HOUSE FINANCE COMMITTEE March 21, 1994 1:40 P.M. TAPE HFC 94 - 73, Side 1, #000 - end. TAPE HFC 94 - 73, Side 2, #000 - end. TAPE HFC 94 - 74, Side 1, #000 - #527. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 1:40 P.M. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Foster ALSO PRESENT Representative Joe Green; Jeffery C. Ottesen, Chief, Right- of-Way & Environment, Department of Transportation and Public Facilities; Mead Treadwell, Deputy Commissioner, Department of Environmental Conservation; Darrel Rexwinkel, Commissioner, Department of Revenue; Thomas Williams, Director, Permanent Fund Division, Department of Revenue; Robert Store, Chief Investment Officer, Department of Revenue; Bill Corbus, Chairman, Alaska State Pension Board (ASPIB), Anchorage; Gail Oba, Vice Chair, ASPIB, Anchorage. SUMMARY HB 330 An Act relating to the use of natural gas as a motor vehicle fuel in state owned vehicles. CS HB 330 (TRS) was reported out of Committee with "no recommendations" and with a zero fiscal note by the Department of Transportation and Public Facilities dated 3/16/94. HB 364 An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date. HB 364 was HELD in Committee for further consideration. 1 HB 494 An Act changing the Alaska State Pension Investment Board to the Alaska Pension Investment Authority and relating to the authority; and providing for an effective date. CS HB 494 (STA) was reported out of Committee with a "do pass" recommendations and with two fiscal notes by the Department of Revenue and a zero fiscal note by the Department of Administration dated 3/14/94. HOUSE BILL 330 "An Act relating to the use of natural gas as a motor vehicle fuel in state owned vehicles." REPRESENTATIVE JOE GREEN stated that natural gas is being used as vehicle fuel in several states and provinces across the continent. He pointed out that the supply of natural gas is abundant in the world, although Alaska appears to be waiting for that supply to arrive. Representative Green remarked that private sector fleet managers have expressed interest in utilizing natural gas, which would offer a number of advantages. The State currently uses natural gas in a few cars. The barrier to more widespread use would be refueling. Presently, the range of natural gas vehicles is limited and there are few refueling stations. HB 330 would dedicate a minimum number of state vehicles to compressed natural gas (CNG) use. By establishing the critical mass in the NGV fleet, investors would then have the confidence to build refueling stations. He concluded that with the development of the refueling infrastructure, the private sector fleet managers could then utilize CNG. Representative Brown asked if DOTPF had evaluated cost efficiency use of natural gas. Representative Green stated they had not. JEFFERY C. OTTESEN, CHIEF, RIGHT-OF-WAY & ENVIRONMENT, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF), testified that the Department would support the legislation and monitor air quality and cost benefits. He stressed that the legislation would be "good business". Representative Martin asked the number of vehicles in the DOTPF fleet. Mr. Ottesen responded there are 900 hundred vehicles in the fleet, and 150 new vehicles are purchased each year. Currently, there are three vehicles dedicated to using natural gas. 2 Representative Brown questioned the cost difference between a natural gas run vehicle and a conventional vehicle. Mr. Ottesen noted that the difference would be approximately $2.0 thousand dollars depending on the size of the vehicle. Representative Martin MOVED to report CS HB 330 (TRS) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Brown OBJECTED. She asked the changes within the Department of Environmental Conservation's (DEC) air plan which would allow that Department to use federal funds. MEAD TREADWELL, DEPUTY COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, remarked that the State Implementation Plan (SIP) for air quality will be enacted shortly, and once it is signed, that option will be available to the Department. He added that SEAMAC funds are DOTPF budget allocations designated for air quality and that they are required to be spent for air quality under federal law. Representative Brown asked if those funds would require matching state funds. Mr. Ottesen replied that they would require matching state funds, although there is $8 million dollars which will lapse at the end of this year if not used. Representative Brown emphasized that there are costs associated with the legislation although the fiscal note indicates no impact. Representative Brown WITHDREW HER OBJECTION to move the bill from Committee. There being NO OBJECTION, it was so ordered. CS HB 330 (TRS) was reported out of Committee with "no