Legislature(2003 - 2004)
05/01/2003 03:35 PM Senate STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
May 1, 2003
3:35 p.m.
MEMBERS PRESENT
MEMBERS ABSENT
Senator Gary Stevens, Chair
Senator John Cowdery, Vice Chair
Senator Fred Dyson
Senator Gretchen Guess
Senator Lyman Hoffman
COMMITTEE CALENDAR
HOUSE BILL NO. 45
"An Act adding a second verse to the official Alaska state
song."
MOVED HB 45 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 127(STA)
"An Act relating to roadside memorials within the right-of-way
of a state highway."
MOVED SCS CSHB 127(STA) OUT OF COMMITTEE
HOUSE BILL NO. 14 am
"An Act relating to an absence from the state while providing
care for a terminally ill family member for purposes of
determining eligibility for a permanent fund dividend; and
providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 195
"An Act giving notice of and approving, and authorizing the
entry into and issuance of certificates of participation for,
the upgrade, expansion, and replacement of certain jails; and
providing for an effective date."
MOVED CSSB 195(STA) OUT OF COMMITTEE
SENATE JOINT RESOLUTION NO. 18
Proposing amendments to the Constitution of the State of Alaska
relating to limiting appropriations from and inflation-proofing
the Alaska permanent fund by establishing a percent of market
value spending limit.
HEARD AND HELD
PREVIOUS ACTION
HB 45 - No previous action to record.
HB 127 - See Transportation minutes dated 4/24/03
HB 14 - See State Affairs minutes dated 4/29/03
SB 195 - No previous action to record.
SJR 18 - No previous action to record.
WITNESS REGISTER
Representative Bruce Weyhrauch
Alaska State Capitol, Room 102
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor HB 45
Missouri Smith
Director, Alaska Youth Choir
Juneau, AK 99801
POSITION STATEMENT: Supported HB 45
J. Allan MacKinnon
P.O. Box 32760
Juneau, AK 99803
POSITION STATEMENT: Testified in support of HB 45
Mathew Campbell
No address provided
POSITION STATEMENT: Testified in support of HB 45
Kala Balovich
No address provided
POSITION STATEMENT: Testified in support of HB 45
Sara Landon
No address provided
POSITION STATEMENT: Testified in support of HB 45
Lori Backes
Alaska State Capitol, Room 501
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 127
James Cantor
Department of Law
th
Anchorage, AK 99501-1994
POSITION STATEMENT: Testified on HB 127
Cheryl Riley
No address provided
POSITION STATEMENT: Testified on HB 127
Barbara Dowdy
1041 Steele Creek Road
Fairbanks, AK 99709
POSITION STATEMENT: Testified on HB 127
Rachelle Dowdy
th
521 A W. 20
Anchorage, AK 99503
POSITION STATEMENT: Testified on HB 127
Jim Pound
Staff to Representative Hugh Fate
Alaska State Capitol, Room 128
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 14
Jerry Burnett
Department of Corrections
431 N. Franklin, Suite 400
Juneau, AK 99801
POSITION STATEMENT: Testified on SB 195
Devon Mitchell
Debt Manager
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Testified on SB 195
Linda Freed
Manager, City of Kodiak
710 Mill Bay Road
Kodiak, AK 99615
POSITION STATEMENT: Testified on SB 195
Laura Achee
Staff to Representative Ralph Samuels
Alaska State Capitol, Room 412
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SJR 18
ACTION NARRATIVE
TAPE 03-24, SIDE A
CHAIR GARY STEVENS called the Senate State Affairs Standing
Committee meeting to order at 3:35 p.m. Present were Senators
Dyson, Cowdery, Guess and Chair Gary Stevens. Senator Hoffman
arrived momentarily.
The first order of business was HB 45.
HB 45-SECOND VERSE OF ALASKA'S STATE SONG
REPRESENTATIVE BRUCE WEYHRAUCH, sponsor of HB 45, stated that
the issue to adopt the second verse of the Alaska flag song has
been before the Legislature several times. Most recently it was
co-sponsored by Senate President Rick Halford.
