Legislature(2019 - 2020)BELTZ 105 (TSBldg)

03/22/2019 01:30 PM JUDICIARY

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Audio Topic
01:32:57 PM Start
01:33:25 PM SB23|| SB24
03:15:34 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 34 PROBATION; PAROLE; SENTENCES; CREDITS TELECONFERENCED
<Bill Hearing Canceled>
-- Testimony <Invitation Only> --
+ SB 23 APPROP:SUPP. PAYMENTS OF PRIOR YEARS' PFD TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ SB 24 PFD SUPPLEMENTAL PAYMENTS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                         March 22, 2019                                                                                         
                           1:32 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Shelley Hughes, Chair                                                                                                   
Senator Mike Shower                                                                                                             
Senator Peter Micciche                                                                                                          
Senator Jesse Kiehl                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lora Reinbold, Vice Chair                                                                                               
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 23                                                                                                              
"An Act  making special appropriations from  the earnings reserve                                                               
account  for  the  payment  of   permanent  fund  dividends;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 24                                                                                                              
"An Act directing  the Department of Revenue to  pay dividends to                                                               
certain  eligible individuals;  and  providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 34                                                                                                              
"An Act  relating to  probation; relating  to a  program allowing                                                               
probationers to  earn credits for  complying with  the conditions                                                               
of  probation;  relating  to   early  termination  of  probation;                                                               
relating to  parole; relating to  a program allowing  parolees to                                                               
earn  credits  for  complying  with  the  conditions  of  parole;                                                               
relating to early termination of  parole; relating to eligibility                                                               
for discretionary  parole; relating  to good time;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 23                                                                                                                   
SHORT TITLE: APPROP:SUPP. PAYMENTS OF PRIOR YEARS' PFD                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/16/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/19       (S)       STA, FIN                                                                                               
02/05/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
02/05/19       (S)       Heard & Held                                                                                           
02/05/19       (S)       MINUTE(STA)                                                                                            
02/26/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
02/26/19       (S)       Heard & Held                                                                                           
02/26/19       (S)       MINUTE(STA)                                                                                            
02/28/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
02/28/19       (S)       Heard & Held                                                                                           
02/28/19       (S)       MINUTE(STA)                                                                                            
03/05/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/05/19       (S)       Heard & Held                                                                                           
03/05/19       (S)       MINUTE(STA)                                                                                            
03/07/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/07/19       (S)       Heard & Held                                                                                           
03/07/19       (S)       MINUTE(STA)                                                                                            
03/12/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/12/19       (S)       Moved CSSB 23(STA) Out of Committee                                                                    
03/12/19       (S)       MINUTE(STA)                                                                                            
03/13/19       (S)       STA RPT CS  1DP 1DNP 2NR 1AM SAME TITLE                                                                
03/13/19       (S)       DP: SHOWER                                                                                             
03/13/19       (S)       DNP: COGHILL                                                                                           
03/13/19       (S)       NR: REINBOLD, MICCICHE                                                                                 
03/13/19       (S)       AM: KAWASAKI                                                                                           
03/13/19       (S)       JUD REFERRAL ADDED AFTER STA                                                                           
03/14/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/14/19       (S)       <Bill Hearing Canceled>                                                                                
03/22/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 24                                                                                                                   
SHORT TITLE: PFD SUPPLEMENTAL PAYMENTS                                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/16/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/19       (S)       STA, FIN                                                                                               
02/05/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
02/05/19       (S)       Heard & Held                                                                                           
02/05/19       (S)       MINUTE(STA)                                                                                            
02/26/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
02/26/19       (S)       Heard & Held                                                                                           
02/26/19       (S)       MINUTE(STA)                                                                                            
02/28/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
02/28/19       (S)       Heard & Held                                                                                           
02/28/19       (S)       MINUTE(STA)                                                                                            
03/05/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/05/19       (S)       Heard & Held                                                                                           
03/05/19       (S)       MINUTE(STA)                                                                                            
03/07/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/07/19       (S)       Heard & Held                                                                                           
03/07/19       (S)       MINUTE(STA)                                                                                            
03/12/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/12/19       (S)       Moved CSSB 24(STA) Out of Committee                                                                    
03/12/19       (S)       MINUTE(STA)                                                                                            
03/13/19       (S)       STA RPT CS  1DP 1DNP 2NR 1AM NEW TITLE                                                                 
03/13/19       (S)       DP: SHOWER                                                                                             
03/13/19       (S)       DNP: COGHILL                                                                                           
03/13/19       (S)       NR: REINBOLD, MICCICHE                                                                                 
03/13/19       (S)       AM: KAWASAKI                                                                                           
03/13/19       (S)       JUD REFERRAL ADDED AFTER STA                                                                           
03/14/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/14/19       (S)       <Bill Hearing Canceled>                                                                                
03/22/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BRUCE TANGEMAN, Commissioner Designee                                                                                           
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Presented SB 23 on behalf of the                                                                          
administration.                                                                                                                 
                                                                                                                                
ED KING, Chief Economist                                                                                                        
Office of Management and Budget                                                                                                 
Office of the Governor                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions during the discussion of                                                               
SB 23 and SB 24.                                                                                                                
                                                                                                                                
WILLIAM MILKS, Senior Assistant Attorney General                                                                                
Civil Division                                                                                                                  
Labor & State Affairs                                                                                                           
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions during the discussion of                                                               
SB 23.                                                                                                                          
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:32:57 PM                                                                                                                    
CHAIR  SHELLEY  HUGHES  called   the  Senate  Judiciary  Standing                                                             
Committee meeting  to order at 1:32  p.m. Present at the  call to                                                               
order  were Senators  Kiehl, and  Chair Hughes.  Senator Micciche                                                               
arrived  shortly  thereafter.  Senator   Shower  arrived  as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
        SB 23-APPROP:SUPP. PAYMENTS OF PRIOR YEARS' PFD                                                                     
                SB 24-PFD SUPPLEMENTAL PAYMENTS                                                                             
                                                                                                                                
1:33:25 PM                                                                                                                    
CHAIR HUGHES announced that the  first order of business would be                                                               
SENATE BILL  NO. 23, "An  Act making special  appropriations from                                                               
the earnings  reserve account for  the payment of  permanent fund                                                               
dividends; and providing for an effective date" and                                                                             
                                                                                                                                
SENATE BILL NO.  24, "An Act directing the  Department of Revenue                                                               
to pay  dividends to certain eligible  individuals; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
[Before  the committee  were  the CSSB  23(STA),  work order  31-                                                               
GS1014\M, and the CSSB 24(STA), work order 31-GS1013\M.                                                                         
                                                                                                                                
1:33:33 PM                                                                                                                    
CHAIR HUGHES  said that the  committee would treat both  bills as                                                               
one agenda item.  She stated that these bills  were introduced at                                                               
the  request  of the  governor  and  have a  Judiciary  Committee                                                               
referral  due  to  the constitutional  questions  raised  in  the                                                               
Senate State Affairs Committee.                                                                                                 
                                                                                                                                
1:34:44 PM                                                                                                                    
BRUCE  TANGEMAN, Commissioner  Designee,  Department of  Revenue,                                                               
Anchorage, stated  that these bills  have commonly  been referred                                                               
to  as the  PFD backpay  bills. The  bills would  appropriate the                                                               
money from  the earnings reserve  account. They authorize  him to                                                               
distribute the permanent fund dividends.                                                                                        
                                                                                                                                
He explained the  processes so members can  better understand why                                                               
this  is  being  done.  Specifically, the  bills  would  pay  out                                                               
dividends over a three-year period.  In 2016, a full dividend was                                                               
authorized and vetoed  by a previous governor. In  2017 and 2018,                                                               
the state paid  out permanent fund dividends that  were less than                                                               
the amount authorized by the  statutory calculation passed by the                                                               
legislature. The bills  would repay the amount  over a three-year                                                               
period. He explained that excess funds  would be drawn out of the                                                               
earnings  reserve account.  Addressing one  year at  a time  will                                                               
allow  the funds  to remain  in the  ERA and  earn a  return. Mr.                                                               
Milks will speak to the process. He summarized the payback:                                                                     
                                                                                                                                
A resident who  qualified for a permanent fund  dividend (PFD) in                                                               
2019 and received a PFD in 2016 would receive $1,061.                                                                           
                                                                                                                                
A resident who qualified for a PFD  in 2020 and received a PFD in                                                               
2017 would receive an additional $1,289.                                                                                        
                                                                                                                                
A resident who qualified for a PFD  in 2021 and received a PFD in                                                               
2018 would receive an additional $1,388.                                                                                        
                                                                                                                                
CHAIR HUGHES asked for further clarification on the amounts.                                                                    
                                                                                                                                
COMMISSIONER TANGEMAN  recapped the  additional PFD  amounts. The                                                               
total amount  projected to pe  paid to qualifying  residents over                                                               
the three-year period would be approximately [$3700].                                                                           
                                                                                                                                
1:38:25 PM                                                                                                                    
SENATOR MICCICHE joined the meeting.                                                                                            
                                                                                                                                
1:38:32 PM                                                                                                                    
SENATOR  KIEHL said  that with  a known  payout date  these funds                                                               
would  not be  invested  in the  same manner.  He  asked for  the                                                               
anticipated rate of return.                                                                                                     
                                                                                                                                
