Legislature(2003 - 2004)

04/14/2004 01:55 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 553                                                                                                          
     An Act relating  to investments of the  Alaska permanent                                                                   
     fund and  to the income  of and appropriations  from the                                                                   
     Alaska permanent fund and  making conforming amendments;                                                                   
     relating  to  the determination  of  net  income of  the                                                                   
     mental   health  trust  fund;   and  providing   for  an                                                                   
     effective date.                                                                                                            
PETE  ECKLUND,  STAFF TO  REPRESENTATIVE  WILLIAMS,  observed                                                                   
that  the  legislation  is  similar  to  HB  298,  which  was                                                                   
previously  moved from  Committee.  He discussed  differences                                                                   
between HB 298  and HB 553. He observed that Section  3 of HB
553 directs the Alaska Permanent  Fund Corporation to use the                                                                   
prudent-investor rule while investing  that value of the Fund                                                                   
in excess of principal.                                                                                                         
BOB BARTHOLOMEW,  CHIEF OPERATING  OFFICER, ALASKA  PERMANENT                                                                   
FUND CORPORATION,  DEPARTMENT  OF REVENUE, further  explained                                                                   
that statutory  directions regarding  how money in  excess of                                                                   
principal is invested  would be repealed. The  statutory list                                                                   
of allowed investments  would apply. The authority  of how to                                                                   
invest the balance in excess of  principal is currently in AS                                                                   
37.13.145,  which   is  being  repealed.  A   portion  of  AS                                                                   
37.13.145  would be  brought into  HB 553:  (a) This  section                                                                   
applies  to  investment  of  fund  principal  and  all  other                                                                   
amounts in the fund                                                                                                             
Mr. Ecklund  noted that  the Committee  might want  to change                                                                   
"general fund" to  "public education" on line 20,  page 3. He                                                                   
further explained that the cost  of operating the Corporation                                                                   
would  before  the split  occurred.  Then  not more  than  50                                                                   
percent could  be to the  General Fund [subsequently  amended                                                                   
by the  Committee to read:  "public education"] and  not more                                                                   
than 50 percent could be appropriated for dividends.                                                                            
Section 5 is the same as HB 298.                                                                                                
Mr. Ecklund  discussed page 4, lines  1 and 2. He  noted that                                                                   
the section  is basically the  same as language  contained in                                                                   
HB 298, with  the exception of the: The revenue  generated by                                                                   
the fund's  investments must be  identified as the  source of                                                                   
the  operating  budget  of  the   corporation  and  shall  be                                                                   
included in the state's operating budget under AS 37.07.                                                                       
The  only  other  difference  from  HB 298  was  on  page  5:                                                                   
disclose the amount of each dividend  attributable to [INCOME                                                                   
EARNED  BY THE  PERMANENT FUND  FROM]  appropriations to  the                                                                   
permanent fund.                                                                                                                 
Representative  Hawker  MOVED to  delete  "general fund"  and                                                                   
insert "public  education" on  line 20, page  3, in  order to                                                                   
conform  to HB  298.  There being  NO  OBJECTION,  it was  so                                                                   
Mr. Ecklund  noted that the effective  date might need  to be                                                                   
changed to  June 30,  2005. Co-Chair  Williams noted  that it                                                                   
could be changed on the House Floor if necessary.                                                                               
Co-Chair Harris MOVED to report  HB 553 out of Committee with                                                                   
the accompanying  fiscal note.  There being NO  OBJECTION, it                                                                   
was so ordered.                                                                                                                 
CSHB 553(FIN)  was REPORTED out of Committee  with individual                                                                   
recommendations and no fiscal impact notes.                                                                                     

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