Legislature(2019 - 2020)SENATE FINANCE 532
03/27/2019 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB55 | |
| SB61 | |
| Discussion on Permanent Fund Dividend Calculation | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 55 | TELECONFERENCED | |
| + | SB 61 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 27, 2019
9:01 a.m.
9:01:29 AM
CALL TO ORDER
Co-Chair von Imhof called the Senate Finance Committee
meeting to order at 9:01 a.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Lyman Hoffman
Senator Peter Micciche
Senator Donny Olson
Senator Mike Shower
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Nancy Meade, General Counsel, Alaska Court System; Tim
Lamkin, Staff, Senator Gary Stevens; Bob Kehoe, Executive
Director, Purse Seine Vessel Owners Association; Frances
Leach, Executive Director, United Fishermen of Alaska; Grey
Mitchell, Director, Division of Worker's Compensation,
Department of Labor and Workforce Development; Senator
Cathy Giessel; Senator Mia Costello; Senator Gary Stevens.
PRESENT VIA TELECONFERENCE
Renee Alward, Fisherman's Fund Advisory and Repeals
Council, Homer.
SUMMARY
SB 55 TEMP. APPOINTMENTS TO COURT OF APPEALS
SB 55 was HEARD and HELD in committee for further
consideration.
SB 61 COMM FISHERMEN'S FUND:VESSEL OWNER CLAIMS
SB 61 was HEARD and HELD in committee for further
consideration.
DISCUSSION on PERMANENT FUND DIVIDEND CALCULATION
SENATE BILL NO. 55
"An Act relating to judges of the court of appeals;
and providing for an effective date."
9:03:02 AM
SENATOR DAVID WILSON, SPONSOR, presented the legislation.
9:04:01 AM
AT EASE
9:04:18 AM
RECONVENED
Senator Wilson continued to present the description of the
bill.
9:05:48 AM
Co-Chair von Imhof acknowledged SENATOR MIA COSTELLO.
Senator Wilson presented the Sectional Analysis (copy on
file):
Section 1: Amends AS 22.07.010 to provide an exception
for an additional court of appeals judge under AS
22.07.070(c)
Section 2: Conforming amendment to remove the
exception for an additional court of appeals judge
after a three-year period
Section 3: Adds a new subsection, AS 22.07.070 (c), to
allow the chief justice of the supreme court to
appoint acting court of appeals judges as needed to
serve for no longer than two years. An acting court of
appeals judge must meet the qualifications established
under AS 22.07.404.
Section 4: Repeals AS 22.07.070(c) after a two-year
period
Section 5: Adds a revisors instruction directing the
revisor of statutes to change the catch line of AS
22.07.070 from "Vacancies" to "Selection of court of
appeals judges"
Section 6: Establishes that sections 2 and 4 of this
act will take effect on July 1, 2021
Senator Hoffman wondered whether the backlogs were included
in the testimony.
Senator Wilson replied that it was difficult to figure out
the reason for the backlogs. He remarked that there was
always a possibility for appeal. He stated that the Court
of Appeals recently had judges retire, and the new judge
would recuse themselves, so it was difficult for the third
judge to see the case.
Senator Hoffman queried the location of the three judges.
Senator Wilson replied that there were only three judges on
the Court of Appeals.
Senator Olson wondered why the legislation was presented,
if the Courts were not asking for it.
Senator Wilson felt that it was a need that he observed
within the court system.
9:09:55 AM
Senator Olson surmised that the Chief Justice would appoint
the Court of Appeals Judge.
Senator Wilson replied that it would be one judge for two
years, which was less than the three-year cycle.
Senator Olson stressed that the judges were chosen by the
governor, which was chosen from a list from the Judicial
Council. He surmised that the bill bypassed that process,
and queried the justification for that bypass.
Senator Wilson replied that there was already a statute
that allowed for the Supreme Court Justice to appoint
district court judges to serve temporarily for a three-year
period.
Senator Olson noted that the Court of Appeals did not see
any new evidence, so they were on a different level than
the lower courts. He felt that equating the District Court
to the Court of Appeals was a "bit of a stretch."
Senator Wilson replied that there was not an attempt to set
up a new hierarchy.
Senator Shower asked for an explanation of the Repealer
section.
