Legislature(2021 - 2022)BUTROVICH 205

05/12/2021 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 129 ELECTION PAMPHLET INFORMATION RE JUDGES TELECONFERENCED
Scheduled but Not Heard
-- Testimony <Invitation Only> --
+ HB 3 DEFINITION OF "DISASTER": CYBERSECURITY TELECONFERENCED
Scheduled but Not Heard
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= HB 109 EXTEND BAR ASS'N BOARD OF GOVERNORS TELECONFERENCED
Moved SCS HB 109(JUD) Out of Committee
+= SJR 6 CONST. AM: PERM FUND & PFDS TELECONFERENCED
Moved CSSJR 6(JUD) Out of Committee
**Streamed live on AKL.tv**
               SJR 6-CONST. AM: PERM FUND & PFDS                                                                            
                                                                                                                                
1:42:18 PM                                                                                                                    
CHAIR  HOLLAND  announced  the   consideration  of  SENATE  JOINT                                                               
RESOLUTION  NO. 6,  Proposing amendments  to the  Constitution of                                                               
the  State  of Alaska  relating  to  the Alaska  permanent  fund,                                                               
appropriations from  the permanent  fund, and the  permanent fund                                                               
dividend.                                                                                                                       
                                                                                                                                
[SJR  6  was  previously  heard on  4/30/21  and  5/3/21.  Public                                                               
testimony was opened and closed on 4/30/21.]                                                                                    
                                                                                                                                
1:42:39 PM                                                                                                                    
SENATOR  SHOWER  mistakenly  made  a   motion  on  SB  129.  [The                                                               
committee treated it as though the motion was rescinded.]                                                                       
                                                                                                                                
1:43:08 PM                                                                                                                    
SENATOR SHOWER  moved to adopt the  proposed committee substitute                                                               
(CS)  for  SJR 6  [work  order  32-GS1694\I,  Version I]  as  the                                                               
working document.                                                                                                               
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
1:43:30 PM                                                                                                                    
ED KING, Staff, Senator Roger  Holland, Alaska State Legislature,                                                               
Juneau, Alaska, reviewed the changes  in the committee substitute                                                               
(CS)  for SJR  6,  Version I.  He  stated that  the  bulk of  the                                                               
changes  were made  to Section  2.  He stated  that the  original                                                               
version  of   SJR  6,  [work   order  32-GS1694\A,   Version  A,]                                                               
subsection (b)  required an  appropriation of  the percentage-of-                                                               
market-value  (POMV) but  the amount  was unspecified.  Version I                                                               
identifies that amount as not more  than five percent of the POMV                                                               
of the  permanent fund for  the first  five of the  preceding six                                                               
fiscal years, he said.                                                                                                          
                                                                                                                                
MR.  KING said  that Version  A, subsection  (c) provided  that a                                                               
portion  of the  amount appropriated  under (b)  of this  section                                                               
shall be  allocated for dividends  as provided by law.  Version I                                                               
would change  that language to  require an amount equal  to fifty                                                               
percent  of   the  amount   available  for   appropriation  under                                                               
subsection (b) shall be allocated as dividend payments.                                                                         
                                                                                                                                
1:44:20 PM                                                                                                                    
MR.  KING explained  that Version  A, subsection  (d) required  a                                                               
vote of the  people for an amendment to the  law that allowed for                                                               
the  dividend to  take effect.  Version I  removes that  language                                                               
because  the dividend  is specified  in the  Alaska Constitution.                                                               
That  provision  in  Version  I   states  the  legislature  shall                                                               
appropriate   a  portion   of  the   amount  appropriated   under                                                               
subsection (b) for Power Cost  Equalization (PCE). He stated that                                                               
the amount to be appropriated  is defined as the amount necessary                                                               
to equalize the cost of power in the state as provided by law.                                                                  
                                                                                                                                
MR.  KING explained  that Version  I adds  a new  subsection (f),                                                               
which provides  that the permanent  fund may  be used to  pay the                                                               
costs  associated with  making investments  under section  (a) of                                                               
the permanent fund amendment.                                                                                                   
                                                                                                                                
MR. KING explained  that the transition language  was adjusted to                                                               
conform to the changes in Section 2, Version I.                                                                                 
                                                                                                                                
1:45:27 PM                                                                                                                    
SENATOR  KIEHL  asked  for  an explanation  of  the  language  in                                                               
Version I, subsection  (f) that states the permanent  fund may be                                                               
used to  pay costs  associated with  investments. He  related his                                                               
understanding that  the Alaska Permanent Fund  Corporation (APFC)                                                               
runs the fund very leanly.                                                                                                      
                                                                                                                                
MR.  KING explained  that  placing this  language  in the  Alaska                                                               
Constitution also  provides an exemption from  the dedicated fund                                                               
clause for  APFC investments. Thus, the  investment earnings from                                                               
the  fund could  be  used  to pay  for  management  of the  fund.                                                               
Currently,  APFC's  management fees  are  paid  for by  the  fund                                                               
according   to   statute   but  are   considered   general   fund                                                               
expenditures. This change would place  the language in the Alaska                                                               
Constitution.                                                                                                                   
                                                                                                                                
1:46:22 PM                                                                                                                    
SENATOR KIEHL  asked for an  explanation of the language  for PCE                                                               
in Version I, subsection (d).                                                                                                   
                                                                                                                                
MR. KING  explained that this  language ensures that  a situation                                                               
could  not arise  in  which  the cost  of  equalizing power  cost                                                               
across the state would be greater  than the amount eligible to be                                                               
withdrawn  from the  fund  minus the  amount  paid to  dividends.                                                               
Currently, the amount  available to the general  fund far exceeds                                                               
the amount necessary  for PCE; however, 50 or 100  years from now                                                               
it might not be so.                                                                                                             
                                                                                                                                
1:48:13 PM                                                                                                                    
BRANDON BREFCZYNSKI, Special Assistant  to Policy Advisor, Office                                                               
of the  Governor, Anchorage, Alaska,  on behalf of  the governor,                                                               
responded that this resolution would  solve a number of issues to                                                               
allow  the  legislature to  focus  on  the  next steps,  such  as                                                               
addressing the spending limit and state revenues.                                                                               
                                                                                                                                
1:48:58 PM                                                                                                                    
SENATOR SHOWER related his understanding  that this resolution is                                                               
similar to  one he introduced  in a prior legislature.  He stated                                                               
it  is  important for  people  to  understand  that a  number  of                                                               
legislators have worked  on this issue. Some  provisions are new,                                                               
including the PCE language, which  may require statutory changes.                                                               
He  said  he  hopes  that   the  committee  will  fully  vet  the                                                               
resolution.  He  asked  Mr. Brefczynski  to  speak  to  statutory                                                               
language that would be necessary if SJR 6 were to pass.                                                                         
                                                                                                                                
1:52:08 PM                                                                                                                    
MR. BREFCZYNSKI,  after first clarifying the  question, explained                                                               
that  under SJR  6 there  will be  a five  percent percentage-of-                                                               
market-value (POMV)  draw based  on a  five-year lag  average, of                                                               
which 50 percent  would be allocated to  permanent fund dividends                                                               
(PFDs).  The other  50  percent  would fund  the  PCE program  as                                                               
provided  by law,  and the  remainder would  be deposited  to the                                                               
general fund to  fund government services. The  PCE formula would                                                               
be provided in statute.                                                                                                         
                                                                                                                                
SENATOR SHOWER  asked him  to address  the statutory  changes for                                                               
PCE since the program was previously subsidized.                                                                                
                                                                                                                                
MR.  BREFCZYNSKI   responded  that  a  number   of  programs  are                                                               
currently  funded from  the PCE  Endowment Fund  earnings. SJR  6                                                               
speaks to the PCE program  itself. He deferred specific questions                                                               
about the  PCE program  to Curtis Thayer  with the  Alaska Energy                                                               
Authority. Since SJR 6 references  the PCE program as provided in                                                               
law, the  program could be amended  in the future to  reflect the                                                               
policy  of  the  legislature.  For example,  if  the  legislature                                                               
wanted  to use  some  of  the funding  for  infrastructure or  to                                                               
continue to  subsidize electrical costs,  it would come  from the                                                               
50 percent allocation directed towards government.                                                                              
                                                                                                                                
