Legislature(2021 - 2022)BUTROVICH 205
04/21/2021 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SJR6|| SB53 | |
| SB122 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 53 | TELECONFERENCED | |
| += | SB 82 | TELECONFERENCED | |
| += | SB 23 | TELECONFERENCED | |
| + | SJR 6 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 122 | TELECONFERENCED | |
SJR 6-CONST. AM: PERM FUND & PFDS
SB 53-PERM FUND; ADVISORY VOTE
1:34:17 PM
CHAIR HOLLAND announced the consideration of SENATE JOINT
RESOLUTION NO. 6, Proposing amendments to the Constitution of
the State of Alaska relating to the Alaska permanent fund,
appropriations from the permanent fund, and the permanent fund
dividend.
And
SENATE BILL NO. 53, "An Act relating to use of income of the
Alaska permanent fund; relating to the amount of the permanent
fund dividend; relating to the duties of the commissioner of
revenue; relating to an advisory vote on the permanent fund;
providing for an effective date by repealing the effective date
of sec. 8, ch. 16, SLA 2018; and providing for an effective
date."
[This was the first hearing for both SJR 6 and SB 53.]
1:35:01 PM
BRANDON BREFCZYNSKI, Special Assistant to the Policy Advisor,
Office of the Governor, Juneau, Alaska, stated that SJR 6 is the
governor's constitutional amendment related to the permanent
fund and SB 53 is the governor's statutory 50:50 rule for the
permanent fund dividend (PFD). On behalf of the governor, he
related that these two pieces of legislation are Governor
Dunleavy's top priorities. The first step to securing the
state's fiscal future is to protect the permanent fund and the
PFD constitutionally. After years of spending down the
Constitutional Budget Reserve (CBR) and the Statutory Budget
Reserve (SBR) accounts, a simple majority vote could deplete the
accounts and jeopardize the permanent fund. This could
potentially eliminate the PFD for future generations of
Alaskans. The governor senses the urgency of the fiscal crisis,
he said. The governor has proposed this legislation to establish
a framework for managing the permanent fund and implementing the
necessary protections to prevent ad hoc spending and allow for
continued growth. In addition to protecting the permanent fund,
this proposal will protect the PFD. It will also restore
Alaskan's confidence and trust that they will receive the annual
share of Alaska's resources and wealth. The governor believes
the public must be included because it was through the people of
the state that the permanent fund was initially created. SJR 6
and SB 53 must be considered together to make sense. This
resolution and bill will protect the permanent fund, provide for
the fund's continued growth, and involve Alaskans in the
process.
1:37:51 PM
SENATOR SHOWER asked him to explain why both the bill and
resolution are necessary.
MR. BREFCZYNSKI responded that SJR 6 proposes two provisions.
First, it would provide an annual draw from the permanent fund
through a percentage-of-market-value (POMV) rule and establish
the permanent fund dividend (PFD) in the Alaska Constitution.
Second, it would require that a portion of the funds withdrawn
be used for the PFD. SB 53 proposes a change in the PFD formula
to 50 percent of the 5 percent-of-market-value (POMV) draw from
the permanent fund earnings. Thus, SB 53 provides the formula
referenced in the constitutional amendment proposed in SJR 6 and
will ensure that the PFD will be paid as provided by law.
1:39:09 PM
SENATOR SHOWER stated that he has heard some legislators express
that enshrining the formula into the Alaska Constitution could
bind future legislatures. He said that this concern could be
assuaged since SB 53 establishes the formula in statute. This
provides the legislature with the ability to work on the
formula. SJR 6 would guarantee the POMV draw for the PFD, he
said.
MR. BREFCZYNSKI added that while PFD formula would be provided
for in statute, any further changes to the formula would require
a vote of the people to ratify the change.
1:40:15 PM
SENATOR HUGHES asked if the reason for the 50:50 split was not
only because it was how then-Governor Hammond established the
permanent fund, but also because 50 percent falls halfway
between the amount of the permanent fund that would be available
to fund government and the amount that could be paid out in
PFDs.
She recalled that initially, the governor suggested paying out
dividends at 70 to 80 percent of the draw and depositing the
remaining 20 to 30 percent in the general fund to provide for
government services. However, some legislators wanted to reverse
that ratio, so the 50:50 split falls in the middle, she said.
