HB 11-PFD CONTRIBUTIONS TO GENERAL FUND AND PFD  4:20:06 PM CHAIR CARRICK announced that the first order of business would be HOUSE BILL NO. 11, "An Act relating to contributions and donations from permanent fund dividends." 4:20:29 PM CHAIR CARRICK opened public testimony on HB 11. After ascertaining there was no one who wished to testify, she closed public testimony. 4:21:02 PM CHAIR CARRICK moved to adopt Amendment 1 to HB 11, labeled 34- LS0182\A.1, Nauman, 5/14/25, which read as follows: Page 3, line 19: Delete "10 percent of the amount of the dividend" Insert "$25 dollars" Page 3, line 20: Delete "10 percent" Insert "$25 dollars" CHAIR CARRICK stated that she would object to Amendment 1 for the purpose of speaking to the amendment. She said that it would simply change the amount that someone can donate their permanent fund dividend (PFD) from an increment of 10 percent to increments of twenty-five dollars. She said that this would align with the current structure of the "click, pick, give" program. She said that it would also align with how individuals are currently able to donate to the education raffle. She said that by structuring donations this way, it would avoid confusion for those applying for the dividend who may not understand the 10 percent structure. She said that she offered this amendment to avoid this type of confusion. 4:22:13 PM REPRESENTATIVE STORY asked what the bill sponsor thought about the proposed amendment. 4:22:25 PM RILEY NYE, Staff, Representative Mike Prax, Alaska State Legislature, on behalf of Representative Prax, prime sponsor of HB 11, characterized Amendment 1 as a "friendly" amendment. He said that the amendment would not impact bill implementation or intent. 4:22:49 PM REPRESENTATIVE HOLLAND asked Mr. Nye if somebody wanted to give away the remaining part of the PFD, and it was not captured by the $25 breakdown, whether there had been any discussions for how to clear the remaining dividend. CHAIR CARRICK said that she has thought about this scenario and discussed it. She discussed anecdotal evidence regarding how most people manage their PFD donations. 4:24:47 PM CHAIR CARRICK removed her objection to Amendment 1. There being no further objection, Amendment 1 was adopted. 4:25:05 PM REPRESENTATIVE HOLLAND moved to adopt Amendment 2 to HB 11, labeled 34-LS0182\A.2, Nauman, 5/14/25, which read as follows: Page 1, line 1, following "dividends": Insert "; and relating to disclosures included  with an individual permanent fund dividend" Page 1, following line 2: Insert a new bill section to read:  "* Section 1. AS 43.23.028(a) is amended to read: (a) By October 1 of each year, the commissioner shall give public notice of the value of each permanent fund dividend for that year and notice of the information required to be disclosed under (3) of this subsection. In addition, the stub attached to each individual dividend disbursement advice must (1) disclose the amount of each dividend attributable to income earned by the permanent fund from deposits to that fund required under art. IX, sec. 15, Constitution of the State of Alaska; (2) disclose the amount of each dividend attributable to income earned by the permanent fund from appropriations to that fund and from amounts added to that fund to offset the effects of inflation; (3) disclose the amount by which each dividend has been reduced due to each appropriation from the dividend fund, including amounts to pay the costs of administering the dividend program and the hold harmless provisions of AS 43.23.240; (4) include a statement that an individual is not eligible for a dividend when (A) during the qualifying year, the individual was convicted of a felony; (B) during all or part of the qualifying year, the individual was incarcerated as a result of the conviction of a (i) felony; or (ii) misdemeanor if the individual has been convicted of a prior felony or two or more prior misdemeanors; (5) include a statement that the legislative purpose for making individuals listed under (4) of this subsection ineligible is to (A) provide funds for services for and payments to crime victims and operating costs of the Violent Crimes Compensation Board; (B) provide funds to pay restitution owed to crime victims; (C) provide funds for grants to nonprofit organizations for services for crime victims and for mental health services and substance abuse treatment for offenders; (D) provide funds for the office of victims' rights; (E) provide funds to the Council on Domestic Violence and Sexual Assault for grants for the operation of domestic violence and sexual assault programs; and (F) obtain reimbursement for some of the costs imposed on the Department of Corrections related to incarceration or probation of those individuals; (6) disclose the total amount that would have been paid during the previous fiscal year to individuals who were ineligible to receive dividends under AS 43.23.005(d) if they had been eligible; (7) disclose the total amount transferred or appropriated for the current fiscal year under AS 43.23.048 for each of the accounts, funds, and agencies listed in AS 43.23.048;  (8) include a statement that the total  amount of the dividend may be subject to federal  individual income tax, regardless of donations or  contributions made under AS 43.23.130, 43.23.135, or  43.23.230." Page 1, line 3: Delete "Section 1" Insert "Sec. 2" Renumber the following bill section accordingly. CHAIR CARRICK objected for the purpose of discussion. REPRESENTATIVE HOLLAND explained that Amendment 2 would be a disclosure that would be added to the dividend process. He said that it simply would provide a disclosure that the total amount of the dividend may be subject to Federal Income Tax, regardless of any donations or contributions to charitable groups. He talked about the issue of surprise Federal Income Tax for individuals who donated their PFD. He discussed confusion associated with energy rebates and new taxable income and related it to the proposed amendment. 