During the Governor's inauguration he learned that the second
verse isn't part of the official song even though it was sung
there, children sing it in school, and it was sung when members
were sworn into the House. He said this would be an opportunity
for the Legislature to follow what the public is already doing.
In researching how the verse was developed, why it was promoted,
who sings it, and why, it became apparent the public believes
the flag song should incorporate the sentiments expressed in
verse two. It's a tribute to Benny Benson, the young man who
designed and drew the "state stars of gold on a field of blue."
It celebrates Alaska as a society open to all peoples and
cultures.
CHAIR GARY STEVENS invited the Alaska Youth Choir to come
forward.
MISSOURI SMYTH, Artistic Director for the Alaska Youth Choir
introduced herself and led a small ensemble within the choir in
singing the second verse of the Alaska flag song.
SENATOR JOHN COWDERY said he has been in Alaska for a long time,
is proud of the Alaska flag song and doesn't want it to change.
REPRESENTATIVE WEYHRAUCH replied the Legislature would make a
statement if it adopted the second verse and it would make the
song an integrated whole.
SENATOR COWDERY asked if not approving the second verse makes a
statement.
REPRESENTATIVE WEYHRAUCH said that when the Legislature does
something, you are able to read their intent. When they change
words, it means something. When the Legislature doesn't pass a
bill, it means it didn't have the political support to get
through. It's not necessarily a statement against the issue.
SENATOR COWDERY inquired about the associated costs.
REPRESENTATIVE WEYHRAUCH pointed out the zero fiscal note. The
statute would be revised and the public would decide what to do
from that point.
SENATOR COWDERY asked if he would favor four additional verses.
REPRESENTATIVE WEYHRAUCH said he would not. He noted that Carol
Beery Davis, former poet laureate of Alaska, wrote the second
verse and school children sing it and understand it and enjoy
talking about it.
SENATOR DYSON expressed gratitude to the sponsor for introducing
the bill. In response to Senator Cowdery, but not directed at
him, he said, "I think it is always presumption when we presume
to think what somebody else means or what their vote means...and
I think it's off the reservation of what I consider to be
ethical conduct to presume that I know what somebody else's
intentions are about what they did or didn't..."
SENATOR COWDERY replied, "I didn't intend to say that."
SENATOR DYSON assured him his comments weren't directed at
anyone in particular. He said that as a culture, we learn as we
grow. When this issue came up, he looked at the verse and the
state seal and found that neither has any recognition or
acknowledgement of the role that Alaska Natives have made and
continue to make in this country. It's altogether proper to say,
"We could do better." and it's a mark of maturity to do better.
It would be more than a gesture to have the Alaska song and
perhaps the seal explicitly acknowledge the profound
contribution Alaska's aboriginal people have made.
CHAIR GARY STEVENS commented he always enjoyed the song and it
was likely the first verse would continue to be sung more
frequently than the second. Intellectually, it's always bothered
him that just the Sourdough is mentioned in the first verse.
Although the Sourdough was an important aspect of Alaska
history, neglecting up to 50,000 years of aboriginal pre-history
as well as the Russian history has always been bothersome.
When he was first in Alaska, he had the pleasure of knowing
Benny Benson. He had great respect for him and is pleased he is
mentioned in the second verse. After all, the song is called
"Alaska's Flag" and Mr. Benson is the man who designed it.
J. ALLAN MACKINNON urged members to support HB 45 adding there
are a number of reasons the bill hasn't passed in previous
years. When Marie Drake wrote the poem to describe the flag
designing contest, the dynamics of the time were such that there
probably wasn't any thought given to aboriginal or Russian
history in Alaska.
Carol Beery Davis was a contemporary of Marie Drake and Elinor
Dusenbury and she also had ties to the Native community. As time
and perspective changed, there were discussions about being more
inclusive and recognizing the contributions of all Alaskans.
Mrs. Davis wrote the second verse and gifted it to the
University of Alaska Foundation in February 1987.
MATHEW CAMPBELL asked, "Please help our second verse be noticed
by all Alaska."
KALA BALOVICH asked, "Please help our Governor and please vote
yes."
