Legislature(2015 - 2016)HOUSE FINANCE 519

04/13/2016 08:30 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time --
*+ HB 311 SUSTAINABLE BUDGET REPORTING TELECONFERENCED
Heard & Held
+ SB 170 DNR FEES FOR GEOLOGICAL SERVICES TELECONFERENCED
Moved CSSB 170(RES) Out of Committee
+ HB 194 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 311                                                                                                            
                                                                                                                                
     "An Act requiring the governor's fiscal plan to                                                                            
     include certain information."                                                                                              
                                                                                                                                
                                                                                                                                
9:52:22 AM                                                                                                                    
                                                                                                                                
9:52:50 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:56:04 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
9:56:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   CHARISSE   MILLETT,   SPONSOR,   introduced                                                                    
herself.                                                                                                                        
                                                                                                                                
9:56:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHARISSE  MILLETT, SPONSOR,  explained  that                                                                    
the  bill  was an  additional  tool to  help  the  budgeting                                                                    
process by  calculating a sustainable amount  that the state                                                                    
can reasonably  spend on funding  government each  year. The                                                                    
bill  would accentuate  a sustainable  budget  plan and  not                                                                    
compete   against    one.   The   legislation    took   into                                                                    
consideration  all of  the  budgetary  mechanisms the  state                                                                    
already  employed to  calculate a  "sustainable spend."  She                                                                    
believed that the bill was  a "fiscal planning tool" and was                                                                    
"relevant" to  the budget  crisis. She  shared that  she had                                                                    
worked extensively  with Dr.  Scott Goldsmith,  Institute of                                                                    
Social   and  Economic   Research,   University  of   Alaska                                                                    
Anchorage, (ISER) who currently  retired. During the process                                                                    
of  crafting  the  bill  the  amount  of  $4.5  billion  was                                                                    
calculated as  the sustainable budget amount.  She felt that                                                                    
by determining  the state's capacity for  spending each year                                                                    
the  bill   was  "generational".   She  believed   the  bill                                                                    
complemented   any   fiscal    plan   implemented   by   the                                                                    
legislature.                                                                                                                    
                                                                                                                                
9:59:32 AM                                                                                                                    
                                                                                                                                
Representative Gattis asked whether  the bill would hold the                                                                    
legislature  accountable.  She  noted her  frustration  with                                                                    
other  fiscal  plans   was  that  they  did   not  hold  the                                                                    
legislature   or  future   legislatures  accountable   to  a                                                                    
spending limit and she would  judge the legislation based on                                                                    
accountability.                                                                                                                 
                                                                                                                                
Representative Guttenberg  voiced that  he had  seen similar                                                                    
legislation over  the years.  He believed  that it  was very                                                                    
difficult in  the end  to develop a  "one page  snapshot" so                                                                    
that everyone  could understand and  base policy  around the                                                                    
information. He thought that the  approach was important and                                                                    
beneficial  and  should  happen  every  year  regardless  of                                                                    
passage of the bill.                                                                                                            
                                                                                                                                
Representative Gara  appreciated the  bill. He spoke  to the                                                                    
requirements  mandating  the  governor  to  issue  a  report                                                                    
regarding incoming  revenue excluding the net  present value                                                                    
of  oil reserves  and wondered  why. Representative  Millett                                                                    
replied  that the  answer would  be forthcoming  through the                                                                    
slide presentation on how ISER set up the calculation.                                                                          
                                                                                                                                
Vice-Chair Saddler voiced that he  did not see anything that                                                                    
precluded  including future  oil reserves  and did  not find                                                                    
the word sustainable in the legislation.                                                                                        
                                                                                                                                
BRAD KEITHLY, PRESIDENT,  KEITHLEY CONSULTING, LLC, provided                                                                    
a  PowerPoint  presentation   titled  "HB  311:  Sustainable                                                                    
Budget Reporting"  dated April 13,  2016 (copy on  file). He                                                                    
relayed  that he  would discuss  the background,  objective,                                                                    
and implementation of the legislation. He moved to slide 3:                                                                     
                                                                                                                                