Senator Wilson replied that Section 4 repealed AS 2.07.007c
after the two-year period. He stressed that it was not in
perpetuity, and had a direct calculated cost to that time
period.
Co-Chair von Imhof asked for thoughts about the judge
addressing the backlog.
9:14:34 AM
NANCY MEADE, GENERAL COUNSEL, ALASKA COURT SYSTEM, shared
that Court System did not seek this change in statute, but
welcomed the change. She remarked that each fall, as the
Court System assessed its needs, this was discussed, but
took a conservative approach with its request.
9:19:45 AM
Senator Bishop queried the number of backlogs. He also
queried the qualifications the Supreme Court Judge would
use to fill the position.
Ms. Meade replied that the statute set out qualifications
for a district court judge, and the bill said that the
qualifications must be met.
Senator Bishop asked for the number of backlogs.
Ms. Meade replied that the Court of Appeals handled
different types of cases, but the number of cases that had
been briefed awaiting decision at the end of FY 18 were 341
cases.
Senator Bishop wondered whether the temporary judge would
qualify for Judiciary retirement.
Ms. Meade replied in the negative, but would be eligible
for Public Employees' Retirement System (PERS).
Senator Wielechowski wondered whether there was a
requirement for the Court of Appeals judges to issue
decisions within six months.
Ms. Meade responded that there was a statutory requirement
that a matter could not be pending for more than six
months. She furthered that the definition of "matter
pending" was not about the moment a case was briefed.
Senator Wielechowski queried statistics on the frequency in
the last two years.
Ms. Meade agreed to provide that information.
Senator Wielechowski wondered whether the Court of Appeals
heard the cases as a three-member panel.
Ms. Meade replied in the affirmative.
9:25:01 AM
Senator Wielechowski wondered how adding one additional
person would work.
Ms. Meade replied that the fourth judge was pulled up for a
few years, and the panel rotated regularly.
Senator Micciche wondered why this was not a priority for
the Court.
Ms. Meade replied that the Supreme Court was cognizant of
the fiscal situation, by not asking for more than what was
absolutely necessary.
Senator Wielechowski noted that the repealer would take
affect July 1, 2021. He wondered whether someone could be
appointed on June 30, 2021, and that person serve for two
years.
Ms. Meade replied that the fiscal note only had funding
available for two years.
Senator Olson wondered how optimistic, with the increased
cases, and decreased budgets that there would not be an
additional request.
Ms. Meade responded that she did not know how long it would
take, but the court was optimistic.
Co-Chair von Imhof wondered whether Ms. Meade had anything
to add to the fiscal note conversation.
Ms. Meade replied in the negative.
Co-Chair von Imhof OPENED public testimony.
Co-Chair von Imhof CLOSED public testimony.
9:30:01 AM
AT EASE
9:30:40 AM
RECONVENED
SB 55 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 61
"An Act relating to claims against protection and
indemnity insurance policies of vessel owners."
9:31:17 AM
SENATOR GARY STEVENS, SPONSOR, presented the legislation.
Co-Chair von Imhof noted that there was one section of the
bill.
9:33:45 AM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, discussed the one
section of the bill.
Senator Micciche declared a conflict of interest.
9:35:30 AM
Mr. Lamkin directed to the fact sheet (copy on file). He
pointed to page 3 which he felt provided important
information.
Senator Bishop declared a potential conflict of interest.
Senator Hoffman stated that the also had a commercial
fishing permit.
Senator Wilson stated that the also had a commercial
fishing permit.
Senator Shower noted that there was no cost to the state,
but queried the small impact in the fiscal note.
Senator Stevens stated that he no longer had a commercial
fishing permit.
Mr. Lamkin noted that the insurance claims were decreasing,
but because of the deductible increase therefore reflected
a modest fiscal note covered by the fund itself.
9:38:20 AM
RENEE ALWARD, FISHERMAN'S FUND ADVISORY AND REPEALS
COUNCIL, HOMER (via teleconference), spoke in support of
the legislation
9:40:27 AM
BOB KEHOE, EXECUTIVE DIRECTOR, PURSE SEINE VESSEL OWNERS
ASSOCIATION, testified in support of the bill.
Senator Wielechowski queried the number of vessel owners
with PNI insurance.
