01/24/2017 03:30 PM Senate STATE AFFAIRS

          SB   1-APPROP: 2016 PFD SUPPLEMENTAL PAYMENT                                                                      
              SB   2-2016 PFD SUPPLEMENTAL PAYMENT                                                                          
                                                                                                                                
4:56:20 PM                                                                                                                    
CHAIR DUNLEAVY called  the committee back to  order. He announced                                                               
the consideration of SB  1 and SB 2. He explained that  SB 1 is a                                                               
bill that he introduced in the  fall of 2016. He detailed that SB
 is the enabling portion to SB 1.                                                                                              
                                                                                                                                
He noted that  the 2016 Legislature passed  an appropriation bill                                                               
that was to  fully fund the entire PFD. He  detailed that half of                                                               
the PFD was  vetoed by the governor,  approximately $700 million.                                                               
He specified  that the governor  said his  veto was an  effort to                                                               
help  with the  state's fiscal  situation. He  revealed that  the                                                               
approximate $700  million from the  veto resides in  the earnings                                                               
reserve and not in the general fund.                                                                                            
                                                                                                                                
CHAIR  DUNLEAVY contended  that  the dividend  is  a very  unique                                                               
issue that  is not seen in  other states or countries.  He opined                                                               
that Alaskans  believe the PFD  is a  way of receiving  a royalty                                                               
from  the  state  of  Alaska  due to  the  Statehood  Act  and  a                                                               
subsequent constitution  that has the state  owning the resources                                                               
in a socialized manner. He explained  that the method of paying a                                                               
dividend from the  permanent fund allows all  Alaskans to partake                                                               
in the state's mineral rights.  He specified that the bill simply                                                               
restores  the second  half  of the  PFD that  was  vetoed by  the                                                               
governor. He  asserted that the belief  is the PFD is  a decades-                                                               
old tradition or right.                                                                                                         
                                                                                                                                
He stated that  he believes restoring the second half  of the PFD                                                               
is the right  thing to do due to the  current economy's condition                                                               
as well  as comments from  his constituents who noted  that their                                                               
dividend was  planned to be  used for fuel oil,  college, medical                                                               
bills, vehicles, etc. He opined  that there are different ways to                                                               
deal with the ongoing fiscal issue  and the bill addresses a need                                                               
to  fix the  2016 PFD  and allow  the Legislature  to move  on to                                                               
bigger and  more important issues  in terms of fixing  the fiscal                                                               
issues.                                                                                                                         
                                                                                                                                
4:59:13 PM                                                                                                                    
GINA RITACCO, Staff, Senator  Dunleavy, Alaska State Legislature,                                                               
Juneau,  Alaska,  provided an  overview  of  SB  1  and SB  2  as                                                               
follows:                                                                                                                        
                                                                                                                                
     There  are two  bills because  one is  an appropriation                                                                    
     bill, which  is SB 1,  SB 2  is the directive  bill and                                                                    
     both are  required in order to  issue check immediately                                                                    
     before  the next  payout  in October.  SB  1 gives  the                                                                    
     appropriation  amount   and  then  SB  2   directs  the                                                                    
     Department  of Revenue  to actually  go ahead  and make                                                                    
     those checks available.                                                                                                    
                                                                                                                                
5:00:02 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
5:00:12 PM                                                                                                                    
CHAIR DUNLEAVY called the committee back to order. He announced                                                                 
that there is a committee substitute (CS) for SB 1.                                                                             
                                                                                                                                
5:00:21 PM                                                                                                                    
SENATOR GIESSEL moved that the committee adopt the CS for SB 1,                                                                 
version: 30-LS0042\D.                                                                                                           
                                                                                                                                
5:00:36 PM                                                                                                                    
CHAIR DUNLEAVY objected for discussion purposes.                                                                                
                                                                                                                                
MS. RITACO provided an overview of the CS as follows:                                                                           
                                                                                                                                
     The sectional change with Section  1 changes the amount                                                                    
     appropriated  from  $660,350,000,  which  was  just  an                                                                    
     estimate at the  time that we had the  bill drafted, to                                                                    
     reflect the  statutory calculated amount vetoed  by the                                                                    
     governor which is $683,234,813.                                                                                            
                                                                                                                                
CHAIR DUNLEAVY asked to verify that there were no other changes.                                                                
                                                                                                                                
MS. RITACCO replied that there were no other changes.                                                                           
                                                                                                                                
5:01:19 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
5:01:31 PM                                                                                                                    
CHAIR DUNLEAVY called  the committee back to  order. He announced                                                               
that he  removed his objection  to the CS  for SB 1.  He declared                                                               
that  the CS  for  SB 1  is  adopted. He  asked  that Ms.  Ritaco                                                               
provide a sectional analysis.                                                                                                   
                                                                                                                                
5:01:48 PM                                                                                                                    
MS. RITACO provided a sectional analysis as follows:                                                                            
                                                                                                                                
     SB  1,  Section  1: restores  approximately  $1,032  to                                                                    
     every Alaskan.                                                                                                             
                                                                                                                                
     SB 1,  Section 2: makes  SB 1  contingent on SB  2; the                                                                    
     reason  for  this  is  that  if  you  don't  make  that                                                                    
     contingent   on  each   other,  you   could  have   the                                                                    
     appropriation  pass and  it will  just sit  there until                                                                    
     the  next   payout  goes,  which  would   be  in  2017,                                                                    
     therefore it  actually would be  in addition  to 2017's                                                                    
     payment  rather   than  a  supplemental  to   the  2016                                                                    
     payment.                                                                                                                   
                                                                                                                                
     SB 2 is the directive, Section 1: the commissioner of                                                                      
       the Department of Revenue is directed to make the                                                                        
     payment immediately.                                                                                                       
                                                                                                                                
     SB 2, Section 2: contingent on SB 1 passing, so if SB
 does not pass, SB 2 does not go into effect.                                                                             
                                                                                                                                
     We put  an effective date of  May 1, 2017 to  give time                                                                    
     for  the Department  of Revenue  to  actually make  the                                                                    
     checks  and send  them out  with FY2017's  funds rather                                                                    
     than FY2018.                                                                                                               
                                                                                                                                
MS. RITACO summarized that SB 1 and SB 2 are interconnected and                                                                 
are contingent on one another.                                                                                                  
                                                                                                                                
5:03:11 PM                                                                                                                    
CHAIR  DUNLEAVY announced  that  [SB  1 and  SB  2]  are held  in                                                               
committee. He  reminded the committee that  public testimony will                                                               
be held  at an upcoming  committee meeting  and the intent  is to                                                               
move the two bills the following week.