Legislature(2023 - 2024)GRUENBERG 120
01/19/2024 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HJR7 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HJR 7 | TELECONFERENCED | |
HJR 7-CONST AM: PERMANENT FUND DIVIDEND
1:03:54 PM
CHAIR VANCE announced that the only order of business would be
HOUSE JOINT RESOLUTION NO. 7, Proposing amendments to the
Constitution of the State of Alaska requiring payment of a
dividend to eligible state residents. [Before the committee was
CSHJR 7(W&M).]
1:04:14 PM
CHAIR VANCE opened public testimony on HJR 7.
1:04:43 PM
JOE GELDHOF, Secretary, Permanent Fund Defenders, described the
proposed legislation as a constitutional override of
Wielechowski v. State of Alaska, which would give the
legislature an opportunity to address fundamental problems. He
shared his belief that HJR 7 would be a "decent" first step that
brings focus to the formula without constitutionalizing a
specific calculation. He suggested that the constitutional
amendment may lead to resolution on a variety of issues, such as
revenue, savings, and scope of government.
1:08:07 PM
MICAHEL L. JONES, representing self, testified in support of HJR
7 as a first step towards resolving Alasa's fiscal challenges.
He detailed his perception of such challenges and urged passage
of the constitutional amendment as a first step in fiscal
responsibility.
1:10:54 PM
The committee took a brief at-ease.
1:11:19 PM
JEAN HOLT, representing self, testified in support of HJR 7.
She urged the legislature to "follow the law," adding that the
proposed legislation would require the state to pay a dividend
according to the formula in statute.
1:12:34 PM
KEVIN HALL, representing self, testified in support of HJR 7 and
urged the legislature to think about citizens rather than
special interests.
1:14:07 PM
MARY RAVETTA, representing self, testified in support of HJR 7.
She urged the legislature to "follow the law" and believed that
[citizens] should be included in the decision to spend from [the
Alaska Permanent Fund].
1:15:04 PM
JOHN MCKEEVER, representing self, testified in support of HJR 7
to protect the permanent fund dividend (PFD) from annual
"attacks" by the legislature.
1:15:51 PM
CHAIR VANCE closed public testimony on HJR 7.
1:17:01 PM
The committee took a brief at-ease.
1:18:38 PM
REPRESENTATIVE EASTMAN considered a scenario in which a future
legislature changed the statutory formula, and a governor vetoed
that legislation. If CSHJR 7(W&M) were enacted, he asked how
the legislature could override the veto and whether to do so,
the required threshold would be a two-thirds or three-quarters
vote.
1:19:32 PM
EMILY NAUMAN, Director, Legislative Legal Services, Legislative
Affairs Agency (LAA), noted that the proposed legislation was
structured as a transfer, not an appropriation. After further
clarifying the question, she stated that answering it would
require speculation on how a court would rule and whether that
court would find a bill that sets the formula through which the
transfer happens as effectuating an appropriation. She said she
was not prepared to answer that question at this time.
1:21:58 PM
REPRESENTATIVE CARPENTER, prime sponsor of CSHJR 7(W&M),
following up on Representative Eastman's question, asked whether
the legislation proposing a formula change would be an
appropriation bill or a policy bill.
MS. NAUMAN stated that in general, an appropriation bill has a
veto override threshold of three-quarters of the legislature in
joint session, or a total of 45 votes. Otherwise, any other
bill has a veto override threshold of two-thirds of the
legislature in joint session, or a total of 40 votes. She said
her hesitancy to answer on the record stemmed from an Alaska
Supreme Court precedent that "muddied" the definition of an
appropriations bill.
1:23:40 PM
REPRESENTATIVE EASTMAN moved to adopt Amendment 2 to CSHJR
7(W&M), labeled 33-LS0439\S.3, Nauman, 1/18/24, which read:
Page 1, line 1, following the second occurrence of
"to":
Insert "dedicated funds, relating to"
Page 1, line 6:
Delete "The proceeds of any state tax or license"
Insert "State revenue, from any source, [THE
PROCEEDS OF ANY STATE TAX OR LICENSE]"
Page 1, line 8:
Delete "out of"
Insert "into and within"
Page 1, line 9, following "to":
Insert "transfers out of the permanent fund and
to"
REPRESENTATIVE ALLARD objected for the purpose of discussion.
1:23:56 PM
REPRESENTATIVE EASTMAN explained that the purpose of Amendment 2
was to clarify the bill language for the public and bring the
"legal parlance" back to common English, specifically in the
dedicated funds provision.
