Legislature(2017 - 2018)ADAMS ROOM 519
03/13/2018 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 | |
| HB267 | |
| HJR23 | |
| Public Testimony | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HJR 23 | TELECONFERENCED | |
| += | HB 285 | TELECONFERENCED | |
| += | HB 286 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 267 | TELECONFERENCED | |
HOUSE JOINT RESOLUTION NO. 23
Proposing amendments to the Constitution of the State
of Alaska relating to the Alaska permanent fund.
2:17:10 PM
Co-chair foster indicated the committee would be hearing
public testimony on HJR 23. He reminded testifiers that
testimony was limited to 2 minutes. He gave the bill
sponsor the opportunity to make comments before opening up
public testimony.
REPRESENTATIVE PAUL SEATON, SPONSOR, relayed that in the
previous public testimony hearing there was some
misinformation. He noted there was a fact sheet that had
been distributed to all of the Legislative Information
Office. He read the fact sheet:
The Permanent Fund includes two portions the
Principal and the Earnings Reserve Account (ERA). Once
money is deposited into the Principal, it cannot be
appropriated out. The ERA is available for
appropriation by any Legislature for any purpose at
any time by simple majority vote. As of January 31,
2018, the balance of the Principal is $49.2 billion
and $16.8 billion for the ERA for a total "value" of
$66 billion.
As it is now in law (not the constitution), the PFD is
based on the average "earnings" over the past 5 years
of the fund, with 50% of that amount going to the PFD.
The Percent of Market Value (POMV) proposes to base
the PFD on the total "value" of the fund versus the
"earnings" of the fund. CS HJR 23 (otherwise referred
to as the CS) proposes a POMV draw of 4.75 percent.
The total draw would come from the ERA since the
Principal cannot be touched. 33 percent of this draw
($813 million) would be used for PFD and 67 percent
($1.65 billion) for essential public services. This
would result in a PFD this October of approximately
$1,258 per qualified Alaskan.
Facts about the Permanent Fund and the CS:
Alaskans would vote on this resolution in
November if the CS passes both the House and
the Senate.
The PFD is only in law (Alaska Statute) and not
in the Alaska Constitution.
The current formula for calculating the PFD was
passed in 1982.
The Principal of the Permanent Fund cannot be
spent.
The PFD is currently paid from the ERA (and the
same for the CS).
The ERA can be used for any purpose. If the ERA
goes away, so does the PFD.
Alaskans have never voted to constitutionalize
the PFD.
Without protection, future Legislatures can
appropriate the full amount of the ERA,
draining the fund, and thus eliminating the
PFD.
CS HJR 23 would protect the ERA by limiting
appropriations to a sustainable level of 4.75
percent annually.
The Legislature "shall" appropriate the 4.75
percent draw to the general fund.
The Legislature "may" appropriate 33 percent of
the 4.75 percent draw to dividends, leaving 67
percent for public services.
"Shall" implies mandated, and "may" implies
subject to appropriation by the Legislature.
Mandating the amount or percentage to PFD will
likely trigger lawsuits.
The total fund is estimated to earn 6.5 percent
annually, so the amount for the PFD under the
CS would increase over time.
Co-Chair further explained that a House Joint Resolution on
a constitutional amendment had to go before the people at
the first general election following a resolution passing
by a two-thirds vote of the House and the Senate. It did
not require any action by the governor. It would appear on
a general election ballot if passed.
Co-Chair Foster reiterated that if the resolution were to
pass by two-thirds of both bodies, it would go to a vote of
the people.
Representative Thompson asked if the committee would only
be hearing people that had not already testified. Co-Chair
Foster responded affirmatively.
Co-Chair Foster OPENED Public Testimony.
^PUBLIC TESTIMONY
2:23:30 PM
GEORGE PIERCE, SELF, KASILOF (via teleconference), opposed
HJR 23. He believed the resolution would change the payout
forever. He thought the resolution was a raid of the
Permanent Fund (PF) and the Permanent Fund Dividend (PFD).
He rejected the idea of the legislature being able to spend
more that the percentage. He advocated for looking out for
Alaskans. He did not believe the legislature could be
trusted. He urged members to avoid changing the
constitution.
2:25:38 PM
TIM FEDERICO, SELF, ANCHORAGE (via teleconference), spoke
in opposition of HJR 23. He thought the bill was out of
sync with the people of Alaska. He wanted to see the budget
cut to the bones. He spoke about the money the legislature
was paid. He mentioned waste within various departments. He
commented that commercial fisheries were actually
subsidized by the state. He suggested saving money in the
school system by having only one administrator. He thought
government was out of control.
2:29:04 PM
BRENDA RHODES, SELF, ANCHORAGE (via teleconference), spoke
against HJR 23. She thought the state needed to return to
the original dividend formula. She urged members to return
to the task of figuring out a fiscal plan. She thanked the
committee.
2:30:03 PM
ELLA LUBIN, SELF, SITKA (via teleconference), spoke in
favor of HJR 23. She believed that the resource wealth came
from public land which all Alaskans shared and deserved to
reach the benefits. She thought it was in the state's best
interest to maintain the PFD so that it continued to be a
benefit - sustaining Alaska and a benefit for young people.