1:55:04 PM                                                                                                                    
CHAIR HOLLAND  explained that  questions on PCE  and SJR  6 arose                                                               
during the press conference today.  He said adding PCE funding to                                                               
SJR 6 would  help provide support for the  bill. He characterized                                                               
the committee  substitute (CS) for SJR  6, Version I, as  a grand                                                               
solution to a lot of smaller problems.                                                                                          
                                                                                                                                
1:55:44 PM                                                                                                                    
CURTIS  THAYER,  Executive  Director,  Alaska  Energy  Authority,                                                               
Anchorage,  Alaska, stated  that  the PCE  endowment  has been  a                                                               
political football  for many  years. Two  years ago,  the reverse                                                               
sweep issue  drew more attention  to it.  SJR 6 would  remove PCE                                                               
from  the  political  realm  by  placing  this  language  in  the                                                               
constitution.  It  would  allow  for  the  continued  PCE  energy                                                               
subsidy of  approximately $32 million  to serve  85,000 Alaskans.                                                               
He stated that the PCE  program currently provides a cash payment                                                               
to offset  the high  cost of  energy bills  in rural  Alaska. The                                                               
state  has  invested in  infrastructure  for  some areas  of  the                                                               
state.  For  example, the  state  built  transmission lines  from                                                               
Willow  to  Healy to  serve  Railbelt  communities. This  subsidy                                                               
saves Fairbanks $40  million in energy costs.  The state's policy                                                               
has been to provide PCE payments  to offset energy costs in rural                                                               
Alaska  since it  is not  feasible to  run transmission  lines to                                                               
serve communities in rural Alaska.                                                                                              
                                                                                                                                
1:57:37 PM                                                                                                                    
LUCINDA MAHONEY, Commissioner,  Department of Revenue, Anchorage,                                                               
Alaska,  on  behalf  of  the   administration,  stated  that  the                                                               
governor  introduced   SJR  6  to  establish   a  foundation  and                                                               
framework using a  two-phased approach to the  plan. The governor                                                               
recognizes  the  importance  of  involving  the  legislature  and                                                               
citizens in the  process. She stated that SJR  6 would transition                                                               
the Alaska  Permanent Fund  into a single  account to  protect it                                                               
from ad hoc  spending. She reported that over the  past ten years                                                               
nearly $18  billion was spent  from the Earnings  Reserve Account                                                               
(ERA). Creating  one account with  a five  percent percentage-of-                                                               
market-value (POMV) draw would  significantly impact spending and                                                               
help the state  move towards a structured  and disciplined fiscal                                                               
environment.                                                                                                                    
                                                                                                                                
CHAIR HOLLAND  asked if  she was referring  to spending  from the                                                               
Constitutional Budget Reserve Account.                                                                                          
                                                                                                                                
MS.  MAHONEY answered  no. She  said she  was speaking  about the                                                               
Earnings Reserve Account expenditures.                                                                                          
                                                                                                                                
SENATOR HUGHES joined the meeting.                                                                                              
                                                                                                                                
1:59:11 PM                                                                                                                    
MS. MAHONEY  stated that enshrining  the permanent  fund dividend                                                               
(PFD) in  the constitution  would fulfill  a promise  to Alaskans                                                               
that they will  share the state's wealth  from natural resources.                                                               
She characterized  the PCE program  as important to  protect. One                                                               
component of  the plan would  provide bridge funding to  give the                                                               
administration time  to develop phase  two of the plan.  The next                                                               
essential  level will  entail making  structural  changes to  the                                                               
expenditures and  considering new and diverse  revenue sources to                                                               
complete the plan, she said.                                                                                                    
                                                                                                                                
2:00:31 PM                                                                                                                    
SENATOR SHOWER  asked if  constitutionally protecting  a subsidy,                                                               
such as PCE,  creates any equal protection  concerns. He recalled                                                               
the  March  briefing  in  Senate   Finance  highlighted  the  PCE                                                               
Endowment  Fund's purpose  as a  financing source  for electrical                                                               
utilities. He offered  his view that some  statutory changes were                                                               
necessary since the program has  been used as a subsidy. Further,                                                               
there have been  some discussions about moving rural  Alaska to a                                                               
more sustainable energy source.                                                                                                 
                                                                                                                                
MR. BREFCZYNSKI deferred to Bill Milks.                                                                                         
                                                                                                                                
2:02:05 PM                                                                                                                    
WILLIAM MILKS,  Senior Assistant Attorney General,  Legislation &                                                               
Regulations Section,  Civil Division, Department of  Law, Juneau,                                                               
Alaska,  in  response  to  Senator  Shower's  question  of  equal                                                               
protection  to fund  the  PCE program  from  the permanent  fund,                                                               
opined that  it would  not be a  violation. Currently,  the state                                                               
funds the PCE program and other  programs that affect some of the                                                               
states'  population and  some regions  of  the state  differently                                                               
than others.                                                                                                                    
                                                                                                                                
He explained that any language  placed in the Alaska Constitution                                                               
must pass  muster with  the equal protection  clause in  the U.S.                                                               
Constitution.  However,  the types  of  decisions  made by  state                                                               
legislatures  to  fund  various  programs are  given  the  lowest                                                               
constitutional review to assess whether  the state had a rational                                                               
basis to  fund one program  over another. The state  could easily                                                               
identify differences in electrical costs  in various parts of the                                                               
state, so  the PCE funding  provision would not pose  a difficult                                                               
burden to meet.  He reiterated that DOL does not  view spending a                                                               
portion  of the  permanent  fund monies  on a  PCE  program as  a                                                               
violation of the equal protection clause.                                                                                       
                                                                                                                                
2:04:31 PM                                                                                                                    
SENATOR   KIEHL  related   his  understanding   that  the   state                                                               
subsidizes  rural  Alaska electrical  costs  and  provides a  tax                                                               
subsidy  to in-state  natural  gas for  the  Kenai Peninsula  and                                                               
Anchorage. He asked  if DOL's analysis would be  different if the                                                               
proposed  constitutional  amendment  in  SJR  6  were  placed  in                                                               
statute.                                                                                                                        
                                                                                                                                
MR. MILKS answered that the  same analysis would apply related to                                                               
use of state revenues for a specific purpose.                                                                                   
                                                                                                                                
SENATOR  SHOWER  asked to  have  the  Legislative Legal  Services                                                               
attorneys respond.                                                                                                              
                                                                                                                                
2:06:00 PM                                                                                                                    
CHAIR HOLLAND  removed his objection.  There being  no objection,                                                               
the  CSSJR 6(JUD),  Version I  was  before the  committee as  the                                                               
working document.                                                                                                               
                                                                                                                                
2:06:15 PM                                                                                                                    
SENATOR KIEHL moved to adopt Amendment 1, [work order 32-                                                                       
GS1694\I.2].                                                                                                                    
                                                   32-GS1694\I.2                                                                
                                                         Nauman                                                                 
                                                         5/8/21                                                                 
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
                                                                                                                                
OFFERED IN THE SENATE                          BY SENATOR KIEHL                                                                 
     TO:  CSSJR 6(JUD), Draft Version "I"                                                                                       
                                                                                                                                
Page 2, line 5:                                                                                                                 
     Delete "fifty"                                                                                                             
     Insert "at least twenty-five"                                                                                              
                                                                                                                                
