Legislature(2023 - 2024)SENATE FINANCE 532
04/18/2023 09:00 AM Senate 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 | |
| SB41 || SB54 | |
| SB29 | |
| SB87 | |
| SB104 | |
| SB107 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 54 | TELECONFERENCED | |
| += | SB 54 | TELECONFERENCED | |
| += | SB 41 | TELECONFERENCED | |
| += | SB 29 | TELECONFERENCED | |
| += | SB 87 | TELECONFERENCED | |
| += | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 107 | TELECONFERENCED | |
SENATE BILL NO. 107
"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."
10:24:45 AM
KEN ALPER, STAFF, SENATOR DONNY OLSON, discussed the
presentation, "Senate Bill 107, How We Got Here: Use of
Savings to Balance the Budget Permanent Fund, CBRF, and the
POMV" (copy on file).
10:25:47 AM
Mr. Alper addressed slide 2, "The Permanent Fund, 1977-
2017":
• For 40 years, the Permanent Fund mostly grew in the
background and was not used for general government in
any way
• Half of statutory earnings, defined by formula, were
distributed as dividends
• The "other half" could have been used by the state,
but was left in the fund
Therefore, the fund now includes the compounded
earnings on the state's "half" that was not used
10:26:32 AM
Mr. Alper pointed to slide 3, "The Permanent Fund, 1977-
2017":
• What would it have been used for?
o Additional state spending
o Larger PFDs
o Lower oil taxes
o Invested separately in another savings fund
• 2016-2017 Dividend Reduced from formula by veto
(2016) or budget action (2017)
• 2018 Passage of SB26, with a sustainable "percent of
market value" draw tied to a five-year lookback fund
value
10:28:13 AM
Mr. Alper discussed slide 4, "Constitutional Budget Reserve
History":
• 1977-1990: Multiple lawsuits between state and oil
industry regarding pipeline tariffs, royalty
valuation, and petroleum taxes
• 1990: As these cases were settling, Art. IX, Sec. 17
passed as a place to hold settlement funds apart from
general revenue
o Two methods to draw funds: by simple majority or by
supermajority
• 1994, Hickel v. Halford, Supreme Court greatly
limited possibility for simple majority draw, making
the "¾ vote" necessary in almost all cases
• 1994-2005, annual budget balancing draws totaling
$5.5 billion
• 2006-2010, budget surpluses were used to pay back
full amount
• 2011-2013, no CBRF draws; budget surpluses saved
elsewhere
• 2014-2017, draws totaling about $11 billion
10:30:10 AM
Mr. Alper displayed slide 5, "Constitutional Budget Reserve
History":
• 2018-2021, ongoing concern of balance hitting zero
• 2022-2023, small repayments due to:
o Failure of "reverse sweep"
o FY22 surplus after spring '22 price spike
o Veto of SBR deposit passed last session
10:31:55 AM
Mr. Alper pointed to slide 6, "POMV, Dividends, and Year
End Balances 2018-2028."
10:34:31 AM
Mr. Alper addressed slide 7, "What If the Senate Version of
SB26 Had Passed?"
• (The House version had similar provisions, including
a 67/33 POMV split, although all were removed by the
conference committee)
• 75/25 Split
• If certain oil revenue (production tax plus UGF
portion of royalty) exceeds $1.2 billion, POMV is
reduced dollar for dollar by the amount over that
o The reduction comes from the GF portion, not
the dividend portion
• When the ERA exceeds four times the current year's
POMV, the amount in excess of this sweeps to the
principal (replaces inflation proofing)
o Internal to the fund, so does not impact this
analysis
• Appropriation cap of $4.1 billion, plus capital
budget and PFD, less debt service, plus inflation from
7/1/16
10:36:45 AM
Mr. Alper pointed to slide 8, "What If the Senate Version
of SB26 Had Passed?"
And then:
• How would budgets have changed?
• Future POMV adjustments due to claw back
• Etc.