1:41:42 PM
MR. BREFCZYNSKI replied it is both. Alaska's resources are owned
in common by the people of the state. He agreed that a
disconnect exists between the current statutory PFD formula in
law and how the legislature uses the POMV formula to draw from
the permanent fund. The governor has decided to meet halfway
with the 50:50 proposal.
SENATOR HUGHES asked if the governor is proposing a midway point
or if he is using the 50:50 rule to negotiate some other split,
such as 20 percent for the PFD and 80 percent for government
services.
MR. BREFCZYNSKI said the governor believes the 50:50 formula is
the appropriate split.
SENATOR HUGHES asked him to verify that the governor supports
the statutory PFD, but he is willing to meet at the mid-point.
MR. BREFCZYNSKI answered yes. The governor believes that 50
percent for PFDs and 50 percent for government services is the
appropriate split.
1:43:47 PM
At ease
1:44:04 PM
CHAIR HOLLAND reconvened the meeting.
1:44:06 PM
SENATOR MYERS offered his view that the 50:50 rule is not
accurate. He said that SJR 6 relates to 50 percent of earnings
from investments. However, the state has already diverted 75
percent of royalties to fund government, perhaps more. Thus, the
state has already shifted a significantly higher proportion than
50 percent to fund government services.
MR. BREFCZYNSKI agreed. It is not 50 percent of the pure royalty
wealth, but it also includes the investment earnings from the
royalties. Then through a formula, 50 percent of the annual
statutory net income from the royalties and investment earnings
provides for the dividends. He explained that since Alaskans
cannot own the subsurface rights, this is a compromise.
Landowners in the Lower 48 receive royalties for any resource
development on their property, so if they choose to save a
portion of those royalties, it will result in investment
earnings, which would pay these landowners an ongoing dividend.
1:45:42 PM
SENATOR SHOWER agreed with Senator Myers that the amount to fund
government does not represent 50 percent. He asked Mr.
Brefczynski to highlight the differences between SJR 6 and SJR 1
introduced by Senator Wielechowski. He expressed his interest in
inflation proofing the permanent fund for the continued
protection and growth of the fund.
1:46:40 PM
MR. BREFCZYNSKI deferred to Mr. Barnhill to speak to SJR 1. In
terms of inflation proofing, SJR 6 will constitutionally protect
the permanent fund, so it will not be necessary to inflation-
proof the fund by depositing a portion of the Earnings Reserve
Account into the fund's principal. He said that the permanent
fund is also protected from inflation by having a set draw.
Currently, statutes set the draw at 5 percent. The goal is to
have the permanent fund earn more, he said. He illustrated how
the calculation in SJR 6 would work, such that permanent fund
earnings of 7 percent with a 5 percent draw would have real
growth of 2 percent. He explained that basing the 5 percent draw
means it would be based on a five-year average, so the effective
rate would also be considered. He reported that currently, the
fund balance is $78 billion. He clarified that the five-year
average goes back 6 years. Thus, it is a much smaller number
than a 5 percent calculation on $78 billion, the fund's current
value.
1:47:49 PM
SENATOR KIEHL agreed it is not a 50:50 split for the people and
government. As Mr. Brefczynski said when he paraphrased the
preamble of the Alaska Constitution, the state is the people so
it is the peoples' roads, bridges, troopers, prisons, courts,
education, schools, clean air, clean drinking water, biologists
and fish managers.
1:48:49 PM
At ease
1:51:47 PM
CHAIR HOLLAND reconvened the meeting.
1:52:22 PM
MIKE BARNHILL, Deputy Commissioner, Department of Revenue,
Juneau, Alaska, began a PowerPoint on behalf of the
administration. He said that the proposals are relatively
straightforward. In response to Senator Shower's request, he
offered to compare SJR 1 and SJR 6 during his presentation.
