Legislature(2015 - 2016)BUTROVICH 205
02/04/2016 09:00 AM Senate STATE AFFAIRS
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 | |
| SB128 | |
| Presentation: "accessing Permanent Fund Earnings to Reduce the Fiscal Gap." | |
| Presentation: "a Way Forward on the Alaska Budget" | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 114 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 128 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SB 128-PERM. FUND: DEPOSITS; DIVIDEND; EARNINGS
9:08:26 AM
CHAIR STOLTZE announced the consideration of SB 128.
9:08:54 AM
RANDALL HOFFBECK, Commissioner, Alaska Department of Revenue,
stated that he appreciated the fact there were many versions of
Permanent Fund legislation as a solution for the fiscal crisis.
He reviewed his presentation on best practices on sovereign-
wealth funds around the world, ways the Permanent Fund relates
to other wealth funds, and ways it can be used to stabilize and
fund government. He reported that he and Attorney General
Richards also provided information on the governor's approach
and how it fits into the governor's total fiscal plan.
He related that SB 128 is one of three pieces that includes
using the state's wealth, a tax component, and a budget-cut
piece. He said SB 128, The Alaska Permanent Fund Protection Act,
is a way to achieve a $3.3 billion endowment-type draw from the
state's earnings by putting 100 percent of oil and gas tax
revenue and other mineral revenue into the Permanent Fund
itself. He detailed that SB 128 would allow the Permanent Fund
account to generate $3.3 billion on a sustainable basis moving
forward. He specified that the dividend would be tied to 50
percent of royalties received on an annual basis. He concluded
that SB 128 is a plan that works and provides a solution to a
very difficult problem.
9:11:52 AM
CHAIR STOLTZE suggested committee members request information on
the constitutionality of SB 128.
SENATOR MCGUIRE stated that her two main concerns are related to
the structure. She disclosed that in SB 114 the General Fund
(GF) is retained, but SB 128 purports to create a new GF in the
Earnings Reserve Account (ERA). The Constitutional Budget
Reserve (CBR) remains the same in SB 114, but in SB 128 the
three-quarters vote to access funds is removed. She inquired how
certain the administration is regarding legal challenges to her
two concerns.
9:13:55 AM
WILLIAM MILKS, Assistant Attorney General, Alaska Department of
Law, asked Senator McGuire to restate her concern about the CBR
and the GF.
SENATOR MCGUIRE specified that the GF is statutorily created
with a minimum-balance threshold to move money in and out. She
detailed that the ERA is statutorily created as an overlay to
the constitutional creation of the Permanent Fund and that money
can move in and out only for inflation proofing and to pay
dividends. She opined that the bill's proposal to statutorily
change the ERA is legally sound. She questioned how vulnerable
the GF would be if the ERA was made a part of it and how
vulnerable it would become because of pulling in royalties and
production taxes, etc., and then paying out for government
expenses. She noted that Senator Wielechowski shares her
concerns.
9:15:51 AM
COMMISSIONER HOFFBECK asked if she meant "vulnerable to the
sweep."
SENATOR MCGUIRE answered yes.
9:17:04 AM
CHAIR STOLTZE held SB 128 in committee.