Legislature(2023 - 2024)GRUENBERG 120
01/17/2024 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB129 | |
| HB4 | |
| HJR7 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 129 | TELECONFERENCED | |
| + | HB 4 | TELECONFERENCED | |
| + | HJR 7 | TELECONFERENCED | |
HJR 7-CONST AM: PERMANENT FUND DIVIDEND
1:50:14 PM
CHAIR VANCE announced that the final order of business would be
HOUSE JOINT RESOLUTION NO. 7, Proposing amendments to the
Constitution of the State of Alaska requiring payment of a
dividend to eligible state residents. [Before the committee was
CSHJR 7(W&M).]
1:50:48 9PM
REPRESENTATIVE CARPENTER, prime sponsor, presented CSHJR 7(W&M).
He issued the sponsor statement [included in the committee
packet], which read as follows [original punctuation provided]:
For almost thirty years, Alaskans could count on their
annual dividend checks as the state legislature
followed the law that directed the dividend to be paid
by a statutory formula.
The trust between the government and the people of
Alaska was broken in 2016 when Governor Walker vetoed
a portion of the annual dividend and the Alaska
Supreme Court ultimately determined that dividends
were subject to the annual appropriations process.
While the legislature could choose to follow the law
and appropriate the dividend according to statute and
separate it from the budget, they have not done so.
Instead, the permanent fund dividend has been
subjected to the budget process, where the dividend
competes with government spending and often becomes
the deficit reduction solution.
HJR7 requires the state to pay the annual Permanent
Fund dividend according to a formula in statute,
rather than by the whims of the annual appropriations
process.
The amendments in HJR7 address the constitutional
issues raised by the Supreme Court in its Wielechowski
opinion that allowed the legislature to appropriate
the annual dividend rather than pay it out by formula.
Neglecting to constitutionalize the PFD would permit
lawmakers to continue avoiding their obligation to
address the shortcomings of Alaska's fiscal and
economic planning, placing the Permanent Fund at risk.
Constitutionally enshrining the Permanent Fund
Dividend will provide for the maximum benefit of all
Alaskans and ensure the prosperity of the Permanent
Fund for generations of Alaskans to come.
1:56:05 PM
KENDRA BROUSSARD, Staff, Representative Ben Carpenter, Alaska
State Legislature, on behalf of Representative Carpenter, prime
sponsor, presented the sectional analysis for CSHJR 7(W&M)
[included in the committee packet], which read as follows
[original punctuation provided]:
Section 1
Article IX, section 7 of the Constitution of Alaska is
amended to except the payment of Permanent Fund
dividends from the prohibition of dedication of funds.
Section 2
Article IX, section 13 of the Constitution of Alaska
is amended to except the payment of Permanent Fund
dividends from the requirement to appropriate all
funds that are paid out of the state treasury.
Section 4
Article IX, Section 15 of the Constitution of Alaska
is amended to require the state to pay a permanent
fund dividend according to a formula in law.
Section 5
Article XV of the Constitution is amended to add a new
transition section that would make the constitutional
changes effective for fiscal year 2026.
Section 6
Provides that this amendment to the Constitution be
placed before voters at the next general election.
1:57:25 PM
MS. BROUSSARD directed attention to a PowerPoint presentation,
titled "Permanent Fund Dividend" [hard copy included in the
committee packet]. She summarized several of the slides,
including slide 2, which read as follows [original punctuation
provided]:
Alaska Constitution Article IX, Section 7
The proceeds of any state tax or license shall not be
dedicated to any special purpose, except as provided
in section 15 of this article or when required by the
federal government for state participation in federal
programs. 1976
Alaska Constitution IX, Section 15
At least twenty-five per cent of all mineral lease
rentals, royalties, royalty sale proceeds, federal
mineral revenue sharing payments and bonuses received
by the State shall be placed in a permanent fund, the
principal of which shall be used only for those
income-producing investments specifically designated
by law as eligible for permanent fund investments. All
income from the permanent fund shall be deposited in
the general fund unless otherwise provided by law.