MR. BARNHILL referred to slide 2, which outlines the objectives
of SJR 6. The first objective is to protect the permanent fund
to ensure it lasts forever by aligning the permanent fund
structure with the modern approach to managing institutional
funds and endowments. As the third bullet point suggests, that
will happen if the legislature adopts a single-account structure
for the permanent fund. The current structure was placed in the
Alaska Constitution in 1976. The drafters crafted the amendment
based on historic trust law and trust structures which used a
two-account structure: a principal account and an income
account. Historically, the mantra was to save the principal and
spend the income. In the last few decades, investment advisers,
consultants, and investment managers have recommended that
endowments update their structures to a one-account structure. A
specific percentage can be spent annually. Once that percentage
is devised, it will automatically inflation-proof the
institutional fund or endowment and its inflation-adjusted value
will last forever.
MR. BARNHILL stated that the second objective is to
constitutionally protect the PFD. SJR 6 would require that a
percentage of the distribution from the permanent fund be
dedicated to the permanent fund dividend (PFD). Since the
enactment of Senate Bill 26 in 2018, the state has been using
the permanent fund to pay the PFD and provide funds for
government spending. The spending demands on the permanent fund
have increased, therefore the percentage of funds drawn from the
permanent fund has also increased. One reason the administration
and other stakeholders, including the trustees of the Alaska
Permanent Fund Corporation, are suggesting the state update the
structure in the Alaska Constitution is concern about
prematurely depleting the Earnings Reserve Account (ERA). It is
possible that the ERA could be depleted in a series of years by
annually drawing 5 percent from the fund, combined with a
downturn in the investment market. To avoid that occurrence, the
APFC trustees and the administration propose to covert the
existing two-account structure to a one-account endowment
structure. Finally, this measure requires an advisory vote by
the people of Alaska when statutory changes to the allocation
for PFDs are made.
1:57:07 PM
SENATOR KIEHL asked which provision in SJR 6 will protect
against eroding the real value of the permanent fund. The
drafting structure for SJR 6 would allow the legislature to draw
10 percent in a year with a simple majority vote by each body
and the governor's signature.
MR. BARNHILL answered that his PowerPoint contains a slide that
discusses the real value versus the nominal value of returns. He
explained that the real value of a fund is its inflation-
adjusted value. The purpose of using the inflation-adjusted
value of the fund is to ensure that the purchasing power of the
fund will be no less over time. Governor Dunleavy has proposed
to allow the legislature through statute to specify the
distribution percentage. In 2018, the legislature passed Senate
Bill 26, the distribution rule. Initially, the distribution rule
specified 5.25 percent of the lagging five-year market value of
the permanent fund and today it is 5 percent. As Mr. Brefczynski
described, the five-year lagging average is the average of the
first 5 of the last 6 fiscal years (FY). The legislature has had
ongoing discussions about whether 5 percent is the correct
number in the past few years. He opined that this discussion
would never end. The state must always evaluate the spending
from the fund in relation to the real return of the fund to
protect the fund from inflation. That calculation is subject to
fluctuations in capital markets, inflation, and spending levels.
MR. BARNHILL said this creates a bit of a dilemma. One solution
would be to hardwire a specific percentage into the
Constitution, but as capital markets fluctuate, the percentage
could be too high or too low. SJR 1 proposes placing a 5 percent
distribution of the permanent fund's lagging five-year
percentage-of-market-value (POMV) in the Constitution. Governor
Dunleavy's proposal in SJR 6 would not specify the percentage in
the Constitution. Instead, SB 53 would establish an annual
distribution rule of 5 percent of the lagging five-year market
value. This will give the legislature the flexibility to pick a
distribution rate consistent with protecting the fund's real
value over time.
2:00:31 PM
MR. BARNHILL responded to Senator Kiehl's question of whether
the legislature could draw 10 percent. He argued that the Alaska
Constitution sets out that it must be a permanent fund, which
means that the fund's real value must be permanently maintained.
Enacting distribution rates are at odds with that constitutional
purpose.
He said the markets could have such high returns that a 10
percent distribution is consistent with the real return of the
permanent fund. That has happened for brief periods over the
past 50 years, but it is not likely to be sustainable. He
offered his belief that the legislature will focus on the spirit
of the Alaska Constitution and that any distribution rate that
risks eroding the real value of the permanent fund over time
will likely be found invalid.
