05/09/2023 06:00 PM House WAYS & MEANS

           SB 107-PERMANENT FUND DIVIDEND; POMV SPLIT                                                                       
                                                                                                                                
7:13:03 PM                                                                                                                    
                                                                                                                                
CHAIR CARPENTER announced that the  final order of business would                                                               
be  CS FOR  SENATE BILL  NO. 107(FIN),  "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."   [Before the  committee, adopted  as a                                                               
working  document   on  4/17/23,   was  the   proposed  committee                                                               
substitute  (CS)   for  SB  107,  Version   33-LS0731\P,  Nauman,                                                               
4/12/23, ("Version P").]                                                                                                        
                                                                                                                                
7:13:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE moved  to adopt  the committee  substitute                                                               
(CS) for CSSB 107, Version  33-LS0349\O, Nauman, 5/5/23 ("Version                                                               
O"), as a working document.                                                                                                     
                                                                                                                                
REPRESENTATIVE GROH objected for the purpose of discussion.                                                                     
                                                                                                                                
7:13:48 PM                                                                                                                    
                                                                                                                                
MS. BROUSSARD,  on behalf of  Representative Carpenter,  gave the                                                               
explanation of changes  for Version O [included  in the committee                                                               
packet], which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
     The  CS deletes  Sections 3,4,6,7  from CS  for SB  107                                                                    
     (FIN).                                                                                                                     
     Section 1                                                                                                                  
     Adds  intent   language.  It  is  the   intent  of  the                                                                    
     legislature  to pass  a  constitutional amendment  that                                                                    
     requires  payment of  the  permanent  fund dividend  to                                                                    
     eligible  residents  and  provides  that  the  dividend                                                                    
     payment is an allowable dedication  of funds. It is the                                                                    
     intent  of the  legislature that  this Act  establish a                                                                    
     maximum draw  on the earnings  reserve and  a statutory                                                                    
     amount of the annual permanent fund dividend.                                                                              
     Section 2                                                                                                                  
     Amended to keep current  law language, "net income from                                                                    
     the fund  includes the income  of the  earnings reserve                                                                    
     account established under AS 37.13.145."                                                                                   
     Section 3                                                                                                                  
     Changes  the language  regarding  the dividend  payment                                                                    
     from  "legislature may  appropriate" from  the earnings                                                                    
     reserve  fund to  the  "general  fund" to  "corporation                                                                    
     shall transfer"  from the earnings reserve  fund to the                                                                    
     "dividend fund."                                                                                                           
     Changes  the  dividend   payment  calculation  from  25                                                                    
     percent  of  a  POMV  to  50 percent  of  the  POMV  as                                                                    
     calculated in current law.                                                                                                 
     Section 4                                                                                                                  
     Section 5 from  CS to SB 107,  with language conforming                                                                    
     to  a   "distribution"  of  funds  that   replaces  the                                                                    
     language,  "appropriation,"  for  the  payment  of  the                                                                    
     dividend.                                                                                                                  
     Section 5                                                                                                                  
     New   language   that   allows   the   legislature   to                                                                    
     appropriate from  the earnings  reserve to  the general                                                                    
     fund.                                                                                                                      
     Section 6                                                                                                                  
     New  language that  limits the  combined  total of  the                                                                    
     dividend  distribution and  the appropriation  from the                                                                    
     earnings reserve account  to be the lesser  of the POMV                                                                    
     calculation  or the  balance  of  the earnings  reserve                                                                    
     fund.                                                                                                                      
     Section 7                                                                                                                  
     Conforming  language  to  exempt  mental  health  trust                                                                    
     income from the income available for distribution.                                                                         
     Section 8                                                                                                                  
     Repeals  language  in  current  law  that  requires  an                                                                    
     annual transfer  from the  earnings reserve  account to                                                                    
     the principle of the account.                                                                                              
     Section 9                                                                                                                  
     Makes the Act effective July 1, 2024.                                                                                      
                                                                                                                                
7:16:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GROH questioned the needed  changes to pay a 50/50                                                               
split of  the percent of market  value (POMV) PFD over  time.  He                                                               
pointed  out   that  the  original   language  in   the  proposed                                                               
legislation had  a "carrot" in  terms of revenues, and  Version O                                                               
would set  a 50/50 split  for POMV dividends without  providing a                                                               
path towards collecting additional revenues.                                                                                    
                                                                                                                                
CHAIR CARPENTER responded that the  original bill which came from                                                               
the Senate  was a mix  between a current  year and a  future year                                                               
solution.    After  viewing  the  presentation  [on  5/8/2023  on                                                               
economic  growth],  he  expressed   the  understanding  that  the                                                               
current budget  problem is driving  the state's  long-term fiscal                                                               
plan.  He expressed  the opinion that this is not  a "wise way to                                                               
go,"  as the  long-term fiscal  plan  needs to  drive the  annual                                                               
budget process.   He suggested simplifying  the Senate's proposed                                                               
legislation to  point to a  constitutional amendment  which would                                                               
allow   the  legislature   to  dedicate   the  PFD   program  and                                                               
statutorily define the PFD and its  earnings.  He said this would                                                               
remove  the PFD  from the  appropriations process;  therefore, it                                                               
would not  be a conversation  every year, and a  long-term fiscal                                                               
plan conversation could follow.   He advised that the state needs                                                               
a new  revenue structure, and this  bill already exists.   From a                                                               
political solution  perspective, he suggested that  the best path                                                               
forward for  a fiscal plan should  include a 50/50 POMV  split of                                                               
the Permanent Fund earnings.                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH commented  that  the state  would still  not                                                               
have revenue vehicles for additional revenue moving.                                                                            
                                                                                                                                
CHAIR CARPENTER  responded that there  has not  been a move  on a                                                               
long-term fiscal  solution in  the legislature  in the  past four                                                               
years.  He said that Representative  Groh is correct, in that the                                                               
committee has  not passed  a solution  for increases  in revenue,                                                               
but he  expressed the opinion that  one exists, and it  will move                                                               
out shortly.   He noted  that the  committee did move  a spending                                                               
limit  bill,  but this  has  not  moved  from the  House  Finance                                                               
Standing Committee.   He further noted  the companion legislation                                                               
in the  Senate would address  a spending limit; however,  this is                                                               
still in a  Senate committee.  He pointed out  that the challenge                                                               
would  be getting  the legislators  interested in  addressing the                                                               
state's fiscal structure.                                                                                                       
                                                                                                                                
REPRESENTATIVE   GROH   questioned   Representative   Carpenter's                                                               
intention to move  a revenue measure out of  committee before the                                                               
end of the session.                                                                                                             
                                                                                                                                
CHAIR CARPENTER expressed the hope on this.                                                                                     
                                                                                                                                
REPRESENTATIVE  GROH  stated that  he  does  not oppose  adopting                                                               
Version O with  amendments, and he removed his  objection.  There                                                               
being no further objection, Version O was before the committee.                                                                 
                                                                                                                                
7:23:57 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 7:23 p.m. to 7:24 p.m.                                                                       
                                                                                                                                
7:24:12 PM                                                                                                                    
                                                                                                                                
[SB 107 was held over]