04/10/2023 03:15 PM House LABOR & COMMERCE

            HB 87-PERM FUND; EMPLOYMENT; ELIGIBILITY                                                                        
                                                                                                                                
3:50:29 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced  that the next order of  business would be                                                               
HOUSE BILL NO. 87, "An Act  relating to record checks for certain                                                               
employees  of the  Department of  Revenue; relating  to permanent                                                               
fund dividends; and providing for an effective date."                                                                           
                                                                                                                                
3:50:38 PM                                                                                                                    
                                                                                                                                
VICE  CHAIR  RUFFRIDGE  moved to  adopt  the  proposed  committee                                                               
substitute (CS) for HB 87,  Version 33-GH1337\S, Nauman, 3/13/23,                                                               
as a working  document.  There being no objection,  Version S was                                                               
before the committee.                                                                                                           
                                                                                                                                
3:51:10 PM                                                                                                                    
                                                                                                                                
JESSE  LOGAN, Staff,  Representative Jesse  Sumner, Alaska  State                                                               
Legislature, on behalf  of the sponsor, the  House Rules Standing                                                               
Committee by request of the  governor, summarized the changes for                                                               
the  proposed CS  for HB  87,  Version S.   Using  a chart  [copy                                                               
included in  the committee packet], he  addressed the differences                                                               
between the section numbers used  for the proposed legislation in                                                               
the  drafting practices  of Legislative  Legal  Services and  the                                                               
Department of Law (DOL).   Addressing the substantive changes, he                                                               
stated that DOL's  Section 1, Section 2, and Section  5 have only                                                               
been slightly reworded.  He  continued that the original bill was                                                               
drafted by  the governor's  office to  give extra  exemptions for                                                               
allowable  absences for  those applying  for  the permanent  fund                                                               
dividend (PFD).  He stated  that these aspects have mostly stayed                                                               
the same  with some extra  exemptions, including the  addition of                                                               
merchant mariners in  DOL's Section 3, [Section 7  in Version S].                                                               
He stated  that Section 7  of Version S also  addresses allowable                                                               
absences for the PFD for those  in "uniform services".  He stated                                                               
that  DOL's  Section  4  [Section   7  in  Version  S]  addresses                                                               
allowable absences for  students.  He stated that  Sections 7, 8,                                                               
and 9  [in Version S]  have transitional language  with effective                                                               
dates.                                                                                                                          
                                                                                                                                
3:54:03 PM                                                                                                                    
                                                                                                                                
MR.  LOGAN,  on  slide  3, paraphrased  the  summary  of  changes                                                               
proposed  by  Chair  Sumner's  office,   which  read  as  follows                                                               
[original punctuation provided with some formatting changes]:                                                                   
                                                                                                                                
     Section 2 Page 2 Line 9-28                                                                                                 
     •Removes  the traditional  formula for  determining the                                                                    
     net  income  of  the  Permanent Fund  for  purposes  of                                                                    
     calculating  the  amount  available  for  appropriation                                                                    
     (which   previously  had   been  used   only  for   the                                                                    
     distribution of the Permanent Fund Dividend.)                                                                              
     • This  section retains  the language stating  that the                                                                    
     amount  available  for  appropriation   is  5%  of  the                                                                    
     average market value of the  fund for the first five of                                                                    
     the preceding six fiscal years.                                                                                            
     • The amount available  for appropriation cannot exceed                                                                    
     the balance  of the  Earnings Reserve Account  (ERA) as                                                                    
     described in AS 37.13.145 (Sec 3)                                                                                          
                                                                                                                                
     Section 3 Page 2 Line 29 through Page 3 line 3                                                                             
     States that  the legislature  may appropriate  from the                                                                    
     ERA to  the dividend fund  50% of the  amount available                                                                    
     for appropriation                                                                                                          
                                                                                                                                
     Section 4 Page 3 Line 4 through Line 22                                                                                    
     Clarifies that under AS  37.13.145(c) the mechanism for                                                                    
     inflation proofing the principle  of the Permanent Fund                                                                    
     is an appropriation by the legislature.                                                                                    
                                                                                                                                
     Section 5 Page 3 Line 23 through Page 4 Line 2                                                                             
     Clarifies that proceeds from State  v. Amerada Hess, et                                                                    
     al is  not available for appropriation  to the dividend                                                                    
     fund,  for inflation  proofing,  or  the Mental  Health                                                                    
     Trust  fund but  will  be deposited  annually into  the                                                                    
     capital income fund (AS 37.05.565)                                                                                         
                                                                                                                                
     Section 6 Page 4 Lines 3-6                                                                                                 
     Clarifies that net income from  the Mental Health Trust                                                                    
     Fund  may not  be included  in the  computation of  the                                                                    
     amount   of   the    Permanent   Fund   available   for                                                                    
     appropriation                                                                                                              
                                                                                                                                
