Legislature(1993 - 1994)

01/28/1994 09:00 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 CHAIRMAN LEMAN brings up SJR 38 RESTRUCTURE PERMANENT FUND as the             
 next order of business before the Senate State Affairs Committee              
 today.  The chairman calls a witness from the Institute for Social            
 & Economic Research (ISER).                                                   
                                                                               
 Number 513                                                                    
                                                                               
 SCOTT GOLDSMITH, Economist, Institute for Social & Economic                   
 Research (ISER), testifying from Anchorage, states he has talked to           
 Mr. Cremo about his plan (SJR 38), and thinks it is an interesting            
 concept.  Mr. Goldsmith has five comments he would like to make               
 regarding SJR 38, which he will submit in further detail in writing           
 to the committee.  They are:                                                  
  1) The Permanent Fund is at risk if this plan is adopted.                    
  2) The need for safety valves must be considered.                            
  3) The plan appears to be simple, but it is not.                             
  4) The plan is not a magic and painless solution.                            
  5) Less radical alternatives should be considered.                           
                                                                               
 Number 533                                                                    
                                                                               
 MR. GOLDSMITH details the previously listed five points.                      
                                                                               
 TAPE 94-5, SIDE B                                                             
 Number 562                                                                    
                                                                               
 MR. GOLDSMITH continues with his detailing of the previously listed           
 five points.                                                                  
                                                                               
 Number 529                                                                    
                                                                               
 MR. GOLDSMITH suggests potential solutions to budget problems.                
 They are:                                                                     
  1) Solution for economic instability from year to year: cap                  
 the budget at 2.5 billion dollars for four years.                             
  2) Solution for price-induced fluctuations in petroleum                      
 revenues from year to year: restructure constitutional budget                 
 reserve to fill all or a portion of any short-fall between current            
 revenues and the budget.                                                      
  3) Solution for long-run petroleum revenues declining with                   
 production: cap the budget at 2.5 billion dollars for four years,             
 the same as number 1.                                                         
  4) Solution to minimize long-term Prudhoe Bay-type economic                  
 boom and busts: double the Permanent Fund contribution rate for               
 royalties on newly discovered natural resource production to 100%.            
  5) Solution to maximize the return on the Permanent Fund: base               
 the dividend on the long-term averaged total return of the fund,              
 including unrealized gains and losses.                                        
                                                                               
 Number 506                                                                    
                                                                               
 CHAIRMAN LEMAN thanks Mr. Goldsmith for his comments and asks that            
 he submit his testimony in writing to the committee by Monday, in             
 order for members to review it before the meeting Wednesday,                  
 February 2, 1994.  The chairman asks Mr. Cremo if he would like to            
 comment on any part of the testimony made by Mr. Goldsmith.                   
                                                                               
 Number 496                                                                    
                                                                               
 MR. CREMO declines, saying he would like to see a copy of Mr.                 
 Goldsmiths' written comments, so he could intelligently respond to            
 them.                                                                         
                                                                               
 Number 488                                                                    
                                                                               
 CHAIRMAN LEMAN asks if there is anyone else who would like to                 
 testify on SJR 38.  Hearing none, he announces SJR 38 will be held            
 until the committee meeting Wednesday, February 2, 1994.                      

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