Legislature(2017 - 2018)HOUSE FINANCE 519
03/20/2017 01:30 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB115 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 111 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 115 | TELECONFERENCED | |
HOUSE BILL NO. 115
"An Act relating to the permanent fund dividend;
relating to the appropriation of certain amounts of
the earnings reserve account; relating to the taxation
of income of individuals; relating to a payment
against the individual income tax from the permanent
fund dividend disbursement; repealing tax credits
applied against the tax on individuals under the
Alaska Net Income Tax Act; and providing for an
effective date."
2:24:37 PM
Representative Thompson MOVED to ADOPT Amendment 13 (copy
on file):
Page 2, line 9:
Delete "a new subsection"
Insert "new subsections"
Page 2, following line 18:
Insert a new subsection to read:
"(c) In accordance with AS
37.13.145(b)(1), and subject to
appropriation, 33 percent of the amount
available for distribution under (b) of this
section shall be reserved for dividends. The
remainder of the amount calculate to be
available for distribution under (b) of this
section shall be reduced by the difference
between the amount calculated under (1) of
this subsection and the amount under (2) of
this subsection if the amount calculated
under (1) of this subsection exceeds the
amount under (2) of this subsection:
(1) the total amount of oil and
gas production taxes under AS 43.55.011
- 43.55.180, mineral lease rentals,
royalties, royalty sale proceeds, net
profit shares under AS 38.05.180(f) and
(g), and federal mineral revenue
sharing payments and bonuses received
by the state from mineral leases that
are deposited into the general fund in
the current fiscal year;
(2) the sum of $1,200,000,000."
Co-Chair Seaton OBJECTED for discussion.
Representative Thompson read from a prepared statement:
In times of higher revenue, we reduce how much is
spent from the Permanent Fund. This concept is no
different then from a family manages their money: when
they make more money, they quit drawing from their
savings account. The draw limit was modeled by the
administration. The $1.2 billion threshold is not
arbitrary. The administration vetted this number using
their model, a model that was vetted by Mackenzie, a
very reputable financial consulting firm. The
administration determined that the draw limit is a
critical addition to protecting the dividend and
preserving the Permanent Fund value. The commissioner
of revenue last year in May signed a letter that
states, "In preserving the value of the fund, the
revenue limit also protects the divided. In short, the
revenue limit is a critical addition to the bill."
Members who say the draw limit is unnecessary because
the forecasts are low need to consider that the
forecasts have consistently been inaccurate. Their
forecasts only go forward 5 years. When you look over
the last 10 years the forecasts have not been correct.
They have been way off. Without the draw limit the
state will have a smaller Permanent Fund, a smaller
percent POMV, and a smaller PFD.
Representative Thompson pointed out that the commissioner
was in the room if anyone wanted to hear from him.
Co-Chair Foster invited the commissioner to come up to
provide a statement.
RANDALL HOFFBECK, COMMISSIONER, DEPARTMENT OF REVENUE,
concurred with the statements made by Representative
Thompson. The administration had always felt that the draw
limit was an important component within the bill to protect
the durability of the fund and the dividend and to take
volatility out of the State of Alaska's revenue stream. He
reiterated that it was one of five "must haves" in the
bill. The administration supported the amendment.
Co-Chair Seaton continued to have some interest in the
amendment. He had looked at a draw point of $1.5 billion.
He also looked at different levels, but had not decided on
an appropriate amount. He was concerned that if the
proposal was enacted at $90 per barrel of oil the state
would still be in a deficit. He opposed the amendment. He
suggested that perhaps it would be appropriate down the
road.
Co-Chair Seaton MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Tilton, Wilson, Pruitt, Thompson
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Seaton, Foster
The MOTION to ADOPT Amendment 13 FAILED (4/7).
Co-Chair Seaton indicated a CS would be drawn up that
reflected the adopted amendments.
Co-Chair Foster reported the amendment would be set aside.
The committee would bring back a clean CS for review.
HB 115 was HEARD and HELD in committee for further
consideration.
2:30:48 PM
AT EASE
2:37:50 PM
RECONVENED