Legislature(2009 - 2010)BELTZ 105 (TSBldg)
03/23/2010 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB282 | |
| SB249 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 282 | TELECONFERENCED | |
| *+ | SB 249 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
March 23, 2010
9:01 a.m.
MEMBERS PRESENT
Senator Linda Menard, Chair
Senator Kevin Meyer, Vice Chair
Senator Hollis French
Senator Albert Kookesh
Senator Joe Paskvan
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 282
"An Act relating to the amount of the transfer from the earnings
reserve account of the Alaska permanent fund for 2010 permanent
fund dividends; and providing for an effective date."
- MOVED SB 282 OUT OF COMMITTEE
SENATE BILL NO. 249
"An Act relating to official action by electronic transmission,
to records, and to public records."
- MOVED SB 249 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 282
SHORT TITLE: PERMANENT FUND DIVIDEND AMOUNT FOR 2010
SPONSOR(s): SENATOR(s) WIELECHOWSKI
02/17/10 (S) READ THE FIRST TIME - REFERRALS
02/17/10 (S) STA, FIN
03/23/10 (S) STA AT 9:00 AM BELTZ 105 (TSBldg)
BILL: SB 249
SHORT TITLE: PUBLIC RECORDS/ELECTRONIC TRANSMISSIONS
SPONSOR(s): SENATOR(s) ELLIS
02/01/10 (S) READ THE FIRST TIME - REFERRALS
02/01/10 (S) STA, JUD
03/23/10 (S) STA AT 9:00 AM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 282.
LAURA ACHEE, director of communications
Permanent Fund Corporation (PFC)
Juneau, AK
POSITION STATEMENT: Provided information for SB 282.
SENATOR JOHNNY ELLIS
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 249.
MAX HENSLEY
Staff to Senator Ellis
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Provided information for SB 249.
GLENN COOK, deputy director
Division of Libraries, Archives and Museums
Department of Education and Early Development
Juneau, AK
POSITION STATEMENT: Expressed concerns about SB 249.
RACHAEL PETRO, deputy commissioner
Department of the Administration
Anchorage, AK
POSITION STATEMENT: Provided information for SB 249.
ACTION NARRATIVE
9:01:11 AM
CHAIR LINDA MENARD called the Senate State Affairs Standing
Committee meeting to order at 9:01 a.m. Present at the call to
order were Senators French, Paskvan and Menard.
SB 282-PERMANENT FUND DIVIDEND AMOUNT FOR 2010
9:01:57 AM
CHAIR MENARD announced the first order of business to come
before the committee would be SB 282.
SENATOR WIELECHOWSKI, sponsor of SB 282, said Alaskans have
relied on their annual Permanent Fund Dividend (PFD) checks
since 1977. Many Alaskans are relying more heavily on this
year's PFD due to the economic downturn. SB 282 will ensure that
Alaskans receive a full dividend this year.
SENATOR MEYER joined the meeting.
SENATOR WIELECHOWSKI explained that the PFD is calculated by a
formula that considers the average amount the fund's investments
have earned over the past five years. A current statute
preventing the PFC from paying out more than 50 percent of the
fund's earnings reserve in any given year could be invoked for
the first time ever this year due to the market downturn over
the last couple years. This means the full calculated amount
could not legally be appropriated from the earnings reserve even
though sufficient funds exist. When SB 282 was initially filed,
enough money was in the earnings reserve to pay out the full
dividend; however, considering the 50 percent limitation, the
account was several hundred million short of the necessary
amount. That gap is now smaller but still exists.
SB 282 addresses only 2010 by transferring one half of 21
percent of the net income of the five year dividend average
calculated for fiscal years 2006-2010 from the earnings reserve
account to the dividend account.
9:04:58 AM
This issue should not be a problem in 2011 because inflation
proofing is expected to be zero. Alaskans deserve to receive the
full benefit from the state's oil revenue during these tough
economic times. SB 282 will ensure Alaskans receive their full
dividend for 2010 in the event that earnings fall below the
threshold required for a full payout.
SENATOR KOOKESH joined the meeting.
