Legislature(2019 - 2020)BELTZ 105 (TSBldg)

04/08/2019 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 35 CRIMES;SEX CRIMES;SENTENCING; PAROLE TELECONFERENCED
Moved CSSB 35(JUD) Out of Committee
-- Public Testimony --
+ SJR 5 CONST. AM.:PERMANENT FUND & DIVIDEND TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                         April 8, 2019                                                                                          
                           1:35 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Shelley Hughes, Chair                                                                                                   
Senator Lora Reinbold, Vice Chair                                                                                               
Senator Mike Shower                                                                                                             
Senator Peter Micciche                                                                                                          
Senator Jesse Kiehl                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 35                                                                                                              
"An Act  eliminating marriage as  a defense to certain  crimes of                                                               
sexual assault;  relating to enticement  of a minor;  relating to                                                               
harassment in  the first  degree; relating  to harassment  in the                                                               
second degree;  relating to indecent  viewing or production  of a                                                               
picture;  relating   to  the  definition  of   'sexual  contact';                                                               
relating   to  assault   in  the   second  degree;   relating  to                                                               
sentencing;  relating  to  prior  convictions;  relating  to  the                                                               
definition of  'most serious felony'; relating  to the definition                                                               
of 'sexual  felony'; relating to  the duty  of a sex  offender or                                                               
child  kidnapper   to  register;  relating  to   eligibility  for                                                               
discretionary parole; and providing for an effective date."                                                                     
                                                                                                                                
     - MOVED CSSB 35(JUD) OUT OF COMMITTEE                                                                                      
                                                                                                                                
SENATE JOINT RESOLUTION NO. 5                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to the  Alaska permanent  fund and  the permanent  fund                                                               
dividend.                                                                                                                       
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 35                                                                                                                   
SHORT TITLE: CRIMES;SEX CRIMES;SENTENCING; PAROLE                                                                               
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/23/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/19       (S)       JUD, FIN                                                                                               
02/13/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/13/19       (S)       Heard & Held                                                                                           
02/13/19       (S)       MINUTE(JUD)                                                                                            
02/15/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/15/19       (S)       Heard & Held                                                                                           
02/15/19       (S)       MINUTE(JUD)                                                                                            
02/18/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/18/19       (S)       Heard & Held                                                                                           
02/18/19       (S)       MINUTE(JUD)                                                                                            
02/22/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/22/19       (S)       -- MEETING CANCELED --                                                                                 
02/25/19       (S)       JUD WAIVED PUBLIC HEARING NOTICE,RULE                                                                  
                         23                                                                                                     
02/28/19       (S)       JUD AT 5:00 PM BELTZ 105 (TSBldg)                                                                      
02/28/19       (S)       -- MEETING CANCELED --                                                                                 
03/04/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/04/19       (S)       Scheduled but Not Heard                                                                                
03/08/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/08/19       (S)       Scheduled but Not Heard                                                                                
03/13/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/13/19       (S)       Heard & Held                                                                                           
03/13/19       (S)       MINUTE(JUD)                                                                                            
03/18/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/18/19       (S)       Heard & Held                                                                                           
03/18/19       (S)       MINUTE(JUD)                                                                                            
04/01/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/01/19       (S)       <Bill Hearing Canceled>                                                                                
04/05/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/05/19       (S)       Heard & Held                                                                                           
04/05/19       (S)       MINUTE(JUD)                                                                                            
04/08/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SJR 5                                                                                                                   
SHORT TITLE: CONST. AM.:PERMANENT FUND & DIVIDEND                                                                               
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/19       (S)       STA, JUD, FIN                                                                                          
03/28/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
03/28/19       (S)       Heard & Held                                                                                           
03/28/19       (S)       MINUTE(STA)                                                                                            
04/02/19       (S)       STA AT 3:30 PM BUTROVICH 205                                                                           
04/02/19       (S)       Scheduled but Not Heard                                                                                
04/03/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/03/19       (S)       <Bill Hearing Canceled>                                                                                
04/03/19       (S)       JUD AT 6:00 PM BELTZ 105 (TSBldg)                                                                      
04/03/19       (S)       <Bill Hearing Canceled>                                                                                
04/04/19       (S)       STA AT 1:30 PM BUTROVICH 205                                                                           
04/04/19       (S)       Moved CSSJR 5(STA) Out of Committee                                                                    
04/04/19       (S)       MINUTE(STA)                                                                                            
04/05/19       (S)       STA RPT CS 1DNP 3AM SAME TITLE                                                                         
04/05/19       (S)       AM: SHOWER, MICCICHE, KAWASAKI                                                                         
04/05/19       (S)       DNP: COGHILL                                                                                           
04/08/19       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MICHAEL DUXBURY, Deputy Commissioner                                                                                            
Office of the Commissioner                                                                                                      
Department of Public Safety (DPS)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions during the discussion of                                                               
SB 35.                                                                                                                          
                                                                                                                                
KELLY HOWELL, Special Assistant                                                                                                 
Legislative Liaison                                                                                                             
Department of Public Safety (DPS)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions during the hearing on SB                                                               
35.                                                                                                                             
                                                                                                                                
JOHN SKIDMORE, Director                                                                                                         
Criminal Division                                                                                                               
Central Office                                                                                                                  
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified and answered questions during the                                                               
discussion of SB 35.                                                                                                            
                                                                                                                                
QUINLAN STEINER, Director                                                                                                       
Public Defender Agency                                                                                                          
Central Office                                                                                                                  
Department of Administration                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified during the hearing on SB 35.                                                                    
                                                                                                                                
KACI SCHROEDER, Assistant Attorney General                                                                                      
Criminal Division                                                                                                               
Legal Services Section                                                                                                          
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the  discussion of                                                             
SB 35.                                                                                                                          
                                                                                                                                
BUDDY WHITT, Staff                                                                                                              
Senator Shelley Hughes                                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained amendments to  SB 35, Version K, on                                                             
behalf of the committee.                                                                                                        
                                                                                                                                
BETH FREAD, representing herself                                                                                                
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  Recommended passing SB 35,  as amended, from                                                             
committee.                                                                                                                      
                                                                                                                                
KEELEY OLSON, Executive Director                                                                                                
Standing Together Against Rape (STAR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 35.                                                                            
                                                                                                                                
MICHAEL DUXBURY, Deputy Commissioner                                                                                            
Office of the Commissioner                                                                                                      
Department of Public Safety (DPS)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during the  hearing on SB                                                             
35.                                                                                                                             
                                                                                                                                
RODGER BRANSON, representing himself                                                                                            
Eagle River, Alaska                                                                                                             
POSITION STATEMENT: Testified  during the hearing on SB  35 as an                                                             
advocate of mental health services.                                                                                             
                                                                                                                                
BRUCE TANGEMAN, Commissioner Designee                                                                                           
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT: Presented  SJR 5  and answered  questions on                                                             
behalf of the administration.                                                                                                   
                                                                                                                                
WILLIAM MILKS, Attorney                                                                                                         
Civil Division                                                                                                                  
Labor & State Affairs                                                                                                           
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT: Presented  a sectional  analysis during  the                                                             
hearing of SJR 5 and answered questions on the resolution.                                                                      
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:35:14 PM                                                                                                                    
CHAIR  SHELLEY  HUGHES  called   the  Senate  Judiciary  Standing                                                             
Committee meeting  to order at 1:35  p.m. Present at the  call to                                                               
order were  Senators Kiehl, Micciche, Reinbold  and Chair Hughes.                                                               
Senator Shower arrived as the meeting was in progress.                                                                          
                                                                                                                                
           SB 35-CRIMES;SEX CRIMES;SENTENCING; PAROLE                                                                       
                                                                                                                                
1:35:34 PM                                                                                                                    
CHAIR HUGHES announced  that the only order of  business would be                                                               
SENATE BILL NO. 35, "An Act  eliminating marriage as a defense to                                                               
certain crimes  of sexual  assault; relating  to enticement  of a                                                               
minor; relating  to harassment in  the first degree;  relating to                                                               
harassment in the second degree;  relating to indecent viewing or                                                               
production of  a picture; relating  to the definition  of 'sexual                                                               
contact'; relating to  assault in the second  degree; relating to                                                               
sentencing;  relating  to  prior  convictions;  relating  to  the                                                               
definition of  'most serious felony'; relating  to the definition                                                               
of 'sexual  felony'; relating to  the duty  of a sex  offender or                                                               
child  kidnapper   to  register;  relating  to   eligibility  for                                                               
discretionary parole; and providing for an effective date."                                                                     
                                                                                                                                
CHAIR  HUGHES  remarked  that  she  hoped  to  move  SB  35  from                                                               
committee today.                                                                                                                
                                                                                                                                
1:37:48 PM                                                                                                                    
SENATOR REINBOLD asked  whether Mr. Duxbury was  familiar with SB                                                               
35, Version K.                                                                                                                  
                                                                                                                                
MICHAEL   DUXBURY,    Deputy   Commissioner,   Office    of   the                                                               
Commissioner, Department of Public  Safety (DPS), Anchorage, said                                                               
he did  not have  Version K  before him.  He said  that he  is in                                                               
consultation  with the  special assistant  for the  Department of                                                               
Public Safety and based on her information he is in agreement.                                                                  
                                                                                                                                
1:39:09 PM                                                                                                                    
KELLY HOWELL, Special  Assistant; Legislative Liaison, Department                                                               
of  Public Safety  (DPS), Anchorage,  stated that  the department                                                               
does not see any red flags.                                                                                                     
                                                                                                                                
