Legislature(1993 - 1994)
01/29/1993 09:20 AM Senate STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE
January 29, 1993
9:20 A.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Robin Taylor
Senator Johnny Ellis
MEMBERS ABSENT
Senator Jim Duncan
Senator Mike Miller
COMMITTEE CALENDAR
SENATE BILL NO. 49
"An Act relating to reelection reports; closing the two-day
reporting gap in those reports; setting the date of February
15 for filing year-end campaign finance reports; and
requiring of zero year-end reports.
SENATE BILL NO. 29
"An Act making a special appropriation to the principal of
the Alaska permanent fund; and providing for an effective
date."
PREVIOUS SENATE COMMITTEE ACTION
SB 49 - No previous action to record.
SB 29 - No previous action to record.
WITNESS REGISTER
Josh Fink, Aide
Senator Tim Kelly
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Testified in support of SB 49.
Brooke Miles
Alaska Public Office Commission
P. O. Box 110222
Juneau, Alaska 99811
POSITION STATEMENT: Testified in support of SB 49.
Senator Bert Sharp
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Sponsor of SB 29.
Jim Kelly
Alaska Permanent Fund Corporation
P. O. Box 25500
Juneau, Alaska 99802-5500
POSITION STATEMENT: Testified on SB 29.
ACTION NARRATIVE
TAPE 93-6, SIDE A
Number 001
Chairman Leman called the Senate State Affairs Committee
meeting to order at 9:20 a.m.
SENATOR LEMAN brought SB 49 (YEAR-END CAMPAIGN FINANCE
REPORTS) before the committee as the first order of
business.
JOSH FINK, representing SENATOR KELLY'S office testified in
support of SB 49. He explained this legislation makes some
long needed adjustments to the campaign reporting laws, the
major feature of which is closing the two-day reporting gap.
Number 035
Since the inception of Alaska's current finance reporting
laws in 1974, there has been an inadvertent two-day gap
which occurs between the seven day pre-election report and
the 24-hour reports. The reporting period for the 7-day pre-
election report ends three days prior to the report due
date. The 24-hour reports for contributions which exceed
$250 do not begin until 7 days prior to the election. Thus,
contributions exceeding $250 received the 9th and 8th days
before the election are not reported until the 10-day post
election report. This has the effect of obscuring the
public's right to know.
In addition SB49 would change the deadline for filing year-
end campaign reports from December 31 to February 15th, thus
allowing candidates and groups the use of December bank
statements, and provide a longer time period to prepare a
year-end report.
This legislation was introduced in the 17th Legislature and,
after passage in the House, passed the Senate Ethics Reform
and Judiciary Committees, but died in the Senate Rules
Committee. During the committee process last session the
Alaska Public Office Commission requested amendments to the
bill; new language clarifies scope of year-end report; and
the filing of zero reports are made mandatory.
SENATOR ELLIS asked if SENATOR KELLY had discussed
introduction of this bill with SENATOR DONLEY and if he was
in agreement with the amendments contained within the
legislation. JOSH FINK, answered that SENATOR KELLY had
talked with SENATOR DONLEY and that SENATOR DONLEY was first
co-sponsor.
Number 100
BROOKE MILES, representing the Alaska Public Office
Commission, testified that SB49 was identical to House Bill
86 from the 17th Legislature and that the Alaska Public
Office Commission was in favor of it.
SENATOR LEMAN asked if the February 15th date was to allow
time for bank statements to clear. BROOKE MILES, replied
that the January 15th date was a concern, and that the
commission supported the date change to February 15th. She
mentioned that the commission currently did not have the
statutory authority for moving forward that date to January
15.
A final concern with respect to its January 15 date is that,
except for the year following gubernatorial elections,
January 15 always falls on the first week of the legislative
session, which makes it difficult for some elected officials
who haven't filed their report before they come to Juneau to
file it timely.
Number 130
SENATOR TAYLOR moved to pass SB 49 from committee with
individual recommendations. Hearing no objections, it was
so ordered.