MR.  TANGEMAN  responded that  funds  remaining  in the  earnings                                                               
reserve account  for two years could  be invested in a  much more                                                               
aggressive rate  than ones  needed to  payout the  permanent fund                                                               
dividend. The Permanent  Fund Corporation would need  to know how                                                               
much  cash it  needs  to  have on  hand.  If  an additional  $600                                                               
million would  need to be  available in  October 2019 to  pay the                                                               
PFD, the corporation could invest  the remaining $1.3 billion. He                                                               
was unsure of the change in rate of return.                                                                                     
                                                                                                                                
1:40:03 PM                                                                                                                    
CHAIR  HUGHES asked  whether he  could  estimate the  anticipated                                                               
rate of return for two years.                                                                                                   
                                                                                                                                
MR. TANGEMAN answered that the  Permanent Fund Corporation's rate                                                               
of return  assumption is 6.55  percent annually. This would  be a                                                               
subset.  He suggested  the corporation  could  better answer  the                                                               
specifics.                                                                                                                      
                                                                                                                                
CHAIR HUGHES asked for the  total draw amount over the three-year                                                               
period.                                                                                                                         
                                                                                                                                
MR. TANGEMAN deferred to the Office of Management and Budget.                                                                   
                                                                                                                                
1:40:58 PM                                                                                                                    
SENATOR MICCICHE  said he  previously heard the  bill and  had no                                                               
further questions.                                                                                                              
                                                                                                                                
1:41:32 PM                                                                                                                    
ED  KING,  Chief  Economist, Office  of  Management  and  Budget,                                                               
Office of the Governor, Juneau,  stated that the question was the                                                               
anticipated  total draw.  He said  OMB  anticipates that  535,000                                                               
Alaskans would qualify  for repayment each year.  He guessed that                                                               
it would be  about $565 million for 2016, $670  million for 2018,                                                               
and $725 million for 2019. In  further response, he said it would                                                               
be about $1.9 billion in total.                                                                                                 
                                                                                                                                
1:42:34 PM                                                                                                                    
CHAIR  HUGHES  remarked  that  this hearing  will  focus  on  the                                                               
constitutional issues, but it was  important for the committee to                                                               
have some idea of the figures.                                                                                                  
                                                                                                                                
1:42:47 PM                                                                                                                    
SENATOR  KIEHL asked  Mr.  King whether  he had  an  idea on  the                                                               
investment return for the two-year period.                                                                                      
                                                                                                                                
MR.  KING  said  the  Permanent   Fund  Corporation  manages  its                                                               
portfolio on  the expectation of  the draws. The  liquidity would                                                               
come from  the expected payment  timeframe. He said  that setting                                                               
out  the payments  with a  structured  draw date  would help  the                                                               
corporation  to  better  manage the  portfolio.  The  expectation                                                               
would be  that the permanent fund  would make more money  than if                                                               
they had  none of this  money in the [earnings  reserve account].                                                               
He  estimated  that  the  rate of  return  would  fall  somewhere                                                               
between 4 and 6.5 percent.                                                                                                      
                                                                                                                                
CHAIR HUGHES asked for the math range at 4 to 6.5 percent.                                                                      
                                                                                                                                
MR. KING offered to calculate it and report back.                                                                               
                                                                                                                                
1:44:04 PM                                                                                                                    
CHAIR HUGHES referred to questions  that were raised in the State                                                               
Affairs Committee regarding the  constitutional issues and how it                                                               
may stand up in court. She  recalled that Mr. Milks had drafted a                                                               
memo on  cases that lay  the groundwork for  the administration's                                                               
position.                                                                                                                       
                                                                                                                                
1:44:33 PM                                                                                                                    
WILLIAM   MILKS,  Senior   Assistant   Attorney  General,   Civil                                                               
Division, Labor & State Affairs,  Department of Law, Juneau, said                                                               
in that  the Senate State  Affairs Standing  Committee considered                                                               
the bill and posed general questions  on whether SB 23 would face                                                               
constitutional issues.  The Department of Law  submitted a letter                                                               
dated March 12,  2019 outlining its position  that rational basis                                                               
review would apply.  The department also concluded  that there is                                                               
a  reasonable  basis  to  conclude  that  the  legislation  would                                                               
survive constitutional scrutiny.                                                                                                
                                                                                                                                
He stated that  two bills cover the same subject  area. One bill,                                                               
an appropriation bill, would provide  for the additional payments                                                               
that  the  commissioner  just  described.   The  second  bill  is                                                               
uncodified  law to  permit  the Department  of  Revenue (DOR)  to                                                               
follow the process, he said.                                                                                                    
                                                                                                                                
1:45:48 PM                                                                                                                    
MR.  MILKS said  that SB  23 seeks  to address  a certain  set of                                                               
circumstances,  including that  Alaska has  had a  long time  PFD                                                               
program.                                                                                                                        
                                                                                                                                
1:45:52 PM                                                                                                                    
SENATOR SHOWER joined the meeting.                                                                                              
                                                                                                                                
1:46:02 PM                                                                                                                    
MR.  MILKS  highlighted  that  for   three  discrete  years,  the                                                               
statutory  formula that  set forth  the calculation  to determine                                                               
the   permanent   fund   dividend   (PFD)   was   not   followed.                                                               
Historically, from  the 1980s forward, the  statutory formula for                                                               
payments of  PFDs was used. This  bill seeks to provide  a three-                                                               
part  process to  remedy those  Alaskans affected.  In 2016,  the                                                               
permanent  fund dividend  was less  than  the statutory  formula.                                                               
Under SB  23, an  additional payment would  be provided  to those                                                               
Alaska residents  who were affected. He  said that constitutional                                                               
issues  were raised  on  whether it  would  create a  distinction                                                               
between  Alaska  residents  based  on  duration.  The  department                                                               
believes  that this  bill is  narrowly tailored  to address  that                                                               
issue.                                                                                                                          
                                                                                                                                
MR. MILKS reviewed the history,  such as the enabling legislation                                                               
that established  the permanent  fund dividend program  that went                                                               
to the U.S. Supreme Court in  Zobel v. Williams. The U.S. Supreme                                                               
Court  found the  original program  was unconstitutional.  At the                                                               
time,  some Alaska  residents would  receive a  PFD of  up to  20                                                               
times  greater than  others, which  the court  found too  great a                                                               
difference,  so  the law  was  struck  down. Since  then,  Alaska                                                               
adopted  a residency  qualification and  the  PFD is  paid in  an                                                               
equal  amount  to  every  Alaska   resident.  He  said  that  the                                                               
Department of  Law reviewed  the Zobel case  and found  the court                                                               
applied  a  rational basis  test.  The  department also  reviewed                                                               
subsequent  Alaska  Supreme Court  decisions,  as  well as  other                                                               
decisions,  to assess  whether  this bill  would  face a  serious                                                               
constitutional challenge.  He pointed  out that  most legislation                                                               
passed  by  the legislature  is  not  second guessed  by  courts.                                                               
Instead, the  courts apply a  rational basis standard  of review,                                                               
which  is very  deferential in  terms of  economic interests,  he                                                               
said.                                                                                                                           
                                                                                                                                
1:50:01 PM                                                                                                                    
MR.  MILKS said  that  the prior  committee  suggested the  court                                                               
might apply  a strict  scrutiny test.  That test  is one  that is                                                               
usually be  applied in cases  where the legislature passed  a law                                                               
that was  found to burden  people on the  basis of sex,  race, or                                                               
religion.                                                                                                                       
                                                                                                                                
Another concern raised  was that some Alaskans  would receive the                                                               
additional  payments  and  others  would not,  he  said.  In  the                                                               
Department of Law's view, the  court would apply a rational basis                                                               
review if SB 23 were to  pass. The legislature would consider the                                                               
unique PFD  program along with  a unique  set of facts,  which is                                                               
that for  the first time  in 40  years the statutory  formula was                                                               
not applied.                                                                                                                    
                                                                                                                                
MR. MILKS highlighted a question  that was raised on a durational                                                               
residency  requirement  and whether  it  would  trigger a  higher                                                               
level of  scrutiny. In the  department's view, it would  not. The                                                               
Alaska Supreme Court  has considered that a  durational period is                                                               
a waiting  period in order to  obtain a benefit. Under  the bill,                                                               
two discrete questions arise, whether  the person is currently an                                                               
Alaska  resident, which  is linked  to residents  who experienced                                                               
underpayment,  the actual  issue  that the  legislature seeks  to                                                               
resolve. If a person did  not experience an underpayment in 2016,                                                               
the person  would fall  outside the  group that  this legislation                                                               
would  remedy. The  legislature can  accomplish the  objective to                                                               
provide an  additional payment to those  individuals who received                                                               
an underpayment, he said.                                                                                                       
                                                                                                                                
1:53:22 PM                                                                                                                    
MR. MILKS  said that the  Department of  Law does not  think that                                                               
the  court   would  interpret  the   U.S.  Constitution   or  the                                                               
Constitution of the State of Alaska  in a way that would prohibit                                                               
the  legislature from  accomplishing what  the Department  of Law                                                               
believes is a valid governmental objective in SB 23.                                                                            
                                                                                                                                
1:53:37 PM                                                                                                                    
CHAIR  HUGHES  asked  for  the  argument  for  using  the  strict                                                               
scrutiny test.  Obviously, the Department  of Law does  not agree                                                               
with that, she said.                                                                                                            
                                                                                                                                
