Legislature(2001 - 2002)

02/21/2002 03:33 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                SJR 13-CONST. AM: PERMANENT FUND                                                                            
CHAIRMAN THERRIAULT  established that the Permanent  Fund Trustees                                                              
had previously  appeared before  the committee.  He wanted  to use                                                              
the current  meeting to  review and  discuss the proposal  because                                                              
Senator Halford  was unable  to attend  the meeting and  requested                                                              
that final action be delayed until the next hearing.                                                                            
ROBERT   STORER,  Alaska   Permanent   Fund  executive   director,                                                              
explained  that  the  resolution   would  place  a  constitutional                                                              
amendment before  the voters that  is designed to  inflation-proof                                                              
the fund by limiting the payout.  He reinforced the fact that they                                                              
are recommending that the annual  payout of fund income be limited                                                              
to  no more  than five  percent of  the fund's  five year  average                                                              
market value. They  believe that, over time, they  can earn a rate                                                              
of return that will exceed inflation by five percent.                                                                           
The  board  is   comfortable  with  the  proposed   constitutional                                                              
amendment  as written,  but  they  want to  make  clear that  they                                                              
support the distinction  that income from the fund,  not to exceed                                                              
principal, would be available for distribution.                                                                                 
His next remarks referred to the following table:                                                                               
             Range of total 5% payout (in millions)                                                                           
                 FY 03    FY 04   FY 05   FY 06     FY 07   FY 08                                                               
  Top quartile                                                                                                                  
                 $1,343 $1,397 $1,439 $1,496 $1,571 $1,668                                                                    
                 $1,313 $1,330 $1,323 $1,368 $1,420 $1,464                                                                    
Bottom quartile                                                                                                                 
                 $1,260 $1,007     $984   $1,031 $1,033 $1,020                                                                
          Range of dividend distribution (in millions)                                                                        
  Top quartile                                                                                                                  
                  $930     $945    $953   $1,086 $1,270 $1,341                                                                
                  $853     $779    $732     $807    $929   $1,039                                                             
Bottom quartile                                                                                                                 
                  $778     $620    $509     $551    $570   $602                                                               
             Range of residual income (in millions)                                                                         
  Top quartile                                                                                                                  
                  $432     $497    $545     $519    $452   $417                                                               
                  $391     $418    $438     $390    $318   $272                                                               
Bottom quartile                                                                                                                 
                  $331     $255    $265     $203    $111   $23                                                                
Money available  at a 5 percent payout  is shown as a  median case                                                              
with a top and  bottom quartile. He repeated that  they expect the                                                              
beginning amount for  distribution to be $1.25  billion. The chart                                                              
shows that  amount is  slightly increased to  $1.3 billion  as the                                                              
fund  has stabilized  at  $25  billion.  They have  extended  that                                                              
number to FY 08 and it is $1.464 billion on a median case.                                                                      
For  FY 03  the bottom  quartile  is close  to  the $1.25  billion                                                              
estimate at $1.26 billion while the  top quartile is $1.343, which                                                              
is a fairly narrow range.                                                                                                       
What does it mean if the statutes  remain the same on the dividend                                                              
formula and the dividend payout?  $853 million would be the median                                                              
case in  FY 03 and $1.039  million in FY  08. In FY 03  the bottom                                                              
quartile  is $778 million  with a  25 percent  probability  or top                                                              
quartile of $930 million.                                                                                                       
The number that has changed speaks  to adjusting projections based                                                              
on  short-term market  volatility.  The median  case  now is  $391                                                              
million with a bottom quartile of  $331 and a top quartile of $432                                                              
million.  He reminded  members  that  using a  percentage  formula                                                              
based  on the  market  value  has  less volatility  than  realized                                                              
income. He  then explained that the  reason for the  increase from                                                              
the  $175-300   million  projection   is  explained   because  the                                                              
volatility  on the  total payout  is not  reduced a  lot from  six                                                              
months or a year  ago. What has changed is the  realized income to                                                              
compute the dividend  formula. This year there  is a significantly                                                              
lower realized income number than  in the four or five prior years                                                              
when there was a bull market. This  means that the dividend payout                                                              
is   somewhat  reduced   and  the   residual   is  available   for                                                              
appropriation for government purposes.                                                                                          
He said he is  more comfortable with the $175-300  million because                                                              
if  the bear  market ends  and the  market goes  up, the  dividend                                                              