Mr. Kehoe replied that he speculated that there was not
much data on that issue.
9:44:21 AM
FRANCES LEACH, EXECUTIVE DIRECTOR, UNITED FISHERMEN OF
ALASKA, spoke in support of the bill.
Senator Olson queried what amount was referred to when
discussing a claim.
Ms. Leach replied that the average claim depended on the
injury.
Co-Chair von Imhof OPENED public testimony.
Co-Chair von Imhof CLOSED public testimony.
9:48:11 AM
GREY MITCHELL, DIRECTOR, DIVISION OF WORKER'S COMPENSATION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, introduced
himself.
Senator Wielechowski queried the benefits available to a
commercial fisherman with no insurance, and the maximum
allowable under the Fisherman's Fund.
Mr. Mitchell replied that the Fisherman's Fund provided a
benefit of up to $10,000 for medical costs, which could
include travel costs related to medical treatment.
Senator Wielechowski queried any data regarding how many
fisherman were injured and were not provided benefits.
Mr. Mitchell replied that the number of claims that the
fund receives was approximately 300 per year.
Senator Olson wondered how many claims had been paid out
on.
Mr. Mitchell agreed to provide that information.
Co-Chair von Imhof announced that questions could be
submitted to her office, consolidated, and distributed.
Senator Bishop explained the fiscal note.
Mr. Mitchell announced that the fund currently had a
balance of over $11 million.
SB 61 was HEARD and HELD in committee for further
consideration.
9:53:05 AM
AT EASE
9:57:26 AM
RECONVENED
^DISCUSSION on PERMANENT FUND DIVIDEND CALCULATION
9:57:37 AM
Co-Chair von Imhof announced that the committee was
evaluating many different inputs simultaneously.
10:00:13 AM
Co-Chair von Imhof discussed the presentation, "POMV,
Percent of Market Value" (copy on file). She explained that
the slide showed the mathematics related to the POMV.
Co-Chair Stedman wondered why there were the different
percentages, and why they were averaged rather than taking
a previous number. He queried the history of the structure.
Co-Chair von Imhof replied that the reason for the numbers
would be discussed later in the presentation. She stated
that the intent was to create a controlled and disciplined
draw on the Permanent Fund. She stated that the 5 percent
was used because most of the similar funds in the world saw
a 4 percent to 5 percent draw on the market value.
Co-Chair Stedman surmised that historical market returns
were used to determine the percentages.
10:06:13 AM
Co-Chair von Imhof replied that the 5 percent rate would
not change how the fund was managed. She stated that there
were funds around the world that had a lower percentage
draw.
Co-Chair Stedman wondered whether the lookback would smooth
out some predictability.
Co-Chair von Imhof replied that the 5-year lookback was a
conservative approach. She stated that she wanted to
provide a predictable draw amount.
Senator Bishop reiterated that there were many discussions
about the statutory draw amount. He recalled discussions
about the predictable budget draw. The effective rate could
theoretically be 4.25 percent.
Co-Chair von Imhof replied that was correct in a rising
market condition.
10:10:04 AM
Co-Chair von Imhof looked at slide 2, "Statutory PFD
Calculation: FY 2020 example." She noted that there were
three statutes.
Co-Chair Stedman wondered whether the income was fairly
constant. He wondered why the previously slide showed $1.2
billion in the ERA, and then 2019 showed $18.9 billion. He
wondered whether those numbers affected the ability to pay
the dividend.
Co-Chair von Imhof noted the sum of previous five year
statutory income and the big jump from 2017 to 2018 from
$3.2 billion to $6.3 billion. She stated that it
demonstrated high volatility.
Co-Chair Stedman noted that 2010 had $1.2 billion in the
ERA. He recalled that there was a concern in 2009 that
there would not be funds available to have a dividend. He
recalled a concern about the Permanent Fund being
aggressive in the management of their assets to assure that
they had the funds to pay a dividend. He noted that the
concerns were addressed at the time. He wanted to ensure
that it would not happen again.
10:15:08 AM
Co-Chair von Imhof shared a historical perspective.
Co-Chair von Imhof highlighted slide 3, "Split of the POMV
draw."