SENATOR LEMAN introduced SB 29 (APPROP: EARNING RESERVE TO
PF PRINCIPAL) and invited the prime sponsor, SENATOR BERT
SHARP, to join the committee at the table.
SENATOR SHARP explained SB 29 proposes to appropriate $600
million dollars from the Permanent Fund Earnings Reserve for
deposit into the Permanent Fund's Principal Account.
The last special appropriation into the principal of the
fund occurred in 1987 when $1,264,000,000 was moved from the
Permanent Fund Earnings Reserve by the legislature into the
Permanent Fund Principal Account.
SB 29's proposal to move $600,000,000 will leave an
estimated balance of $235,000,000 in the Earnings Reserve
Account.
This balance should prove more than adequate to meet other
needs and be a cushion for assuring that inflation proofing
obligations are met through the 1990's.
Number 175
SENATOR SHARP explained that the $835 million projected
balance got a lot of legislators, administrators and
advocates of various programs eyeballing it pretty strongly
for their various projects. He suggested that appropriating
some funds into the principal balance portion of the reserve
may be a way that the public perception would accept using
some of the other funds for education or whatever.
He said that the projections assume that there would be no
other withdrawals from the earnings reserve and that was a
very optimistic assumption for the next five, six or seven
years.
JIM KELLY, representing the Permanent Fund Corporation,
testified their job is to manage the money, keep it safe,
earn as much income as they can and leave the decisions
about what to do with the use of the earnings up to the
legislature. The only time the Corporation's board of
trustees would take a position is if the legislature were
proposing some kind of a change that was going to adversely
affect the corporation's ability to do it's job.
The analysis that has been provided is strictly the
corporation's best estimate about what the impacts are going
to be on growth principal in the future, what's going to
happen to income if something like this is done, what will
be the impact on the statutory uses that exist for it right
now.
Mr. Kelly said, right now $835 million is the amount that
will be in the fund at yearend. However, that amount is
subject to change with still five months to go.
Number 250
JIM KELLY said the board meets once a year to discuss asset
allocation. Those decisions are based on what the board
thinks the different markets are going to earn over the next
five-year period.
JIM KELLY distributed a packet that included various
reports, charts and miscellaneous information on the
permanent fund.
SENATOR LEMAN asked how the Alaska Permanent Fund ranked in
terms of funds, such as pension funds, etc. When the fund
moves assets around, does it have a significant impact on
the market? JIM KELLY answered that although the fund was
one of the 50 largest funds in the world, when assets were
moved, it did not have a significant impact on the market.
SENATOR LEMAN said, if $600 million is put into the
principal, that will affect inflation proofing because there
is a larger principal to inflation proof and there is a time
coming soon where we are going to have trouble meeting our
inflation proofing. I assume that shifts the date somewhat,
if so, when does it shift and how will if affect future
inflation proofing.
Number 375
JIM KELLY explained that based on the capital market
assumptions, and one he did not mention was what the rate of
inflation would be, the rate of inflation was going to be 4
percent on the average over the next four years. If
inflation is at 4 percent and the fund is able to earn 8 1/2
percent, we should be able to make enough money each year to
do both, even with the $600 million going to principal. If
inflation jumps up dramatically or our earning go down, we
will have to start drawing down that earnings reserve.
SENATOR SHARP said he neglected to mention that there is
some confusion currently where the permanent fund earning
reserve comes into play. Classification under the
constitutional budget reserve statute says all other funds
have to be exhausted before getting into the constitutional
reserve, and according to legislative legal there is a
possibility that the permanent fund earnings are labeled as
other funds. Unless clarified by statute, which he thinks
no matter what we do, we might want to see that that's
clarified depending on the will of the body.
If that's the case he felt that its more imperative than
ever to protect some of the reserves.
Due to the loss of a quorum, the Chairman announced the bill
would be moved out of committee at the next meeting.
There being no further business to come before the
committee, the meeting was adjourned at 9:50 a.m.
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