Alaska State Legislature

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HCS CSSB 26(FIN)(efd fld H): "An Act relating to an appropriation limit; relating to the budget responsibilities of the governor; relating to the Alaska permanent fund, the earnings of the Alaska permanent fund, and the earnings reserve account; relating to the mental health trust fund; relating to deposits into the dividend fund; and relating to the calculation and payment of permanent fund dividends."

00 HOUSE CS FOR CS FOR SENATE BILL NO. 26(FIN)(efd fld H) 01 "An Act relating to an appropriation limit; relating to the budget responsibilities of the 02 governor; relating to the Alaska permanent fund, the earnings of the Alaska permanent 03 fund, and the earnings reserve account; relating to the mental health trust fund; relating 04 to deposits into the dividend fund; and relating to the calculation and payment of 05 permanent fund dividends." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 37.05.550(b) is amended to read: 08 (b) The legislature may appropriate to the fund money received by the state as 09 Alaska marine highway system program receipts or from a settlement or final judicial 10 determination of the Dinkum Sands case (United States v. Alaska) and the North 11 Slope royalty case (State v. Amerada Hess, et al.) and not deposited into the Alaska 12 permanent fund under AS 37.13.010(a) [AS 37.13.010(a)(1) OR (2)] or into the public 13 school trust fund under AS 37.14.150.

01 * Sec. 2. AS 37.07.020 is amended by adding a new subsection to read: 02 (f) In addition to the budget and bills submitted under (a) of this section and 03 the fiscal plan submitted under (b) of this section, the governor shall submit a report 04 on how the budget prepared under (a) of this section complies with the appropriation 05 limit set out in art. IX, sec. 16, Constitution of the State of Alaska. 06 * Sec. 3. AS 37.13.010(a) is amended to read: 07 (a) Under art. IX, sec. 15, of the state constitution, there is established as a 08 separate fund the Alaska permanent fund. The Alaska permanent fund consists of 09 (1) 25 percent of all mineral lease rentals, royalties, royalty sale 10 proceeds, net profit shares under AS 38.05.180(f) and (g), and federal mineral revenue 11 sharing payments received by the state from mineral leases [ISSUED ON OR 12 BEFORE DECEMBER 1, 1979], and 25 percent of all bonuses received by the state 13 from mineral leases [ISSUED ON OR BEFORE FEBRUARY 15, 1980]; and 14 (2) [50 PERCENT OF ALL MINERAL LEASE RENTALS, 15 ROYALTIES, ROYALTY SALE PROCEEDS, NET PROFIT SHARES UNDER 16 AS 38.05.180(f) AND (g), AND FEDERAL MINERAL REVENUE SHARING 17 PAYMENTS RECEIVED BY THE STATE FROM MINERAL LEASES ISSUED 18 AFTER DECEMBER 1, 1979, AND 50 PERCENT OF ALL BONUSES RECEIVED 19 BY THE STATE FROM MINERAL LEASES ISSUED AFTER FEBRUARY 15, 20 1980; AND 21 (3)] any other money appropriated to or otherwise allocated by law or 22 former law to the Alaska permanent fund. 23 * Sec. 4. AS 37.13.140 is amended to read: 24 Sec. 37.13.140. Income and market value. Net income of the fund includes 25 income of the earnings reserve account established under AS 37.13.145. The 26 corporation shall determine the net [NET] income of the fund [SHALL BE 27 COMPUTED ANNUALLY AS OF THE LAST DAY OF THE FISCAL YEAR] in 28 accordance with generally accepted accounting principles, excluding any unrealized 29 gains or losses. [INCOME AVAILABLE FOR DISTRIBUTION EQUALS 21 30 PERCENT OF THE NET INCOME OF THE FUND FOR THE LAST FIVE FISCAL 31 YEARS, INCLUDING THE FISCAL YEAR JUST ENDED, BUT MAY NOT

01 EXCEED NET INCOME OF THE FUND FOR THE FISCAL YEAR JUST ENDED 02 PLUS THE BALANCE IN THE EARNINGS RESERVE ACCOUNT DESCRIBED 03 IN AS 37.13.145.] 04 * Sec. 5. AS 37.13.140 is amended by adding new subsections to read: 05 (b) The corporation shall determine the amount available for distribution each 06 year. The amount available for distribution is 5.25 percent of the average market value 07 of the fund for the first five of the preceding six fiscal years, including the fiscal year 08 just ended, computed annually for each fiscal year in accordance with generally 09 accepted accounting principles. In this subsection, "the average market value of the 10 fund" includes the balance of the earnings reserve account established under 11 AS 37.13.145, but does not include that portion of the principal attributed to the 12 settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First 13 Judicial District). 14 (c) In accordance with AS 37.13.145(b)(2), and subject to appropriation, 33 15 percent of the amount available for distribution under (b) of this section shall be 16 reserved for dividends. The remainder of the amount calculated to be available for 17 distribution under (b) of this section shall be reduced by 80 cents for each dollar by 18 which the amount calculated under (1) of this subsection and the amount under (2) of 19 this subsection if the amount calculated under (1) of this subsection exceeds the 20 amount under (2) of this subsection: 21 (1) the total amount of oil and gas production taxes under 22 AS 43.55.011 - 43.55.180, mineral lease rentals, royalties, royalty sale proceeds, net 23 profit shares under AS 38.05.180(f) and (g), and federal mineral revenue sharing 24 payments and bonuses received by the state from mineral leases that are deposited into 25 the general fund in the current fiscal year; 26 (2) the sum of $1,400,000,000, adjusted annually for inflation based on 27 a formula provided by the Department of Labor and Workforce Development, 28 reflecting the change from the previous year in the Consumer Price Index for the 29 Anchorage metropolitan area compiled by the Bureau of Labor and Statistics, United 30 States Department of Labor, and rounded to the nearest $10,000,000. 31 * Sec. 6. AS 37.13.140(b), added by sec. 5 of this Act, is amended to read:

01 (b) The corporation shall determine the amount available for distribution each 02 year. The amount available for distribution is five [5.25] percent of the average market 03 value of the fund for the first five of the preceding six fiscal years, including the fiscal 04 year just ended, computed annually for each fiscal year in accordance with generally 05 accepted accounting principles. In this subsection, "the average market value of the 06 fund" includes the balance of the earnings reserve account established under 07 AS 37.13.145, but does not include that portion of the principal attributed to the 08 settlement of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First 09 Judicial District). 10 * Sec. 7. AS 37.13.145(b) is amended to read: 11 (b) Each [AT THE END OF EACH] fiscal year, the legislature may 12 appropriate [CORPORATION SHALL TRANSFER] from the earnings reserve 13 account to the 14 (1) principal of the fund, 0.25 percent of the average market value 15 of the fund for the first five of the preceding six fiscal years, including the fiscal 16 year just ended, computed annually for each fiscal year in accordance with 17 generally accepted accounting principles; in this paragraph, "average market 18 value of the fund" has the meaning given in AS 37.13.140(b); 19 (2) dividend fund established under AS 43.23.045, 33 [50] percent of 20 the amount [INCOME] available for distribution under AS 37.13.140(b); and 21 (3) general fund, 67 percent of the amount available for 22 distribution under AS 37.13.140(b) [AS 37.13.140]. 23 * Sec. 8. AS 37.13.145(d) is amended to read: 24 (d) Income [NOTWITHSTANDING (b) OF THIS SECTION, INCOME] 25 earned on money awarded in or received as a result of State v. Amerada Hess, et al., 26 1JU-77-847 Civ. (Superior Court, First Judicial District), including settlement, 27 summary judgment, or adjustment to a royalty-in-kind contract that is tied to the 28 outcome of this case, or interest earned on the money, or on the earnings of the money 29 shall be treated in the same manner as other income of the Alaska permanent fund, 30 except that it is not available for distribution [TO THE DIVIDEND FUND OR FOR 31 TRANSFERS TO THE PRINCIPAL] under (b) [(c)] of this section, and shall be

01 annually deposited into the Alaska capital income fund (AS 37.05.565). 02 * Sec. 9. AS 37.13.145 is amended by adding new subsections to read: 03 (e) Each year that the balance of the earnings reserve account exceeds four 04 times the amount calculated for appropriations under (b) and (f) of this section, after 05 the appropriations under (b) and (f) of this section, the legislature may appropriate 06 from the earnings reserve account to the principal of the fund the lesser of the 07 (1) amount by which the balance of the earnings reserve account 08 exceeds four times the amount calculated for appropriations under (b) and (f) of this 09 section; or 10 (2) cumulative amount of inflation on the principal of the fund 11 between the current fiscal year and June 30, 2015, less amounts transferred after 12 June 30, 2015, to the fund to offset the effect of inflation on the principal of the fund. 13 (f) After the appropriations under (b) of this section, but before the 14 appropriation under (e) of this section, for fiscal years 2018 and 2019, the legislature 15 may appropriate from the earnings reserve account an additional amount, if necessary, 16 to provide a dividend of at least $1,250 for each individual. 17 * Sec. 10. AS 37.13.145(e), added by sec. 9 of this Act, is amended to read: 18 (e) Each year that the balance of the earnings reserve account exceeds four 19 times the amount calculated for appropriations under (b) [AND (f)] of this section, 20 after the appropriations under (b) [AND (f)] of this section, the legislature may 21 appropriate from the earnings reserve account to the principal of the fund the lesser of 22 the 23 (1) amount by which the balance of the earnings reserve account 24 exceeds four times the amount calculated for appropriations under (b) [AND (f)] of 25 this section; or 26 (2) cumulative amount of inflation on the principal of the fund 27 between the current fiscal year and June 30, 2015, less amounts transferred after 28 June 30, 2015, to the fund to offset the effect of inflation on the principal of the fund. 29 * Sec. 11. AS 37.13.150 is amended to read: 30 Sec. 37.13.150. Corporation budget. The revenue generated by the fund's 31 investments must be identified as the source of the operating budget of the corporation