1976
MS. BROUSSARD continued to slide 3, which featured a statement
from Governor Jay Hammond regarding his intent for the permanent
fund dividend (PFD) in 1976. Slide 4 highlighted a statement by
the House Finance Committee in 1982 pertaining to the payment of
the dividend. She advanced to slide 7, which read as follows
[original punctuation provided]:
Governor Walker proposed several revisions to
permanent fund formulas that would have allowed for
use of earnings, as well as a variety of new revenue
measures. After the 2016 session, when none of these
had passed and the state was facing continuing large
deficits, he vetoed roughly half of the PFD
appropriation in the FY 2017 budget. This was
historic, the first time since 1982 that the dividend
formula had not been followed. His stated intent at
the time was to draw attention to the seriousness of
Alaska's fiscal crisis. Subsequently, the legislature
followed this precedent and appropriated less than the
statutory formula during the 2017 and 2018 sessions.
MS. BROUSSARD noted the creation of the Bicameral Permanent Fund
Working Group in January 2020 to find a solution to the PFD on
slide 20. In June 2021, the Fiscal Policy Working Group (FPWG)
was formed, which recommended enshrining the dividend in the
Alaska Constitution.
1:59:27 PM
REPRESENTATIVE CARPENTER explained that that the FPWG offered
two recommendations: constitutionalizing the PFD formula itself
or constitutionalizing the dividend while allowing statute to
dictate the formula. CSHJR 7(W&M) would require the state to
pay the annual PFD according to a formula in statute, rather
than constitutionalizing the size of the dividend. He posited
that in doing so, the legislation would effectively enact an
appropriation limit because the statutory formula would be
"backed up" by the constitution.
2:01:43 PM
REPRESENTATIVE GRAY asked the sponsor to elaborate on how the
resolution would effectuate a spending cap.
REPRESENTATIVE CARPENTER explained that CSHJR 7(W&M) would not
solve the size of the dividend; however, it would require that a
dividend is paid.
2:03:28 PM
REPRESENTATIVE EASTMAN asked whether the expectation was for the
legislature to revisit the formula each year to match available
funds.
REPRESENTATIVE CARPENTER suggested that if CSHJR 7(W&M) were to
pass, a conversation about the size of the dividend would need
to be held in a policy committee prior to the budget process.
He advocated for establishing a system of consistency and
predictability that was part of a larger fiscal plan to avoid
annual discussions on the size of the PFD. He reiterated that
the resolution would force a conversation about a larger fiscal
plan and force a decision on the statutory size of the dividend.
Other fiscal mechanisms could be put in place to stabilize the
state's finances.
REPRESENTATIVE EASTMAN conveyed a historic concern about the
legislature spending from the Alaska Permanent Fund itself. He
questioned whether the proposed legislation would enable the
legislature to spend from the corpus of the fund and how, going
forward, the earnings reserve account (ERA) could be spent.
REPRESENTATIVE CARPENTER clarified that the ERA was accessible
to the legislature by a simple 21 vote majority. He added that
nothing in the legislation would give the legislature more
access to the corpus of the fund. CSHJR 7(W&M) would simply
state that a PFD would be distributed going forward and that the
size of the dividend would be decided upon by the legislature.
He asked Ms. Nauman whether the corpus of the fund could be
spent if there was not enough money in the ERA to make the 5
percent of market value (POMV) draw and whether the resolution
would change that.
2:16:05 PM
EMILY NAUMAN, Director, Legislative Legal Services, Legislative
Affairs Agency (LAA), answered no, the legislature could not
withdraw money from the corpus of the Alaska Permanent Fund, per
Article 4, Section 15 of the Alaska Constitution. CSHJR 7(W&M)
would not change that general structure. Instead, the
resolution would allow the legislature to set a formula through
which money from the ERA was deposited into the general fund
(GF) and directs the state to pay a dividend from the GF based
on a statutory formula.