CHAIR MENARD asked if Senator Wielechowski was concerned that a
precedent would be set for future similar situations.
SENATOR WIELECHOWSKI replied that ultimately the way in which
the PFD is paid out needs to change. "We have enough money to
pay out the full dividend, however the way the law is written,
we can't pay out the full dividend". With oil high, and costs
and expenses high, Alaskans will not be happy if they do not get
their full dividend.
SENATOR PASKVAN asked what the loss per PFD might be.
SENATOR WIELECHOWSKI replied that when SB 282 was initially
filed, the fund was short over $100 million, equaling several
hundred dollars to PFD's. The gap has closed to $50 million,
roughly equaling an $80 shortfall per PFD. Whether the gap will
open or close between now and June is unknown.
SENATOR MEYER said a lot of things can happen between now and
June 30th. In 2003, the same concern existed but the market
improved. He is concerned about tinkering with a system that has
been working for nearly 30 years.
9:08:58 AM
SENATOR WIELECHOWSKI replied that oil prices are high, a $10
million savings account and $2.2 billion surplus exist. It will
be difficult to tell Alaskans they do not get their full PFD
this year because of a provision that the fund must have twice
as much as the payout amount.
SENATOR MEYER said he warns people that the PFD fluctuates and
not to count on it. He has been telling his constituents, "It's
out of our hands; we have a system set up. You don't want us to
intervene because we'll screw it up". He understands Senator
Wielechowski's purpose, especially considering the economy, but
it is a slippery slope.
9:11:55 AM
SENATOR FRENCH asked about the policy debate or rationale behind
the statute that no more than 50 percent of the money in the
earnings reserve account be paid out.
LAURA ACHEE, director of communications, Permanent Fund
Corporation (PFC), replied that she does not know what the
legislative intent was for the 50 percent limitation. That
section of statute has not been altered since the 1980's.
SENATOR FRENCH clarified that the 50 percent limitation is the
rule that would prevent a full payout of the dividend this year.
MS. ACHEE replied yes. The ultimate point of the statute is that
no more than 50 percent of the balance of the earnings reserve
may go to the PFD in any given year.
SENATOR FRENCH suggested that part of the rationale was to
ensure that money was available for inflation proofing which is
paid from the same account.
MS. ACHEE agreed and said that statute stipulates the next step
after paying the PFD is to calculate and pay inflation proofing.
SENATOR FRENCH said 2010 is a year of historically low inflation
and little demand for inflation proofing. He asked what amount
might be appropriated for inflation proofing this fiscal year.
MS. ACHEE replied that the rate used for this year is zero; the
PFC will not make an inflation proofing transfer on June 30th of
this year.
9:16:00 AM
SENATOR FRENCH summarized that plenty of money is in the
earnings reserve account to pay the PFD but the 50 percent rule
is holding this up. Paying out the full PFD would not result in
any loss to the permanent fund because no money from that
account is needed for inflation proofing this year.
MS. ACHEE said that is correct.
CHAIR MENARD said the PFD is upmost on all constituents' minds
and the Legislature should look at getting the full PFD to
constituents.
SENATOR MEYER asked what year the same situation existed
previously.
MS. ACHEE replied 2003. She said, "the cupboard was bare" and
paying the dividend at all was a concern. The issue was solved
by early 2003 after markets recovered dramatically.
SENATOR MEYER asked if 2010 is similar to 2003. He said these
past five years seem to be doing better than the tech bubble
bursting in 2001-2003.
9:18:35 AM
MS. ACHEE replied that the dividend calculation has two parts:
the five year average calculation, and the presence of the money
to pay it. In 2003, regardless of the five year calculation, the
earnings reserve was empty. In 2010, regardless of the
calculation, the earnings reserve account, according to statute,
does not have enough money to pay the projected dividend amount.
Since 2003, the Attorney General (AG) has issued an opinion that
moved unrealized gains and losses out of the earnings reserve to
principle. In 2003, unrealized gains would have been part of the
earnings reserve and would have caused that dramatic swing. Now,
only realized gains and losses are booked to the earnings
reserve, meaning the balance of that fund is more stable.
