Legislature(1993 - 1994)

02/04/1994 09:09 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                 SENATE STATE AFFAIRS COMMITTEE                                
                        February 4, 1994                                       
                           9:09 a.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Senator Loren Leman, Chair                                                   
 Senator Mike Miller, Vice Chair                                               
 Senator Johnny Ellis                                                          
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Robin Taylor                                                          
 Senator Jim Duncan                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 245                                                           
 "An Act relating to investments of the permanent fund involving               
 equity interests in and debt obligations secured by mortgages on              
 real estate; and providing for an effective date."                            
                                                                               
 SENATE BILL NO. 170                                                           
 "An Act relating to income of the permanent fund."                            
                                                                               
 SENATE JOINT RESOLUTION NO. 38                                                
 Proposing amendments to the Constitution of the State of Alaska               
 relating to revenues from natural resources, the Alaska permanent             
 fund, the appropriation limit and the budget reserve fund; and                
 providing for an effective date for the amendments.                           
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 245 - See State Affairs minutes dated 1/28/94.                             
                                                                               
 SB 170 - See State Affairs minutes dated 1/26/94, 1/28/94.                    
                                                                               
 SJR 38 - See State Affairs minutes dated 1/26/94, 1/28/94.                    
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 William H. Scott, Executive Director                                          
 Alaska Permanent Fund Corporation                                             
 P.O. Box 25500, Juneau, AK 99802-5500¶465-2047                                
  POSITION STATEMENT:  in favor of SB 245                                      
                                                                               
 Pete Jeans, Chief Real Estate Investment Officer                              
 Alaska Permanent Fund Corporation                                             
 P.O. Box 25500, Juneau, AK 99802-5500¶465-2047                                
  POSITION STATEMENT:  in favor of SB 245                                      
                                                                               
                                                                               
 Jim Kelly, Research & Liaison Officer                                         
 Alaska Permanent Fund Corporation                                             
 P.O. Box 25500, Juneau, AK 99802-5500¶465-2047                                
  POSITION STATEMENT:  in favor of SB 245                                      
  POSITION STATEMENT:  testified on SJR 38                                     
                                                                               
 Shelby Stastny, Director                                                      
 Office of Management & Budget                                                 
                           ¶465-3568                                           
  POSITION STATEMENT:  in favor of SB 170                                      
  POSITION STATEMENT:  testified on SJR 38                                     
                                                                               
 Roger Cremo                                                                   
 425 G Street, Anchorage, AK 99501¶333-8188                                    
  POSITION STATEMENT:  in favor of SJR 38                                      
                                                                               
 Representative Mark Hanley                                                    
 State Capitol, Juneau, AK 99801-1182¶465-4939                                 
  POSITION STATEMENT:  testified on SJR 38                                     
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 94-6, SIDE A                                                             
 Number 001                                                                    
                                                                               
 CHAIRMAN LEMAN calls the Senate State Affairs Committee to order at           
 9:09 a.m.                                                                     
                                                                               
 Number 010                                                                    
                                                                               
 CHAIRMAN LEMAN announces SB 170 will be heard later in the meeting.           
                                                                               
 Number 016                                                                    
 CHAIRMAN LEMAN brings up SB 245 (PERMANENT FUND INVESTMENTS IN REAL           
 ESTATE) as the first order of business before the committee today.            
 The chairman calls representatives of the Alaska Permanent Fund               
 Corporation as the first witnesses.                                           
                                                                               
 Number 023                                                                    
                                                                               
 WILLIAM H. SCOTT, Executive Director, Alaska Permanent Fund                   
 Corporation, introduces Pete Jeans, the Chief Real Estate                     
 Investment Officer for the corporation.                                       
                                                                               