Page 2, line 10:                                                                                                                
     Delete "fifty"                                                                                                             
     Insert "twenty-five"                                                                                                       
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
2:06:24 PM                                                                                                                    
SENATOR KIEHL explained that Amendment  1 would set the floor for                                                               
permanent fund  dividends (PFDs) at  not less than 25  percent of                                                               
the sustainable draw.  Second, it would cap the draw  for the PCE                                                               
program at  no more  than 25  percent. He  advocated for  the PCE                                                               
program funding, noting that he  represents some communities that                                                               
rely  on the  program. It  would  not create  any ambiguity  that                                                               
would  allow  the   state  to  exceed  the   total  five  percent                                                               
percentage-of-market-value (POMV)  draw. Instead, it  would leave                                                               
25 percent  as an  undesignated draw.  He acknowledged  that this                                                               
would not cover all the costs  to fund PCE but it would establish                                                               
25  percent  of  the  draw  as a  floor.  The  legislature  could                                                               
appropriate additional  funds to  meet Alaska North  Slope energy                                                               
needs and  increase PFD amounts.  However, it would  not obligate                                                               
the state to issue PFDs at  $2,800 under the proposed 50:50 split                                                               
with an unbalanced budget. He  related his understanding that the                                                               
proposed  plan would  require an  extra draw  from the  permanent                                                               
fund of about  three billion dollars to cover a  couple of years.                                                               
Even at  the state's low  levels of  spending that has  left many                                                               
unmet needs  for Alaskans,  SJR 6 would  not balance  the budget.                                                               
The net effect of  Amendment 1 would be to lower the  cap to a 25                                                               
percent draw for  PCE and establish a 25 percent  floor for PFDs.                                                               
Amendment  1 would  constitutionally guarantee  the dividend  but                                                               
give the  legislature fiscal room  without resorting to  taxes to                                                               
balance the budget.                                                                                                             
                                                                                                                                
2:09:39 PM                                                                                                                    
CHAIR HOLLAND  offered his belief that  if the floor were  set at                                                               
25 percent  for PFDs, the  legislature would never pay  more than                                                               
that for PFDs.                                                                                                                  
                                                                                                                                
2:09:49 PM                                                                                                                    
SENATOR  SHOWER stated  that since  2006, the  budget has  nearly                                                               
doubled.   However,  during   that  same   period,  the   state's                                                               
population  increased   by  100,000.  He  noted   the  state  has                                                               
experienced an  outflow for  the past six  years. He  agreed with                                                               
Chair  Holland  that  the  legislature  would  limit  PFDs  under                                                               
Amendment 1 because it would  spend the additional funds on state                                                               
services. He offered his belief  that the 50:50 proposal is fair.                                                               
He  recalled  Senator  Wielechowski   indicated  that  the  50:50                                                               
proposal would  shrink PFD amounts  to only  2.5 to 3  percent of                                                               
total taxes and royalties. He  said he cannot support Amendment 1                                                               
because ultimately voters will not support it.                                                                                  
                                                                                                                                
2:11:49 PM                                                                                                                    
SENATOR HUGHES said if state spending  were more in line with the                                                               
overall  population, she  might entertain  Amendment 1.  However,                                                               
state  spending  is  not  where  it  should  be,  she  said.  She                                                               
emphasized  that the  state must  settle this  matter. Since  the                                                               
Wielechowski v. State case, the  legislature knows that statutory                                                               
changes will  not remedy the  situation whereas  a constitutional                                                               
amendment will.  However, a  constitutional amendment  requires a                                                               
public vote. If the remedy is  not seen as fair and reasonable by                                                               
the  voters, it  will likely  fail. She  offered her  belief that                                                               
permanent fund  dividend issues have  absorbed a majority  of the                                                               
legislature's  time, which  could be  better spent  on addressing                                                               
revenue  shortfalls and  other major  issues, including  reducing                                                               
sex offense crimes, and improving  student reading abilities. She                                                               
agreed  with  Senator  Shower that  the  proposed  constitutional                                                               
amendment language  must be  acceptable to  the voters.  She said                                                               
she would not  support Amendment 1 since it would  establish a 25                                                               
percent minimum draw for PFDs.                                                                                                  
                                                                                                                                
2:14:07 PM                                                                                                                    
CHAIR HOLLAND related  that some of his  constituents support the                                                               
statutory  formula  but  that  does  not appear  to  be  the  way                                                               
forward.  He  estimated  that  PFDs would  be  $3,200  under  the                                                               
statutory formula and  that the percentage-of-market-value (POMV)                                                               
draw would  be about $2,300  to $2,400,  of which 50  percent for                                                               
PFDs would be  between $1,150 and $1,200. He  offered support for                                                               
the 50:50 split.                                                                                                                
                                                                                                                                
2:14:59 PM                                                                                                                    
SENATOR KIEHL  agreed that the  state faces  tremendous problems.                                                               
He  disagreed  with  Senator Shower  because  he  views  Alaskans                                                               
collectively  as  the government  since  the  people elect  their                                                               
representatives.  He reminded  members that  the preamble  of the                                                               
Alaska  Constitution  supports  his view.  He  acknowledged  that                                                               
cutting  the   budget  has  long   been  desired.   However,  the                                                               
governor's proposed  budget would shift the  cost of prosecutions                                                               
to local taxpayers  but not cut government. He  suggested that if                                                               
cuts  could  be made,  they  would  already  have been  made.  He                                                               
reminded members that Alaska must meet the needs of Alaskans.                                                                   
                                                                                                                                
2:16:15 PM                                                                                                                    
CHAIR HOLLAND maintained his objection.                                                                                         
                                                                                                                                
2:16:21 PM                                                                                                                    
A  roll call  vote was  taken. Senator  Kiehl voted  in favor  of                                                               
Amendment  1  and Senators  Myers,  Hughes,  Shower, and  Holland                                                               
voted against it. Therefore, Amendment 1 failed by a 1:4 vote.                                                                  
                                                                                                                                
2:16:47 PM                                                                                                                    
SENATOR  MYERS moved  to  adopt Amendment  2,  [work order  32-GS                                                               
1694\I.4], which was amended to include additional language:                                                                    
                                                                                                                                
                                                  32-GS1694\I.4                                                                 
                                                        Nauman                                                                  
                                                       5/12/21                                                                  
                          AMENDMENT 2                                                                                       
                                                                                                                                
                                                                                                                                
OFFERED IN THE SENATE                          BY SENATOR MYERS                                                                 
     TO:  CSSJR 6(JUD), Draft Version "I"                                                                                       
                                                                                                                                
                                                                                                                                
     Page 1, line 11:                                                                                                           
          Delete "(b), (c), (d), and (e)"                                                                                   
          Insert "(b) - (f)"                                                                                                
                                                                                                                                
     Page 2, line 2:                                                                                                            
          Delete "to the general fund"                                                                                          
                                                                                                                                
     Page 2, line 7, following "Each":                                                                                          
          Insert "fiscal"                                                                                                       
                                                                                                                                
     Page 2, following line 11:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(e)  Each fiscal year, the legislature may                                                                           
     appropriate  that portion  of  the amount  appropriated                                                                    
     under  (b)   of  this   section  remaining   after  the                                                                    
     appropriations  under (c)  and (d)  of this  section to                                                                    
     the general fund."                                                                                                         
                                                                                                                                
     Reletter the following subsection accordingly.                                                                             
                                                                                                                                
     Amendment 2 included additional handwritten language,                                                                    
     which read:                                                                                                              
                                                                                                                                
     Page 2, line 5, "remove appropriated, add calculated"                                                                      
     Page 2, line 1: delete "may", insert "shall".                                                                              
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
2:17:05 PM                                                                                                                    
SENATOR  MYERS explained  that SJR  6  proposes a  percentage-of-                                                               
market-value  (POMV)  draw of  "not  more"  than 50  percent.  He                                                               
related  a   scenario,  such   that  if   revenues  significantly                                                               
increased in one year, the  legislature might decide to draw less                                                               
than 5  percent and  retain some  of the  excess earnings  to the                                                               
permanent fund. The current language  would limit PFDs to half of                                                               
the  draw. At  the  time  the PFD  program  was established,  the                                                               
legislature's  intent  was  to  require the  first  call  of  the                                                               
permanent  fund  earnings  to be  distributed  to  Alaskans.  One                                                               
reason for  the public anger  in the past  five or six  years was                                                               
that  the  legislature  did not  follow  the  statutory  formula.                                                               
Amendment 2  would establish the  PFDs at a straight  2.5 percent                                                               
of the  percentage-of-market-value (POMV). The  legislature could                                                               
draw  an  additional amount  up  to  a  total  of 5  percent  for                                                               
dividends.  The  legislature would  not  be  able to  change  the                                                               
formula. He offered  his view that this will  fulfill the initial                                                               
intent  for establishing  a PFD  and it  would still  fulfill the                                                               
late Governor Hammond's 50:50 principle.                                                                                        
                                                                                                                                