Background                                                                                                                      
                                                                                                                                
     · HB 136 (28thLegislature)                                                                                                 
                                                                                                                                
     · Hearings on HB 136:                                                                                                      
        Apr. 5, 2013 (full Committee)                                                                                           
        Jan. 9, 2014 (Fiscal Policy Subcommittee)                                                                               
                                                                                                                                
     · HB 311 is the same bill                                                                                                  
                                                                                                                                
        In preparation for the 2013 testimony Dr. Goldsmith                                                                     
        and I prepared a work draft that improved some                                                                          
        provisions.                                                                                                             
                                                                                                                                
        We have included that work draft here as part of                                                                        
        this testimony.                                                                                                         
                                                                                                                                
                                                                                                                                
Mr.  Keithley  relayed that  the  bill  had originally  been                                                                    
introduced as HB  136 during the 28th  legislature. The work                                                                    
draft was  included in the  bill's backup file and  could be                                                                    
adopted  as a  Committee Substitute.  He turned  to slide  4                                                                    
which contained a quote from Dr. Scott Goldsmith:                                                                               
                                                                                                                                
Objectives                                                                                                                      
                                                                                                                                
   · Requires the Administration to calculate and submit                                                                        
     each year as part of the December budget process a                                                                         
     long term sustainable budget number                                                                                        
                                                                                                                                
          "A  spending  level  based  on  current  financial                                                                    
          assets and the  projected future petroleum revenue                                                                    
          stream which, if adopted  now, could be maintained                                                                    
          consistently  long into  the future,  adjusted for                                                                    
          inflation and population growth"                                                                                      
                                                                                                                                
Mr. Keithley  thought that the bill's  objective to annually                                                                    
calculate a long-term sustainable  budget number was simple.                                                                    
He noted that the  methodology was considered the "Goldsmith                                                                    
approach."  He discussed  the historical  volatility of  the                                                                    
price  of oil  and the  resulting revenue  ups and  downs as                                                                    
well as  spending highs and  lows. He  moved to slide  4 and                                                                    
referred  to  the  table   depicting  different  sources  of                                                                    
revenue  to  the state  in  various  colors. He  listed  the                                                                    
income   sources   considered   in  the   Goldsmith   model;                                                                    
Constitutional  Budget Reserve  (CBR), other  taxes, current                                                                    
oil  sources,   incremental  oil  revenues  from   new  oil,                                                                    
revenues from  the AKLNG Project,  divert earnings  from the                                                                    
Permanent Fund  deposit, and  Permanent Fund  Dividend (PFD)                                                                    
Earnings  Reserve funds.  He explained  that the  black line                                                                    
was calculated  by the  model and  depicted a  steady budget                                                                    
through  periods  of  time when  revenues  were  higher  and                                                                    
lower.  He delineated  that if  the state  saved money  when                                                                    
revenues  were above  the line  sufficient funding  would be                                                                    
available when  revenue dipped below  the line. The  goal of                                                                    
the process was to treat  all generations of Alaskans fairly                                                                    
through a reliable spending stream.                                                                                             
                                                                                                                                
10:10:56 AM                                                                                                                   
                                                                                                                                
Mr. Keithley addressed the goal of the bill on slide 5:                                                                         
                                                                                                                                
Objectives                                                                                                                      
                                                                                                                                
   · Goal is to provide a number that "looks through" the                                                                       
     ups and downs of the commodity cycle and identifies a                                                                      
     stable, long term (i.e., "sustainable") budget number                                                                      
                                                                                                                                
   · Not a spending cap, although it could be used for that                                                                     
     (as I and others have advocated)                                                                                           
                                                                                                                                
   · Not a fiscal plan, although it could be used for that                                                                      
     as well (as I and others have advocated)                                                                                   
                                                                                                                                
