Legislature(1997 - 1998)
04/06/1998 01:40 PM Senate JUD
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SENATE JUDICIARY COMMITTEE
April 6, 1998
1:40 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Drue Pearce, Vice-Chairman
Senator Mike Miller
Senator Sean Parnell
Senator Johnny Ellis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 18
Proposing amendments to the Constitution of the State of Alaska to
guarantee the permanent fund dividend, to provide for inflation-
proofing, and to require a vote of the people before spending
undistributed income from the earnings reserve of the permanent
fund; and relating to the permanent fund.
- MOVED SJR 18 OUT OF COMMITTEE
SENATE BILL NO. 244
"An Act relating to polygraph or other lie-detecting testing for
certain correctional officers."
- MOVED SB 244 OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SJR 18 - See State Affairs minutes dated 3/13/97. See Judiciary
minutes dated 6/10/97.
SB 244 - See State Affairs minutes dated 2/17/98.
WITNESS REGISTER
Ms. Renee Howell
Staff to Senator Lyda Green
State Capitol
Juneau, Ak 99801-1182
POSITION STATEMENT: Presented SJR 18
Mr. Jim Kelley
Director of Communications
Alaska Permanent Fund Corporation
PO Box 25500
Juneau, Ak 99802-5500
POSITION STATEMENT: Commented on SJR 18
Mr. William Terbeck
PO Box 220205
Anchorage, Ak 99520
POSITION STATEMENT: Commented on SJR 18
Mr. Craig Johnson
Staff to Senator Jerry Ward
State Capitol
Juneau, Ak 99801-1182
POSITION STATEMENT: Presented SB 244
ACTION NARRATIVE
TAPE 98-30, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:40 p.m. and brought up SJR 18 as the first order of
business.
SJR 18 - CONST AM: PERM. FUND INCOME & DIVIDEND
MS. RENEE HOWELL, staff to Senator Lyda Green, presented SJR 18,
which would require a vote of the people to spend any of the
earnings reserve of the Permanent Fund. The measure would also
inflation-proof the Permanent Fund. MS. HOWELL explained that the
bill would require voters' approval to cap or lower dividends from
the permanent fund or change the fund in any way.
Number 082
MR. JIM KELLEY, Director of Communications for the Alaska Permanent
Fund Corporation (APFC), reported that their attorney has advised
APFC that the adoption of this amendment may weaken the state's
position that the income of the fund is not subject to taxation.
MR. KELLEY also commented on the letter submitted from Mr. Michael
O'Leary that talked about the volatility of the stock market. MR.
KELLEY said that Alaska has enjoyed the upside of this volatility
in recent years but may also sometime face the downside and the
legislature may decide they want to change the distribution of
funds, even put them into an endowment or another type of
structure. He said if a change is put into the Constitution, it
will be difficult to change again in the future.
SENATOR PARNELL asked if the inflation proofing calculation on page
two was related to the Consumer Price Index (CPI), and, if so if
MR. KELLEY thinks the CPI could overstate or understate inflation.
MR. KELLEY agreed this was possible and said the CPI lags one year
behind as well.
SENATOR PARNELL asked if MR. KELLEY believes inflation proofing
should be included in the Constitution and, if so, how should it be
calculated? MR. KELLEY said this is how the law is written, with
the inflation rate calculated relative to the CPI.
SENATOR PARNELL asked if the language in this bill reflects how the
dividend is currently calculated and MS. HOWELL agreed it is the
same.
CHAIRMAN TAYLOR asked if making a deposit from the undistributed
income account to the corpus of the fund could adversely impact
future dividends? CHAIRMAN TAYLOR then asked what amount should be
left in the undistributed income so dividends would not be
adversely impacted. MR. KELLEY replied $625 million provided that
the fund realizes the anticipated median expected return for next
year.
CHAIRMAN TAYLOR questioned why there was no reduction in the
dividend amount as a result of previous deposits, he asked MR.
KELLEY if the fund had always surpassed its median estimates. MR.
KELLEY replied it had in the past couple of years.
