SB 128-PERM. FUND: DEPOSITS; DIVIDEND; EARNINGS  9:08:26 AM CHAIR STOLTZE announced the consideration of SB 128. 9:08:54 AM RANDALL HOFFBECK, Commissioner, Alaska Department of Revenue, stated that he appreciated the fact there were many versions of Permanent Fund legislation as a solution for the fiscal crisis. He reviewed his presentation on best practices on sovereign- wealth funds around the world, ways the Permanent Fund relates to other wealth funds, and ways it can be used to stabilize and fund government. He reported that he and Attorney General Richards also provided information on the governor's approach and how it fits into the governor's total fiscal plan. He related that SB 128 is one of three pieces that includes using the state's wealth, a tax component, and a budget-cut piece. He said SB 128, The Alaska Permanent Fund Protection Act, is a way to achieve a $3.3 billion endowment-type draw from the state's earnings by putting 100 percent of oil and gas tax revenue and other mineral revenue into the Permanent Fund itself. He detailed that SB 128 would allow the Permanent Fund account to generate $3.3 billion on a sustainable basis moving forward. He specified that the dividend would be tied to 50 percent of royalties received on an annual basis. He concluded that SB 128 is a plan that works and provides a solution to a very difficult problem. 9:11:52 AM CHAIR STOLTZE suggested committee members request information on the constitutionality of SB 128. SENATOR MCGUIRE stated that her two main concerns are related to the structure. She disclosed that in SB 114 the General Fund (GF) is retained, but SB 128 purports to create a new GF in the Earnings Reserve Account (ERA). The Constitutional Budget Reserve (CBR) remains the same in SB 114, but in SB 128 the three-quarters vote to access funds is removed. She inquired how certain the administration is regarding legal challenges to her two concerns. 9:13:55 AM WILLIAM MILKS, Assistant Attorney General, Alaska Department of Law, asked Senator McGuire to restate her concern about the CBR and the GF. SENATOR MCGUIRE specified that the GF is statutorily created with a minimum-balance threshold to move money in and out. She detailed that the ERA is statutorily created as an overlay to the constitutional creation of the Permanent Fund and that money can move in and out only for inflation proofing and to pay dividends. She opined that the bill's proposal to statutorily change the ERA is legally sound. She questioned how vulnerable the GF would be if the ERA was made a part of it and how vulnerable it would become because of pulling in royalties and production taxes, etc., and then paying out for government expenses. She noted that Senator Wielechowski shares her concerns. 9:15:51 AM COMMISSIONER HOFFBECK asked if she meant "vulnerable to the sweep." SENATOR MCGUIRE answered yes. 9:17:04 AM CHAIR STOLTZE held SB 128 in committee.