MR. BARNHILL said that the governor's approach would allow
flexibility and for indefinite, ongoing discussions because that
is how endowment funds are managed. However, if the legislature
so desires, the governor is willing to let the legislature make
the policy decision to hardwire a specific percentage into the
Alaska Constitution. This could happen in a variety of ways. One
approach taken in 2018 in House Bill 213 was to convert the
Public School Trust from a historic two-account structure to an
endowment with not more than a 5 percent distribution rate.
Adding specific language "not more than" provided it some
flexibility to distribute less if APFC's staff and consultants
determined there was a risk of overdraw. HJR 1 takes that
approach, he said.
2:03:09 PM
SENATOR MYERS asked if the constitutional language should use
the average real realized rate of return rather than hardwire in
a specific figure into the Alaska Constitution or statute.
MR. BARNHILL answered that would be worth considering because
the goal of modern institutional fund management is to try to
match the real rate of return to the spending rate. One
difficulty is that market rates can fluctuate substantially. The
danger of using the real rate of return is that when markets are
high, it is possible to draw out too much and fund the budget at
a higher level, which would need to be ratcheted down. However,
setting the percentage of distribution rate in statute, using
the lagging five-year market value of the permanent fund,
provides the permanent fund and the legislature some consistency
each year. Currently, under the Senate Bill 26 formula, the
permanent fund distributions have been about $3 billion a year.
2:05:48 PM
SENATOR HUGHES asked if there is universal or general agreement
among financial experts that a 5 percent POMV will allow for
inflation proofing. She said she has heard some people
supporting a lower amount.
MR. BARNHILL moved to slide 4, distribution rates. He explained
that discussions about the returns from the permanent fund
typically relate to nominal returns. In order to calculate the
real rate of return, it is necessary to subtract inflation. In
order to inflation proof an institutional or endowment fund
model, the fund needs to retain earnings in the amount of the
inflation during that period. He clarified that the global
capital market has been a bull market, meaning returns have been
rising since 2009. Investment markets were concerned as to
whether the bull market was sustainable. In March 2020, the
global pandemic caused a sharp market correction with an almost
automatic rebound. The bull market has continued or else the
markets have entered a new business cycle and bull market.
He offered his belief that overall, the investment consultants
never agree. However, most investment consultants and market
advisors the state uses are concerned that over the next 10
years, hitting the 5 percent rate of return will be challenging.
Currently, the year-to-date investment return is greater than 20
percent for the retirement systems and permanent fund.
2:08:52 PM
MR. BARNHILL offered his view that the capital markets are
pulling returns forward and the state will pay the price for
that over the next three to five years. However, no one knows
for sure. The Department of Revenue recommends that the state
always keep an eye on the 1, 3, 5, and 10-year real rate of
return and the effective spending rate. In fact, the permanent
fund has started reporting its effective spending rate in its
presentations to the Finance committees. If the effective rate
of spending is higher than the real rate of return over time,
there is a risk of eroding the inflation-adjusted value of the
permanent fund. He opined that investment consultants expressed
concern that 5 percent may not be achievable over ten years, so
the state must be very aware of spending versus the real rate of
return.
MR. BARNHILL offered to bring reports to the finance committee
to provide an understanding with respect to spending versus a
real return.
2:10:44 PM
SENATOR SHOWER recalled that legislators have extensively
discussed the spending cap related to the structure of the
permanent fund in prior years. As Mr. Barnhill highlighted, it
is possible to draw down permanent fund savings. He acknowledged
that a spending cap would provide stability.
MR. BARNHILL opined that a 10 percent real rate of return is not
likely to be sustainable.
2:12:32 PM
MR. BARNHILL restated the mechanics of SJR 6. SJR 6 proposes to
convert the Alaska Permanent Fund in the Alaska Constitution
from its existing two-account structure to a one-account
endowment structure. SJR 6 would establish the formula as a
percentage times the lagging five-year average of the market
value of the Alaska Permanent Fund. It would establish the
permanent fund dividend in the Alaska Constitution with the
legislature setting the allocation formula in statute. Finally,
SJR 6 proposes when statutory changes to the allocation for PFDs
are made, it will require an advisory vote by the people of
Alaska.
2:14:06 PM
SENATOR HUGHES stated that the State v. Wielechowski case
determined that the appropriation powers of the legislature
superseded the statutory formula for the permanent fund
dividend. Some legislators consider the operating budget as law.
