05/14/2019 03:00 PM House STATE AFFAIRS

          HB 132-PERM. FUND:DEPOSITS;DIVIDEND;EARNINGS                                                                      
                                                                                                                              
5:21:35 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  KREISS-TOMKINS  announced  that   the  final  order  of                                                               
business would  be HOUSE BILL  NO. 132,  "An Act relating  to the                                                               
Alaska permanent fund; relating  to the earnings reserve account;                                                               
relating  to the  permanent fund  dividend; relating  to deposits                                                               
into  the  permanent  fund; relating  to  appropriations  to  the                                                               
dividend fund  and general fund;  and providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
5:21:53 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  moved  to  adopt   Amendment  1,  [labeled  31-                                                               
LS0799\U.1, Nauman, 5/13/19], which read:                                                                                       
                                                                                                                                
     Page 5, line 21:                                                                                                           
          Delete "33"                                                                                                           
          Insert "40"                                                                                                           
                                                                                                                                
CO-CHAIR KREISS-TOMKINS objected for the purpose of discussion.                                                                 
                                                                                                                                
CO-CHAIR  FIELDS  explained that  Amendment  1  would change  the                                                               
percentage used  to calculate the  permanent fund  dividend (PFD)                                                               
from 33  percent to 40 percent.   This would ensure  that the PFD                                                               
provided under HB  132 would be about $1,400;  he maintained that                                                               
this amount  would be "imminently reasonable  and defensible" and                                                               
comparatively substantial.                                                                                                      
                                                                                                                                
5:22:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL commented  that he  supports the  amendment.                                                               
He stated that  based on 2018 revenues, 33 percent  would yield a                                                               
$1,142 PFD; 40  percent would yield a $1,384 PFD.   He added that                                                               
based on 2019 revenues, [40 percent] would yield a $1,435 PFD.                                                                  
                                                                                                                                
CO-CHAIR KREISS-TOMKINS  removed his  objection.  There  being no                                                               
further objection, it was so ordered.                                                                                           
                                                                                                                                
REPRESENTATIVE  WOOL maintained  that  a PFD  formula is  needed,                                                               
which was  his motivation  for introducing  HB 132.   He  gave an                                                               
analogy:  A group  of investors own a restaurant.   At the end of                                                               
the year, they  each get a percentage of the  profit based on the                                                               
performance  of the  restaurant.   If the  restaurant has  a good                                                               
year,  the investors  get more  money.   If the  restaurant loses                                                               
money, the  investors get less or  no money.  He  maintained that                                                               
no  one would  suggest that  the  investors get  a percentage  of                                                               
profit based  on the value of  the building.  Real  estate values                                                               
may be escalating  every year, but the percentage  of profit that                                                               
the  investors get  as stakeholders  in the  restaurant would  be                                                               
based  on  the performance  of  the  restaurant.   Some  day  the                                                               
investors  may  sell  the  building; but  in  this  analogy,  the                                                               
building is  the permanent  fund, and Alaska  would not  sell it.                                                               
He  reiterated  that   the  dividend  should  be   based  on  the                                                               
performance of oil and other mineral resources.                                                                                 
                                                                                                                                
CO-CHAIR KREISS-TOMKINS expressed that  he has some reservations,                                                               
but the conversation about the PFD formula is important.                                                                        
                                                                                                                                
REPRESENTATIVE  HOPKINS  stated  that many  constituents  mention                                                               
"running  the state  like a  business" and  finding efficiencies;                                                               
when  a  business does  well,  it  pays  dividends based  on  its                                                               
profitability.    He  recalled  in  2008,  Governor  Sarah  Palin                                                               
approved an energy  rebate in addition to that year's  PFD.  Even                                                               
though  the  state's  economy  was  healthy,  Alaskans  felt  the                                                               
negative impacts  of higher  heating fuel  costs.   He maintained                                                               
that  HB 132  would alleviate  the adverse  consequences of  this                                                               
inverse relationship.   He encouraged further  dialogue about the                                                               
percentage to  be appropriated for  the dividend,  but maintained                                                               
that  linking that  percentage to  oil  revenues more  accurately                                                               
gives Alaskans their  share of the resource wealth  and does mote                                                               
to helps  assist with the  cost of  living than does  linking the                                                               
PFD amount to the performance of  "Wall Street."  He reminded the                                                               
committee  that in  the late  2000s, when  the price  of oil  was                                                               
increasing,  the stock  market was  crashing, and  the PFDs  were                                                               
smaller;  under  HB 132,  the  dividends  would reflect  the  oil                                                               
revenues.                                                                                                                       
                                                                                                                                
5:29:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS moved  to  report  HB 132,  as  amended, out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  note.    There  being no  objection,  CSHB  132(STA)  was                                                               
reported from the House State Affairs Standing Committee.