04/08/2019 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB35 | |
| SJR5 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 35 | TELECONFERENCED | |
| + | SJR 5 | TELECONFERENCED | |
| + | 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 |