03/01/2024 01:00 PM House RESOURCES

                  HB 359-ONE-TIME PFD PAYMENT                                                                               
                                                                                                                                
1:11:05 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY announced  that the first order of  business would be                                                               
HOUSE  BILL NO.  359,  "An  Act relating  to  the permanent  fund                                                               
dividend and a one-time permanent  fund dividend payment and land                                                               
voucher; and providing for an effective date."                                                                                  
                                                                                                                                
1:11:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MIKE CRONK, Alaska State Legislature, as prime                                                                   
sponsor of HB 359, deferred to his staff, Mr. Stancliff, to                                                                     
present the bill.                                                                                                               
                                                                                                                                
1:11:41 PM                                                                                                                    
                                                                                                                                
DAVE STANCLIFF,  Staff, Representative  Mike Cronk,  Alaska State                                                               
Legislature, on  behalf of  Representative Cronk,  prime sponsor,                                                               
presented HB 359.   He shared the sponsor  statement [included in                                                               
the   committee  packet],   which  read   as  follows   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     HB -  359 is  drafted to  allow a  one-time opportunity                                                                    
     for  PFD recipients  to receive  a lump  sum amount  of                                                                    
     $15,000.00  dollars  and  a  $5000.00  non-transferable                                                                    
     land credit in lieu of any future yearly payouts.                                                                          
                                                                                                                                
     The benefit  for those choosing the  buyout option will                                                                    
     be  a more  useful amount  of money  immediately and  a                                                                    
     substantial  credit for  future purchase  of any  state                                                                    
     lands made available for private ownership.                                                                                
                                                                                                                                
     Facts:  The  courts  have  ruled  the  legislature  can                                                                    
     ignore  the   PFD  statutory   requirements  previously                                                                    
     established. In  response legislators have  reduced PFD                                                                    
     amounts below the statutory requirements to                                                                                
     balance annual budgets.                                                                                                    
                                                                                                                                
     It  does not  take artificial  intelligence metrics  to                                                                    
     see how the rising cost of government affects the PFD                                                                      
     amounts.  Each  year  the savings  accounts  are  being                                                                    
     drained and rising inflation forces the legislature to                                                                     
     reduce the PFD payout.                                                                                                     
                                                                                                                                
     The question  is not if  the PFD will disappear,  it is                                                                    
     when will  the PFD  disappear? Legislators do  not need                                                                    
     economic  wizards or  flow charts  to see  where annual                                                                    
     budgets lines meet the PFD cost line. At some point                                                                        
     in the not-too-distant future there  will be no options                                                                    
     left and the PFD will be funded at minuscule levels if                                                                     
     at all.                                                                                                                    
                                                                                                                                
     Basic   Math:  (Using   $1500.00   dollar  PFD   annual                                                                    
     baseline) (Using a population of 600,00) (Assuming I                                                                       
     in 3 PFD recipients take the buyout.)                                                                                      
                                                                                                                                
     Example: To  execute the buyout provision  the one-time                                                                    
     up-front cost to the state will be $3 billion                                                                              
     dollars to  buyout 200,000  PFD recipients.  (200,000 x                                                                    
     $15,000.00 dollars)                                                                                                        
                                                                                                                                
     With the  elimination of  200,000 PFDs,  the additional                                                                    
     revenue available to the state for 20 years will be $6                                                                     
     billion dollars. (20 years X  200,000 people X $1500.00                                                                    
     PFD)                                                                                                                       
                                                                                                                                
     Using the  same metrics  those who retain  the existing                                                                    
     PFD  plan   for  the  next   20  years   would  receive                                                                    
     $30,000.00 dollars. (20 years@ $1500.00 per year)                                                                          
                                                                                                                                
     Questions of  age, health,  economic needs,  and family                                                                    
     will affect decisions.                                                                                                     
                                                                                                                                
     I.e. For a family of four  who need a down payment on a                                                                    
     house, a car or college tuition, a $15,000.00                                                                              
     lump sum may be very helpful.                                                                                              
                                                                                                                                
     As for  folks still  willing to  pull the  familiar PFD                                                                    
     lever,  the  realities  of  Alaska's  budget,  and  the                                                                    
     spending  patterns  of  legislators,  should  make  the                                                                    
     "Cash Out" button much more tempting.                                                                                      
                                                                                                                                
1:13:56 PM                                                                                                                    
                                                                                                                                
MR. STANCLIFF next presented the sectional analysis for HB 359                                                                  
[included in the committee packet], which read as follows                                                                       
[original punctuation provided]:                                                                                                
                                                                                                                                