could  increase and  that would  leave  a lower  residual to  fund                                                              
He said he would be happy to answer questions.                                                                                  
CHAIRMAN  THERRIAULT asked  if the  residual goes  up because  the                                                              
bear market  results in  losses and  brings the five-year  average                                                              
MR. STORER said that is correct.  The residual goes up because the                                                              
realized  income  is lower.  However,  the  size  of the  fund  is                                                              
smoothed out because of the percentage of market value payout.                                                                  
CHAIRMAN THERRIAULT asked him to  comment on the scenario in which                                                              
things had to  be liquidated to achieve a five  percent payout and                                                              
how that impacts the calculations  for the dividend. Over time the                                                              
percentage of the five percent that  goes into the dividend starts                                                              
moving up and the room for the residual starts getting squeezed.                                                                
MR. STORER said  that potential exists if a  substantially greater                                                              
amount  was  required  to  be  liquidated.   Then  you  would  see                                                              
accelerated capital  gains taking an accelerated  dividend payout,                                                              
which would exacerbate the payout.                                                                                              
He  said  it  is  easier  to  manage  money  when  you  have  more                                                              
information on predicted  cash flow needs. They  realize they must                                                              
raise substantial amounts  of money in September of  every year so                                                              
they  build that  into  the structure  of  the  portfolio so  they                                                              
aren't  necessarily  forced into  taking  large  capital gains  or                                                              
loses. Predictability certainly helps in managing the fund.                                                                     
CHAIRMAN  THERRIAULT  said legislators  have  different  long-term                                                              
ideas regarding  the permanent fund.  A criticism of this  plan is                                                              
that it  has the  potential to guarantee  the inflation  proofing,                                                              
and it spins  off the revenue  stream for the dividends  but there                                                              
is little revenue  stream left for general government  without the                                                              
legislature changing the dividend program.                                                                                      
MR.  STORER replied  that as  it now  stands, there  would be  two                                                              
different  formulas. One  would be  for the  percentage of  market                                                              
value  approach, which  limits  the volatility  of  the amount  of                                                              
money that could  be appropriated in any given  year. The dividend                                                              
formula is based on realized gains  and not market value. The bull                                                              
market has masked  the fact that realized income  is more volatile                                                              
or less predictive than the percentage  of market value payout. As                                                              
long  as the  dividend  comes first,  that  residual amount  would                                                              
absorb the volatility.                                                                                                          
SENATOR STEVENS asked for a recap of the two formulas.                                                                          
MR. STORER  said the dividend  formula is  in the statutes  and is                                                              
based on realized  earnings. It is dividends,  interest, net gains                                                              
or losses and  the liquidation of securities.  Unrealized gains or                                                              
losses are not included in the formula.                                                                                         
SENAOTR  STEVENS asked  if  he was  correct  that  the percent  of                                                              
market value (POMV) is not an average,  it is an annual percent of                                                              
market payout.                                                                                                                  
MR. STORER said  they are proposing that it be  the average market                                                              
value of the fund  over the trailing five years and  not to exceed                                                              
five percent.                                                                                                                   
SENATOR  STEVENS asked  if they couldn't  eliminate volatility  in                                                              
one of  the two  by adjusting  the dividend  formula to  match the                                                              
five percent payout formula that is proposed.                                                                                   
MR. STORER said that is correct.  If both were a percent of market                                                              
value you  would reduce  the volatility of  the residual  and also                                                              
the volatility of the dividend payment.                                                                                         
SENATOR STEVENS said  the payments would be inflation  proofed and                                                              
they would be real numbers.                                                                                                     
MR. STORER agreed.                                                                                                              
SENATOR STEVENS asked if he's correct  that there is only a payout                                                              
if there  are earnings  over the  last five  years. If there  were                                                              
five  years  with negative  returns  there  would be  no  dividend                                                              
MR.  STORER  said that  possibility,  unlikely  as it  is,  exists                                                              
whether the law is changed or not.  However, the board feels it is                                                              
very important to  maintain a cushion in the earnings  reserve. At                                                              
the end of this  fiscal year they will have a  cushion of about $3                                                              
billion and if this is maintained,  it is the shock absorber for a                                                              
prolonged bear market.                                                                                                          
SENATOR STEVENS  asked him to explain  the cycle that  would occur                                                              
with prolonged periods of high inflation  and what would happen to                                                              