recommendation" and with a zero fiscal note by the Department of Public Facilities dated 3/16/94. HOUSE BILL 494 "An Act changing the Alaska State Pension Investment Board to the Alaska Pension Investment Authority and relating to the authority; and providing for an effective date." Co-Chair MacLean stated that HB 494 is the final building block in creating an organization focused on managing over $7 billion dollars in financial assets belonging to the State's retirement systems. The legislation is important to the State, political subdivisions, school districts and all beneficiaries of the retirement systems. It would represent the culmination of an extensive effort to ensure the best financial returns on the assets of the retirement system in 3 an organizational structure responsible to participating interests. She pointed out that the bill would establish an investment authority as the structural framework for the responsive and efficient operations of the Alaska State Pension Investment Board (ASPIB). The Board is an eight member board of trustees created in 1992 by SB 329. The ASPIB has fiduciary responsibility for assets of the State's defined benefit pension programs including the Public Employees' Retirement System (PERS), Teachers' Retirement System (TRS), and Judicial and Military Retirement Systems, and assets of the Supplemental Benefits System (SBS) and the deferred compensation program. Co-Chair MacLean added that a separate investment authority would be in the best interest of the State. The proposed authority would continue to meet in public, report to the Governor and the Legislature, use the same budget process and have the Attorney General provide legal assistance in the same manner that currently exists. HB 494 would create a structure consistent with the way large public pension plans are managed. Co-Chair MacLean concluded that HB 494 would create an investment authority that allows the ASPIB to hire an executive director and staff to assist in the management of pension assets and implementation of policy for the retirement systems. The bill would create more efficiency in the organization while clearly defining the responsibility and accountability for management of those pension assets. BILL CORBUS, CHAIRMAN, ALASKA STATE PENSION BOARD (ASPIB), ANCHORAGE, testified in support of the legislation and explained the duties of the Board. [Testimony on file]. He commented that in 1992, SB 329 created the Alaska State Pension Board and pointed out that the staff of that board works for the Commissioner of the Department of Revenue. The Board would prefer to staff without the consent of the Commissioner of Revenue. The solution would be to create a separate and independent authority which would be able to address the staffing needs of the Board. GAIL OBA, VICE CHAIR, ALASKA STATE PENSION BOARD (ASPIB), ANCHORAGE, spoke in support of HB 494 stating that the legislation does not provide a pension increase to any of the beneficiaries of the system. There would be no additional costs to employers if the legislation was passed. She added that the current program would be improved by creating a better structure. The legislation would continue 4 to grant the Board's authority over the pension fund and would also grant supervisory authority over the staff. Representative Martin indicated his concern over losing the legislative link to the accountability of the Pension Board. Ms. Oba advised that when the legislation is passed, there will be greater accountability. Currently, the staff reports to the Commissioner of the Department of Revenue, whereas through the legislation, the staff would report to any one of the eight trustees. DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE, provided a brief history of the Alaska State Pension Board (ASPIB) legislation. He reiterated that the Board was created in 1992, leaving the staff in the Department of Revenue. With the fiduciary responsibility given the board, they must oversee $8 billion dollars. He stated that since the Board is held responsible for the funds, they should have complete authority to administer those assets. The proposed legislation would provide that authority. Commissioner Rexwinkel referenced the fiscal notes associated with the legislation stating that they do not indicate a revenue change, although the Board understands that with the authority to manage the staff, they will be able to achieve more substantial returns. The fiscal notes would cover cash-debt management of twenty-nine (29) staff increasing the staff by eight (8) positions. Discussion followed among Committee members and Commissioner Rexwinkel regarding the transfer of responsibilities through the proposed legislation. Representative Brown asked the financial