SJR 5-CONST. AM.:PERMANENT FUND & DIVIDEND  4:27:46 PM CHAIR SHOWER reconvened the meeting and announced the consideration of SENATE JOINT RESOLUTION NO. 5, Proposing amendments to the Constitution of the State of Alaska relating to the Alaska permanent fund and the permanent fund dividend. 4:28:30 PM BRUCE TANGEMAN, Commissioner, Department of Revenue, Fairbanks, reported that for over three decades the permanent fund dividend calculation and the amount of the dividend was never questioned. This because an issue when the dividend was politicized and it created mistrust for many Alaskans. He explained that SJR 5 does three things. First, the dividends would be guaranteed by initiating an automatic transfer rather than being subject to appropriation. Second, the PFD could not be reduced by the legislature or a governor's veto. Third, any changes to the statutory PFD formula would require a vote of the people. Finally, he said, SJR 5 is just one part of Governor Dunleavy's fiscal plan that seeks to ensure that Alaskans are included in deciding the size and scope of their government. 4:30:03 PM BILL MILKS, Assistant Attorney General, Civil Division, Labor and State Affairs Section, Department of Law, Juneau, delivered the following sectional analysis for SJR 5. Section 1: This would provide a conforming amendment to the existing language in order to authorize a portion of permanent fund income to be used for dividends as set forth in Section 2. Section 2: This section would create two new subsections in the permanent fund amendment. Subsection (b) would require that a portion of the permanent fund income be used, without an appropriation, solely for the purpose of paying permanent fund dividends to state residents. Those payments would occur according to the dividend program and formula currently set forth in statute. Subsection (b) would also allow the legislature to change the dividend program, including amount and eligibility, subject to the approval of the voters in subsection (c). Subsection (c) would require that any law passed by the legislature to amend the permanent fund dividend program, including the amount and the eligibility requirements, would not take effect unless the voters approved the proposed law at the next statewide election. If approved by the voters, it would take effect 90 days after certification of the election. Section 3: This transition provision specifies that the dividend program in place on January 1, 2019 would remain in place until the legislature and the voters approved a change to the program. Section 4: This section would require that the constitutional amendment be placed on the general election ballot in 2020. 4:33:19 PM CHAIR SHOWER reminded everyone that SJR 5 will also be vetted in both the judiciary and finance committees. This committee will address the policies but because some members will only hear the bill in this committee, he'll allow more latitude in the questions. SENATOR REINBOLD said she didn't realize initially that the voters would determine who is and is not eligible for a PFD. She asked if the voters will be making policy decisions about military families, prisoners, restitution, hold harmless clauses, and garnishments. MR. MILKS answered yes; the voters will make decisions about eligibility and the amount of the dividend. SENATOR REINBOLD asked if the voters will be involved in decisions about garnishing a dividend for child support. MR. MILKS replied SJR 5 would not change the existing law that provides for that so garnishment procedures would continue. SENATOR REINBOLD commented that there's conflicting information because eligibility is also in existing law and that's changing whereas garnishing is not changing. MR. MILKS said the intent is that the existing eligibility rules will continue. SENATOR REINBOLD asked if the voters would weigh in on the hold- harmless clause. MR. MILKS asked for clarification of the question. SENATOR REINBOLD explained that the state will pay the federal government about $17 million [this year] because of the PFD hold-harmless statutes that allow low income Alaskans to receive their PFD and also continue to receive their welfare benefits. She highlighted that this annual payment to the federal government results in a lower PFD for all Alaskans. MR. MILKS said the existing statutory eligibility requirements will remain. He added that this is the first hearing and he would review all the questions on that subject to ensure he fully understood what she asked. 