Legislature(2023 - 2024)DAVIS 106
03/06/2023 06:00 PM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| HB90 | |
| HJR7 | |
| HJR8 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 90 | TELECONFERENCED | |
| *+ | HJR 7 | TELECONFERENCED | |
| *+ | HJR 8 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HJR 7-CONST AM: PERMANENT FUND DIVIDEND
6:34:32 PM
CHAIR CARPENTER announced that the next 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."
6:34:19 PM
The committee took an at-ease from 6:34 p.m. to 6:35 p.m.
6:35:05 PM
KENDRA BROUSSARD, Staff, Representative Ben Carpenter, Alaska
State Legislature, presented HJR 7 on behalf of the House
Special Committee on Ways and Means, sponsor, on which
Representative Carpenter serves as chair. She read the sponsor
statement [included in the committee packet], which read as
follows [original punctuation provided]:
For almost thirty years, Alaskans could count on their
annual dividend checks as the state legislature
followed the law that directed the dividend to be paid
by a statutory formula.
The trust between the government and the people of
Alaska was broken in 2016 when Governor Walker vetoed
a portion of the annual dividend and the Alaska
Supreme Court ultimately determined that dividends
were subject to the annual appropriations process.
While the legislature could choose to follow the law
and appropriate the dividend according to statute and
separate it from the budget, they have not done so.
Instead, the permanent fund dividend has been
subjected to the budget process, where the dividend
competes with government spending and often becomes
the deficit reduction solution.
HJR7 requires the state to pay the annual Permanent
Fund dividend according to a formula in statute,
rather than by the whims of the annual appropriations
process.
The amendments in HJR7 address the constitutional
issues raised by the Supreme Court in its Wielechowski
opinion that allowed the legislature to appropriate
the annual dividend rather than pay it out by formula.
Neglecting to constitutionalize the PFD would permit
lawmakers to continue avoiding their obligation to
address the shortcomings of Alaska's fiscal and
economic planning, placing the Permanent Fund at risk.
Constitutionally enshrining the Permanent Fund
Dividend will provide for the maximum benefit of all
Alaskans and ensure the prosperity of the Permanent
Fund for generations of Alaskans to come.
6:37:20 PM
MS. BROUSSARD proceeded to read the following sectional analysis
[included in the committee packet], which read as follows
[original punctuation provided]:
Section 1
Article IX, section 7 of the Constitution of Alaska is
amended to except the payment of Permanent Fund
dividends from the prohibition of dedication of funds.
Section 2
Article IX, section 13 of the Constitution of Alaska
is amended to except the payment of Permanent Fund
dividends from the requirement to appropriate all
funds that are paid out of the state treasury.
Section 4
Article IX, Section 15 of the Constitution of Alaska
is amended to require the state to pay a permanent
fund dividend according to a formula in law.
Section 5
Article XV of the Constitution is amended to add a new
transition section that would make the constitutional
changes effective for fiscal year 2026.
Section 6
Provides that this amendment to the Constitution be
placed before voters at the next general election.
6:38:26 PM
REPRESENTATIVE MCCABE turned attention to page 2, line 13, "Each
fiscal year, without appropriation, the State shall pay a
dividend". He asked about the use of the word "shall".
6:38:53 PM
CHAIR CARPENTER asked Ms. Nauman what the effect of putting the
word "shall" would have on the resolution.
EMILY NAUMAN, Director, Legislative Legal Services, Legislative
Agencies and Offices, explained that HJR 7 proposes a
constitutional amendment, and that the Wielechowski v. Alaska
decision was an interpretation of state constitution as it
exists today; under that interpretation, appropriations for
dividends must be made by the legislature and are subject to the
legislative appropriation cycle annually. Since HJR 7 is
seeking to change the constitution, the resolution itself does
not need to abide by Wielechowski v. Alaska, so it is
permissible to use the word "shall".
CHAIR CARPENTER asked whether the justices recommended that a
constitutional amendment would be necessary if the legislature
wanted to dedicate money to the PFD.