MR. MILKS related  his understanding that the  argument is linked                                                               
to the  notion that durational  residency requirements  are often                                                               
held to a  strict scrutiny test. For example,  if the legislature                                                               
passed a  law that requires  individuals to be residents  for two                                                               
years in order  to obtain public assistance  benefits. The courts                                                               
have applied  strict scrutiny  reviews of  that type  of benefit.                                                               
However,  for  eligibility  rules for  residency  or  fixed-point                                                               
residency rules, [courts have used]  a rational basis review. The                                                               
Department  of  Law  would  consider this  to  be  a  fixed-point                                                               
residency issue and not a  durational one. He highlighted that if                                                               
the  bill  required individuals  to  reside  in Alaska  for  four                                                               
straight years to  qualify to receive the benefit,  that it would                                                               
be  a  stronger  argument  that it  was  a  durational  residency                                                               
requirement.                                                                                                                    
                                                                                                                                
MR. MILKS  explained the two  fixed points  in SB 23.  First, the                                                               
Alaska residents [who qualified  for the permanent fund dividend]                                                               
in 2016 did  not receive a full dividend.  Instead, they received                                                               
a PFD  less than the full  statutory formula. He said  the letter                                                               
of  March 12,  2019 cited  a recent  U.S. Court  of Appeals  case                                                               
Harris  v. Hahn  related  to  a program  in  Texas  that is  very                                                               
similar  in  its legal  analysis.  The  State of  Texas  provides                                                               
veteran residents  with free tuition  so long as they  were Texas                                                               
residents  at the  time they  enlisted  in the  service. The  two                                                               
points in time connection, that  they were Texas residents at the                                                               
time they enlisted, or they enlisted  in Texas. The U.S. Court of                                                               
Appeals  for  the Fifth  Circuit,  in  Harris  v. Hahn,  found  a                                                               
rational basis standard would apply in  that case because it is a                                                               
fixed-point residency and not  a durational residency. Therefore,                                                               
it upheld  the Texas legislature's  ability to restrict  the free                                                               
tuition to  individuals who were currently  veteran residents and                                                               
had enlisted in Texas.                                                                                                          
                                                                                                                                
He  highlighted the  key  point  is whether  it  is a  durational                                                               
residency,  one  with  a  waiting   period.  The  permanent  fund                                                               
dividend (PFD)  issue was one  that people either received  a PFD                                                               
less than the statutory amount or they did not receive it.                                                                      
                                                                                                                                
1:58:04 PM                                                                                                                    
SENATOR  MICCICHE   asked  whether  it  matters   [for  repayment                                                               
purposes]  that people  indicate  when they  fill  out their  PFD                                                               
applications for the years 2016-2019  that they intend to live in                                                               
the  state,  but  then  they subsequently  leave  the  state.  He                                                               
offered  his belief  that  the rational  basis  would not  change                                                               
since the PFD program is for  Alaska residents who spend 180 days                                                               
per year in Alaska. When people  are no longer present in Alaska,                                                               
they no longer qualify, he said.  He argued that in his scenario,                                                               
those receiving  the payments would  no longer qualify.  He asked                                                               
whether there was  any value in considering that  select group of                                                               
people.                                                                                                                         
                                                                                                                                
MR.  MILKS  responded that  he  believed  it  would be  of  value                                                               
because it speaks  to an authentic connection to the  state and a                                                               
stated  intention  to be  an  Alaska  resident. When  the  Alaska                                                               
Supreme  Court considered  Alaska residency  requirements related                                                               
to  the permanent  fund dividend,  it  recognized the  difference                                                               
types of  residency requirements.  With respect to  residency for                                                               
the permanent  fund dividend,  the court  has been  very mindful.                                                               
For example, in Heller v.  State, Department of Revenue case, the                                                               
court  said   that  the  permanent  fund   dividend  program  was                                                               
particularly susceptible to passersby  who establish minimal ties                                                               
to  Alaska, while  tending to  reside elsewhere.  He offered  his                                                               
belief that  it is one  key reason  the Alaska Supreme  Court has                                                               
upheld  eligibility  rules against  a  legal  challenge on  equal                                                               
protection or right to travel basis clauses.                                                                                    
                                                                                                                                
2:00:28 PM                                                                                                                    
CHAIR  HUGHES asked  whether he  has the  specific language  that                                                               
poses  the  residency  question on  the  application.  She  asked                                                               
whether the application requires a yes  or no answer or if it was                                                               
in the fine print before the signature.                                                                                         
                                                                                                                                
MR. MILKS  offered to provide  it. He recalled that  the question                                                               
pops up on  the screen and the person would  certify by answering                                                               
yes or no.                                                                                                                      
                                                                                                                                
CHAIR HUGHES suggested that it would be important to know.                                                                      
                                                                                                                                
2:01:16 PM                                                                                                                    
SENATOR  KIEHL related  a  scenario in  which  a person  receives                                                               
his/her PFD  check and  deposits in October,  but the  person has                                                               
left  the state  by November.  He asked  whether the  state seeks                                                               
repayment.                                                                                                                      
                                                                                                                                
MR. MILKS answered  no. He said that  the eligibility requirement                                                               
for the program are in statute.                                                                                                 
                                                                                                                                
SENATOR   KIEHL   asked   for  further   clarification   on   the                                                               
constitutional legal intent for "intent to remain."                                                                             
                                                                                                                                
MR.  MILKS  answered  that  eligibility is  part  of  a  complete                                                               
package  of individuals  who are  asked a  variety of  questions,                                                               
including how  much time is  spent in and  out of state.  He said                                                               
that question  would be  one of many  elements of  an eligibility                                                               
requirement  that the  Alaska Supreme  Court  has considered  and                                                               
found to pass constitutional muster.                                                                                            
                                                                                                                                
2:02:32 PM                                                                                                                    
SENATOR   MICCICHE  said   that   his  question   was  based   on                                                               
eligibility.  If the  program is  based on  the time  of payment,                                                               
which  is what  this  does, it  bases residency  on  the time  of                                                               
payment rather than on past  residency. For example, someone must                                                               
qualify  in  2016,   but  the  time  of  payment   would  be  the                                                               
distribution of the  check. Once the payment is  made, the person                                                               
has the right to leave the state.                                                                                               
                                                                                                                                
He related his understanding that  the rational basis would apply                                                               
since the  payments are staggered  over three  consecutive years.                                                               
The  eligibility question  asked whether  the person  at time  of                                                               
payment of  this year's  dividend that  the person  qualifies for                                                               
this year's  dividend and for the  previous one. He said  it made                                                               
sense to  him. This speaks  to the constitutionality  and whether                                                               
it is defensible.  He said that the rational basis  seemed to fit                                                               
the logic in Harris v. Hahn.                                                                                                    
                                                                                                                                
2:03:39 PM                                                                                                                    
SENATOR SHOWER related  a scenario when a person  qualified for a                                                               
dividend payment and  the permanent fund dividend  was capped. If                                                               
the person  left the  state, could  the person  legally challenge                                                               
the amount not  paid since it was over the  cap. He asked whether                                                               
the state has any responsibility.  He expressed concern that this                                                               
would open a can of worms of possible legal challenges.                                                                         
                                                                                                                                
MR.  MILKS responded  that the  potential  exists for  litigation                                                               
since people can always file  legal challenges. The Department of                                                               
Law would argue  on a rational basis that the  state can restrict                                                               
the treasury  to individuals  who continue  to reside  in Alaska.                                                               
The distinction  is that only  Alaska residents will  receive the                                                               
money, he said.                                                                                                                 
                                                                                                                                
He suggested that the state  would absorb administrative costs if                                                               
it decided  it needed  to track  people down  who no  longer live                                                               
here. That  would be  separate from the  state deciding  to share                                                               
its wealth with residents. He suggested  that it is a policy call                                                               
for the legislature.  The legislature is not  without the ability                                                               
to address this unique set of  facts, which is why the department                                                               
finds   it   is   constitutional.  Others   believe   there   are                                                               
constitutional issues, but the department  does not look at it as                                                               
durational residency.                                                                                                           
                                                                                                                                
2:07:32 PM                                                                                                                    
SENATOR SHOWER  related his understanding that  risk is involved,                                                               
but the administration  believes it will prevail  and survive the                                                               
legal challenge.                                                                                                                
                                                                                                                                
2:08:17 PM                                                                                                                    
SENATOR  KIEHL said  that the  word  "owed" has  come up  several                                                               
times. He  related a scenario  in which  John Q. Public  sent the                                                               
department a bill  stating he received the 2016 PFD.  Here is the                                                               
bill  for  the $1,061  that  he  is  owed.  He assumed  that  the                                                               
Department of  Law would  advise the  Division of  Permanent Fund                                                               
not to pay the bill.                                                                                                            
                                                                                                                                
MR. MILKS explained the public  policy behind the bill. A statute                                                               
provided for a  certain dollar sum, which was  followed for forty                                                               
years and then an underpayment  occurred. The legislature has the                                                               
means, if it so  chooses, to address it. He said  that would be a                                                               
legitimate  government objective.  That is  different from  being                                                               
legally owed, such that someone  could obtain a judgement against                                                               
the  State of  Alaska. As  Senator  Kiehl knows,  there has  been                                                               
litigation  on  the permanent  fund  dividend  issue. The  Alaska                                                               
Supreme Court  has established that  the payment of  dividends is                                                               
subject to appropriation by the legislature.                                                                                    
                                                                                                                                