the payout. He also asked if the  fund was inflation proofed first                                                              
or is  it earnings  first and the  fund itself  bears the  risk of                                                              
inflationary times.                                                                                                             
MR. STORER said prolonged rising  inflation with financial markets                                                              
not keeping up with that growth such  as in the 1970's is close to                                                              
such a scenario.  In response to the second question  he said that                                                              
currently the  dividend formula precedes inflation.  Following the                                                              
statutes,  the  dividend would  be  paid  and then  the  inflation                                                              
proofing would occur  afterwards. What they are  proposing has the                                                              
effect of putting inflation proofing first.                                                                                     
SENATOR STEVENS  asked if  we would  have a  dividend if  rates of                                                              
return were lower than inflation such as in 1976-1981.                                                                          
MR. STORER  said if  the earnings  reserve has sufficient  cushion                                                              
then both  goals could be achieved.  He feels the  current cushion                                                              
can withstand all but an extreme market.                                                                                        
SENATOR PHILLIPS asked  if he said inflation proofing  would occur                                                              
before the dividend payout.                                                                                                     
MR.  STORER  said  this  is  his  opinion.  He  believes  that  by                                                              
memorializing  inflation  proofing in  the  Constitution it  would                                                              
have  the  effect  of putting  inflation  proofing  ahead  of  the                                                              
SENATOR PHILLIPS asked if it would  have some affect on the payout                                                              
of the dividend.                                                                                                                
MR. STORER said it would in an extreme scenario.                                                                                
SENATOR  PHILLIPS  thought most  people  wouldn't  care about  the                                                              
mechanics  but  would want  to  know  how  it would  affect  their                                                              
permanent  fund dividend  (PFD). With  that in  mind, he asked  if                                                              
there were polls to determine voter support.                                                                                    
MR.  STORER  said  they  don't  feel   it's  appropriate  for  the                                                              
Permanent Fund  Corporation to  conduct a  poll. Expanding  on the                                                              
effect on the dividend, he repeated  that by memorializing this in                                                              
the  Constitution it  would  have the  effect  of maintaining  the                                                              
purchasing power of the fund and  therefore increasing the size of                                                              
the  dividend  over  time.  Without  changing  the  formula,  they                                                              
suggest it would have a long-term  positive effect on the dividend                                                              
for this and subsequent generations.                                                                                            
CHAIRMAN  THERRIAULT said  he has  cautioned the  trustees not  to                                                              
conduct polls  or lobby  the general public.  To do so  would give                                                              
them   a  political   appearance  that   wouldn't  ultimately   be                                                              
SENATOR  PHILLIPS  asked  what  they would  say  if  a  legislator                                                              
offered an amendment  making it a constitutional  right to receive                                                              
the PFD.                                                                                                                        
MR. STORER said  they have outside opinion that states  if the PFD                                                              
were to be memorialized in the Constitution  it would put the tax-                                                              
exempt status of the permanent fund earnings in question.                                                                       
SENATOR STEVENS  asked if that isn't  why they have elected  to be                                                              
"sort of  half of  an endowment."  If you  start taking  principal                                                              
then  it  jeopardizes how  the  fund  is  managed, which  in  turn                                                              
jeopardizes the tax-exempt status.                                                                                              
MR. STORER said the key on the IRS  ruling is that the fund can be                                                              
used for government purposes.                                                                                                   
SENATOR THERRIAULT  asked if  all of the  earnings had to  be used                                                              
for  government  services.  Would  the  IRS look  favorably  on  a                                                              
guaranteed  dividend of something  less than  50 percent  with the                                                              
balance allocated to government services?  He supports the concept                                                              
of a guaranteed  dividend and believes  it might keep  more Mackie                                                              
Plans from being presented.                                                                                                     
MR. STORER  asked if he was  referring to a constitutional  change                                                              
or statutory change.                                                                                                            
CHAIRMAN  THERRIAULT said  he was  referring  to a  constitutional                                                              
MR. STORER doubted  that this would be view favorably,  but wanted                                                              
to defer to legal counsel.                                                                                                      
CHAIRMAN THERRIAULT  then asked  about wording  on page 1,  line 8                                                              
that  assures that  principal  couldn't be  used  for the  payout.                                                              
Legislative  Legal  Counsel  has  pointed out  that  the  proposed                                                              
wording in  (b) is in conflict with  that line. He wanted  to make                                                              
sure it is the board's view that  you would never want to get into                                                              
a  situation  where  the  five  percent   potentially  erodes  the                                                              
MR. STORER  said that  is correct;  their counsel  spoke with  the                                                              
legislative  counsel  about  interpretation.  Both the  board  and                                                              
