SENATE BILL NO. 199 "An Act relating to use of income of the Alaska permanent fund; relating to the amount of the permanent fund dividend; relating to the duties of the commissioner of revenue; and providing for an effective date." 9:45:15 AM Co-Chair Bishop relayed that it was the second hearing for SB 199. The committee intended to consider a CS. Co-Chair Stedman made a motion to adopt a Committee Substitute. 9:45:57 AM AT EASE 9:46:22 AM RECONVENED Co-Chair Stedman restated the motion. Co-Chair Stedman MOVED to ADOPT proposed committee substitute for SB 199, Work Draft 32-LS1529\I (Nauman, 3/25/22). Co-Chair Bishop OBJECTED for discussion. Ms. Shine explained that the proposed CS took a different approach to paying a Permanent Fund Dividend (PFD). She explained that the previous version of the bill proposed to have an escalating step-up to a 50/50 dividend, with a $1,100 PFD in FY 23, a $1,200 PFD in FY 24, a $1,300 PFD in FY 25, with a $1,300 PFD plus inflation in FY 26 and beyond. She noted there was a trigger for a 50/50 PFD if the legislature adopted $700 million in new revenue. The proposed CS took a similar approach, but a different PFD payout. She directed attention to Section 3, which would proposed to amend the appropriation for a PFD to a 50/50 PFD in FY 23, while in FY 24 and beyond there would be a 25 percent of market value (POMV) dividend (with 75 percent going to the General Fund). Ms. Shine continued to address the proposed CS. She noted that the new version proposed in Section 5 to amend AS 37.13.145(b). She discussed conditional effect language in Section 11, which would require $800 million in new revenues (as compared to June 30, 2022) by December 15, 2026. If the condition were to take place, in FY 28 and beyond, there would be a 50/50 POMV dividend. There were some technical and conforming amendments made between the two different Committee Substitutes. The changes were to ensure the language conformed to a supreme court case and to ensure that the version was sound. Co-Chair Bishop WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. 9:49:35 AM Co-Chair Stedman assumed that Co-Chair Bishop had requested updated analyses to be brought before the committee. Co-Chair Bishop relayed that there were updated fiscal analyses that would be provided to the committee in due haste by the Legislative Finance Division (LFD). He expected the bill would be before the committee again soon. Senator Olson asked what would happen if the $800 million in new revenue proposed in the CS did not materialize. Co-Chair Bishop answered that if the revenue did not materialize then the PFD would stay at a 25 POMV payout. Senator Wilson asked why there had been a change from $700 million to $800 million in new revenue. Co-Chair Bishop stated that the number was based on an analysis he saw two months previously. He mentioned that the number hit within $25 million of the Bicameral Permanent Fund Working Groups number the previous year. Co-Chair Stedman informed that the committee was working on the operating budget and would be coming out with a proposed CS in the next few days. He explained that the analysis from LFD would be updated. He though there was an overall roughly 5 percent budgetary increase and mentioned escalating inflation issues. 9:52:33 AM Senator Hoffman observed that the back end of the funding of the 50/50 dividend was quite similar to what the governor had introduced the previous year. He asked if it was the intent of the co-chairs to pay for the dividend through a fiscal note. Co-Chair Stedman thought paying the dividend through a fiscal note would most likely be a good idea and stated that the committee would work through the budget process. Senator Wilson wondered if the committee would also be considering other models to be presented next time the bill was before the committee. Co-Chair Bishop asked if Senator Wilson was asking about running different scenarios. Senator Wilson answered affirmatively. Co-Chair Bishop stated that the co-chairs would encourage running different scenarios. Senator Wielechowski thought Alaskans were concerned about stability and dividend predictability. He shared concerns about the language that iterated "the legislature may appropriate funds" and he thought absent a constitutional amendment, Alaskans could not get the stability and predictability that was desired. He thought the bill would put the state in a position in which future legislatures could choose to ignore the bill language and pay out lesser dividend amounts than the statute called for. He noted that there were bills that proposed a constitutional payment of the dividend. He did not think the bill provided stability. SB 199 was HEARD and HELD in committee for further consideration. Co-Chair Bishop discussed the agenda for the afternoon meeting.