2:20:39 PM                                                                                                                    
SENATOR  HUGHES pointed  out that  changing "may"  to "shall"  on                                                               
page 2,  line 1, would  ensure that the 5  percent percentage-of-                                                               
market-value  (POMV) draw  would  be made.  She highlighted  that                                                               
while  Senator Meyer's  explanation for  Amendment 2  referred to                                                               
2.5 percent, that 2.5 percent  represents 50 percent of the draw,                                                               
which would go to PFDs.                                                                                                         
                                                                                                                                
2:21:23 PM                                                                                                                    
SENATOR  SHOWER asked  for clarification  that changing  "may" to                                                               
"shall"  on page  2, line  1, would  ensure that  the legislature                                                               
could not have  less than 2.5 percent of the  draw. Instead, each                                                               
year 50  percent of  the percentage-of-market-value  (POMV) would                                                               
be allocated to PFDs.                                                                                                           
                                                                                                                                
SENATOR MYERS agreed that was correct.                                                                                          
                                                                                                                                
SENATOR SHOWER said  he wanted to be sure that  the committee was                                                               
not creating a loophole.                                                                                                        
                                                                                                                                
2:22:28 PM                                                                                                                    
SENATOR HUGHES pointed  out that this language  would mirror what                                                               
the  original  statute  intended  and  the  legislature  did  for                                                               
several decades. She said the  statute basically defined the draw                                                               
at 50  percent of the percentage-of-market-value  (POMV) formula.                                                               
The government did not need its  50 percent of the draw since the                                                               
state had  significant revenues to  pay for  government services.                                                               
In  fact, the  reason the  permanent  fund grew  was because  the                                                               
legislature was  not using its  portion. Making the  draw smaller                                                               
than the original draw as proposed  in SJR 6 will ensure that the                                                               
fund will  continue to grow.  Otherwise, it would be  possible to                                                               
spend more than was earned, she said.                                                                                           
                                                                                                                                
2:24:28 PM                                                                                                                    
SENATOR  KIEHL  reminded  members that  when  the  constitutional                                                               
amendment  passed to  create  the permanent  fund,  there was  no                                                               
dividend. The government  could use whatever funds  it decided to                                                               
appropriate for state services. He referred  to page 2, line 6 of                                                               
SJR  6, Version  I,  which  read, "(c)  Each  fiscal year,  fifty                                                               
percent  of the  amount appropriated  under (b)  of this  section                                                               
shall be allocated for dividend  payments?. He asked why it reads                                                               
"appropriated" and not "allocated" for the PFD program.                                                                         
                                                                                                                                
2:25:52 PM                                                                                                                    
MR.  KING  agreed  that  the   language  in  Version  I  makes  a                                                               
distinction    between   appropriation    and   allocation.    He                                                               
acknowledged  that the  PCE fund  was a  transfer to  the general                                                               
fund and an  appropriation. He said it sounds  like this suggests                                                               
the distribution out  of the permanent fund is  an allocation and                                                               
not  an  appropriation.  He  deferred to  Mr.  Milks  to  further                                                               
explain.                                                                                                                        
                                                                                                                                
MR. MILKS answered  that the language in  subsection (b) provides                                                               
not  more than  five  percent  of the  percentage-of-market-value                                                               
(POMV) can be  withdrawn from the permanent  fund. Subsection (c)                                                               
provides that 50 percent of  the appropriation shall be allocated                                                               
for permanent  fund dividends. (PFDs).  In that  circumstance, it                                                               
means that of  the amount being appropriated, 50  percent will be                                                               
for  dividends.   He  opined  that  there   is  no  appropriation                                                               
discretion. Once the  percentage-of-market-value (POMV) funds are                                                               
appropriated, one half will be for dividend payments.                                                                           
                                                                                                                                
2:27:52 PM                                                                                                                    
SENATOR  KIEHL asked  why Version  I subsequently  uses the  term                                                               
"appropriate" for the  PCE program. He asked if  a different term                                                               
should be used.                                                                                                                 
                                                                                                                                
MR. MILKS  explained that the  language in Version  I, subsection                                                               
(d) states that  the legislature shall appropriate  funds for PCE                                                               
but  it does  not  set  a designated  amount  for  it. Thus,  the                                                               
distinction  is  that  Version I,  subsection  (c)  identifies  a                                                               
specific calculation for the permanent fund dividend (PFD).                                                                     
                                                                                                                                
2:28:30 PM                                                                                                                    
SENATOR KIEHL  said this  bears further  study. He  asked whether                                                               
this  is a  reaction to  the  Alaska Supreme  Court ruling  under                                                               
Wielechowski v.  State. That ruling  essentially states  that all                                                               
of the  appropriations from  the permanent fund  first go  to the                                                               
general  fund  and  then wherever  the  legislature  appropriates                                                               
them. He offered  his view that this appears to  take a different                                                               
approach. He asked for the reason to do so.                                                                                     
                                                                                                                                
SENATOR MYERS responded  that Amendment 2 would  take a different                                                               
approach by  removing any legislative  discretion related  to the                                                               
PFD amount, which he preferred.                                                                                                 
                                                                                                                                
2:29:59 PM                                                                                                                    
SENATOR  KIEHL said  he understood  the intention  was to  remove                                                               
legislative  discretion. He  stated his  support for  placing the                                                               
PFD formula  in the Alaska  Constitution. However, he  would like                                                               
Legislative Legal Services to explain the mechanics to do so.                                                                   
                                                                                                                                
2:30:26 PM                                                                                                                    
SENATOR HUGHES asked  if the term "appropriate"  was used because                                                               
it  was   an  indeterminate  amount  whereas   "allocate"  was  a                                                               
determinate amount  since the language on  page 2, lines 5  and 6                                                               
established a formula.                                                                                                          
                                                                                                                                
2:31:10 PM                                                                                                                    
CHAIR HOLLAND  offered his view  that the term  "appropriate" was                                                               
used  to pull  out  funds and  the term  "allocate"  was used  to                                                               
distribute   that    appropriation.   An   allocation    of   the                                                               
appropriation refers to the disbursement of the funds, he said.                                                                 
                                                                                                                                
2:31:45 PM                                                                                                                    
MR.  MILKS agreed  with Chair  Holland on  the drafter's  intent.                                                               
Once  the  funds  are  appropriated,  they  could  be  allocated,                                                               
distributed, or  set aside. The  appropriation would be  based on                                                               
the percentage-of-market-value  (POMV), and the  allocation would                                                               
specify the percent of the  appropriation that could be allocated                                                               
to the program.                                                                                                                 
                                                                                                                                
2:32:32 PM                                                                                                                    
SENATOR HUGHES stated  the sponsor's intent with  Amendment 2 was                                                               
to ensure that  half of the 5  percent of the POMV  draw would be                                                               
allocated for PFD  payments. However, it assumes  that the amount                                                               
appropriated  under subsection  (b)  would be  5  percent of  the                                                               
average  draw. She  said  she  was not  sure  that this  language                                                               
guaranteed that amount. The language  in subsection (b) "not more                                                               
than  five percent"  allows the  legislature  the flexibility  to                                                               
appropriate a range from zero to  five percent. She asked if this                                                               
would  guarantee that  the  appropriation for  PFDs  would be  50                                                               
percent of the five percent POMV of the fund.                                                                                   
                                                                                                                                
2:33:59 PM                                                                                                                    
SENATOR SHOWER  said he  would like  that issue  clarified before                                                               
SJR 6 moves to the Finance Committee.                                                                                           
                                                                                                                                
2:34:52 PM                                                                                                                    
SENATOR HUGHES  referred to  [Senator Myer's  handwritten portion                                                               
of Amendment 2,  which would remove "appropriate"  and replace it                                                               
with "calculated"  on page  2, line  5 of SJR  6, Version  I. She                                                               
explained  that  the  committee  would like  to  ensure  that  50                                                               
percent  of the  five  percentage-of-market-value  (POMV) of  the                                                               
permanent fund would go to pay PFDs.                                                                                            
                                                                                                                                