10:39:16 AM
Mr. Alper discussed slide 9, "What CSSB107(FIN)\Y Does":
• Establishes the 75/25 Split (25 percent of POMV to
dividends)
• Sets a "trigger" by which the split increases to
50/50 (50 percent of the POMV to dividends):
o If, in any year starting in 2026, the
legislature passes at least $900 million in new
revenue, the POMV split increases to 50/50
o Must be new, annually recurring revenue, versus
what was in statute as the law read on January 1,
2023
o The condition must be agreed to by both the
Commissioner of Revenue and the Director of
Legislative Finance
o If this doesn't happen by 2037, the condition
expires and the 75/25 remains
10:40:39 AM
Mr. Alper pointed to slide 10, "Potential additional
amendments to the POMV":
• Modify the "trigger" (for the switch from 75/25 to
50/50)
o Different revenue amount than $900 million
o Add multiple "steps" of new revenue where the
POMV split would change gradually
• Add additional "triggers"
o Minimum savings amount
o Condition to passing some other legislation
• Add additional pieces from SB26
o lawback" / volatility piece (POMV reduced
when oil revenue is high)
o Automatic sweep from ERA to Principal when ERA
hits certain size
10:42:06 AM
AT EASE
10:43:03 AM
RECONVENED
10:43:03 AM
PETE ECKLUND, STAFF, SENATOR BERT STEDMAN, looked at the
presentation, "Historical Capital Budgets" (copy on file).
He looked at slide 1.
Mr. Ecklund discussed slide 2. He noted that the slide
showed some of the deferred maintenance needs in the state,
and school major maintenance needs.
10:45:36 AM
Mr. Ecklund pointed to slide 3. He remarked that the slide
was from the Office and Management and Budget (OMB), which
addressed preventative maintenance.
Mr. Ecklund looked at slide 4. He stated that the slide was
drafted by Senator Bishop.
Senator Bishop stated that the slide showed that the slide
would slowly address the issue, because it adjusted for
inflation as related to deferred maintenance .
Mr. Ecklund pointed to slide 5. He noted that the slide
pointed to the modeling assumptions.
Mr. Ecklund pointed to slide 6. He remarked that the slide
was built into the assumption for education.
Mr. Ecklund discussed slide 7. He noted that the slide
showed the assumptions, which were similar to other budget
items throughout the session.
10:50:32 AM
Mr. Ecklund pointed to slide 8. He noted that the slide
showed what was needed in revenue to get to a 50/50
dividend.
Mr. Ecklund displayed slide 9, which showed the
probabilistic modeling.
Co-Chair Olson noted the CBR probability.
Mr. Ecklund agreed
Mr. Ecklund addressed slide 10, which showed that the
reduction in the budget would reflect the history of the
budgets.
10:56:09 AM
Co-Chair Olson looked at slide 6, and wondered whether the
supplemental budget was slated at $50 million per year.
Mr. Ecklund replied in the affirmative.
Co-Chair Olson felt that assumption was low for the
supplemental budget.
SB 107 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson discussed the following meeting's agenda.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 54 FY2023_Cap_Supp_Summary_Spreadsheet_4-17-23.pdf |
SFIN 4/18/2023 9:00:00 AM |
SB 54 |
| SB 54 FY23CapSuppBackup.pdf |
SFIN 4/18/2023 9:00:00 AM |
SB 54 |
| SB 54 FY23OpSuppBackup.pdf |
SFIN 4/18/2023 9:00:00 AM |
SB 54 |
| SB 54 FY2023_Op_Supp_Summary_Spreadsheet_4-17-23.pdf |
SFIN 4/18/2023 9:00:00 AM |
SB 54 |
| SB 54 23.04.18 OMB Supplemental Budget Overview SFIN.pdf |
SFIN 4/18/2023 9:00:00 AM |
SB 54 |
| SB 104 DCCED DCRA 041523.pdf |
SFIN 4/18/2023 9:00:00 AM |
SB 104 |
| SB 29 Version R Summary of Changes.pdf |
HEDC 4/26/2024 8:00:00 AM SFIN 4/18/2023 9:00:00 AM |
SB 29 |
| SB 29 work draft version R.pdf |
HEDC 4/26/2024 8:00:00 AM SFIN 4/18/2023 9:00:00 AM |
SB 29 |