   · But in the form of HB 311 a guide to the spending                                                                          
     levels that help ride through the ups and downs of                                                                         
     commodity cycles                                                                                                           
                                                                                                                                
Mr. Keithley communicated  that the bill was  not a spending                                                                    
cap or a  fiscal plan. The bill  merely provided information                                                                    
and  would "institutionalize"  getting a  number before  the                                                                    
legislature.                                                                                                                    
                                                                                                                                
10:12:58 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:13:07 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Mr. Keithley presented slide 6:                                                                                                 
                                                                                                                                
Origin of the model                                                                                                             
                                                                                                                                
   · A response to wide swings in spending levels (and                                                                          
     economy) based on revenue levels                                                                                           
                                                                                                                                
          "How much do we need to save during a high                                                                            
          revenue period in order to be prepared to offset                                                                      
          the effect during a low revenue period"                                                                               
                                                                                                                                
Mr. Keithley  revealed that  the plans  inception came  as a                                                                    
question to Dr. Goldsmith from  bankers at Northrim Bank who                                                                    
asked him  to develop  a methodology  to determine  what the                                                                    
state would have  to save today in order to  have income for                                                                    
tomorrow  in  light  of the  revenue  volatility  the  state                                                                    
experiences. He  noted the chart  on the slide  developed by                                                                    
the Legislative Finance Division  that depicted the high and                                                                    
low revenue  periods through the  years. He turned  to slide                                                                    
7:                                                                                                                              
                                                                                                                                
Creates focus on long-term outlook                                                                                              
                                                                                                                                
     If you assume future is always like the present:                                                                           
                                                                                                                                
     • At  high prices, too optimistic  and current spending                                                                    
     overshoots the mark                                                                                                        
                                                                                                                                
     • But  pessimism is an  equal problem - at  low prices,                                                                    
     too pessimistic  and policy makers pull  tax/PFD levers                                                                    
     that unnecessarily penalize the current economy                                                                            
                                                                                                                                
     HB311 creates  a tool  to help  focus fiscal  policy on                                                                    
     the long-term  out look  to look  through high  and low                                                                    
     cycles, which is critical in a commodity based economy                                                                     
                                                                                                                                
10:16:36 AM                                                                                                                   
                                                                                                                                
Mr.  Keithley  remarked  that   the  following  slides  were                                                                    
directly from ISER. He highlighted slide 9:                                                                                     
                                                                                                                                
RECOGNIZE AND  MANAGE OUR PETROLEUM WEALTH  (ENDOWMENT) LIKE                                                                    
A DEPLETABLE ASSET                                                                                                              
                                                                                                                                
     1. How  much is it  worth?2. How  can we invest  it for                                                                    
     maximum  return?  3.  How  much  of  it  can  we  spend                                                                    
     annually without depleting it?                                                                                             
                                                                                                                                
Mr. Keithley moved  to slide 10 titled  "Petroleum Wealth of                                                                    
the "Owner State." He reported  that the chart showed ISER's                                                                    
calculation  of  the state's  wealth  (Total:  FY 2017  $125                                                                    
billion) in  the bank  ($64 billion) and  oil in  the ground                                                                    
($61  billion). He  explained  that oil  in  the ground  was                                                                    
defined  as  the  estimated  net  present  value  of  future                                                                    
petroleum revenue  based on a  three year moving  average to                                                                    
account for  volatility in  the price  of oil.  He addressed                                                                    
slide 11  titled: "How Much  Can We Spend Today:  GF Maximum                                                                    
Sustainable  Yield."  He   indicated  that  Mr.  Goldsmith's                                                                    
approach considered  the state's  fiscal assets and  the net                                                                    
present value of  the oil assets equally and  took 5 percent                                                                    
of  the  total  and  subtracted  0.8  percent  adjusted  for                                                                    
inflation  and population  growth,  which  kept the  revenue                                                                    
level per Alaskan  the same in the future  which equaled 4.2                                                                    
percent. He calculated that 4.2  percent of $125 billion was                                                                    
$5.2 billion  minus the  PFD maintained  at the  full amount                                                                    
($1.3  billion)  and  added in  non-petroleum  revenue  ($.5                                                                    
billion) and came  up with the GF  maximum sustainable yield                                                                    
in  FY  17  totaling  $4.4 billion.  He  observed  that  the                                                                    
maximum  sustainable yield  was the  number the  state could                                                                    
spend  today  from  revenue and  savings  without  adversely                                                                    
impacting  the future.  When revenues  were high  the number                                                                    
adjusted for  inflation and population growth  should remain                                                                    
the  same  and  the   surplus  deposited  into  savings.  He                                                                    
detailed that the savings needed  to be replenished to repay                                                                    
the withdrawal  from savings when  revenues were low  and to                                                                    
maintain spending  through future  periods of  low revenues.                                                                    
He reiterated that the number was not a spending cap.                                                                           
                                                                                                                                