She  explained   that  half  of   the  amount   calculated  under                                                               
subsection  (b)   would  be  allocated  for   dividend  payments.                                                               
However,  subsection  (b) would  allow  up  to five  percent,  or                                                               
essentially a range  from zero to five percent, of  the POMV draw                                                               
to be  appropriated. She expressed concern  whether this language                                                               
would truly  guarantee that a PFD  would equal 50 percent  of the                                                               
five percent POMV draw from the fund.                                                                                           
                                                                                                                                
2:35:47 PM                                                                                                                    
EMILY NAUMAN,  Attorney, Legislative Legal  Services, Legislative                                                               
Affairs Agency, Juneau, Alaska,  responded that Senator Hughes is                                                               
correct that  the amount for the  PFD would be 50  percent of the                                                               
percentage  amount the  legislature elected  to appropriate  from                                                               
the permanent fund up to the five percent.                                                                                      
                                                                                                                                
SENATOR HUGHES asked how Amendment  2 could be amended to comport                                                               
with the sponsor's intent.                                                                                                      
                                                                                                                                
MS. NAUMAN suggested  that the language could  read, "Each fiscal                                                               
year 2.5 percent of the market  value of the permanent fund shall                                                               
be  appropriated   for  the   payment  of   dividends."  Further,                                                               
subsection (b) could  be amended to read,  "The legislature could                                                               
appropriate up to  2.5 percent of the POMV to  the general fund."                                                               
She explained this would also allocate funds to the PCE Fund.                                                                   
                                                                                                                                
2:36:43 PM                                                                                                                    
SENATOR HUGHES  expressed concern  that when  voters vote  on the                                                               
constitutional  ballot proposition,  they  might misconstrue  the                                                               
2.5 percent  of POMV as  something other  than 50 percent  of the                                                               
draw.  She expressed  interest in  having the  language clear  so                                                               
voters understand that  fifty percent of the draw  will fund PFDs                                                               
and the other half would fund government.                                                                                       
                                                                                                                                
2:36:59 PM                                                                                                                    
MS. NAUMAN  opined that it was  confusing to have a  math problem                                                               
as language  in the  Alaska Constitution  that "fifty  percent of                                                               
five  percent"  would be  allocated.  That  language led  her  to                                                               
wonder  why  it does  not  just  state  "2.5 percent."  Thus,  an                                                               
argument could be made for each approach.                                                                                       
                                                                                                                                
2:37:46 PM                                                                                                                    
SENATOR HUGHES asked  if the language could  read, "fifty percent                                                               
of the maximum amount."                                                                                                         
                                                                                                                                
2:38:02 PM                                                                                                                    
SENATOR KIEHL  was unsure  he agreed with  Ms. Nauman.  There are                                                               
only two  calculations in subsection  (b): one is an  average and                                                               
the other  is five  percent of  that average.  Thus, half  of the                                                               
average value  of the fund  is a  nonsensical result so  the only                                                               
sensible  result  is that  it  means  half  of the  five  percent                                                               
calculated but  not necessarily  the amount  drawn. He  asked how                                                               
the amount calculated would mean the amount drawn.                                                                              
                                                                                                                                
2:38:48 PM                                                                                                                    
MS.  NAUMAN stated  the committee  was apparently  working off  a                                                               
different document. She  directed attention to page 2,  line 5 of                                                               
the committee substitute  (CS) for SJR 6, Version  I, which read,                                                               
"Each  fiscal  year, fifty  percent  of  the amount  appropriated                                                               
under  (b)  of  this  section shall  be  allocated  for  dividend                                                               
payments ?."  She interpreted this  to mean that  the legislature                                                               
could appropriate any amount from zero percent to five percent.                                                                 
                                                                                                                                
[After ascertaining  that Ms.  Nauman did  not have  the language                                                               
for Amendment 2,]  Senator Myers read the  first handwritten note                                                               
on Amendment 2:                                                                                                                 
                                                                                                                                
     Page 2, line 5: "remove appropriated, add calculated."                                                                     
                                                                                                                                
MS.  NAUMAN  acknowledged that  would  change  her analysis.  She                                                               
suggested   it  could   read   "maximum   amount  available   for                                                               
appropriation" in  order to conform  to the existing  language of                                                               
SJR 6. She agreed with Senator Kiehl's point.                                                                                   
                                                                                                                                
2:40:43 PM                                                                                                                    
SENATOR MYERS moved to adopt  Conceptual Amendment 1 to Amendment                                                               
2, to add "the maximum amount calculated" on line 5.                                                                            
                                                                                                                                
CHAIR  HOLLAND confirmed  Conceptual Amendment  1 to  Amendment 2                                                               
would add "maximum amount calculated"                                                                                           
                                                                                                                                
SENATOR SHOWER  stated the  effect of  Conceptual Amendment  1 to                                                               
Amendment 2.  On page  2, line  5 of Version  I would  read, "(c)                                                               
Each fiscal year, fifty percent  of the maximum amount calculated                                                               
under  (b)  of  this  section shall  be  allocated  for  dividend                                                               
payments to residents of the State."                                                                                            
                                                                                                                                
SENATOR  SHOWER  directed  attention  to  the  second  change  in                                                               
Conceptual Amendment 1 to Amendment 2.  Page 2, line 1 of Version                                                               
I, changes  "may" to "shall"  appropriate the  dividend payments.                                                               
He asked  if this  language would  guarantee that  residents will                                                               
have  first draw  and either  50 percent  or 2.5  percent of  the                                                               
amount appropriated will fund the PFDs.                                                                                         
                                                                                                                                
MS. NAUMAN  opined that proposed  Amendment 2, as  amended, would                                                               
require the  legislature to appropriate  an amount equal  to half                                                               
of the  5 percent  draw for  a dividend every  year, even  if the                                                               
legislature chose not to make a draw on the permanent fund.                                                                     
                                                                                                                                
2:43:04 PM                                                                                                                    
MS.  NAUMAN asked  to revert  back to  Conceptual Amendment  1 to                                                               
Amendment  2. She  said she  was  rethinking the  language to  be                                                               
certain  that   the  legislature  would  appropriate   funds  for                                                               
dividends even  if no draw were  made to the permanent  fund. She                                                               
suggested adding language  to Conceptual Amendment 1  to read "an                                                               
amount  equal  to"  fifty  percent of  the  maximum  amount.  She                                                               
explained  that the  legislature would  want to  be certain  that                                                               
this  amount would  be appropriated  from the  general fund  even                                                               
when  a draw  on  the permanent  fund  did not  take  place in  a                                                               
current fiscal year.                                                                                                            
                                                                                                                                
CHAIR HOLLAND asked  if she was suggesting  changes to Conceptual                                                               
Amendment 1 to  Amendment 2, in subsection (c), after  the "," to                                                               
add language "an amount equal to".                                                                                              
                                                                                                                                
MS. NAUMAN answered yes.                                                                                                        
                                                                                                                                
2:44:06 PM                                                                                                                    
SENATOR  SHOWER  asked  if  the   administration  agreed  to  the                                                               
changes.                                                                                                                        
                                                                                                                                
2:44:23 PM                                                                                                                    
MR. BREFCZYNSKI  stated that  the administration  was comfortable                                                               
with the additional language to the amendment.                                                                                  
                                                                                                                                
2:44:44 PM                                                                                                                    
CHAIR HOLLAND directed attention to  lines 5 and 6, to subsection                                                               
(c). He  stated that line  5 uses  "appropriate" and line  6 uses                                                               
"allocate."                                                                                                                     
                                                                                                                                
SENATOR MYERS noted that the  Conceptual Amendment 1 to Amendment                                                               
2 was not yet adopted.                                                                                                          
                                                                                                                                
CHAIR HOLLAND agreed.                                                                                                           
                                                                                                                                
