.
Phil Okeson understood that to be correct and deferred to
Tam Cook.
Senator Loren Leman directed the witness's attention to the
description of Plan B in Section 11 page 8, line 26. He
remembered Department of Revenue Commissioner Wilson Condon
testifying that the second transfer of $4 billion from the
earnings reserve fund to the general fund would occur in
2010 rather than 2011 as shown in the ballot language.
Phil Okeson replied that the fiscal year 2011 date is
garnered from the most recent spreadsheet issued by the
Department of Revenue showing the Governor's budget plan.
He clarified that technically, fiscal year 2011 occurs in
calendar year 2010.
Senator Loren Leman then referred to the description of
"income tax" under Plan B on line 29. He noted the language
states, "Impose a personal income tax on all wage earners."
He surmised that the governor's actual proposal stipulates
that the income tax would only be imposed on some wage
earners. He cited testimony Commissioner Condon gave to
affirm this.
Senator Loren Leman stated he would like both
aforementioned issues to be considered by the Committee.
Co-Chair John Torgerson referred to a spreadsheet issued by
the Department of Revenue dated 5/14/99 2:37 PM showing the
latest figures for the Governor's plan. (Copy not
distributed.) Co-Chair John Torgerson noted the
spreadsheet shows the second $4 billion withdrawal from the
permanent fund begins in calendar year 2010.
Senator Loren Leman expressed concerns with how the two
plans were compared. He noted that Plan A asks all Alaskans
to participate in a reduced dividend.
Tape: SFC - 99 #145, Side B
Senator Loren Leman continued saying what troubled him the
most is the prioritization of the spending increases
proposed in Plan A as education, public safety and
transportation. He wanted the order to be reversed with
transportation listed first. He argued that people
contribute to transportation proportionate to their use of
vehicles and purchase of fuel. While he thought everyone
benefits somewhat from public safety, he stressed that
before all Alaskans could be asked to contribute to
education, there should be a mechanism to allow parents to
chose a delivery system that costs the state less money. He
viewed this as an economic incentive and suggested that
this matter could be addressed in separate legislation.
Senator Loren Leman moved to amend the committee substitute
to delete "2011" and insert "2010" and delete "all wage
earners" and insert "certain wage earners". The motion was
ruled out of order as the committee substitute had not been
adopted as a Workdraft and was therefore not available for
amending.
Senator Loren Leman moved for adoption of SCS CSHB 231
Version "M" as a Workdraft. There was no objection and the
committee substitute was adopted as a workdraft.
[Note: amendments were considered out of order.]
Amendment #2: This amendment deletes "2011" and inserts
"2010" on page 8 line 26, changing the Plan B description
language to read, "Permanent Fund Earnings Reserve:
Immediately transfer $4,000,000,000 from the permanent fund
earnings to the constitutional budget reserve fund, with an
additional $4,000,000,000 in 2010, and $4,000,000,000 in
2020." This amendment also deletes "all" and inserts
"certain" on line 29, changing the language to read,
"Income Tax: Impose a personal income tax on certain wage
earners projected to be 31 percent of a person's federal
income tax, collecting $350,000,000."
Senator Loren Leman moved for adoption. The amendment was
adopted without objection or further discussion.
Amendment #1: This amendment replaces the advisory vote
ballot language in Section 11 as follows.
QUESTION
Preamble: The state treasury's reliance upon declining
Alaska oil production and erratic world oil prices
constitutes an unsustainable state budget system. The
legislature and governor seek Alaskans' input in
selecting a long-term balanced budget plan. Please
select the plan you believe Alaska should implement
for a balanced budget.
Plan A
Summary of Plan A: Plan A has further spending
reductions. Dividends are a percentage of the value of
the Alaska Permanent Fund. This plan has no personal
income tax.
(1) Spending Reductions
Continue state general fund budget
reductions of at least $70 million over
the next two fiscal years.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is
inflation-proofed to protect the value of
the principle of the fund for all Alaskans,
including future generations.