CHAIR VANCE asked how the insertion of "dedicated funds" in
Amendment 2 would impact other areas of the constitutional
amendment.
MS. NAUMAN acknowledged that the change proposed in Amendment 2
was broader than the scope of CSHJR 7(W&M), as currently
drafted. The dedicated funds provision touches nearly every
dollar that comes into the state, she added. She expressed
concern that the broader the change, the more likely the Alaska
Supreme Court would consider the change a revision requiring a
constitutional convention. In addition, she said she was unsure
how the court would interpret the new language, as there was
already a lot of legal precedent and historical interpretation
of the current dedicated funds provision.
CHAIR VANCE questioned the difference between a permissible
constitutional amendment and a constitutional revision.
MS. NAUMAN said there was not a lot of case law that offered
insight on amendments versus revisions. The court would
consider both qualitative and quantitative changes to the
overall functioning of state government. Due to the lack of
guidance, she said it was more likely that a resolution with
either broad changes or numerous changes would be considered a
revision by the courts.
CHAIR VANCE questioned the financial implications of the change
on page 1, line 6 of Amendment 2.
1:29:12 PM
ALEXEI PAINTER, Director, Legislative Finance Division (LFD),
Legislative Agencies and Offices, shared his understanding that
the common interpretation of this section was broader than "just
taxes" and could include investments that may not be obvious
from the language.
1:30:32 PM
REPRESENTATIVE C. JOHNSON questioned whether federal dollars are
considered state revenue.
MR. PAINTER said he considered all money that could be spent by
a state agency as state revenue, including federal funds. He
shared his understanding that [Amendment 2] would not greatly
impact other fund sources, like federal funds, because they
already have existing restrictions.
1:31:47 PM
REPRESENTATIVE EASTMAN questioned the impact of lines 9-14 of
Amendment 2.
MS. NAUMAN described lines 9-14 as technical changes. In
response to a follow up question, she proceeded to read and
explain each technical change in further detail.
REPRESENTATIVE CARPENTER said the intention of the proposed
legislation was to keep it as simple as possible. He opined
that Amendment 2 would add unnecessary complexity and for that
reason, he stated his opposition to the amendment.
REPRESENTATIVE EASTMAN withdrew Amendment 2.
1:37:40 PM
REPRESENTATIVE EASTMAN move to adopt Amendment 1 to CSHJR
7(W&M), labeled 33-LS0439\S.2, Nauman, 1/18/24, which read:
Page 2, lines 16 - 19:
Delete "Each fiscal year, without appropriation,
an amount determined by a formula set out in law shall
be transferred from the earnings reserve account in
the permanent fund to the general fund. The amount
transferred from the earnings reserve account shall
not exceed the balance of the earnings reserve
account."
Insert "Except as otherwise provided in this
subsection, each fiscal year, without appropriation,
an amount equal to 50 percent of 21 percent of the net
income of the permanent fund for the last five fiscal
years, including the fiscal year just ended, shall be
transferred from the earnings reserve account in the
permanent fund to the general fund. The amount
transferred from the earnings reserve account shall
not exceed the balance of the earnings reserve account
plus the net income of the permanent fund for the
fiscal year just ended."
Page 2, line 21:
Delete "from"
Insert "equal to"
REPRESENTATIVE ALLARD objected for the purpose of discussion.
REPRESENTATIVE EASTMAN indicated that Amendment 1 would give
future legislatures the constitutional authority to adjust the
statutory formula.
REPRESENTATIVE ALLARD asked for the bill sponsor's perspective
on Amendment 1.
REPRESENTATIVE CARPENTER said CSHJR 7(W&M) would require the
legislature to "follow the law." He shared his belief that
passing Amendment 2 would kill any opportunity for the
constitutional amendment to pass the legislature. Further, he
posited that any initial solution would need to be simple and
keep the formula out of the Alaska Constitution. Instead, the
constitution can point to the statute and allow the legislature
to follow the law or change it, he said.
1:44:05 PM
REPRESENTAIVE EASTMAN questioned the lack of support for putting
a calculation in statute.
REPRESENTATIVE CARPENTER opined that without additional
adjustments to the state's fiscal policy, the legislature would
continue to fight over the dividend. He expressed his hope that
there were enough members of the legislature who want to solve
the fiscal imbalance by taking one first step with CSHJR 7(W&M).
1:47:13 PM
REPRESENTATIVE C. JOHNSON asked whether Amendment 2 was, in
effect, an appropriation despite having no dollar amount affixed
to it.
MS. NAUMAN said was not prepared to answer that question. She
added that the legislature retains the ability to change the
statutes that effectuate the transfer contemplated by the
constitutional amendment.
