Legislature(2025 - 2026)GRUENBERG 120
05/05/2025 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HJR10 | |
| HB209 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HJR 10 | TELECONFERENCED | |
| *+ | HB 209 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 209-PERMANENT FUND DIVIDEND: INCOME THRESHOLD
2:20:47 PM
CHAIR GRAY announced that the final order of business would be
HOUSE BILL NO. 209, "An Act relating to the Alaska permanent
fund; relating to income of the Alaska permanent fund; relating
to the amount available for appropriation and appropriations
from the earnings reserve account; relating to the permanent
fund dividend; and providing for an effective date."
2:21:04 PM
The committee took a brief at-ease at 2:21 p.m.
2:22:28 PM
REPRESENTATIVE ZACK FIELDS, Alaska State Legislature, as prime
sponsor, presented HB 209. He said many people in the public
are not aware of how dire Alaska's fiscal situation is becoming
with declining oil prices. He stated that paying a $1,000
dividend will become impossible without significant new taxes,
means-testing, or wholesale elimination of programs. He said
there are hard choices ahead and HB 209 provides one more option
on the table for those Alaskans who see value in having a
meaningful permanent fund dividend (FPD). He referred to a
PowerPoint presentation on HB 209 [included in the committee
packet] that shared the history of the Alaska Permanent Fund,
the establishment of the dividend, historic dividend averages,
and Legislative Finance Division (LFD) models. He shared that
the bill would set the PFD at $1,000, which is in line with the
historical average. In comparing the LFD models, he indicated
that paying a full statutory dividend, a 50/50 dividend, or a
75/25 dividend would not be possible without a significant tax
increase. He stated that a $1,000 dividend would be achievable
if its means-tested with minor to no taxes, or modest taxes.
2:32:20 PM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, on behalf of Representative Fields, prime sponsor,
presented the sectional analysis for HB 209 [included in the
committee packet], which read as follows [original punctuation
provided]:
Section 1: This section amends AS 37.13.140 to
authorize the Department to compute the net income of
the Permanent Fund annually on the last day of the
fiscal year, excluding any unrealized gains or losses.
It removes the statutory calculation that income
available for distribution equal 21% of the net income
of the fund for the last five fiscal years.
Section 2: This section amends AS 37.13.145(b) to
authorize the legislature to appropriate funds from
the earnings reserve account to the dividend fund and
to pay out a dividend of $1,000 to each eligible
individual per fiscal year.
Section 3: This section amends AS 37.13.145(c) to give
the legislature the ability to appropriate additional
funds from the earnings reserve account to the
principal of the Permanent Fund in order to offset the
effect of inflation during that fiscal year.
Section 4: This section amends AS 37.13.145(d)
replacing the words "distribution" and "transfer" with
"appropriation" to conform with previous sections.
Section 5: This section amends AS 37.13.145(f), which
gives the legislature the authority to appropriate
funds from the earnings reserve account to the general
fund. This is a conforming change.
Section 6: This section amends AS 37.13.300(c), making
conforming changes to the statute that disallows the
legislature from including income from the mental
health trust fund in the funds available for
appropriation.
Section 7: This section amends AS 43.23.005(a), to
establish a new income threshold for Permanent Fund
Dividend eligibility. Individuals who earn $50,000 or
less annually, or married couples who earn $100,000 or
less of combined income are eligible to receive a
dividend. Individuals who are exempt from filing a
federal income tax return are also eligible.
Section 8: This section amends AS 43.23.028(a) to
remove the annual public notice requirement for the
Permanent Fund Dividend amount and instead replace it
with a similar disclosure that each recipient of the
PFD will receive.
Section 9: This section is a conforming change to AS
43.23.045(d) to delete the phrase "determining the
amount of" because the PFD is capped at $1000.