CHAIR MENARD asked if the dividend calculation is still six or
seven months away.
MS. ACHEE said it's about four months away.
SENATOR MEYER asked if the PFC has any projections.
MS. ACHEE replied that the dividend is probably calculated at
$791 million, based in part on a stream of regular income every
month and not including any gains from selling an asset. In
November, that stream of regular income was not going to add up
to be enough. Since then, movement in the portfolios has
resulted in some gain and the account is now short only $50
million. The CFO thinks that gap is or will be closed; that
information will not come until the end of the month.
9:22:58 AM
SENATOR PASKVAN said inflation proofing is expected to be zero.
The law, with respect to inflation proofing, is not being
changed; the cap at 50 percent is the problem. The earnings
reserve account is $50 million short of being able to pay out
the full PFD. He asked what percentage, above the 50 percent
cap, does would the additional pay out constitute.
MS. ACHEE said the PFC is projecting a $790 million dividend and
ending the year at $1.5 billion. $790 million is more than half
of $1.5 billion. The $50 million shortfall is about 3 percent,
or a small percentage, of the overall earnings reserve.
9:25:35 AM
SENATOR PASKVAN said the permanent fund now is $35 billion. He
asked what a 1 percent inflation protection would calculate out
to.
MS. ACHEE replied that historically, when inflation has been in
the 2 and 3 percent range, about $800 million to $1 billion has
been paid to inflation proofing. When considering inflation
proofing in the future, she suggested looking at the total
volume of the principle because the percentage is multiplied
against that principle, which has grown huge. Going forward,
bigger and bigger numbers will be thrown off on inflation
proofing even if we stay in a stationary environment. Any
positive percentage is going to throw off a big number for
inflation proofing.
SENATOR PASKVAN said the gap between the $791 million and the
forecasted $1.5 billion is $700 million or 2 percent of the $34
billion. There is enough for a 2 percent inflator if needed, but
this year it is zero.
MS. ACHEE said even if a full dividend is paid this year, over
$700 million will be left in the earnings reserve.
CHAIR MENARD asked if Ms. Achee felt this legislation was a mute
point.
MS. ACHEE replied that creating the dividend and the 50 percent
rule were the Legislature's call. Whether or not to put this
mechanism in place is also. The PFC is neutral.
9:29:08 AM
MS. ACHEE said Mr. Burns, executive director of the PFC, felt
that letting the Legislature know about the gap was crucial even
though he felt confident that the gap would be made up.
SENATOR MEYER read from SB 282 and asked if one-half of 21
percent of the net income is the right number to get us to where
we want to be.
MS. ACHEE replied that the dividend calculation is one-half of
21 percent of the net income. SB 282 says you will pay out the
calculated dividend regardless of what statutes say.
9:31:17 AM
CHAIR MENARD closed public testimony.
SENATOR FRENCH moved to report SB 282 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, the motion carried.
At ease from 9:32 a.m. to 9:34 a.m.
SB 249-PUBLIC RECORDS/ELECTRONIC TRANSMISSIONS
CHAIR MENARD announced the consideration of SB 249.
9:34:20 AM
SENATOR JOHNNY ELLIS, sponsor of SB 249, said the bill
strengthens and clarifies current law regarding access to and
preservation of public records. Current statutes have three
different definitions of a public record which causes confusion:
one is for maintenance of records, another for access to records
and a third definition relates to criminal statutes. SB 249
creates a consistently broad definition of a public record. The
definition explicitly includes electronic transmission,
clarifies the duty of state agencies to preserve records and the
ability of the public to access records that are required to be
preserved. SB 249 explains that impeding the preservation of or
access to public records is a violation of existing criminal
law. SB 249 amends the executive branch Ethics Act to require
state employees to use state email for state business. This
codifies, in statute, the goal of Commissioner Kreitzer's
(Department of Administration) current policy. Senator Ellis
said he supports the Parnell Administration's current policy and
feels enshrining it in statute is important.
SB 249 limits the fees the state can charge for access to public
records to the actual cost of duplication, without an inflated
cost of labor, putting Alaska in line with 14 other states. He
mentioned news reports of "fairly stunning" amounts of money
required of citizens or journalists wanting to access public
records. High fees are a barrier to access of public
information.