SARA LANDON said, "Please make Alaska state song verse two
because some of us are Native and it represents our culture."
SENATOR DYSON announced, "Whether we do this or don't do this
may not make a statement for various individuals, but for me it
does."
SENATOR COWDERY advised he homesteaded in territorial days and
he still cherishes the land. He is a traditionalist and that
follows his earlier statement.
SENATOR LYMAN HOFFMAN said the verse is good. He advised that
his paternal great-grandfather had a trading post on the
Kuskokwim and church records indicate he guided the Bethel
founding fathers up the Kuskokwim River in 1884. His great-
grandfather married a Native woman and one hundred years later,
a Hoffman family reunion in the Bethel area was five hundred
strong. The second verse recognizes the merging of two cultures
and how Alaska was founded.
SENATOR DYSON made a motion to move HB 45 from committee with
individual recommendations and zero fiscal note. There being no
objection, it was so ordered.
HB 127-ROADSIDE MEMORIALS
LORI BACKES, staff to Representative Jim Whittaker, said HB 127
seeks to allow Alaskans the right to express their grief at the
loss of a loved one with as little governmental interference as
possible. When someone is killed on an Alaskan highway, family
and friends sometimes place a memorial at the site of the
accident. The memorials serve two purposes. First they pay
tribute to the individual who died, and second they warn other
travelers of the potential tragedy associated with dangerous
driving.
Most states allow such memorials either officially or
unofficially. Although Alaska Department of Transportation and
Public Facilities (DOTPF) has traditionally ignored them, two
years ago they gave notice that personal memorials would have to
be removed. As a result, the mother of a person killed by a
drunk driver in the Fairbanks area circulated a petition
requesting the state continue to allow the memorials.
HB 127 sets out to clarify that the state won't discourage the
placing of such memorials, but they will reasonably regulate
them so as not to allow unsafe distractions and hazards in
Alaska's rights of way.
The Department of Law (DOL) requested an amendment to the bill,
which would avoid any liability to the state should a person
suffer injury or damage as a result of the placement of a
memorial. Representative Whitaker didn't object to the amendment
she said.
SENATOR JOHN COWDERY noted the Senate Transportation Committee
also amended the bill.
MS. BACKUS said the language in the original bill read, "a
person who died in a traffic accident" and the amended language
was, "a person who died as a result of a traffic accident."
SENATOR COWDERY asked what types of memorials would be allowed
and for the definition of temporary.
MS. BACKUS explained that temporary isn't intended to be any
particular length of time; it simply indicates the memorials
aren't permanent fixtures. She read page 1, lines 10-12 and said
a cement structure probably would not be allowed. It's been made
clear to DOTPF that they would be expected to craft guidelines
based on their knowledge of the realm of safety.
SENATOR COWDERY noted there have been legal problems associated
with expanding roads or buildings when they infringe on private
burial grounds. He asked what would happen if a road was
expanded.
MS BACKUS stated that all memorials would have contact
information in case the memorial needed to be moved. If the
contact information was not up to date or the contact individual
wasn't able to move the memorial, the contractor, working
through DOTPF, would have the authority to do so.
SENATOR COWDERY asked for assurance that there was no intent for
the state to be held liable if contact information on the
memorials became outdated.
MS. BACKUS replied DOTPF would have full authorization to move
the memorial.
SENATOR COWDERY said he intended to vote in favor of the
legislation and he believes memorials send a safety message.
SENATOR LYMAN HOFFMAN questioned whether this would jeopardize
any federal funding.
MS. BACKUS replied DOTPF was concerned about that because of
language in the Highway Beautification Program that speaks to
what would happen if a state didn't control encroachments in the
highway rights-of-way. The sponsor believes the legislation
allows the state the latitude to control encroachments to a
satisfactory degree and the department has never been threatened
with a loss of funding.
She said Lady Byrd Johnson did not intend for her program to
impact these types of memorials.
CHAIR GARY STEVENS asked the DOL to comment on the amendment.
