Legislature(2019 - 2020)CAPITOL 106

05/07/2019 03:00 PM House STATE AFFAIRS

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Audio Topic
03:08:18 PM Start
03:09:55 PM HJR5|| HJR6|| HJR7
04:20:14 PM HB139
04:21:36 PM Presentation(s): Permanent Fund 101
05:33:38 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Location Change --
Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved HB 139 Out of Committee
-- Public Testimony --
+ Presentation: Permanent Fund 101 by TELECONFERENCED
Angela Rodell,CEO, Alaska Permanent Fund Corp &
David Teal, Dir., Legislative Finance Div.
   HJR  5-CONST. AM: SHJR  5-CONST. AM: STATE TAX; INTIATIVE                                                                
          HJR  6-CONST. AM.:PERMANENT FUND & DIVIDEND                                                                       
          HJR  7-CONST AM:APPROP. LIMIT; RESERVE FUND                                                                       
3:09:55 PM                                                                                                                    
CO-CHAIR  KREISS-TOMKINS  announced  that   the  first  order  of                                                               
business  would  be  HOUSE  JOINT  RESOLUTION  NO.  5,  Proposing                                                               
amendments   to  the   Constitution  of   the  State   of  Alaska                                                               
prohibiting the  establishment of,  or increase  to, a  state tax                                                               
without the approval of the voters  of the state; and relating to                                                               
the  initiative  process  and   HOUSE  JOINT  RESOLUTION  NO.  6,                                                               
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to the  Alaska permanent  fund and  the permanent  fund                                                               
dividend and  HOUSE JOINT RESOLUTION NO.  7, Proposing amendments                                                               
to  the  Constitution of  the  State  of  Alaska relating  to  an                                                               
appropriation  limit; relating  to  the budget  reserve fund  and                                                               
establishing  the  savings  reserve  fund; and  relating  to  the                                                               
permanent fund.                                                                                                                 
CO-CHAIR KREISS-TOMKINS relayed a  personal anecdote of his first                                                               
meeting with  Vic Fischer  at the  Conference of  Young Alaskans.                                                               
He asked Mr. Fischer to offer  comments and insights to the House                                                               
State  Affairs  Standing  Committee regarding  the  Alaska  State                                                               
Constitution and the proposed amendments  under HJR 5, HJR 6, and                                                               
HJR 7.                                                                                                                          
3:13:29 PM                                                                                                                    
VIC  FISCHER   testified  as  a   former  delegate   to  Alaska's                                                               
Constitutional  Convention.     He  responded  to  Representative                                                               
Kreiss-Tomkins's  anecdote.    He  then referred  to  an  opinion                                                               
editorial ("Op Ed")  that he recently authored,  published in the                                                               
Anchorage Daily  News and other  local newspapers,  entitled "The                                                               
Alaska I  helped build is  under attack,"  which read in  part as                                                               
     As  one  of the  founders  of  Alaska statehood,  I  am                                                                    
     appalled  by  Gov.  Mike  Dunleavy's  proposed  budget,                                                                    
     which drastically cuts  funding for  K-12 education and                                                                    
     the  university,   and  slashes  health   services  for                                                                    
     213,000  Alaskans, half  of them  children. It  reduces                                                                    
     support   for  seniors   and   undermines  the   taxing                                                                    
     authority of local governments across the state.                                                                           
     The  Alaska that  I helped  to build  is under  attack.                                                                    
     When  we wrote  Alaska's  Constitution  in 1955-56  and                                                                    
     achieved statehood in 1959,  we established a structure                                                                    
     of  state and  local  government  to provide  essential                                                                    
     services. Now, 60 years later,  the ideals of statehood                                                                    
     and  our   constitution  are  under  assault   by  Gov.                                                                    
     Dunleavy and his people.                                                                                                   
3:18:57 PM                                                                                                                    
MR.  FISCHER   relayed  that  when   he  reviewed   the  proposed                                                               
constitutional  amendments under  HJR 5,  HJR  6, and  HJR 7,  he                                                               
thought  back to  his involvement  in  World War  II -  a war  to                                                               
protect democracy  around the world.   After  the war he  came to                                                               
Alaska, which  was a territory  at the time, and  became involved                                                               
in  the statehood  movement.   He  ran and  was elected  to be  a                                                               
delegate  to the  constitutional convention.   He  said that  the                                                               
impetus to  become a state  was so  that the residents  of Alaska                                                               
could be full-fledged citizens of  the U.S. and control their own                                                               
futures.   The  constitutional  convention  was initiated  before                                                               
statehood to demonstrate that the  territory was mature enough to                                                               
design a  constitution that  was as  good as  - and  maybe better                                                               