CHAIR VANCE agreed that the question was an important one. She
questioned, rhetorically, whether the formula [provided in
Amendment 2] was considered a transfer or an appropriation.
REPRESENTATIVE EASTMAN asked whether the prohibition on voting
for an appropriation referred to the initiative process.
MS. NUAMAN confirmed that the prohibition on effectuating an
appropriation through a change in the law was a restriction on
referendums and initiatives and not a restriction on
constitutional amendments.
REPRESENTATIVE EASTMAN, in wrap up, viewed the existing
language, without Amendment 2, as "pushing the can down the
road" for a future legislature to resolve the issue of the
dividend calculation. He pointed out that the current statutory
formula was not followed every year and was a topic of
conversation and angst. He argued that CSHJR 7(W&M), as
drafted, would not accomplish its desired effect without
addressing the current, historic dividend calculation.
1:53:35 PM
The committee took an at-ease from 1:53 p.m. to 1:55 p.m.
1:55:51 PM
REPRESENTATIVE ALLARD maintained her objection.
A roll call vote was taken. Representative Eastman voted in
favor of Amendment 1. Representatives Gray, Groh, Allard,
Carpenter, C. Johnson, and Vance voted against it. Therefore,
Amendment 1 failed by a vote of 1-6.
1:58:37 PM
The committee took a brief at-ease.
1:59:06 PM
REPRESENTATIVE CARPENTER commented that he was not opposed to
the bill passing from committee today; however, he wanted
Legislative Legal Services to provide legal opinions on the
committees unanswered questions.
CHAIR VANCE sought final comment on CSHJR 7(W&M).
REPRESENTATIVE GRAY commented on the importance of the dividend
to low-income families. He said he strongly supported the
proposed legislation, adding that he never wanted to see the day
when the dividend, which he described as "the most liberal,
progressive, public welfare program," could be taken away. He
shared his belief that the best way to ensure the longevity of
the PFD was to enshrined in in the constitution.
2:02:12 PM
REPRESENTATIVE GROH stressed his strong support for the PFD and
emphasized the need for a comprehensive solution to the state's
structural deficit. He acknowledged that the proposed
legislation was one step of many that should be taken up
simultaneously. He discussed the need for a robust permanent
fund, a dividend, and a number of other services.
2:04:42 PM
REPRESENTATIVE EASTMAN commented on the state's increased
appetite for progressive liberal welfare programs and pointed
out that, more than a welfare program, the PFD ties Alaskans to
the state's natural resources. He characterized the proposed
legislation as a capitulation to the Alaska Supreme Court and
expressed concern that it would further encourage other branches
of government to intrude on the legislature's power.
2:08:51 PM
REPRESENTATIVE ALLARD expressed her support for the proposed
legislation.
REPRESENTATIVE C. JOHNSON shared his belief that without the
Alaska Permanent Fund, people would care less about government
spending and keep a less watchful eye on the legislature.
Without the public's eye, he said, "I don't trust [the
legislature]" in terms of fiscal responsibility. He opined that
enshrining the dividend in the constitution would guarantee that
the legislature would continue to be held accountable.
2:11:29 PM
REPRESENTATIVE CARPENTER observed that the dividend had become
the go-to solution for the state's fiscal imbalance. He argued
that for those who value the PFD, CSHJR 7(W&M) was the way to
ensure that the dividend moves forward into the future and that
additional conversations are had.
2:13:21 PM
CHAIR VANCE stated her support for the proposed legislation
because it would guarantee that state resources are available to
every Alaskan. She disagreed that the dividend was a liberal,
progressive welfare program and reflected on the history of the
PFD. Instead, she posited that the PFD was the most equal form
of distribution based on principle. Despite being a supporter
of the historic formula, she described herself as a
constitutional purist and for that reason, wanted to keep a
dividend in the constitution and maintain formulaic flexibility
in statute to respond accordingly. She expressed her hope that
the legislature would retain the historic formula in statute.
2:17:47 PM
REPRESENTATIVE ALLARD moved to report CSHJR 7(W&M) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHJR 7(W&M) was
reported out of the House Judiciary Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR 7 - Sponsor Statement.pdf |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - v.B.PDF |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Sectional Analysis.pdf |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Div. of Elections Fiscal Note.pdf |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Amendment 1 (S.2) by Rep. Eastman.pdf |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Amendment 2 (S.3) by Rep. Eastman.pdf |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |
| HJR 7 - Summary of Changes Version B to S.pdf |
HJUD 1/19/2024 1:00:00 PM |
HJR 7 |