1:39:35 PM                                                                                                                    
SENATOR  REINBOLD  offered  her  belief  that  the  bill  was  an                                                               
improvement.  She  asked  whether  the  department  had  taken  a                                                               
position on SB 35.                                                                                                              
                                                                                                                                
MS. HOWELL  answered that  she can not  speak for  the governor's                                                               
office, but the department is generally supportive of the bill.                                                                 
                                                                                                                                
1:40:15 PM                                                                                                                    
JOHN  SKIDMORE,  Director,  Criminal  Division,  Central  Office,                                                               
Department of Law, Anchorage, stated  that the administration was                                                               
in support of Version K of SB 35.                                                                                               
                                                                                                                                
CHAIR  HUGHES  congratulated Mr.  Skidmore  on  his promotion  to                                                               
Deputy Commissioner.                                                                                                            
                                                                                                                                
MR. SKIDMORE  thanked her. He  said that  he will not  assume the                                                               
position  as  the  Deputy Attorney  General,  Criminal  Division,                                                               
Department of Law until May 16.                                                                                                 
                                                                                                                                
1:41:40 PM                                                                                                                    
SENATOR KIEHL asked about the  change from knowingly to reckless.                                                               
He  asked  whether  the  change in  mental  state  causes  strong                                                               
concerns  about  justice  and  the  likelihood  of  inappropriate                                                               
convictions.                                                                                                                    
                                                                                                                                
1:42:25 PM                                                                                                                    
SENATOR SHOWER joined the meeting.                                                                                              
                                                                                                                                
1:42:34 PM                                                                                                                    
SENATOR KIEHL asked  whether the public defender  agency sees the                                                               
change as something  that will lead to higher  costs. He wondered                                                               
if it  would lead to more  jury trials. Finally, he  wondered how                                                               
this would interact  with threshold cases, such as  when a victim                                                               
is  in  the  early  stages   of  dementia  or  has  developmental                                                               
disabilities.                                                                                                                   
                                                                                                                                
1:43:13 PM                                                                                                                    
QUINLAN  STEINER,  Director,   Public  Defender  Agency,  Central                                                               
Office,  Department of  Administration,  Anchorage,  said he  has                                                               
concerns about  the changes in the  bill related to mens  rea for                                                               
sex offenses, especially  when combined with the  changes made to                                                               
the  elimination  of  the marriage  defense.  Simply  put,  these                                                               
change  the mens  rea from  knowingly to  recklessly. This  means                                                               
that someone  can have  an honestly held  belief that  someone is                                                               
not mentally  incapable, incapacitated,  or unaware and  still be                                                               
subject  to prosecution.  This is  particularly problematic  with                                                               
the removal of  the marriage defense without replacing  it with a                                                               
consent  defense.  This version  of  the  bill would  criminalize                                                               
typical   conduct   between   married  couples   or   people   in                                                               
relationships. He predicted  it would lead to  the prosecution of                                                               
people that one would not want charged or prosecuted.                                                                           
                                                                                                                                
He predicted  it would drive up  costs of litigation. He  said it                                                               
makes it more  difficult to understand the  line between criminal                                                               
and  non-criminal  behavior.  It  is  especially  difficult  when                                                               
individuals have  dementia or are  consuming alcohol. He  said it                                                               
is important to  recognize that the belief  that prosecutors will                                                               
use  their discretion  and not  charge  cases should  not be  the                                                               
basis for  not being  more specific  about what  is criminalized.                                                               
There are many  state prosecutors with a range of  points of view                                                               
on who should  be prosecuted based on the  definition in statute.                                                               
He  said the  language  has  been broadened  to  the extent  that                                                               
convictions and  prosecutions can be expected.  Further, a person                                                               
may  actually consent  to certain  conduct, which  will still  be                                                               
considered  criminal  conduct,  even   though  the  person  fully                                                               
consented.                                                                                                                      
                                                                                                                                
1:45:58 PM                                                                                                                    
CHAIR HUGHES asked Mr. Skidmore for further clarification.                                                                      
                                                                                                                                
MR.  SKIDMORE  identified the  two  issues  presented. The  first                                                               
issue is related  to resources, and the second one  is related to                                                               
changing  the  mens rea  for  sexual  assault  as it  relates  to                                                               
mentally incapable, incapacitated, or  individuals unaware that a                                                               
sex act is occurring and  the interaction with the elimination of                                                               
the marriage defense.                                                                                                           
                                                                                                                                
MR.  SKIDMORE agreed  that some  additional sexual  assault cases                                                               
involving victims  who are mentally incapable,  incapacitated, or                                                               
unaware  would  be  prosecuted,  but it  would  be  difficult  to                                                               
quantify the  number at  this time.  He said  he did  not believe                                                               
that a  substantial increase  in resources  would be  required or                                                               
that the changes  would result in unwanted  prosecutions. He said                                                               
the definition of reckless found  in AS 11.41.900(a)(3) says that                                                               
a  person  has  to  be  aware  of  and  consciously  disregard  a                                                               
substantial and  unjustifiable risk that the  results will occur,                                                               
or  the circumstances  exist. The  scenario  the public  defender                                                               
described  was of  a married  couple  with one  suffering from  a                                                               
mental  issue   that  resulted  in  impaired   functioning.  This                                                               
language would require  the partner without dementia  to be aware                                                               
of  and consciously  disregard  a  substantial and  unjustifiable                                                               
risk  that  the   other  person  was  suffering   from  a  mental                                                               
debilitation. The  definition goes on  to say that the  risk must                                                               
be of such  a nature and degree that the  disregard constitutes a                                                               
gross deviation  from the standard  of conduct that  a reasonable                                                               
person would observe in that  situation. Although the state might                                                               
prosecute  additional cases,  he did  not agree  with the  public                                                               
defender that they would be unwarranted arrests.                                                                                
                                                                                                                                
1:50:06 PM                                                                                                                    
SENATOR  REINBOLD  remarked  that   changing  the  standard  from                                                               
knowingly to reckless was really important.                                                                                     
                                                                                                                                
1:50:37 PM                                                                                                                    
KACI  SCHROEDER,  Assistant  Attorney  General,  Central  Office,                                                               
Criminal  Division,  Department of  Law,  Juneau,  said that  she                                                               
concurred with Mr. Skidmore's analysis.                                                                                         
                                                                                                                                
1:51:57 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  1,  work  order  31-                                                               
GS1873\K.1, Radford, 4/4/19, which read as follows:                                                                             
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
          TO:  CSSB 35(JUD), Draft Version "K"                                                                                  
                                                                                                                                
                                                                                                                                
     Page 15, lines 20 - 21:                                                                                                    
          Delete "if the victim is at least six years                                                                       
     younger than the offender"                                                                                             
          Insert "under AS 11.41.438(c)"                                                                                    
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
BUDDY  WHITT,   Staff,  Senator  Shelley  Hughes,   Alaska  State                                                               
Legislature, Juneau, explained that  Amendment 1 was a conforming                                                               
amendment.  He referred  to Section  24 and  read the  amendment.                                                               
This  would reference  the criminal  statute  AS 11.41.438(c)  to                                                               
clear up any ambiguity, he said.                                                                                                
                                                                                                                                
1:52:21 PM                                                                                                                    
SENATOR  SHOWER removed  his objection.  There  being no  further                                                               
objection, Amendment 1 was adopted.                                                                                             
                                                                                                                                
1:53:22 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  2,  work  order  31-                                                               
GS1873\K.3, Radford, 4/4/19, which read as follows:                                                                             
                                                                                                                                
                          AMENDMENT 2                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
          TO:  CSSB 35(JUD), Draft Version "K"                                                                                  
                                                                                                                                
     Page 23, line 22:                                                                                                          
          Delete "in-service"                                                                                               
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
1:53:34 PM                                                                                                                    
MR. WHITT referred  to Section 36 on  page 23, line 22  of SB 35,                                                               
Version  K.  He  explained  that   Amendment  2  relates  to  the                                                               
additional annual  training for  mandatory reporters  of possible                                                               
sexual offenses  against children implemented in  Sections 33-35.                                                               
He said  the committee was  informed that the department  had the                                                               
means  to  provide  computer-based  training, but  the  term  in-                                                               
service implies face-to-face training.                                                                                          
                                                                                                                                
SENATOR  SHOWER removed  his objection.  There  being no  further                                                               
objection, Amendment 2 was adopted.                                                                                             
                                                                                                                                
1:54:46 PM                                                                                                                    
CHAIR  HUGHES  moved  to  adopt   Amendment  3,  work  order  31-                                                               
GS1873\K.4, Radford, 4/6/19, which read as follows:                                                                             
                                                                                                                                
                          AMENDMENT 3                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
          TO:  CSSB 35(JUD), Draft Version "K"                                                                                  
                                                                                                                                
                                                                                                                                
     Page 11, line 19, following "mechanism,":                                                                              
          Insert "10 - 25 years;"                                                                                           
                                                                                                                                
     Page 11, lines 20 - 22:                                                                                                    
          Delete all material.                                                                                                  
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
1:54:54 PM                                                                                                                    
MR. WHITT  said that  Amendment 3 is  a technical  amendment that                                                               
removes  redundant language  that  Senator  Kiehl identified.  He                                                               
explained that if a second  offense occurs, it would be addressed                                                               
by language on lines 25-26 of version K.                                                                                        
                                                                                                                                
SENATOR  SHOWER removed  his objection.  There  being no  further                                                               
objection, Amendment 3 was adopted.                                                                                             
                                                                                                                                
1:56:07 PM                                                                                                                    
CHAIR HUGHES moved to adopt Amendment 4, work order 31-                                                                         
GS1873\.K.5, Radford, 4/6/19, which read as follows:                                                                            
                                                                                                                                
