03/15/2012 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB178 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 117 | TELECONFERENCED | |
| += | SB 178 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
March 15, 2012
9:04 a.m.
MEMBERS PRESENT
Senator Bill Wielechowski, Chair
Senator Kevin Meyer
Senator Cathy Giessel
MEMBERS ABSENT
Senator Joe Paskvan, Vice Chair
Senator Albert Kookesh
COMMITTEE CALENDAR
SENATE BILL NO. 178
"An Act relating to the Alaska operating endowment fund; and
providing for an effective date."
- MOVED CSSB 178(STA) OUT OF COMMITTEE
SENATE BILL NO. 117
"An Act relating to the allowable absence for active duty
service members of the armed forces for purposes of permanent
fund dividend eligibility."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 178
SHORT TITLE: ALASKA OPERATING ENDOWMENT FUND
SPONSOR(s): FINANCE
01/27/12 (S) READ THE FIRST TIME - REFERRALS
01/27/12 (S) STA, FIN
02/23/12 (S) STA AT 9:00 AM FAHRENKAMP 203
02/23/12 (S) Heard & Held
02/23/12 (S) MINUTE(STA)
03/15/12 (S) STA AT 9:00 AM BUTROVICH 205
WITNESS REGISTER
DARWIN PETERSON, Staff
Senator Bert Stedman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 178 on
behalf of Senator Stedman, Co-Chair of the Senate Finance
Committee, sponsor of SB 178.
ACTION NARRATIVE
9:04:48 AM
CHAIR BILL WIELECHOWSKI called the Senate State Affairs Standing
Committee meeting to order at 9:04 a.m. Present at the call to
order were Senators Giessel, Meyer, and Chair Wielechowski.
Senators Paskvan and Kookesh were excused from the meeting.
SB 178-ALASKA OPERATING ENDOWMENT FUND
9:05:30 AM
CHAIR WIELECHOWSKI announced that SB 178 was before the
committee. He related that SB 178 creates the Alaska Operating
Endowment Fund and is sponsored by the Senate Finance Committee
and presented by Senator Bert Stedman. He said that the goal of
the legislation is laudable. It recognizes the strong commitment
to savings the legislature has demonstrated in recent years. The
state has set aside roughly $15 billion in savings, giving
Alaska the largest savings account of any state in the nation.
Every Alaskan should be proud of that accomplishment, and we in
the legislature should be vigilant in ensuring that our savings
are safeguarded well into the future. He thanked Senator Stedman
for introducing the bill and for his commitment to ensuring
Alaska's financial health for generations to come.
CHAIR WIELECHOWSKI said he had several concerns about the bill.
The sponsor statement indicates that "it is the intent of the
Senate Finance Committee that approximately $15 billion will be
used to capitalize the fund." This number was calculated by
combining the current balance of the Constitutional Budget
Reserve (CBR), the Statutory Budget Reserve, and the estimated
FY 12 revenue surplus. The CBR was created by the voters in 1990
to deal with the problem of short-term fluctuations in oil
revenue. The constitutional amendment passed by Alaskans
required the state to deposit all settlements from oil and gas
tax and royalty disputes into the fund. More importantly, it
specified that withdrawals from the fund be authorized with a
three-quarter vote of each house of the legislature and must be
repaid. The voters clearly wanted Alaska's nest egg to be
protected and protected well.
CHAIR WIELECHOWSKI voiced concern that SB 178 would not
accomplish that important public goal. It would allow future
legislatures to withdraw money from the fund with a simple
majority vote and would not require that those funds be repaid.
He said he did not think that was the sponsor's intent. He
suggested the sponsor would be open to the idea of creating an
endowment with the level of protection afforded to funds
currently in the CBR.
CHAIR WIELECHOWSKI continued to say that SB 178 does not require
the balance of the CBR be transferred into the proposed Alaska
Operating Endowment Fund. The bill simply creates a structure
and proposes a concept. It begins a discussion that the
legislature should have about how to protect Alaska's savings,
yet use them to fund essential government operations when annual
revenues are insufficient for that purpose. For that reason, he
said he has proposed two small changes in the new committee
substitute.
SENATOR MEYER moved to adopt the CS for SB 178, labeled 27-
LS1255\M, as the working document.
CHAIR WIELECHOWSKI objected for discussion purposes.
CHAIR WIELECHOWSKI addressed the changes in the bill. On page 2,
line 8, "four and one-half percent" was replaced with "four"
percent. This was done after reviewing literature about
endowments and the recent performance of several state accounts.
Also, on page 2, line 12, ", or any other amount," was deleted
when describing the amount the legislature may annually
appropriate from the fund.
CHAIR WIELECHOWSKI noted that nationally inflation has averaged
3.43 percent since the federal government began tracking
consumer prices in 1913. He said he wanted to begin the
discussion today with a reduced annual allowable pay-out from
the proposed fund. He stated that he also wanted to eliminate
the legislature's opportunity to exceed a responsible annual
payout by removing the loophole in the original bill which
allowed the legislature to withdraw as much as it wanted from
the fund in any given year. He said he understood the language
was included in the bill to protect against any assertion that
the legislature was binding the hands of a future legislature.
He noted he had been advised by legislative attorneys that there
may be other ways to guard against that potential.
At ease from 9:10 to 9:14.
9:14:28 AM
CHAIR WIELECHOWSKI requested comments from the sponsor regarding
the changes in the bill.
9:14:59 AM
DARWIN PETERSON, staff, Senator Bert Stedman, Co-Chair of the
Senate Finance Committee, sponsor of SB 178, commented on the
changes to the bill. He stated that Senator Stedman has no
problems with version M of the bill. He related that Senator
Stedman respects the protections that are in the constitution
for the CBR and would agree to similar protections in the
endowment fund. He concluded that version M is a starting point
to continue the discussion of the fund in the Senate Finance
Committee.
CHAIR WIELECHOWSKI appreciated the sponsor's leadership in this
area.
MR. PETERSON thanked the chair.
CHAIR WIELECHOWSKI noted the bill has an additional referral to
the Senate Finance Committee. He said he hopes that if an
Operating Endowment Fund comes into existence and includes funds
from the CBR, it will be done through a constitutional
amendment. That way the fund would be protected and it would go
to a vote of all Alaskans.
CHAIR WIELECHOWSKI pointed out that the bill has a fiscal note
of $3.1 million, based on the assumption that $15 billion would
be moved into the fund.
9:17:21 AM
SENATOR MEYER moved to report the CS for SB 178, version M, from
committee with individual recommendations and the attached
fiscal note. There being no objection, CSSB 178(STA) was
reported from the Senate State Affairs Standing Committee.
9:17:50 AM
There being no further business to come before the committee,
Chair Wielechowski adjourned the Senate State Affairs Standing
Committee at 9:17 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 178 payout schedule.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| CS for SB 178 (STA), version M.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| SB 178 Sponsor Statement.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| SB 178dedicated fund legal opinion.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| SB0178A.PDF |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| SB178-DOR-TRS-02-21-12.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| SB178-DOR-TRS-02-22-12.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| GF Investment objectives and actual performance.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| Perm Fund investment objectives and actual performance.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| PERS and TERS investment objectives and actual performance.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| Anchorage historical CPI.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| US historical rate of inflation 3.4%.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |
| CBR investment objectives and actual performance.pdf |
SSTA 3/15/2012 9:00:00 AM |
SB 178 |