Legislature(2017 - 2018)SENATE FINANCE 532

05/08/2018 09:00 AM CONFERENCE COMMITTEE ON SB 26

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Audio Topic
09:03:23 AM Start
09:10:35 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 26 APPROP LIMIT & PER FUND:DIVIDEND;EARNINGS TELECONFERENCED
Moved CCS SB 26 Out of Committee
               30TH ALASKA STATE LEGISLATURE                                                                                    
                      SECOND SESSION                                                                                            
                CONFERENCE COMMITTEE ON SB 26                                                                                   
                        May 8, 2018                                                                                             
                         9:03 a.m.                                                                                              
                                                                                                                                
9:03:23 AM                                                                                                                    
                                                                                                                                
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair MacKinnon called the Conference Committee meeting                                                                      
on SB 26 to order at 9:03 a.m.                                                                                                  
                                                                                                                                
MEMBERS PRESENT:                                                                                                              
                                                                                                                                
Senate:                                                                                                                         
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Dennis Egan                                                                                                             
                                                                                                                                
House:                                                                                                                          
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton                                                                                                      
Representative Steve Thompson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT:                                                                                                                 
                                                                                                                                
Laura Cramer, Staff, Senator Anna MacKinnon.                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 26     APPROP LIMIT & PER FUND:DIVIDEND;EARNINGS                                                                             
                                                                                                                                
          CCS SB  26 was  REPORTED out  of committee  with a                                                                    
          "do   pass"  recommendation   and  with   one  new                                                                    
          indeterminate  fiscal   note  by   the  conference                                                                    
          committee for various departments.                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 26(FIN)                                                                                                
                                                                                                                                
     "An Act  relating to  an appropriation  limit; relating                                                                    
     to  the   budget  responsibilities  of   the  governor;                                                                    
     relating to the Alaska  permanent fund, the earnings of                                                                    
     the  Alaska permanent  fund, and  the earnings  reserve                                                                    
     account;  relating to  the  mental  health trust  fund;                                                                    
     relating to  deposits into the dividend  fund; relating                                                                    
     to  the  calculation  and  payment  of  permanent  fund                                                                    
     dividends; and providing for an effective date."                                                                           
                                                                                                                                
and                                                                                                                             
                                                                                                                                
HOUSE CS FOR CS FOR SENATE BILL NO. 26(FIN)(efd fld H)                                                                        
                                                                                                                                
     "An Act  relating to  an appropriation  limit; relating                                                                    
     to  the   budget  responsibilities  of   the  governor;                                                                    
     relating to the Alaska  permanent fund, the earnings of                                                                    
     the  Alaska permanent  fund, and  the earnings  reserve                                                                    
     account;  relating to  the  mental  health trust  fund;                                                                    
     relating  to  deposits  into  the  dividend  fund;  and                                                                    
     relating to  the calculation  and payment  of permanent                                                                    
     fund dividends."                                                                                                           
                                                                                                                                
9:04:05 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon explained that the purpose of the                                                                            
meeting was to discuss the conference committee substitute.                                                                     
                                                                                                                                
Representative Foster MOVED to ADOPT proposed conference                                                                        
committee substitute for SB 26, Work Draft 30-GS1690\Q                                                                          
(Martin, 5/7/18).                                                                                                               
                                                                                                                                
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
LAURA CRAMER, STAFF, SENATOR ANNA MACKINNON, reviewed a                                                                         
Sectional Analysis for the committee substitute (copy not                                                                       
on file):                                                                                                                       
                                                                                                                                
     Section 1:  5.25% percent of  market value    effective                                                                    
     July 1, 2018 (sec. 9)                                                                                                      
                                                                                                                                
     Section 2: 5% POMV  effective July 1, 2021 (sec. 8)                                                                        
                                                                                                                                
     Section 3: An Inflation  proofing transfer from the ERA                                                                    
     is separate from the POMV draw                                                                                             
                                                                                                                                