                          AMENDMENT 4                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
          TO:  CSSB 35(JUD), Draft Version "K"                                                                                  
                                                                                                                                
     Page 25, following line 11:                                                                                                
     Insert a new bill section to read:                                                                                         
        "* Sec. 44. Section 33 of this Act takes effect                                                                     
     September 1, 2020."                                                                                                        
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 25, line 12:                                                                                                          
          Delete "secs. 42 and 43"                                                                                              
          Insert "secs. 42 - 44"                                                                                                
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
MR. WHITT referred to page 25  of Version K. He stated this would                                                               
add  a new  effective  date of  September  1, 2020,  specifically                                                               
related  to the  training requirements  in  Section 3  of SB  35,                                                               
Version K.  This would  allow the  department sufficient  time to                                                               
prepare training prior to the start of the school year.                                                                         
                                                                                                                                
SENATOR SHOWER removed his objection. There being no further                                                                    
objection, Amendment 4 was adopted.                                                                                             
                                                                                                                                
1:56:50 PM                                                                                                                    
CHAIR HUGHES moved to adopt Amendment 5, work order 31-                                                                         
GS1873\K.6, Radford, 4/6/19, which read as follows:                                                                             
                                                                                                                                
                          AMENDMENT 5                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                    BY SENATOR HUGHES                                                                 
          TO:  CSSB 35(JUD), Draft Version "K"                                                                                  
                                                                                                                                
     Page 23, line 14:                                                                                                          
          Delete "the report to the department or a law                                                                     
     enforcement agency as"                                                                                                 
         Insert "a [THE] report [TO THE DEPARTMENT AS]"                                                                     
                                                                                                                                
SENATOR SHOWER objected for discussion purposes.                                                                                
                                                                                                                                
MR.  WHITT  said that  Senator  Micciche  brought this  technical                                                               
amendment  to  the  committee's   attention.  He  explained  that                                                               
Amendment 5  would clean up the  language on page 23,  line 14 of                                                               
SB 35, Version K. It would read,  "   obligation to make a report                                                               
as required under (a) of this section."                                                                                         
                                                                                                                                
SENATOR  SHOWER removed  his objection.  There  being no  further                                                               
objection, Amendment 5 was adopted.                                                                                             
                                                                                                                                
1:57:59 PM                                                                                                                    
CHAIR HUGHES opened public testimony on SB 35.                                                                                  
                                                                                                                                
1:58:38 PM                                                                                                                    
BETH FREAD, representing herself, Palmer,  spoke in support of SB                                                               
35, as amended.  She said she appreciated the  work the committee                                                               
did on SB 35.                                                                                                                   
                                                                                                                                
1:59:44 PM                                                                                                                    
KEELEY OLSON, Executive Director,  Standing Together Against Rape                                                               
(STAR), Anchorage,  spoke in support  of SB 35. Although  she has                                                               
not had an  opportunity to review the new bill  draft, STAR would                                                               
support  removing the  defense  of marriage  and  the changes  to                                                               
sexual  assault in  the second  degree. For  example, she  worked                                                               
with  a  woman who  was  raped  by her  spouse  when  she was  on                                                               
prescription medication  after gynecological surgery.  The victim                                                               
had to  have subsequent emergency  surgery. Her spouse  was aware                                                               
that she  was not to engage  in any sexual activity.  This is one                                                               
example of several that have occurred in Anchorage, she said.                                                                   
                                                                                                                                
She commended  the language in  the bill that would  increase and                                                               
enhance  statutes concerning  the  use of  technology for  sexual                                                               
solicitation  of   minors.  She  stated  support   for  returning                                                               
sentencing  levels to  pre-Senate  Bill 91  levels, which  should                                                               
enhance victim safety. She stated  further support for having sex                                                               
offenders from other states register as sex offenders.                                                                          
                                                                                                                                
MS. OLSON expressed  concern with language changes on  page 22 of                                                               
Version  K,  [to AS  47.17.020(a)]  that  requires that  mandated                                                               
reporting be made  to local law enforcement agencies,  as well as                                                               
to the  department. She asked  for further clarification  on that                                                               
language since  a process already exists  for mandated reporting.                                                               
She emphasized that reporting is  considered a sworn duty and the                                                               
organization trusts that the information  is being relayed to the                                                               
law enforcement  agency or  to the  jurisdiction where  the crime                                                               
occurred, which is often not the same location.                                                                                 
                                                                                                                                
2:03:06 PM                                                                                                                    
CHAIR HUGHES characterized the changes  in mandatory reporting as                                                               
casting a wider net as a  result of situations that have occurred                                                               
in the schools with teachers  and minors. This alerts the parties                                                               
that   besides  reporting   suspected   sexual   crimes  to   the                                                               
department, the suspected  sex offenses must also  be reported to                                                               
the nearest  law enforcement agency.  She expressed  concern that                                                               
some crimes  may be reported  to the principal and  this language                                                               
ensures that law enforcement is also informed.                                                                                  
                                                                                                                                
She thanked  Ms. Olson  for her input  and suggestions.  She said                                                               
that one issue that was not  changed is the consent language. She                                                               
explained that Mr. Skidmore will  work with the committee on this                                                               
issue during the  interim. She acknowledged that  the language is                                                               
archaic  and  needs   to  be  fixed.  However,   the  project  is                                                               
significant since it  will have a domino effect.  Mr. Skidmore is                                                               
committed to researching  this since other states  have worked on                                                               
it and  Alaska can  avoid some  of their  mistakes. She  said she                                                               
hoped to address this in January.                                                                                               
                                                                                                                                
CHAIR HUGHES  related that the organization  Community United for                                                               
Safety  and  Protection  requested legislators  amend  the  House                                                               
version of  SB 35 to  address police officers engaging  in sexual                                                               
conduct  during  investigations.  She   said  this  seemed  quite                                                               
alarming, but  in conversations with law  enforcement she learned                                                               
that laws currently  exist to prosecute officers  who commit such                                                               
crimes, and that this type of  behavior is not condoned by either                                                               
local law enforcement or the Alaska State Troopers.                                                                             
                                                                                                                                
MS.  OLSON responded  that STAR  is not  aligned or  engaged with                                                               
that citizens' group. She surmised  that this group has an agenda                                                               
to decriminalize  sex work  and disregards any  harm that  may be                                                               
caused  by  human  trafficking.  She  said  that  STAR  has  been                                                               
involved in  several cases where local  law enforcement personnel                                                               
engaged in  sexual misconduct, including former  Anchorage Police                                                               
Officer Anthony Rollins [who was convicted in 2011].                                                                            
                                                                                                                                
She  offered  her  belief  that   the  response  from  local  law                                                               
enforcement was stellar in regard  to protecting and working with                                                               
the victims to hold former  officer Rollins accountable. She said                                                               
she has heard  anecdotally that the organization  told people not                                                               
to  seek assistance  from STAR.  She emphasized  that STAR  would                                                               
always be available  for anyone in the community  who was harmed.                                                               
She  said  that  STAR  would  make  victims  aware  of  available                                                               
resources and their rights. No  one should be subjected to sexual                                                               
violence,  she said.  She  further emphasized  that  STAR is  not                                                               
aware of  any of  the cases  that group  alleges occurred  or any                                                               
activity  or pattern  it attests  is typical.  That has  not been                                                               
STAR's experience, she said.                                                                                                    
                                                                                                                                
CHAIR HUGHES  remarked that  if any  such pattern  exists, Alaska                                                               
has laws to  charge any officer engaged in  illegal activity. She                                                               
asked  Deputy  Commissioner Duxbury  to  speak  to the  Community                                                               
United  for Safety  and Protection  group. She  asked whether  an                                                               
amendment was needed.                                                                                                           
                                                                                                                                
2:08:54 PM                                                                                                                    
MICHAEL   DUXBURY,    Deputy   Commissioner,   Office    of   the                                                               
Commissioner, Department of Public  Safety (DPS), Anchorage, said                                                               
that he  has been associated  with the Alaska State  Troopers for                                                               
approximately 30  years. He has  spent considerable  time working                                                               
undercover,  and he  has also  served as  the supervisor  of many                                                               
undercover operations. He echoed  Ms. Olson's succinct testimony.                                                               
He  said that  he  participated in  the  investigation of  former                                                               
officer  Rollins. He  confirmed that  current statutes  provide a                                                               
means to prosecute these types of crimes.                                                                                       
                                                                                                                                
He emphasized that Alaska State  Troopers never engage in one-on-                                                               
one operations  related to illegal  sex crimes. He said  that the                                                               
department's focus  is always on  the underlying  criminality and                                                               
the people involved  in the crime. He said  that everyone working                                                               
in  those  covert operations  is  monitored  by surveillance,  in                                                               
conjunction  with  the  district   attorney,  or  with  the  U.S.                                                               
Attorney's  office. Further,  a high-level  supervisor, the  next                                                               
level supervisor, and the line  supervisor would all be involved.                                                               
He said  that these  are dangerous  situations with  the criminal                                                               
milieu behind the  scenes and in that type of  lifestyle. He said                                                               
he has  heard the supposition  that these operations  are one-on-                                                               
one situations.  In order  for these allegations  to be  true, it                                                               
would  mean  that the  department  had  extensive corruption.  He                                                               
reiterated that laws are in  place to prosecute any rogue officer                                                               
who  engaged  in that  criminal  activity.  He stressed  that  an                                                               
officer engaging in  that type of criminal  behavior is abhorrent                                                               
to professional law enforcement. He  said that the department and                                                               
the troopers hold up integrity and trust to the public.                                                                         
                                                                                                                                