She related a scenario in which SJR 6 and SB 53 both pass and
the PFD formula is set in statute. The legislature could fund
PFDs at a different amount in the operating budget. She asked
whether SJR 6 would prevent that from happening since they are
both laws. She referred to page 2, line 7 of SJR 6, which read,
"A law that changes the amount allocated for dividend payments
must be approved by the voters of the State under (d) of this
section." Therefore, the formula could be set in statute but
also the operating budget. If the legislature does not follow
the statutory formula but uses the amount set by the operating
budget, she asked if it must be put before the voters for
approval.
2:15:48 PM
MR. BARNHILL referred to the language on page 3, lines 5-11 of
the bill, which read:
(d) For purposes of the 2022 amendments to Section 15
of Article IX, the law governing the amount allocated
for dividend payments to residents of the State under
Section 15(c) of Article IX is the law setting forth
the allocation for dividend payments at the time of
adoption of the 2022 amendments to Section 15(c) of
Article IX and that is not a law that is enacted as an
appropriation bill, subject to the enactment of a law
amending the law regarding dividend payments in
accordance with the requirements of Section 15(d) of
Article IX.
MR. BARNHILL explained that the bill drafters considered that
question and included language in SJR 6 that the law setting
forth the allocation for dividend payments could not be an
appropriation bill.
2:16:29 PM
SENATOR HUGHES expressed concern that SJR 6 will give Alaskans
less assurance that a dividend will be paid because the language
related to the draw states "may". She related a scenario in
which the state has a windfall, assuming it has a spending cap
and it can fund the budget without a draw. She related her
understanding that there would not be a PFD without a draw.
MR. BARNHILL responded that her scenario was considered at a
hearing yesterday and that Mr. Brefczynski responded that it is
the administration's intention that PFDs will be issued each
year. He said that Mr. Brefczynski offered to work on an
amendment to make that clear.
2:18:24 PM
SENATOR KIEHL agreed that the language needs to be revised
because the way it is currently written, without a draw it would
take a vote of the people. He was unsure about the timing of an
advisory vote under SJR 6. He asked what the approach and vision
taken in SJR 6 would be. He said it seems like "protect the
check" rather than a "protect the permanent fund."
2:19:34 PM
MR. BARNHILL answered that the administration's goal is to
protect the inflation-adjusted value of the permanent fund going
forward with no overspending. The proposed plan is consistent
with modern institution and endowment practices, which attempt
to balance access to the funds for the present versus access to
funds in the future. The best way to accomplish this is to
ensure that spending is limited to the real return of the fund
and nothing more. This needs to be viewed in 5 to 10 year
averages because market returns can be volatile. The whole
philosophy of governing endowments is to protect
intergenerational equity. As long as the fund's real value is
the same over time, it maintains purchasing power. The
governor's proposal is similar to how the trustees of a
university endowment fund would manage its fund. The legislature
will decide the rate of distribution, but the legislature should
always consider a distribution rate that will protect the fund's
real value. He offered to work on the language in SJR 6 to make
that clear. That is somewhat at odds with the 5 percent rate
that is hardwired in the Alaska Constitution under SJR 1. He
acknowledged that 5 percent could be too high during specific
economic time periods in investment market climates. The
administration's goal is to protect the permanent fund over
time.
2:23:09 PM
SENATOR MYERS acknowledged that SJR 6 and SB 53 were designed to
work concurrently. He asked what happens if SB 53 passes but SJR
6 does not pass since SB 53 will take 11 votes, but SJR 6 will
take 14 votes to pass the Senate.
2:23:48 PM
MR. BARNHILL turned to slide 5. He explained that SB 53
implements SJR 6 but it also acts as a stand-alone bill if SJR 6
does not pass. SB 53 proposes a 5 percent distribution rate, a
50:50 rule to allocate the PFD, and it will require an advisory
vote on the PFD. If SJR 6 fails to pass, but SB 53 passes, it
will make some conforming changes to align the statute with
State v. Wielechowski. The state would continue under that
paradigm, he said.
2:24:52 PM
SENATOR MYERS offered his view that the legislature will face
more problems if SB 53 passes but SJR 6 does not than if the
statutes were left alone. He said in the interest of time and to
allow people to consider this, he does not have any questions.