effect on treasury management if the fiscal note was not approved for the eight (8) new positions. Commissioner Rexwinkel advised that currently, there is shared staffing between the Board and the Department. (Tape Change, HFC 94-73, Side 2). Staff would have to be replaced in order to continue the accounting capabilities. The addition of employees would cover those lost or left within the Department. Commissioner Rexwinkel added that two new investment management staff are needed in order to increase pension funds. ROBERT STORE, CHIEF INVESTMENT OFFICER, DEPARTMENT OF REVENUE, advised that currently, the Department of Revenue provides staff to the State Pension Investment Board as well as responsibility for managing a number of their funds. In managing fixed income securities, the yield curve is 5 generally positive. If a security has a longer investment, a higher rate of return on the investment would be expected. Staff feels with increased cash flow analysis the yield curve could be expanded which would allow less cash to be kept on hand and would provide greater comfort to move the aggregate portfolio on the yield curve. The enhanced cash flow analysis would include education and greater communication with the various agencies to allow them to understand the focus and control of that flow. Mr. Store thought with more investment officers, the low case scenario expectation for the pension fund would be $10 million dollars. Representative Brown asked for further clarification of the capital expenditure request for the $388 thousand dollars. Commissioner Rexwinkel elaborated that the note would cover costs of start-up equipment and furniture for the new employees. Discussion followed among Committee members regarding the expenditures itemized in the fiscal note. Representative Martin recommended that the fiscal note be changed to program receipts rather than the general fund source. Commissioner Rexwinkel stated that the general fund treasury component requires payment for additional staff in order that the Board can maintain its own functioning fiduciary division. He added that the Board's ability to create additional interest earnings for the general fund would be enhanced through the proposed legislation. Co-Chair MacLean MOVED to report CS HB 494 (STA) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Martin OBJECTED. Representative Martin MOVED that the fiscal note be changed to program receipts from general funds. Commissioner Rexwinkel pointed out that the Department of Revenue has been very careful not to mix the components of various funds. Representative Navarre clarified that the investment will make at a minimum, $10 million dollars for the State. Representative Martin thought that the investment board should be responsible for their own costs. Representative Hanley pointed out that the program receipts from the Pension Board Account would be used to manage non-pension funds. Representative Martin WITHDREW THE MOTION. There being NO OBJECTIONS, it was removed. Representative Brown MOVED to delete $388 thousand dollars from the capital expenditures and insert $200 thousand dollars. She pointed out that at the current recommendation, $19 thousand dollars would be allocated for each employee for equipment and furniture. To provide $200 thousand dollars for capital expenditures would allocate $10 6 thousand dollars per employee for equipment costs. Co-Chair MacLean OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Hanley, Parnell, Therriault, Brown, Larson. OPPOSED: Hoffman, Martin, Navarre, Foster, MacLean. The MOTION PASSED (6-5). Co-Chair MacLean MOVED to report CS HB 494 (STA) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 494 (STA) was reported out of Committee with "individual recommendations" and with two fiscal notes by the Department of Revenue and a zero fiscal note by the Department of Administration dated 3/14/94. HOUSE BILL 364 "An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date." Representative Parnell advised that the subcommittee had addressed concerns of expanding the number of recipients for the permanent fund dividend. He stressed that the original intention of the fund was to encourage persons to maintain their residence in the State and to reduce a population turnover. Representative Parnell MOVED to adopt work draft #8- LS1378\0, Cook, 3/14/94 which would explain "allowable absences" as the version before the Committee. Representative Martin OBJECTED for purposes of discussion and stated that the Public Health Service Corp should not be given a special dispensation. Representative Martin MOVED to delete to Page 2, Lines 28 - 29, Section (I). Representative Martin WITHDREW HIS OBJECTION on the motion to adopt the work draft. There being NO