CHAIR HUGHES asked the record  to reflect his testimony to inform                                                               
the public that laws exist to  address this and the importance of                                                               
integrity among law enforcement personnel.                                                                                      
                                                                                                                                
2:13:08 PM                                                                                                                    
RODGER BRANSON,  representing himself,  Eagle River, spoke  as an                                                               
advocate of  mental health  services. He said  he wanted  to know                                                               
about any subversive activity in Palmer.                                                                                        
                                                                                                                                
CHAIR  HUGHES  asked him  to  submit  specific questions  to  Mr.                                                               
Duxbury via her office, but to limit his testimony to SB 35.                                                                    
                                                                                                                                
MR. BRANSON said he wanted to  ensure that the bill would protect                                                               
everyone. He said he would be  concerned about relying on STAR to                                                               
determine illegal activity  since they could perhaps  turn away a                                                               
victim. He  said the committee  is doing "some awesome  work that                                                               
needs  to be  done,"  but  he wants  to  ensure  that [the  bill]                                                               
protects the people who need to be protected.                                                                                   
                                                                                                                                
2:15:05 PM                                                                                                                    
CHAIR HUGHES, after  first determining no one  wished to testify,                                                               
closed public testimony on SB 35.                                                                                               
                                                                                                                                
2:15:18 PM                                                                                                                    
SENATOR REINBOLD expressed her thanks  for the work on this bill.                                                               
She said  she was pleased  that SB 35  has become a  more victim-                                                               
centered  bill. She  emphasized that  she supports  strengthening                                                               
criminal law related to sexual assault.                                                                                         
                                                                                                                                
2:15:52 PM                                                                                                                    
SENATOR KIEHL expressed his thanks for  the work on this bill. On                                                               
the whole it  is really good legislation  and provides additional                                                               
tools  and   resources  for  victims,   he  said.   He  expressed                                                               
appreciation that the bill would  eliminate the marriage defense.                                                               
However,  while the  bill  contains many  good  changes, it  also                                                               
increases  the severity  of  the offenses  that  will use  public                                                               
safety resources. He offered his  belief that increased penalties                                                               
were unlikely to  make a difference. Changes  that will apprehend                                                               
offenders  not previously  being  caught are  excellent ones,  he                                                               
said. He  argued that penalties for  some crimes were not  on par                                                               
with  penalties for  other crimes.  He predicted  those increased                                                               
penalties  would  cost  money  to implement,  but  it  would  not                                                               
improve public safety. He supported  the intent language for more                                                               
proactive work on Internet crimes  against children because these                                                               
provisions will  catch criminals  and help  reduce the  number of                                                               
victims. He emphasized that Internet  crimes against children are                                                               
important ones  to focus  on and to  use criminal  justice system                                                               
resources. Those are the most  important changes this bill makes,                                                               
he said.                                                                                                                        
                                                                                                                                
He predicted that some provisions  in the bill will be litigated.                                                               
He concurred that  sex offenders who have  committed sex offenses                                                               
that are crimes  in Alaska should be on a  sex offender registry.                                                               
However,  the  language in  the  bill  also captures  people  who                                                               
committed  offenses   in  another   jurisdiction  that   are  not                                                               
considered criminal offenses in  Alaska. The Alaska Supreme Court                                                               
has  reviewed the  Constitution of  the State  of Alaska  and has                                                               
acknowledged the punitive element for  those on the sex registry.                                                               
He  offered his  belief  that it  is  unconstitutional to  punish                                                               
people whose behavior is not a  crime in Alaska. He said he hopes                                                               
that as the  bill moves forward this issue would  be addressed so                                                               
that strong  public protections are  met, and the state  does not                                                               
waste time in court.                                                                                                            
                                                                                                                                
SENATOR  KIEHL  stated  support   for  eliminating  the  marriage                                                               
defense,  which  is  a  good provision.  However,  he  said  that                                                               
combining it  with the change in  mental state for the  crimes of                                                               
sexual assault  in the  second degree and  sexual assault  in the                                                               
third degree worries him. He  recalled that Mr. Skidmore read the                                                               
definition of  reckless. He  offered his  belief that  this would                                                               
create an  ambiguous line.  For example, it  may be  difficult to                                                               
determine criminal  behavior for marital relations  when a couple                                                               
has  been married  for  a  long time,  but  one partner  develops                                                               
dementia or has an early  onset Alzheimer that gradually worsens.                                                               
He  agreed that  the knowing  standard  is very  clear, but  this                                                               
language also includes sexual contact.  He emphasized the need to                                                               
catch the  "bad actors,"  but he had  concern that  combining the                                                               
two  changes would  create  some  real problems.  He  said he  is                                                               
anxious to move SB 35 forward,  but he believes that it could use                                                               
additional work.                                                                                                                
                                                                                                                                
2:20:39 PM                                                                                                                    
SENATOR  MICCICHE thanked  the  committee for  its  work on  this                                                               
bill. He  questioned how long  the state  needed to be  listed as                                                               
number one  in the nation  for the most sexually  abused children                                                               
before it remedies the issue.  Since these crimes are increasing,                                                               
he  expressed his  support  for increasing  the  severity of  the                                                               
penalties for sexual assault crimes.                                                                                            
                                                                                                                                
He said that  there is only one  way to break the  cycle. In many                                                               
communities Alaska's  perpetrators have  been known  for decades.                                                               
For  example,  he  said  that   Peter  [Wilson]  allegedly  raped                                                               
children for years before he  killed 10-year-old Ashley [Johnson-                                                               
Barr].  In terms  of the  registry, he  said some  of these  acts                                                               
should have  been made crimes  in Alaska years ago.  For example,                                                               
the acts  Justin Schneider  committed should  have been  a crime.                                                               
Alaska is just  now recognizing that some  state criminal justice                                                               
systems are  more advanced than  in Alaska. Many of  these states                                                               
have a  far lower incidence  of sexual abuse and  sexual assault,                                                               
he   said.   Children   can    be   destroyed   emotionally   and                                                               
physiologically. These children  may later act out,  so the cycle                                                               
continues, he said.  Not only do the children  and their families                                                               
pay with  a diminished  quality of  life, but  the state  pays in                                                               
almost  every  category in  the  budget.  If these  victims  ever                                                               
normalize, it  would come  after years  of counseling.  This bill                                                               
attempts  to address  all of  the issues  the state  is battling,                                                               
including opioid  abuse, alcoholism, suicide,  domestic violence,                                                               
and  sexual assault.  He said  he wholeheartedly  supports moving                                                               
the bill forward.                                                                                                               
                                                                                                                                
2:23:13 PM                                                                                                                    
CHAIR HUGHES said when gauging  whether public safety is improved                                                               
by  increasing the  severity  of penalties,  it  is important  to                                                               
remember the statistics for sexual  offenses. However, one reason                                                               
the recidivism rates  are low is due to the  strict structure and                                                               
the containment  model used.  The number  of years  sex offenders                                                               
are incarcerated helps  keep the reoccurrence low,  she said. She                                                               
said that  she spoke  with Alaskans  about suicide  prevention in                                                               
her office recently.  Part of getting to the root  of the problem                                                               
is "calling things  what they are." The state  has many children,                                                               
teens, and adults who have been  harmed. In some ways the victims                                                               
suffer lifelong pain that could be considered worse than death.                                                                 
                                                                                                                                
She  said that  in terms  of Senator  Kiehl's concerns  about the                                                               
marriage  defense and  the  change in  the  standard of  defense,                                                               
prosecutors will target the bad guys.  She said she did not share                                                               
his concern that problems would surface.                                                                                        
                                                                                                                                
CHAIR  HUGHES  said that  considering  the  horrific crimes  that                                                               
children suffer  has made  her cognizant  of the  prosecutors who                                                               
work  in the  field. She  asked  members to  give prosecutors  "a                                                               
shout out" because  they deal with these victims  daily. She said                                                               
she hopes the tools [in SB  35] will be helpful. She acknowledged                                                               
that it is  not possible to eradicate evil with  good policy, but                                                               
she  hopes   that  the  legislature   can  help  deter   it.  She                                                               
acknowledged that additional work needs  to be done regarding the                                                               
consent  language  and on  other  issues  that may  surface.  She                                                               
looked forward to working with the department on these issues.                                                                  
                                                                                                                                
2:26:47 PM                                                                                                                    
SENATOR REINBOLD  moved to report  the committee  substitute (CS)                                                               
for  SB 35,  work order  35-GS1873\K as  amended, from  committee                                                               
with individual recommendations and attached fiscal note(s).                                                                    
                                                                                                                                
There  being no  objection, CSSB  35(JUD) was  reported from  the                                                               
Senate Judiciary Standing Committee.                                                                                            
                                                                                                                                
CHAIR HUGHES  asked the  record to  reflect that  the Legislative                                                               
Legal  Services, Legislative  Affairs Agency,  was authorized  to                                                               
make any technical  and conforming changes in  order to implement                                                               
the adopted amendments.                                                                                                         
                                                                                                                                
2:27:12 PM                                                                                                                    
At-ease.                                                                                                                        
                                                                                                                                
           SJR 5-CONST. AM.:PERMANENT FUND & DIVIDEND                                                                       
                                                                                                                                
2:27:22 PM                                                                                                                    
CHAIR  HUGHES  reconvened the  meeting.  She  announced that  the                                                               
final order of  business would be SENATE JOINT  RESOLUTION NO. 5,                                                               
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to the  Alaska permanent  fund and  the permanent  fund                                                               
dividend.                                                                                                                       
                                                                                                                                
[Before the committee was the CSSJR 5(STA), Version U.]                                                                         
                                                                                                                                