their counsel  are willing  to discuss  any language changes  that                                                              
might be helpful.                                                                                                               
CHAIRMAN  THERRIAULT  said it's  important  that  the language  is                                                              
clear  and straightforward  before it  is put  before the  public.                                                              
This would  be particularly important  if questions  regarding the                                                              
sanctity of  the principal  are raised  and the proposed  language                                                              
leaves a gray area.                                                                                                             
He then  asked if the inflation  proofing doesn't  occur naturally                                                              
under the proposal since it's just retained earnings.                                                                           
MR. STORER  said that is correct.  If the payout is limited  to no                                                              
more than five  percent of that moving average, it  would have the                                                              
effect of inflation proofing.                                                                                                   
SENATOR  PHILLIPS  asked  what  their  reaction would  be  if  the                                                              
question that  is ultimately  put before the  voters asks  if they                                                              
favor a constitutionally guaranteed dividend.                                                                                   
MR.  STORER  replied the  potential  for  unintended  consequences                                                              
always  exists. The  board hasn't  addressed  this explicitly  but                                                              
they have  been consistent in  their concern about  the tax-exempt                                                              
status being at risk.                                                                                                           
CHAIRMAN  THERRIAULT told  Senator Phillips  that needs  exploring                                                              
because if the public has any suspicion  that voting yes seriously                                                              
jeopardizes the  tax-exempt status of  the fund it will  be turned                                                              
SENATOR STEVENS  asked if this  proposal could have  any long-term                                                              
impact on the rate of return the fund could earn in the future.                                                                 
MR STORER said it  would ensure that the fund could  be managed to                                                              
its  maximum  rate   of  return  without  taking   undo  risk.  If                                                              
uncertainty is  created whereby substantial amounts  of money from                                                              
the fund are required to fund whatever  purchase in excess of that                                                              
five percent, the  potential exists to manage  more conservatively                                                              
to meet  those higher  cash flow  needs. Currently  they manage  a                                                              
balance of meeting  the annual dividend flow versus  the long-term                                                              
objective.  However,  if  they  knew there  was  a  potential  for                                                              
substantial increases  in the fund draws, they would  have to take                                                              
less risk and manage  for a less high rate of  return because they                                                              
couldn't accept that interim volatility of the markets.                                                                         
SENATOR  STEVENS  said  this  proposal  gives  more  stability  in                                                              
managing long-term because demands could be forecast.                                                                           
MR. STORER said  the more certainty any fund manager  has in terms                                                              
of payout, the more effectively they are able to manage funds.                                                                  
SENATOR STEVENS said  it would be fair to say that  if a POMV were                                                              
implemented, the Permanent Fund could grow at a faster rate.                                                                    
MR. STORER  said it could  grow at an  equal or faster  rate given                                                              
the fact  that uncertainty has  been eliminated in  the management                                                              
of the fund.                                                                                                                    
CHAIRMAN  THERRIAULT  asked  for  the  current  breakdown  between                                                              
principal and earnings reserve.                                                                                                 
MR. STORER  said the  principal is currently  $21 billion  and the                                                              
earnings reserve is about $3.7 billion.                                                                                         
CHAIRMAN  THERRIAULT   said  with  a  vote  of  21   and  11,  the                                                              
legislature could appropriate the  entire earnings reserve so they                                                              
must manage accordingly. If the proposal  were adopted, they would                                                              
no longer  have that  ability, but the  earnings reserve  could be                                                              
managed more aggressively.                                                                                                      
MR. STORER said  that is correct. They are currently  managing for                                                              
a five  percent real  rate of  return because  they have  heard no                                                              
discussion to  indicate that the  fund would be used  for anything                                                              
more than the  dividend. As discussions accelerated  to using more                                                              
of the fund they  would have to incorporate that  information into                                                              
the  management  of  the  fund. If  it  exceeded  more  than  five                                                              
percent,   then  the   fund  would   have  to   be  managed   more                                                              
CHAIRMAN  THERRIAULT said  there is  the issue  that the  earnings                                                              
reserve is general fund dollars but  it has been put back into the                                                              
fund  to be  managed along  with  the principal.  However, if  the                                                              
proposed language  is voted  on and adopted,  it doesn't  say what                                                              
has  happened to  that earnings  reserve. Is  it now  part of  the                                                              
principal of the  fund or is it still available  for appropriation                                                              
by the legislature?  To appropriate those funds cannot  be part of                                                              
the  vote because  the  people don't  have  that  power; only  the                                                              
