00 SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 224 01 "An Act relating to income of the Alaska permanent fund; relating to the disposition of 02 income of the Alaska permanent fund; establishing and relating to the distribution 03 account; relating to the calculation of permanent fund dividends; relating to the 04 dividend fund; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 37.13.140 is amended to read: 07 Sec. 37.13.140. Income and distribution. Net income of the fund includes 08 income of the earnings reserve account established under AS 37.13.145. Net income 09 of the fund shall be computed annually as of the last day of the fiscal year in 10 accordance with generally accepted accounting principles, excluding any unrealized 11 gains or losses. Money [INCOME] available for distribution equals 4.5 [21] percent of 12 the average market value [NET INCOME] of the balance of the fund for the first 13 [LAST] five of the six fiscal years immediately preceding the current fiscal year, 14 including any unrealized gains or losses, but excluding that portion of the 01 principal of the fund attributed to the settlement of State v. Amerada Hess, et al., 02 1JU-77-847 Civ. (Superior Court, First Judicial District) on July 1, 2004, as 03 determined at the end of the fiscal year in accordance with generally accepted 04 accounting principles. The distribution under this section [FISCAL YEARS, 05 INCLUDING THE FISCAL YEAR JUST ENDED, BUT] may not exceed net income 06 of the fund for the fiscal year just ended plus the balance in the earnings reserve 07 account described in AS 37.13.145. 08 * Sec. 2. AS 37.13.140 is amended by adding a new subsection to read: 09 (b) The amount available for distribution under (a) of this section shall be used 10 to satisfy any net deficit of unrestricted general funds in the proposed capital and 11 operating budgets submitted under AS 37.07.020 for the succeeding fiscal year. The 12 amount available for distribution and used to satisfy any net deficit of unrestricted 13 general funds under this subsection shall be used before a capital, operating, or 14 supplemental budget includes revenue from a personal income tax assessed on state 15 residents. 16 * Sec. 3. AS 37.13.145(b) is amended to read: 17 (b) At the beginning [END] of each fiscal year, the corporation shall transfer 18 from the earnings reserve account to the distribution account established under 19 AS 43.23.049 the amount [DIVIDEND FUND ESTABLISHED UNDER 20 AS 43.23.045, 50 PERCENT OF THE INCOME] available for distribution under 21 AS 37.13.140. 22 * Sec. 4. AS 37.13.145(d) is amended to read: 23 (d) Income [NOTWITHSTANDING (b) OF THIS SECTION, INCOME] 24 earned on money awarded in or received as a result of State v. Amerada Hess, et al., 25 1JU-77-847 Civ. (Superior Court, First Judicial District), including settlement, 26 summary judgment, or adjustment to a royalty-in-kind contract that is tied to the 27 outcome of this case, or interest earned on the money, or on the earnings of the money 28 shall be treated in the same manner as other income of the Alaska permanent fund, 29 except that it is not available for distribution under AS 37.13.140 [TO THE 30 DIVIDEND FUND OR FOR TRANSFERS TO THE PRINCIPAL UNDER (c) OF 31 THIS SECTION], and shall be annually deposited into the Alaska capital income fund 01 (AS 37.05.565). 02 * Sec. 5. AS 43.23.025(a) is amended to read: 03 (a) By October 1 of each year, the commissioner shall determine the value of 04 each permanent fund dividend for that year, subject to (c) of this section, by 05 (1) determining the total amount available for dividend payments, 06 which equals 07 (A) the amount available for transfer [OF INCOME OF THE 08 ALASKA PERMANENT FUND TRANSFERRED] to the dividend fund 09 under AS 43.23.049(c) [AS 37.13.145(b)] during the current year; 10 (B) plus the unexpended and unobligated balances of prior 11 fiscal year appropriations that lapse into the dividend fund under 12 AS 43.23.045(d); 13 (C) less the amount necessary to pay prior year dividends from 14 the dividend fund in the current year under AS 43.23.005(h), 43.23.021, and 15 43.23.055(3) and (7); 16 (D) less the amount necessary to pay dividends from the 17 dividend fund due to eligible applicants who, as determined by the department, 18 filed for a previous year's dividend by the filing deadline but who were not 19 included in a previous year's dividend computation; 20 (E) less appropriations from the dividend fund during the 21 current year, including amounts to pay costs of administering the dividend 22 program and the hold harmless provisions of AS 43.23.075; 23 (2) determining the number of individuals eligible to receive a 24 dividend payment for the current year and the number of estates and successors 25 eligible to receive a dividend payment for the current year under AS 43.23.005(h); and 26 (3) dividing the amount determined under (1) of this subsection by the 27 amount determined under (2) of this subsection. 