SENATOR KIEHL  recalled that  Mr. Milks  has used  unique several                                                               
times. He asked  how this situation is legally  unique from other                                                               
cases  in  which  the  statute  says the  state  shall  pay.  For                                                               
example,  he pointed  out  that the  longevity  bonus program  is                                                               
still in  statute, and some  residents are still eligible.  As by                                                               
law, the  state is required  to reimburse municipalities  for the                                                               
foregone  property   tax  from  the  senior   citizens,  disabled                                                               
veterans, or  renters. He asked  how the permanent  fund dividend                                                               
statute is unique, from a legal  sense from the other programs in                                                               
which the  state has not  appropriated money to pay,  even though                                                               
the statutes read "shall" pay.                                                                                                  
                                                                                                                                
2:11:03 PM                                                                                                                    
MR. MILKS  answered that  "unique" deals with  a specific  set of                                                               
facts regarding  the permanent fund dividend.  The Alaska Supreme                                                               
Court has been pretty clear  that the legislature's appropriation                                                               
power must  govern. He said it  is up to the  legislature whether                                                               
to appropriate funds. The legislature  has the power and right to                                                               
appropriate or not appropriate, he  said. The legislature, in its                                                               
collective  wisdom,  could  decide  that  an  additional  payment                                                               
should be provided to address  the statute not being followed. He                                                               
said that a  subsequent legislature could make a  decision to pay                                                               
for the programs, if it so chooses.                                                                                             
                                                                                                                                
2:12:37 PM                                                                                                                    
SENATOR MICCICHE offered  his belief that was the  same ruling in                                                               
Wielechowski v.  State. He said  that Legislative  Legal Services                                                               
said,  "The  Constitution of  the  State  of Alaska  permits  the                                                               
legislature  and  the  governor   to  legally  deviate  from  the                                                               
statutory calculation under the  authority of the Constitution of                                                               
the State of  Alaska." He said that the  constitution would trump                                                               
the statute.                                                                                                                    
                                                                                                                                
He  wondered  if a  bigger  problem  would  be  that no  one  has                                                               
challenged the entire program on  the fundamental right to travel                                                               
since the regulation limits absences  to 180 days, by regulation.                                                               
He  asked  why the  fundamental  right  to  travel has  not  been                                                               
challenged.                                                                                                                     
                                                                                                                                
MR. MILKS recalled  the Alaska Supreme Court issued  a decision a                                                               
few years ago, Heller v.  State, Department of Revenue. The court                                                               
addressed  Alaska's  eligibility   requirements  considering  the                                                               
right to travel and equal  protection legal challenges. The court                                                               
rejected  a legal  challenge on  the right  to travel.  The court                                                               
pointed out  that in the  circumstance of PFD the  rational basis                                                               
test would apply. The court  noted that when dealing with readily                                                               
portable benefits,  the Alaska Supreme  Court rejected  the right                                                               
to  travel analysis.  Instead,  the court  found  that while  the                                                               
right  to travel  would  fit  into some  kinds  of state  benefit                                                               
programs, but  when dealing  with a  highly portable  benefit [in                                                               
the permanent  fund dividend  program], the  right to  travel was                                                               
given a much more limited rational basis scrutiny.                                                                              
                                                                                                                                
2:15:35 PM                                                                                                                    
SENATOR MICCICHE offered  his belief that the right  to travel is                                                               
based on the  PFD program. It would require an  applicant to be a                                                               
resident and be eligible for  the permanent fund dividend. One of                                                               
the  criteria would  allow an  applicant  to be  absent from  the                                                               
state up to 180 days in  a calendar year. However, a person could                                                               
be  absent for  181  days or  longer and  still  be considered  a                                                               
resident.  The  person  simply  would not  be  eligible  for  the                                                               
program. He related his understanding  that [the right to travel]                                                               
remains  within  the  spirit  of   the  permanent  fund  dividend                                                               
program.                                                                                                                        
                                                                                                                                
MR.  MILKS  agreed.  He  noted the  importance  that  the  Alaska                                                               
Supreme Court addressed the right  to travel issue in the context                                                               
of  the  permanent fund  dividend  program.  He acknowledged  the                                                               
serious issues with  the permanent fund dividend and  the risk of                                                               
passersby with minimal ties being able to obtain a benefit.                                                                     
                                                                                                                                
2:16:33 PM                                                                                                                    
CHAIR HUGHES  referred to  the provision  in the  Constitution of                                                               
the  State  of  Alaska  that   the  appropriation  power  in  the                                                               
legislature  trumps anything  in statute.  She asked  whether the                                                               
bill would  bind future legislatures  since the  proposed payback                                                               
would span three years and extend beyond the [3lst legislature].                                                                
                                                                                                                                
MR. MILKS  said that  a future  legislature could  always revisit                                                               
this issue, so it would not bind a future legislature.                                                                          
                                                                                                                                
2:17:35 PM                                                                                                                    
CHAIR  HUGHES recalled  the [Harris  v. Hahn]  case in  Texas was                                                               
related  to  two points  in  time.  She  said that  all  previous                                                               
permanent fund dividend applications,  payouts, and checks relied                                                               
on one point, based on the  prior calendar year. She said that SB                                                               
33 would  set it up for  two points. She asked  whether any legal                                                               
challenges  could  be brought  because  the  repayment was  being                                                               
handled differently than the historically payments.                                                                             
                                                                                                                                
MR.  MILKS said  that brings  the discussion  back to  the issues                                                               
being raised here.  He pointed out that this law  seeks to change                                                               
the uncodified law,  that it would be a temporary  law to address                                                               
specific  circumstances.  It  would  not attempt  to  change  the                                                               
existing  PFD  program.  It  would   relate  to  individuals  who                                                               
received  a   PFD  in   2016  and   met  the   current  residency                                                               
requirements.  He  reiterated  that  the bill  does  not  seek  a                                                               
permanent change in statute.                                                                                                    
                                                                                                                                
CHAIR  HUGHES asked  for further  clarification that  there would                                                               
not be a legal issue. A  person cannot question the two points in                                                               
time even though  the program historically had only  one point in                                                               
time.                                                                                                                           
                                                                                                                                
MR. MILKS  answered that this bill  would set up a  temporary law                                                               
to address  a particular event.  It would not  permanently change                                                               
the permanent fund dividend program.                                                                                            
                                                                                                                                
2:20:02 PM                                                                                                                    
SENATOR KIEHL  asked how long a  person could be absent  from the                                                               
state.                                                                                                                          
                                                                                                                                
MR. MILKS said that this  bill would apply the existing residency                                                               
requirements  for  [those  residents  who are  applying  for  the                                                               
permanent  fund  dividend  program]  which have  been  upheld  as                                                               
constitutional. The department would  need to assess any proposed                                                               
changes related to residency requirements.                                                                                      
                                                                                                                                
SENATOR  KIEHL clarified  that his  question was  focused on  the                                                               
mechanics proposed under  the bill. For example, in  order for an                                                               
applicant who  received the  2016 to be  eligible to  receive the                                                               
extra payment the  person would need to be eligible  for the 2019                                                               
PFD. He asked how long the person could be out-of-state.                                                                        
                                                                                                                                
MR.  MILKS said  it would  be  based on  the current  eligibility                                                               
requirements for the  2019 PFD. He recalled  that the application                                                               
asks if  the applicant  resided in Alaska  for the  calendar year                                                               
2018.                                                                                                                           
                                                                                                                                
2:22:46 PM                                                                                                                    
SENATOR KIEHL referred  to the Zobel case. He  recalled Mr. Milks                                                               
said the  Alaska Supreme Court  used the rational basis  test. He                                                               
said he had a slightly  different understanding. He recalled that                                                               
the court  said it did not  have to reach the  question of strict                                                               
scrutiny because the  state could not even  reach rational basis.                                                               
He asked whether he misunderstood the Zobel ruling.                                                                             
                                                                                                                                
MR. MILKS  said that  court decided to  apply the  rational basis                                                               
test.  He thought  that the  court  also applied  a higher  basis                                                               
test.                                                                                                                           
                                                                                                                                
SENATOR KIEHL remarked  that failing to finish  a qualifying race                                                               
and not finishing the race is not quite the same thing.                                                                         
                                                                                                                                
2:24:31 PM                                                                                                                    
SENATOR KIEHL  referred to Legislative Legal  Services memorandum                                                               
[dated  February  8,  2019].  He   identified  the  3rd  Judicial                                                               
District  case, Lindly  v. Malone,  in  July 1990  listed in  the                                                               
footnote  [on  page  6],   holding  unconstitutional  a  two-year                                                               
residency  requirement for  permanent  fund  and longevity  bonus                                                               
programs.                                                                                                                       
                                                                                                                                
MR. MILKS  answered that  he recalled  a Superior  Court decision                                                               
stated that,  but it  was not an  Alaska Supreme  Court decision.                                                               
The department  does not  perceive it  as a  durational residency                                                               
requirement but rather that it is based on two points.                                                                          
                                                                                                                                
2:25:20 PM                                                                                                                    
SENATOR KIEHL argued  that there would be  a durational residency                                                               
pieces since  the bill  uses two  separate eligibility  years for                                                               
eligibility, which  would mean surpassing the  two-year residency                                                               
requirement.                                                                                                                    
                                                                                                                                