2:45:08 PM                                                                                                                    
SENATOR   SHOWER   expressed   an   interest   in   whether   the                                                               
administration and  the Legislative Legal Services  attorney both                                                               
agree that the  effect of Conceptual Amendment 1  to Amendment 2,                                                               
was that residents  would have first draw plus 50  percent of the                                                               
earnings  even when  the state's  revenues were  down and  if the                                                               
legislature  decided not  to draw  the full  five percent  of the                                                               
percentage-of-market-value (POMV). He stated  for the record that                                                               
everyone  was  nodding  yes. He  stated  support  for  Conceptual                                                               
Amendment 1 to Amendment 2.                                                                                                     
                                                                                                                                
2:45:40 PM                                                                                                                    
CHAIR HOLLAND asked if anyone  objected to Conceptual Amendment 1                                                               
to Amendment 2, which would add "maximum" before "amount".                                                                      
                                                                                                                                
CHAIR HUGHES interjected it would add "an amount equal to".                                                                     
                                                                                                                                
CHAIR  HOLLAND added  after  the ","  Conceptual  Amendment 1  to                                                               
Amendment 2 would add "an amount equal to."                                                                                     
                                                                                                                                
SENATOR MYERS  suggested that  procedurally the  committee should                                                               
adopt his  original Conceptual  Amendment 1  to Amendment  2, and                                                               
then offer a second conceptual  amendment to add the language "an                                                               
amount equal to".                                                                                                               
                                                                                                                                
[The committee treated  it as though it had  rescinded its action                                                               
on Conceptual Amendment 1 to Amendment  2, to add on page 2, line                                                               
5,  to insert  "an  amount  equal to"  after  "year," and  before                                                               
"fifty".]                                                                                                                       
                                                                                                                                
SENATOR MYERS  restated his motion to  adopt Conceptual Amendment                                                               
1 to Amendment  2, on page 2,  line 5 to add  "the maximum amount                                                               
calculated".                                                                                                                    
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
2:46:35 PM                                                                                                                    
SENATOR  HUGHES clarified  Senator  Myers' motion,  which was  to                                                               
move to adopt  Conceptual Amendment 1 to Amendment 2,  on page 2,                                                               
line 5 to insert "maximum" before "amount".                                                                                     
                                                                                                                                
SENATOR MYERS agreed.                                                                                                           
                                                                                                                                
[The committee treated it as though the objection was removed.]                                                                 
                                                                                                                                
There  being  no further  objection,  Conceptual  Amendment 1  to                                                               
Amendment 2 was adopted.                                                                                                        
                                                                                                                                
2:47:14 PM                                                                                                                    
SENATOR MYERS moved to adopt  Conceptual Amendment 2 to Amendment                                                               
2,  on page  2, line  5,  to insert  "an amount  equal to"  after                                                               
"year," and before "fifty".                                                                                                     
                                                                                                                                
SENATOR  SHOWER  asked  if  the   administration  agreed  to  the                                                               
language.                                                                                                                       
                                                                                                                                
MS. NAUMAN answered yes.                                                                                                        
                                                                                                                                
There  being  no further  objection,  Conceptual  Amendment 2  to                                                               
Amendment 2 was adopted.                                                                                                        
                                                                                                                                
CHAIR HOLLAND  stated that  Amendment 2,  as amended,  was before                                                               
the committee.                                                                                                                  
                                                                                                                                
2:48:14 PM                                                                                                                    
SENATOR KIEHL  said some  provisions of  SJR 6  use "appropriate"                                                               
but  other provisions  use "allocate."  He recalled  that in  the                                                               
budget,  the legislature  appropriates  funds for  a purpose.  He                                                               
asked  whether   there  was  a   constitutional  effect   to  use                                                               
"allocate" rather than "appropriate."                                                                                           
                                                                                                                                
MS. NAUMAN pointed  out that the word "allocated"  appears in the                                                               
original  draft.   She  said  she   would  rely  on   Mr.  Milk's                                                               
explanation. She surmised that a  court would find that the words                                                               
had  different meanings.  She opined  that "allocate"  would mean                                                               
that  the monies  would automatically  be transferred  without an                                                               
appropriation.  She  suggested  that  there  is  value  in  being                                                               
consistent  with  the  usage.   Stating  "The  legislature  shall                                                               
appropriate  "  would make  it clear how  the movement  of monies                                                               
would happen, she said.                                                                                                         
                                                                                                                                
2:50:20 PM                                                                                                                    
CHAIR HOLLAND said he was fine with using the term "allocate."                                                                  
                                                                                                                                
2:50:43 PM                                                                                                                    
SENATOR KIEHL said  he preferred the consistent use  of the term,                                                               
"appropriate" because the intent was clear.                                                                                     
                                                                                                                                
2:50:58 PM                                                                                                                    
SENATOR HUGHES  recalled that "allocate" would  mean an automatic                                                               
transfer of  monies, which was  due to the Wielechowski  v. State                                                               
decision. She  expressed concern  that using "allocate"  may mean                                                               
the legislative process could be skipped.                                                                                       
                                                                                                                                
MS. NAUMAN  answered that she  was unsure what  "allocate" meant.                                                               
The statutes that  were challenged in Wielechowski  v. State used                                                               
the word  "transfer" so that decision  provided statutory history                                                               
for  what  "transfer"  might  mean.  However,  she  recalled  the                                                               
legislature  continued to  make appropriations  despite the  word                                                               
"transfer"  being in  statute. One  of  the reasons  she was  not                                                               
concerned about the Wielechowski decision  is because SJR 6 would                                                               
amend the  Alaska Constitution.  She said she  would rely  on Mr.                                                               
Milks  to determine  what the  administration's  intent was  when                                                               
using the word "allocation."                                                                                                    
                                                                                                                                
2:52:14 PM                                                                                                                    
SENATOR HUGHES  recalled that  when the  fund was  created, funds                                                               
were  automatically  transferred  and PFDs  were  distributed  to                                                               
eligible residents.  She asked  if the  administration envisioned                                                               
this process would be used.                                                                                                     
                                                                                                                                
MR. BREFCZYNSKI  responded that  the intent  was to  guarantee 50                                                               
percent of  the draw for the  POMV as dividends for  the eligible                                                               
recipients  in the  state. Since  the  committee adopted  several                                                               
conceptual amendments  to SJR 6,  he said  he would defer  to Mr.                                                               
Milks.                                                                                                                          
                                                                                                                                
2:53:21 PM                                                                                                                    
MR.   MILKS  responded   that  Mr.   Brefczynski  explained   the                                                               
administration's  intent in  SJR  6  was for  the  process to  be                                                               
automatic.  He explained  that  the overall  intent  was that  50                                                               
percent  of  the amount  appropriated  shall  be distributed  for                                                               
dividend   payments.  The   appropriation  would   be  based   on                                                               
allocating 50 percent  of the POMV. The  common understanding was                                                               
this would mean that the funds  would be set aside. The committee                                                               
could decide to insert "appropriate" if it chooses to do so.                                                                    
                                                                                                                                
2:54:47 PM                                                                                                                    
SENATOR HOLLAND encouraged  members to close out  Amendment 2. He                                                               
offered to solicit a further amendment to address "allocate."                                                                   
                                                                                                                                
2:55:01 PM                                                                                                                    
SENATOR  HUGHES asked  Mr. Milks  to consider  the effect  of the                                                               
amendments  to  SJR  6  since   "appropriated"  was  replaced  by                                                               
"calculated."  She asked  if that  language means  that it  would                                                               
bypass  the  legislature and  go  straight  to distribution.  She                                                               
offered  her  belief  that   the  legislature  appropriates.  She                                                               
wondered  if using  "calculated"  and "allocated"  would mean  it                                                               
would be an automatic transfer.                                                                                                 
                                                                                                                                
2:55:50 PM                                                                                                                    
MR. MILKS explained  that he was responding to  the issue Senator                                                               
Kiehl raised  on page  2, line 6  of SJR 6.  If the  committee is                                                               
speaking  to SJR  6, as  amended by  Senator Myers,  it would  be                                                               
helpful  to hear  that  language since  he does  not  have it  in                                                               
writing.                                                                                                                        
                                                                                                                                
2:56:29 PM                                                                                                                    
SENATOR HUGHES stated it would  read, "Each fiscal year an amount                                                               
equal to  fifty percent  of the  maximum amount  calculated under                                                               
(b) of this  section shall be allocated for  dividend payments to                                                               
residents of the State."                                                                                                        
                                                                                                                                