She spoke about being a lifelong Alaskan and having
benefited from receiving PFD's. She noted that the PFD was
a vital income source for many Alaskans. She provided a
statistic by Institute of Social and Economic Research
(ISER). She mentioned the importance of constitutionalizing
the PFD. She referred to the PF as a "rainy day account"
and that Alaska's rainy day was the present day. She
thanked the committee.
Representative Ortiz asked if Ms. Lubin had participated in
the recent DDF [Drama, Debate, and Forensics] competition.
Ms. Lubin responded in the positive. Representative Ortiz
commented that she was likely as effective as her sisters.
2:32:10 PM
GARY MCDONALD, SELF, ANCHORAGE (via teleconference), spoke
against HJR 23. He thought the full dividend should be
given to the people of Alaska. He thanked the committee.
2:33:00 PM
LAURA BONNER, SELF, ANCHORAGE (via teleconference),
supported the concept of enshrining the PFD in the Alaska
Constitution. She argued that because paying the PFD was
only in statute, current or future legislatures could opt
not to pay the PFD. However, she preferred the first
proposed version of the bill over the work draft submitted
by the House Finance Committee. She suggested the work
draft could be amended to be more acceptable to Alaskans.
She recommended changing the verbiage in Section 2(c) from
"may" to "shall." She also recommended adding the words,
"at least" or changing to a higher percentage. She hoped
the resolution continued to move through the legislative
process. She thanked the committee for re-opening public
testimony.
Vice-Chair Gara agreed with Ms. Bonner that the word should
be "shall." He thought the sponsor wanted the word "shall
pay." However, the legislature received legal advice that
the word "shall " could not be used in the constitution. He
also appreciated the "at least" language suggestion. Ms.
Bonner had read the legal opinion and understood the
possibility of constitutional issues.
2:36:18 PM
LIZ VAZQUEZ, SELF, ANCHORAGE (via teleconference), opposed
HJR 1. The resolution did not protect the PFD. It would be
up to the legislature to determine the amount of the
dividend or whether it would be distributed at all. She
provided a brief history about the fund. She relayed that
the makers of the PF set up the PFD in order to ensure the
people had a voice about how the fund was spent. She
thought HJR 23 reflected the opposite of what the makers
intended. She spoke of the current economic recession and
the challenges the state faced. She thought HJR 23 would
inflict greater damage by tampering with the PFD. She
encouraged members to vote against the resolution.
2:40:20 PM
Vice-Chair Gara commented that the previous year's budget
was lower than the last year that she had been in the
legislature. He relayed that the legislature had been told
by the legal department that "shall" could not be used in
the constitution. The word "may" could be used. He wondered
if she had a legal opinion on the issue. Ms. Vasquez was
interested in seeing the legal opinion. Co-Chair Foster
relayed that the opinion could be found online.
Vice-Chair Gara clarified that it was the express testimony
from the lead legislative attorney. He was still looking
into the issue. He thought committees were trying to find
something more enforceable than what was currently in
statute.
Representative Wilson asked in a constitutional amendment
whether Ms. Vasquez would use the formula that had worked,
or whether she would use a Percent of Market Value (POMV)
giving less to Alaskans. Ms. Vasquez would have to look at
some of the opinions of the economists. She thought the
4.75 percent draw was too aggressive. She noted the
variable returns on the fund.
Representative Wilson asked if Ms. Vasquez would enshrine a
percentage as outlined in the resolution of 66/33 or use
the current calculation. Ms. Vasquez would keep the 50/50
split. She added that the POMV might work. However, the
suggested percentage might be too aggressive and could
potentially hurt the fund in the long run. She would have
to study the historical yield.
2:45:16 PM
FRED STURMAN, SELF, KENAI (via teleconference), opposed
HJR 23. He wanted to see a 50/50 split. He thought
additional reductions were necessary. He recommended
closing the DMV. He thought several things could be cut. He
opposed taking the PFD. He spoke to having children in
college. He thought additional cuts were necessary and
encouraged legislators to be focusing on the important
stuff.
2:47:36 PM
JASMINE LEVEMIA, SELF, PETERSBURG, spoke in support of
HJR 23. She supported constitutionalizing the PFD. She
wanted to see the PFD continue to support future
generations.
2:49:20 PM
Co-Chair Foster CLOSED Public Testimony.
HJR 23 was HEARD and HELD in committee for further
consideration.
2:50:04 PM
AT EASE
2:51:41 PM
RECONVENED
Co-Chair Foster called the meeting back to order. He
relayed that the committee would not be hearing HB 285 and
HB 286. Amendments for HJR 23 were due by 5:00 p.m. in the
current afternoon.
Representative Wilson emailed all finance members the
written testimony she had received.
HB 285 was SCHEDULED but not HEARD.
HB 286 was SCHEDULED but not HEARD.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR 23 - Letters of Support 3.13.2018 (2).pdf |
HFIN 3/13/2018 1:30:00 PM |
HJR 23 |
| HJR 23 - Letters of Opposition 3.13.2018 (2).pdf |
HFIN 3/13/2018 1:30:00 PM |
HJR 23 |
| CSHJR 23 Fact Sheet.pdf |
HFIN 3/13/2018 1:30:00 PM |
HJR 23 |
| HJR 23 - Letters of Support 3.14.2018.pdf |
HFIN 3/13/2018 1:30:00 PM |
HJR 23 |
| HJR 23 - Letters of Opposition 3.14.2018.pdf |
HFIN 3/13/2018 1:30:00 PM |
HJR 23 |