legislature has  the power to  make appropriations. There  is some                                                              
problem with the wording in how it deals with that.                                                                             
MR.  STORER said  it has  always  been their  assumption that  the                                                              
money is  in the general fund  unless otherwise stated by  law and                                                              
the law states there is an earnings  reserve. They have considered                                                              
that independent of the general fund  but that it could in fact be                                                              
appropriated  into the  general fund. Again,  it's important  that                                                              
the  language eliminates  any  ambiguities. At  no  time did  they                                                              
consider the earnings  reserve as a component of  the general fund                                                              
unless  the legislature  appropriated  it into  the general  fund.                                                              
It's  been  their  intent  to ensure  there  is  a  principal  and                                                              
earnings reserve  and that no more  than five percent of  the fund                                                              
earnings could be used as long as it doesn't invade principal.                                                                  
CHAIRMAN  THERRIAULT reminded  members  of the  court decision  on                                                              
constitutional  budget reserve. Their  ruling indicates  they will                                                              
look  at the  earnings reserve  as  general fund  dollars that  is                                                              
available for appropriation with a simple majority.                                                                             
He said  it's important to try  and understand the  potential view                                                              
of the IRS  because different people expect different  things from                                                              
the fund.  Some people  want inflation  proofing guaranteed,  some                                                              
want a  dividend guaranteed  to them,  and some  want a  potential                                                              
revenue stream  available to  the government.  Each group  will be                                                              
looking  for what is  important to  them and  will have  questions                                                              
that will need to be answered.                                                                                                  
RON LORENSON, outside  counsel to the Permanent  Fund Corporation,                                                              
said  he is  not  a  tax expert,  but  has  reviewed all  the  tax                                                              
opinions that have  been prepared for the Permanent  Fund over the                                                              
years and has  read a number of  court decisions on tax  issues in                                                              
various  situations.  It  is  his   conclusion  that  putting  the                                                              
dividend  guarantee  in the  Constitution  would  place a  private                                                              
interest in  a government  fund. This would  create a  bright line                                                              
and it  would make the  entire fund  susceptible to taxation.  The                                                              
risk of being  wrong is so significant that it  isn't worth taking                                                              
the chance.                                                                                                                     
SENATOR PHILLIPS said, "You're just  one lawyer's opinion, right?"                                                              
MR. LORENSON  said he's  one lawyer  who has spent  a lot  of time                                                              
reviewing these opinions, but he's not a court and not the IRS.                                                                 
SENATOR PHILLIPS  asked what  the odds are  if he were  "Jimmy the                                                              
MR. LORENSON said less than 10 percent.                                                                                         
SENATOR PHILLIPS said, "Okay, I like the odds."                                                                                 
CHAIRMAN THERRIAULT asked if he thought  the higher the percentage                                                              
of  the payout  that  is guaranteed  as  dividend  the bigger  the                                                              
RON LORENSON said  certainly the greater the percentage  of payout                                                              
the  stronger the  argument becomes  that there  is a  significant                                                              
private interest  rather than just  a private interest.  He hasn't                                                              
seen the question  whether it is significant or  not, just whether                                                              
a private  interest is  created. Certainly the  smaller it  is the                                                              
better  your argument  to keep  from  converting it  to a  taxable                                                              
fund, but the risk is still there.                                                                                              
CHAIRMAN THERRIAULT said the Constitution  currently guarantees no                                                              
dividend even  though that's  really all that  the money  has been                                                              
used for.                                                                                                                       
RON  LORENSON  said  as  long  as  it  is  in  the  power  of  the                                                              
Legislature  to decide  what happens  to  the money  each year  it                                                              
passes the IRS test. It is in the  Legislature's power now, but it                                                              
wouldn't be if it goes into the Constitution.                                                                                   
SENATOR STEVENS  remarked the  IRS would view  it as  an endowment                                                              
once a guarantee was made.                                                                                                      
RON  LORENSON  didn't  know  whether  they  draw  the  distinction                                                              
between an  endowment or some other  kind of fund, but  whether or                                                              
not it creates  a private interest  that is beyond the  control of                                                              
the Legislature to control or appropriate.                                                                                      
SENATOR STEVENS asked  for an explanation of the  repercussions if                                                              
the IRS viewed the fund as a taxable entity.                                                                                    
RON LORENSON said  it would be whatever the corporate  tax rate is                                                              
on the realized  income. It is his interpretation  that all of the                                                              
income becomes susceptible to taxation  once the legislature gives                                                              
up control of any portion of it.                                                                                                
CHAIRMAN THERRIAULT  said he has  examined some private  interests                                                              
