SB 35-APPROP: FUNDS  CHAIR McGUIRE announced the consideration of SB 35. 10:11:04 AM SENATOR GARY WILKEN, Alaska State Legislature, sponsor of SB 35, said that during the last election he had to correct four people who said the state spent everything last year. "Last year we saved 46 percent of our surplus," which was $649 million, he said. Some people knew it but characterized savings as spending, and some simply didn't know it. He said there are "a couple of billion dollars in surplus in 07 and 08, and so I wanted to get out to the folks that we have places that we can put that." SB 35 is an appropriation fund, called "bank-a-billion" in marketing terms. He said Alaska revenues will be record-high from the new profit-based petroleum tax, but it will not be known until March or later. SB 35 will save this expected surplus of $1.35 billion into four separate savings accounts: $250 million each to the Public Education Fund; Alaska Housing Finance Corporation (AHFC) capital account; Permanent Fund Earnings Reserve Account; and Constitutional Budget Reserve Account. "The deposit of a billion dollars in four separate, unique accounts forces the Legislature to save for the future, a time when our state's financial picture might be different than today." 10:14:25 AM SENATOR FRENCH asked what the status is of the public education fund and what the governor is planning for it. SENATOR WILKEN said last year there was $565 million, "which we used," and there is now $509 million. The governor proposes to drain that to fund K-12. "The effect of that would be to use the $509 million, but then you would not use your surplus so the surplus, on June 30, would automatically…that particular $509 million would then drift into the [Constitutional Budget Reserve]." SENATOR FRENCH said if the legislature spent within its means and kept the budget somewhere between the governor's and legislature's budget, all this money would be swept into the CBR at the end of the fiscal year. SENATOR WILKEN said, yes. The bill would divert three fourths of that to three separate accounts. SENATOR FRENCH asked for the current AHFC capital account. SENATOR WILKEN said $300 million was put in that account. He noted that "we all thought, last year, that we had taken $300 million and put it into a capital account" in AHFC, but that is not the case, because it is still in the general fund, "and there's a fence around it." Lines 1-5 on page 2 of the bill are incorrect, and he said he has an amendment to fix it. That money is currently roped off in the general fund, so the bill will move another $250 million to it. SENATOR FRENCH asked if the amendment would move the funds out of the general fund into the AHFC capital account itself. SENATOR WILKEN said no, it matches the $250 million with the $300 million that is in the general fund. SENATOR FRENCH surmised it would still reside there with a fence around it. SENATOR WILKEN said he just found out about this yesterday. The bill is written for money to go into the revolving fund, and that isn't correct. "I don't think any of us knew that this hadn't been moved over into Alaska Housing Finance fund." The important point is that it is roped off, he stated. SENATOR GREEN asked if an appropriation is generally made to the AHFC capital account. SENATOR WILKEN said, no, former Governor Murkowski wanted $400 million, "and so we took that and said, OK let's rope it off, but if you don't need it, it could be used for something else." 10:18:36 AM SENATOR FRENCH asked what currently is in the Permanent Fund Earnings Reserve Account and the Constitutional Budget Reserve. SENATOR WILKEN said the permanent fund had $4.5 billion in realized earnings, and the Constitutional Budget Reserve had $2.46 billion at the end of December. 10:19:06 AM SENATOR GREEN made a motion to adopt Amendment 1, labeled 25- LS0271\C.1, Kane, as follows: Page 1, line 3: Delete "housing finance revolving fund" Insert "Housing Finance Corporation" Page 2, lines 1 - 5: Delete all material and insert:  "* Sec. 3. ALASKA HOUSING FINANCE CORPORATION. The sum of $250,000,000 is appropriated to the Alaska Housing Finance Corporation for the purpose of funding capital projects, including financing expenses, from the general fund available after all other appropriations for the fiscal year ending June 30, 2007, are accounted for, but before the deposit required under art. IX, sec. 17(d), Constitution of the State of Alaska, is made. It is the intent of the legislature that the Alaska Housing Finance Corporation may transfer this money and the earnings to a subsidiary of the Alaska Housing Finance Corporation on or after July 1, 2007, under AS 18.56.086." CHAIR McGUIRE announced that without objection, Amendment 1 carried. SENATOR GREEN asked why Senator Wilken used a dollar figure instead of a percentage for the funds in the bill. SENATOR WILKEN said the term, bank-a-billion is cute and it works. He said the legislature should have a sense of how much it wants to save. He said "all of us" worked on it last year, and campaign time came "and we struggled to talk about savings." He said "savings" was a four-letter word for many years, and the state is blessed with surpluses, and savings is not spending, he explained, "you spend it into a savings account." SENATOR GREEN asked if the bill should say "at least" in case the surplus is higher. SENATOR WILKEN said that number will move around in finance committee, "the point being, let's save something. Let's put it in four places that we can access at a future time." 10:22:11 AM CHAIR McGUIRE said she likes that there are four places because everyone has ideas about where to save. She struggled to convince her constituents that money was set aside last year. This is a vehicle that the finance committee can deal with. She said, "We don't know what the numbers will be or if they'll change or even if those pots of money will be allocated slightly differently, but…the finance committee would be a better resting place for it…until those numbers come in." SENATOR GREEN made a motion to report SB 35, as amended, from committee with individual recommendations and attached fiscal note(s). Hearing no objections, CSSB 35(STA) moved from committee.