 Number 037                                                                    
                                                                               
 PETE JEANS, Chief Real Estate Investment Officer, Alaska Permanent            
 Fund Corporation, gives the committee some background on the real             
 estate investment experience of the corporation.  Originally, the             
 corporation began by investing in real estate pools.  Since that              
 time, the corporation has become one of the largest institutional             
 real estate holders in the United States.  One of the problems                
 investors in real estate pools have is that there absolutely no               
 control over the assets.  Other than real estate pools, the                   
 corporation also had the option of co-investing in property with              
 other institutional investors.  Six years ago, when the corporation           
 began co-investing, many of the other pension funds and co-                   
 investors were sitting on the sidelines.  This enabled the                    
 corporation to do quite a bit of investing, mostly with small                 
 pension funds.  The larger pension funds weren't willing to co-               
 invest; if they were investing, they were going to invest 100%.               
 The few properties in which the corporation did invest with the               
 larger pension funds, were properties worth 200-250 million                   
 dollars; even the larger funds don't want to hold one property of             
 that size.                                                                    
                                                                               
 Number 102                                                                    
                                                                               
 MR. JEANS says one of the problems with 40% investments, is that              
 the corporation doesn't have any control over the property.  At the           
 time the Alaska Permanent Fund Corporation began co-investing,                
 there wasn't much investing going on, and the corporation was able            
 to negotiate buy-sells and shoot-out clauses which gave the                   
 corporation some control over the deals.  That is no longer the               
 case.  Over the last year, the corporation has lost quite a few               
 deals because the managers weren't willing to do deals with no                
 controls.  The corporation has become the leader in co-investing              
 and has dealt with over 200 funds in the country.  The problem now            
 is that there is more money out there, and when the corporation               
 tries to line up partners on a proposal, if the potential partners            
 like it, they do the whole deal and the corporation doesn't get any           
 of it.  One of the problems the corporation is going to run into              
 with less than 100% investment in properties is finding partners to           
 take a minority position, with no controls in the investment.                 
                                                                               
 Number 140                                                                    
                                                                               
 MR. JEANS states the real estate market is starting to turn around,           
 and the people the corporation co-invested with five years ago are            
 going to be the corporation's major competitors.  Unless the                  
 corporation is allowed to go to 100% investments in real estate, it           
 is going to be extremely difficult for the corporation to get any             
 money out on real estate, especially on the good properties.                  
                                                                               
 Number 149                                                                    
                                                                               
 CHAIRMAN LEMAN thanks Mr. Jeans for his testimony and asks if                 
 anyone has any questions.  The chairman agrees with Mr. Jeans that            
 the corporation should be able to invest 100% in real estate, but             
 is hesitant to make that change.                                              
                                                                               
                                                                               
 Number 183                                                                    
                                                                               
 MR. JEANS says the corporation has been fortunate for the last                
 three years because it has weathered the down-turn in real estate             
 very well.  It worked to the corporation's best interest in                   
 enabling it to find co-investors.  However, that is now changing.             
 Since 1993, the corporation has started losing deals.  The                    
 corporation purchased quite a few apartments over the last two or             
 three years.  It is probably a good time to be putting those                  
 apartments back on the market, but unfortunately the corporation's            
 partners don't want to sell.                                                  
                                                                               
 Number 214                                                                    
                                                                               
 The committee begins discussing some amendments and the proposed              
 State Affairs Committee substitute for SB 245.                                
                                                                               
 SENATOR ELLIS says he thinks the amendments to SB 245 look too                
 restrictive to him, and he is not uncomfortable with the original             
 bill.                                                                         
                                                                               
 Number 221                                                                    
                                                                               
 SENATOR MILLER says he is more comfortable with the committee                 
 substitute for SB 245 than he is with the original bill.  He                  
 believes the board is going to have to be willing to compromise to            
 get a bill passed in the legislature.  Senator Miller is not                  
 comfortable in giving the corporation leeway to invest 100% in any            
 property, of any size.                                                        
                                                                               