Section 10: This section repeals AS 43.23.025(a) which
directs the Department to calculate the amount of the
dividend annually. This section also repeals AS
43.23.028(b), which directs the Department to transfer
the amount that would have been owed to ineligible
applicants to the restorative justice fund.
Section 11: This section adds new language to
uncodified law to clarify that the provisions of this
bill apply to the dividend qualifying year 2025 for
the 2026 dividend.
Section 12: This section sets an immediate effective
date for the bill.
2:35:20 PM
CHAIR GRAY sought questions from committee members.
2:35:34 PM
REPRESENTATIVE KOPP spoke to the importance of talking honestly
about the state's fiscal situation and thanked the sponsor for
initiating this conversation. He commented on the volatility in
the price of oil and said paying a full statutory dividend in
this year's budget would result in a $1.6 billion deficit. He
added that paying the full statutory dividend in years past
stretched communities so thin and almost resulted in a recall of
the governor. He added that whether this is the right solution
or not, putting parameters around the dividend is an important
conversation.
2:38:50 PM
REPRESENTATIVE MINA expressed appreciation for the bill sponsor
for educating the public on the structural deficit. She asked
whether there are instances in which a corporation would
exclusively limit who receives a dividend.
REPRESENTATIVE FIELDS responded yes, the dividend has been used
as a universal basic income program but as the Alaska Supreme
Court opined, it could be based on a rational income test that
wouldn't discriminate Equal Protection laws.
CHAIR GRAY asked Mr. Mills to comment.
2:40:55 PM
SEAN MILLS, House Majority Staff, Alaska State Legislature, said
the Zobel v. Williams case offers legal guidance on designing a
system for a PFD distribution. He explained that similarly
situated people cannot be treated differently under Equal
Protection rights in the U.S. Constitution. He described the
Zobel case in greater detail, which struck down a prior system
of distributing the dividend based on years of residency;
however, a means test based on current income would not be
considered permanent classification and would avoid a similar
Equal Protection issue. He opined that there would not be Equal
Protection issues with HB 209.
2:45:33 PM
CHAIR GRAY asked whether the Alaska Supreme Court "got it right"
with regard to the Zobel case.
MR. MILLS said the most significant question raised is whether
the Alaska Supreme Court used a more lenient standard than what
was appropriate at the time. There was a dissent in the case by
Justice William Rehnquist who believed that a stricter standard
should have been applied, which is also reflected in some of the
concurring opinions. Nonetheless, the law failed under the
lowest rational basis standard.
2:48:19 PM
REPRESENTATIVE MINA pointed out that in the bill, the PFD is
means tested at $1,000. She referred to the PowerPoint
presentation and asked whether the historic dividend averages
were adjusted for inflation.
REPRESENTATIVE FIELDS answered no.
REPRESENTATIVE MINA estimated that $1,000 in 1982 would be
$3,300 when adjusted for inflation in today's dollars. In that
sense, she asked whether $1,000 is an accurate average.
REPRESENTATIVE FIELDS stated that the fund is a renewable
resource, most of which has been generated by investment and is
consistent with the voter's original intent in 1976. He opined
that "good legislation" must honor that original intent and grow
that renewable resource. For that reason, he said he would
never vote for overspending beyond the 5 percent POMV cap.
2:51:20 PM
REPRESENTATIVE VANCE asked why the legislature should turn the
dividend into welfare.
REPRESENTATIVE FIELDS said he put the bill forward for voters to
inform the legislature of their preferences in a tough fiscal
climate. He said the legislature could choose not to means test
the dividend and let its value erode; however, he argued that he
would not consider means testing as welfare.
REPRESENTATIVE VANCE countered the idea that it's would not be
welfare by citing Section 7, which would specifically distribute
the dividend to low-income people. She asked how $50,000 per
individual and $100,000 for a couple was decided upon.