MS. NAUMAN responded that she does not recall the case saying
anything about a constitutional [amendment].
6:40:43 PM
REPRESENTATIVE GROH sought confirmation that HJR 7 requires the
payment of the PFD but does not prescribe a distribution
formula.
MS. BROUSSARD answered that's correct.
6:41:22 PM
REPRESENTATIVE MCCABE shared that the Fiscal Policy Working
Group held hours of conversation with Legislative Legal Services
and the Legislative Finance Division about whether to put a
distribution formula in the constitution. He said the group had
settled on just putting language in the state constitution
mandating that the state pay the PFD, while putting formula law
into state statute.
6:41:57 PM
CHAIR CARPENTER asked what the reasoning was behind seeking that
the language be put in the constitution.
REPRESENTATIVE MCCABE answered that it was because even if the
bill language says "shall" the legislature could still violate
the law. He relayed that his constituents wanted both the PFD
and the formula in the constitution; however, having a formula
in the constitution would not only be problematic but dangerous
during a major economic downturn. He reiterated the working
group's compromise: put the PFD in the constitution, because in
the constitution, the word "shall" can be used, and the
legislature must follow it.
CHAIR CARPENTER asked Ms. Nauman how easily the legislature
could ignore the statute to which HJR 7 would refer.
6:44:20 PM
MS. NAUMAN answered that it's hard to predict how the Alaska
Supreme Court is going to interpret constitution or statute, but
if HJR 7 were to pass, the Alaska Supreme Court would require
the legislature to appropriate money for dividends according to
the formula in statue. She noted that one caveat is that the
court does not have a mechanism to make such an appropriation
happen; the legislature must make the appropriation ultimately.
If the court orders the legislature to make an appropriation, it
is unclear what would happen if the legislature did not do so,
she stated.
6:45:43 PM
REPRESENTATIVE GROH referenced page two, lines 13-15, "Each
fiscal year, without appropriation, the State shall pay a
dividend from the income of the permanent fund to eligible
residents of the State, according to a formula set out in law."
He shared that alternative language that focuses on the formula
set out in law or statute rather than an appropriations bill or
the budget, and he asked what the differences are between those
two proposals.
MS. NAUMAN answered that the language that orders the state to
pay a dividend but states that it is not an appropriations bill
is insurance, while an appropriations bill is law; therefore,
stating that a dividend shall be paid according to state law
would not be sufficient to ensure that the legislature would pay
a dividend according to a set formula. In the case of HJR 7,
the state pays a dividend according to formula, and it would not
face the same issue.
6:47:51 PM
REPRESENTATIVE GRAY surmised that if the legislature were to
pass only HJR 7, and not accompanying statutory legislation, it
would be ordering the legislature to do what it has already been
doing, which is paying dividends.
CHAIR CARPENTER rephrasing Representative Gray's remark into a
question, asked whether, if HJR 7 were to pass, an additional
piece of legislation would be required to make HJR 7 effective
or current legislation would fit within the resolution.
6:48:55 PM
MS. NAUMAN answered that current statute governing the amount
paid in a PFD, based on a fiscal situation, could conflict. If
HJR 7 were to pass, she advised, the legislature would need to
clean up existing PFD statute. In response to Representative
Gray's remark, she confirmed that HJR 7 would require the
legislature to pay out a PFD into the future.
REPRESENTATIVE GRAY asked for confirmation that if the
legislature were to pass only HJR 7, it could change statute at
any time but still would be required to pay a PFD.
MS. NAUMAN confirmed that's correct, in that the legislature
could pass an appropriations bill to pay a PFD, and then make a
statutory change to the formula.
6:50:35 PM
CHAIR CARPENTER recognized that HJR 7 tells the legislature
that, without appropriation, the state shall pay a PFD from a
statute that is established. He asked what the effect would be
if the legislature attempted to pay a PFD through the
appropriations process instead. Further, he asked if there
would be conflict between the statute that is on the books and
an appropriations bill that would pay an amount that differs
from what statute orders.