OBJECTION, it was adopted. (Tape Change, HFC 94-74, Side 1). THOMAS WILLIAMS, DIRECTOR, PERMANENT FUND DIVISION, DEPARTMENT OF REVENUE, stated that the number of Alaska Public Health Service officers claiming Alaska residence is 7 296, and that the number of individuals living in other states claiming Alaska residency is 200, which does not include spouses and children. Representative Brown advised that determination of exemptions should be fair. Discussion followed among Committee members regarding the differences between merchant marines and the public health service corp. A roll call vote was taken on the MOTION to delete Section IN FAVOR: Hanley, Hoffman, Martin, Therriault, Grussendorf, MacLean, Larson. OPPOSED: Parnell, Navarre, Brown, Foster. The MOTION PASSED (7-4). Representative Therriault MOVED to delete Section 2, Page 2, Lines 9-27. Representative Martin OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Hoffman, Therriault, Brown, Grussendorf, Hanley, Larson. OPPOSED: Martin, Navarre, Parnell, Foster, MacLean. The MOTION PASSED (6-5). Representative Therriault MOVED a title change to HB 364, Page 1, Lines 2-3, deleting "and to allowable absences from the state for purposes of eligibility for dividends;". There being NO OBJECTION, it was adopted. Mr. Williams stated that adoption of Section 1 would have a minimal amount of change except for those individuals who were gone longer than 180 days per year. An out of state college student would be required to come back to Alaska for the summer in order to continue to qualify for the permanent fund dividend. Discussion followed among Committee members regarding college student's permanent fund dividends. Representative Parnell stated that there are a group of people in the State who are gone more than 180 days per year on State business. He MOVED a conceptual amendment to exempt a category of persons from Section 1. 1. Those who are serving the U.S. Congress as a representative or senator for the State of Alaska. 2. Those serving on the staff of a representative or 8 senator from Alaska. 3. Those serving as an employee of the State of Alaska including employment in a field office. Following discussion regarding fully allowable absences Representative Parnell WITHDREW THE MOTION. There being NO OBJECTION, it was so ordered. HB 364 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 3:30 P.M. HOUSE FINANCE COMMITTEE March 21, 1994 1:40 P.M. TAPE HFC 94 - 73, Side 1, #000 - end. TAPE HFC 94 - 73, Side 2, #000 - end. TAPE HFC 94 - 74, Side 1, #000 - #527. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 1:40 P.M. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Foster ALSO PRESENT Representative Joe Green; Jeffery C. Ottesen, Chief, Right- of-Way & Environment, Department of Transportation and Public Facilities; Mead Treadwell, Deputy Commissioner, Department of Environmental Conservation; Darrel Rexwinkel, Commissioner, Department of Revenue; Thomas Williams, Director, Permanent Fund Division, Department of Revenue; Robert Store, Chief Investment Officer, Department of Revenue; Bill Corbus, Chairman, Alaska State Pension Board (ASPIB), Anchorage; Gail Oba, Vice Chair, ASPIB, Anchorage. SUMMARY 9 HB 330 An Act relating to the use of natural gas as a motor vehicle fuel in state owned vehicles. CS HB 330 (TRS) was reported out of Committee with "no recommendations" and with a zero fiscal note by the Department of Transportation and Public Facilities dated 3/16/94. HB 364 An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date. HB 364 was HELD in Committee for further consideration. HB 494 An Act changing the Alaska State Pension Investment Board to the Alaska Pension Investment Authority and relating to the authority; and providing for an effective date. CS HB 494 (STA) was reported out of Committee with a "do pass" recommendations and with two fiscal notes by the Department of Revenue and a zero fiscal note by the Department of Administration dated 3/14/94. HOUSE BILL 330 "An Act relating to the use of natural gas as a motor vehicle fuel in state owned vehicles." REPRESENTATIVE JOE GREEN stated that natural gas is being used as vehicle fuel in several states and provinces across the continent. He pointed out that the supply of natural gas is abundant in the world, although Alaska appears to be waiting for that supply to arrive. Representative Green remarked that private sector fleet managers have expressed interest in utilizing natural gas, which would offer a number of advantages. The State currently uses natural gas in a few cars. The barrier to more widespread use would be refueling. Presently, the range of natural gas vehicles is limited and there are few refueling stations. HB 330 would dedicate a minimum number of state vehicles