(3) Permanent Fund Dividends
Guarantee a dividend is paid to qualified
Alaska residents at a minimum of $1,700 in
1999 and $1,700 in 2000. Thereafter, the
annual dividend is based on a rate of 2.75
percent of the market value of the Alaska
Permanent Fund, including the Alaska
Permanent Fund Earnings Reserve Account.
These dividends are projected to be $1,250
in 2001 to $1,430 in 2010.
(4) Permanent Fund Earnings Reserve
Guarantees inflation-proofing the Alaska
Permanent Fund and pays Permanent Fund
Dividends, then spends remaining funds in
the Alaska Permanent Fund Earnings Reserve
Account for state government services.
(5) -Revenues
No personal income tax or new broad-based
taxes. Use at least $100 million in new
revenues from resource development (NPRA,
ANWR).
Plan B
Summary of Plan B: Plan B has no further state
spending reductions. Dividends from the Alaska
Permanent Fund are calculated under the current
method. This plan includes a personal income tax.
(1) Spending Reductions
No further reductions to state spending.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is
inflation-proofed to protect the value of
the principle of the fund for all Alaskans,
including future generations.
(3) Permanent Fund Dividends
Dividend will not be changed from the
current formula and method of calculation.
The dividend is projected to be $1,796 in
2001 and $1,784 in 2010.
(4) Permanent Fund Earnings Reserve
Immediately transfer $4 billion from the
permanent fund earnings to the
Constitutional Budget Reserve Fund, with an
additional transfer of $4 billion in 2010
and $4 billion in 2020. Spend the
Constitutional Budget Reserve Fund earnings
for state government services.
(5) Revenues
Impose a personal income tax on all wage
earners projected to be 31% of a person's
federal income tax, beginning January 1st,
2000 collecting $350 million.
Please select one: ____ Plan A ____ Plan B
Senator Randy Phillips made a technical correction to the
amendment to insert "and the Constitutional Budget Reserve
Fund" at the end of the second sentence of the third
descriptive paragraph of Plan A.
Senator Randy Phillips made another technical correction to
the amendment to reflect the adoption of Amendment #2 and
accurately state the year the income tax goes into effect.
Senator Randy Phillips moved for adoption of Amendment #1
as technically amended. Co-Chair John Torgerson objected
for explanation.
Senator Randy Phillips explained the amendment changes the
ballot language to present to the voters, a balanced and
fair representation of both plans. Plan A lists the
projected dividend amount, which he felt is important for
the public to know. He said the amendment also contains
stylistic changes to the wording for both Plan A and Plan
B.
Senator Randy Phillips added that the forth descriptive
paragraph of Plan A stipulates that the remaining funds in
the Alaska Permanent Fund Earnings Reserve Account are
spent for government services. This change addresses
Senator Loren Leman's concerns about the prioritization of
education, public safety and transportation, according to
Senator Randy Phillips.
The final difference between the ballot language in the
committee substitute and the amendment, Senator Randy
Phillips stated, is the committee substitute gives voters
two choices and the amendment gives one choice. He
explained that the amendment asks voters to chose one of
the two plans where the committee substitute asks voters to
decide yes or no for each plan.
Senator Gary Wilken moved to amend Amendment #1 to delete
the language in the forth descriptive paragraph of Plan A
and insert the language contained in the committee
substitute. He stated he wished the priority of education,
public safety and transportation to remain part of the
ballot language. Senator Dave Donley objected.
Senator Gary Wilken reiterated earlier discussion on the
advisory vote language noting that the Committee adopted
the priority language. He felt the plan is based on
priority spending that recognizes that certain parts of
government will grow at a rate greater than other areas of
government. He stressed that the remaining government
spending is held flat. He thought this language shows that
the legislature is willing to spend funds for those areas
that constituents were asking for.
By a roll call vote of 4-3-2, the amendment to the
amendment was adopted and Amendment #1 was AMENDED. Senator
Lyda Green, Senator Randy Phillips and Senator Dave Donley
cast nay votes and Senator Pete Kelly and Senator Loren
Leman were absent.
Amendment #1 as amended read as follows.
