Number 001 SJR 18 CONST. AM: PERM. FUND INCOME & DIVIDEND  CHAIRMAN GREEN called the Senate State Affairs Committee to order at 3:40 p.m. and brought up SJR 18 as the first order of business before the committee. Number 020 ORAL FREEMAN , a former member of the Board of Trustees of the Alaska Permanent Fund testifying via the teleconference network from Ketchikan, stated he has been a resident of Alaska for 51 years and served in the First State Legislature. He came back to the Legislature in 1972, which was shortly after the first leases on the North Slope were sold and the state collected in excess of $900 million in one day. In a few years that $900 million began to disappear pretty fast and it became apparent to the legislators of that time that some kind of a savings account for future generations was needed and, as a result, the idea of the permanent fund was adopted. Mr. Freeman said he has spent 31 years of his life in state, municipal, appointed and policy making positions, and during that time the one thing he learned was that in a policy-making position you suffer a lot of frustrations, a lot of disappointments, but as far as he is concerned, the permanent fund is one thing that has worked exactly the way it was supposed to. Mr. Freeman commended the sponsors of SJR 18 for bringing forth legislation to write into the constitution the provisions that guarantee the permanent fund dividend and provide for inflation proofing. He said his fear all along has been that if we, the people of Alaska, through the Legislature, ever start spending the permanent fund that it will disappear eventually. He has often said that the dividend program is the life insurance policy of the permanent fund. In 1980, at the time when the total of the permanent fund was $364 million, Mr. Freeman introduced a bill in the Legislature to appropriate $900 million from the general fund and deposit it in the principal of the permanent fund, although he didn't have much hope he would be successful, but he was. The permanent fund more than tripled in size, and it then became apparent that inflation- proofing was important. The next year he introduced another bill to appropriate $1.8 billion from the general fund which also passed and became law. As the fund grew, it became clear to the legislators and the administration that some kind of a set up was needed that was devoted to the proper, conservative, careful management of that permanent fund. Mr. Freeman said he wholeheartedly agrees with the idea of the dividend, as well as the inflation proofing of the fund, because in the first place, the permanent fund is created from money that's collected from the sale of a nonrenewable natural resource that under our constitution belongs to every citizen of the state. Mr. Freeman said he thinks it is the proper time to write into the state constitution the provisions that provide for the dividend and inflation-proofing as they exist right now by statute. He said the main fear of the public is that if monies from the permanent fund are used to run government, the dividend will disappear, so if the provisions to protect the dividend and the inflation proofing are in the constitution, he doesn't think the public will get to concerned about spending undistributed income from the earnings reserve of the fund. Number 225 SENATOR MACKIE commented he has always considered Mr. Freeman as one of the founders of the permanent fund, as well as former Governor Hammond and others that served in that period of time. He then asked if he was suggesting that if the dividend and the inflation-proofing are protected, then as the fund continues to grow and earnings become greater that will allow the opportunity to utilize some of the earnings. MR. FREEMAN reiterated the public's fear that if the Legislature ever starts spending earnings from the permanent fund that are not protected by the constitution, that it will grow and pretty soon the Legislature will be spending all of the permanent fund, but if the those protections are there, he doesn't think the public would have a problem with it. Number 332 RALPH SEEKINS , a former member of the Board of Trustees of the Alaska Permanent Fund Corporation, testifying from Fairbanks via the teleconference network, said during his tenure as a trustee a lot of decisions were made on how that fund should be invested, and billions of dollars moved forth and back with the hope that they would realize the greatest possible return for the people of the state of Alaska. He said he thinks every Alaskan recognizes by virtue of that dividend check that they have a vested interest in the success of that fund, so consequently there is nearly 600,000 people that are watching so see what's done with it, how much its earnings are, and how much it will return to them as individual Alaskans. Like Mr. Freeman, Mr. Seekins said he is convinced that without that dividend program, the fund probably would have been spent by now. He thinks the discussion on how to spend these funds is going to go on forever unless something is done to finally take the decision away from each group of legislators every year, and he thinks the resolution would accomplish what he would like to see done. Mr. Seekins spoke to the impact the dividend has on the people of the state. To some it is like a bonus, but for a lot of people it really makes a difference in the quality of their lives, as well as having a tremendous economic effect on the economy of the state. For that reason, he has repeatedly gone on record as one who would distribute the fund's earnings after inflation-proofing directly to the people in ad infinitum. To take that away from Alaskans, in any respect, would be wrong. Mr. Seekins said he knows that the Legislature and the Governor have in the past, and are continuing to eyeball the earnings reserve and what effect it might have on balancing the budget. He believes it is absolutely unacceptable to even discuss using any portion of the permanent fund's earnings for government programs. He stressed that state government needs to downsize before it would take away the peoples' share of the revenue from the peoples' natural resources. Concluding his testimony, Mr. Seekins said he is very much in favor of letting the people decide whether or not they want to guard their permanent fund. To him, if the dividend check got to $2,000, $3,000, $5,000, $10,000 a year, then he would applaud that because it allows each individual Alaskan to decide how their portion of the revenue from the resources that, according to our state constitution, belong to all of the people. Number 430 SENATOR MACKIE moved SJR 18 be passed out of committee with individual recommendations. Hearing no objection, it was so ordered.