 Number 235                                                                    
                                                                               
 SENATOR ELLIS comments on a historical perspective relating to                
 investment requirements for the corporation: he recalls Tom Fink's            
 proposal to only allow the Alaska Permanent Fund Corporation to               
 invest in property within the State of Alaska.  This would have               
 caused an enormous crash; this kind of restriction, in hind sight,            
 would have been really disastrous.  The restriction in the                    
 amendment is much more reasonable than Fink's proposed restriction,           
 but Senator Ellis wanted to warn the committee not to put too many            
 restrictions on the permanent fund corporation.  He reiterates that           
 he leans towards allowing the managers at the corporation more                
 discretion in their investments.  The track record of the                     
 corporation puts Senator Ellis's mind at ease.                                
                                                                               
 Number 254                                                                    
                                                                               
 SENATOR MILLER states he agrees with Senator Ellis, and he did not            
 agree with Mayor Fink's proposal, but he does not think it is wise            
 to put all one's eggs in one basket either.                                   
                                                                               
                                                                               
 Number 260                                                                    
                                                                               
 JIM KELLY states the Alaska Permanent Fund Corporation has a target           
 of having 10% of its' investments in real estate, while the                   
 legislature has a target of 15% investment in real estate for the             
 corporation.  The corporation is not going to be able to reach the            
 legislature's target of 15% if they are not allowed to invest in a            
 higher percentage of a deal.  PERS and TERS already have the option           
 to do 100% deals.  They have no restrictions except the prudent               
 investor rule.  The corporation has the prudent investor rule, plus           
 an authorized list of additional restrictions.  If the corporation            
 didn't have these additional restrictions, it would still follow              
 the prudent investor rule.  In the absence of the additional                  
 restrictions, the corporation is not going to put 380 million                 
 dollars into one deal.  The committee could put in an upper number            
 if it makes the committee feel comfortable, but the board is not              
 going to approve the corporation getting into a 350 million dollar            
 deal anywhere.  The board's main job is to diversify the fund and             
 keep it safe, in addition to making money.  The board is having a             
 hard time keeping the fund safe with the restrictions it has right            
 now.  The corporation is also going to have a harder time making              
 money.                                                                        
                                                                               
 Number 275                                                                    
                                                                               
 MR. JEANS comments it is difficult to set limits for investments,             
 but limits can always be changed.  The corporation would like to be           
 able to handle real estate in the same way it would manage any                
 other asset class.                                                            
                                                                               
 Number 288                                                                    
                                                                               
 CHAIRMAN LEMAN asks if the corporation can sell its' interest in a            
 property even if a partner does not want to sell.  Mr. Scott                  
 replies it is extremely difficult to do without control of the                
 investment.  Mr. Jeans adds, that to sell a minority interest in a            
 property, the corporation would have to discount it to the extent             
 it wouldn't make sense to sell it.                                            
                                                                               
 Number 302                                                                    
                                                                               
 MR. SCOTT comments that the difference between the lesser players             
 in the real estate market and the Alaska Permanent Fund Corporation           
 is that when the lesser players have a property that is performing            
 well, they don't want to sell it, while the corporation thinks that           
 is the best time to sell in order to maximize returns.                        
                                                                               
 Number 312                                                                    
                                                                               
 MR. KELLY asks Mr. Jeans if he would explain the reasoning behind             
 why the corporation invested so much money in Tyson's Corner and              
 the likelihood of the corporation investing that much in any one              
 project again.                                                                
                                                                               