2:30:23 PM                                                                                                                    
BRUCE  TANGEMAN, Commissioner  Designee,  Department of  Revenue,                                                               
Anchorage, stated  that SJR  5 would  change the  Constitution of                                                               
the State  of Alaska to  include the permanent fund  dividend. He                                                               
explained  that  for  over  three   decades  the  permanent  fund                                                               
dividend calculation  and the amount  paid to Alaskans  was never                                                               
questioned.  As recently  as 2012  and  2013, the  amount of  the                                                               
dividend was  $900. The Alaska  Permanent Fund and  the permanent                                                               
fund  dividend were  not broken  and did  not need  to be  fixed.                                                               
During the  previous administration the  legislature appropriated                                                               
the full  permanent fund dividend  amount. However,  the governor                                                               
vetoed half of  it. The following two years,  the legislature and                                                               
the  governor  agreed  on  a  dividend that  was  less  than  the                                                               
calculated amount.                                                                                                              
                                                                                                                                
He said  that SJR  5 will guarantee  the permanent  fund dividend                                                               
(PFD). It would not be  subject to appropriation. The funds would                                                               
automatically  be transferred  for payment  to Alaskans.  He said                                                               
this process  would protect the  permanent fund  dividend (PFDs),                                                               
which would not be subject to  the governor's veto. The PFD would                                                               
follow  the  calculation amount.  Any  changes  to the  statutory                                                               
permanent  fund dividend  formula  would require  a  vote of  the                                                               
people. He said  this resolution is part of the  fiscal plan that                                                               
the  governor introduced  this  legislative  session, which  also                                                               
includes  a constitutional  spending limit  and a  constitutional                                                               
amendment  for any  changes to  taxes  or new  taxes proposed  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
2:32:58 PM                                                                                                                    
WILLIAM MILKS, Assistant Attorney  General, Civil Division, Labor                                                               
&  State   Affairs,  Department  of  Law,   Juneau,  presented  a                                                               
sectional  analysis during  the  hearing of  SJR  5. He  reviewed                                                               
Section 1.                                                                                                                      
                                                                                                                                
     Section 1:  This would  provide a  conforming amendment                                                                    
     to  the  existing  language in  order  to  authorize  a                                                                    
     portion  of  permanent  fund  income  to  be  used  for                                                                    
     dividends as set forth in Section 2.                                                                                       
                                                                                                                                
MR. MILKS said that except  as provided under subsection (b), all                                                               
income from the permanent fund  shall be deposited to the general                                                               
fund unless otherwise provided by law.                                                                                          
                                                                                                                                
2:33:51 PM                                                                                                                    
MR. MILKS reviewed Section 2.                                                                                                   
                                                                                                                                
     Section   2:  This   section  would   create  two   new                                                                    
     subsections in the permanent fund amendment.                                                                               
                                                                                                                                
MR.  MILKS  explained that  a  portion  of  the income  from  the                                                               
permanent  fund shall  be  transferred solely  for  a program  of                                                               
dividend payments to state residents.                                                                                           
                                                                                                                                
2:34:04 PM                                                                                                                    
MR. MILKS read subsections (b) and (c).                                                                                         
                                                                                                                                
     Subsection  (b) would  require that  a  portion of  the                                                                    
     permanent   fund    income   be   used,    without   an                                                                    
     appropriation,  solely   for  the  purpose   of  paying                                                                    
     permanent  fund  dividends  to state  residents.  Those                                                                    
     payments would occur according  to the dividend program                                                                    
     and formula currently set forth in statute.                                                                                
                                                                                                                                
     Subsection  (b) would  also  allow  the legislature  to                                                                    
     change  the  dividend  program,  including  amount  and                                                                    
     eligibility, subject  to the approval of  the voters in                                                                    
     subsection (c).                                                                                                            
                                                                                                                                
     Subsection  (c) would  require that  any law  passed by                                                                    
     the legislature  to amend  the permanent  fund dividend                                                                    
     program,  including  the  amount  and  the  eligibility                                                                    
     requirements, would  not take effect unless  the voters                                                                    
     approved  the  proposed  law   at  the  next  statewide                                                                    
     election.  If approved  by the  voters,  it would  take                                                                    
     effect 90  days after certification of  the election or                                                                    
     on a special effective  date concurred in by two-thirds                                                                    
     of the  members of  each house upon  passage, whichever                                                                    
     date is later.                                                                                                             
                                                                                                                                
MR. MILKS read Section 3.                                                                                                       
                                                                                                                                
     Section  3: This  transition  provision specifies  that                                                                    
     the dividend program in place  on January 1, 2019 would                                                                    
     remain in  place until the  legislature and  the voters                                                                    
     approved a change to the program.                                                                                          
                                                                                                                                
2:35:10 PM                                                                                                                    
MR. MILKS read Section 4.                                                                                                       
                                                                                                                                
     Section  4:   This  section  would  require   that  the                                                                    
     constitutional  amendment  be  placed  on  the  general                                                                    
     election ballot in 2020.                                                                                                   
                                                                                                                                
2:35:21 PM                                                                                                                    
MR. MILKS  said that  as Commissioner  Tangeman explained,  SJR 5                                                               
would  do  several important  things.  It  would provide  that  a                                                               
portion of  permanent fund  income would be  used for  a dividend                                                               
program. It also  would provide for an automatic  transfer of the                                                               
income  for  the  permanent fund  dividend  program  without  any                                                               
appropriation. It would place into  the Constitution of the State                                                               
of  Alaska  a  permanent  fund dividend  program  that  could  be                                                               
changed by the legislature and  the voters working together. This                                                               
resolution follows  up on  the Alaska  Supreme Court  decision in                                                               
Wielechowski v.  State that the  permanent fund  dividend program                                                               
set forth in statute is  subject to legislative appropriation and                                                               
the  governor's  veto.  He  characterized that  as  the  sum  and                                                               
substance of SJR 5.                                                                                                             
                                                                                                                                
2:36:29 PM                                                                                                                    
CHAIR HUGHES  asked how  many years  the permanent  fund dividend                                                               
has gone  through the budget  appropriation process.  She related                                                               
her understanding that initially it  was a direct transfer to the                                                               
program and payment.                                                                                                            
                                                                                                                                
MR. TANGEMAN said he was unsure.                                                                                                
                                                                                                                                
MR. MILKS  remarked that  certainly through the  80s it  has been                                                               
through  the  budget appropriation  process.  He  added that  the                                                               
court  ultimately  said  it  is   subject  to  the  appropriation                                                               
process.                                                                                                                        
                                                                                                                                
CHAIR  HUGHES  said  that  one argument  she  has  heard  against                                                               
putting the  permanent fund dividend  in the Constitution  of the                                                               
State  of  Alaska is  that  it  does not  reach  the  level of  a                                                               
fundamental right.  She highlighted  areas that are  important to                                                               
Alaskans.  For  example,  education  and  health  care  are  very                                                               
important to society. The U.S. has  a K-12 system and the federal                                                               
government provides Medicaid and  Medicare. The U.S. Constitution                                                               
does  not  set   out  public  education  or  health   care  as  a                                                               
fundamental  right. She  asked whether  other  functions are  not                                                               
included in the  Constitution of the State of Alaska  or in other                                                               
states' constitutions.                                                                                                          
                                                                                                                                
MR. MILKS directed attention to  Article VIII of the Constitution                                                               
of  the State  of Alaska  to  the Natural  Resources Section.  He                                                               
identified this as  an uncommon provision that  embodies a policy                                                               
statement  in terms  of the  utilization of  the state's  natural                                                               
resources  for the  collective  benefit of  the  Alaskans in  the                                                               
constitution.                                                                                                                   
                                                                                                                                
2:39:04 PM                                                                                                                    
CHAIR  HUGHES said  she  would  be interested  to  know if  other                                                               
states also have unusual constitutional provisions.                                                                             
                                                                                                                                
MR. MILKS  said he would need  to contemplate it and  report back                                                               
to the committee.                                                                                                               
                                                                                                                                
2:39:16 PM                                                                                                                    
CHAIR HUGHES turned  to the mathematical provision  in statute to                                                               
the Percent of Market Value (POMV),  which is set at 5.25 percent                                                               
but  will drop  to 5  percent.  She recalled  that a  Legislative                                                               
Legal  Services  opinion  indicated that  the  legislature  could                                                               
decide to draw  out additional funds. She asked  whether it would                                                               
ever be necessary to draw out more than the POMV.                                                                               
                                                                                                                                
COMMISSIONER  DESIGNEE TANGEMAN  answered yes.  He said  that the                                                               
calculation  for the  POMV is  5.25 percent,  stepping down  to 5                                                               
percent. He pointed  out that the statute is silent  on how those                                                               
funds  are  spent.  Obviously,  this  discussion  is  related  to                                                               
government and dividends. However,  the historical rate of growth                                                               
has been  4 percent. Under  that scenario, the entire  POMV would                                                               
be consumed  by government. He  estimated that this  could happen                                                               
within  the  next 10-15  years.  Since  the  rate of  growth  for                                                               
spending  is not  connected  to the  POMV  calculation, it  still                                                               
could be consumed by government spending.                                                                                       
                                                                                                                                
2:40:54 PM                                                                                                                    
CHAIR HUGHES clarified her interest  was whether [the POMV] could                                                               
ever be consumed by the PFD by following the historical formula.                                                                
                                                                                                                                
