2005-02-28                     Senate Journal                      Page 0415
was read the first time and referred to the State Affairs and Finance                               
Committees.                                                                                         
                                                                                                    
The following fiscal information was published today:                                               
 Fiscal Note No. 1, Department of Revenue                                                           
                                                                                                    
Governor's transmittal letter dated February 25:                                                    
                                                                                                    
Dear President Stevens:                                                                             
                                                                                                    
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am                          
transmitting a bill that would establish the Alaska capital income                                  
account as a separate account of the Alaska permanent fund, and                                     
would authorize the deposit into that account of the earnings on money                              
received from State v. Amerada Hess, et al., 1JU-77-847 Civ.                                        
(Superior Court, First Judicial District).                                                          
                                                                                                    
In 1992, the state's oil and gas royalty litigation (State v. Amerada                               
Hess, et al., 1JU-77-847 Civ. (Superior Court, First Judicial District))                            
was headed to trial.  Both state and federal judges had expressed                                   
concerns about the capacity of Alaskan judges and jurors to participate                             
in the case on an impartial basis in light of the fact that the earnings on                         
the portion of any recovery in the case would be deposited into the                                 
permanent fund and be used to pay the permanent fund dividends that                                 
all judges and jurors receive.  AS 37.13.145(d) was enacted, which                                  
deposited into the principal of the permanent fund the earnings of all                              
amounts received from settlement of this case.  Thus, the concern                                   
about impartiality was resolved by disallowing the earnings from the                                
settlement from being used in calculating the annual dividend amount.                               
                                                                                                    
The Amerada Hess litigation is now completed, though the possibility                                
of a re-opener subject to an arbitration remains.  Approximately $425                               
million from this case, including earnings on settlement receipts and                               
inflation-proofing, was deposited into the permanent fund.                                          
                                                                                                    
This bill proposes to end inflation proofing of the part of the                                     
permanent fund principal attributable to the Amerada Hess settlement                                
and to authorize the deposit of the earnings from the settlement                                    
proceeds into a separate account of the Alaska permanent fund called                                
the Alaska capital income account.  The money in this separate