Co-Chair Stedman understood that there may be favorable
resource markets, and there may be a surplus on the
recurring revenue. Therefore, the draw would not be
necessary.
10:20:26 AM
Co-Chair von Imhof noted that it highlighted the fact that
keeping the draw flexible was important to the program.
Co-Chair von Imhof addressed slide 4, "FY 19 UGF
Expenditures."
Co-Chair Stedman remarked that there was a forecasted draw
of $300 million in the current year to make ends meet.
Co-Chair von Imhof highlighted slide 5, "What is the PFD
and Budget Interplay?"
Break even: It appears the state could pay about a
$1000 check with flat funding.
Caution: More cuts may not necessarily mean a biggest
dividend because the state should consider past
underfunding of capital, Mr. Grasser: leaky school
roofs, damaged bridges, aging infrastructure.
10:26:13 AM
Senator Wilson expressed concern paying the dividend. He
did not see any discussions about more than 50/50, because
that would require additional statues passed in the
legislature. He stressed that the focus should only be on a
50/50.
Co-Chair von Imhof noted that no bills were introduced, but
she felt that it was important to show the interplay.
Senator Wielechowski stressed that SB 26 did not change
anything, and the legislature always had authority to draw
from the ERA. He noted that the bill put a cap on it of 5.2
percent. He stressed that the dividend statute that defined
its specific amount. He felt that if the legislature wanted
to ignore the statute, the statute must be changed.
Co-Chair Stedman noted the substantial risk, so the
conversation was important.
Co-Chair von Imhof acknowledged that there was money in the
ERA, so the percentage split discussions could take place.
10:34:38 AM
Senator Hoffman remarked that it was not the intent of the
committee to "raid" the Permanent Fund.
Co-Chair Stedman remarked that it was important to ensure
that the money not be spent, so there should be raids
blocked.
Senator Wielechowski felt that it was an important
discussion. He wanted to discuss whether the state was
getting its fair share of its resources.
Senator Micciche felt that the discussion was only
conceptual.
Co-Chair von Imhof replied that it was a conceptual
conversation.
Senator Micciche did not feel that it was appropriate to
discuss things that were untrue, because the state's oil
tax in the year prior was close to 44 percent.
Co-Chair Stedman remarked that the budget components had
been assigned to the members of the committee to chair
their subcommittees.
10:42:01 AM
Senator Hoffman remarked that he was a strong proponent of
SB 26 .
Co-Chair von Imhof surmised that 56 villages had their own
specific needs. She wondered whether the dividend should be
in the constitution, rather than education and health care.
Senator Hoffman wanted to resolve the issue once and for
all.
10:48:29 AM
Co-Chair Stedman remarked that the process should be to
discuss the concept and to have a draft bill refined.
Senator Bishop stated that Alaska was a very rich state,
and stressed that the state was not broke.
Senator Shower echoed Senator Hoffman's comments about a
solution to keep the PFD out of politics.
Co-Chair von Imhof did not feel that future generations
should be financially obligated.
ADJOURNMENT
10:56:13 AM
The meeting was adjourned at 10:56 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB61 Sectional Version A.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB61 Sponsor Statement 02.27.19.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Fishermens Fund - Research Fact Sheet - 03.01.19.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Support Letter UFA.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Support Letter PSVOA.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Support Letter SEAFA.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 55 - Sectional Summary.pdf |
SFIN 3/27/2019 9:00:00 AM SJUD 3/11/2019 1:30:00 PM |
SB 55 |
| SB 55 - Sponsor Statement.pdf |
SFIN 3/27/2019 9:00:00 AM SJUD 3/11/2019 1:30:00 PM |
SB 55 |
| SB 55 - Explanation of Changes, Version A to B.pdf |
SFIN 3/27/2019 9:00:00 AM |
SB 55 |
| 032719 Senate Finance POMV Split Presentation March 27.2019.pdf |
SFIN 3/27/2019 9:00:00 AM |
Permanent Fund Divdend |
| SB 61 DOL Worker's Compensation Sen Fin Question 3-27.pdf |
SFIN 3/27/2019 9:00:00 AM |
SB 61 |
| SB 55 - 4.1.2019 Courts Response.pdf |
SFIN 3/27/2019 9:00:00 AM |
SB 55 |