Legislature(2021 - 2022)BUTROVICH 205

03/02/2021 03:30 PM Senate STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Moved SJR 1 Out of Committee
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
                   SB 84-LAND VOUCHERS; PFDS                                                                                
4:11:07 PM                                                                                                                    
CHAIR   SHOWER  reconvened   the   meeting   and  announced   the                                                               
consideration  of SENATE  BILL NO.  84  "An Act  relating to  the                                                               
veterans'  land   purchase  discount;  establishing   state  land                                                               
vouchers; relating  to the permanent  fund dividend;  relating to                                                               
the  duties  of  the  Department   of  Revenue;  authorizing  the                                                               
Department of  Natural Resources  to accept state  land vouchers;                                                               
relating to eligibility for public  assistance; and providing for                                                               
an effective date."                                                                                                             
He listed the individuals available to answer questions.                                                                        
4:11:38 PM                                                                                                                    
MIKE BARNHILL, Deputy Commissioner,  Department of Revenue (DOR),                                                               
Juneau, Alaska, stated  that SB 84 creates a  program through the                                                               
Permanent Fund Dividend  (PFD) that allows applicants  to elect a                                                               
PFD  land voucher  in lieu  of a  cash dividend.  The face  value                                                               
would  be two  times the  statutory formula  of the  dividend. He                                                               
said this  is an opportunity  for Alaskans to use  their vouchers                                                               
to purchase state  land from the Department  of Natural Resources                                                               
(DNR).  He  described the  precedent  of  land vouchers  in  this                                                               
country  that started  after the  American  Revolutionary War  to                                                               
compensate veterans. He  said the governor's objective  is to get                                                               
state land into the hands of Alaskans.                                                                                          
4:13:50 PM                                                                                                                    
MR. BARNHILL  summarized the following sectional  analysis for SB
     Section 1:  Amends AS 38.05.940(c)  to allow  a veteran                                                                  
     to  apply one  or  more dividend  land vouchers  issued                                                                    
     under  AS   43.23.018  to  the  one-time   purchase  of                                                                    
     discounted  state  land  under AS  38.05.940(c)  ("Land                                                                    
     purchase price discount for veterans.")                                                                                    
     Section  2: Amends  AS 38.05.940(d)  to limit  a person                                                                  
     using a  dividend land voucher  to purchase  land under                                                                    
     AS 43.23.018 to purchasing  surface rights only, and to                                                                    
     prohibit  a  person  from   applying  a  dividend  land                                                                    
     voucher to  costs ineligible for  a discount  under the                                                                    
     Section  3:  Amends  AS  38.95   by  adding  three  new                                                                  
     Proposed  AS   38.95.350  directs  the   Department  of                                                                    
     Natural Resources (DNR),  on or after Jan.  1, 2022, to                                                                    
     accept  one or  more  dividend land  vouchers at  their                                                                    
     face  value  for  purchase of  state  land  under  land                                                                    
     contracts.  It prohibits  DNR  from accepting  vouchers                                                                    
     for  payment of  rents or  fees or  land purchases.   A                                                                    
     voucher  will be  exhausted after  one  use whether  it                                                                    
     covered  the   full  land  sale   price  or   not,  and                                                                    
     applicants are  entitled to no  refund or  other credit                                                                    
     for any portion of  the voucher's value remaining after                                                                    
     such a sale.                                                                                                               
     Mental health  trust land is  excluded from  state land                                                                    
     that can be purchased with a voucher.                                                                                      
     Proposed AS  38.95.360, requires  DNR to report  to the                                                                    
     governor  before September  1 of  each year  the number                                                                    
     and total  value of dividend land  vouchers it accepted                                                                    
     for  payment in  the previous  fiscal year.  The report                                                                    
     shall  include  a  recommendation  for  any  additional                                                                    
     appropriation  for the  Land  Disposal  Income Fund  to                                                                    
     account for decreases to the  fund caused by acceptance                                                                    
     of  vouchers  to pay  for  state  land. Loss  of  these                                                                    
     funds, if not replaced  by another revenue source, will                                                                    
     result in  significant challenges to  maintaining DNR's                                                                    
     land sale programs.                                                                                                        
     Proposed AS 38.95.400 defines "department" to be DNR.                                                                      
     Section 4: Adds a new section, AS 43.23.018.                                                                             
     Subsection (a) directs DOR to  allow a person using the                                                                    
     electronic application for a  Permanent Fund dividend                                                                      
     and not  a person or  public agency applying  on behalf                                                                    
     of another individual,  or an assignee of  the right to                                                                    
     receive a  dividendto  make an irrevocable  election to                                                                    
     receive  a single  dividend land  voucher instead  of a                                                                    
     monetary dividend.  It directs DOR, if  unable during a                                                                    
     dividend  year to  determine  whether  an applicant  is                                                                    
     eligible   to  receive   a  dividend,   to  void   that                                                                    