MR. MILKS said  he thought it would bring us  back to the broader                                                               
picture. The department views that  the legislature has the power                                                               
to legislate.  The judicial branch  does not take it  upon itself                                                               
to second guess the policy  decisions of the legislature. This is                                                               
the reason why legislation is  given broad deferential review [by                                                               
the courts]. Using that framework  means that it does not pertain                                                               
to a strict  scrutiny case with one group based  on sex, race, or                                                               
ethnicity  gets  a   benefit  and  another  one   does  not.  The                                                               
department understands  the notion.  It's the  type of  case that                                                               
should be considered  like a fundamental right or  apply a strict                                                               
scrutiny. In  the department's view,  it essentially  disarms the                                                               
legislative branch from  addressing a specific and  unique set of                                                               
facts.  It  would mean  the  legislature  could not  do  anything                                                               
except make payments to individuals  based on what was considered                                                               
a reason to make up for  non-payment of the statutory formula. It                                                               
would  say that  now we  must pay  it to  everyone regardless  of                                                               
whether they were  in that discrete group. The  Department of Law                                                               
does not view the legislature so restrained in its abilities.                                                                   
                                                                                                                                
2:27:39 PM                                                                                                                    
SENATOR KIEHL  recalled that the only  option would be to  pay to                                                               
everyone, whether  or not  they were  in the  original qualifying                                                               
year  under the  bill. He  asked whether  there would  be another                                                               
option.  The  legislature  could  choose  to  say  those  in  the                                                               
original qualifying year,  file the paperwork and  not impose the                                                               
second residency year.                                                                                                          
                                                                                                                                
MR.  MILKS recalled  that was  the question  that Senator  Shower                                                               
raised. It  would mean  paying the repayment  amount for  the PFD                                                               
regardless of whether they are  Alaska residents. He recapped the                                                               
two  scenarios  he has  heard,  which  is  to pay  the  repayment                                                               
dividend  to  everyone, even  if  the  applicants are  no  longer                                                               
Alaska residents or pay it to  everyone who is a resident even if                                                               
they  did not  experience the  shortfall  PFD. He  said that  the                                                               
Department  of  Law believes  it  is  a  rational basis  for  the                                                               
legislature to  distinguish between current residents  of Alaska,                                                               
and those  who do not reside  in Alaska any longer.  Further, the                                                               
department  believes   that  it  is  a   legitimate  governmental                                                               
objective  to  limit  the  state's  fiscal  resources  to  Alaska                                                               
residents including  as well as  the various  legislative burdens                                                               
that would  be encumbered. He  acknowledged there could  be other                                                               
approaches taken.                                                                                                               
                                                                                                                                
2:29:50 PM                                                                                                                    
SENATOR  KIEHL offered  his  belief that  the  difficulty is  the                                                               
durational  waiting period.  He  referred  to the  administrative                                                               
burden,  noting  the  fiscal note  indicates  the  Department  of                                                               
Revenue would  need to  reprogram its  computer system.  He asked                                                               
him to identify  the greater administrative burden  that would be                                                               
avoided.                                                                                                                        
                                                                                                                                
MR. MILKS  deferred to the  Department of Revenue to  respond. He                                                               
related that  the legislature would  appropriate funds  to people                                                               
who no  longer reside in  Alaska and  have no obligation  to make                                                               
any  connection to  the state.  If the  state were  to do  so, it                                                               
would  need to  absorb  the administrative  burden  of trying  to                                                               
locate people.                                                                                                                  
                                                                                                                                
2:31:14 PM                                                                                                                    
CHAIR HUGHES related her understanding  the committee heard three                                                               
scenarios. One,  the state  would pay  everyone who  was eligible                                                               
for  the  two points  in  time;  two,  pay  the people  who  were                                                               
eligible then,  or three, pay  those who are  currently eligible.                                                               
She asked  whether someone could  provide the  population numbers                                                               
and the dollar amount for all three scenarios.                                                                                  
                                                                                                                                
2:31:49 PM                                                                                                                    
SENATOR MICCICHE  said that none  of those choices make  sense to                                                               
him. He  did not understand  the reason  to pay a  permanent fund                                                               
dividend to  people who decided  to leave the state.  The program                                                               
is designed  specifically for Alaska  residents, but it  does not                                                               
require a  three-year residency. He  related a scenario  in which                                                               
people  who left  the state  on March  31, 2016  and returned  by                                                               
January  1,  2018  would  be  eligible  for  the  2016  and  2019                                                               
dividends. The qualifying periods  are not stacked because people                                                               
qualify for individual years, he  said. The applicants would have                                                               
indicated  on  their  2016  and   2019  permanent  fund  dividend                                                               
applications an  intention to  stay in Alaska  and they  would be                                                               
eligible for  the payments. He  argued that the program  does not                                                               
have a residency requirement, but an eligibility requirement.                                                                   
                                                                                                                                
He pointed out  that some military members may not  have lived in                                                               
Alaska for  many years yet still  qualify for both 2016  and 2019                                                               
PFDs and the repayment in 2019.  He emphasized his point was that                                                               
people could be  absent from Alaska, miss two  dividend years and                                                               
still qualify for  the 2019 repayment. He said he  thought it was                                                               
an important consideration of the rational basis.                                                                               
                                                                                                                                
2:33:26 PM                                                                                                                    
MR. MILKS  agreed on both points.  He agreed that the  bill would                                                               
set  up  two periods  of  eligibility.  Speaking to  the  broader                                                               
point, he  said the bill  was drafted considering  the durational                                                               
requirements,  constitutional  issues,  eligibility  requirements                                                               
and  the  distinctions between  residents.  In  fact, the  Alaska                                                               
Supreme Court  recently found  that a  duration requirement  is a                                                               
waiting period, he said. The Department  of Law does not see this                                                               
bill as establishing a waiting period.                                                                                          
                                                                                                                                
2:34:21 PM                                                                                                                    
CHAIR  HUGHES recalled  that  Senator Kiehl  referred  to a  case                                                               
[Lindly  v. Malone,  July 1990]  that knocked  down the  two-year                                                               
requirement.  She asked  Mr. Milks  to explain  why the  two-year                                                               
requirement was not allowed.                                                                                                    
                                                                                                                                
MR.  MILKS answered  that the  case in  reference had  a two-year                                                               
waiting  period and  that it  was determined  to be  a durational                                                               
basis. He  said that SB 33  would establish a temporary  law with                                                               
eligibility requirements  at two points  in time. He  pointed out                                                               
that  the [Lindly  v. Malone,  July  1990] decision  was a  lower                                                               
court decision and not an Alaska Supreme Court decision.                                                                        
                                                                                                                                
2:35:41 PM                                                                                                                    
SENATOR SHOWER agreed with Senator  Micciche that it doesn't make                                                               
sense to pay someone who is  no longer eligible. He clarified his                                                               
earlier  concern stemmed  from  whether the  state  would have  a                                                               
legal obligation to  locate people who were eligible  in 2016 but                                                               
are no longer residents.                                                                                                        
                                                                                                                                
CHAIR HUGHES said that is one  reason she asked Mr. King for data                                                               
on people who are in that category.                                                                                             
                                                                                                                                
2:37:06 PM                                                                                                                    
SENATOR KIEHL  said people in  Senator Micciche's  scenario could                                                               
essentially move  out of state  for about 18-20 months  and still                                                               
be  eligible. He  questioned whether  it would  be two  points in                                                               
time. He appreciated the distinction  for service members because                                                               
that was important.  He did not think most people  would move out                                                               
of state for 18-20 months.                                                                                                      
                                                                                                                                
He  said the  commissioner talked  about investment  earnings. He                                                               
asked why not  require everyone to be present in  2021 to receive                                                               
the  repayments  since  it  would  maximize  the  permanent  fund                                                               
investment earnings.                                                                                                            
                                                                                                                                
MR. MILKS  responded that this  bill was drafted with  a specific                                                               
objective,  which  was  to  address  only  individuals  who  were                                                               
eligible for  and received  a permanent  fund dividend  for three                                                               
distinct periods  where the statutory  formula was  not followed.                                                               
The administration's  policy focused on the  three-year solution.                                                               
Senator Kiehl points out a different policy objective, he said.                                                                 
                                                                                                                                
SENATOR KIEHL said he was focused on finding consistency.                                                                       
                                                                                                                                
2:39:27 PM                                                                                                                    
SENATOR  SHOWER asked  whether any  legal  precedent exists  that                                                               
would identify the length of time  the state would need to search                                                               
for 2016-2019  permanent fund  dividend recipients  who currently                                                               
live  out-of-state  if  it  was   determined  the  state  had  an                                                               
obligation to  locate them. He  wondered if the state  would need                                                               
to public notice it for a certain length of time.                                                                               
                                                                                                                                
MR.  MILKS responded  that he  did not  have a  ready answer.  He                                                               
envisioned the state  would seek a reasonable  but limited period                                                               
and those  eligible could  respond or not  respond or  the burden                                                               
could be placed on them.                                                                                                        
                                                                                                                                
SENATOR SHOWER said  he wanted to be sure the  state would not be                                                               
"on the hook" for 10 years  but it would have a limited timeframe                                                               
to contact those eligible for repayments.                                                                                       
                                                                                                                                
MR. MILKS recalled that consumers  often receive notifications on                                                               
products that  indicate they  can join  the class  action lawsuit                                                               
within  a  certain  timeframe. He  agreed  a  reasonable  limited                                                               
period would be set.                                                                                                            
                                                                                                                                