4:39:32 PM SENATOR COGHILL observed that this puts the concept of a fundamental right of the dividend and the fundamental right of the legislature to act in tension by sweeping in four Articles of legislative power pertaining to things like effective dates and veto powers. He said it's something to think about because this appears to touch a live wire of changing our constitutional structure for an individual fundamental right. He said another wrinkle is that this would assume a constitutional right for some statutory provisions outside of a ratification, but it's not quite an initiative and it's not quite legislative authority. He said he might start by asking if this is a revision to constitutionalize existing statutory language. MR. MILKS responded that there is always a question about whether a proposed change to the constitution is an amendment or a revision. SJR 5 was drafted to be a constitutional amendment. He cited a recent court case where the Alaska Supreme Court said that absent another constitutional amendment, the Permanent Fund Dividend Program must compete for annual legislative funding just like other state programs. He said the Department of Law sees the issues that Senator Coghill identified, but their view is that this is not so sweeping as to be a revision. It's an effort to provide a program that has an automatic dividend payment. SENATOR COGHILL said he understands that, but he struggles with changing the "legislature act of law" for a single issue, which is the dividend. He stated his intent to review the documents related to the founding of the constitution and the conversations surrounding the statements that all power resides with the people and all lawmaking power resides in the legislature. SJR 5 says those powers are tied so instead of a check and balance it's become a way to addressing a fundamental right. He said that's a fundamental change that he'll think about very carefully. 4:49:01 PM CHAIR SHOWER asked Mr. Milks to explain the legal difference between an amendment to the constitution and a revision of the constitution. MR. MILKS said the basic difference is that an amendment is a small change and a revision is a more sweeping structural change. However, the Alaska Supreme Court has said it is possible for an amendment to change the basic constitutional rules to such an extent that it should be considered a revision. A revision of the constitution requires a constitutional convention. He said that in Bess vs. Ulmer, the Alaska Supreme Court looked at the California constitutional framework on the amendment versus revision piece and came up with an Alaska test that looks at the balance between the quantitative and the qualitative changes. He acknowledged the limitation of having just one Alaska case. CHAIR SHOWER asked him to clarify whether this is about enshrining an individual right to a dividend or the program but not necessarily the amount of the dividend in the constitution. MR. MILKS said SJR 5 seeks to respond to the issue that came out of having a statutory dividend program that many people thought would occur automatically but is actually subject to appropriation and is therefore also subject to governor veto in full or part. He said he believes that, as written, SJR 5 does not give anybody a lifetime fundamental right to a dividend of a certain dollar amount, but it does say that there is going to be a dividend program and some of the permanent fund income is going to provide for a dividend. CHAIR SHOWER asked what would happen if this becomes part of the constitution and there isn't enough income to pay a dividend in 5-10 years. He specifically asked if the legislature would be forced to initiate a tax to pay the dividend. MR. MILKS responded that SJR 5 only talks about using a portion of the income of the Alaska Permanent Fund for a dividend. It does not talk about any other income stream. CHAIR SHOWER said he'd need to think about this a little more because this sets the legislature up to be at odds with the people. 4:59:17 PM SENATOR REINBOLD stated for the record that she did not support either the taking of the dividend or the POMV. She went on to say there are two schools of thought on this issue, the first of which is to tax all resources and put the revenue in the permanent fund so there will be a long-term permanent fund. The second aspect is to tax just oil. However, with that approach she, too, questions what will happen if oil revenue drops to nothing and there's no money going into the permanent fund. "Where do we go with that?" she asked. MR. MILKS said the proposed constitutional amendment provides that dividends will only be paid if there is permanent fund income. CHAIR SHOWER commented that this brings up interesting things to think about. SENATOR MICCICHE said the reality is that there is no relief valve if the oil and gas infrastructure fails, and that should be part of the discussion. 