SJR 11-CONST AM: PERM FUND INCOME DISTRIBUTION    CHAIRMAN TAYLOR announced SJR 11 to be up for consideration. SENATOR THERRIAULT asked if the earnings reserve would be maintained, but would be treated as part of the corpus of the Permanent Fund now. SENATOR WARD answered yes. CHAIRMAN TAYLOR said they have a committee substitute that includes actual language instead of leaving the statutory references within the Constitution. SENATOR COWDERY moved to adopt the CS, Cook 4/20/01, to SJR 11. There were no objections and it was so ordered. SENATOR DONLEY said drafting the bill in this way has allowed them to review the existing formula for calculating the dividend on page 2, lines 7 - 9, which says, "The dividend may not exceed the net income of the fund for the fiscal year just ended, plus the balance of the earnings reserve account." He said that language was the basis for the argument during the September 1999 advisory ballot debate. "It was a complicated calculation. It was a speculative argument, but people just assumed it as fact for some of the arguments that were being put out there to the public. I think that language is problematic…" SENATOR DONLEY said before he could support that section, which he disagrees with in current statute, he would want an extensive analysis. He didn't think the sponsor agreed with the technical way it might function, either. SENATOR WARD explained: "I didn't put the language into law and if there was going to be a simplification of what he was trying to accomplish and what the people of Alaska were trying to accomplish, this would be the proper place to do it." SENATOR TAYLOR said all they did in the bill was state existing state law. SENATOR WARD said it would take a constitutional amendment to change the formula. SENATOR WARD did not want to change existing law at this time, because people in his district like it the way it is. SENATOR DONLEY agreed with Senator Ward, but he thought that there were very few Alaskans that know the ramifications of those three sentences for some future calculation of their dividend. "That's what worries me. That sentence hasn't kicked in yet, but if it did, I think there would be a lot of shocked people out there." SENATOR WARD said he didn't disagree with that. "If the Finance Committee wants to change existing law in the form of a vote of the people, then I think it's something they, as a committee, need to come up with - what the ramifications are and the various models of that, because we're talking dollars now." SENATOR COWDERY moved to pass CSSJR 11(JUD) from committee with individual recommendations. SENATOR ELLIS objected: This on its face has some popular appeal, but I can't be the only one at this table who is concerned about the potential risks and the chain of events this could set in motion. There was a lot of discussion at the last committee hearing about the IRS. I got more and more nervous as that discussion went on. I think if there's any contact with the IRS, I think that's a bad idea to start with….If there's any contact to be done, I would hope it could be done in an institutional fashion, in a very reserved and careful way so that we ask the right questions. I think asking the questions is dangerous in and of itself. SENATOR ELLIS again said he wasn't the only person at the table who was concerned about this and he knew there was a perception in the public, but he didn't think the Permanent Fund Dividend was in imminent danger from this legislature. CHAIRMAN TAYLOR said that he also has grave concerns about the same subject, but he thought they should have the discussion. There being no further discussion, he asked for a roll call vote. SENATORS DONLEY, COWDERY, THERRIAULT, and TAYLOR voted yeah; SENATOR ELLIS voted nay; and the bill was passed from committee by a vote of 4 to 1. TAPE 01-21, SIDE B  SENATOR THERRIAULT noted that the Trustees had requested that another proposal be introduced and he said he would move that alternative also, so that the Finance Committee has different ideas to look at.