than - any other constitution in the U.S.                                                                                       
3:23:01 PM                                                                                                                    
MR.  FISCHER  stated  that  the  Alaska  State  Constitution  was                                                               
drafted  over a  period  of  75 active  days  in  session at  the                                                               
Fairbanks campus  of the University  of Alaska - the  only campus                                                               
of the  university at that  time.  It  was an excellent  venue in                                                               
that  it  was  away  from politics  and  special  interests;  the                                                               
convention lacked partisanship;  the elections were non-partisan;                                                               
and  there  was no  mention  of  political  parties.   They  were                                                               
working to  build a  foundation for  the future  of Alaska.   The                                                               
constitution was modeled  after the U.S. Constitution;  it was to                                                               
be  brief, easy  to understand,  and non-partisan,  and it  would                                                               
provide  the policies  and  structures for  the  future state  of                                                               
Alaska.   He  mentioned  his collaboration  and partnership  with                                                               
Jack Coghill, despite political differences.                                                                                    
3:26:41 PM                                                                                                                    
MR.  FISCHER  expressed  that the  constitution  is  composed  of                                                               
concise, short,  declarative statements  of policy,  process, and                                                               
organization.  He  stated that the proposed  amendments under HJR
5, HJR  6, and HJR 7  are atrociously written.   For the original                                                               
constitution, the Committee  on Drafting and Style  set the rules                                                               
for how  to write a constitution.   The language in  the proposed                                                               
amendments  is based  in legislative  drafting.   He relayed  his                                                               
extensive  experience  in state  government  over  the years  and                                                               
offered that  "there is  a time  and place  for everything."   He                                                               
maintained that the language in  the proposed amendments does not                                                               
belong in a constitution.                                                                                                       
3:29:47 PM                                                                                                                    
MR. FISCHER  referred to  HJR 5, which  proposes a  limitation on                                                               
taxes by amending  Section 1 of Article IX  [of the constitution]                                                               
- Finance and Taxation.  He  cited Section 1, which read in part,                                                               
"The power  of taxation  shall never  be surrendered."   It  is a                                                               
solid policy  statement; the  proposed amendment  would undermine                                                               
the stated  policy.  He  maintained that restrictions  should not                                                               
be  put  into  the  constitution based  on  "somebody's  thinking                                                               
today; it  may be  totally inappropriate 20  or 50  years hence."                                                               
He  said   that  the  proposed   amendments  would   shackle  the                                                               
legislature and  impose the  will and values  of today  on future                                                               
generations.   He continued by  saying that the  constitution has                                                               
been in effect for 60 years and  it works.  He offered that there                                                               
have  been  amendments  to  the   constitution  -  some  of  them                                                               
atrociously written - because there  has been no process of style                                                               
and  drafting in  consideration of  policies versus  legislation.                                                               
He  declared that  HJR 7  is  an insult  to constitutional  style                                                               
drafting;  "it  just  goes  on   and  on  and  on  with  detailed                                                               
legislative matter that may be  totally inappropriate seven years                                                               
from now, to say nothing of seventy years from now."                                                                            
3:33:15 PM                                                                                                                    
MR. FISCHER  referred to Gordon Harrison's  publication, entitled                                                               
"Alaska's  Constitution A  Citizen's  Guide."   He suggested  the                                                               
House  State Affairs  Standing Committee  invite Mr.  Harrison to                                                               
respond to the issues currently  being discussed in the committee                                                               
3:34:33 PM                                                                                                                    
GORDON  HARRISON opined  that the  proposed spending  limit under                                                               
HJR 7 is particularly unwise, because  the state has no idea what                                                               
is in the future for Alaska.   He mentioned an oil field in Texas                                                               
- the largest  in the U.S. -  which had declined to  the point it                                                               
almost had  been abandoned.   Within  the last  few years  it has                                                               
revived  and is  now the  largest  oil field  in the  world.   He                                                               
declared, "Nobody foresaw  that."  He maintained  that nobody can                                                               
foresee   the  wild   price  swings   in  oil;   the  future   is                                                               