5:03:57 PM CHAIR SHOWER recessed the meeting until 6:00 p.m. ^Public Testimony on sjr 5 6:05:40 PM CHAIR SHOWER reconvened the meeting and opened public testimony on SJR 5. 6:06:26 PM LYNETTE CLARK, representing self, Fox, stated support for SJR 5. She said this constitutional amendment is needed to restore the peoples' trust in government. The previous administration destroyed that trust when the governor cut the dividend and the next year the legislature reduced the dividend. Enshrining the dividend in the constitution will help to restore that trust. 6:09:01 PM MIKE COONS, President, Alaska Chapter of Association of Mature American Citizens(AMAC), Palmer, stated full support for SJR 5. He said the Governor's clear intent in this constitutional amendment is for the people to control their money. He said legislators serve at the consent of the governed and last year they took away the peoples' money without their consent. Through SJR 5 and the other proposed constitutional amendments the people are taking back their government. He echoed the previous speaker about restoring the peoples' trust. 6:11:03 PM JEB STUART, representing self, Deadhorse, said the people voted for Governor Dunleavy because he said he would restore the dividends and cut spending and he'd like to see that happen. Responding to a question from the Chair, he said he supports SJR 5. 6:11:48 PM At ease 6:13:45 PM CHAIR SHOWER reconvened the meeting. 6:13:54 PM JIM CLARK, representing self, Fairbanks, stated that he was standing up to say that the government needs to learn to live within its means. Governor Dunleavy is trying to draw the line. Responding to a question from the Chair, he said he supports SJR 5. 6:14:22 PM SENATOR MICCICHE joined the committee. 6:15:47 PM KAREN PERRY, representing self, Chugiak, said she struggles with SJR 5 because everyone knows that legislators ignore the statutes and she wonders if there should be a constitutional amendment that would require legislators to go to prison for that. She opined that legislators need to go on the record and let their constituents know where they stand on this and other issues. She also commented on her lack of faith in the election process. Responding to a question from the Chair, she said she couldn't decide whether or not she supports SJR 5. 6:17:42 PM GARY MCDONALD, representing self, Anchorage, stated support for SJR 5. He singled out Senator Reinbold for special recognition. 6:18:20 PM WILLIAM TOPEL, representing self, Anchorage, stated support for SJR 5. 6:18:36 PM KYLER DIAS, representing self, Wasilla, testified in support of SJR 5. He described the way people are approaching the permanent fund as crazy nonsense. He said he supports SJR 5 if it protects the principal of the PFD. He spoke in support of cutting waste, reducing the size of government, and capping the PFD for people who make more than $100,000 a year. He also questioned continuing to put money into the PFD because it's in the stock market and is self-sustaining. He favors guaranteeing a PFD for generations to come. 6:20:54 PM VIKKI JO KENNEDY, representing self, Kodiak, testified in support of SJR 5. She drew an analogy between SJR 5 and the Distant Early Warning (DEW) line. They were both designed to protect Alaskans, she said. 6:23:01 PM RANDY FINCH, representing self, Nikiski, stated support for SJR 5. He said the people should vote on this; the burden should not be on the legislature. 6:23:52 PM JACK JOHNSON, representing self, North Pole, stated support for SJR 5. He is a senior on a fixed income and the dividend is more than just a little helpful. 6:24:51 PM FREDLAIN ELLIS, representing self, Wasilla, stated support for SJR 5. She wants to vote on this issue. "It means too much to too many of us whether we're seniors or not," she said. 6:25:46 PM SUSAN JOHNSON, representing self, North Pole, stated support for SJR 5. 6:26:23 PM MATTHEW HELLER, representing self, Fairbanks, stated support for SJR 5. "That's it; I support it," he said. 6:27:22 PM MARK SESLER, representing self, Soldotna, stated support for SJR 5. "Put it into the constitution," he said. 6:27:48 PM SALLY JOHNSON, representing self, Palmer, stated, "Put SJR 5 in the constitution as it was [written] by Jay Hammond." She shared that she is on a very limited income and she believes the legislature needs to tighten its belt. 6:28:53 PM DEBORAH HOLLAND, representing self, Anchorage, said she was calling in support of SJR 5. She said she wants it in the constitution so legislators can't get their hands on the people's money. 