10:22:33 AM                                                                                                                   
                                                                                                                                
Mr. Keithley  briefly examined slide 12  titled "What Should                                                                    
We  Sustain?" which  contained a  chart  that portrayed  the                                                                    
results  of maintaining  a sustainable  budget approach.  He                                                                    
summarized that  overtime more money  would be taken  out of                                                                    
earnings  to supplement  low oil  reserves  but the  savings                                                                    
would  grow and  be available  for spending.  He highlighted                                                                    
slide 13: "Maximum Sustainable Yield: Implementation."                                                                          
                                                                                                                                
  · Manage financial assets for maximum long term return                                                                        
                                                                                                                                
   · Proactively participate in management of petroleum in                                                                      
     the ground for maximum return                                                                                              
                                                                                                                                
   · Establish monitoring system to track Nest Egg value,                                                                       
     set   MSY   target,    and   track   progress   towards                                                                    
     sustainability                                                                                                             
                                                                                                                                
   · Gradually transition to GF Maximum Sustainable Yield                                                                       
     level                                                                                                                      
                                                                                                                                
Mr. Keithley  pointed out  that the  third bullet  point was                                                                    
the only  one on the slide  relevant to HB 311.  He moved to                                                                    
slide 14:                                                                                                                       
                                                                                                                                
Other perspectives                                                                                                              
                                                                                                                                
     "The State is spending  money at an unsustainable rate.                                                                    
     If  this  is  not  checked, extreme  measures  such  as                                                                    
     diverting  all  Permanent  Fund  Dividends  and  and/or                                                                    
     instituting  state  taxes  could  become  necessary  to                                                                    
     sustain spending on State programs ….                                                                                      
                                                                                                                                
     The State  has an urgent  need to develop  the practice                                                                    
     of creating  successive long-term strategic  plans with                                                                    
     annual budgets based on maximum sustainable yield of                                                                       
     the State's primary assets."                                                                                               
     -Commonwealth North (Feb. 2013)                                                                                            
                                                                                                                                
Mr. Keithley informed the committee  that The Alaska Chamber                                                                    
had   recommended   Dr.    Goldsmith's   approach   to   the                                                                    
legislature. In  addition, Commonwealth North had  looked at                                                                    
the approach  in detail in  February, 2013. He read  the two                                                                    
quotes from the slide. He underlined slide 15:                                                                                  
                                                                                                                                
     HB 311 was a tool to help keep Alaska fiscal policy                                                                        
     focused on the long-term…                                                                                                  
                                                                                                                                
