00 SENATE CS FOR CS FOR HOUSE BILL NO. 231(FIN) 01 "An Act relating to deposits to the Alaska permanent fund from mineral lease 02 rentals, royalties, royalty sale proceeds, net profit shares under AS 38.05.180(f) 03 and (g), federal mineral revenue sharing payments received by the state from 04 mineral leases, and bonuses received by the state from mineral leases, and 05 limiting deposits from those sources to the 25 percent required under art. IX, 06 sec. 15, Constitution of the State of Alaska; relating to income of the Alaska 07 permanent fund, to the Alaska Income Account, and to permanent fund 08 dividends; authorizing an advisory vote on a long term financial plan for the 09 state; and providing for an effective date." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11 * Section 1. AS 37.05.540 is amended to read: 12 Sec. 37.05.540. Alaska Income Account [BUDGET RESERVE FUND]; 13 appropriation limit. (a) There is established as a separate fund in the state treasury 14 the Alaska Income Account [BUDGET RESERVE FUND]. The Alaska Income 01 Account [BUDGET RESERVE FUND] consists of appropriations to the fund. Money 02 received by the state that is subject to the appropriation limit under (b) of this section 03 and that exceeds that limit, may be appropriated to the Alaska Income Account 04 [BUDGET RESERVE FUND]. 05 (b) Except for appropriations to the permanent fund or for Alaska permanent 06 fund dividends, appropriations to the Alaska Income Account [BUDGET RESERVE 07 FUND], appropriations of revenue bond proceeds, appropriations required to pay the 08 principal and interest on general obligation bonds, and appropriations of money 09 received from a nonstate source in trust for a specific purpose, including revenue of 10 a public enterprise or public corporation of the state that issues revenue bonds, 11 appropriations from the mental health trust settlement income account (AS 37.14.036), 12 and appropriations made to the mental health trust fund (AS 37.14.031), appropriations 13 from the treasury made in a fiscal year may not exceed appropriations made in the 14 preceding fiscal year by more than five percent plus the change in population and 15 inflation since the beginning of the preceding fiscal year. For purposes of applying 16 this limit an appropriation is considered to be made in the fiscal year in which it is 17 enacted and a reappropriation remains attributed to the fiscal year in which the original 18 appropriation is enacted. The determination of the change in population for purposes 19 of this subsection shall be based on an annual estimate of population by the 20 Department of Labor. The determination of the change in inflation for purposes of this 21 subsection shall be based on the Consumer Price Index for all urban consumers for 22 Anchorage prepared by the United States Bureau of Labor Statistics. The amount of 23 money received by the state that is subject to the appropriation limit includes the 24 balance in the general fund carried forward from the preceding fiscal year. 25 (c) If the legislature determines that the money subject to the appropriation 26 limit received by the state in a fiscal year is less than the maximum permitted to be 27 appropriated under (b) of this section, up to 25 percent of the balance of the Alaska 28 Income Account [BUDGET RESERVE FUND] may be appropriated to the general 29 fund. 30 (d) The Department of Revenue shall manage and invest assets of the Alaska 31 Income Account [BUDGET RESERVE FUND] in the manner set out for the 01 management and investment of the assets of the general fund under AS 37.10.070. 02 Income from investment of the Alaska Income Account [BUDGET RESERVE 03 FUND] may be appropriated to the fund each year by law. 04 (e) Notwithstanding other provisions of this section, appropriations may be 05 made from the Alaska Income Account [BUDGET RESERVE FUND] needed by the 06 governor to meet a disaster. In this subsection, "disaster" has the meaning given in 07 AS 26.23.900. 08 * Sec. 2. AS 37.10.420(a) is amended to read: 09 (a) For purposes of applying art. IX, sec. 17(b), Constitution of the State of 10 Alaska, 11 (1) "the amount available for appropriation" or "funds available for 12 appropriation" means 13 (A) the unrestricted revenue accruing to the general fund during 14 the fiscal year; 15 (B) general fund program receipts as defined in AS 37.05.146; 16 (C) the unreserved, undesignated general fund balance carried 17 forward from the preceding fiscal year that is not subject to the repayment 18 obligation imposed by art. IX, sec. 17(d), Constitution of the State of Alaska; 19 and 20 (D) the balance in the Alaska Income Account [STATUTORY 21 BUDGET RESERVE FUND] established in AS 37.05.540; 22 (2) "the amount appropriated for the previous fiscal year" means the 23 amount appropriated from the 24 (A) constitutional budget reserve fund under the authority 25 granted in art. IX, sec. 17, Constitution of the State of Alaska; and 26 (B) same revenue sources used to calculate the money available 27 for appropriation for the current fiscal year; and 28 (3) "the amount of appropriations made in the previous calendar year 29 for the previous fiscal year" means appropriations made from sources identified in (2) 30 of this subsection for a fiscal year that were enacted during the calendar year that ends 31 on December 31 of that same fiscal year. 01 * Sec. 3. AS 37.05.550(b) is amended to read: 02 (b) The legislature may appropriate to the fund money received by the state 03 as Alaska marine highway system program receipts or from a settlement or final 04 judicial determination of the Dinkum Sands case (United States v. Alaska) and the 05 North Slope royalty case (State v. Amerada Hess, et al.) and not deposited into the 06 Alaska permanent fund under AS 37.13.010(a)(1) [AS 37.13.010(a)(1) or (2)] or into 07 the public school trust fund under AS 37.14.150. 