2:25:28 PM
MR. BARNHILL offered to compare SJR 1 to SJR 6 in response to
Senator Shower's earlier request.
2:25:58 PM
MR. BARNHILL said SJR 1 would use the historical approach of
distributing from the permanent fund using statutory net income,
which considers cash and realization. These funds would be
deposited in the Earning Reserve Account. Using the statutory
net income approach to investment management decisions would
generate more income at limes and less at other times. The point
is that the statutory net income approach can be volatile.
He said SJR 6 proposes using an institutional endowment fund
approach, a percent-of-market-value (POMV) approach, the
standard method of distributing from one account fund. The
(POMV) approach is used by institutional and endowment funds
worldwide because it is more consistent over time. This
percentage can be calculated in a variety of ways. The
administration proposes using a 5 percent distribution rule
using a percentage of the permanent fund's average lagging five-
year market value, split 50:50 to fund PFDs and government.
MR. BARNHILL explained the fundamental difference between SJR 1
and SJR 6 is that SJR 1 would place the legacy statutory formula
consisting of a 5 percent hardwired distribution rate into the
Alaska Constitution. However, a lack of alignment exists for
using that approach to distribute PFDs. He expressed his concern
that SJR 1 is taking an approach to distribution that is
nonstandard and can be volatile. There are times when it could
be in excess of the 5 percent distribution rate. He suggested
those are concerns the committee should consider.
2:30:01 PM
At ease
2:30:40 PM
CHAIR HOLLAND reconvened the meeting.
2:31:32 PM
WILLIAM MILKS, Senior Assistant Attorney General, Legislation &
Regulations Section, Civil Division, Department of Law, Juneau,
Alaska, stated that SJR 6 proposes an amendment to the Alaska
Constitution and SB 53 would set out the specific percentage of
market value (POMV) at 5 percent and a 50 percent split. He
stated the Alaska Supreme Court State v. Wielechowski case
relates to the statute that sets out how a PFD would be paid.
2:33:00 PM
SENATOR HUGHES stated that Art. [XI], Sec. 7, pertains to
restrictions for initiatives, including that an initiative
cannot make or repeal appropriations. She asked if any conflict
would arise by requiring the amount proposed by SJR 6 to be
approved or disapproved by placing it on the ballot.
MR. MILKS said SJR 6 proposes a percentage of market value
(POMV) draw from the permanent fund and in Sec. 2 (c) a portion
of that amount shall be allocated for dividend payments (PFD).
It includes language that a future law changing the amount
allocated for PFDs must be approved by the voters. He stated
that SJR 6 will govern over more general restrictions on
initiatives in Art. XI than was identified.
2:34:37 PM
SENATOR HUGHES expressed concern that SB 53 does not ask the
voters if the proposal is something the legislature should
consider adopting as a resolution for a constitutional
amendment. She asked if that were added to the advisory vote
whether it could be combined as one question or if it must be
two questions. She clarified her concern was that asking people
if the law should be changed when they know that the law
establishing the PFD statutory formula has not been followed
might bring voters to conclude that changing the law won't mean
much.
She said it seems as though an advisory vote would also include
SJR 6. It would ask voters if the 50:50 rule is okay and whether
the legislature should consider the Constitutional Amendment
proposed by SJR 6 to establish this in the Alaska Constitution.
MR. MILKS responded that the legislature has a broad ability to
draft language for an advisory vote. The legislature's goal is
to understand what the people think. He said that if the
legislature asks a compound question, it could create ambiguity.
For example, some people may like the 50:50 rule but may not
want that language in the Alaska Constitution. He cautioned
members that the legislature must be careful how that language
is drafted.
2:37:01 PM
SENATOR HUGHES related her understanding that combining the
questions will not pose any legal issue, but care must be taken
when drafting the language.
2:37:09 PM
SENATOR MYERS suggested that the advisory vote as written would
not pass because an advisory vote on SJR 6 would require a yes
or no answer. However, some people will vote yes because they
like the change, some will vote no because they want a bigger
ratio to increase government funding. Some will vote no because
they support the original statutory formula for the PFD. He
suggested that an advisory vote as written might be like
"putting the cart before the horse."