10:26:08 AM                                                                                                                   
                                                                                                                                
Representative  Gattis  agreed  that   the  state  needed  a                                                                    
sustainable  budget. She  stated there  were others  who may                                                                    
disagree and planned to "play  devil's advocate" through her                                                                    
questions.  She wondered  why the  state  would assume  $125                                                                    
billion and then  exclude the major saving  account from the                                                                    
maximum  sustainable yield  formula.  Mr. Keithley  answered                                                                    
that  it had  been a  deficiency  in the  original bill.  He                                                                    
explained that when  drafting the bill a  long debate ensued                                                                    
between   Legislative  Legal   Services   and  the   sponsor                                                                    
regarding the language in the  bill that did not capture Dr.                                                                    
Goldsmith's intention.  He related  that the work  draft for                                                                    
HB 136  (Sustainable Budget) [introduced February  22, 2013]                                                                    
more  accurately   reflected  the  approach   he  described.                                                                    
Representative Gattis  read the following: "the  changes the                                                                    
bill  made to  statute  seemed  to nullify  the  basis of  a                                                                    
maximum   sustainable   yield    principal.   Your   maximum                                                                    
sustainable yield  calculation for FY 2017  was $4.4 billion                                                                    
not including the dividend. She  asked where the state would                                                                    
"get the  cash" if  the approach excluded  savings accounts.                                                                    
Mr.  Keithley replied  that the  language deficiency  in the                                                                    
current version  was incorrect and  the methodology  did not                                                                    
exclude anything.  He recapped  that the approach  drew from                                                                    
savings when in a low revenue  cycle and adds to saving in a                                                                    
high  revenue cycle.  Representative  Gattis  asked why  the                                                                    
state would be  broke in FY 2022 if  the maximum sustainable                                                                    
yield plan  worked. Mr. Keithley  answered that if  the plan                                                                    
was used the state would not  be broke in FY 22; application                                                                    
would lead the state to be solvent in FY 22.                                                                                    
                                                                                                                                
Representative Millett  interjected that  the bill  could be                                                                    
used with  any of the  fiscal plans that had  been proposed.                                                                    
She  reiterated that  the  approach  was a  tool  and was  a                                                                    
mechanism for determining a  sustainable spend. She declared                                                                    
that the  legislation was not  a panacea. The  bill provided                                                                    
the  legislature  with  a guide.  She  maintained  that  the                                                                    
sustainable  yield  was merely  "an  indicator  of what  the                                                                    
state could spend based on assumptions that we use."                                                                            
                                                                                                                                
10:32:29 AM                                                                                                                   
                                                                                                                                
Representative Wilson asked whether  the $4.4 billion number                                                                    
included  capital  and   operating  expenses.  Mr.  Keithley                                                                    
answered in the affirmative.  He elaborated that the formula                                                                    
did not care what  category the spending was. Representative                                                                    
Wilson  asked how  the plan  reconciled the  accounting when                                                                    
general  fund  spending  was moved  to  "other  funds."  Mr.                                                                    
Keithley  responded that  the tool  did not  delve into  the                                                                    
undesignated  general fund  versus  designated general  fund                                                                    
monies;  it offered  a  number that  represented  a "pot  of                                                                    
money" available for spending.                                                                                                  
                                                                                                                                