     Section 8 Page 6 Lines 19-28                                                                                               
     Provides  a  definition  of  "uniformed  Services"  for                                                                    
     purposes of dividend eligibility under AS43.23.008(a)                                                                      
                                                                                                                                
     Section 9 Page 6 line 29 through page 7 Line 5                                                                             
     Adds a new subsection to  AS 43.23.011 to allow a grace                                                                    
     period  for dependents  of  Alaskans  who experience  a                                                                    
     medical emergency  that prevents  them from  filing for                                                                    
     their dependents' permanent fund  dividend by the March                                                                    
     31st filing deadline.                                                                                                      
                                                                                                                                
     Section 10 Page 7 Lines 6-31                                                                                               
     On page 7 line 11.  Language change to clarify that the                                                                    
     amount in the dividend fund is "appropriated"                                                                              
                                                                                                                                
     Section 13 Page 10 Lines 17-22                                                                                             
     Applicability.                                                                                                             
                                                                                                                                
3:56:58 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:56 p.m. to 4:01 p.m.                                                                       
                                                                                                                                
4:01:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX  questioned  whether   the  funds  would  be                                                               
transferred from  the earnings reserve  account to  the Permanent                                                               
Fund by an appropriation, as opposed to an automatic transfer.                                                                  
                                                                                                                                
MR. LOGAN  responded that since  the early  1980s it has  been in                                                               
statute as  a transfer; however,  he expressed  the understanding                                                               
that the Alaska  Permanent Fund Corporation has  always viewed it                                                               
as  an  appropriation.    He  deferred to  the  director  of  the                                                               
division.                                                                                                                       
                                                                                                                                
REPRESENTATIVE PRAX  concurred and  stated that for  the purposes                                                               
of the  proposed legislation  "that makes  sense."   He expressed                                                               
the understanding  that there has been  discussion about changing                                                               
the  constitutional  language so  this  could  be transferred  by                                                               
statute and would not need an appropriation.                                                                                    
                                                                                                                                
CHAIR  SUMNER stated  that this  would  require a  constitutional                                                               
change, as currently it is an appropriation.                                                                                    
                                                                                                                                
4:03:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  expressed  the  understanding  from  the                                                               
sectional analysis under the third  bullet in Section 2, the size                                                               
of PFDs would be limited.                                                                                                       
                                                                                                                                
MR. LOGAN  responded that this  language is standard  and already                                                               
in the  statute, and  this would make  sure the  earnings reserve                                                               
account would not be overdrawn.   He reiterated that the language                                                               
in question is already in existing law.                                                                                         
                                                                                                                                
4:04:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   FIELDS  expressed   support  for   the  proposed                                                               
legislation.   He  explained  that he  is  drafting an  amendment                                                               
which would  establish a rebate  for an  income tax equal  to the                                                               
size  of  the  PFD.    He explained  that  this  would  create  a                                                               
structure where high-income  families pay an income  tax equal to                                                               
the dividend  while lower-income  families would  not.   He added                                                               
that nonresidents  as well as residents  would pay this tax.   In                                                               
response  to  Representative  Saddler,  he  stated  that  he  has                                                               
requested an  amendment to  this effect.   He continued  that the                                                               
state does not  have enough money currently, and this  would be a                                                               
way to raise  revenue.  He offered that  his constituents support                                                               
paying for state services in this way.                                                                                          
                                                                                                                                
REPRESENTATIVE  SADDLER  questioned  whether  this  would  be  an                                                               
income tax and part of the proposed legislation.                                                                                
                                                                                                                                
REPRESENTATIVE FIELDS stated that he  is bringing this forward as                                                               
part of the discussion on  whether the proposed legislation would                                                               
simply update the formula, or  whether it would raise new revenue                                                               
as well.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   SADDLER,   for   the   record,   expressed   the                                                               
understanding  that  regarding  income  tax  the  answer  to  his                                                               
question was "yes."                                                                                                             
                                                                                                                                
4:07:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WRIGHT  requested the definition of  "high income"                                                               
in terms of the idea behind the possible amendment.                                                                             
                                                                                                                                
REPRESENTATIVE  FIELDS  stated that,  as  it  is drafted  in  the                                                               
amendment, it  would be  $75,000 for  an individual  and $150,000                                                               
for a two-income family.                                                                                                        
                                                                                                                                
4:09:19 PM                                                                                                                    
                                                                                                                                
CHAIR  SUMNER  advised  that  the   discussion  not  move  toward                                                               
proposed amendments.                                                                                                            
                                                                                                                                
4:10:20 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that CSHB 87, Version S, was held over.