unpredictable.  He offered that  a spending limit, as proposed by                                                               
HJR 7, is very unwise.   He added that the spending limit already                                                               
in law has  not been effective.  That spending  limit was adopted                                                               
at a time when spending was  at record highs.  Currently spending                                                               
- by  historic levels  - is  low.  He  concluded that  a spending                                                               
limit now would be overstated.                                                                                                  
3:36:32 PM                                                                                                                    
REPRESENTATIVE HOPKINS referred to  constitutional changes in the                                                               
past  and asked  for  circumstances under  which the  legislature                                                               
should propose amendments to the constitution.                                                                                  
MR. FISCHER responded that the question  to be answered is, Is it                                                               
necessary  to put  something in  the  constitution?   He gave  an                                                               
example:  Article  8 is titled "Natural Resources."   In 1955-56,                                                               
there was  no idea that Alaska  would have "big" oil.   Article 8                                                               
is  the basis  for the  wealth of  Alaska; it  implemented policy                                                               
directives with specific requirements;  and one of the directives                                                               
required  public  notice.    He   cited  a  lawsuit  against  the                                                               
Department  of Natural  Resources (DNR)  for issuing  hundreds of                                                               
permits for water  rights and drill sites  without public notice;                                                               
each  site was  a separate  issue; the  case went  to the  Alaska                                                               
Supreme  Court  [Moore v.  State,  1976].    He quoted  from  the                                                             
decision, which  read in part,  "No disposals or leases  of state                                                               
lands, or interests  therein, shall be made  without prior notice                                                               
and other  safeguards ...."   He maintained  that a  short simple                                                               
phrase or  sentence represents constitutional law;  otherwise the                                                               
legislature  will   become  involved   in  minutia,   and  future                                                               
legislators will have to "clean up  the mess."  He stated that it                                                               
is    the   legislature's    responsibility   to    decide   what                                                               
constitutional  amendments  should go  before  the  people for  a                                                               
vote;   the  constitution   requires  two-thirds   vote  of   the                                                               
membership of each  house to do so.   He asserted that  it is not                                                               
the  governor's  responsibility  or the  Alaska  Supreme  Court's                                                               
responsibility to decide what goes  before the people for a vote.                                                               
He said, "Think  of it in terms  of not just one  election or two                                                               
elections;  think of  it that  this  is for  your children,  your                                                               
grandchildren, and their grandchildren.                                                                                         
3:41:51 PM                                                                                                                    
CO-CHAIR FIELDS referred  to committee discussion of HJR  5 - the                                                               
proposed  constitutional  amendment  on taxation  -  which  would                                                               
deprive  Alaskans  of  the  authority   to  pass  initiatives  by                                                               
requiring legislative approval of  taxation passed by initiative.                                                               
He asked  for comment on  the constitutional  delegates' thinking                                                               
on  retaining  the  ability  of the  people  to  institute  taxes                                                               
through the initiative process.                                                                                                 
MR. HARRISION  replied that the  delegates were  ambivalent about                                                               
the initiative process.  On the  one hand, they granted the power                                                               
[to the  people]; however,  on the other  hand, they  trusted the                                                               
legislature to do the right thing in  the long run.  He said that                                                               
they gave the  legislature the authority to  repeal an initiative                                                               
in two years.                                                                                                                   
MR. FISCHER asserted that the  constitutional amendment under HJR
5,  which  would  require  approval by  the  legislature  for  an                                                               
initiative to be  enacted, would be unconstitutional.   He stated                                                               
that the initiative  is the exercise of legislative  power by the                                                               
3:44:44 PM                                                                                                                    
REPRESENTATIVE STORY asked Mr. Fischer  to comment on two issues.                                                               
The first  is that many people  feel that currently the  state is                                                               
overspending, hence  the proposed constitutional  amendment under                                                               
HJR 7.   The  second is that  the constitutional  convention gave                                                               
great  power  to  the  governor  for  vetoing  the  work  of  the                                                               
MR. FISCHER relayed  that he was in the legislature  in 1982 when                                                               
the statutory formula  for the permanent fund  dividend (PFD) was                                                               