JIM CANTOR from the Attorney General's office explained that the
amendment would add immunity for damage or injury as a result of
the placement of the memorial. The concern is that modern
highways are designed with a clear zone concept, which is the
zone where a vehicle could leave the highway and not hit
something. Allowing memorials in the clear zone could subject
the state to liability.
Since the program is designed to eliminate governmental
interference, they propose this as a way to go forward without
increasing the fiscal cost to the state.
SIDE B
4:20 pm
CHAIR GARY STEVENS asked if the state could make itself not
liable by announcing it was not liable.
MR. CANTOR replied, "Yes."
SENATOR COWDERY made a motion to adopt amendment #1. Page 2,
line 8, following "damage to": insert ",or damage or injury
resulting from the presence of," There was no objection.
BARBARA DOWDY read a statement from Sheryl Riley into the record
relating Heather Dowdy's story. She was a vibrant, productive
17-year-old student who was ready to graduate from high school
when she was hit and killed by a drunk driver.
BARBARA DOWDY, Heather's mother, testified she is a member of
the MADD chapter in Fairbanks and she fully supports passage of
HB 127. On her way to deliver her testimony, she traveled the
Old Steese Highway so she could stop and place fresh flowers on
Heather's cross. She noted others had left flowers as well. She
said that roadside memorials let people know that a loved one is
remembered and their passing is noticed.
RACHAEL DOWDY, Heather's sister, outlined the last day of
Heather's life. After the accident, family and friends placed a
roadside memorial in her memory and to help in their healing
process. She said that roadside memorials remind people that
driving fatalities are personal and Heather's family has
anecdotal evidence that her memorial has changed at least one
person's drinking and driving behavior. They are sure the
standard DOTPF sign would not have this same affect.
She then read a statement written by Sandy Gilespie, Heather's
sister-in-law, supporting HB 127.
There was no further testimony.
SENATOR COWDERY made a motion to move SCS HB 127(STA) from
committee with individual recommendations and zero fiscal note.
There being no objection, it was so ordered.
HB 14-PERMANENT FUND ALLOWABLE ABSENCES
CHAIR GARY STEVENS announced HB 14 was heard previously and the
committee was waiting for answers to several questions.
JIM POUND, staff to Representative Hugh Fate, advised the
answers were addressed in a memo that had been distributed. In
particular, the term canon law was used as an interpretation of
family so some more liberal definitions would not apply.
SENATOR GRETCHEN GUESS made reference to Tamara Cook's memo and
asked why the bill didn't simply list the family members that
would be included rather than use canon law, which is a
confusing term.
CHAIR GARY STEVENS asked Mr. Pound if doing so would present a
problem.
MR. POUND reported the term canon law was used to eliminate
wordiness.
CHAIR GARY STEVENS commented he thought using the term was
confusing and he would support an amendment.
SENATOR GUESS made a motion to adopt conceptual amendment #1 to
delete the term "canon law" and refer specifically to the family
members that are within the second degree of kinship under canon
law. This would include: mother, father, sister, brother,
grandfather, grandmother, son, daughter, grandson,
granddaughter, uncle, aunt, niece, nephew and first cousin.
There was no objection to amendment #1.
SENATOR GUESS noted the sponsor's memo said the original bill
was drafted solely to address the terminally ill and life-
threatening illness and settling an estate weren't included.
Because life threatening and terminal illnesses are both very
stressful, she questioned why he did that.
MR. POUND said the sponsor wanted to address terminal illness
and when originally drafted, the others didn't seem to be as
important.
The bill evolved from its original intent, which was to add
grandparent to the original language. Grandparent was changed to
family member and perhaps that's part of the difficulty.
SENATOR GUESS said there could be a fine line distinguishing the
two and paragraphs (6) and (7) were inconsistent.
CHAIR GARY STEVENS asked Mr. Pound if he had comments on
proposed amendment #2 that was discussed at the previous
hearing.
MR. POUND was under the impression that amendment #1 would
address proposed amendment #2 as well.
SENATOR GUESS said the issue would be guardianship and the
drafter would have to address the changes.
CHAIR GARY STEVENS noted the next committee of referral was
finance and the bill could be amended in either committee.