2:41:45 PM                                                                                                                    
SENATOR MICCICHE asked if the  commissioner or the governor would                                                               
have any authority  to issue checks if these bills,  SB 23 and SB                                                               
24,  do not  pass  the legislature.  He said  he  is asking  this                                                               
question because some people might  simply expect the governor to                                                               
send them a check.                                                                                                              
                                                                                                                                
MR.  MILKS answered  no.  He  said that  the  legislature is  the                                                               
appropriating body.  He said the  legislature would need  to pass                                                               
an  appropriation  bill  to authorize  the  payment.  The  Alaska                                                               
Supreme Court has  been very clear, including in  its decision in                                                               
the Wielechowski  case, that the expenditures  from the permanent                                                               
fund income requires an appropriation by the legislature.                                                                       
                                                                                                                                
2:43:11 PM                                                                                                                    
CHAIR HUGHES said  that the legislature has the power  to set the                                                               
amount for  the dividends. He  said the legislature could  add an                                                               
amount to the historical formula without the bill.                                                                              
                                                                                                                                
MR. MILKS offered his belief  that the legislature would have the                                                               
ability.  The payment  requires a  legislative appropriation,  he                                                               
said.                                                                                                                           
                                                                                                                                
2:43:58 PM                                                                                                                    
CHAIR HUGHES  indicated an interest  in having Mr.  Milks present                                                               
the sectional analysis  and to have Mr. King  answer questions on                                                               
the economic impact.                                                                                                            
                                                                                                                                
2:44:24 PM                                                                                                                    
SENATOR SHOWER  asked the  record to reflect  what occurs  if one                                                               
bill passes but the other one does not pass.                                                                                    
                                                                                                                                
MR.  MILKS  said  the  department   views  both  bills  traveling                                                               
together since  the appropriation  bill authorizes  spending, but                                                               
it is based on the unique eligibility in the two points in time.                                                                
                                                                                                                                
2:45:11 PM                                                                                                                    
SENATOR MICCICHE  asked whether the  single subject rule  did not                                                               
allow the two bills to be combined.                                                                                             
                                                                                                                                
MR.  MILKS  answered that  the  department  considered the  legal                                                               
issues.  The   existing  statute  outlines  the   permanent  fund                                                               
dividend payments.  However, this  is an additional  payment that                                                               
is  not  pursuant  to  the   existing  statutory  program.  These                                                               
payments would be based on the  requirements of the two points in                                                               
time.  The department  decided  to take  a  cautious approach  to                                                               
avoid legal  challenges, such as  confinement clause  issues. The                                                               
bills  were  crafted   so  a  temporary  law   would  direct  the                                                               
Department of  Revenue commissioner to make  payments to eligible                                                               
permanent fund  dividend recipients  based on  the two  points in                                                               
time and an appropriation bill to appropriate the funds.                                                                        
                                                                                                                                
2:46:41 PM                                                                                                                    
SENATOR  KIEHL   said  his  understanding   of  the   history  of                                                               
confinement  clause is  different  from Mr.  Milks. He  suggested                                                               
that the  legislature on a recurrent  basis appropriates one-time                                                               
funding  for distribution  through an  existing statute  based on                                                               
conditions  at  a   future  point  in  time.   For  example,  the                                                               
legislature  appropriates  one-time  funding  to  be  distributed                                                               
according to an adjusted [Average  Daily Membership (ADM)] in the                                                               
education formula.                                                                                                              
                                                                                                                                
MR.  MILKS explained  that  these bills  pertain  to a  statutory                                                               
formula  pertaining to  eligibility for  the PFD.  The department                                                               
considered that an  appropriation bill to pay a  dividend that is                                                               
based  on different  eligibility criteria  than existing  statute                                                               
should have a  bill accompany it to create the  temporary law, he                                                               
said.                                                                                                                           
                                                                                                                                
2:48:13 PM                                                                                                                    
MR. MILKS presented a sectional analysis for SB 33. He                                                                          
reviewed Section 1, subsections (a)-(c).                                                                                        
                                                                                                                                
     Section 1(a). This section  makes an appropriation from                                                                    
     the  permanent   fund  earnings  reserve   account  (AS                                                                    
     37.13.145) to  the dividend  fund (AS  43.23.045(a)) of                                                                    
     the amount  of money necessary  for a payment  of $1061                                                                    
     to eligible  individuals who  received a  2016 dividend                                                                    
     and who  are eligible  to receive  a 2019  dividend for                                                                    
     fiscal year 2020                                                                                                           
                                                                                                                                
     Section 1(b). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund  of the amount  of money necessary  for a                                                                    
     payment of  $1289 to eligible individuals  who received                                                                    
     a 2017 dividend and who  are eligible to receive a 2020                                                                    
     dividend for fiscal year 2021.                                                                                             
                                                                                                                                
     Section 1(c). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund  of the amount  of money necessary  for a                                                                    
     payment of  $1388 to eligible individuals  who received                                                                    
     a 2018 dividend and who  are eligible to receive a 2021                                                                    
     dividend for fiscal year 2022.                                                                                             
                                                                                                                                
MR. MILKS  explained that SB  23 was an  appropriation bill,                                                                    
that  subsections (a)-(c)  would address  the appropriations                                                                    
for the  additional payments linked  to the prior  years for                                                                    
the  permanent fund  dividend  that were  not  paid per  the                                                                    
historical statutory formula.                                                                                                   
                                                                                                                                
2:48:43 PM                                                                                                                    
MR. MILKS reviewed Sections 1(d)-(g).                                                                                           
                                                                                                                                
     Section 1(d). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2020.                                                                                            
                                                                                                                                
     Section 1(e). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2021.                                                                                            
                                                                                                                                
     Section 1(f). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2022.                                                                                            
                                                                                                                                
     Section 1(g). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2023.                                                                                            
                                                                                                                                
He  said  that subsection  (d)  would  provide the  standard                                                                    
appropriation for  this year's  permanent fund  dividend and                                                                    
the following subsections related  to repayment for PFDs for                                                                    
subsequent years.                                                                                                               
                                                                                                                                
2:49:10 PM                                                                                                                    
MR. MILKS reviewed Section 2.                                                                                                   
                                                                                                                                
     Section  2. This  section  is  a contingency  provision                                                                    
     that  makes  the  appropriations  in  section  1(a)-(c)                                                                    
     contingent on  the legislature's passage  and enactment                                                                    
     into  law  of  a  bill directing  the  commissioner  of                                                                    
     revenue  to  include  certain payments  for  the  2016,                                                                    
     2017, and  2018 dividends to eligible  individuals with                                                                    
     the dividend payments for 2019, 2020, and 2021.                                                                            
                                                                                                                                
He  said   that  Section  2  would   provide  a  contingency                                                                    
provision. The  appropriation bill would be  contingent upon                                                                    
the  legislature  passing  SB  24, which  would  direct  the                                                                    
commissioner to make the additional payments.                                                                                   
                                                                                                                                
2:49:31 PM                                                                                                                    
MR. MILKS reviewed Sections 3-6.                                                                                                
                                                                                                                                
     Section  3. This  section makes  the appropriations  in                                                                    
     section 1(b) and (e) which  relate to dividend payments                                                                    
     in 2020 effective July 1, 2020.                                                                                            
                                                                                                                                
     Section  4. This  section makes  the appropriations  in                                                                    
     section 1(c) and (f) which  relate to dividend payments                                                                    
     in 2021 effective July 1, 2021.                                                                                            
                                                                                                                                
     Section  5. This  section  makes  the appropriation  in                                                                    
     section  1(g) which  relates  to  dividend payments  in                                                                    
     2022 effective July 1, 2022.                                                                                               
                                                                                                                                
     Section  6.  This  section  provides  that  except  for                                                                    
     sections 3-5,  the Act  takes effect  immediately under                                                                    
     AS 01.10.070(c).                                                                                                           
                                                                                                                                
He explained that these sections relate to the effective                                                                        
dates based on the three year roll out of the                                                                                   
appropriations.                                                                                                                 
                                                                                                                                
2:49:48 PM                                                                                                                    
MR. MILKS provided the sectional analysis for SB 24. This                                                                       
bill would amend the uncodified law to allow the Department                                                                     
of Revenue to make the additional PFD repayments.                                                                               
                                                                                                                                
     Section 1(a).  This section would amend  the uncodified                                                                    
     law to  provide that notwithstanding AS  43.23.005, the                                                                    
     commissioner  of revenue  shall include  with permanent                                                                    
     fund  dividends in  2019, 2020,  and  2021 payments  to                                                                    
     eligible  individuals  of  $1,061 in  2019,  $1,289  in                                                                    
     2020, and $1,388 in 2021.                                                                                                  
                                                                                                                                
2:50:18 PM                                                                                                                    
MR. MILKS read Section 1(b)-(d).                                                                                                
                                                                                                                                
     Section  1(b).  This  section  would  provide  that  an                                                                    
     individual eligible in 2019 for  a payment of $1,061 in                                                                    
     addition  to   the  permanent   fund  dividend   is  an                                                                    
     individual who received a  2016 permanent fund dividend                                                                    
     and  is  eligible  to receive  a  2019  permanent  fund                                                                    
     dividend.                                                                                                                  
                                                                                                                                