adopted into  law.   He reiterated that  to reference  statute in                                                               
the constitution, as  proposed under HJR 6, is  preposterous.  He                                                               
maintained that  it is the  responsibility of the  legislature to                                                               
abide by  the constitution and  its own laws; the  legislature is                                                               
not responsible for  what happened four, three, or  two years ago                                                               
ignoring state  laws.  He said,  "Don't make it worse  by putting                                                               
details like  that into the  constitution, because in one  way or                                                               
another,  it's not  going to  work."   He mentioned  that if  the                                                               
state had these [proposed] amendments  in the constitution during                                                               
the construction  of the Trans-Alaska Pipeline,  state government                                                               
would have been incapable of responding to the constant changes.                                                                
MR. FISCHER  offered that behind  the proposals is a  strategy of                                                               
reducing the  wealth of  the people of  Alaska; applied  into the                                                               
future,  they would  impoverish Alaska;  it would  be a  downhill                                                               
spiral.    He said  that  the  prohibition  of  a change  in  tax                                                               
structure  without a  vote of  the people  - tax  structures that                                                               
were not created  by a vote of the people  but by the legislature                                                               
- would freeze today's structure for the future.                                                                                
3:49:29 PM                                                                                                                    
MR. FISCHER relayed  that Bob Bartlett played a  larger role than                                                               
anyone else in  securing statehood for Alaska.   Mr. Fischer read                                                               
from his  book, Alaska's Constitutional Convention,  which quotes                                                             
Bob Bartlett in his keynote  address to the convention as follows                                                               
[original punctuation provided]:                                                                                                
     This moment will  be a critical one  in Alaska's future                                                                    
     history.   Development  must   not  be   confused  with                                                                    
     exploitation  at this  time. The  financial welfare  of                                                                    
     the future state and the  well-being of its present and                                                                    
     unborn  citizens depend  upon  the wise  administration                                                                    
     and oversight  of these developmental activities.   Two                                                                    
     very  real dangers  are present.  The  first, and  most                                                                    
     obvious, danger is that of  exploitation under the thin                                                                    
     disguise  of   development.  The  taking   of  Alaska's                                                                    
     mineral  resources  without   leaving  some  reasonable                                                                    
     return for the support  of Alaska governmental services                                                                    
     and the  use of all  the people  in Alaska will  mean a                                                                    
     betrayal in the administration  of the people's wealth.                                                                    
     The   second   danger   is  that   outside   interests,                                                                    
     determined to  stifle any  development in  Alaska which                                                                    
     might  compete with  their  activities elsewhere,  will                                                                    
     attempt  to  acquire  great areas  of  Alaska's  public                                                                    
     lands in order NOT to  develop them until such time as,                                                                    
     in  the  omnipotence and  the  pursuance  of their  own                                                                    
     interests, they see fit.                                                                                                   
MR. FISCHER relayed that a good  example of the second concern is                                                               
as follows:  Point Thomson oil  and gas field was discovered near                                                               
the  Arctic  National  Wildlife  Refuge  (ANWR),  and  ExxonMobil                                                               
Corporation (Exxon)  "sat on" the  resource for 30  years because                                                               
it had interests elsewhere.   Governor Frank Murkowski threatened                                                               
to cancel the leases unless it developed the resource.                                                                          
MR.  FISCHER  gave an  example  of  the  first caution  that  Mr.                                                               
Bartlett gave to  the convention:  Senate Bill  21 [passed during                                                               
the  Twenty-Eighth Alaska  State  Legislature, 2013-2014,  signed                                                               
into law 5/21/13] reduced the  state's revenue from oil extracted                                                               
from  the  state's resources.    "Every  day, every  week,  every                                                               
month, every  year that people of  Alaska are not getting  a fair                                                               
share of the oil [wealth] ...."   He quoted former Governor Wally                                                               
Hickel, who  said, "It's our  oil."   Alaska should get  a proper                                                               
return.    He maintained  that  if  the constitutional  amendment                                                               
[under HJR  5] - relating to  changes in taxes -  is approved, it                                                               