28 * Sec. 6. AS 43.23.025 is amended by adding new subsections to read: 29 (c) Notwithstanding the amount calculated under (a) of this section, the 30 amount of each permanent fund dividend may not exceed $2,000, and, based on the 31 combined value of the constitutional budget reserve fund (art. IX, sec. 17, Constitution 01 of the State of Alaska) and the statutory budget reserve fund (AS 37.05.540), 02 including unrealized gains or losses, determined in accordance with generally accepted 03 accounting principles on December 31 of the calendar year immediately preceding the 04 current year, the amount of each permanent fund dividend shall be further limited as 05 follows: 06 (1) if the combined value is less than $2,500,000,000, then the amount 07 of each permanent fund dividend may not exceed $250; 08 (2) if the combined value is at least $2,500,000,000 but less than 09 $5,000,000,000, then the amount of each permanent fund dividend may not exceed 10 $500; 11 (3) if the combined value is at least $5,000,000,000 but less than 12 $7,500,000,000, then the amount of each permanent fund dividend may not exceed 13 $750; 14 (4) if the combined value is at least $7,500,000,000 but less than 15 $10,000,000,000, then the amount of each permanent fund dividend may not exceed 16 $1,000; 17 (5) if the combined value is at least $10,000,000,000 but less than 18 $12,500,000,000, then the amount of each permanent fund dividend may not exceed 19 $1,250; 20 (6) if the combined value is at least $12,500,000,000 but less than 21 $15,000,000,000, then the amount of each permanent fund dividend may not exceed 22 $1,500; 23 (7) if the combined value is $15,000,000,000 or more, then the amount 24 of each permanent fund dividend may not exceed $2,000. 25 (d) Notwithstanding the amount calculated under (a) or (c) of this section, the 26 amount of the permanent fund dividend shall be zero if a personal income tax is 27 assessed on state residents during the fiscal year in which the permanent fund dividend 28 is to be distributed. 29 * Sec. 7. AS 43.23 is amended by adding a new section to read: 30 Sec. 43.23.049. Distribution account. (a) The distribution account is 31 established as a separate account in the general fund. The distribution account shall be 01 administered by the commissioner and shall be invested by the commissioner in the 02 same manner as provided in AS 37.10.070. The distribution account consists of money 03 transferred under AS 37.13.145(b) and other money appropriated to the account. 04 (b) On July 1 of each year, the department shall transfer the amount 05 appropriated to satisfy any net deficit of unrestricted general funds as provided under 06 AS 37.13.140(b) from the distribution account to the general fund. The amount 07 available for distribution and used to satisfy any net deficit of unrestricted general 08 funds under this subsection shall be transferred before a capital, operating, or 09 supplemental budget includes revenue from a personal income tax assessed on state 10 residents. 11 (c) On October 1 of each year, after a transfer under (b) of this section, the 12 department shall, subject to appropriation, transfer the amount necessary to pay 13 permanent fund dividends and administrative and associated costs, as calculated under 14 AS 43.23.025, from the distribution account to the dividend fund established under 15 AS 43.23.045. 16 (d) Nothing in this section prohibits the legislature from making an 17 appropriation to the dividend fund established under AS 43.23.045 from a source other 18 than the distribution account. 19 (e) Unless specified otherwise in an appropriation act, if appropriations from 20 the budget reserve fund (art. IX, sec. 17, Constitution of the State of Alaska) have not 21 been repaid, the unexpended and unobligated balance of the distribution account shall 22 be deposited into the budget reserve fund under art. IX, sec. 17(d), Constitution of the 23 State of Alaska, at the end of the fiscal year. If previous appropriations from the 24 budget reserve fund (art. IX, sec. 17, Constitution of the State of Alaska) have been 25 repaid, the unexpended and unobligated balance of the distribution account shall be 26 transferred to the statutory budget reserve fund (AS 37.05.540) at the end of the fiscal 27 year. 28 * Sec. 8. AS 37.13.145(c) is repealed. 29 * Sec. 9. This Act takes effect June 30, 2016.