Legislature(2017 - 2018)BUTROVICH 205
03/24/2017 08:00 AM Senate EDUCATION
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SB 78-PERM FUND DIVIDEND CONTRIBUTIONS/LOTTERY 8:28:59 AM CHAIR HUGHES announced the considerations of SB 78. SENATOR CLICK BISHOP, Alaska State Legislature, sponsor of SB 78. He introduced SB 78 by saying that the bill sets up a foundation for an innovative way to raise funding to help a great cause - funding the future for Alaska's greatest asset - its children. He said he has long been in favor of economic diversification and using renewable resources, such as the earning of the permanent fund. He shared a personal story about an education tax on his paycheck when he was first starting to work. In the 1980s the education head tax was struck down. He said he has been seeking support for a way to fund education for the last four years. He called his bill a voluntary limited income tax. He said over 60 percent of his district supports education. He gave an example of a constituent who returned his PFD the last two years. SENATOR BISHOP said the purpose of the bill is to look way into the future, post oil, to help partially fund education using Alaska's renewal resource, the power of its permanent fund earnings. 8:33:17 AM SENATOR STEVENS asked if he will use Pick, Click, Give. SENATOR BISHOP said yes. PETE FELLMAN, Staff, Senator Click Bishop, Alaska State Legislature, explained SB 78 on behalf of the sponsor. He explained that SB 78 provides that everyone could donate to education in $100 increments on their permanent fund application. He said that half of the money goes to the public education fund; a quarter goes to an education endowment fund which will reach a cap and then roll money into the public education fund; and one quarter goes into the lottery fund which has a $500 million cap. After the lottery has reached the cap, all future donations will go to education. Out of the lottery fund, 20 percent will go to lotter prizes, and 80 percent will stay in the lottery fund. Every year the lottery fund will grow and will be managed in a conservative manner. 8:36:47 AM MR. FELLMAN showed a table of hypothetical fund result possibilities year by year: number of participants, average donations, deposits to fund types, and prize amounts. He termed it a bucket lottery. He hoped the fund would be self-sustaining in the future. He noted Alaska already has sixteen variations of charitable gaming and he provided examples, such as the Ice Classic. The lottery will not need administrative money from the state, it comes from the donations. 8:40:05 AM MR. FELLMAN explained the changes in the proposed CS, version R. One change would cap the amount of money needed to manage the lottery to $500,000. The other change was so that the 125,000 people who do not file their permanent fund on a computer could participate in the lottery. It removes the word "electronic" and "who files electronically" from the bill. 8:40:48 AM SENATOR COGHILL moved to adopt the CS for SB 78, labeled 30- LS0534\R, as the working document before the committee. CHAIR HUGHES objected for discussion purposes. 8:41:43 AM CHAIR HUGHES noted there are state lotteries in the U.S., but SB 78 is more like a raffle. She asked what the difference between a lottery and a raffle is. MR. FELLMAN clarified that it is a limited lottery because participants must be residents of the state who receive a PFD and the donation can come only once a year from the PFD. Participants cannot spend their children's PFD or their rent money. It is different than any other game of chance. CHAIR HUGHES asked why they chose "lottery" rather than "raffle." MR. FELLMAN said they were excited about it and lottery is a catch word for big winnings, not a small raffle. The sponsor pictured the Governor announcing the permanent fund and the winners of this lottery. He concluded that 95 percent of the money stays secure for education. CHAIR HUGHES removed her objection and version R was adopted. She held SB 78 in committee.