SENATOR GUESS commented the Finance Committee is very busy and
she would prefer amending the bill before passing it on.
SENATOR FRED DYSON noted a meeting could be called as soon as
the amendment was drafted since the 24-hour rule was in effect.
CHAIR GARY STEVENS held HB 14 in committee.
SB 195-CERTIFICATES OF PARTICIPATION FOR JAILS
CHAIR GARY STEVENS announced there was a proposed committee
substitute (CS) before the committee.
SENATOR JOHN COWDERY made a motion to adopt CSSB 195 \D version
as the working document. There was no objection.
CHAIR GARY STEVENS explained the bill would provide certificates
of participation (COP) for the upgrade and expansion of certain
jails that are in need of expansion or replacement.
There are 15 community jails throughout rural Alaska and four of
them are at the top of the needs list. The community jails in
Dillingham and Kotzebue are top priority due to the high demand
for their services while the North Slope Borough Community Jail
needs more beds and has no room to expand. The Kodiak Community
Jail needs to be replaced because it is old and in poor
condition.
The bill would provide COPs to be issued and each of the four
municipalities would receive $4,000,000 provided they agreed to
match the funds.
JERRY BURNETT, Director of Administrative Services for the
Department of Corrections, agreed that the four community jails
were of top priority. He pointed out that community jails are an
integral pre-trial component of the state correctional system
and that the need for expansion is critical. The department
requested federal funds for all four through both OMB (Office of
Management and Budget) and the Alaska Congressional Delegation.
They took no position as to whether COPs were the appropriate
financing method.
SENATOR GRETCHEN GUESS asked whether federal funds would be
available in the next year.
MR. BURNETT said they didn't know.
SENATOR COWDERY asked if the maintenance appropriations were for
the entire jail or just the additions.
MR. BURNETT replied the annual 3.3 million additional funding
would be for the additional capacity. The department currently
has about $4.8 million for community jails in the operating
budget and they currently operate 153 beds.
SENATOR COWDERY asked if they would try to standardize the size
and design of the facilities.
MR. BURNETT replied he was unaware of any standardized design.
Although they wouldn't oppose it, some of the jails were already
designed.
SENATOR COWDERY asked if there was a benefit to constructing
larger facilities initially.
MR. BURNETT said he couldn't speak to that, but this would
alleviate some of the overcrowding in the state facilities in
Bethel and Nome that are currently operating at over 100 percent
capacity.
SENATOR COWDERY asked if these were all pre-trial facilities.
MR. BURNETT said the primary use of community jails is for
pretrial or short sentences. The four community jails under
discussion are all in communities that have a superior court so
the people housed in those jails must appear in court in that
community.
SENATOR COWDERY asked if need is tied to population growth.
MR. BURNETT said the number of people in the state facilities
has increased at a higher rate than the population growth, but
there is a strong correlation.
SENATOR GRETCHEN GUESS asked if fewer inmate transfers would
result in a savings.
MR. BURNETT said there are bi-weekly transfers between community
jails and the facilities in Bethel and Nome and sometimes there
are more frequent transports due to overcapacity. Expanding the
jails would reduce transfer costs, but actual savings are
difficult to define.
SENATOR COWDERY asked for the average length of stay.
MR. BURNETT didn't have that data with him.
CHAIR GARY STEVENS said the Kodiak City Manager probably had the
information.
DEVIN MITCHELL, Debt Manager for the Department of Revenue,
explained the bill authorizes the issue of up to four COPs. They
are leased back securities of the State of Alaska that are
subject to appropriation for repayment. They are A-rated and
garner low interest rates. They have a 15-year term and, with
the current low interest rates, they would probably return about
4.5 percent interest on the borrowed money. In the bill, this
correlates to about $1.6 million annually.
The community would have a trustee act on its behalf to take a
title-interest in the jail. In the event the state failed to
appropriate, the trustee would take the facility and attempt to
make bondholders whole. Also at issue is additional State of
Alaska debt as it correlates to its bond ratings. The state
recently issued $461 million in general obligation debt and
although it's unlikely that SB 195 would rise to the level that
it would impact state ratings, if much more money were involved
the department would probably ask that ongoing revenues match
ongoing expenditures.
