02/05/2019 03:30 PM Senate STATE AFFAIRS

        SB  23-APPROP:SUPP. PAYMENTS OF PRIOR YEARS' PFD                                                                    
                                                                                                                                
3:33:46 PM                                                                                                                    
CHAIR SHOWER  announced the consideration  of SENATE BILL  NO. 23                                                               
"An Act  making special appropriations from  the earnings reserve                                                               
account  for  the  payment  of   permanent  fund  dividends;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
He asked  the presenters to  introduce themselves and  noted that                                                               
Commissioner  Designee Tangeman  would provide  opening comments.                                                               
He  advised that  public testimony  would  be taken  at a  future                                                               
hearing.                                                                                                                        
                                                                                                                                
3:35:18 PM                                                                                                                    
BRUCE  TANGEMAN, Commissioner  Designee,  Department of  Revenue,                                                               
stated that  SB 23 and  the next bill on  the agenda, SB  24, are                                                               
critical in the cornerstone of  what Governor Dunleavy campaigned                                                               
on and is dear to his  heart. They are more about restoring trust                                                               
in  government  than paying  back  the  permanent fund  dividends                                                               
(PFD).   The   governor   wanted    to   correct   the   previous                                                               
administration's  decision to  take  a different  route than  the                                                               
long-standing statutory  calculation for the PFD.  He highlighted                                                               
that the  size of government  was not significantly  reduced over                                                               
the  last  three  years  while  the  dividend  was  reduced,  and                                                               
Governor Dunleavy  believes these go  hand in hand.  The dividend                                                               
can be  restored but  the size  of government  in Alaska  must be                                                               
brought  into check.  He advised  that  considering the  dividend                                                               
issue is just  one part of the larger discussion  that will begin                                                               
on February 13 when the budget is released.                                                                                     
                                                                                                                                
3:38:05 PM                                                                                                                    
ED KING,  Chief Economist, Department of  Revenue, explained that                                                               
SB  23 is  an appropriation  bill that  transfers money  from the                                                               
earnings reserve account  into the dividend fund.  He delivered a                                                               
sectional analysis speaking to the following prepared document:                                                                 
                                                                                                                                
     Section 1(a). This section  makes an appropriation from                                                                    
     the  permanent   fund  earnings  reserve   account  (AS                                                                    
     37.13.145) to  the dividend  fund (AS  43.23.045(a)) of                                                                    
     the amount  of money necessary  for a payment  of $1061                                                                    
     to eligible  individuals who  received a  2016 dividend                                                                    
     and who  are eligible  to receive  a 2019  dividend for                                                                    
     fiscal year 2020.                                                                                                          
                                                                                                                                
     Section 1(b). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund  of the amount  of money necessary  for a                                                                    
     payment of  $1289 to eligible individuals  who received                                                                    
     a 2017 dividend and who  are eligible to receive a 2020                                                                    
     dividend for fiscal year 2021.                                                                                             
                                                                                                                                
     Section 1(c). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund  of the amount  of money necessary  for a                                                                    
     payment of  $1328 to eligible individuals  who received                                                                    
     a 2018 dividend and who  are eligible to receive a 2021                                                                    
     dividend  for fiscal  year 2022.  [He noted  that there                                                                    
     may have been  an error in this calculation,  and it is                                                                    
     under review.]                                                                                                             
                                                                                                                                
     Section 1(d). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2020.                                                                                            
                                                                                                                                
     Section 1(e). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2021.                                                                                            
                                                                                                                                
     Section 1(f). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2022.                                                                                            
                                                                                                                                
     Section 1(g). This section  makes an appropriation from                                                                    
     the  permanent fund  earnings  reserve  account to  the                                                                    
     dividend fund of the amount  authorized for transfer by                                                                    
     the Alaska  Permanent Fund  Corporation pursuant  to AS                                                                    
     37.13.145(b)   for  the   payment  of   permanent  fund                                                                    
     dividends for fiscal year 2023.                                                                                            
                                                                                                                                
     Section  2. This  section  is  a contingency  provision                                                                    
     that  makes  the  appropriations  in  section  1(a)-(c)                                                                    
     contingent on  the legislature's passage  and enactment                                                                    
     into  law  of  a  bill directing  the  commissioner  of                                                                    
     revenue  to  include  certain payments  for  the  2016,                                                                    
     2017, and  2018 dividends to eligible  individuals with                                                                    
     the dividend payments for 2019, 2020, and 2021.                                                                            
                                                                                                                                
     Section  3. This  section makes  the appropriations  in                                                                    
     section 1(b) and (e) which  relate to dividend payments                                                                    
     in 2020 effective July 1, 2020.                                                                                            
                                                                                                                                
     Section 4. This section makes the appropriations in                                                                        
     section 1(c) and (f) which relate to dividend payments                                                                     
     in 2021 effective July 1, 2021.                                                                                            
                                                                                                                                
     Section 5. This section makes the appropriation in                                                                         
     section 1(g) which relates to dividend payments in                                                                         
     2022 effective July 1, 2022.                                                                                               
                                                                                                                                
     Section 6. This section provides that except for                                                                           
     sections 3-5, the Act takes effect immediately under                                                                       
     AS 01.10.070(c).                                                                                                           
                                                                                                                                
3:41:42 PM                                                                                                                    
ED KING,  Chief Economist,  Department of  Revenue, characterized                                                               
SB 23 and SB 24 as "basically  married" and said he would move on                                                               
to the sectional analysis for SB 24 unless there were questions.                                                                
                                                                                                                                
SENATOR  MICCICHE asked  if the  bill received  legal vetting  to                                                               
look  at constitutionality  and the  potential for  challenges by                                                               
those who  received a  dividend during  the three  previous years                                                               
but are no longer a resident and thus ineligible.                                                                               
                                                                                                                                
MR.  KING deferred  to the  commissioner to  speak to  policy and                                                               
advised that a legal team  would be available to answer questions                                                               
at a subsequent hearing.                                                                                                        
                                                                                                                                
3:43:07 PM                                                                                                                    
COMMISSIONER  DESIGNEE TANGEMAN  related that  the Department  of                                                               
Law  (DOL)  vetted the  bill  thoroughly  and the  administration                                                               
believes it will stand up in a court.                                                                                           
                                                                                                                                
[SB 23 was held in committee.]