to compressed natural gas (CNG) use. By establishing the critical mass in the NGV fleet, investors would then have the confidence to build refueling stations. He concluded that with the development of the refueling infrastructure, the private sector fleet managers could then utilize CNG. 10 Representative Brown asked if DOTPF had evaluated cost efficiency use of natural gas. Representative Green stated they had not. JEFFERY C. OTTESEN, CHIEF, RIGHT-OF-WAY & ENVIRONMENT, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF), testified that the Department would support the legislation and monitor air quality and cost benefits. He stressed that the legislation would be "good business". Representative Martin asked the number of vehicles in the DOTPF fleet. Mr. Ottesen responded there are 900 hundred vehicles in the fleet, and 150 new vehicles are purchased each year. Currently, there are three vehicles dedicated to using natural gas. Representative Brown questioned the cost difference between a natural gas run vehicle and a conventional vehicle. Mr. Ottesen noted that the difference would be approximately $2.0 thousand dollars depending on the size of the vehicle. Representative Martin MOVED to report CS HB 330 (TRS) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Brown OBJECTED. She asked the changes within the Department of Environmental Conservation's (DEC) air plan which would allow that Department to use federal funds. MEAD TREADWELL, DEPUTY COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, remarked that the State Implementation Plan (SIP) for air quality will be enacted shortly, and once it is signed, that option will be available to the Department. He added that SEAMAC funds are DOTPF budget allocations designated for air quality and that they are required to be spent for air quality under federal law. Representative Brown asked if those funds would require matching state funds. Mr. Ottesen replied that they would require matching state funds, although there is $8 million dollars which will lapse at the end of this year if not used. Representative Brown emphasized that there are costs associated with the legislation although the fiscal note indicates no impact. Representative Brown WITHDREW HER OBJECTION to move the bill from Committee. There being NO OBJECTION, it was so ordered. CS HB 330 (TRS) was reported out of Committee with "no recommendation" and with a zero fiscal note by the Department of Public Facilities dated 3/16/94. 11 HOUSE BILL 494 "An Act changing the Alaska State Pension Investment Board to the Alaska Pension Investment Authority and relating to the authority; and providing for an effective date." Co-Chair MacLean stated that HB 494 is the final building block in creating an organization focused on managing over $7 billion dollars in financial assets belonging to the State's retirement systems. The legislation is important to the State, political subdivisions, school districts and all beneficiaries of the retirement systems. It would represent the culmination of an extensive effort to ensure the best financial returns on the assets of the retirement system in an organizational structure responsible to participating interests. She pointed out that the bill would establish an investment authority as the structural framework for the responsive and efficient operations of the Alaska State Pension Investment Board (ASPIB). The Board is an eight member board of trustees created in 1992 by SB 329. The ASPIB has fiduciary responsibility for assets of the State's defined benefit pension programs including the Public Employees' Retirement System (PERS), Teachers' Retirement System (TRS), and Judicial and Military Retirement Systems, and assets of the Supplemental Benefits System (SBS) and the deferred compensation program. Co-Chair MacLean added that a separate investment authority would be in the best interest of the State. The proposed authority would continue to meet in public, report to the Governor and the Legislature, use the same budget process and have the Attorney General provide legal assistance in the same manner that currently exists. HB 494 would create a structure consistent with the way large public pension plans are managed. Co-Chair MacLean concluded that HB 494 would create an investment authority that allows the ASPIB to hire an executive director and staff to assist in the management of pension assets and implementation of policy for the retirement systems. The bill would create more efficiency in the organization while clearly defining the responsibility and accountability for management of those pension assets. BILL CORBUS, CHAIRMAN, ALASKA STATE PENSION BOARD (ASPIB), ANCHORAGE, testified in support of the legislation and explained the duties of the Board. [Testimony on file]. 