REPRESENTATIVE FIELDS stated that the bill is a compromise
between those who rely on the dividend and those who want to get
rid of it. He said the dividend could be means tested to
determine the right dollar figure and peg it to inflation. He
reiterated his belief that it doesn't make sense for his family
to receive a dividend when they make hundreds of thousand
dollars per year while essentially taking it away from someone
in Mountain View.
2:55:26 PM
REPRESENTATIVE UNDERWOOD shared an example of a person with
millions in assets who chose to earn a salary of less than
$50,000. She asked given the Wielechowski v. State of Alaska
decision, whether the legislature could still choose to
appropriate or not appropriate if the bill were to pass.
REPRESENTATIVE FIELDS reiterated that the dividend would
diminish to zero on its current path. He asked whether it would
be better to update the formula with something achievable and
pay $1,000 to those who need it most. In response to
Representative Underwood's first example, he said it would make
sense to ask the Department of Revenue (DOR) how to best capture
the high-net-worth low adjusted gross income individuals.
2:58:07 PM
REPRESENTATIVE COSTELLO said she struggled with the idea of
making the dividend program something other than a share in the
state's mineral wealth. She stated that the dividend is
sacrosanct to Alaskans and said she's not sure this bill is
something the public would ever support. She spoke to the
history of the dividend and asked the bill sponsor to respond to
her concerns.
REPRESENTATIVE FIELDS shared his understanding that the key
purpose of the PFD was to grow the fund, as established by
voters in the constitution, which was a new idea for states. He
added that the dividend gave people a stake in growing the fund
and was designed to be a means to that end. He posited that
although circumstances are different in today's fiscal climate,
fidelity to the fund must remain consistent.
REPRESENTATIVE COSTELLO argued that the dividend protects the
corpus of the fund, so making it means tested would stray from
its intended purpose.
3:03:57 PM
REPRESENTATIVE EISCHEID sought to clarify that the bill would
set the PFD at a max of $1,000 for eligible recipients.
REPRESENTATIVE FIELDS answered yes, it would update the PFD
formula to $1,000.
REPRESENTATIVE EISCHEID asked if the bill were to pass, whether
it would cut the PFD for those who qualify due to inflation.
REPRESENTATIVE FIELDS pointed out that most budget items are not
pegged to inflation.
REPRESENTATIVE EISCHEID asked whether as written, the dividend
would be an inflationary cut.
REPRESENTATIVE FIELDS responded no, because it would actually
increase the dividend for the people who need it relative to its
current path, which is on a rapid decline. He reiterated that
at projected oil prices, the dividend would be in the low
hundreds of dollars within the next 3 to 4 years.
REPRESENTATIVE EISCHEID expressed concern that a $1,00 dividend
would shrink each year when adjusting for inflation.
3:06:50 PM
CHAIR GRAY characterized the PFD as the most progressive fiscal
policy in America, which has resulted in much less income
equality in Alaska. He said the dividend is amazing because of
its benefit to the poorest in Alaska. He said he liked the bill
but it's too conservative because it's not tied to inflation,
the income cap is too low, and $1,000 is not enough. He
commended the bill sponsor for telling the truth and in that
spirit, he shared his own truths about HB 209: the income
thresholds would be raised, the dividend amount would be
doubled, and it would be tied to inflation. He announced that
HB 209 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR 10 Version A.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Sectional Analysis.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Fiscal Note Governor.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Presentation.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 - Invited Testimony.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10- Memo.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HB 209 Sponsor Statement.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 Version A.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 - Sectional Analysis.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 - JUD Bill Presentation 4.28.25.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 Supporting Document Sum of PFD Payments 1982-2024.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HJR 10 - Sponsor Statement 5.2.25.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HJR 10 Supporting Document APFC presentation UPDATED.pdf |
HJUD 5/5/2025 1:00:00 PM |
HJR 10 |
| HB 209 Supporting Doc Case Brief Zobel.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |
| HB 209 - JUD Bill Presentation 5.5.25.pdf |
HJUD 5/5/2025 1:00:00 PM |
HB 209 |