CHAIR GARY STEVENS noted the total payments for the full term of
the COPs are estimated to be $24,000,000 rather than $30,000,000
as in previous years due to the change in interest rates.
MR. MITCHELL agreed then pointed out that the numbers in the
bill were estimated higher than the current rate. Because
today's interest rates are extraordinarily low, the department
cushioned the figures to avoid an underestimate.
SENATOR COWDERY asked if privatization would save the state
money.
MR. MITCHELL replied he know nothing about prison operations.
LINDA FREED, Kodiak City Manager, testified via teleconference
in strong support of SB 195. On behalf of the state, the City of
Kodiak operates a community jail for the entire region. Under
the current contract, the city is liable for any activity that
occurs in the jail and although they have a cooperative working
relationship with the Department of Corrections, the city's
liability is rising as the building ages.
Increasing the number of beds to 20 would provide expansion
capability into the future. They hope to be able to house
prisoners for up to 30 days in the new facility instead of just
10 days. The city would be able to house special needs prisoners
and operate more efficiently.
The city is unable to underwrite the entire cost of a jail for
the state, but they are happy to work through SB 195 and pay a
cost share. They are committing the land, the design and
engineering and they are willing to bond under their local
capacity as long as they have some commitment from the state to
pay back the debt service on the portion of the building that is
committed to the jail.
5:05 pm
SENATOR COWDERY asked if the current building is unsafe.
MS. FREED replied the building isn't unsafe, but the roof needs
to be replaced and there are problems with the foundation. The
city has determined it would be more cost efficient to replace
this and several other old city buildings rather than continuing
to make repairs.
TAPE 03-25, SIDE A
SENATOR COWDERY asked about prisoner escapes.
MS. FREED reported they have had no problems with escapes.
SENATOR FRED DYSON made a motion to move CSSB 195(STA)\D and the
attached fiscal notes from committee with individual
recommendations. There being no objection, it was so ordered.
SJR 18-CONST. AM: PF APPROPS/INFLATION-PROOFING
CHAIR GARY STEVENS announced his intention was to introduce the
bill and take initial testimony.
LAURA ACHEE, aide to the Legislative Budget and Audit Committee
and Representative Ralph Samuels, introduced Mr. Bartholomew.
BOB BARTHOLOMEW, Chief Operating Officer for the Alaska
Permanent Fund Corporation, highlighted why the board believes
this is a good public policy issue to be brought to a vote of
the people in November 2004.
· For 23 of the last 27 years the board's number
one objective has been to manage the Permanent
Fund so that it is protected against inflation.
· The second objective is to ensure there is an
annual dividend distribution.
· The board believes the proposal to change the
statute would better protect the Permanent Fund
against inflation.
· The proposal changes how to determine what is
available from the Permanent Fund by going to a
payout based on market value (POMV).
· POMV provides a limit on what can be spent from
the Permanent Fund.
· In good years POMV stops overspending and in down
years it makes an annual distribution available.
· Currently, the annual distribution could go to
zero.
SENATOR JOHN COWDERY understood the proposal didn't include
the previous year and he asked why not simply average from
the last five years.
MR. BARTHOLOMEW explained the amendment recommends not
counting the current fiscal year so in January the
Legislature would know how much money would be available.
For example, to determine how much money should be
available for FY04, which is the budget currently before
the Legislature, you would take a five-year average that
ends June 30, 2002.
SENATOR COWDERY asked how much would be available.
MR. BARTHOLOMEW replied $1.2 billion would be available
under a five percent limit.
SENATOR COWDERY asked if the entire $1.2 billion would be
distributed as dividends.
MR. BARTHOLOMEW said it would not. Current statute
determines that one-half of what is available goes to the
dividend then inflation proofing is paid. It is silent with
regard to the balance and, historically, the balance hasn't
been appropriated other than out of the earnings reserve
into principal.
SENATOR COWDERY asked if the one-half would result in a
$1,000 dividend check.