     Section  1(c).  This  section  would  provide  that  an                                                                    
     individual eligible in 2020 for  a payment of $1,289 in                                                                    
     addition  to   the  permanent   fund  dividend   is  an                                                                    
     individual who received a  2017 permanent fund dividend                                                                    
     and  is  eligible  to receive  a  2020  permanent  fund                                                                    
     dividend.                                                                                                                  
                                                                                                                                
     Section  1(d).  This  section  would  provide  that  an                                                                    
     individual eligible in 2021 for  a payment of $1,388 in                                                                    
     addition  to   the  permanent   fund  dividend   is  an                                                                    
     individual who received a  2018 permanent fund dividend                                                                    
     and  is  eligible  to receive  a  2021  permanent  fund                                                                    
     dividend.                                                                                                                  
                                                                                                                                
     Section  1(e).  This  section would  provide  than  the                                                                    
     amount  appropriated from  the permanent  fund earnings                                                                    
     reserve  account (AS  37.13.145) to  the dividend  fund                                                                    
     (AS 43.23.045(a))  for the payments in  section 1(a) to                                                                    
     eligible   individuals   during   2019-2021   may   not                                                                    
     contribute  to  the  calculation  for  the  2019-  2021                                                                    
     dividends under AS 43.23.025.                                                                                              
                                                                                                                                
He added that Section 1(e) is a housekeeping measure.                                                                           
                                                                                                                                
[Section 2 would provide for an immediate effective date.]                                                                      
                                                                                                                                
2:51:17 PM                                                                                                                    
CHAIR HUGHES  asked whether the  "Pick, Click,  Give" option                                                                    
found on  the permanent  fund dividend application  could be                                                                    
used  to   donate  to  non-profit  organizations   for  this                                                                    
application process.                                                                                                            
                                                                                                                                
MR. MILKS responded that he  has not considered this, but it                                                                    
seemed to make sense that it would.                                                                                             
                                                                                                                                
2:52:07 PM                                                                                                                    
SENATOR KIEHL  asked the reason  for an  immediate effective                                                                    
date  since  there would  be  plenty  of  time to  make  the                                                                    
payments.                                                                                                                       
                                                                                                                                
MR. MILKS  said the department  thought it would  be helpful                                                                    
to  clarify  the  issue.  He agreed  that  that  the  normal                                                                    
effective date for payouts would also work.                                                                                     
                                                                                                                                
2:53:02 PM                                                                                                                    
MR.  KING  offered  to provide  information  that  committee                                                                    
members requested earlier in the meeting.                                                                                       
                                                                                                                                
MR.  KING  detailed  the proposed  permanent  fund  dividend                                                                    
amounts using an estimated 535,000  population in Alaska. He                                                                    
also   provided  the   estimated  total   appropriation,  as                                                                    
follows:                                                                                                                        
                                                                                                                                
In calendar  year 2019 for  FY 2020, the  proposed permanent                                                                    
fund dividend amount per person  would be $1,061 for a total                                                                    
appropriation of $565 million.                                                                                                  
                                                                                                                                
In calendar  year 2020 for  FY 2021, the  proposed permanent                                                                    
fund dividend amount per person  would be $1,289 for a total                                                                    
appropriation of $683 million.                                                                                                  
                                                                                                                                
In calendar  year 2021 for  FY 2022, the  proposed permanent                                                                    
fund dividend amount per person  would be $1,388 for a total                                                                    
appropriation of $735 million.                                                                                                  
                                                                                                                                
He said  the total appropriation  for all three  years would                                                                    
be $1.983 billion.                                                                                                              
                                                                                                                                
2:54:09 PM                                                                                                                    
MR.  KING, in  response to  an earlier  question by  Senator                                                                    
Kiehl, gave  a range  of 4-6.5 percent.  He said  that using                                                                    
that  range  implied that  by  spreading  the payments  over                                                                    
three years rather than paying  the amount in one year would                                                                    
generate  an   additional  $80-150  million   of  additional                                                                    
earnings.                                                                                                                       
                                                                                                                                
MR.  KING,  in response  to  an  earlier question  by  Chair                                                                    
Hughes, explained that even  if the eligibility requirements                                                                    
changed, the figures would be  relatively the same by paying                                                                    
everyone who  was eligible in the  first appropriation year,                                                                    
or by  paying the  amount to every  Alaskan who  is eligible                                                                    
today  because   the  population  would   not  significantly                                                                    
change. The  difference in appropriations for  FY 2020 would                                                                    
be $110-110 million, for FY  2021 would be $130-140 million,                                                                    
and  for  FY  2022  would be  $140-150  million.  The  total                                                                    
appropriation difference between $379-400 million, he said.                                                                     
                                                                                                                                
CHAIR HUGHES asked how much the population would change.                                                                        
                                                                                                                                
MR. KING said  when he conducted the analysis,  he sought to                                                                    
determine the attrition  and turnover rate. He  said that he                                                                    
compared  the PFD  payment in  one year  and determined  how                                                                    
many  people received  a payment  three  years later,  which                                                                    
historically  resulted in  a 17  percent attrition  rate. He                                                                    
interpreted  that to  mean  that 83  percent  of people  who                                                                    
received  a PFD  in one  year also  received it  three years                                                                    
later. This historical  data provided the basis  in the bill                                                                    
for the estimated number of eligible residents at 530,000.                                                                      
                                                                                                                                
He explained  that this  has to do  with migration.  He said                                                                    
that Alaska  is a  transitory state, with  approximately 40-                                                                    
50,000  people moving  in and  out of  the state  because of                                                                    
jobs or the military. This figure  is usually is a wash, but                                                                    
in the last few years fewer  people have been coming in than                                                                    
moving out.  The one-year  delay before  eligibility creates                                                                    
attrition. Not only  do people move away but  they also die.                                                                    
Those people would  not be present to  claim their permanent                                                                    
fund dividends. This  brings forth the matter  of policy and                                                                    
law.  The would  need guidance  on how  dispensing with  the                                                                    
current  one-year   eligibility  requirement   would  affect                                                                    
estates  and  unclaimed  property.  These  issues  could  be                                                                    
clarified via  statutory language. Otherwise  the Department                                                                    
of Revenue  would seek to  make administrative  decisions to                                                                    
address applicants who  were eligible but did  not claim the                                                                    
dividend.                                                                                                                       
                                                                                                                                
CHAIR HUGHES  observed that the $370-400  million difference                                                                    
tends to  make the case  quite well  that the two  points in                                                                    
time are  important. She said it  is a lot of  money to send                                                                    
to people who no longer reside in Alaska.                                                                                       
                                                                                                                                
2:58:24 PM                                                                                                                    
SENATOR MICCICHE  pointed out that many  Alaskans, including                                                                    
himself, work  for businesses whose  projects take  them out                                                                    
of state for more than  180 days per calendar year. However,                                                                    
the PFD  program is designed  for Alaska residents  who live                                                                    
in the state for 180 days  or more. Some people serve in the                                                                    
military  after  being  a resident,  he  said.  Some  people                                                                    
believe  the allowable  absences for  the program  should be                                                                    
less.                                                                                                                           
                                                                                                                                
2:59:24 PM                                                                                                                    
SENATOR KIEHL referred to the  17 percent attrition rate. He                                                                    
asked  whether  it was  attrition  or  a difference  in  the                                                                    
number  of people  eligible for  the program.  He asked  how                                                                    
many were due to births and deaths.                                                                                             
                                                                                                                                
MR. KING  answered that none  of the attrition would  be due                                                                    
to births.  He said  he does  not have  the figures  for the                                                                    
attrition  rate.  He offered  to  review  the Department  of                                                                    
Labor  figures  and  the Department  of  Health  and  Social                                                                    
Services, Vital Statistics figures.                                                                                             
                                                                                                                                
3:00:06 PM                                                                                                                    
SENATOR  KIEHL asked  whether any  money is  being held  for                                                                    
potentially eligible people, other than for minor children.                                                                     
                                                                                                                                
MR. KING  answered no. He  explained that the  Department of                                                                    
Revenue  handles  unclaimed  property.  The  question  would                                                                    
become   whether  unclaimed   dividends  would   qualify  as                                                                    
unclaimed property.                                                                                                             
                                                                                                                                
SENATOR  KIEHL  asked Mr.  Milks  if  unpaid permanent  fund                                                                    
dividends would be considered as unclaimed property.                                                                            
                                                                                                                                
3:01:02 PM                                                                                                                    
MR.  MILKS related  his understanding  that the  question is                                                                    
whether  a  2016  dividend  that  was  less  than  statutory                                                                    
calculation would be considered unclaimed property.                                                                             
                                                                                                                                
MR. KING explained his rationale  of unclaimed property. The                                                                    
current bill would  require an applicant to  qualify for the                                                                    
permanent  fund dividend.  If the  amended legislation  also                                                                    
required  an application  process, it  would clearly  create                                                                    
criteria. One possibility or scenario  would be that someone                                                                    
who  qualified for  a  PFD in  2016  would automatically  be                                                                    
eligible for the subsequent  payments without taking further                                                                    
action.  If so,  it  would raise  the  question whether  the                                                                    
department  would need  to hold  funds on  their behalf,  he                                                                    
said.                                                                                                                           
                                                                                                                                
SENATOR  KIEHL   said  he  had  not   heard  anyone  suggest                                                                    
automatic eligibility for the repayment.                                                                                        
                                                                                                                                
