CHAIRMAN LEMAN brings up SJR 38 RESTRUCTURE PERMANENT FUND as the next order of business before the Senate State Affairs Committee today. The chairman calls a witness from the Institute for Social & Economic Research (ISER). Number 513 SCOTT GOLDSMITH, Economist, Institute for Social & Economic Research (ISER), testifying from Anchorage, states he has talked to Mr. Cremo about his plan (SJR 38), and thinks it is an interesting concept. Mr. Goldsmith has five comments he would like to make regarding SJR 38, which he will submit in further detail in writing to the committee. They are: 1) The Permanent Fund is at risk if this plan is adopted. 2) The need for safety valves must be considered. 3) The plan appears to be simple, but it is not. 4) The plan is not a magic and painless solution. 5) Less radical alternatives should be considered. Number 533 MR. GOLDSMITH details the previously listed five points. TAPE 94-5, SIDE B Number 562 MR. GOLDSMITH continues with his detailing of the previously listed five points. Number 529 MR. GOLDSMITH suggests potential solutions to budget problems. They are: 1) Solution for economic instability from year to year: cap the budget at 2.5 billion dollars for four years. 2) Solution for price-induced fluctuations in petroleum revenues from year to year: restructure constitutional budget reserve to fill all or a portion of any short-fall between current revenues and the budget. 3) Solution for long-run petroleum revenues declining with production: cap the budget at 2.5 billion dollars for four years, the same as number 1. 4) Solution to minimize long-term Prudhoe Bay-type economic boom and busts: double the Permanent Fund contribution rate for royalties on newly discovered natural resource production to 100%. 5) Solution to maximize the return on the Permanent Fund: base the dividend on the long-term averaged total return of the fund, including unrealized gains and losses. Number 506 CHAIRMAN LEMAN thanks Mr. Goldsmith for his comments and asks that he submit his testimony in writing to the committee by Monday, in order for members to review it before the meeting Wednesday, February 2, 1994. The chairman asks Mr. Cremo if he would like to comment on any part of the testimony made by Mr. Goldsmith. Number 496 MR. CREMO declines, saying he would like to see a copy of Mr. Goldsmiths' written comments, so he could intelligently respond to them. Number 488 CHAIRMAN LEMAN asks if there is anyone else who would like to testify on SJR 38. Hearing none, he announces SJR 38 will be held until the committee meeting Wednesday, February 2, 1994.