would  freeze the  existing tax  structure and  not allow  future                                                               
legislatures future actions.   The barrier to change  it would be                                                               
huge; and therefore, the people of  Alaska may not get their fair                                                               
share of the resource taken.                                                                                                    
3:54:49 PM                                                                                                                    
CO-CHAIR  KREISS-TOMKINS  mentioned  that  Alaska's  constitution                                                               
provides  a  [veto]  override  threshold  for  budget  bills  and                                                               
appropriation  bills of  three-quarters  [vote]  and an  override                                                               
threshold  for non-appropriation  bills of  two-thirds.   He said                                                               
that  most  other  states  have   a  uniform  override  threshold                                                               
regardless  of the  bills  being policy  or  appropriations.   He                                                               
asked what  the thinking was  of the framers of  the constitution                                                               
in  providing a  different  and higher  threshold for  overriding                                                               
line item vetoes on  appropriation bills versus non-appropriation                                                               
MR.  FISCHER said  that  he does  not  know.   He  said that  the                                                               
quotation  from   the  chairman  of  the   Alaska  Constitutional                                                               
Convention  Committee  on  the  Executive  Branch  was  that  the                                                               
delegates  are putting  together a  constitution that  includes a                                                               
strong executive.   The  fiscal structure  of the  state dictates                                                               
that  appropriations   and  the  budget  are   the  legislature's                                                               
responsibility; a  strong governor  has strong  veto power.   Mr.                                                               
Fischer stated that he does  not recall the issue being discussed                                                               
on  the floor  of  the constitutional  convention  and he  didn't                                                               
notice the distinction.  He  said that the convention wanted each                                                               
branch of  state government  to be as  strong and  independent as                                                               
possible - as  effective as possible.  He  mentioned the proposed                                                               
constitutional   amendment  [under   SJR  3,   relating  to   the                                                               
membership of the Alaska Judicial  Council] that would change the                                                               
membership  of  the  judicial  council.     He  stated  that  the                                                               
membership  of  the  judicial  council was  designed  in  a  very                                                               
deliberate process  to be  a non-partisan,  non-political, merit-                                                               
based selection of judges and  justices.  The proposal to subject                                                               
the  attorney  appointees  to the  legislative  approval  process                                                               
would politicize  the future  judiciary of  the State  of Alaska.                                                               
He  maintained  that  the  design of  the  judicial  council  was                                                               
intentional, and he reiterated that  the emphasis was on a strong                                                               
legislature, a  strong executive, and  a strong judiciary.   As a                                                               
territory,  Alaskans  had no  authority  over  themselves or  the                                                               
3:59:49 PM                                                                                                                    
CO-CHAIR  KREISS-TOMKINS  asked  for  Mr.  Fischer's  advice  for                                                               
drafting a  proposed constitutional amendment.   He asked whether                                                               
there  have been  amendments successfully  incorporated into  the                                                               
constitution that are good examples of that style of drafting.                                                                  
MR.  FISCHER  replied that  a  process  is  needed along  with  a                                                               
committee of  reviewers.   He offered  that Gordon  Harrison, who                                                               
has studied  the constitution, written  about it, and  worked for                                                               
the legislature,  knows the internal  and external  processes and                                                               
could write [a constitutional amendment].   He emphasized that it                                                               
is the  responsibility of  the legislature  to put  the amendment                                                               
before the people  - not the governor's responsibility.   He said                                                               
that in  2022, Alaskans  will vote on  the question,  Shall there                                                               
being  a constitutional  convention?   In  1979, the  legislature                                                               
established  a joint  committee to  prepare for  the question  in                                                               
1982;  it  sponsored research  to  provided  information [to  the                                                               
voters].   He maintained that it  would take work to  provide the                                                               
pros and  cons and a decent  foundation [for voters to  make that                                                               
4:03:40 PM                                                                                                                    
CO-CHAIR  FIELDS expressed  his  appreciation  for Mr.  Fischer's                                                               
testimony and perspective.                                                                                                      
[HJR 5, HJR 6, and HJR 7 were held over.]                                                                                       

Document Name Date/Time Subjects
Permanent Fund 101 APFC Presentation.pdf HSTA 5/7/2019 3:00:00 PM
Permanent Fund 101 - APFC Presentation