MR. MILKS remarked that it  was important that the language means                                                               
what the members intended it to mean.                                                                                           
                                                                                                                                
2:58:21 PM                                                                                                                    
SENATOR  KIEHL said  he  liked the  Chair's  suggestion that  the                                                               
committee finish  its action on  Amendment 2. He offered  to take                                                               
up whether to use "allocate" or "appropriate" on its own.                                                                       
                                                                                                                                
2:58:40 PM                                                                                                                    
CHAIR  HOLLAND   stated  that  Amendment  2,   with  [handwritten                                                               
amendments added], and as amended  by Conceptual Amendments 1 and                                                               
2 was before the committee.                                                                                                     
                                                                                                                                
CHAIR HOLLAND removed his objection.                                                                                            
                                                                                                                                
There being  no further objection,  Amendment 2, as  amended, was                                                               
adopted.                                                                                                                        
                                                                                                                                
2:59:07 PM                                                                                                                    
SENATOR KIEHL moved  to adopt Conceptual Amendment 3,  on page 2,                                                               
line 6, to replace the word "allocated" with "appropriated."                                                                    
                                                                                                                                
CHAIR HOLLAND objected for discussion purposes.                                                                                 
                                                                                                                                
SENATOR  KIEHL  explained that  the  courts  look to  legislative                                                               
intent and the  committee's understanding when the  words are not                                                               
clear.  The   courts  also  assume  that   different  words  mean                                                               
different things.  He offered his  belief that Senator  Myers was                                                               
clear  and if  the legislature  intends to  constitutionalize the                                                               
permanent fund dividend  the language should be  very clear, such                                                               
as "shall  be appropriated."  He directed  attention to  Art. IX,                                                               
Sec.  13,  and  read,  "No  money shall  be  withdrawn  from  the                                                               
treasury except  in accordance with appropriations  made by law."                                                               
Therefore, he would  like the language in every section  of SJR 6                                                               
to match  the language  in the Alaska  Constitution by  using the                                                               
word "appropriate."                                                                                                             
                                                                                                                                
3:00:15 PM                                                                                                                    
CHAIR HOLLAND  stated that this  resolution will be going  to the                                                               
Finance Committee next.                                                                                                         
                                                                                                                                
3:00:24 PM                                                                                                                    
SENATOR HUGHES  offered her belief  that this was a  policy call.                                                               
If the  language in SJR  6 uses  "appropriate" it means  that the                                                               
funds will  pass through the  legislative process as a  line item                                                               
in the budget. She said she  understood Art. IX, Sec. 13 as read.                                                               
However, if the legislature decides  to make an exception and not                                                               
have the  fifty percent draw for  PFD payments to go  through the                                                               
legislative  process,  it  could  be accomplished  via  a  direct                                                               
transfer. That is what initially  happened with the original PFD.                                                               
According to  Ms. Nauman, the  word "allocate" would be  a direct                                                               
transfer  and   bypass  the  legislative  process.   She  further                                                               
understood her  intent that  residents receive  half of  the five                                                               
percent draw.  She expressed an  interest in knowing her  view on                                                               
bypassing  the  legislature  and reverting  to  transferring  the                                                               
funds for PFDs. She asked  for the administration's intent and if                                                               
it  was interested  in the  direct transfer  for PFD  payments to                                                               
avoid the potential for the legislature to muddle it up.                                                                        
                                                                                                                                
MR. BREFCZYNSKI responded that the  administration would prefer a                                                               
direct transfer. He suggested that  the budget process may entail                                                               
delays or be subject to vetoes.  The intent would be to guarantee                                                               
the dividend  as fifty percent  of the  POMV. He deferred  to Mr.                                                               
Milks in terms of whether "allocate" will satisfy the transfer.                                                                 
                                                                                                                                
3:02:42 PM                                                                                                                    
SENATOR  HUGHES asked  whether  "allocate"  indicates a  transfer                                                               
that would bypass the legislative process.                                                                                      
                                                                                                                                
MR. MILKS responded that he believes that is what it states.                                                                    
                                                                                                                                
MS. NAUMAN responded that she  reviewed the section of the Alaska                                                               
Constitution that  Senator Kiehl referenced. She  said she agrees                                                               
with him  that this section  would be  better and less  likely to                                                               
conflict  with   that  section  if   this  sentence   read,  "The                                                               
legislature  shall  appropriate  fifty  percent  of  the  maximum                                                               
amount calculated to go to dividends for state residents."                                                                      
                                                                                                                                
3:03:58 PM                                                                                                                    
SENATOR  HUGHES asked  if  there  could be  an  exception in  the                                                               
Alaska Constitution. She  suggested it might not  work in statute                                                               
due to the dedicated funds prohibition.                                                                                         
                                                                                                                                
CHAIR HOLLAND asked  if the language "appropriate"  could allow a                                                               
future legislature to adjust the amount.                                                                                        
                                                                                                                                
SENATOR HUGHES  clarified that she  was not concerned  about that                                                               
but rather that the PFD payments  could be slowed down or vetoed.                                                               
However, allocating  the direct transfer ensures  that PFDs would                                                               
be paid to residents.                                                                                                           
                                                                                                                                
3:05:17 PM                                                                                                                    
MR. KING responded  that if it is the committee's  will to accept                                                               
this amendment, it might be good  to insert an exemption from the                                                               
line item  veto. Otherwise, leaving the  language as "allocation"                                                               
may create some ambiguity. That  ambiguity could force the courts                                                               
to discuss why that ambiguity  exists. He said there is extensive                                                               
legislative  intent   during  this  debate.  He   suggested  that                                                               
Legislative Legal  Services may  be able  to clarify  whether the                                                               
legislative intent would survive a  court challenge. One of those                                                               
two options seems viable to him, he said.                                                                                       
                                                                                                                                
3:05:55 PM                                                                                                                    
CHAIR HOLLAND stated his intention to maintain his objection.                                                                   
                                                                                                                                
SENATOR SHOWER read online definitions  [no source given] that An                                                               
Act of appropriation means an  Act of the legislature authorizing                                                               
money  to be  paid from  the  treasury for  a specified  purpose.                                                               
However, "allocate" means to set aside for a purpose.                                                                           
                                                                                                                                
3:06:36 PM                                                                                                                    
A roll call vote was interrupted by an at-ease.                                                                                 
                                                                                                                                
3:06:55 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
3:07:37 PM                                                                                                                    
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
3:07:53 PM                                                                                                                    
SENATOR HUGHES stated  her preference was to  use "allocate.  The                                                               
PFDs initially  used a process  that provided more  certainty and                                                               
will avoid a  potential veto. She suggested that if  the Chair is                                                               
eager  to pass  SJR 6  from committee,  this discussion  could be                                                               
taken up by the Finance Committee.  She said she does not want to                                                               
change the language  to "appropriate" because it  means that PFDs                                                               
will  use  the  budget  process unless  another  amendment  could                                                               
provide veto proofing. She pointed  out that Mr. Milks previously                                                               
stated that the  administration's intent was to  use the language                                                               
"allocate," which  means that funds would  automatically transfer                                                               
and not require legislative appropriation.                                                                                      
                                                                                                                                
CHAIR HOLLAND stated his preference  was to use "allocate" rather                                                               
than   "appropriate."  He   offered  his   view  that   a  future                                                               
legislature could decide not to "allocate" the funds.                                                                           
                                                                                                                                
3:09:19 PM                                                                                                                    
SENATOR KIEHL  commented that  the committee  has heard  that the                                                               
attorneys disagreed about  the meaning of the  specific terms. If                                                               
the intention  is for the  Alaska Constitution to  read "transfer                                                               
without appropriation"  or "be used without  appropriation", that                                                               
language  should be  added,  he said.  He  recalled that  Senator                                                               
Shower read  a definition of  "allocation" but he  questioned the                                                               
meaning.  He stated  that the  language  that is  closest to  the                                                               
meaning was "shall appropriate."                                                                                                
                                                                                                                                