     applicant's  election   to  receive  a   dividend  land                                                                    
     voucher;  if  later  determined  to  be  eligible,  the                                                                    
     applicant  will  be  eligible  to  receive  a  monetary                                                                    
     dividend, but not  to elect to receive  a dividend land                                                                    
     Subsection  (b)  sets  the value  of  a  dividend  land                                                                    
     voucher at  twice the value  of a monetary  dividend as                                                                    
     calculated under  AS 43.23.025 if 50  percent of income                                                                    
     available  distribution was  deposited into  the Fund's                                                                    
     dividend fund under AS 37.13.145(b).                                                                                       
     Subsection  (c)  limits the  use  of  vouchers only  to                                                                    
     purchase of land under AS 38.95.350.                                                                                       
     Subsection  (d)  provides  that vouchers  issued  under                                                                    
     this section do not expire.                                                                                                
     Subsection  (e)  makes  vouchers  transferable  to  any                                                                    
     person.  The Department of  Revenue is required to keep                                                                    
     records of  voucher transfers.   An action  against the                                                                    
     state related  to transfer of  a state land  voucher is                                                                    
     Subsection (f)  provides that  issuing a  land dividend                                                                    
     voucher creates no obligation on  DNR to make any state                                                                    
     land  available for  sale  or to  enter  any land  sale                                                                    
     contract, nor  does it  confer eligibility  to purchase                                                                    
     state land.                                                                                                                
     Subsection  (g) provides  that the  value of  a voucher                                                                    
     subject to  garnishment is  set under  AS 43.23.140(e).                                                                    
     The  Department of  Revenue shall  issue land  vouchers                                                                    
     for the value remaining after such collection.                                                                             
     Section  5:  Amends  AS  43.23.045   by  adding  a  new                                                                  
     subsection (f),  directing that the cash  from foregone                                                                    
     PFDs  resulting from  individual  elections to  receive                                                                    
     state land will, after  garnishment under AS 43.23.140,                                                                    
     lapse to the General Fund.                                                                                                 
     Section 6:  Amends AS 43.23.055 to  conform the Revenue                                                                  
     commissioner's  duties to  include  issuing state  land                                                                    
     vouchers  under   AS  43.23.180;  directs   Revenue  to                                                                    
     develop  regulations to  establish procedures  and time                                                                    
     limits for  voucher issuance  and use,  as well  as for                                                                    
     replacing  a lost,  stolen or  destroyed land  voucher;                                                                    
     and directs Revenue to report  annually to DNR both the                                                                    
     number   of  individuals   electing  to   receive  land                                                                    
     vouchers instead of monetary  dividends, and the number                                                                    
     and value of such vouchers issued.                                                                                         
     Sections  7-8:  Amends AS  43.23.140  by  adding a  new                                                                  
     subsection  (e) to  specify that  the value  of a  land                                                                    
     voucher  may  only  be  garnished   up  to  the  amount                                                                    
     available for garnishment from a monetary dividend.                                                                        
     Section  9:  Adds  a new  subsection  AS  43.23.240(d),                                                                  
     directing the Department of  Health and Social Services                                                                    
     to consider  a land voucher  as income or  resources of                                                                    
     an   applicant,   in   calculating   that   applicant's                                                                    
     eligibility   for   public   assistance   programs   it                                                                    
     administers,  and  to   notify  all  public  assistance                                                                    
     recipients of the effects of  receiving a dividend land                                                                    
     Section 10:  Adds a new subsection  AS 43.23.250(b), to                                                                  
     require financial needs-based  programs administered by                                                                    
     the  state   or  by  a   state  instrumentality   or  a                                                                    
     municipality to  consider the value of  a dividend land                                                                    
     voucher held by an applicant  as income or resources in                                                                    
     determining  whether the  person  is  eligible for  the                                                                    
     Section 11:   Adds  a new  subsection to  AS 43.23.270.                                                                  
     New  subsection  (f)  applies the  same  penalties  for                                                                    
     violations  of state  law  relating  to Permanent  Fund                                                                    
     dividend eligibility and  application, to dividend land                                                                    
     vouchers eligibility and application.                                                                                      
     Section 12:  Establishes as  the bill's  effective date                                                                  
     as January 1, 2022.                                                                                                        
MR. BARNHILL deferred to Mr. Parsons to offer the Department of                                                                 
Natural Resources' (DNR) perspective of the bill.                                                                               
4:17:56 PM                                                                                                                    
MARTY  PARSONS, Director,  Division of  Mining, Land,  and Water,                                                               
Department   of  Natural   Resources  (DNR)   Anchorage,  Alaska,                                                               
described SB 84 as a  means to fulfill the constitutional mandate                                                               
to help  develop the land and  resources of Alaska in  the public                                                               
interest.  He  said he  views  the  voucher  as  a win  for  both                                                               