COMMISSIONER  DESIGNEE TANGEMAN  said  he thought  that was  also                                                               
possible.  If  the state  enjoys  continued  healthy returns  the                                                               
dividend would  continue to  grow. He stated  that the  state saw                                                               
returns of 15-20 percent in at  least two of the last five years.                                                               
He  predicted that  without market  corrections  factored in  the                                                               
permanent  fund dividend  would  continue to  grow. He  estimated                                                               
that this  year's permanent fund dividend  would be approximately                                                               
$3,000.  However, the  POMV could  also be  consumed by  the full                                                               
dividend, he said.                                                                                                              
                                                                                                                                
2:41:41 PM                                                                                                                    
CHAIR  HUGHES pointed  out that  with  continued healthy  growth,                                                               
especially if  the constitutional amendment for  a spending limit                                                               
were  to pass,  the state  could have  very large  permanent fund                                                               
dividends  in  the  future. She  expressed  concern  that  people                                                               
outside  Alaska might  want  to come  to  Alaska specifically  to                                                               
receive this permanent fund dividend benefit.                                                                                   
                                                                                                                                
She  said  that   SJR  5  also  would  require   any  changes  to                                                               
eligibility to  be approved by  a public vote. She  asked whether                                                               
the administration would be open  to a change in the eligibility,                                                               
perhaps requiring a two-year residency  prior to eligibility. She                                                               
asked  whether eligibility  could  reduce  the allowable  absence                                                               
from 180 days to 90 or  100 days, and if other restrictions could                                                               
be made to the number of  years for an allowable absence from the                                                               
state for  medical reasons or  military personnel.  She preferred                                                               
that  the eligibility  changes would  be made  in statute  rather                                                               
than in the Constitution of the State of Alaska.                                                                                
                                                                                                                                
COMMISSIONER  DESIGNEE  TANGEMAN  offered  his  belief  that  the                                                               
governor  would  consider  any proposals  the  legislature  would                                                               
recommend.  He characterized  the  permanent fund  dividend as  a                                                               
very important issue.  The dividend has been  on "cruise control"                                                               
for several  decades. However, in  the last few years  the public                                                               
has been more  engaged because the statutory  calculation has not                                                               
been followed.                                                                                                                  
                                                                                                                                
CHAIR HUGHES asked him to follow up with information on the two-                                                                
year  eligibility, lessening  the  allowable  absences, and  some                                                               
type of limitation for people  who leave the state for qualifying                                                               
reasons but who no longer reside  in Alaska and have not lived in                                                               
Alaska for a number of years.                                                                                                   
                                                                                                                                
2:45:10 PM                                                                                                                    
SENATOR  KIEHL referred  to Chair  Hughes's  questions about  the                                                               
Senate Bill 26 limit and  the permanent fund dividend payment. He                                                               
asked whether  the statutory limit  in the rapid  growth scenario                                                               
is  effective. He  asked  whether  it is  a  part  of the  system                                                               
provided by law.                                                                                                                
                                                                                                                                
COMMISSIONER DESIGNEE TANGEMAN responded  that the Senate Bill 26                                                               
debate  focused  on the  amount  that  could  be taken  from  the                                                               
earnings  reserve account  (ERA) without  harming it.  He pointed                                                               
out that the Alaska Permanent  Fund Corporation does not weigh in                                                               
on  how the  earnings are  spent. The  entire legislative  debate                                                               
surrounds what would constitute a  sustainable draw from the ERA.                                                               
Step  two  after adopting  Senate  Bill  26  would have  been  to                                                               
determine  the   split  [between  government  services   and  the                                                               
permanent fund  dividend]. The legislature  has not been  able to                                                               
come to a  consensus on that issue, so the  debate has shifted to                                                               
how to spend it in a responsible manner.                                                                                        
                                                                                                                                
He   highlighted   that    this   administration   believes   the                                                               
constitutional  amendment to  the  existing spending  limit is  a                                                               
critical  part of  the  equation since  it  would cap  government                                                               
spending. That  would address the  concern that  government would                                                               
absorb the  bulk of Senate  Bill 26 and  the POMV draw.  When the                                                               
spending  limit  is  put  into place,  the  focus  on  government                                                               
spending is  critical because  the POMV draw  would be  a limited                                                               
amount, he said.                                                                                                                
                                                                                                                                
2:47:25 PM                                                                                                                    
SENATOR KIEHL recapped that the  state has had a five-year period                                                               
with  11-12  percent  growth.  He  estimated  that  half  of  the                                                               
earnings over that  period would be more than the  5 percent cap.                                                               
He  said that  SJR 5  would  calculate the  dividend payments  as                                                               
required  by law.  "So is  [Senate Bill  26] a  provision by  law                                                               
protected  by this  constitutional  amendment? Do  we reduce  the                                                               
dividend?" he asked.                                                                                                            
                                                                                                                                
MR.  MILKS  responded  that  under  SJR  5,  the  permanent  fund                                                               
dividend is provided  by law as the  statutory dividend framework                                                               
per  the  Alaska Supreme  Court  decision  under Wielechowski  v.                                                               
State.  The Alaska  Supreme Court  identified that  the statutory                                                               
calculation  determines the  amount  available for  distribution,                                                               
and another calculation requires 50  percent of that income shall                                                               
be   transferred   from   the  earnings   reserve   account   for                                                               
distribution of  the permanent fund dividend.  Finally, that case                                                               
also addressed the eligibility requirements.  SJR 5 would set out                                                               
in law the existing three-piece statutory framework, he said.                                                                   
                                                                                                                                
He said that  Commissioner Tangeman described the  Senate Bill 26                                                               
law  that set  up the  statutory Percent  of Market  Value (POMV)                                                               
framework  for a  sustainable draw.  Thus,  these components  are                                                               
related. However,  SJR 5 would  establish the  existing statutory                                                               
program for dividends.                                                                                                          
                                                                                                                                
2:49:21 PM                                                                                                                    
SENATOR KIEHL  apologized for not  stating his  question clearly.                                                               
He offered to submit his question in writing.                                                                                   
                                                                                                                                
2:49:34 PM                                                                                                                    
CHAIR HUGHES referred to  [page 1, line 31 to page  2, line 1] of                                                               
SJR 5, which  states, "provided by law read on  January 1, 2019."                                                               
She said  the POMV  is involved. However,  Mr. Milks  referred to                                                               
the  historical statutory  formula. She  offered her  belief that                                                               
ambiguity exists  since the historical statutory  formula and the                                                               
statutory POMV are both laws.                                                                                                   
                                                                                                                                
2:50:11 PM                                                                                                                    
SENATOR SHOWER  remarked that  a lot  of confusion  surrounds the                                                               
statutory  provisions for  the permanent  fund dividend.  He said                                                               
that it  is straightforward.  He pointed out  that last  year the                                                               
legislature passed Senate Bill 26,  which establishes the formula                                                               
for the  draw. The historical  statutory formula, which  has been                                                               
in place for  40 years, is still  law, he said. If SJR  5 were to                                                               
pass,  the  legislature  would  draw an  amount  using  the  POMV                                                               
formula  [established  in  Senate  Bill  26],  but  it  would  be                                                               
calculated  and   distributed  using  the   historical  statutory                                                               
formula. He suggested  that the confusion about  the amount arose                                                               
because  the legislature  did not  make any  change to  the 50:50                                                               
split, which means a weird statute is in place.                                                                                 
                                                                                                                                
CHAIR  HUGHES  pointed  out  a conflict  exists.  She  said  that                                                               
Commissioner    Tangeman    explained    the    conflict    since                                                               
mathematically the historical statutory  formula could exceed the                                                               
POMV draw.                                                                                                                      
                                                                                                                                
2:51:49 PM                                                                                                                    
SENATOR REINBOLD  asked what  the difference  is between  the way                                                               
the  [Alaska Permanent  Fund  Corporation]  invests the  earnings                                                               
reserve as opposed to the permanent fund principal.                                                                             
                                                                                                                                
COMMISSIONER  DESIGNEE TANGEMAN  answered that  there is  not any                                                               
difference,  other  than  the liquidity  aspect.  For  investment                                                               
purposes, the  Alaska Permanent Fund  does not treat the  ERA and                                                               
the corpus of the fund differently.                                                                                             
                                                                                                                                
SENATOR REINBOLD related  a scenario in which the  ERA balance is                                                               
$15 billion, with a $3 billion  draw, and another $2 billion draw                                                               
to  pay  for paybacks.  That  would  reduce  the balance  to  $10                                                               
billion and  thus affect investments.  She expressed  an interest                                                               
in learning the rate of return on the ERA versus the principal.                                                                 
                                                                                                                                
COMMISSIONER DESIGNEE  TANGEMAN explained  that when  some people                                                               
calculate the  funds drawn from  the permanent fund, they  do not                                                               
consider  the incoming  revenues.  He said  their calculation  is                                                               
typically based on a 6.55 percent  expected rate of return so for                                                               
FY 2020, an estimated $4 billion  would be deposited to the fund,                                                               
and $3  billion would be  drawn based  on the POMV.  Instead, the                                                               
investment portfolio of $65 billion  should be the focus, not the                                                               
ERA which is  only a repository for realized gains.  The issue is                                                               
more  about the  return on  $65  billion, and  that any  realized                                                               
gains are deposited to the ERA,  which is the current $18 billion                                                               
balance. To illustrate  this, he related a scenario  in which the                                                               
earnings  were $4  billion, $3  billion  was drawn  based on  the                                                               
POMV, and  another $600 million  was drawn for the  backpay. This                                                               
would result in a net $400 million increase, he said.                                                                           
                                                                                                                                
