04/23/2001 01:44 PM Senate JUD

          SJR 11-CONST AM: PERM FUND INCOME DISTRIBUTION                                                                    
                                                                                                                              
CHAIRMAN TAYLOR announced SJR 11 to be up for consideration.                                                                    
                                                                                                                                
SENATOR  THERRIAULT   asked  if  the   earnings  reserve   would  be                                                            
maintained,  but  would be  treated as  part  of the  corpus of  the                                                            
Permanent Fund now.                                                                                                             
                                                                                                                                
SENATOR WARD answered yes.                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR said they  have a committee substitute that includes                                                            
actual language  instead of leaving the statutory  references within                                                            
the Constitution.                                                                                                               
                                                                                                                                
SENATOR  COWDERY moved  to adopt the  CS, Cook  4/20/01, to  SJR 11.                                                            
There were no objections and it was so ordered.                                                                                 
                                                                                                                                
SENATOR DONLEY  said drafting the bill in this way  has allowed them                                                            
to review the existing  formula for calculating the dividend on page                                                            
2, lines  7 - 9, which  says, "The dividend  may not exceed  the net                                                            
income of the fund for  the fiscal year just ended, plus the balance                                                            
of the earnings reserve account."                                                                                               
                                                                                                                                
He said  that language  was the  basis for the  argument during  the                                                            
September  1999  advisory  ballot  debate.  "It  was  a complicated                                                             
calculation. It was a speculative  argument, but people just assumed                                                            
it as fact for  some of the arguments that were being  put out there                                                            
to the public. I think that language is problematic…"                                                                           
                                                                                                                                
SENATOR DONLEY  said before he could support that  section, which he                                                            
disagrees  with  in current  statute,  he  would want  an  extensive                                                            
analysis. He didn't think  the sponsor agreed with the technical way                                                            
it might function, either.                                                                                                      
                                                                                                                                
SENATOR WARD explained:  "I didn't put the language  into law and if                                                            
there was  going to  be a simplification  of what  he was trying  to                                                            
accomplish and what the  people of Alaska were trying to accomplish,                                                            
this would be the proper place to do it."                                                                                       
                                                                                                                                
SENATOR TAYLOR said all they did in the bill was state existing                                                                 
state law.                                                                                                                      
                                                                                                                                
SENATOR WARD said it would take a constitutional amendment to                                                                   
change the formula.                                                                                                             
                                                                                                                                
SENATOR WARD did not want to change existing law at this time,                                                                  
because people in his district like it the way it is.                                                                           
                                                                                                                                
SENATOR DONLEY  agreed with Senator Ward, but he thought  that there                                                            
were very few  Alaskans that know  the ramifications of those  three                                                            
sentences  for some future  calculation of  their dividend.  "That's                                                            
what worries me. That sentence  hasn't kicked in yet, but if it did,                                                            
I think there would be a lot of shocked people out there."                                                                      
                                                                                                                                
SENATOR  WARD said he  didn't disagree  with that.  "If the  Finance                                                            
Committee wants to change  existing law in the form of a vote of the                                                            
people, then  I think it's something  they, as a committee,  need to                                                            
come up with - what the  ramifications are and the various models of                                                            
that, because we're talking dollars now."                                                                                       
                                                                                                                                
SENATOR  COWDERY moved  to pass  CSSJR 11(JUD)  from committee  with                                                            
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR ELLIS objected:                                                                                                         
                                                                                                                                
     This on its  face has some popular appeal, but  I can't be                                                                 
     the  only one at  this table  who is concerned  about  the                                                                 
     potential risks and the  chain of events this could set in                                                                 
     motion.  There  was  a  lot  of  discussion  at  the  last                                                                 
     committee  hearing  about the  IRS. I  got more  and  more                                                                 
     nervous  as that discussion  went on.  I think if there's                                                                  
     any  contact with the  IRS, I think that's  a bad idea  to                                                                 
     start  with….If there's  any contact to  be done, I  would                                                                 
     hope it  could be done in an  institutional fashion,  in a                                                                 
     very  reserved and careful  way so that  we ask the  right                                                                 
      questions. I think asking the questions is dangerous in                                                                   
     and of itself.                                                                                                             
                                                                                                                                
SENATOR ELLIS again said he wasn't the only person at the table                                                                 
who was concerned about this and he knew there was a perception                                                                 
in the public, but he didn't think the Permanent Fund Dividend                                                                  
was in imminent danger from this legislature.                                                                                   
                                                                                                                                
CHAIRMAN TAYLOR said that he also has grave concerns about the                                                                  
same subject, but he thought they should have the discussion.                                                                   
There being  no further discussion,  he asked for a roll  call vote.                                                            
                                                                                                                                
SENATORS  DONLEY,  COWDERY,  THERRIAULT,   and  TAYLOR  voted  yeah;                                                            
SENATOR ELLIS  voted nay; and the bill was passed  from committee by                                                            
a vote of 4 to 1.                                                                                                               
                                                                                                                                
TAPE 01-21, SIDE B                                                                                                            
                                                                                                                                
SENATOR THERRIAULT  noted that the  Trustees had requested  that                                                                
another proposal  be introduced and  he said he would move  that                                                                
alternative  also, so that the Finance  Committee has different                                                                 
ideas to look at.