12 He commented that in 1992, SB 329 created the Alaska State Pension Board and pointed out that the staff of that board works for the Commissioner of the Department of Revenue. The Board would prefer to staff without the consent of the Commissioner of Revenue. The solution would be to create a separate and independent authority which would be able to address the staffing needs of the Board. GAIL OBA, VICE CHAIR, ALASKA STATE PENSION BOARD (ASPIB), ANCHORAGE, spoke in support of HB 494 stating that the legislation does not provide a pension increase to any of the beneficiaries of the system. There would be no additional costs to employers if the legislation was passed. She added that the current program would be improved by creating a better structure. The legislation would continue to grant the Board's authority over the pension fund and would also grant supervisory authority over the staff. Representative Martin indicated his concern over losing the legislative link to the accountability of the Pension Board. Ms. Oba advised that when the legislation is passed, there will be greater accountability. Currently, the staff reports to the Commissioner of the Department of Revenue, whereas through the legislation, the staff would report to any one of the eight trustees. DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE, provided a brief history of the Alaska State Pension Board (ASPIB) legislation. He reiterated that the Board was created in 1992, leaving the staff in the Department of Revenue. With the fiduciary responsibility given the board, they must oversee $8 billion dollars. He stated that since the Board is held responsible for the funds, they should have complete authority to administer those assets. The proposed legislation would provide that authority. Commissioner Rexwinkel referenced the fiscal notes associated with the legislation stating that they do not indicate a revenue change, although the Board understands that with the authority to manage the staff, they will be able to achieve more substantial returns. The fiscal notes would cover cash-debt management of twenty-nine (29) staff increasing the staff by eight (8) positions. Discussion followed among Committee members and Commissioner Rexwinkel regarding the transfer of responsibilities through the proposed legislation. Representative Brown asked the financial effect on treasury management if the fiscal note was not approved for the eight (8) new positions. Commissioner Rexwinkel advised that currently, there is shared staffing between the Board and the Department. 13 (Tape Change, HFC 94-73, Side 2). Staff would have to be replaced in order to continue the accounting capabilities. The addition of employees would cover those lost or left within the Department. Commissioner Rexwinkel added that two new investment management staff are needed in order to increase pension funds. ROBERT STORE, CHIEF INVESTMENT OFFICER, DEPARTMENT OF REVENUE, advised that currently, the Department of Revenue provides staff to the State Pension Investment Board as well as responsibility for managing a number of their funds. In managing fixed income securities, the yield curve is generally positive. If a security has a longer investment, a higher rate of return on the investment would be expected. Staff feels with increased cash flow analysis the yield curve could be expanded which would allow less cash to be kept on hand and would provide greater comfort to move the aggregate portfolio on the yield curve. The enhanced cash flow analysis would include education and greater communication with the various agencies to allow them to understand the focus and control of that flow. Mr. Store thought with more investment officers, the low case scenario expectation for the pension fund would be $10 million dollars. Representative Brown asked for further clarification of the capital expenditure request for the $388 thousand dollars. Commissioner Rexwinkel elaborated that the note would cover costs of start-up equipment and furniture for the new employees. Discussion followed among Committee members regarding the expenditures itemized in the fiscal note. Representative Martin recommended that the fiscal note be changed to program receipts rather than the general fund source. Commissioner Rexwinkel stated that the general fund treasury component requires payment for additional staff in order that the Board can maintain its own functioning fiduciary division. He added that the Board's ability to create additional interest earnings for the general fund would be enhanced through the proposed legislation. Co-Chair MacLean MOVED to report CS HB 494 (STA) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Martin OBJECTED. Representative Martin