QUESTION
Preamble: The state treasury's reliance upon declining
Alaska oil production and erratic world oil prices
constitutes an unsustainable state budget system. The
legislature and governor seek Alaskans' input in
selecting a long-term balanced budget plan. Please
select the plan you believe Alaska should implement
for a balanced budget.
Plan A
Summary of Plan A: Plan A has further spending
reductions. Dividends are a percentage of the value of
the Alaska Permanent Fund. This plan has no personal
income tax.
(1) Spending Reductions
Continue state general fund budget
reductions of at least $70 million over
the next two fiscal years.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is
inflation-proofed to protect the value of
the principle of the fund for all Alaskans,
including future generations.
(3) Permanent Fund Dividends
Guarantee a dividend is paid to qualified
Alaska residents at a minimum of $1,700 in
1999 and $1,700 in 2000. Thereafter, the
annual dividend is based on a rate of 2.75
percent of the market value of the Alaska
Permanent Fund, including the Alaska
Permanent Fund Earnings Reserve Account and
the Constitutional Budget Reserve Fund.
These dividends are projected to be $1,250
in 2001 to $1,430 in 2010.
(4) Permanent Fund Earnings Reserve
Guarantee inflation-proofing the Alaska
Permanent Fund and payment of permanent fund
dividends, then prioritize remaining funds
in the Alaska permanent fund earnings
reserve account for education, public safety
and transportation.
(5) -Revenues
No personal income tax or new broad-based
taxes. Use at least $100 million in new
revenues from resource development (NPRA,
ANWR).
Plan B
Summary of Plan B: Plan B has no further state
spending reductions. Dividends from the Alaska
Permanent Fund are calculated under the current
method. This plan includes a personal income tax.
(1) Spending Reductions
No further reductions to state spending.
(2) Permanent Fund
Guarantee the Alaska Permanent Fund is
inflation-proofed to protect the value of
the principle of the fund for all Alaskans,
including future generations.
(3) Permanent Fund Dividends
Dividend will not be changed from the
current formula and method of calculation.
The dividend is projected to be $1,796 in
2001 and $1,784 in 2010.
(4) Permanent Fund Earnings Reserve
Immediately transfer $4 billion from the
permanent fund earnings to the
Constitutional Budget Reserve Fund, with an
additional transfer of $4 billion in 2010
and $4 billion in 2020. Spend the
Constitutional Budget Reserve Fund earnings
for state government services.
(5) Revenues
Impose a personal income tax on certain wage
earners projected to be 31% of a person's
federal income tax, beginning January 1st,
2001 collecting $350 million.
Please select one: ____ Plan A ____ Plan B
Senator Dave Donley commented that the Committee was too
fatigued to be giving this bill the proper consideration
that it deserves. Co-Chair Sean Parnell pointed out that
the Committee had already made these decisions with SB 76.
Senator Randy Phillips argued that the changes were not
word-for-word and stressed that he felt the language needed
to be balanced.
The amended amendment FAILED to be adopted by a vote of 2-
7. Senator Lyda Green and Senator Randy Phillips voted in
favor.
Senator Dave Donley expressed concern with language on
pages seven and eight of the committee substitute, but
noted they had been addressed previously.
Senator Lyda Green commented that while some voters oppose
any changes, they would be willing to consider a low
statewide seasonal sales tax. She felt that was more
informative than simply asking if voters want their
dividend cut.
Co-Chair John Torgerson qualified that the ballot language
was not ideal for every member, but noted that the
Committee had already discussed and voted on the matter.
Senator Lyda Green appreciated that no vote outcome would
show an overwhelming pattern and noted that a "paragraph"
style to the ballot language might be a more appropriate
approach.
Co-Chair Sean Parnell offered a motion to report from
Committee, SCS CSHB 231(FIN) as amended with individual
recommendations and $939. fiscal note from the Office of
the Governor, Division of Elections. Without objection, the
bill was REPORTED OUT.
ADJOURNMENT
Co-Chair John Torgerson recessed the Committee at 2:40 AM.
SFC-99 (21) 5/18/99
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