03/28/2000 02:05 PM House FIN

HOUSE BILL NO. 18                                                                                                               
                                                                                                                                
An Act making a special appropriation from the earnings                                                                         
reserve account to the principal of the permanent fund;                                                                         
and providing for an effective date.                                                                                            
                                                                                                                                
Co-Chair Mulder MOVED to adopt work draft HB 18, 1-LS0163\D,                                                                    
Cramer, 3/20/00. [Copy on File].  There being NO OBJECTION,                                                                     
it was adopted.                                                                                                                 
                                                                                                                                
In response to Representative Foster, Co-Chair Mulder                                                                           
explained that in the original bill, there was approximately                                                                    
$4.1 billion dollars in available funds.  Based upon the                                                                        
testimony from the Permanent Fund Corporation, it was                                                                           
determined that $2.5 million dollars was appropriate and                                                                        
would not put the dividend in jeopardy.                                                                                         
                                                                                                                                
Representative Foster asked if that action would affect the                                                                     
State's ability to tap into that fund to pay future bills.                                                                      
Co-Chair Mulder advised that this would be an earnings                                                                          
reserve and that the Legislature has never spent any money                                                                      
from that account.  He reiterated that there is currently a                                                                     
little more than $4.1 billion dollars in that account.                                                                          
                                                                                                                                
Representative Austerman advised that he did not support                                                                        
this bill in its original form, however, now he does with                                                                       
the changes made.  He did not believe that this would have a                                                                    
negative effect on the Permanent Fund Corporation.                                                                              
                                                                                                                                
Representative J. Davies noted his concern when                                                                                 
contemplating vehicles such as HB 411, which restructures                                                                       
items by taking a percentage of the market value.  He                                                                           
recommended that there should be a large cushion in the                                                                         
earnings reserve for those bad years.  The problem with                                                                         
making a deposit like the one being proposed is that it                                                                         
would minimize the reserve shock absorber.  Representative                                                                      
J. Davies insinuated that the proposed action is premature                                                                      
before having full discussion on HB 411.                                                                                        
                                                                                                                                
Following concerns voiced by Representative Grussendorf, Co-                                                                    
Chair Mulder proposed a conceptual amendment placing the                                                                        
$250 million dollar amount into the title of the bill.  Co-                                                                     
Chair Mulder MOVED the conceptual amendment.  There being NO                                                                    
OBJECTION, it was adopted.                                                                                                      
                                                                                                                                
Representative G. Davis thought that the legislation would                                                                      
limit the programs utilizing the savings account interest                                                                       
for State government.  He stated that he would oppose the                                                                       
bill as he believes in keeping as much in the savings                                                                           
account as possible.                                                                                                            
                                                                                                                                
Representative Moses stated that no more money should be                                                                        
placed into the principle until the fiscal gap is satisfied.                                                                    
Representative Phillips agreed.                                                                                                 
                                                                                                                                
Co-Chair Mulder MOVED to report CS HB 18 (FIN) out of                                                                           
Committee.  Representative Grussendorf OBJECTED.                                                                                
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Foster, Williams, Austerman, Mulder,                                                                                  
Therriault                                                                                                                      
OPPOSED: J. Davies, G. Davis, Grussendorf, Moses,                                                                               
Phillips                                                                                                                        
                                                                                                                                
Representative Bunde was not present for the vote.                                                                              
                                                                                                                                
The MOTION FAILED (5-5).                                                                                                        
                                                                                                                                
HB 18 was HELD in Committee for further consideration.