MOVED that the fiscal note be changed to program receipts from general funds. Commissioner Rexwinkel pointed out that the Department of Revenue has been very careful not to mix the components of various 14 funds. Representative Navarre clarified that the investment will make at a minimum, $10 million dollars for the State. Representative Martin thought that the investment board should be responsible for their own costs. Representative Hanley pointed out that the program receipts from the Pension Board Account would be used to manage non-pension funds. Representative Martin WITHDREW THE MOTION. There being NO OBJECTIONS, it was removed. Representative Brown MOVED to delete $388 thousand dollars from the capital expenditures and insert $200 thousand dollars. She pointed out that at the current recommendation, $19 thousand dollars would be allocated for each employee for equipment and furniture. To provide $200 thousand dollars for capital expenditures would allocate $10 thousand dollars per employee for equipment costs. Co-Chair MacLean OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Hanley, Parnell, Therriault, Brown, Larson. OPPOSED: Hoffman, Martin, Navarre, Foster, MacLean. The MOTION PASSED (6-5). Co-Chair MacLean MOVED to report CS HB 494 (STA) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 494 (STA) was reported out of Committee with "individual recommendations" and with two fiscal notes by the Department of Revenue and a zero fiscal note by the Department of Administration dated 3/14/94. HOUSE BILL 364 "An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date." Representative Parnell advised that the subcommittee had addressed concerns of expanding the number of recipients for the permanent fund dividend. He stressed that the original intention of the fund was to encourage persons to maintain their residence in the State and to reduce a population turnover. Representative Parnell MOVED to adopt work draft #8- LS1378\0, Cook, 3/14/94 which would explain "allowable 15 absences" as the version before the Committee. Representative Martin OBJECTED for purposes of discussion and stated that the Public Health Service Corp should not be given a special dispensation. Representative Martin MOVED to delete to Page 2, Lines 28 - 29, Section (I). Representative Martin WITHDREW HIS OBJECTION on the motion to adopt the work draft. There being NO OBJECTION, it was adopted. (Tape Change, HFC 94-74, Side 1). THOMAS WILLIAMS, DIRECTOR, PERMANENT FUND DIVISION, DEPARTMENT OF REVENUE, stated that the number of Alaska Public Health Service officers claiming Alaska residence is 296, and that the number of individuals living in other states claiming Alaska residency is 200, which does not include spouses and children. Representative Brown advised that determination of exemptions should be fair. Discussion followed among Committee members regarding the differences between merchant marines and the public health service corp. A roll call vote was taken on the MOTION to delete Section IN FAVOR: Hanley, Hoffman, Martin, Therriault, Grussendorf, MacLean, Larson. OPPOSED: Parnell, Navarre, Brown, Foster. The MOTION PASSED (7-4). Representative Therriault MOVED to delete Section 2, Page 2, Lines 9-27. Representative Martin OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Hoffman, Therriault, Brown, Grussendorf, Hanley, Larson. OPPOSED: Martin, Navarre, Parnell, Foster, MacLean. The MOTION PASSED (6-5). Representative Therriault MOVED a title change to HB 364, Page 1, Lines 2-3, deleting "and to allowable absences from the state for purposes of eligibility for dividends;". There being NO OBJECTION, it was adopted. Mr. Williams stated that adoption of Section 1 would have a minimal amount of change except for those individuals who 16 were gone longer than 180 days per year. An out of state college student would be required to come back to Alaska for the summer in order to continue to qualify for the permanent fund dividend. Discussion followed among Committee members regarding college student's permanent fund dividends. Representative Parnell stated that there are a group of people in the State who are gone more than 180 days per year on State business. He MOVED a conceptual amendment to exempt a category of persons from Section 1. 1. Those who are serving the U.S. Congress as a representative or senator for the State of Alaska. 2. Those serving on the staff of a representative or senator from Alaska. 3. Those serving as an employee of the State of Alaska including employment in a field office. Following discussion regarding fully allowable absences Representative Parnell WITHDREW THE MOTION. There being NO OBJECTION, it was so ordered. HB 364 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 3:30 P.M. 17