Co-Chair Neuman remarked on the  $800 million in tax credits                                                                    
that  the state  issued  to incentivize  production in  Cook                                                                    
Inlet. He  asked whether the  credits were included  "in the                                                                    
budget." Mr.  Keithley answered that  they were  included in                                                                    
the $4.4 billion;  tax credits were taking money  out of the                                                                    
treasury and  depleted the state's  revenues like  all other                                                                    
spending. Co-Chair Neuman discussed  the benefits of the oil                                                                    
credits especially  in the area of  increased throughput. He                                                                    
indicated that when the credits  were offered there was more                                                                    
oil in  the pipeline and the  price of oil was  much higher.                                                                    
He wondered  whether the  state had  to spend  extra dollars                                                                    
now  on tax  credits  above  the $4.4  billion  in order  to                                                                    
ensure that in  the future there was more  revenue coming in                                                                    
through  increased  input  in order  to  maintain  the  $4.4                                                                    
billion. He  wondered how the  plan would "level  that out."                                                                    
Mr. Keithley answered that the  methodology did "a very good                                                                    
job  of  that"  by  projecting  future  oil  production  and                                                                    
factored  in  the  tax  credits.   The  model  included  the                                                                    
calculation  of the  value of  what the  tax incentives  had                                                                    
produced  in the  future. However,  the model  informed that                                                                    
even with the  additional future value from  the tax credits                                                                    
the  spending  level  should still  be  maintained  at  $4.4                                                                    
billion.  He  reiterated  that  the bill  did  not  cap  the                                                                    
spending  amount at  $4.4  billion.  Co-Chair Neuman  stated                                                                    
that  in the  last 3  years throughput  in the  pipeline had                                                                    
increased 5 percent. He asked  whether there was a mechanism                                                                    
that  averaged  out  investing   now  for  increased  future                                                                    
throughput.  He stated  there were  $800 million  in credits                                                                    
that were unexpected and he  did not want to "touch" Prudhoe                                                                    
Bay credits in  order to maintain the  viability of Alaska's                                                                    
oil  and  gas industry.  He  reported  that the  budget  was                                                                    
roughly $4.3  billion or  $4.4 billion in  FY 17,  which was                                                                    
close to the sustainable number  but the oil and gas credits                                                                    
were  currently "dogging"  the state's  budget. He  wondered                                                                    
whether there  was a  mechanism to  average the  spending on                                                                    
credits now to maintain the $4.5 billion spend.                                                                                 
                                                                                                                                
10:39:41 AM                                                                                                                   
                                                                                                                                
Mr. Keithley  returned to a graph  on slide 7 that  showed a                                                                    
calculation of  a long-term sustainable revenue  number. The                                                                    
green on the  graph related to new oil  created from credits                                                                    
and  incentives and  depicted an  estimate of  the resulting                                                                    
volume. He reiterated  that even by taking the  new oil into                                                                    
account  the calculation  still brought  the number  to $4.4                                                                    
billion. He deduced that spending  any more than that amount                                                                    
impaired the  dollars available in the  future. He suggested                                                                    
that  decisions about  what to  spend the  money on  was not                                                                    
involved  in the  calculation. He  remarked that  the number                                                                    
took  into  account the  consequences  of  oil and  gas  tax                                                                    
credits and projected out the  future production levels. Co-                                                                    
Chair Neuman  noted that several  years ago  the legislature                                                                    
used  $3  billion  from the  Constitutional  Budget  Reserve                                                                    
(CBR)  to  pay  down  Public  Employees'  Retirement  System                                                                    
(PERS) and  Teachers' Retirement  System (TRS)  resulting in                                                                    
over  $1 billion  less in  actuarial payments.  Mr. Keithley                                                                    
responded that  it had  been a  bit different  scenario than                                                                    
oil tax  credits because the  payment was used to  lower the                                                                    
operating costs  going forward. He stressed  that the number                                                                    
that was  calculated each  year out  of the  methodology was                                                                    
what  the number  should be.  He related  that in  any given                                                                    
year if the legislature determined  that by spending more it                                                                    
would  lower future  operating costs;  the PERS/TRS  payment                                                                    
was an example,  the judgement to spend more  could be made.                                                                    
He believed  that the sustainable number  would provoke deep                                                                    
examination  to   understand  the  long-term  impact   in  a                                                                    
scenario where  spending was  above the  sustainable number.                                                                    
The bill would provide a long-term perspective.                                                                                 
                                                                                                                                
10:43:30 AM                                                                                                                   
                                                                                                                                
Co-Chair  Neuman  characterized  the   oil  tax  credits  as                                                                    
"somewhat out of the budgeting  cycle" that were investments                                                                    
for the  future and not really  part of the state's  "day to                                                                    
day" operating expenses. Mr. Keithley  agreed, but felt that                                                                    
oil tax  credits were different  than the PERS and  TRS one-                                                                    
time payment. He qualified that  the oil and gas tax credits                                                                    
were  continuing   and  the   sustainable  number   was  the                                                                    
"baseline"  measured  against  what the  legislature  should                                                                    
consider spending on credits.                                                                                                   
                                                                                                                                