4:26:43 PM REPRESENTATIVE STORY asked Mr. Nye what the bill sponsor thought of the amendment. MR. NYE responded that given discussions with the bill sponsor, Representative Prax, he was happy to defer to the will of the committee for this amendment. He said that this would likely not cause any major fiscal implications but said Ms. Wojtusik may be able to speak to the mechanics about implementing this amendment. 4:27:28 PM CHAIR CARRICK asked Ms. Wojtusik whether Amendment 2 would bear a cost to administer. 4:27:38 PM GENEVIEVE WOJTUSIK, Director, Permanent Fund Dividend Division, Department of Revenue (DOR), responded that she did not believe that there would be any additional cost other than what was already associated with the bill. She said that there is already an indeterminate fiscal note with the required programming. She cautioned that the PFD division does not do any administration with tax and PFD division usually defers to the tax division. She said that having a statement like this would be a new piece to the PFD application. 4:28:32 PM REPRESENTATIVE STORY commented that it would be helpful for the public to be reminded that there are federal tax deductions on the PFD. She said she was in favor of Amendment 2. 4:28:55 PM REPRESENTATIVE HOLLAND explained that Amendment 2 uses the word "may" and noted that it would not be "tax advice." He said the wording was done this way to avoid confusion. 4:29:30 PM CHAIR CARRICK removed her objection. There being no further objection, Amendment 2 was adopted. 4:29:49 PM REPRESENTATIVE HOLLAND moved to adopt Amendment 3 to HB 11, labeled 34-LS0182\A.3, Nauman, 5/14/25, which read as follows: Page 1, line 1, following "Act": Insert "relating to the calculation of the  permanent fund dividend; relating to eligibility forms  and applications for the permanent fund dividend;  relating to appropriations from the dividend fund to  the general fund; and" Page 1, following line 2: Insert new bill sections to read:  "* Section 1. AS 43.23.005(a) is amended to read: (a) An individual is eligible to receive one permanent fund dividend each year in an amount to be determined under AS 43.23.025 if the individual (1) submits the eligibility form and  application for the dividend [APPLIES] to the department; (2) is a state resident on the date the  individual submits the eligibility form and [OF] application; (3) was a state resident during the entire qualifying year; (4) has been physically present in the state for at least 72 consecutive hours at some time during the prior two years before the current dividend year; (5) is (A) a citizen of the United States; (B) an alien lawfully admitted for permanent residence in the United States; (C) an alien with refugee status under federal law; or (D) an alien that has been granted asylum under federal law; (6) was, at all times during the qualifying year, physically present in the state or, if absent, was absent only as allowed in AS 43.23.008; and (7) was in compliance during the qualifying year with the military selective service registration requirements imposed under 50 U.S.C. App. 453 (Military Selective Service Act), if those requirements were applicable to the individual, or has come into compliance after being notified of the lack of compliance.  * Sec. 2. AS 43.23.005(c) is amended to read: (c) A parent, guardian, or other authorized representative may apply for and claim a permanent fund dividend on behalf of an unemancipated minor or on behalf of a disabled or an incompetent individual who is eligible to receive a payment under this section. Notwithstanding (a)(2) - (4) of this section, a minor is eligible for a dividend if, during the two calendar years immediately preceding the current dividend year, the minor was born to or adopted by an individual who is eligible for a dividend for the current dividend year.  * Sec. 3. AS 43.23.005(h) is amended to read: (h) If an individual who applied for and would otherwise have been eligible for a permanent fund dividend dies [AFTER APPLYING FOR THE DIVIDEND BUT] before the dividend is paid, the department shall pay the dividend to a personal representative of the estate or to a successor claiming personal property under AS 13.16.680. If an individual who would otherwise have been eligible for a dividend and who did not apply for the dividend dies during the application period, a personal representative of the estate or a successor claiming personal property under AS 13.16.680 may apply for and receive the dividend. If an individual who received a dividend for the year immediately before the qualifying year and who would otherwise have been eligible for a dividend dies during the qualifying year after having been a state resident for at least 180 days immediately before the date of death, notwithstanding (a)(1) - (3) and (a)(6) of this section, a personal representative of the estate or a successor claiming personal property under AS 13.16.680 may apply for and receive the dividend. Notwithstanding AS 43.23.011, an application for a dividend may be filed by the personal representative or the successor under this subsection at any time before the end of the application period for the next dividend year.  * Sec. 4. AS 43.23.011(a) is amended to read: (a) An eligibility form and application for a permanent fund dividend shall be filed during the period that begins January 1 and ends March 31 of that dividend year.  * Sec. 5. AS 43.23.015(b) is amended to read: (b) The department shall prescribe and furnish an eligibility [APPLICATION] form for an individual claiming a permanent fund dividend. The eligibility  form [APPLICATION] must include (1) notice of the penalties provided for under AS 43.23.270; (2) a statement of eligibility and a certification of residency; (3) the means for an individual [APPLICANT] eligible to vote under AS 15.05, or a person authorized to act on behalf of the applicant, to furnish information required by AS 15.07.060(a)(1) - (4) and (7) - (9), and an attestation that the [SUCH] information is true.  * Sec. 6. AS 43.23.015(c) is amended to read: (c) Except as provided in (d) of this section or as may be provided by regulations adopted by the department, an individual must personally sign the eligibility form [APPLICATION] for permanent fund dividends, including the certification of residency required under (b) of this section.  * Sec. 7. AS 43.23.015(d) is amended to read: (d) The eligibility form, application, and certification of residency of an unemancipated individual under 18 years of age or of a disabled or an incompetent individual must be signed by the individual's parent, legal guardian, or other authorized representative. An individual may complete, sign, and file an eligibility form and application on behalf of a member of the armed forces of the United States who is serving on active duty outside of the United States if the individual has a power of attorney from the member of the armed forces that authorizes, in specific or general terms, the individual to file that eligibility form and application.  * Sec. 8. AS 43.23.015(j) is amended to read: (j) The eligibility [APPLICATION] form for claiming a permanent fund dividend must include a place for the individual [APPLICANT] to voluntarily indicate that the individual [APPLICANT] is a veteran, the branch of service, including the Alaska Territorial Guard, and the dates of service. Notwithstanding AS 43.23.110, the department shall release information provided under this subsection to the Department of Military and Veterans' Affairs and may not otherwise release the information. The Department of Military and Veterans' Affairs may only release the information to congressionally chartered veterans service organizations in the state. The eligibility [APPLICATION] form must contain notice that providing the information under this subsection is voluntary, that the information will be released as provided in this subsection, and that the veterans service organizations are not required to keep it confidential.  * Sec. 9. AS 43.23 is amended by adding a new section to read: Sec. 43.23.018. Eligibility form; application. The department shall prepare an electronic Alaska permanent fund eligibility form separate from the dividend application. The eligibility form must allow an individual to determine the individual's eligibility for a dividend before applying for the dividend payment. After the individual submits the eligibility form, and before the individual applies for the dividend, the department shall notify the individual that a dividend not claimed by an eligible individual is deposited into the general fund, subject to appropriation.  * Sec. 10. AS 43.23 is amended by adding a new section to read:  Sec. 43.23.023. Foregone dividends. (a) Each year, the department shall determine the amount of foregone dividends. The amount of foregone dividends is the number of individuals, estates, and successors that submitted an eligibility form and are eligible to receive, but do not apply for, the permanent fund dividend, multiplied by the amount of the dividend for that year, as calculated under AS 43.23.025(a).  (b) Each fiscal year, the legislature may appropriate from the dividend fund to the general fund an amount equal to the amount of foregone dividends determined under (a) of this section.  * Sec. 11. AS 43.23.025(a) is amended to read: (a) By October 1 of each year, the commissioner shall determine the value of each permanent fund dividend for that year by (1) determining the total amount available for dividend payments, which equals (A) the amount of income of the Alaska permanent fund transferred to the dividend fund under AS 37.13.145(b) during the current year; (B) plus the unexpended and unobligated balances of prior fiscal year appropriations that lapse into the dividend fund under AS 43.23.045(d); (C) less the amount necessary to pay prior year dividends from the dividend fund in the current year under AS 43.23.005(h), 43.23.021, and 43.23.055(3) and (7); (D) less the amount necessary to pay dividends from the dividend fund due to eligible applicants who, as determined by the department, filed for a previous year's dividend by the filing deadline but who were not included in a previous year's dividend computation; (E) less appropriations from the dividend fund during the current year, including amounts to pay costs of administering the dividend program and the hold harmless provisions of AS 43.23.240; (2) determining the number of individuals who have applied for and are eligible to receive a dividend payment for the current year and the number of estates and successors that have applied for and  are eligible to receive a dividend payment for the current year under AS 43.23.005(h); and (3) dividing the amount determined under (1) of this subsection by the amount determined under (2) of this subsection." Page 1, line 3: Delete "Section 1" Insert "Sec. 12" Renumber the following bill sections accordingly. Page 3, following line 12: Insert a new bill section to read:  "* Sec. 13. AS 43.23.110 is amended to read: Sec. 43.23.110. Applicant information  confidential. (a) Except as provided in (c) of this section, information provided by an individual on a [EACH] permanent fund dividend eligibility form or application, except the individual's [APPLICANT'S] name, is confidential. The