2:54:55 PM                                                                                                                    
SENATOR REINBOLD offered her belief  that the POMV draw, the full                                                               
$3,000 dividend,  and $2 billion  in unallocated for back  pay of                                                               
the  dividends  is  important  because  it  could  affect  future                                                               
dividends.  She  said  that understanding  the  whole  scope  and                                                               
trigger  points  was important.  Although  she  supports the  PFD                                                               
statutory formula  as a  means to  compensate Alaskans  for their                                                               
subsurface  rights, she  was  unsure how  the  mineral rights  of                                                               
Native  Regional   Corporations  might   affect  the   fund.  The                                                               
Constitution  of  the State  of  Alaska  provides rights,  so  if                                                               
people  are  stripped  of permanent  fund  dividend  and  mineral                                                               
rights, it  raises constitutional issues, she  said. She wondered                                                               
if the  legislature was  giving people  false hope.  She recalled                                                               
the  ramifications  of the  massive  dip  in the  permanent  fund                                                               
during 2008.  She feared  there could be  a negative  dividend at                                                               
some point.  That is  the reason she  wants to  better understand                                                               
the impact  that the POMV,  the statutory formula  and allocation                                                               
draw have on future permanent fund dividends.                                                                                   
                                                                                                                                
2:57:13 PM                                                                                                                    
SENATOR KIEHL asked why the  administration chose 120 days in SJR                                                               
5, since  it would leave the  choice of using either  the primary                                                               
or the general election ballot.                                                                                                 
                                                                                                                                
MR.  MILKS answered  that the  language of  120 days  was derived                                                               
from the  initiative language in  Article II, Section 4.  He said                                                               
that  the administration  sought consistency  in time  periods in                                                               
the Constitution of the State of Alaska.                                                                                        
                                                                                                                                
2:58:11 PM                                                                                                                    
SENATOR  KIEHL asked  for further  clarification on  which ballot                                                               
would be  used for proposed  changes. He turned to  the technical                                                               
language  in the  bill  and asked  for the  impact  on the  funds                                                               
transferred under Article IX, Section 17(b).                                                                                    
                                                                                                                                
MR. MILKS  said that  SJR 5  would provide  an exception  and the                                                               
funds would be moved without  an appropriation. He suggested that                                                               
might  be an  issue for  him to  review since  it relates  to the                                                               
constitutional budget reserve account (CBR) issue.                                                                              
                                                                                                                                
2:59:24 PM                                                                                                                    
SENATOR KIEHL  asked for further  clarification of  the statutory                                                               
POMV structure.  He asked why  the proposal does not  provide any                                                               
inflation-proofing protection  or a POMV cap  in the Constitution                                                               
of  the State  of Alaska.  He said  that knowing  the interaction                                                               
between the two would be valuable.                                                                                              
                                                                                                                                
COMMISSIONER DESIGNEE  TANGEMAN answered that  the administration                                                               
has proposed  a series of  amendments to the Constitution  of the                                                               
State of  Alaska. He offered  his belief that  inflation proofing                                                               
would  be  handled  under the  resolution  for  a  constitutional                                                               
spending  cap. He  acknowledged  that  inflation-proofing is  not                                                               
covered in SJR 5.                                                                                                               
                                                                                                                                
3:00:51 PM                                                                                                                    
SENATOR  KIEHL  questioned  whether the  administration  had  any                                                               
charts or for projections to show how that would work.                                                                          
                                                                                                                                
COMMISSIONER DESIGNEE TANGEMAN offered to  work with his staff to                                                               
provide the information.                                                                                                        
                                                                                                                                
SENATOR  KIEHL  observed  that  the   state  attempts  to  use  a                                                               
statutory  POMV  cap,  but  still  maintains  the  constitutional                                                               
distinction  between   the  permanent  fund  principal   and  the                                                               
earnings  reserve account.  He expressed  concern that  over time                                                               
the value of  the principal would diminish, and the  value of the                                                               
ERA would  take over. He  suggested that without  some limitation                                                               
"with teeth,"  unstructured draws could  create more risk  to the                                                               
value  of the  permanent fund.  If  the legislature  is going  to                                                               
consider  a constitutional  amendment on  the permanent  fund, it                                                               
should consider protections  to the permanent fund  that would be                                                               
effective for  generations rather than  for only a few  years, he                                                               
said.                                                                                                                           
                                                                                                                                
3:02:13 PM                                                                                                                    
SENATOR SHOWER  raised a counterpoint on  the three-year payback.                                                               
He pointed  out that if  $2 billion had  been taken out  over the                                                               
three years, the  fund value would be less today.  He offered his                                                               
belief  that the  fund value  would  have changed  over time.  He                                                               
related a scenario  in which someone has $20,000  in his/her bank                                                               
account,  then deposits  $4,000,  but also  withdraws $4,000.  It                                                               
would net to $20,000, he said.                                                                                                  
                                                                                                                                
He explained that  the money not paid out for  dividends over the                                                               
three-year-period is still in the  fund, such that the balance is                                                               
essentially the same.                                                                                                           
                                                                                                                                
SENATOR   SHOWERS   expressed   concern   that   enshrining   the                                                               
eligibility  requirements in  the  Constitution of  the State  of                                                               
Alaska may  lead to  some unintended  consequences. He  asked Mr.                                                               
Milks to discuss any potential downfalls.                                                                                       
                                                                                                                                
MR. MILKS  answered that  SJR 5 includes  a requirement  of voter                                                               
approval  on eligibility  and computation  of the  permanent fund                                                               
dividend.  Alaska  statutes   contain  eligibility  statutes  and                                                               
exceptions  that permit  absences from  Alaska for  the permanent                                                               
fund dividend  program. He  said he thought  it would  be covered                                                               
under SJR  5 if adopted  in this  form. He recalled  that Senator                                                               
Reinbold  raised  come  ancillary  concerns  in  prior  committee                                                               
hearings, such  as garnishment.  However, he  did not  think that                                                               
changes of  that nature  would be subject  to voter  approval. He                                                               
characterized  garnishments as  being  more of  a consequence  of                                                               
receiving a dividend rather than an eligibility issue.                                                                          
                                                                                                                                
3:06:45 PM                                                                                                                    
SENATOR SHOWER  said that  one concern  is whether  the permanent                                                               
fund  dividend  should   be  an  individual  right   and  if  the                                                               
legislature  should retain  eligibility requirements  in statute.                                                               
He  said he  would like  to protect  the permanent  fund dividend                                                               
program. He  said the  struggle is  related to  the legislature's                                                               
ability  to  change the  amount.  He  said  that he  favors  less                                                               
government  spending. He  wondered  if the  legislature would  be                                                               
stuck with  a 50:50 split.  He maintained that  eligibility might                                                               
be better left in the legislature's  purview since it may need to                                                               
change eligibility  requirements for absences for  college or the                                                               
military.                                                                                                                       
                                                                                                                                
CHAIR HUGHES  said that she  does not support  adding eligibility                                                               
in the Constitution of the State  of Alaska either. She asked the                                                               
rationale for constitutionalizing eligibility requirements.                                                                     
                                                                                                                                
COMMISSIONER DESIGNEE  TANGEMAN said the administration  would be                                                               
willing to entertain discussions on  eligibility. That has been a                                                               
topic of internal discussion, he said.                                                                                          
                                                                                                                                
3:08:47 PM                                                                                                                    
CHAIR HUGHES raised   an issue that she acknowledged  was more of                                                               
an issue for  the finance committee to consider. She  asked for a                                                               
rough estimate on  the number of people who would  be affected if                                                               
eligibility  requirements  were  changed to  a  two-year  minimum                                                               
residency, a  90-day maximum absence,  and an  eligibility cutoff                                                               
after  a  three-year legitimate  absence  for  those who  do  not                                                               
physically  reside  in Alaska.    Further,  she would  like  more                                                               
information  on  the  "fundamental  right" issue.  She  said  her                                                               
primary interest was  to identify any other programs  that do not                                                               
fall  under  fundamental  rights.   She  expressed  concern  that                                                               
protections were not  in place for the  earnings reserve account.                                                               
She  said that  the Legislative  Legal Services  provided a  memo                                                               
after Senate Bill 26 passed  that indicated the legislature has a                                                               
right to  draw outside of  the POMV.  She asked whether  this was                                                               
something that the administration would also entertain.                                                                         
                                                                                                                                
COMMISSIONER  DESIGNEE  TANGEMAN  answered yes.  He  offered  his                                                               
belief that  the administration's view  is that the ERA  would be                                                               
protected through the constitutional spending limit in SJR 4.                                                                   
                                                                                                                                
3:10:48 PM                                                                                                                    
CHAIR  HUGHES  said  she  understood   that  the  permanent  fund                                                               
dividend  would be  issued  based  on a  direct  transfer to  the                                                               
program. She  asked whether this  transfer would come  before the                                                               
legislative finance committees.                                                                                                 
                                                                                                                                
COMMISSIONER  DESIGNEE TANGEMAN  answered that  it would  not. He                                                               
said  that  the calculation  would  occur,  and the  funds  would                                                               
transfer directly  into the permanent  fund dividend  program. It                                                               
would not part of the appropriation process, he said.                                                                           
                                                                                                                                
3:11:28 PM                                                                                                                    
SENATOR MICCICHE said  that he agreed with the  discussion on the                                                               
eligibility requirements.  He offered his belief  that the public                                                               
would  not be  interested in  voting on  changes to  eligibility,                                                               
such as the  length and cause of absences. He  said the permanent                                                               
fund dividend program is  about protecting residents. Eligibility                                                               
would be  something else since  it would pertain to  someone that                                                               
may  not be  regarded as  being qualified  yet. It  is not  about                                                               
taking away any rights from established residents, he said.                                                                     
                                                                                                                                