6:29:42 PM TANIA KITKA, representing self, Kodiak, stated support for SJR 5. 6:30:06 PM At ease 6:32:33 PM CHAIR SHOWER reconvened 6:32:47 PM JOHN MOROPOULOS, representing self, Anchorage, stated support for SJR 5. He believes that expenditures of the permanent fund should be in the hands of Alaskans. 6:33:23 PM At ease 6:36:43 PM CHAIR SHOWER reconvened the meeting. 6:36:49 PM SANDRA ST. JOHN, representing self, Sutton, stated support for SJR 5 and having the PFD added to the constitution. 6:37:13 PM MELANIE GLATT, representing self, Palmer, stated support for SJR 5 and expressed disappointment that the legislature has failed to deliver a gas line. That could have solved many problems, she said. 6:37:50 PM LAWRENCE SALZMAN, representing self, Fairbanks, stated that he currently supports SJR 5. He believes it is a beginning to protect the permanent fund and he believes the $12 billion from the Constitutional Budget Reserve should be repaid. His views are similar to a majority of Alaskans who voted for Governor Dunleavy. 6:38:52 PM At ease 6:41:47 PM CHAIR SHOWER reconvened the meeting. 6:41:56 PM DENISE BOGUE-SKONIECZKI, representing self and her husband, Anchorage, said leave our PFDs alone and return what has been taken. She opined that legislators should not be paid for any special sessions and schools can cut management positions. Responding to a question from Senator Micciche, she said she supports SJR 5. 6:43:42 PM SHERRY PARSONS, representing self, Wasilla, said the people need a say in how the permanent fund is distributed. She believes the government should stay out of it because the money belongs to the people who will spend it wisely. Responding to a question from the Chair, she said she supports SJR 5. 6:45:22 PM At ease 6:49:04 PM CHAIR SHOWER reconvened the meeting. 6:49:09 PM CHERYL SHUPE, representing self, Fairbanks, said she believes that the PFD should be constitutionally protected and restored to its original form. The state should live within its means. 6:49:46 PM KEN BROWN, representing self, Soldotna, stated support for SJR 5 to constitutionalize the PFD. The state needs to downsize and keep money in the private sector, he said. 6:50:20 PM GREG PARSONS, representing self, Wasilla, stated support for SJR 5. The legislature needs to figure out how to pay for government without using the dividend, he said. 6:51:12 PM At ease 7:00:15 PM CHAIR SHOWER reconvened the meeting. 7:00:19 PM ALBERT NINGEULOOK, representing self, Shishmaref, said he hopes the Governor keeps the PFD intact and does not use it for the state budget. The people in rural areas need their money. Responding to a question from the Chair, he said he couldn't say whether he supports SJR 5, but he is in favor of saving the PFD and using it wisely. 7:01:45 PM KIM BERGEY, representing self, Palmer, said she is calling to state support for SJR 5 to enshrine the PFD in the constitution and not use it for government spending. She said, "I know that we the people can use it diligently and wisely for our needs." 7:02:21 PM At ease 7:07:01 PM CHAIR SHOWER reconvened the meeting. 7:07:09 PM GEORGE PIERCE, representing self, Kasilof, stated support for SJR 5. The PFD should be enshrined in the constitution and not be used by government. 7:08:03 PM DEAN KASISCHKE, representing self, Seward, said he supports SJR 5, full constitutional protection of the PFD, and no change to the PFD without a public vote. 7:08:39 PM At ease 7:11:24 PM CHAIR SHOWER reconvened the meeting. 7:11:29 PM RODERICK PERRY, representing self, Chugiak, stated support for SJR 5 to enshrine the PFD in the constitution by a vote of Alaskans. "Stop ignoring the rule of law and follow the statutes," he said. 7:12:04 PM RON GILLHAM, representing self, Soldotna, stated support for SJR 5. He believes the permanent fund should be in the constitution so his kids and grandkids can have it for the future. CHAIR SHOWER advised that Senator Coghill and Senator Micciche were attending other meetings. 7:13:05 PM At ease 7:17:36 PM CHAIR SHOWER reconvened the meeting. 7:17:40 PM DEBRA KIRK, representing self, Kodiak, stated opposition to SJR 5 because she is pleased with the infrastructure that has built up around the state the last 40-50 years and she'd hate it to go backwards. 7:18:14 PM JANET FAURE, representing self, Juneau, stated opposition to SJR 5. She and her husband appreciate the services and infrastructure the state has provided for its citizens. 