9:37:42 AM
SENATOR FRENCH said he still saw three definitions of public
record in Sections 1,3 and 7 of SB 249. He asked if the three
definitions have substantial differences.
MAX HENSLEY, staff to Senator Ellis, replied that the committee
packet contains a side-by-side reading of the three existing
definitions. SB 249 proposes that all definitions are the same.
SENATOR MEYER commented that constituents often feel that public
records should be free and that a charge prohibits access.
However, providing the material does cost the state. He asked if
SB 249 is a happy medium.
9:40:24 AM
SENATOR ELLIS replied that SB 249 proposes charging for the cost
of the duplication and not for the staff time or salaries of
state employees. Every state grapples with this issue.
SENATOR MEYER said Senator Ellis has found the balance but some
would say even the duplicating costs should not be charged.
CHAIR MENARD commented about frivolous lawsuits, copies and the
need to say "enough is enough" and consider what is reasonable.
She asked if "electronic transmissions" in the title is overly
broad.
SENATOR ELLIS replied that the term is used commonly but he is
open to more specification.
CHAIR MENARD asked if other states use "electronic
transmissions".
SENATOR ELLIS replied he believed so.
MR. HENSLEY said SB 249 uses "electronic transmissions" because
technology changes. This language can apply to any adopted
technologies. He noted that every state has a public records
law, many of which do not specify electronic records but have
been interpreted to include electronic records.
9:43:47 AM
CHAIR MENARD asked if SB 249 would affect all branches of state
government and state personnel.
MR. HENSLEY replied that SB 249 would affect different parts of
state government slightly differently. The requirement to use
official email for official business is an amendment to the
executive branch Ethics Act. Courts and the Legislature have
separate versions. The ability to access public records would
apply to all of state government. The definition of personnel
that is used is a public officer, which is a person with the
ability to make a decision. For example, the staff secretary
would not get in trouble for not properly maintaining or
preserving records; it would be the person who has the
responsibility to make a decision on behalf of the state.
SENATOR PASKVAN said that the Health Insurance Portability and
Accountability Act (HIPAA) went to great lengths to allow
patients to have access to records because prohibitive fees and
charges were being imposed. He said SB 249 puts a cap on costs,
thereby allowing access to public records.
9:46:47 AM
SENATOR ELLIS said he has tried to be responsive to policy
questions and issues and not to re-plow old ground or drag
personalities in. The current administration has a policy in
place that SB 249 seeks to make permanent. A policy that changes
from administration to administration is not easily understood.
The current administration's policy makes sense and the
Legislature should deliberate about putting it into statute.
CHAIR MENARD asked if SB 249 has any pushback.
SENATOR ELLIS answered no.
SENATOR FRENCH said Section 2 [amending AS 39.52] of SB 249
commands that the public records system be used to conduct state
official business. He asked what happens if a public officer
does not do what the statute says to do.
9:49:44 AM
SENATOR ELLIS said Section 6 on page 4 of SB 249 addresses
Senator French's question.
MR. HENSLEY said Section 6 [which repeals and reenacts AS
40.25.125] is a reference to existing criminal law which refers
to the destruction or impairment of public records. By
establishing the electronic records are public records, public
officers have a duty to ensure that electronic documents are
included in the public records system. Noncompliance falls into
additional criminal punishments.
SENATOR FRENCH asked what AS 11.56.815 and 11.56.820 refer to
[as mentioned on page 4, line 19 in Section 6 of SB 249].
SENATOR ELLIS said he does not have that information.
SENATOR FRENCH asked if Senator Ellis sees these problems being
solved by the criminal system or the Ethics Act.
SENATOR ELLIS replied, "a mix of the two".
9:51:48 AM
SENATOR FRENCH said AS 11.56.815 is tampering with public
records in the first degree, a class C felony. AS 11.56.820 is
tampering with public records in the second degree, a class A
misdemeanor.
9:52:25 AM
CHAIR MENARD opened public testimony.