3:09:53 PM                                                                                                                    
SENATOR  SHOWER  related  his understanding  that  the  committee                                                               
would like to  move SJR 6 as the vehicle  for further discussion.                                                               
He stated that he would  not support Conceptual Amendment 3 since                                                               
he would  prefer to  move the  bill to  the Finance  Committee to                                                               
debate the most  relevant language to use. He  related that staff                                                               
raised the  issue of  the line  item veto  so the  language needs                                                               
further vetting.                                                                                                                
                                                                                                                                
CHAIR HOLLAND maintained his objection.                                                                                         
                                                                                                                                
3:10:38 PM                                                                                                                    
A  roll call  vote was  taken. Senator  Kiehl voted  in favor  of                                                               
Conceptual Amendment  3 and Senators  Shower, Hughes,  Myers, and                                                               
Holland  voted  against  it. Therefore,  Conceptual  Amendment  3                                                               
failed by a 1:4 vote.                                                                                                           
                                                                                                                                
3:11:10 PM                                                                                                                    
SENATOR  SHOWER asked  if  the committee  wanted  to entertain  a                                                               
conceptual  amendment   to  add   language  to  veto   proof  the                                                               
appropriation.                                                                                                                  
                                                                                                                                
3:11:42 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
3:12:44 PM                                                                                                                    
CHAIR HOLLAND reconvened the meeting.                                                                                           
                                                                                                                                
3:13:00 PM                                                                                                                    
SENATOR HUGHES  directed attention to  page 2,  line 6 of  SJR 6.                                                               
She  asked what  language would  ensure  that the  funds for  PFD                                                               
payments   will  be   transferred  without   going  through   the                                                               
legislative budget process or being subject to any delays.                                                                      
                                                                                                                                
She asked  Mr. Milks  to first respond,  followed by  Ms. Nauman.                                                               
She  added that  Mr.  Milk's opinion  was  that "allocate"  would                                                               
allow the  transfer of  funds to  bypass the  legislative process                                                               
and ensure  PFD payments  were made.  She expressed  concern that                                                               
additional language may  be needed to ensure the  funds would not                                                               
be subject to the budget process and be susceptible to a veto.                                                                  
                                                                                                                                
3:14:21 PM                                                                                                                    
MR.  MILKS responded  that  if the  committee  was interested  in                                                               
protecting  against  the  possibility  of a  veto,  he  suggested                                                               
inserting language, "The transfer is  not subject to a veto under                                                               
Art. II, Sec. 16.                                                                                                               
                                                                                                                                
3:14:48 PM                                                                                                                    
SENATOR  HUGHES expressed  concern that  with that  language, the                                                               
funds  could still  end up  as part  of the  budget process.  She                                                               
asked whether  there was some  way to directly transfer  funds to                                                               
avoid being  part of the  legislative budget process  and subject                                                               
to a veto.                                                                                                                      
                                                                                                                                
3:15:20 PM                                                                                                                    
MR. MILKS responded that Ms.  Nauman identified the appropriation                                                               
provision  in the  Alaska Constitution  as Art.  IX, Sec.  13. He                                                               
related his  understanding that the committee  seeks language for                                                               
maximum coverage  so it is  not an appropriation and  funds would                                                               
not  be subject  to  a veto,  such that  both  Articles would  be                                                               
referenced. It would not be  an appropriation subject to Art. IX,                                                               
Sec. 13 and not subject to veto under Art. II, Sec. 16.                                                                         
                                                                                                                                
3:16:14 PM                                                                                                                    
SENATOR HUGHES  asked whether  this language  means it  cannot be                                                               
vetoed. She offered her belief  that the language would still not                                                               
prevent transferred funds from being a line item in the budget.                                                                 
                                                                                                                                
3:16:26 PM                                                                                                                    
MS. NAUMAN explained  that part of the reason  that two attorneys                                                               
are grappling  with the language  is because the  committee seeks                                                               
to create a new mechanism to  move monies that does not currently                                                               
appear in the Alaska Constitution.                                                                                              
                                                                                                                                
She agreed with  Mr. Milks if the committee would  like to exempt                                                               
PFDs from  the current process  that all the money  flows through                                                               
under    the    constitution,    the   language    could    read,                                                               
"Nothwithstanding  Art IX,  Sec  13 in  the  Constitution of  the                                                               
State of  Alaska, each year  fifty percent of the  maximum amount                                                               
calculated under  (b) of  this section shall  be allocated  for a                                                               
payment  of dividends  to residents  of the  state." Further,  to                                                               
ensure against a veto, to add  language, "A governor may not veto                                                               
or reduce the amount allocated  under this section under Art. II,                                                               
Sec. 15."                                                                                                                       
                                                                                                                                
SENATOR HUGHES was unsure if  she could repeat the exact language                                                               
in a conceptual amendment.                                                                                                      
                                                                                                                                
3:17:38 PM                                                                                                                    
MR. MILKS concurred with Ms. Nauman's suggested language.                                                                       
                                                                                                                                
3:17:44 PM                                                                                                                    
CHAIR HOLLAND asked Ms. Nauman to state the suggested language.                                                                 
                                                                                                                                
MS. NAUMAN restated the proposed language:                                                                                      
                                                                                                                                
On page 2,  line 5, before the word  "Each", add "Notwithstanding                                                               
Art. IX, Sec. 13 Constitution of  the State of Alaska, Each year,                                                               
?." On page 2 line 6,  following, "State.", insert a new sentence                                                               
to read, "Notwithstanding Art. II,  Sec. 15, the governor may not                                                               
veto or reduce the amount allocated under this section."                                                                        
                                                                                                                                
MS.  NAUMAN further  suggested changing  "allocate to  "transfer"                                                               
since  Senator   Kiehl  and  her  budget   colleagues  stated  an                                                               
implication that  "allocation" means money could  be moved within                                                               
an  appropriation.   Since  the   goal  was   to  create   a  new                                                               
constitutional  concept, perhaps  using  "transfer" might  better                                                               
describe the goal the committee wishes to accomplish, she said.                                                                 
                                                                                                                                
3:19:24 PM                                                                                                                    
SENATOR HUGHES moved  to adopt Conceptual Amendment  4, using Ms.                                                               
Nauman's suggested language and her  suggested change, on line 6,                                                               
to  delete  "allocated"   and  insert  "transferred".  Conceptual                                                               
Amendment 4 to Version I read:                                                                                                  
                                                                                                                                
     On page  2, line  5, subsection  (c), before  "Each" to                                                                    
     add,  "Notwithstanding Art.  IX, Sec.  13, Constitution                                                                    
     of the State of Alaska."  In subsection (c), Each year,                                                                    
     ?."  On page  2  line 6,  following, "State.",  insert,                                                                    
     Notwithstanding Art. II, Sec.  15, the governor may not                                                                    
     veto  or  reduce  the  amount  transferred  under  this                                                                    
     section.                                                                                                                   
                                                                                                                                
MR. BREFCZYNSKI  stated that the  administration agreed  with the                                                               
language.                                                                                                                       
                                                                                                                                
3:20:06 PM                                                                                                                    
CHAIR HOLLAND  acknowledged that the recording  would capture the                                                               
language  in  Conceptual  Amendment  4. He  restated  the  motion                                                               
before the  committee. On page  2, line 5, after  subsection (c),                                                               
before  "Each"  to  add,  "Notwithstanding   Art.  IX,  Sec.  13,                                                               
Constitution of  the State of Alaska."  After the "." at  the end                                                               
of [subsection] (c)  add, "Notwithstanding Art. II,  Sec. 15, the                                                               
governor  may not  reduce or  veto the  amount transferred  under                                                               
this section."                                                                                                                  
                                                                                                                                
CHAIR  HOLLAND  removed his  objection.  There  being no  further                                                               
objection, Conceptual Amendment 4 was adopted.                                                                                  
                                                                                                                                
3:21:13 PM                                                                                                                    
SENATOR SHOWER moved to report  the proposed committee substitute                                                               
(CS)  for SJR  6,  Version  I, as  amended,  from committee  with                                                               
individual  recommendations and  attached  fiscal note(s).  There                                                               
being no  objection, CSSJR 6  (JUD) was reported from  the Senate                                                               
Judiciary Standing Committee.                                                                                                   

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