MR. MILKS deferred to Mr. Barnhill to answer why SJR 6 is
written in this fashion. He said SB 53 would establish the
framework for how to spend permanent fund income and establish
an advisory vote to ask voters if the 50:50 rule sounds like a
good idea.
2:39:06 PM
MR. BARNHILL said the administration wants a proposal that
comprehensively addresses some thorny problems that have defied
resolution. The three principles the governor is putting forward
are first, protect the permanent fund forever; second, involve
the people in a meaningful way; and third, protect the permanent
fund dividend (PFD) forever. He said if you ask 60 people about
these issues, there will be disagreement in the details, but
there would be broad-scale agreement on the principles. He
acknowledged that it is fair to ask which should come first.
However, the administration is trying to put forth a
comprehensive set of measures for the legislature to consider.
He said he hoped a supermajority would agree.
2:40:57 PM
SENATOR MYERS expressed concern about meaningfully involving the
people, such that the meaning will get lost. He offered his view
that by changing the Alaska Constitution in SJR 6 and a statute
in SB 53 first, then asking the people if they agree with those
changes muddles the meaning. If an advisory vote fails, the
legislature could interpret why it failed in many different
ways. He offered his belief that it failed that test.
2:41:58 PM
SENATOR KIEHL offered his view that there is an order of
operations issue in SJR 6 and SB 53 that the legislature should
consider as this legislation moves through the process. SJR 6
proposes any change to the 50:50 distribution rule between
government services and PFDs must be approved by the voters.
However, the transitional language states that this happens
after SB 53 becomes law, regardless of the outcome of the
advisory vote. He said it strikes him as inconsistent to make
changes in the Alaska Constitution, then require an advisory
vote for further changes. Instead, it should require an advisory
vote before changing the Alaska Constitution.
2:43:08 PM
MR. BARNHILL answered that the people would be consulted at the
first general election, after which the legislature would have
the flexibility to set the PFD distribution rate. The advisory
vote aims to determine whether the voters agree with the changes
the legislature made. He acknowledged that there could be
different ways to accomplish this. However, this process seems
relatively efficient in that it gives appropriate accord to the
legislative process. The people elect their legislators, the
legislature uses its expertise, in consultation with the
executive branch, to make decisions on behalf of the people. The
people subsequently can voice their opinions in an advisory vote
as to whether they agree with the legislature's decisions. As
previously mentioned, many conclusions can be drawn on the
advisory vote. He recalled that in 1999, the legislature
seriously considered the outcome of the advisory vote on the use
of permanent fund earnings. Therein lies the meaningful nature
of this process since the legislature would consult with
Alaskans on the decisions it made.
2:45:21 PM
SENATOR SHOWER commented on where the legislature is at this
point. He related that the legislature is discussing and
debating the level of services, including the value of services
to the public, compared to them receiving PFD checks. He offered
his view it is important to note that government services are
not equally distributed. Some people are consumers, and others
are producers; some use substantial government services, but
others do not. However, PFDs are equally distributed. It's a
philosophical issue about whether to support SJR 6 and SB 53 or
how else to solve the level of government services compared to
the amount of the PFDs. The legislature has many options to
address these issues.
[SB 53 and SJR 6 were held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 53 Sectional.pdf |
SJUD 4/21/2021 1:30:00 PM |
SB 53 |
| Dept of Revenue SJR 6 042021 - Final.pdf |
SJUD 4/21/2021 1:30:00 PM |
SB 53 SJR 6 |
| SB 122 Sponsor Statement v. B.pdf |
HJUD 5/10/2021 1:00:00 PM HJUD 5/12/2021 1:00:00 PM HJUD 5/14/2021 1:00:00 PM HJUD 5/17/2021 1:00:00 PM SJUD 4/21/2021 1:30:00 PM |
SB 122 |
| SB 122 Sectional Analysis v. B.pdf |
HJUD 5/10/2021 1:00:00 PM HJUD 5/12/2021 1:00:00 PM HJUD 5/14/2021 1:00:00 PM HJUD 5/17/2021 1:00:00 PM SJUD 4/21/2021 1:30:00 PM |
SB 122 |