GLENN COOK, deputy director, Division of Libraries, Archives and
Museums, said states that do not charge for access to public
records raise money to support archives through filing fees
charged every time a document is filed. Alaska does not have
that system. Extensive record requests could devastate Alaska's
archive programs due to staff time. Skelton staffs are already
in place; fees allow for hiring assistance.
MR. COOK read from SB 249 [page 2, line 21], amending AS
39.52.135, "a public officer may not send or cause another to
send information by electronic transmission within a system of
electronic delivery unless the system is operated and maintained
by the state." He asked how that relates to cell phones owned
personally but partially paid for by the state.
9:56:04 AM
RACHAEL PETRO, deputy commissioner, Department of the
Administration, said she would happy to get a full answer.
MR. HENSLEY said the email system, not the cell phone, would
create the record. For example, if your state email is linked to
your personal cell phone, it still goes through the state
maintained and operated system. The issue would arise if using a
private email or other system.
MR. COOK said text messages are not documented through the email
system. He said the wording about the use of electronic
transmission is broad and suggested that the digital phone
system in the state office buildings be excluded; otherwise
documentation of all phone conversations could be required.
9:58:47 AM
MS. PETRO said the meaning of electronic transmission definition
in statute needs to be discussed because everything is
increasingly digital.
SENATOR FRENCH asked if phone records include numbers called and
received or capturing the substance of the conversation.
MR. COOK replied capturing of the actual voice.
SENATOR FRENCH asked if the current phone system keeps record of
conversations.
MR. COOK said conversations are captured for a brief period and
then not kept or maintained. In the future it could be captured
and he questioned the legal implications.
SENATOR FRENCH said it is news to him that conversations are
captured on a hard drive even momentarily and he would like more
information.
MS. PETRO said the voice over internet protocol phones in place
throughout most of state government have the technical
capability to record a data transmission. Currently the data is
not stored or recorded in any manner. Conversations are not
recorded and no data is stored in that regard.
10:02:18 AM
SENATOR KOOKESH asked Mr. Cook if he opposed or supported SB
249. He said he believe the intent of the SB 249 is clear and
good. He also questioned if Mr. Cook's opinion is the official
stance of his department.
MR. COOK replied that SB 249 has merit as it codifies some
things already being done. He is not supportive of dropping the
fees for "doing searches" if the cost cannot be picked up in
some other way. He said he is not opposed to SB 249 and would
love to see free, open records for anyone but the money has to
come from somewhere.
SENATOR PASKVAN asked if Mr. Cook has an idea of a fee that
would be reasonable.
MR. COOK said Washington and New Jersey charge a $2 fee per
license or anything else that is filed such as a fishing or
marriage license. The $2 goes to the state archives to provide
free access to records.
SENATOR PASKVAN asked if Mr. Cook was suggesting that a person
who wants to research whether or not someone has a fishing
license pays a $2 flat fee and then the cost of a copy.
10:05:24 AM
MR. COOK replied no. He said he is suggesting that at the time a
person purchases a license of any sort, a $2 fee is paid. That
$2 supports the state archives programs to help maintain and
provide access to public records.
SENATOR KOOKESH asked what would work for Mr. Cook if actual
costs do not work.
MR. COOK replied that if fees are waived and the ability to bill
for extensive research is eliminated, then the money to operate
the archives has to come from somewhere else. Eliminating fees
opens the door to more frivolous lawsuits and requests, flooding
or shutting down a department.
10:08:14 AM
CHAIR MENARD thanked Mr. Cook for helping the committee to look
at things they may not have thought of. She closed public
testimony. She said she would like to hold SB 249 and get the
sponsor to meet with Ms. Petro and Mr. Cook.
SENATOR KOOKESH said holding SB 249 is not necessary.
SENATOR MEYER agreed with Senator Kookesh. He said his
constituents would like free access to all records but it does
cost the state. Senator Ellis has found the right solution.
CHAIR MENARD responded that every chairman can change her mind.
10:10:12 AM
SENATOR MEYER moved to report SB 249 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, the motion carried.
10:10:27 AM
CHAIR MENARD, seeing no further business to come before the
committee, adjourned the meeting at 10:10 a.m.
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