Legislature(1997 - 1998)
05/01/1997 04:04 PM Senate STA
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* first hearing in first committee of referral
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SENATE STATE AFFAIRS COMMITTEE
May 1, 1997
4:04 p.m.
MEMBERS PRESENT
Senator Lyda Green, Chairman
Senator Jerry Ward, Vice-Chairman
Senator Jerry Mackie
MEMBERS ABSENT
Senator Mike Miller
Senator Jim Duncan
COMMITTEE CALENDAR
HOUSE CONCURRENT RESOLUTION NO. 7
Proposing an amendment to the Uniform Rules of the Alaska State
Legislature relating to notice of committee meetings held during
the first week of a first regular session.
SENATE BILL NO. 118
"An Act relating to investments of the Alaska Permanent Fund
Corporation."
CS FOR HOUSE BILL NO. 50(FIN)
"An Act relating to the use of broadcasting to promote certain
classics or sweepstakes; and providing for an effective date."
CONFIRMATION HEARINGS ON GOVERNOR'S APPOINTEES TO BOARDS AND
COMMISSIONS: Alaska Air National Guard and Alaska Mental Health
Trust Authority Board of Trustees
PREVIOUS SENATE COMMITTEE ACTION
HCR 7 - See Senate State Affairs minutes dated 5/1/97.
Rules minutes dated 5/8/97.
SB 118 - See Senate State Affairs minutes dated 5/1/97.
HB 50 - No previous action to record.
WITNESS REGISTER
Jeff Logan, Staff to Representative Joe Green
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Offered information on HCR 7
Byron Mallott, Executive Director
Alaska Permanent Fund Corporation
P.O. Box 25500
Juneau, AK 99802-5500
POSITION STATEMENT: Testified in support of SB 118
Representative Mark Hogins
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Prime Sponsor of CSHB 50(FIN)
Ms. Laura Measles
402 Overland
Kenai, AK 99611
POSITION STATEMENT: Testified in support of CSHB 50(FIN)
ACTION NARRATIVE
TAPE 97-25, SIDE A
Number 001
HCR 17 IMPROVE HIGHWAYS AND HWY FACILITIES
CHAIRMAN GREEN called the Senate State Affairs Committee to order
at 4:04 p.m. and brought up HCR 7 as the first order of business
before the committee.
JEFF LOGAN, staff to Representative Joe Green, explained HCR 7
amends Uniform Rule 23(a) to allow a committee chairman to hold a
meeting within 24 hours notice during the first week of the first
session. Currently, the rule requires five-day notification of a
meeting, and under this requirement it is technically impossible
for a chairman to hold a meeting during the first week of session.
He pointed out that as chairman of the House Health, Education &
Social Services Committee, Representative Green wanted to hold a
meeting during the first week of session for departmental overviews
but was unable to under the current rule.
Mr. Logan said HCR 7 amends the Uniform Rules to allow for a
hearing during the first week of the first session to be held after
24 hours notice. Such a hearing could only be held for the
purposes of an overview or committee organization. The five-day
notice requirement for a bill or resolution would still apply.
There being no further testimony on HCR 7, CHAIRMAN GREEN asked for
the pleasure of the committee.
Number 050
SENATOR MACKIE moved HCR 7 be passed out of committee with
individual recommendations. Hearing no objection, it was so
ordered.
Number 060
SB 118 PERMANENT FUND CORP. INVESTMENTS
CHAIRMAN GREEN brought SB 118 before the committee as the next
order of business.
BYRON MALLOTT, Executive Director, Alaska Permanent Fund
Corporation, explained that the percentage of their total portfolio
allocated to stocks is now limited to 50 percent and SB 118 will
allow the corporation to increase that allocation to 60 percent.
Based upon their current allocation, a 50 percent equities
exposure, on a total return basis the fund can be expected to
return essentially 8.4 percent. If the corporation is given the
authorization to increase that equity exposure to 60 percent, the
return, over time, would move to 8.7 percent. Over a 20-year
period of time, using their current portfolio and reasonable
assumptions for growth and use of income, at a 50 percent limit it
would allow growth of the total portfolio to just under $50
billion, and at a 60 percent limit it would grow to over $60
billion.
Mr. Mallott said the corporation believes that increasing this
percentage provides the opportunity to add value to this tremendous
state asset over time without meaningful additional risk. He added
that the volatility in returns at 50 percent are similar to the
volatility in returns that they could expect at 60 percent in the
equities market, while the opportunity for additional return is
meaningfully greater and grows at an expediential rate over time.
He pointed out the fund has experienced significant volatility in
equity markets over the past two years, but the corporation has
still achieved significant growth in the portfolio in spite of that
record.