 Number 317                                                                    
                                                                               
 MR. JEANS states Tyson's Corner is a unique property and is                   
 probably one of the top three shopping centers in the country.  The           
 corporation owns 39% of Tyson's Corners, which is a controlling               
 interest.  It is worth it to the corporation to have 145 million              
 dollars invested in Tyson's Corner in order to have the controlling           
 interest; the corporation has veto rights over all the other                  
 partners.  Tyson's Corner is such a well-known asset, that almost             
 any pension fund in the country would buy Tyson's from the                    
 corporation.  The corporation doesn't have close to that amount of            
 money in any other property.  One of the problems the corporation             
 has with its co-investors is that they are mostly small pension               
 funds with perhaps 50-100 million dollars invested in about 5                 
 properties, and if those properties are performing well, those                
 pension funds are afraid to sell.  The only choice the corporation            
 has, if we want to market the properties, is to buy out these co-             
 investors.  The 40% rule, when it came into effect, was to allow              
 the corporation to piggy-back on the major pension funds and                  
 utilize their investment expertise.  The 40% rule is now enabling             
 the smaller pension funds to piggy-back on the corporation, because           
 the larger funds are now doing their own deals and they won't give            
 the corporation a piece of it.                                                
                                                                               
 Number 348                                                                    
                                                                               
 CHAIRMAN LEMAN suggests that on page 1, lines 9 and 10 of the                 
 proposed committee substitute the figure 20,000,000 be changed to             
 50,000,000.  Also add: if the investment exceeds 50,000,000, the              
 corporation shall have no more than 67% ownership in a property.              
 The Chairman asks Mr. Jeans if this language would restrict the               
 corporation too much on its' larger investments.                              
                                                                               
 Number 364                                                                    
                                                                               
 MR. JEANS replies that proposal would be more workable than the               
 limitations with which the corporation currently has to work.                 
                                                                               
 Number 366                                                                    
                                                                               
 CHAIRMAN LEMAN asks if the corporation would lose deals or lose out           
 on opportunities with the changes he has just proposed.                       
                                                                               
 Number 368                                                                    
                                                                               
 MR. JEANS responds the corporation will lose some major retail                
 properties and some major offices.  The difficulty the corporation            
 will have with any restrictions is in finding an investor willing             
 to come in and take a minority share in a property.  If these                 
 restrictions pass, the corporation will probably find itself doing            
 deals up to 50 million, period.                                               
                                                                               
 Number 373                                                                    
                                                                               
 SENATOR ELLIS asks what the administration's position is on SB 245.           
                                                                               
 Number 375                                                                    
                                                                               
 CHAIRMAN LEMAN answers he is not aware of a position from the                 
 administration.                                                               
                                                                               
 Number 377                                                                    
                                                                               
 MR. JEANS and MR. SCOTT responds the administration has no                    
 objection to SB 245.                                                          
                                                                               
 Number 379                                                                    
                                                                               
 SENATOR ELLIS says one could then make the assumption the governor            
 would sign the legislation if it passed.                                      
                                                                               
 Number 380                                                                    
                                                                               
 MR. JEANS and MR. SCOTT answer that it is their understanding the             
 governor would sign the legislation.                                          
                                                                               
 Number 383                                                                    
                                                                               
 CHAIRMAN LEMAN comments that in order to pass SB 245 out of State             
 Affairs Committee today, the members must come to agreement on the            
 bill.  The chairman asks Senator Miller what he would agree to in             
 SB 245.                                                                       
                                                                               
 Number 384                                                                    
                                                                               
 SENATOR MILLER states if the bill changes above and beyond what it            
 is now, he cannot vote for it on the floor.                                   
                                                                               
 Number 388                                                                    
                                                                               
 SENATOR MILLER moves the adoption of CSSB 245 (STA) in lieu of the            
 original bill.                                                                
                                                                               
 Number 389                                                                    
                                                                               
 CHAIRMAN LEMAN, hearing no objection, notes that CSSB 245(STA) has            
 been adopted.                                                                 
                                                                               
 Number 391                                                                    
                                                                               
 CHAIRMAN LEMAN offers an amendment to CSSB 245(STA).  On page 1,              
 lines 9 and 10 change 20,000,000 to 50,000,000.  On page 1, line 12           
 change  40  percent to  33  percent.  On page 2, line 5 change  40            
 percent to  33  percent.   On page 2, line 9 change  60  percent to  6     6  
 percent.                                                                      
                                                                               