MR. BARTHOLOMEW replied that if the financial markets were
to stay flat between now and June 30, the dividend would be
approximately $1,100. However, if the markets were to
correct downward, it could be lower due to the limitations.
SENATOR COWDERY commented there is a chance of a zero
dividend this year or next without the amendments, but with
the amendments there would be a $1,000 dividend.
MR. BARTHOLOMEW agreed provided the formula remained
unchanged.
CHAIR GARY STEVENS announced he would like to hear from Ms.
Griswold at the Homer LIO before adjourning the hearing.
MARY GRISWOLD from Homer testified in support of the bill.
SJR 18 constitutionally inflation proofs the
entire Permanent Fund. It sets a spending limit
to prohibit excess appropriations in flush years
while making distributions available in lean
years.
POMV is compatible with the fund's diversified
portfolio that is managed for long-term value over
short-term gains. A five POMV payout protects the
value of the fund and provides a limited and
predictable and sustainable revenue stream. This is a
management tool and not a distribution plan, but the
two are inherently linked. The use of a payout
shouldn't be set in the constitution because it's an
appropriation issue.
AS 37.13.140 and AS 37.13.145 relating to the
Permanent Fund income and income distribution must be
amended to conform to five POMV because they would no
longer apply as written. Establishing a comparable
dividend formula when the statutes are changed is
advisable because five POMV is too valuable an asset
to risk voter rejection by threatening their dividend
checks.
For the purposes of a model, assume an eight percent
total return, three percent inflation and a five
percent real return. Under existing statute, 50
percent of the income available for distribution goes
to the dividend program. Inflation proofing then takes
three percent, leaving one percent for other
legislative appropriations, which has never been
touched. For this distribution to work under POMV, 80
percent of the five percent payout must be allocated
to the dividend program to provide a comparable amount
of money. Inflation proofing of three percent has
already been accounted for by establishing a five
percent payout limit, leaving 20 percent of the payout
for other legislative appropriations, which is the
same as the one percent under existing distribution
statutes. Fifty percent of the money available for
distribution before inflation proofing equals 80
percent of the money available for distribution after
inflation proofing. Fifty percent of eight translates
to 80 percent of five.
This constitutional amendment, combined with a change
to the statutes, securing 80 percent of the annual
payout for dividends is a critical step and a three-
way win. The Permanent Fund gets a better management
framework, the Legislature gets a predictable revenue
stream, and the people keep their dividend formula.
CHAIR GARY STEVENS remarked this isn't an easy issue to
comprehend or explain. He asked what kind of response she
receives as she explains this to her friends and neighbors.
MS GRISWOLD told him most people don't understand POMV; they
just want to know how it would affect their dividend. When she
explains that if the payout is allocated 80/20, their dividend
check won't be affected and they're pleased. It's interesting
that they don't understand the rest and her main concern is "the
rest of it." A 50/50 split would require voter approval and
she's sure it would be defeated.
SENATOR DYSON asked if she believes that funds should be
allocated to educate voters.
MS. GRISWOLD said voter education is very important.
SENATOR DYSON noted that if care isn't taken, this could be
interpreted as jeopardizing the status quo, which is perceived
to be a golden goose.
MS. GRISWOLD said she believes the Alaska Permanent Fund
Corporation has hired a communication specialist who could
provide educational services.
SENATOR DYSON wasn't sure it was legal for the corporation to
use money from the earnings to lobby the public.
SENATOR COWDERY commented the Legislature could appropriate the
earnings to educate the public.
MR. BARTHOLOMEW advised he would return for the next hearing and
concluded his comments by restating the board's two objectives:
· Inflation proof the Permanent Fund constitutionally rather
than with an annual statutory appropriation
· Remove the word "principal" from the constitution so it
assures an annual distribution and that protection is
provided through the spending limit
CHAIR GARY STEVENS stated this is an important issue that
everyone should understand and feel comfortable with before it
moves. With that, he announced he would hold SJR 18 in committee
for further discussion.
There being no further business to come before the committee,
Chair Gary Stevens adjourned the meeting at 5:30 pm.
| Document Name | Date/Time | Subjects |
|---|