Number 142
CHAIRMAN GREEN asked if other funds similar to the Alaska Permanent
Fund have more flexibility in all arenas as to the percentages they
designate for certain types of investment. MR. MALLOTT responded
that most funds operate under the Prudent Investor Rule and they
have no limitations on where they can place their assets in the
marketplace except as their prudent judgment might dictate. The
Alaska Permanent Fund Corporation invests to a specific investment
list which is specified in statute, whereas most funds have
significantly greater latitude. Most other funds that do manage to
statutory investment lists are moving away from that system toward
the Prudent Investor standard, although the corporation is not
requesting that.
Number 230
CHAIRMAN GREEN noted that previously the percentage of the total
investments of the fund added up to 100 percent, but under this
legislation it now adds up to 110. She asked if something else
needs to be adjusted. JIM KELLY, Director of Communications,
Alaska Permanent Fund Corporation, explained these are limits for
asset categories and none of these limits can be exceeded.
Number 270
SENATOR MACKIE asked if the corporation had approached the
Legislative Budget & Audit Committee and asked that this
legislation be introduced. MR. MALLOTT said the corporation
approached Legislative Budget & Audit (which is their mandated
oversight committee) and indicated that they did not want to
proceed with seeking this legislation unless there was meaningful
legislative support going in. The corporation wanted to be sure
that LB&A understood the nature of what it was they were seeking,
that they weren't pressing for it in a way that would suggest that
it's importance might be overblown. He added that moving from 50
to 60 percent isn't that significant as you look at the total
portfolio and the total impact on the fund.
Number 304
There being no further testimony on SB 118, CHAIRMAN GREEN stated
the bill would be held until the end of the meeting.
CSHB 50(FIN) BROADCASTING OF RAFFLES AND CLASSICS
CHAIRMAN GREEN brought CSHB 50(FIN) before the committee as the
final order of business.
REPRESENTATIVE MARK HODGINS, prime sponsor of HB 50, explained the
legislation allows the removal of a prohibition on legislatively
designated sweepstakes to be broadcast on radio or T.V. Currently,
the only designated sweepstakes that can be broadcast are fishing
derbies. This will bring 19 sweepstakes such as the Nenana Ice
Classic, the Kenai Snow Goose Classic, etc., into the same status
as a fishing derby. He said basically these are community activist
groups that are trying to raise money to provide scholarships and
other benefits within their communities.
Number 326
LAURA MEASLES, Executive Director, Kenai Chamber of Commerce,
testifying from Kenai in CSHB 50(FIN), said the Kenai Chamber Snow
Goose Classic began in 1993, and Tesoro Alaska has been the major
sponsor in providing financial assistance each year to put this
event on. A determination was made in 1993 by an attorney working
for Tesoro that it would not be a violation of any gaming laws if
they advertised over the radio the location of ticket outlets in
their community, which they proceeded to do, and over the next
couple of years the classic grew. In November 1996, the chamber
was notified by the Division of Gaming that the advertising over
the radio was illegal and in violation of the gaming law. Ms.
Measles then contacted Representative Hodgins to see what could be
done legislatively so that they could at least promote their
activity on the airways. She noted that without the radio
promotion this year, the classic experienced no growth, and it is
affecting their ability, as well as others, to fund their goals of
scholarships and various community events.
There being no further testimony on CSHB 50(FIN), CHAIRMAN GREEN
asked for the pleasure of the committee.
SENATOR WARD moved CSHB 50(FIN) and the accompanying zero fiscal
note be passed out of committee with individual recommendations.
Hearing no objection, it was so ordered.
CHAIRMAN GREEN requested a motion to move SB 118 (PERMANENT FUND
CORP. INVESTMENTS) out of committee.
SENATOR MACKIE moved SB 118 be passed out of committee with
individual recommendations. Hearing no objection, it was so
ordered.
The final item on the committee calendar was a confirmation hearing
on the Governor's appointees to boards and commissions. There
being no questions or witnesses waiting to testify, CHAIRMAN GREEN
requested a motion on the nominees.
SENATOR WARD moved the names of the following appointees be
forwarded to a joint session for consideration:
Alaska Air National Guard - Brigadier General: Colonel Van P.
Williams, Jr., Commander 176th Wing; and Colonel Jerry W. Gillean,
Chief of Staff, Headquarters Alaska Air National Guard
Alaska Mental Health Trust Authority Board of Trustees: John
Malone, Bethel; and Caren Robinson, Juneau
Hearing no objection, CHAIRMAN GREEN stated the motion carried, and
clarified that the committee members' signature do not necessarily
indicate endorsement of the appointees.
There being no further business to come before the committee, the
meeting adjourned at 4:35 p.m.
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