CHAIR VANCE questioned the impact of passing CSHJR 7(W&M)
without changing the current statutory formula. In addition,
she asked whether the legislation would legally obligate the
legislature to clarify its statutes.
MS. NAUMAN said nothing in CSHJR 7(W&M) would require the
legislature to amend current statutes.
CHAIR VANCE asked Mr. Painter whether passage of the resolution
would require the legislature to change [the current statutory
formula].
2:19:35 PM
ALEXEI PAINTER, Director, Legislative Finance Division (LFD),
Legislative Agencies and Offices, said no, statutes would not
need to be changed from a fiscal note standpoint. For the sake
of conformity, however, the mechanics may need to be clarified.
He noted that with the current statutory formula, the state
would be left with a fiscal deficit.
REPRESENTATIVE GROH asked whether Representative Carpenter
recalled the FPWG recommendation that urged the legislature to
negotiate a comprehensive solution as a whole, rather than one
part at a time. Further, he asked how that recommendation
aligned with the singular focus of CSHJR 7(W&M).
REPRESENTATIVE CARPENTER explained that Alaska's single subject
requirement prevents a comprehensive package from being drafted
in one omnibus bill. He reflected on his "good faith effort" to
sponsor multiple bills last session to meet numerous FPWG
recommendations. He opined that the proposed legislation was a
good starting point to "overcome the inertia to do nothing."
REPRESENTATIVE GROH asked whether adopting the resolution would
create a hole by reducing the possibility of agreement on a
comprehensive solution.
REPRESENTATIVE CARPENTER disagreed. He shared his belief that
passing CSHJR 7(W&M) and thereby ensuring that a dividend be
paid would force continued conversations.
2:29:28 PM
CHAIR VANCE asked the bill sponsor to explain the mechanics of
passing a constitutional amendment.
REPRESENTATIVE CARPENTER explained that passage of CSHJR 7(W&M)
would require a vote of the people, as the legislature could not
amend the constitution without voter approval.
CHAIR VANCE questioned the threshold for passing a
constitutional amendment in the legislature.
REPRESENTATIVE CARPENTER answered two-thirds of each body.
CHAIR VANCE questioned the other components of the
[comprehensive] fiscal plan.
REPRESENTATIVE CARPENTER listed the following components:
addressing the PFD, stabilizing revenue sources, implementing a
spending limit, and reducing the size of government.
CHAIR VANCE asked whether this constitutional amendment would
stimulate economic growth and fiscal stability in Alaska.
REPRESENTATIVE CARPENTER said on its own, CSHJR 7(W&M) would not
directly impact the economy. However, the current statutory
formula, which provided for a 50/50 split between the dividend
and government spending, would have a sizeable impact on
Alaskans.
2:35:57 PM
CHAIR VANCE announced that CSHJR 7(W&M) would be held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 129 - Amendment #1 (B.7)(as conceptually amended) by Chair Vance.pdf |
HJUD 1/17/2024 1:00:00 PM |
HB 129 |
| HB 129 - Amendment #6 (B.9)(as conceptually amended).pdf |
HJUD 1/17/2024 1:00:00 PM |
HB 129 |
| HB 4 - Summary of Changes (01-17-24).pdf |
HJUD 1/17/2024 1:00:00 PM |
HB 4 |
| HB 4 - v.U (01-15-24).pdf |
HJUD 1/17/2024 1:00:00 PM |
HB 4 |
| HJR 7 - Sponsor Statement.pdf |
HJUD 1/17/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - v.B.PDF |
HJUD 1/17/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Sectional Analysis.pdf |
HJUD 1/17/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Div. of Elections Fiscal Note.pdf |
HJUD 1/17/2024 1:00:00 PM |
HJR 7 |
| HJR 7 Presenatation - Permanent Fund Dividend.pdf |
HJUD 1/17/2024 1:00:00 PM |
HJR 7 |