3:02:50 PM                                                                                                                    
CHAIR HUGHES asked for the  economic impact of the repayment                                                                    
of the PFD for the three repayment years.                                                                                       
                                                                                                                                
MR. KING  acknowledged that the  permanent fund  dividend is                                                                    
an  important part  of household  income  for all  Alaskans.                                                                    
Most people  have a  tendency to spend  money given  to them                                                                    
and  they have  the right  to  spend the  PFD in  or out  of                                                                    
Alaska.  The  permanent  fund  dividend  improves  Alaskans'                                                                    
quality  of  life and  is  considered  an economic  benefit.                                                                    
Other ways  to measure  economic activity  include assessing                                                                    
wages  and  income  or  the  productivity  in  a  region  by                                                                    
measuring the value of the products produced.                                                                                   
                                                                                                                                
MR. KING  did not  think the  permanent fund  dividend would                                                                    
increase   gross  national   product  (GNP)   by  much.   He                                                                    
elaborated that  job counts  are measured  by jobs  held. He                                                                    
cautioned members to use care  when using statistics that do                                                                    
not consider  income or  differentiate between  part-time or                                                                    
fulltime workers  since they do  not have the  same economic                                                                    
contribution.  Typically,  the   PFD  injection  means  that                                                                    
people spend more at stores  and restaurants which generates                                                                    
some demand for labor. He  recalled that Institute of Social                                                                    
and  Economic Research  estimated 900  jobs per  100 million                                                                    
[appropriated],  or about  9,000  jobs this  year. The  data                                                                    
doesn't reflect much  of an increase because it  is based on                                                                    
full time equivalent jobs. In  terms of increased jobs, some                                                                    
part-time  employees may  obtain more  hours and  some hours                                                                    
will be  generated by overtime,  which does  not necessarily                                                                    
appear  in the  data. However,  the figures  do reflect  the                                                                    
additional  wages flowing  into  households. This  household                                                                    
income is  more relevant  with respect to  the PFD  since it                                                                    
provides  an  immediate  deposit  into  residents'  checking                                                                    
accounts, which has an immediate  impact on the economy, and                                                                    
on the  quality of  life. Although the  impact from  the PFD                                                                    
only lasts  a few months, it  is meaningful and can  be life                                                                    
changing.  The   permanent  fund   dividend  can   mean  the                                                                    
difference between  people being  evicted or having  a place                                                                    
to live. It often provides  some residents with fuel for the                                                                    
winter or a vacation for others.                                                                                                
                                                                                                                                
3:07:10 PM                                                                                                                    
CHAIR  HUGHES  referred  to the  number  of  reductions  the                                                                    
governor is  proposing in the  budget, which will  result in                                                                    
job  losses.  She  asked  for  the net  offset  to  jobs  by                                                                    
factoring in the full historical permanent fund dividend.                                                                       
                                                                                                                                
MR. KING  estimated that the  direct impacts of  budget cuts                                                                    
would generate  job losses  in the range  of 5,000  to 7,000                                                                    
job range and  whether these jobs are  fulltime or part-time                                                                    
jobs  is unknown.  Whether these  job losses  actually occur                                                                    
also would depend on how  residents respond to the job cuts.                                                                    
In  terms  of the  increase  in  jobs  related to  the  PFD,                                                                    
several economists  have indicated these are  temporary jobs                                                                    
concentrated  in October  through  December timeframe.  From                                                                    
the  job perspective,  it  does not  make  sense to  compare                                                                    
budget cut job losses to temporary PFD job increases.                                                                           
                                                                                                                                
Instead,  the  better  comparison  would be  to  assess  the                                                                    
effects to household income for  Alaskans and how it affects                                                                    
their quality of life. From  that perspective the $1 billion                                                                    
decrease in  the concentrated impacts  from budget  cuts and                                                                    
the $1.5 billion  increase in household income  from the PFD                                                                    
distributions,  he  concluded  would  have  a  net  positive                                                                    
impact on  household income across  the state.  Although the                                                                    
630,000  people would  feel a  small impact  [from the  $1.5                                                                    
billion  PFD   income],  and  5,000-7,000   thousand  people                                                                    
absorbing  $1 billion  in lost  income [from  due to  budget                                                                    
cuts. He concluded that it is a very different comparison.                                                                      
                                                                                                                                
MR. KING said  it is very difficult to give  a hard and fast                                                                    
rule  on  which  is  better. It  comes  down  to  individual                                                                    
interpretations of  the value  of government  services being                                                                    
provided and  whether someone in  one community  receiving a                                                                    
full PFD  is better than  someone else in  another community                                                                    
receiving those  services. He characterized  it as  a public                                                                    
policy question rather than an economic one.                                                                                    
                                                                                                                                
3:10:10 PM                                                                                                                    
CHAIR  HUGHES  asked  him to  consider  the  temporary  bump                                                                    
provided by the  PFD over several years and to  derive a job                                                                    
number comparison.                                                                                                              
                                                                                                                                
3:10:31 PM                                                                                                                    
SENATOR  MICCICHE  offered  his   belief  that  it  was  not                                                                    
possible for  the committee to conduct  an adequate economic                                                                    
analysis right  now, which  is not the  goal. The  reason to                                                                    
support SB 23 and SB 24  would be because Alaskans expect to                                                                    
receive the  full statutory-based dividend. He  did not view                                                                    
it  as an  economic  consideration.  The legislature  should                                                                    
make a  decision based on whether  it is the right  thing to                                                                    
do or  not. He agreed  that it was challenging  for Alaskans                                                                    
who  anticipated receiving  [a certain  level] of  permanent                                                                    
fund dividends three years in  a row. However, he thought it                                                                    
would be dangerous to  consider one-sided economics impacts.                                                                    
The Finance Committee  spent hours on this issue,  but it is                                                                    
not an easy one, he  said. However, the economic comparisons                                                                    
are like comparing  apples to watermelons, so  it would take                                                                    
considerable time to achieve a responsible answer.                                                                              
                                                                                                                                
3:11:54 PM                                                                                                                    
CHAIR  HUGHES  said  it  is  important  for  the  public  to                                                                    
understand that even  though it is difficult  to define, and                                                                    
this  committee cannot  do it,  that some  counter balancing                                                                    
would  occur  if  the budget  has  sizable  reductions.  She                                                                    
suggested  that circulating  money into  the private  sector                                                                    
would be helpful in softening that impact.                                                                                      
                                                                                                                                
3:12:22 PM                                                                                                                    
SENATOR KIEHL  asked whether Mr.  King could give  the delta                                                                    
of the amount  that would be available  to provide essential                                                                    
services  to Alaskans  if the  $1.8 or  1.9 billion  was not                                                                    
distributed  as PFDs  but was  managed  under the  statutory                                                                    
formula under SB 26.                                                                                                            
                                                                                                                                
MR. KING  answered an estimated  $2 billion with  a rate-of-                                                                    
return  of about  6.5  percent would  result  in about  $130                                                                    
million. The  full reduction would  not be  seen immediately                                                                    
due to  averaging, so it  would take between five  and seven                                                                    
years for the full $130  million reduction to occur. He said                                                                    
for those  whose perspective is  that this money  belongs to                                                                    
the people  and not the state,  it would not be  viewed as a                                                                    
reduction by the state holding on to it.                                                                                        
                                                                                                                                
SENATOR  KIEHL  appreciated  the difference  in  philosophy,                                                                    
acknowledging  that people  have different  expectations. He                                                                    
said that people once expected  their longevity bonus check,                                                                    
and  that  seniors  or  disabled  veterans  expected  to  be                                                                    
compensated by property taxes  paid. However, those programs                                                                    
were entirely  eliminated. He said that  people still expect                                                                    
adequate  schools, troopers,  airports,  roads and  bridges,                                                                    
and   other  essential   services.   He  characterized   the                                                                    
situation as a bind, that it  is not a black or white issue.                                                                    
He said the conversation about  the waiting period that this                                                                    
method   of  dispersing   money  puts   in  place   is  very                                                                    
problematic.                                                                                                                    
                                                                                                                                
CHAIR  HUGHES did  not  agree  that it  should  be called  a                                                                    
waiting period.                                                                                                                 
                                                                                                                                
[SB 23 and SB 24 were held in committee.]                                                                                       
                                                                                                                                
3:14:44 PM                                                                                                                    
CHAIR HUGHES reviewed upcoming committee announcements.                                                                         
                                                                                                                                
3:15:34 PM                                                                                                                    
There  being   no  further  business  to   come  before  the                                                                    
committee,  Chair  Hughes  adjourned  the  Senate  Judiciary                                                                    
Standing Committee meeting at 3:15 p.m.                                                                                         

Document Name Date/Time Subjects
CSSB23 Version M.PDF SJUD 3/22/2019 1:30:00 PM
SB 23
SB 23 TL - Senate President.pdf SJUD 3/22/2019 1:30:00 PM
SB 23
SB23 Sectional.pdf SJUD 3/22/2019 1:30:00 PM
SB 23
CSSB24 Version M.PDF SJUD 3/22/2019 1:30:00 PM
SB 24
SB 24 TL - Senate President.pdf SJUD 3/22/2019 1:30:00 PM
SB 24
SB24 Sectional.pdf SJUD 3/22/2019 1:30:00 PM
SB 24
SB0024-1-2-011619-REV-Y.PDF SJUD 3/22/2019 1:30:00 PM
SB 24