He  referred to  subsection (c)  on page  2, line  6. He  said he                                                               
found  it  interesting  that  it  refers to  the  amount  of  the                                                               
dividend instead of the dividend  calculation. He said that SJR 5                                                               
supports what was in statute on  January 1, 2019. He said that he                                                               
thought  the dividend  calculation  would be  a more  appropriate                                                               
choice of language.                                                                                                             
                                                                                                                                
MR. MILKS  said he understood  the point and agreed  the language                                                               
could be clearer.                                                                                                               
                                                                                                                                
3:13:51 PM                                                                                                                    
SENATOR  MICCICHE  related  his  understanding  that  this  would                                                               
preserve  the  dividend  calculation,   but  the  amount  of  the                                                               
dividend is  not part of  the resolution.  It is not  possible to                                                               
know the  earnings or what would  be available in the  future for                                                               
distribution, he  said. Instead, the statutory  calculation would                                                               
be enshrined in the Constitution of the State of Alaska.                                                                        
                                                                                                                                
MR.  MILKS agreed  that the  statutory formula  is what  would be                                                               
enshrined since  the amount  of the  permanent fund  dividend has                                                               
historically varied.                                                                                                            
                                                                                                                                
3:14:58 PM                                                                                                                    
SENATOR MICCICHE  asked whether  a quarterly payment  could occur                                                               
under SJR 5 since it would be limited to a distribution method.                                                                 
                                                                                                                                
MR.  MILKS offered  his belief  that would  likely work  since it                                                               
would  not be  part of  the dividend  calculation nor  was it  an                                                               
eligibility issue.  He said  he thought  it would  be permissible                                                               
and not subject to voter ratification.                                                                                          
                                                                                                                                
3:16:42 PM                                                                                                                    
CHAIR HUGHES  returned to  an earlier  discussion related  to the                                                               
historical  formula and  the POMV  laws in  effect on  January 1,                                                               
2019.  She  asked  which  statute  would  trump  the  other,  the                                                               
historical statutory formula or the  POMV formula in statute. She                                                               
wondered  if the  permanent fund  would  get to  the point  where                                                               
paying the  permanent fund dividend  according to  the historical                                                               
formula would  exceed the POMV  draw. She asked whether  it would                                                               
stop with the POMV amount and  be divided by the population or if                                                               
the historical formula would trump the POMV statute.                                                                            
                                                                                                                                
MR. MILKS offered  his belief that this would be  an amendment to                                                               
the  Constitution of  the State  of Alaska.  The language  in the                                                               
constitution  would   supersede  a   statute  that   described  a                                                               
statutory draw. SJR  5 would state that a portion  of income from                                                               
the permanent  fund would be  used for a permanent  fund dividend                                                               
program.                                                                                                                        
                                                                                                                                
CHAIR HUGHES asked for further  clarification that the historical                                                               
formula would  trump the  POMV law. She  said that  both statutes                                                               
were  in law  as of  January 1,  2019. She  asked whether  he was                                                               
saying that the  courts would interpret it in that  way. "Even if                                                               
mathematically  the  historical formula  to  pay  it out  to  the                                                               
residents would  be more than the  five, let's say we  are at the                                                               
five  percent point,  that  the constitution  would  say you  can                                                               
exceed the law on the books that says five percent," she said.                                                                  
                                                                                                                                
MR. MILKS, referring to the  hypothetical question, said that the                                                               
provision  in  the Constitution  of  the  State of  Alaska  would                                                               
govern.  The court  would look  at  the constitutional  provision                                                               
that  established  a  portion  of  income would  be  used  for  a                                                               
dividend  program. He  said that  the administration  has tracked                                                               
the Wielechowski case, which has  been described as the permanent                                                               
fund  dividend   program,  which  is  based   on  the  historical                                                               
statutory formula  being the amount  of income to  be transferred                                                               
to  pay  the permanent  fund  dividends.  He explained  that  the                                                               
statute  enacted  by Senate  Bill  26  addressed the  sustainable                                                               
Percent of Market Value (POMV)  draw. Although these two statutes                                                               
are related,  one pertains  directly to  the dividends,  which is                                                               
the historical  statutory framework.  He offered his  belief that                                                               
the provisions in SJR 5 would govern.                                                                                           
                                                                                                                                
3:19:52 PM                                                                                                                    
CHAIR HUGHES asked whether SJR 5  would require the draw be taken                                                               
out of  the POMV or if  it could be  taken outside of it  and the                                                               
POMV could be used to fund government services.                                                                                 
                                                                                                                                
MR. MILKS answered  that the POMV was established  by Senate Bill                                                               
26  and is  a statute.  SJR  5 would  address income  out of  the                                                               
permanent fund,  which is not  identified in the  Constitution of                                                               
the State of Alaska as the POMV.                                                                                                
                                                                                                                                
CHAIR HUGHES asked  whether the POMV could be used  for the state                                                               
budget and the draw could be on top of that.                                                                                    
                                                                                                                                
3:21:15 PM                                                                                                                    
SENATOR KIEHL  argued that  Senate Bill 26  would prevent  it. He                                                               
also  argued  against what  Mr.  Milks  said earlier,  that  this                                                               
transfer  in the  Constitution  of the  State  of Alaska  somehow                                                               
trumps the  POMV statute established  by Senate Bill 26.  He said                                                               
that  the  statute  established under  Senate  Bill  26  referred                                                               
directly to the transfer for  dividends and an appropriation that                                                               
could be used to fund  state government services. Further, Senate                                                               
Bill 26  is also a  law that existed on  January 1, 2019.   Thus,                                                               
SJR 5 would  set the Senate Bill  26 limit in stone,  he said. He                                                               
said  he did  not  share  the concern  that  the dividends  would                                                               
regularly go over 5 percent,  but the possibility of limiting the                                                               
permanent fund dividend is a concern.                                                                                           
                                                                                                                                
3:22:27 PM                                                                                                                    
CHAIR  HUGHES  asked  whether  the language  in  Senate  Bill  26                                                               
mentioned  permanent  fund dividends  or  if  it referred  to  an                                                               
appropriation.                                                                                                                  
                                                                                                                                
COMMISSIONER  DESIGNEE   TANGEMAN  said  he  did   not  think  it                                                               
mentioned dividends because  the legislature could not  come to a                                                               
resolution on the  split. He said the legislature  settled on the                                                               
amount available for a sustainable draw.                                                                                        
                                                                                                                                
CHAIR HUGHES related her understanding  that SJR 5 would have the                                                               
historical  formula   outside  the  appropriation   process.  She                                                               
offered her  belief that  the 5.25  or 5.0  percent appropriation                                                               
draw could  be used  for government  spending and  the historical                                                               
formula transfer  could be  separate. She asked  if that  was the                                                               
administration's intention.                                                                                                     
                                                                                                                                
COMMISSIONER DESIGNEE  TANGEMAN said he acknowledges  her concern                                                               
is  that there  would  be  two separate  paths.  He recapped  her                                                               
concern, that  the permanent fund  dividend would be  drawn using                                                               
the historical  formula under SJR 5  but the POMV would  be drawn                                                               
from  the  earnings reserve  account.  He  offered to  study  the                                                               
question and respond to the committee in writing.                                                                               
                                                                                                                                
3:23:57 PM                                                                                                                    
SENATOR MICCICHE  argued that for  the POMV  to be consumed  by a                                                               
statutory  permanent  fund  dividend  would  require  20  percent                                                               
earnings  net of  fees. He  said  would be  unprecedented but  he                                                               
thought it  was a good point.  He said if  SJR 5 were to  pass it                                                               
would  be important  to revise  the statutes  affected by  Senate                                                               
Bill 26 to  reflect that automatic transfer. The  POMV would need                                                               
to  be  net  of  that  transfer  in  order  to  stay  within  the                                                               
investment  disbursement rules  that were  assumed when  the step                                                               
down to 5  percent was established. Otherwise, it  would create a                                                               
situation  that would  very quickly  erode  the earnings  reserve                                                               
account, which would be problematic.                                                                                            
                                                                                                                                
3:25:11 PM                                                                                                                    
SENATOR  SHOWER said  that the  constitutional spending  limit is                                                               
critical  to curtail  state government.  If  SJR 5  were to  pass                                                               
without a spending limit in place, it would be a setup for                                                                      
failure, he said.                                                                                                               
                                                                                                                                
3:25:46 PM                                                                                                                    
CHAIR HUGHES said that she concurred. However, she said that it                                                                 
still makes her nervous to have the spending limit and permanent                                                                
fund dividend constitutional changes in separate resolutions.                                                                   
                                                                                                                                
[SJR 5 was held in committee.]                                                                                                  
                                                                                                                                
3:26:16 PM                                                                                                                    
CHAIR HUGHES reviewed the upcoming meeting announcements.                                                                       
                                                                                                                                
3:26:41 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Hughes adjourned the Senate Judiciary Standing Committee                                                                  
meeting at 3:26 p.m.                                                                                                            

Document Name Date/Time Subjects
SJR 5 Transmittal Letter.pdf SJUD 4/8/2019 1:30:00 PM
SSTA 3/28/2019 3:30:00 PM
SJR 5
CSSJR 5 Version U.PDF SJUD 4/8/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 - CSSJR 5(STA) ver U Sectional 4.8.19.pdf SJUD 4/8/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 - CSSJR 5(STA) - Comparison 4.8.19.pdf SJUD 4/8/2019 1:30:00 PM
SJUD 4/15/2019 1:30:00 PM
SJR 5
SJR 5 Fiscal Note GOV-DOE.pdf SJUD 4/8/2019 1:30:00 PM
SSTA 4/2/2019 3:30:00 PM
SSTA 4/4/2019 1:30:00 PM
SJR 5