HB 245-DIR DEPOSIT PFD IN INVESTMENT ACCT  3:05:13 PM CHAIR SHAW announced that the first order of business would be HOUSE BILL NO. 245, "An Act relating to depositing permanent fund dividends into investment accounts; and providing for an effective date." 3:05:30 PM REPRESENTATIVE DAN SADDLER, Alaska State Legislature, as prime sponsor, paraphrased his sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: House Bill 245 would give Alaskans the option to simply and easily direct all or part of their annual Permanent Fund dividends into investment accounts, and make it easier for them to build their personal financial security. Much as the popular "Pick. Click. Give." program lets Alaskans check a box on their dividend application to direct money to their own favorite charities, "Pick. Click. Save." would let Alaskans direct money to their own investment accounts, such as Individual Retirement Accounts (IRAs) or 401(k) accounts. Making it easier for Alaskans to put money aside today to grow through compound interest and capital appreciation for the future can make them more financially independent, and less dependent on potentially unreliable government benefits. Currently, a person filling out a PFD application has the option to direct all or part of their dividend to a checking account, savings account, 529 education savings account, education raffle ticket or, through "Pick. Click. Give.," any of several charities. HB 245 would expand those options to include direct deposit into an existing investment account, eliminating the necessity of waiting to receive the dividend, then having to take the additional step of contributing it to an investment account. It's important to note that HB 245 does not seek to address any high-level policy questions about the Permanent Fund, such as how dividend amounts are calculated, how the Fund is invested, whether its principal and reserve accounts should be combined, or anything else. It simply would make it easier for Alaskans to invest the dividends they do receive in a way that will benefit their personal, long-term financial health. Pick. Click. Save. is a modest but important way we can help Alaskans along the journey to economic independence. 3:08:37 PM MELODIE WILTERDINK, Staff, Representative Dan Saddler, Alaska State Legislature, on behalf of Representative Saddler, prime sponsor, provided a sectional analysis of HB 245 [included in the committee packet], which read as follows [original punctuation provided]: Section 1, Page 1, Lines 4-14 & Page 2, Line 1 Section 1 of HB 245 amends AS 43.23 by adding a new section, AS 43.23.058, which has three subsections. Subsection (a) states that a recipient of a permanent fund dividend may direct the Permanent Fund Division to deposit all or part of that dividend into an investment account. Subsection (b) directs the Department of Revenue to design the permanent fund dividend application to allow direct deposits into investment accounts and to request any information from dividend applicants needed to make those deposits. Subsection (c) stipulates that the Department of Revenue may not use money from the dividend fund to cover the administrative costs of implementing this Act. Section 2, Page 2, Line 2 Section 2 provides for an effective date of January 1, 2025. 3:10:02 PM REPRESENTATIVE STORY asked about the administrative costs. 3:10:42 PM REPRESENTATIVE SADDLER explained that while the "Pick.Click.Give." collects an administrative fee, "Pick.Click.Save." would have no fee. He referenced the zero fiscal note. REPRESENTATIVE STORY asked for an explanation for the lack of fees. REPRESENTATIVE SADDLER explained that setting up one extra box on the online application would create little administrative impact. 3:12:03 PM REPRESENTATIVE CARRICK asked for more specificity concerning the types of accounts that can be utilized. REPRESENTATIVE SADDLER answered that while HB 245 was envisioned to encourage Alaskans to contribute to retirement accounts, it is not limited to retirement accounts and can be put into any long-term investing account including money-marketing accounts or crypto currencies. REPRESENTATIVE CARRICK asked if the investment accounts would need to be established by the permanent fund dividend (PFD) recipient. REPRESENTATIVE SADDLER affirmed that the investment accounts would be set up by the constituent separately. He noted that in an earlier iteration of the bill that there would have been a requirement to enroll in a state sponsored investment account. The current version of HB 245 imposes no obligation on the state to set up accounts. REPRESENTATIVE CARRICK asked if there is wisdom in narrowing the language to "retirement accounts" to deter Alaskans from utilizing predatory accounts. REPRESENTATIVE SADDLER explained that autonomy should be granted for citizens to determine their own investment decisions. He made note of his personal views on long-term retirement accounts. CHAIR SHAW made a comment about using the PFD as an investment opportunity. 3:16:04 PM REPRESENTATIVE CARPENTER asked if the extra box is necessary. REPRESENTATIVE SADDLER said HB 245 creates an additional option for direct deposit of the PFD into a personal investment account. He recollected opportunities in the past for Alaskans to buy shares of the permanent fund. REPRESENTATIVE CARPENTER asked why it is necessary for the PFD online application to indicate a separate box for investing. 3:18:08 PM MS. WILTERDINK answered that the types of accounts, including checking, savings, and investment accounts, must be indicated to prevent technical errors. REPRESENTATIVE CARPENTER asked for confirmation that the changes to the application would be minor enough to not incur extra costs. MS. WILTERDINK reiterated that the bill received a zero fiscal note. Small changes made to the PFD application would be absorbed. CHAIR SHAW commented about using the PFD for college fund accounts. 3:20:34 PM REPRESENTATIVE SADDLER commented about the Alaska 529 plan. 3:21:26 PM CHAIR SHAW announced that HB 245 was held over.