but the Permanent  Fund is different because it can't  be sold, or                                                              
willed to someone.                                                                                                              
RON  LORENSON  didn't  think  that  was ever  the  basis  for  the                                                              
question of whether it was a private  interest or not. It has more                                                              
to do  with the fact  that the governmental  entity no  longer has                                                              
SENATOR PHILLIPS  said he's been  in the Legislature for  25 years                                                              
and he's learned to ask lawyers about odds.                                                                                     
SIDE B                                                                                                                          
4:20 p.m.                                                                                                                       
JAY  HOGAN  asked  committee  members  to read  the  letter  dated                                                              
February 21, 2002  that was in their packets. His  concern is that                                                              
the  Permanent Fund  was originally  created as  a repository  for                                                              
surplus  revenues. The  assumption of  many who  voted for  it was                                                              
that  it  would  be  available  at such  time  when  oil  and  gas                                                              
declined. That decline has come sooner than anticipated.                                                                        
The euphoria of  the late 1970's and early 1980's  is difficult to                                                              
understand today.  He referred to  the $900 million  appropriation                                                              
to the Permanent  Fund in 1980 and the $1.8  billion appropriation                                                              
the following year. No Legislature  has been able to consider that                                                              
kind of  appropriation  since and  it is unlikely  they will.  The                                                              
Legislature  of the  1970's  took  great care  to  draft a  highly                                                              
flexible   document  to   leave  all  the   decisions  to   future                                                              
Legislatures  by statute. The  original amendment establishes  the                                                              
fund, says  the investments  must be  earning investments  and the                                                              
income  may be  appropriated, as  the  circumstances require.  Now                                                              
that  the  Constitutional  Budget  Reserve is  running  low,  it's                                                              
important to do nothing precipitous.                                                                                            
Most states  west of  the Mississippi  have small permanent  funds                                                              
that come from original statehood  land grants. Unlike states that                                                              
made  land  selections by  single  sections,  Alaska was  able  to                                                              
select petroleum  rich North Slope  land by contiguous  townships,                                                              
which  gave  it tremendous  capabilities  and  opportunities.  For                                                              
comparative purposes,  Mr. Hogan included information  on both the                                                              
Texas and the  Wyoming permanent funds and that  information is in                                                              
the bill file.                                                                                                                  
4:30 p.m.                                                                                                                       
SENATOR PHILLIPS  said he is "the  only [elected] relic  left over                                                              
from the  70's" and he  reminded everyone  that in the  1980's the                                                              
Legislature took some  of the earnings reserve account  and put it                                                              
back into the  principal of the Permanent Fund.  "The $900 million                                                              
was symbolic  because  it paid for  past sins  of the  Legislature                                                              
prior and then we  doubled it again and then we  have, in the 80's                                                              
specially we  put in more monies  to support the  earnings reserve                                                              
account that  was left  over after  inflation proofing  and paying                                                              
the  dividend… And  one  thing I  want  to add  and  you guys  can                                                              
correct me  from the Permanent  Fund. Last  year's PFD, if  we did                                                              
not do  that, your PFD  would have been  about $1,200  $1,300, two                                                              
thirds  of  what  it  is today  because  of  the  actions  of  the                                                              
legislature taken in the 80"s and  in the 70's to do this. So lots                                                              
of cases we don't get the credit  for it because we get blamed but                                                              
the public  doesn't  know that if  we didn't  take these  actions,                                                              
their check  would have  been about two  thirds the amount  versus                                                              
what is today, around $1,850."                                                                                                  
MR.  HOGAN said  those  numbers  are listed  on  page  two of  his                                                              
letter. The dedicated  revenues are the 25 percent  set out in the                                                              
constitution. Each  source has contributed about one  third to the                                                              
value of the permanent fund today.                                                                                              
CHAIRMAN  THERRIAULT asked  Mr. Storer  what would  happen to  the                                                              
balance  of the money  if the  Legislature didn't  use the  entire                                                              
payout in any one year.                                                                                                         
MR.  STORER  told him  that  money  could  not  be banked  at  the                                                              
Permanent Fund; it would have to  be banked elsewhere for it to be                                                              
available  at a  later time.  Monies  allowed for  payout but  not                                                              
appropriated in  one year  would become a  part of the  fund value                                                              
and could not be appropriated in a subsequent year.                                                                             
There were no additional questions.                                                                                             
CHAIRMAN THERRIAULT said the bill would be held in committee                                                                    
while they worked to resolve some of the issues that were raised.                                                               

Document Name Date/Time Subjects