 Number 396                                                                    
                                                                               
 CHAIRMAN LEMAN, hearing no objection to the amendment, notes the              
 amendment has been adopted unanimous consent.                                 
                                                                               
 Number 400                                                                    
                                                                               
 SENATOR ELLIS asks that CSSB 245(STA) be moved from committee with            
 individual recommendations.                                                   
                                                                               
 Number 401                                                                    
                                                                               
 CHAIRMAN LEMAN, hearing no objection, orders that CSSB 245(STA) be            
 discharged from the Senate State Affairs Committee with individual            
 recommendations.                                                              
 Number 404                                                                    
 CHAIRMAN LEMAN brings up SB 170 (DISPOSITION OF PERMANENT FUND                
 INCOME) as the next order of business before the committee today              
 and calls Senator Rieger and Mr. Stastny to testify.                          
                                                                               
 Number 412                                                                    
                                                                               
 SHELBY STASTNY, Director, Office of Management & Budget, Governor's           
 Office, says there is not a formal administration position on SB
 170, but that he personally is favorably disposed to the bill.                
                                                                               
 Number 424                                                                    
                                                                               
 CHAIRMAN LEMAN asks Senator Rieger what effect SB 170 will have on            
 future dividends if it passes.                                                
                                                                               
 Number 431                                                                    
                                                                               
 SENATOR RIEGER says the effect of SB 170 will likely be that                  
 dividends will probably hit 900 dollars before they start climbing            
 again.  This affect is drawn from run # 10, which Senator Rieger              
 thinks is the most likely run.  Senator Rieger continues to                   
 describe the differences between run # 10 and run # 11.  He states            
 under SB 170.                                                                 
                                                                               
 Number 473                                                                    
                                                                               
 CHAIRMAN LEMAN asks Senator Rieger if the formula for payout of               
 dividends will be changed to accommodate inflation proofing the               
 fund.                                                                         
 Number 474                                                                    
                                                                               
 SENATOR RIEGER says that a hold-harmless feature could be added to            
 the bill so dividend amounts do not drop.  However, once the fund             
 is inflation proofed, any amount could be paid out in dividends               
 without having to worry about protecting the fund.                            
                                                                               
 Number 477                                                                    
                                                                               
 CHAIRMAN LEMAN asks if anyone has questions or if there is anyone             
 else wishing to testify on SB 170.  Hearing none, the chairman asks           
 the pleasure of the committee.                                                
                                                                               
 Number 480                                                                    
                                                                               
 SENATOR MILLER makes a motion to discharge SB 170 from the Senate             
 State Affairs Committee with individual recommendations.                      
                                                                               
 Number 481                                                                    
                                                                               
 CHAIRMAN LEMAN, hearing no objections, orders SB 170 discharged               
 from committee with individual recommendations.                               
 Number 483                                                                    
 CHAIRMAN LEMAN brings up SJR 38 (RESTRUCTURE PERMANENT FUND) as the           
 next order of business before the committee.  The chairman invites            
 Mr. Stastny to comment on SJR 38.                                             
                                                                               
 Number 492                                                                    
                                                                               
 SHELBY STASTNY, Director, Office of Management & Budget (OMB),                
 Governor's Office, states OMB has spent some time reviewing Mr.               
 Cremo's proposal (SJR 38).  While OMB would like to believe SJR 38            
 would solve the state's fiscal problems, it doesn't appear that it            
 would, at least in the short term, fifteen to twenty years.  OMB              
 shares the concerns many people have regarding the amount of                  
 revenues that will come to the state.  If one excludes for current            
 use the resources we have in our reserve funds, then it appears               
 this proposal would exacerbate the current budget gap to the tune             
 of 200 to 300 million dollars a year.  OMB bases these projections            
 on mid-case scenarios of the Department of Revenue projections.  It           
 could be even more if based on low-case scenarios.  So it certainly           
 would put great pressure on the budget.  Mr. Stastny thinks that by           
 the year 2000 the state would be dealing with a total                         
 appropriations budget of about the 2.4 billion dollar range, which            
 would be a significant reduction from today's budget.  This range             
 would be equivalent to taking about 700 million dollars out of our            
 current budget.  If we could live with that reduction for ten or              
 fifteen years, there is a period of time where we would cross the             
 line and there would be more money available under the Cremo plan             
 than there would be under the current revenue projections.                    
 Number 540                                                                    
                                                                               