     Section 1.                                                                                                                 
     Adds a new section to AS 38.05.942.                                                                                        
     Permanent fund dividend land vouchers.                                                                                     
                                                                                                                                
     Establishes  the   authority  for  the   Department  of                                                                    
     Resources to receive from the Department of Revenue a                                                                      
     land voucher for use in the purchase of state land.                                                                        
                                                                                                                                
     Section 2.                                                                                                                 
     Amends AS 43.23.025 (a)                                                                                                    
                                                                                                                                
     Establishes the  number of  individuals eligible  for a                                                                    
     PFD "Cash out."                                                                                                            
                                                                                                                                
     Section 3.                                                                                                                 
     Amends AS 43.23 with a new section to article I.                                                                           
                                                                                                                                
      Establishes the one-time amount of the "Cash out" as                                                                      
     well as the PFD land voucher and establishes the                                                                           
    funding   will   be    made   through   a   legislative                                                                     
     appropriation.                                                                                                             
                                                                                                                                
1:14:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRONK observed  a refusal  by the  legislature to                                                               
fix  the  issue of  the  Alaska  permanent  fund.   He  said  the                                                               
permanent fund  dividend (PFD) will  be permanent  for government                                                               
expenses, not for  the people.  He said this  matter is worthy of                                                               
conversation  and impressed  upon the  importance of  honesty for                                                               
the people of Alaska.                                                                                                           
                                                                                                                                
1:16:37 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY  shared his  understanding that if  the bill  were to                                                               
pass, a person could request 20  years' worth of dividends to put                                                               
towards land.                                                                                                                   
                                                                                                                                
MR. STANCLIFF  clarified that  any person  could choose  to "cash                                                               
out"  their dividend  and  receive $15,000  and  a one-time  land                                                               
voucher for $5,000.                                                                                                             
                                                                                                                                
1:18:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether  the land voucher  would be                                                               
transferrable.                                                                                                                  
                                                                                                                                
REPRESENTATIVE CRONK  answered that nothing  is set in  stone and                                                               
all options are on the table.                                                                                                   
                                                                                                                                
MR.  STANCLIFF  noted that  the  [Division  of Mining,  Land  and                                                               
Water] would  keep a log  of those individuals qualified  for the                                                               
land  voucher,  so there  would  be  no  need to  issue  physical                                                               
vouchers thereby saving the state time and money.                                                                               
                                                                                                                                
1:21:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAUSCHER  considered  a   scenario  in  which  25                                                               
percent of dividend  eligible Alaskans decided to  cash out their                                                               
PFD.  He  asked how that would be funded,  while still paying out                                                               
individual dividends to the rest of the population.                                                                             
                                                                                                                                
MR. STANCLIFF said it would  depend on how the legislature sought                                                               
to fund the cash out where that money might come from.                                                                          
                                                                                                                                
1:24:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MEARS expressed concern  about this decision being                                                               
made for minors  and people under legal care of  someone else, as                                                               
well  as  the  inequity  of  those who  would  be  able  to  take                                                               
advantage of a land voucher.                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRONK   said  he   anticipated  those   types  of                                                               
questions  and  thanked  Representative  Mears  for  sharing  her                                                               
concerns.                                                                                                                       
                                                                                                                                
1:25:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ARMSTRONG asked  how the  bill sponsor  chose the                                                               
metric  of one-in-three  PFD  recipients  and questioned  whether                                                               
it's a reasonable barometer.                                                                                                    
                                                                                                                                
MR.  STANCLIFF  answered  that the  one-in-three  metric  was  an                                                               
initial attempt  at estimating how  many people may opt  into the                                                               
plan.  He said the number  was chosen to make the proposal easier                                                               
to understand.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  ARMSTRONG pointed  out behavioral  economics show                                                               
that most  people choose  to take  a lower,  lump sum  amount, as                                                               
opposed  to more  money  over  time.   She  recommended that  the                                                               
Legislative Finance Division analyze  the financial impact to the                                                               
Alaska permanent  fund and present economic  scenarios at varying                                                               
levels of uptake.                                                                                                               
                                                                                                                                
1:28:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SADDLER  agreed   that  further   discussion  is                                                               
required.  He asked whether  Representative Cronk would encourage                                                               
his constituents to take such a deal.                                                                                           
                                                                                                                                
1:29:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRONK responded,  "If  I was  a  gambling man,  I                                                               
would," as  he predicted that  dividends would  get progressively                                                               
lower.  He reiterated his  belief that the legislature has failed                                                               
to address  the PFD issue and  the bill is an  attempt at forcing                                                               
discussion.                                                                                                                     
                                                                                                                                
1:30:35 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY announced that HB 359 was held over.