08 * Sec. 4. AS 37.13.010(a) is amended to read: 09 (a) Under art. IX, sec. 15 , of the state constitution, there is established as a 10 separate fund the Alaska permanent fund. The Alaska permanent fund consists of 11 (1) 25 percent of all mineral lease rentals, royalties, royalty sale 12 proceeds, net profit shares under AS 38.05.180(f) and (g), 25 percent of [AND] 13 federal mineral revenue sharing payments received by the state from mineral leases 14 [ISSUED ON OR BEFORE DECEMBER 1, 1979], and 25 percent of all bonuses 15 received by the state from mineral leases [ISSUED ON OR BEFORE FEBRUARY 15, 16 1980]; and 17 (2) [50 PERCENT OF ALL MINERAL LEASE RENTALS, 18 ROYALTIES, ROYALTY SALE PROCEEDS, NET PROFIT SHARES UNDER 19 AS 38.05.180(f) AND (g), AND FEDERAL MINERAL REVENUE SHARING 20 PAYMENTS RECEIVED BY THE STATE FROM MINERAL LEASES ISSUED 21 AFTER DECEMBER 1, 1979, AND 50 PERCENT OF ALL BONUSES RECEIVED 22 BY THE STATE FROM MINERAL LEASES ISSUED AFTER FEBRUARY 15, 23 1980; 24 (3)] any other money appropriated to or otherwise allocated by law or 25 former law to the Alaska permanent fund. 26 * Sec. 5. AS 37.13.140 is repealed and reenacted to read: 27 Sec. 37.13.140. Income. All income of the fund shall be deposited in the 28 earnings reserve account established under AS 37.13.145. The balance of the earnings 29 reserve account shall be determined according to generally accepted accounting 30 principles. Income of the fund includes income of the earnings reserve account. 31 * Sec. 6. AS 37.13.145 is repealed and reenacted to read: 01 Sec. 37.13.145. Disposition of income. (a) The earnings reserve account is 02 established as a separate account in the fund. Subject to (c) of this section, following 03 the end of each fiscal year, an amount shall be transferred from the earnings reserve 04 account to the general fund that is equal to 2.5 percent of the average of the quarter- 05 end market value of the last 20 fiscal year quarters before the fiscal year just ended of 06 (1) the fund, including the earnings reserve account; and 07 (2) the budget reserve fund (art. IX, sec. 17, Constitution of the State 08 of Alaska). 09 (b) After the transfer under (a) of this section, an amount shall be transferred 10 from the earnings reserve account to the dividend fund (AS 43.23.045) that is equal 11 to 2.75 percent of the average of the quarter-end market value of the last 20 fiscal year 12 quarters before the fiscal year just ended of 13 (1) the fund, including the earnings reserve account; and 14 (2) the budget reserve fund (art. IX, sec. 17, Constitution of the State 15 of Alaska). 16 (c) Transfers following the end of a fiscal year that are required under this 17 section shall be made during the next fiscal year and may consist of separate 18 installments transferred on different days; however, all installments must be transferred 19 during the same fiscal year. Transfers following the end of a fiscal year that are 20 required under this section may not exceed the entire balance that is in the earnings 21 reserve account during the fiscal year in which the installments are transferred. 22 * Sec. 7. AS 37.13.300(c) is amended to read: 23 (c) Net income from the mental health trust fund may not be included in the 24 [COMPUTATION OF NET] income of the Alaska permanent fund [AVAILABLE 25 FOR DISTRIBUTION] under AS 37.13.140. 26 * Sec. 8. AS 37.17.020(b) is amended to read: 27 (b) The endowment shall be held and invested by the Alaska Permanent Fund 28 Corporation subject to AS 37.13.120; however, net income from the endowment shall 29 be distributed under AS 37.17.010 - 37.17.110 and 37.17.225. Net income from the 30 endowment may not be included in the [COMPUTATION OF NET] income of the 31 Alaska permanent fund [AVAILABLE FOR DISTRIBUTION] under AS 37.13.140. 01 * Sec. 9. AS 37.17.440(b) is amended to read: 02 (b) The principal and income of the endowment shall be held and invested by 03 the Alaska Permanent Fund Corporation subject to AS 37.13.120; however, net income 04 from the endowment and subsequent income earned on net income from the 05 endowment shall be held in a separate account until appropriated by the legislature. 06 Net income from the endowment may not be included in the [COMPUTATION OF 07 NET] income of the Alaska permanent fund [AVAILABLE FOR DISTRIBUTION] 08 under AS 37.13.140. 