individuals and the  state treasury. It is an  opportunity to get                                                               
more land into the hands of Alaskans.                                                                                           
CHAIR  SHOWER asked  how many  acres of  state land  are eligible                                                               
under the state land sale program and where it is located.                                                                      
4:20:59 PM                                                                                                                    
MR. PARSONS stated that just  over 2 million acres are classified                                                               
as "settlement" and  could be included in the  land sale program.                                                               
Much of  it is  remote, but  there is  some near  Tok, Glenallen,                                                               
Wasilla, and  Fairbanks. He noted  the lack of  infrastructure in                                                               
the state  and said the department  has tried to ensure  that the                                                               
land it offers has buildable sites.                                                                                             
CHAIR SHOWER asked  him to talk about the size  of the properties                                                               
relative to the size of the PFD.                                                                                                
MR. PARSONS  said five-acre  parcels are  about the  average size                                                               
and the cost is about $3,000  per acre or $15,000 for a five-acre                                                               
parcel. He also noted the  state's generous financing program for                                                               
state land sales.                                                                                                               
CHAIR SHOWER asked if unrelated  individuals could pool resources                                                               
to purchase a piece of land.                                                                                                    
MR. PARSONS said he doesn't  believe there are limitations but he                                                               
would defer to Mr. Barnhill.                                                                                                    
4:26:40 PM                                                                                                                    
MR.  BARNHILL clarified  that the  legislation  does not  prevent                                                               
individuals from pooling their land vouchers.                                                                                   
CHAIR SHOWER asked how the land is titled.                                                                                      
MR.  BARNHILL said  he assumes  the title  would be  the same  as                                                               
would  be granted  in any  other state  land sale,  but he  would                                                               
defer to Mr. Parsons.                                                                                                           
MR.  PARSONS confirmed  that the  title would  be similar  to any                                                               
other land purchased from the state.                                                                                            
SENATOR HOLLAND asked how often  the previous PFD voucher program                                                               
was used.                                                                                                                       
MR.  BARNHILL replied  that legislation  was  never enacted  into                                                               
SENATOR HOLLAND asked if the  money stays in the Earnings Reserve                                                               
Account (ERA)  or transferred "to  some portion of the  state for                                                               
the property."                                                                                                                  
4:28:24 PM                                                                                                                    
MR. BARNHILL referred to the hypothetical  cash flow on page 4 of                                                               
the PowerPoint to answer the  question. He noted that he prepared                                                               
the hypothetical  at the  committee's request  last year  when it                                                               
considered   similar   legislation.   He   clarified   that   the                                                               
hypothetical  was  not a  projection;  it  showed how  the  money                                                               
The example  shows a statutory  PFD of $2,300 per  person, actual                                                               
appropriation of  $1,000 per person,  and the land  voucher under                                                               
this bill  of $4,600 per  person. Of the 640,000  PFD applicants,                                                               
600,000  elect  the  cash  PFD  and 40,000  elect  the  PFD  land                                                               
The total  amount appropriated from  the ERA to the  general fund                                                               
(GF) to the PFD fund is  640,000 times $1,000 or $640 million. Of                                                               
this, cash PFDs total $600 million,  $40 million lapses to the GF                                                               
because of  land voucher  elections (40,000  times $1,000  or $40                                                               
million), and the  face value of the land vouchers  is $4,600 per                                                               
person times 40,000 participants or $184 million.                                                                               
The  hypothetical assumes  $300 million  in land  sales to  which                                                               
$184 million in land sales  is applied, leaving $116 million that                                                               
the purchasers  would need to  supply from personal  resources to                                                               
complete the $300 million purchase.                                                                                             
The result of  this hypothetical shows $116 million  in cash from                                                               
the purchases  plus $40  million in unelected  cash PFDs  or $156                                                               
million going to the general fund.                                                                                              
MR. BARNHILL displayed a mock-up  of the land voucher to conclude                                                               
the presentation.                                                                                                               
CHAIR SHOWER found  no questions and asked if he  had any closing                                                               
MR.  BARNHILL reiterated  that the  purpose of  SB 83  is to  get                                                               
state land  into the hands  of Alaskans  and move residents  to a                                                               
higher degree of self-sufficiency.                                                                                              
CHAIR SHOWER stated support for  the concept then highlighted the                                                               
cost barrier to access the land.                                                                                                
4:33:10 PM                                                                                                                    
CHAIR SHOWER held SB 84 in committee.                                                                                           

Document Name Date/Time Subjects
SB 84 Dept of Revenue PPT.pdf SSTA 3/2/2021 3:30:00 PM
SB 84
SB 84 Sectional Analysis.pdf SSTA 3/2/2021 3:30:00 PM
SB 84
SB 84 Bill.PDF SSTA 3/2/2021 3:30:00 PM
SB 84
SB 83 Sectional Analysis version A.pdf SSTA 3/2/2021 3:30:00 PM
SB 83
SB 83 Sponsor Statement version A.pdf SSTA 3/2/2021 3:30:00 PM
SB 83
SB 83 A.PDF SSTA 3/2/2021 3:30:00 PM
SB 83
SB 83-1-2-021221-GOV-N.PDF SSTA 3/2/2021 3:30:00 PM
SB 83