     Section 4:  Income earned from  Amerada Hess  funds are                                                                    
     not available  for transfer or appropriation  under the                                                                    
     POMV draw                                                                                                                  
                                                                                                                                
     Section 5:  The POMV appropriation to  the general fund                                                                    
     may not  exceed the  percentages outline in  sections 1                                                                    
     and 2                                                                                                                      
                                                                                                                                
     Section  6:  The  Alaska  Permanent  Fund  Corporations                                                                    
     operating  budget  shall  be treated  as  part  of  the                                                                    
     market value of the fund                                                                                                   
                                                                                                                                
     Section  7:  Mental  Health  Trust  funds  may  not  be                                                                    
     included  in the  computation of  net income  or market                                                                    
     value available  for distribution or  appropriation for                                                                    
     the POMV draw                                                                                                              
                                                                                                                                
     Section 8: Effective  date of the 5% draw  in Section 2                                                                    
     is July 1, 2021                                                                                                            
                                                                                                                                
     Section  9:   All  other  sections  of   the  bill  are                                                                    
     effective July 1, 2018                                                                                                     
                                                                                                                                
9:06:25 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further OBJECTION, Work Draft 30-GS1690\Q was ADOPTED.                                                                          
                                                                                                                                
Representative  Foster MOVED  to  REPORT CCS  SB  26 out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CCS SB  26 was REPORTED  out of  committee with a  "do pass"                                                                    
recommendation and  with one  new indeterminate  fiscal note                                                                    
by the conference committee for various departments.                                                                            
                                                                                                                                
Representative  Foster  remarked  on the  cooperation  shown                                                                    
between the  House and  Senate in the  passage of  the bill,                                                                    
which   he  believed   was  a   great  stepping   stone.  He                                                                    
appreciated   the  progress,   which  he   believed  was   a                                                                    
demonstration  of the  legislature's  commitment to  working                                                                    
together.                                                                                                                       
                                                                                                                                
Co-Chair MacKinnon thanked  the conference committee members                                                                    
and reflected that it had taken  over a year of hard work to                                                                    
get to the  particular moment in Alaska's  history. The bill                                                                    
was a collaboration of work  effort between both legislative                                                                    
bodies.  She  continued  it  was   an  effort  to  stabilize                                                                    
Alaska's  economy  by  using the  percent  of  market  value                                                                    
capped at 5.25  percent for three years, dropping  down to 5                                                                    
percent and  an effective rate  that was much lower.  The FY                                                                    
19 effective rate draw would  be 4.35 percent as analyzed by                                                                    
the legislature's  fiscal analysts. She considered  that the                                                                    
bill was a way to protect  draws and limit spending from the                                                                    
earnings  reserve.  She  appreciated   the  efforts  by  the                                                                    
committee, Legislative  Legal Services, and  the Legislative                                                                    
Finance Division.                                                                                                               
                                                                                                                                
9:09:18 AM                                                                                                                    
                                                                                                                                
Representative Seaton noted  that Section 5 of  the bill was                                                                    
a  limitation on  the legislature's  ability  to take  money                                                                    
from the earnings reserve. He  explained that currently with                                                                    
majority votes,  the legislature could take  any amount. The                                                                    
limitation   was    structural   going   forward    on   the                                                                    
legislature's  ability  to  take  money  from  the  earnings                                                                    
reserve.                                                                                                                        
                                                                                                                                
Co-Chair  MacKinnon agreed  that  the  bill represented  one                                                                    
step  in  addressing  the  state's  fiscal  challenges.  She                                                                    
remarked  that the  operating  budget had  yet  to pass  the                                                                    
legislature and even with the  passage of SB 26, there would                                                                    
be  a  need for  a  constitutional  budget draw  from  state                                                                    
savings. She concluded  that the passage of SB  26 moved the                                                                    
state closer to solving Alaska's  problem, but did not solve                                                                    
it entirely.                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
9:10:35 AM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 9:10 a.m.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 26 CCS for SB26 Work Draft Version Q.pdf JSB26 5/8/2018 9:00:00 AM
SB 26