department may only release information that is confidential under this section  (1) to a local, state, or federal government agency; (2) in compliance with a court order; (3) to the individual who or agency that files an eligibility form or application on behalf of another; (4) to a banking institution to verify the direct deposit of a permanent fund dividend or correct an error in that deposit; (5) as directed to do so by the individual [APPLICANT]; (6) to a contractor who has a contract with a person entitled to obtain the information under (1) - (5) of this section to receive, store, or manage the information on that person's behalf; a contractor receiving data under this paragraph may only use the data as directed by and for the purposes of the person entitled to obtain the information; (7) to the division of elections as required by AS 43.23.101. (b) Notwithstanding (a) of this section, the department may release the names and addresses of individuals who have filed an eligibility form or  application for a permanent fund dividend [APPLICANTS] to a legislator of this state and to the legislator's office staff for official legislative purposes. (c) Information submitted on a permanent fund dividend eligibility form [APPLICATION] that is used for the purpose of registering an individual [APPLICANT] to vote under AS 43.23.101 shall be kept confidential by the division of elections as provided in AS 15.07.195." Renumber the following bill sections accordingly. Page 4, following line 4: Insert new bill sections to read:  "* Sec. 15. AS 43.23.200(a) is amended to read: (a) Except as provided in (b) of this section, a person who has applied for and is eligible to receive a permanent fund dividend may not assign the right to the dividend. An attempted assignment of the right to receive a permanent fund dividend is against public policy and is void.  * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICABILITY. This Act applies to the permanent fund dividend 2024 qualifying year for the 2025 permanent fund dividend." CHAIR CARRICK objected for the purpose of discussion. REPRESENTATIVE HOLLAND explained that Amendment 3 was a follow- up to the discussion from prior hearings. He talked about the option for somebody to opt out of the PFD and roll it back into the state general fund (GF). He explained that there would be two potential issues to the idea. One was that currently, if someone chooses not to take the PFD, their money will go into the general PFD pool to increase other applicant dividends. He said the way the application process is structured, if someone were to somehow designate it to go to the GF, it would still be considered a "taxable" personal decision. He commented on previous discussions about how to avoid taxable debt. He said simply put, Amendment 3 would split up the process of PFD eligibility and PFD application. He said that by not filling out the application, the Alaska Permanent Fund Corporation (APFC) would be able to "sweep up" the eligible dividends that were not received by anyone. He said that it is a plausible pathway to avoid federal tax stipulations but said that this may not be easy to implement. CHAIR CARRICK said that the PFD Division could speak to Amendment 3. 4:33:49 PM MS. WOJTUSIK explained that the PFD Division has only begun looking at Amendment 3 and would require some time to review it. She said the current bill has an indeterminate fiscal note for programming costs and Amendment 3 might need an additional fiscal note for staffing. She said that as Representative Holland alluded to, Amendment 3 would split the process up and this may require some additional "manpower." She said the division would need more time to evaluate and report on any impact to the bill's fiscal note. 4:34:52 PM MR. NYE said that he has looked extensively into this issue and while he found that the proposed method may technically work, it is not the solution that Representative Prax was looking for. He said that this would provide Alaskans with an "all or nothing" approach to donating to the GF and the intent is to find a solution to the federal income tax that would allow for donations in increments. He said that from what he found, such a solution does not seem to exist. He said the bill sponsor intended to "veer away" from this path. 4:35:39 PM REPRESENTATIVE HIMSCHOOT asked why an Alaskan would bother to establish eligibility if they did not want to receive a dividend. She said that she was unsure how many people would do this. 4:36:16 PM REPRESENTATIVE HOLLAND responded that he knew many individuals that would like to use the dividend to pay for things. He talked about the legal ways for someone to give the dividend back. He said someone would have to be motivated to help pay for a particular state or all state services. He acknowledged that there was uncertainty to the mechanics of this and it may not be aligned with the bill sponsor's intent. REPRESENTATIVE HOLLAND [moved to withdraw] Amendment 3, noting appreciation for its consideration but acknowledged that it would not address "what the sponsor is wanting to do." CHAIR CARRICK noted, [there being no objection], Amendment 3 was withdrawn. She remarked that a lot of Alaskans may be unaware that the dividend is subject to federal tax, including the donations. She said that this is a worthwhile issue to look at. CHAIR CARRICK ascertained there was no further discussion on HB 11. 4:38:22 PM REPRESENTATIVE STORY moved to report HB 11, as amended, out of committee with individual recommendations and the accompanying fiscal notes and to authorize Legislative Legal Services to make any necessary technical and conforming changes. There being no objection, CSHB 11 (STA) was reported out of the House State Affairs Standing Committee.