MS. NAUMAN corrected her previous answer after recollecting that
HJR 7 does not require a PFD appropriation; it would be a
mandatory transfer without appropriation. She said that the
hope is that such a situation wouldn't happen, and that the
legislative intent in making the appropriation would need to be
clear whether the intention of the legislature was to
appropriate for the transfer or to make an appropriation on top
of the transfer.
6:52:03 PM
REPRESENTATIVE GROH asked, regarding proposed constitutional
amendments, what risk there is that any amendment that is being
considered in committee might run afoul with the doctrine from
the Alaska Supreme Court Case, Bess v. Ulmer, regarding revision
versus amendment. He requested Ms. Nauman to talk about that
doctrine and how it might affect the committee's consideration
of constitutional amendments.
MS. NAUMAN outlined that there are two ways to amend the state
constitution, as prescribed within the document itself: first
is the process happening right now, in that there is a
legislative resolution followed by a vote of the people; second
is via a constitutional convention. The Alaska Supreme Court
conveyed that if the conditional changes are significant enough,
it must go through a constitutional convention process. She
said the court's analysis in Bess v. Ulmer looked at it in two
ways: qualitative, the nature of changes; and quantitative, the
number of changes required to rebalance government power. For
constitutional amendments around the permanent fund, she said
the driver of the determinations on whether the amendment would
constitute a revision is how much the change impairs the
legislature's already broad appropriation authority over all the
money coming from the permanent fund. She said there is only
one case on the issue, which is Bess v. Ulmer, which she pointed
out does not provide much guidance on circumstances relating to
the PFD.
6:55:09 PM
CHAIR CARPENTER announced that HJR 7 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB0090A.PDF |
HW&M 3/6/2023 6:00:00 PM |
HB 90 |
| HB 90 Sponsor Statement.pdf |
HW&M 3/6/2023 6:00:00 PM |
HB 90 |
| HB 90 - Sectional Analysis.pdf |
HW&M 3/6/2023 6:00:00 PM |
HB 90 |
| HB 90 Fiscal Note.pdf |
HW&M 3/6/2023 6:00:00 PM |
HB 90 |
| Historical average dividend since 1982.pdf |
HW&M 3/6/2023 6:00:00 PM |
HB 90 |
| HB 90 - WM Bill Hearing Presentation 3.6.23.pdf |
HW&M 3/6/2023 6:00:00 PM |
HB 90 |
| HJR007A.PDF |
HFSH 1/19/2024 1:00:00 PM HW&M 3/6/2023 6:00:00 PM |
HJR 7 |
| Sponsor Statement HJR7.pdf |
HFSH 1/19/2024 1:00:00 PM HW&M 3/6/2023 6:00:00 PM |
HJR 7 |
| Sectional Analysis HJR7.pdf |
HFSH 1/19/2024 1:00:00 PM HW&M 3/6/2023 6:00:00 PM |
HJR 7 |
| HJR 7 Fiscal Note.pdf |
HFSH 1/19/2024 1:00:00 PM HW&M 3/6/2023 6:00:00 PM |
HJR 7 |
| HJR008A.PDF |
HW&M 3/6/2023 6:00:00 PM |
HJR 8 |
| Sponsor Statement HJR8.pdf |
HW&M 3/6/2023 6:00:00 PM |
HJR 8 |
| SectionalAnalysisHJR8.pdf |
HW&M 3/6/2023 6:00:00 PM |
HJR 8 |
| HJR 8 Fiscal Note.pdf |
HW&M 3/6/2023 6:00:00 PM |
HJR 8 |
| ISER Presentation Economic Impacts of Fiscal Options and Uncertainty - Dr Guettabi.pdf |
HW&M 3/6/2023 6:00:00 PM |
|
| UAA Business Enterprise Institute Presentation - Christi Bell.pdf |
HW&M 3/6/2023 6:00:00 PM |
|
| Bicameral Permanent Fund Working Group Report With Title Page, 20 January 2020.pdf |
HW&M 3/6/2023 6:00:00 PM |