09 * Sec. 10. TRANSITION. (a) Notwithstanding AS 37.13.145(a), as repealed and 10 reenacted in sec. 6 of this Act, a transfer from the earnings reserve account to the general fund 11 following the end of 12 (1) fiscal year 2001 is equal to 2.5 percent of the average of the quarter-end 13 market value for the last 12 fiscal year quarters before the fiscal year just ended of 14 (A) the Alaska permanent fund (art. IX, sec. 15, Constitution of the 15 State of Alaska), including the earnings reserve account; and 16 (B) the budget reserve fund (art IX, sec. 17, Constitution of the State 17 of Alaska); 18 (2) fiscal year 2002 is equal to 2.5 percent of the average of the quarter-end 19 market value for the last 16 fiscal year quarters before the fiscal year just ended of 20 (A) the Alaska permanent fund (art. IX, sec. 15, Constitution of the 21 State of Alaska), including the earnings reserve account; and 22 (B) the budget reserve fund (art. IX, sec. 17, Constitution of the State 23 of Alaska). 24 (b) Notwithstanding AS 37.13.145(b), as repealed and reenacted in sec. 4 of this Act, 25 a transfer from the earnings reserve account to the dividend fund following the end of 26 (1) fiscal year 2001 is equal to 2.75 percent of the average of the quarter-end 27 market value for the last 12 fiscal year quarters before the fiscal year just ended of 28 (A) the Alaska permanent fund (art. IX, sec. 15, Constitution of the 29 State of Alaska), including the earnings reserve account; and 30 (B) the budget reserve fund (art IX, sec. 17, Constitution of the State 31 of Alaska); 01 (2) fiscal year 2002 is equal to 2.75 percent of the average of the quarter-end 02 market value for the last 16 fiscal year quarters before the fiscal year just ended of 03 (A) the Alaska permanent fund (art. IX, sec. 15, Constitution of the 04 State of Alaska), including the earnings reserve account; and 05 (B) the budget reserve fund (art. IX, sec. 17, Constitution of the State 06 of Alaska). 07 * Sec. 11. ADVISORY VOTE. At a special election to be held on September 14, 1999, 08 in substantial compliance with the election laws of the state, including absentee voting, the 09 lieutenant governor shall place before the qualified voters of the state a question advisory to 10 the legislature and the governor. The question shall appear on the ballot in the following 11 form: 12 Q U E S T I O N 13 Preamble: The state treasury's reliance upon declining Alaska oil production 14 and volatile oil prices constitutes an unsustainable state budget system. The 15 legislature and governor seek the public's input in choosing a long-term budget 16 plan. Please mark "yes" or "no" beside one or both plans that you believe the 17 legislature and governor should proceed to implement as a balanced budget 18 plan. 19 "Plan A" Description 20 Summary of Plan A: Plan A has further spending reductions. Dividends are 21 a percentage of the value of the Alaska permanent fund. This plan has no 22 personal income tax. 23 (1)Spending Reductions/Spending Limits: Continue state general fund 24 budget reductions of at least $70,000,000 over the next two fiscal 25 years. 26 (2)Permanent Fund: Guarantee the Alaska permanent fund is inflation- 27 proofed to protect the value of the principal of the fund for all Alaskans, including future 28 generations. 29 (3)Permanent Fund Dividends: Guarantee a dividend is paid to qualified 30 Alaska residents at a minimum of $1,700 in 1999 and $1,700 in 2000. 31 Thereafter, the annual dividend is based on a rate of 2.75 percent of the 01 combined market value of the Alaska permanent fund, including the 02 Alaska permanent fund earnings reserve account, and the constitutional 03 budget reserve fund. 04 (4)Permanent Fund Earnings Reserve: Guarantee inflation-proofing the 05 Alaska permanent fund and payment of permanent fund dividends, then 06 prioritize remaining funds in the Alaska permanent fund earnings 07 reserve account for education, public safety, and transportation. 08 (5)No Income Tax: Use at least $100,000,000 in new revenues instead of 09 implementing new broad-based taxes. 10 Plan A Yes [ ] Plan A No [ ] 11 "Plan B" Description 12 Summary of Plan: Plan B has no further state spending reductions. Dividends 13 from the Alaska permanent fund are calculated under the current method. This 14 plan includes a personal income tax. 15 (1)Spending Reductions: No further reductions to state spending. 16 (2)Permanent Fund: Guarantee the Alaska permanent fund is inflation- 17 proofed to protect the value of the principal of the fund for all Alaskans, including future 18 generations. 19 (3)Permanent Fund Dividends: Dividends will not be changed from the 20 current formula and method of calculation. 21 (4)Permanent Fund Earnings Reserve: Immediately transfer 22 $4,000,000,000 from the permanent fund earnings to the constitutional 23 budget reserve fund, with an additional $4,000,000,000 in 2010, and 24 $4,000,000,000 in 2020. Spend the constitutional budget reserve fund 25 earnings for state government services. 26 (5)Income Tax: Impose a personal income tax on certain wage earners 27 projected to be 31 percent of a person's federal income tax, collecting 28 $350,000,000. 29 Plan B Yes [ ] Plan B No [ ] 30 * Sec. 12. Sections 1 - 10 of this Act take effect January 1, 2001. 31 * Sec. 13. Section 11 of this Act takes effect immediately under AS 01.10.070(c).