01 in the state's operating budget under AS 37.07 (Executive Budget Act). The 02 unexpended balance of the corporation's annual operating budget does not lapse at the 03 end of the fiscal year but shall be treated as income and part of the market value of 04 the fund under AS 37.13.140. 05 * Sec. 12. AS 37.13.300(c) is amended to read: 06 (c) Net income from the mental health trust fund may not be included in the 07 computation of net income or market value available for distribution under 08 AS 37.13.140. 09 * Sec. 13. AS 43.23.025 is amended by adding a new subsection to read: 10 (c) Notwithstanding (a) of this section, the amount of each permanent fund 11 dividend for fiscal years 2018 and 2019 shall be at least $1,250. If the amount of 12 appropriations is not sufficient to provide the dividend amount in this subsection, the 13 commissioner shall reduce the dividend amount under this subsection by an equal 14 amount for each eligible individual. 15 * Sec. 14. AS 43.23.055 is amended to read: 16 Sec. 43.23.055. Duties of the department. The department shall 17 (1) annually pay permanent fund dividends from the dividend fund, 18 without further appropriation; 19 (2) subject to AS 43.23.011 and paragraph (8) of this section, adopt 20 regulations under AS 44.62 (Administrative Procedure Act) that establish procedures 21 and time limits for claiming a permanent fund dividend; the department shall 22 determine the number of eligible applicants by October 1 of the year for which the 23 dividend is declared and pay the dividends by December 31 of that year; 24 (3) adopt regulations under AS 44.62 (Administrative Procedure Act) 25 that establish procedures and time limits for an individual upon emancipation or upon 26 reaching majority to apply for permanent fund dividends not received during minority 27 because the parent, guardian, or other authorized representative did not apply on 28 behalf of the individual; 29 (4) assist residents of the state, particularly in rural areas, who because 30 of language, disability, or inaccessibility to public transportation need assistance to 31 establish eligibility and to apply for permanent fund dividends;

01 (5) use a list of individuals ineligible for a dividend under 02 AS 43.23.005(d) provided annually by the Department of Corrections and the 03 Department of Public Safety to determine the number and identity of those 04 individuals; 05 (6) adopt regulations that are necessary to implement AS 43.23.005(d); 06 (7) adopt regulations that establish procedures for the parent, guardian, 07 or other authorized representative of a disabled individual to apply for prior year 08 permanent fund dividends not received by the disabled individual because no 09 application was submitted on behalf of the individual; 10 (8) adopt regulations that establish procedures for an individual to 11 apply to have a dividend disbursement under AS 37.25.050(a)(2) reissued if it is not 12 collected within two years after the date of its issuance; however, the department may 13 not establish a time limit within which an application to have a disbursement reissued 14 must be filed; 15 (9) provide any information, upon request, contained in permanent 16 fund dividend records to the child support services agency created in AS 25.27.010, or 17 the child support enforcement agency of another state, for child support purposes 18 authorized under law; if the information is contained in an electronic data base, the 19 department shall provide the requesting agency with either 20 (A) access to the data base; or 21 (B) a copy of the information in the data base and a statement 22 certifying its contents; 23 (10) establish a fraud investigation unit for the purpose of assisting the 24 (A) Department of Law in the prosecution of individuals who 25 apply for or obtain a permanent fund dividend in violation of a provision in 26 AS 11, by detecting and investigating those crimes; and 27 (B) commissioner to detect and investigate the claiming or 28 paying of permanent fund dividends that should not have been claimed by or 29 paid to an individual and to impose the penalties and enforcement provisions 30 under AS 43.23.035. 31 * Sec. 15. AS 37.13.145(c) is repealed July 1, 2017.

01 * Sec. 16. AS 37.13.145(f) and AS 43.23.025(c) are repealed June 30, 2020. 02 * Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 FISCAL YEAR 2017. Notwithstanding another provision of law, the legislature may 05 appropriate from the earnings reserve account for fiscal year 2017 the amount by which 5.25 06 percent of the average market value of the fund for fiscal years 2011, 2012, 2013, 2014, and 07 2015, computed annually for each fiscal year in accordance with generally accepted 08 accounting principles, exceeds $695,650,000. In this section, "average market value of the 09 fund" includes the balance of the earnings reserve account established under AS 37.13.145, 10 but does not include that portion of the principal attributed to the settlement of State v. 11 Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First Judicial District). 12 * Sec. 18. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 RETROACTIVITY. If sec. 17 of this Act takes effect after June 29, 2017, sec. 17 of 15 this Act is retroactive to June 29, 2017. 16 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 CONDITIONAL EFFECT. This Act takes effect only if the Thirtieth Alaska State 19 Legislature passes and enacts into law in 2017 20 (1) legislation relating to a broad-based tax, directed to education, that is 21 estimated by the Department of Revenue to generate annually at least $650,000,000, once 22 fully implemented, and that has an effective date not later than January 1, 2019; and 23 (2) the version of House Bill 111 that passes out of the House of 24 Representatives.