7:18:55 PM At ease 7:25:15 PM CHAIR SHOWER reconvened the meeting. 7:25:19 PM WILLIAM WARREN, representing self, Nikiski, stated support for SJR 5. He said he is amazed at the "hard and fast grab" for the permanent fund dividend and he believes putting it in the constitution is the only way to protect it. He highlighted that the Alaska LNG pipeline will eventually be built and provide revenue to the state but in the meantime the dividend should be enshrined. 7:27:24 PM At ease 7:29:39 PM CHAIR SHOWER reconvened the meeting. 7:29:52 PM MARY FORBES, representing self, Kodiak, stated opposition to SJR 5. She disagreed with the previous caller and related her belief that the permanent fund dividend is not a God-given right to the citizens of Alaska. Rather, the permanent fund was intended to be partially used to fund government once the oil ran out. She said her research indicates that was Jay Hammond's intention. She doesn't want to see Alaskans' quality of life to deteriorate to the point that they leave the state and Governor Dunleavy opens the state to the highest bidder to "rape and pillage" Alaska's resources. Responding to a question from the Chair, she confirmed that she opposes SJR 5. 7:30:57 PM CAROL CARMAN, representing self, Palmer, stated support for SJR 5 and complete disagreement with the last caller. The research she's done on the permanent fund and the dividend itself demonstrates that the dividend was intended to give the royalty share to Alaskans for their [loss of] mineral rights. She explained that once Alaska became a state the people as a whole assumed ownership of the minerals rights and received royalty payments in lieu of individual ownership rights. Her belief is that it is necessary to enshrine the PFD in the constitution to keep government from taking what is the people's portion. 7:32:22 PM At ease 7:34:47 PM CHAIR SHOWER reconvened the meeting. 7:34:54 PM KACI GILLHAM, representing self and family, Sterling, stated support for SJR 5 to enshrine the PFD in the constitution. 7:35:34 PM NEVA MILLS, representing self, Chatanika, stated support for SJR 5 to protect the permanent fund. She highlighted the waste in the budget and opined that the dividend should never have been stolen from the people. She said, "it's been stated in research papers" that about 7,000 jobs would be eliminated if Governor Dunleavy's budget is adopted. Her understanding is that departments are receiving money for vacant positions. She said she knows that the university wastes several hundred thousand dollars at the end of the fiscal year just to qualify for the same amount of money the next fiscal year. That needs to stop. She emphasized that parents, not teachers, need to step up and raise their children so teachers have time to teach. She warned that if the permanent fund [dividend] is cut, over 9,000 private sector jobs will be lost and low income seniors such as herself may be forced to leave Alaska. She said she prays every day that legislators will have the wisdom and knowledge to fix this problem. SENATOR KAWASAKI asked for the source of the report or study she mentioned at the beginning of her testimony. MS. MILLS said she didn't recall but she would email the information to the committee. CHAIR SHOWER asked her to send the information to senate.state.affairs@akleg.gov. 7:41:34 PM SIRELEI KAORI, representing self, Anchorage, stated support for SJR 5. 7:41:44 PM JAMES SQUIRES, representing self, Gulkana, stated support for SJR 5. 7:41:56 PM At ease 7:46:54 PM CHAIR SHOWER reconvened the meeting. 7:46:58 PM MARK GLATT, representing self, Palmer, stated support for SJR 5. He opined that the dividend should be constitutionally protected. 7:47:40 PM At ease 7:51:26 PM CHAIR SHOWER reconvened the meeting. 7:51:30 PM DONNA WILMOT, representing self and her family, Kasilof, stated support for SJR 5 to enshrine the PFD in the constitution. 7:52:01 PM BRETT WILMOT, representing self, Kasilof, stated support for SJR 5 to enshrine the PFD in the constitution. 7:52:26 PM At ease 7:56:08 PM CHAIR SHOWER reconvened the meeting. 7:56:11 PM LARRY PANNELL, representing self and family, Soldotna, stated support for SJR 5. He believes the PFD needs to be enshrined in the constitution to protect it now and for future generations. 7:56:51 PM At ease 7:58:45 PM CHAIR SHOWER reconvened the meeting. 7:58:50 PM STACEY WRIGHT, representing self, Kenai, stated support for SJR 5 to enshrine the PFD in the constitution. 7:59:12 PM CHAIR SHOWER closed public testimony on SJR 5 and advised that written testimony could be submitted to senate.state.affairs@akleg.gov. [SJR 5 was held in committee.]