 MR. STASTNY says one of the constraints from the type of plan in              
 SJR 38 is that we would have difficulties investing in revenue                
 raising matters.  One argument for SJR 38 is we would be able to              
 bond for projects, but the question that always comes up is if                
 you've got money available, should you be bonding?  OMB does not              
 believe the state could live within the constraints of SJR 38 for             
 the period of time we would have to until we reached the point in             
 which we were in a better position with cash flow.  Mr. Stastny               
 does not believe the state can save ourselves rich, and he thinks             
 that's what SJR 38 will try to do.  He thinks the state will better           
 be able to invest its' money in income-producing resources in the             
 future, and will be able to make the state rich by using the                  
 resources of the state.                                                       
                                                                               
 Number 564                                                                    
                                                                               
 CHAIRMAN LEMAN comments that the state cannot spend itself rich               
 either.                                                                       
                                                                               
 Number 566                                                                    
                                                                               
 MR. STASTNY asks if the state could invest itself rich.                       
                                                                               
 Number 570                                                                    
                                                                               
 CHAIRMAN LEMAN calls Representative Hanley as the next witness.               
                                                                               
 Number 579                                                                    
                                                                               
 REPRESENTATIVE HANLEY states he has set up the Alaska Permanent               
 Fund Corporation's numbers, as well as Mr. Cremo's plan in his                
 computer.                                                                     
                                                                               
 TAPE 94-6, SIDE B                                                             
 Number 582                                                                    
                                                                               
 REPRESENTATIVE HANLEY continues, saying the January 27th run that             
 he did is based on mid-case scenarios.  The Alaska Permanent Fund             
 Corporation, as well as the Governor's Office use the low-case                
 scenario for their revenue projections.  So he then changed his               
 chart to show the low-case scenario as well as the percentage of              
 the first year withdrawal has been reduced from 20% to 16.4%, with            
 a geometric progression down to the 6% numbers.                               
                                                                               
 Number 572                                                                    
                                                                               
 SENATOR ELLIS asks Representative Hanley if the figures on his                
 chart are in nominal dollars.                                                 
                                                                               
                                                                               
 Number 570                                                                    
                                                                               
 REPRESENTATIVE HANLEY replies that the figures on his chart are in            
 nominal dollars.  Those are the basic changes that were made at the           
 request of the committee.  The chart was developed in order to come           
 up with an apples to apples comparison.  Representative Hanley says           
 his numbers come out pretty comparable to Mr. Stastny's numbers.              
 Another addition to the chart was a net withdrawal percentage.                
 Representative Hanley continues with his explanation of his chart             
 on "Traditional vs Cremo Budgeting".                                          
                                                                               
 Number 559                                                                    
                                                                               
 CHAIRMAN LEMAN asks Representative Hanley if SJR 38 has been                  
 double-checked to make sure the language in it is very clear.                 
                                                                               
 Number 547                                                                    
                                                                               
 REPRESENTATIVE HANLEY states he has suggested House Finance                   
 Committee look at the spreadsheets and fiscal aspects of SJR 38,              
 and then send the resolution back to the House Judiciary Committee            
 to double-check the language.  There are some questions in regards            
 to clarifying some of the definitions, for instance, a definition             
 for the term "biological marine resource".  Every single word in              
 SJR 38 needs to be defined for the record so that it is very clear            
 in the future as to what was intended.                                        
                                                                               