CHAIRMAN TAYLOR asked if he had recommended a change to the manner
in which the income of the fund is calculated. MR. KELLEY replied
that the Trustees has set up a committee on investment policy
options to look at other possible distribution policies for the
fund, but have as of yet come forward with no specific
recommendations. CHAIRMAN TAYLOR asked if that change would be
appropriately added as an amendment to this bill. MR. KELLEY said
he was not sure the board was ready to do that, but he would find
out. CHAIRMAN TAYLOR commented that he found it ludicrous that
someone was waging a campaign to convince people that this bill
will result in lower dividends. MR. KELLEY responded that any
change to the fund generates a financial projection which explains
all the possible consequences of the change. MR. KELLEY said he has
distributed this paper to members of the Legislature. He stated
that the Legislature makes the policy regarding the fund, but the
fact is that they will not continue to get the high rate of return
on the fund they have gotten over the past few years. Consequently,
a future liability is being created which may necessitate use of
the earnings reserve, or the reduction of the dividend. CHAIRMAN
TAYLOR asked if they should amend the formula so the undistributed
income can just spill over into the fund unless the people vote to
spend it on something else. MR. KELLEY said the formula
specifically says the income available for distribution is the
income of five years times 21 percent, but may not exceed the
amount of money earned in a given year plus the earnings reserve
account. He believes this formula was written to keep the fund from
paying out more than it takes in during any given year.
CHAIRMAN TAYLOR asked if the board was scheduled to meet soon. MR.
KELLY indicated the board would meet on April 22nd. CHAIRMAN TAYLOR
asked MR. KELLEY to bring this issue up to them so any concern
could be addressed before the passage of this bill. MR. KELLEY
agreed to do so.
SENATOR ELLIS asked if the sponsor was available to speak to her
legislation. CHAIRMAN TAYLOR said she was not. SENATOR ELLIS asked
about the language in section one, questioning if that language was
what was intended to appear on the ballot or to be included as the
title of the ballot initiative. MS. HOWELL was unable to respond to
this question and SENATOR ELLIS asked generally if it was routine
to for this to occur. CHAIRMAN TAYLOR said he was not certain but
he believed the language does not bind the Lt. Governor to describe
the initiative in that manner.
CHAIRMAN TAYLOR then took testimony from MR. TERBECK, who testified
via teleconference from Anchorage. MR. TERBECK said 25 percent of
Alaska Natives have no other income and he does not believe the
Legislature should touch the permanent fund. He stated that if they
need money they should bring back a state income tax. MR. TERBECK
suggested the permanent fund dividend might be better distributed
over a twelve month period. CHAIRMAN TAYLOR assured MR. TERBECK
that there is nothing before either body of the Legislature that
will invade the permanent fund.
SENATOR MILLER moved SJR 18 from committee with individual
recommendations. Without objection, it was so ordered.
SB 244 - POLYGRAPHS FOR CORRECTIONAL OFFICERS
MR. CRAIG JOHNSON, staff to Senator Jerry Ward, said SB 244 allows
for the administration of polygraph tests to correctional officers
and those applying to be correctional officers. MR. JOHNSON argued
that in order to ensure the integrity and character of the officers
as well as the public safety, it is no less in order for these
correctional officers than it is for police officers who currently
take this type of test. MR. JOHNSON said this is a proven method of
screening applicants and the bill has wide support.
SENATOR PARNELL moved SB 244 out of committee with individual
recommendations.
CHAIRMAN TAYLOR informed the committee that Mr. Norsworthy had sent
them a list of questions and the names of people he recommended
should appear before the committee. CHAIRMAN TAYLOR said he would
like to have a discussion on where the committee will go from here.
CHAIRMAN TAYLOR noted the coincidence that this polygraph bill
would come up at this same time and commented that he was amazed
that not one of the people in the investigation was asked to take
a polygraph test, even when copious amounts of evidence
contradicted their story. CHAIRMAN TAYLOR asked the committee
members to review the witness list and make further recommendations
if they saw fit.
SENATOR PEARCE said she was troubled that decisions were made in
advance that bound the investigation, and also was troubled that
trained officers were instructed in how to conduct the
investigation.
CHAIRMAN TAYLOR informed the committee they would discuss it
further after the witness list and questions were circulated. With
nothing further to come before them, they were adjourned.
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