Vice-Chair Saddler understood  the maximum sustainable yield                                                                    
concept and  the "caution" it  provided the  legislature. He                                                                    
wondered  what tool  was actually  created by  the bill.  He                                                                    
thought  the legislation  "did what  the governor  should do                                                                    
anyway"  and was  puzzled  that the  bill  language did  not                                                                    
address  sustainability.  Representative Millett  reiterated                                                                    
that the language in the  current version was inadequate and                                                                    
she recognized  the flaw but  introduced the  legislation in                                                                    
expediency. She shared  that she had a fix  and formula that                                                                    
explained how  the calculation worked and  remarked that the                                                                    
bill  did a  poor job  and a  new Committee  Substitute (CS)                                                                    
would be  introduced. She directed  an additional  remark to                                                                    
Co-Chair  Neuman. She  agreed that  the decisions  regarding                                                                    
PERS and TRS were  beneficial, carefully weighed, with known                                                                    
fiscal impacts. She  offered that the bill  did not prohibit                                                                    
any  future spending  above the  sustainable  number and  it                                                                    
informed the outcome  of the spending above  the number. She                                                                    
felt that  the calculation  was "just a  number in  time and                                                                    
how it  would affect"  the state's budget  and was  merely a                                                                    
"mechanism"  so  that  legislatures and  the  administration                                                                    
would  be aware  of spending  consequences in  future years.                                                                    
She thought  that a  transitional fund for  the oil  and gas                                                                    
credits could  work in concert with  the maximum sustainable                                                                    
yield.                                                                                                                          
                                                                                                                                
10:48:13 AM                                                                                                                   
                                                                                                                                
Co-Chair Thompson noted  that the bill would  be heard again                                                                    
in committee with a new Committee Substitute.                                                                                   
                                                                                                                                
Representative Munoz  felt that  the calculation was  a very                                                                    
important tool.  She asked about  the intangible  aspects of                                                                    
the net operating  losses that were difficult  to include in                                                                    
a sustainable  draw calculation and  wondered how  they were                                                                    
accounted   for.  Mr.   Keithley  replied   that  the   bill                                                                    
represented  a big  picture tool.  He mentioned  that future                                                                    
revenue was  a prediction of  revenue under the  current tax                                                                    
regime  and  the  net operating  losses  factored  into  the                                                                    
calculation  of the  net  present value  of  the future  oil                                                                    
stream.                                                                                                                         
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
HB 311 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Thompson addressed the following meeting schedule.                                                                     
                                                                                                                                

Document Name Date/Time Subjects
HB194 - Summary of Changes Ver A to Ver N.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB 194 CS WORKDRAFT FIN vG.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 - Transmittal Letter.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 Fiscal Note-DCCED-DBS-01-25-16.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 Supporting Documents - ACLI letter.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 Supporting Documents - Robert Banks letter.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 Supporting Documents - Snowbird Exemptions.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 Supporting Documents - Ver P Whitepaper.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 ver I Summary of Changes.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 ver I Sectional Analysis.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
HB194 ver I Supporting Documents - Crosswalk Ver I.pdf HFIN 4/13/2016 8:30:00 AM
HB 194
SB0170-Explanation of Changes-Version A to Version W.pdf HFIN 4/13/2016 8:30:00 AM
SB 170
SB0170-Sectional Analysis-Version W.pdf HFIN 4/13/2016 8:30:00 AM
SB 170
SB0170-Sponsor Statement.pdf HFIN 4/13/2016 8:30:00 AM
SB 170
SB0170-Supporting Document-FAQs from DNR-DGGS.pdf HFIN 4/13/2016 8:30:00 AM
SB 170
SB0170-Supporting Document-Letter-DNR-DGGS.pdf HFIN 4/13/2016 8:30:00 AM
SB 170
HB311 Sponsor Statement.pdf HFIN 4/13/2016 8:30:00 AM
HB 311
HB 311 Presentation (4.13.2016).pdf HFIN 4/13/2016 8:30:00 AM
HB 311