 Number 532                                                                    
                                                                               
 CHAIRMAN LEMAN thanks Representative Hanley for his testimony and             
 calls Mr. Cremo to testify.                                                   
                                                                               
 Number 530                                                                    
                                                                               
 ROGER CREMO, testifying from Hawaii, states he does not share Mr.             
 Stastny's concerns.  Mr. Stastny's characterization of SJR 38 as a            
 savings plan is incorrect.  It is merely an attempt to convert the            
 fluctuating revenues that the state has now into revenues that                
 fluctuate less or not at all.  The permanent fund now seems to be             
 an income fund.  Mr. Cremo questions whether the Alaska Permanent             
 Fund Corporation has the authority to even invest 40% in stocks.              
 He questions whether it has the authority to invest in real estate.           
 He questions whether it has the authority to buy and invest in                
 currency.                                                                     
                                                                               
 Number 500                                                                    
                                                                               
 MR. CREMO thinks it is important that in the proposed fund, the               
 withdrawal is taken from a twelve quarter average of fund value.              
 This means the withdrawal is less than a nominal 6%.  Mr. Cremo               
 does not agree with the comments made by Mr. Kelly, Mr. Goldsmith,            
 or Mr. Stastny.  Mr. Cremo goes on to detail his disagreement with            
 their comments.  One of the reasons he disagrees with the comments            
 of Mr. Kelly is because the Alaska Permanent Fund Corporation uses            
 extremely conservative figures.  He continues his analysis of                 
 permanent fund corporation practices and inflation proofing of the            
 fund.  He believes his plan, SJR 38, would solidify the inflation             
 proofing of the permanent fund.                                               
                                                                               
 Number 368                                                                    
                                                                               
 MR. CREMO doubts the correctness of some of the points made by Mr.            
 Goldsmith.  One point of disagreement is that Mr. Goldsmith thinks            
 SJR 38 is too complicated, while Mr. Cremo thinks SJR 38 is a very            
 simple plan.  He disagrees on another point: saying the earnings              
 reserve account is not part of the permanent fund, but simply                 
 another general fund.  Mr. Cremo summarizes by saying he finds it             
 difficult to agree with much of what he is hearing.                           
                                                                               
 Number 288                                                                    
                                                                               
 CHAIRMAN LEMAN thanks Mr. Cremo for his testimony and asks if                 
 anyone else wishes to testify.                                                
                                                                               
 Number 284                                                                    
                                                                               
 MR. KELLY clarifies for the committee that when he referred to real           
 withdrawals from the fund, he was including the oil revenues that             
 are added in that category.                                                   
                                                                               
 Number 272                                                                    
                                                                               
 CHAIRMAN LEMAN states there is some tinkering to be done on SJR 38,           
 but he doesn't necessarily thinks the resolution needs to be kept             
 in the committee to do it, and so is not opposed to moving it out             
 of committee.                                                                 
                                                                               
 Number 260                                                                    
                                                                               
 SENATOR ELLIS says work on SJR 38 will continue; he would like to             
 see the bill move on.  Senator Ellis makes a motion to discharge              
 SJR 38 from the Senate State Affairs Committee with individual                
 recommendations.                                                              
                                                                               
 Number 249                                                                    
                                                                               
 CHAIRMAN LEMAN, hearing no objection, orders that SJR 38 be                   
 discharged from committee with individual recommendations.                    
 Number 245                                                                    
                                                                               
 CHAIRMAN LEMAN announces the agenda for Wednesday, February 9, 1994           
 as SB 237 and SB 220.                                                         
                                                                               
 Number 240                                                                    
                                                                               
 CHAIRMAN LEMAN adjourns the Senate State Affairs Committee meeting            
 at 10:27 a.m.                                                                 
                                                                               

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