Legislature(2015 - 2016)SENATE FINANCE 532

03/30/2016 09:00 AM Senate FINANCE

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Audio Topic
09:03:51 AM Start
09:04:27 AM SB114 || SB128
10:58:01 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Dr. Gunnar Knapp, Director and Professor of TELECONFERENCED
Economics, ISER - UAA
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 114                                                                                                           
     "An Act  relating to deposits  into the  dividend fund;                                                                    
     and relating to the Alaska permanent fund."                                                                                
SENATE BILL NO. 128                                                                                                           
     "An  Act   relating  to  the  Alaska   permanent  fund;                                                                    
     relating  to  appropriations   to  the  dividend  fund;                                                                    
     relating  to  income  of  the  Alaska  permanent  fund;                                                                    
     relating to  the earnings reserve account;  relating to                                                                    
     the Alaska  permanent fund dividend;  making conforming                                                                    
     amendments; and providing for an effective date."                                                                          
9:04:27 AM                                                                                                                    
Co-Chair  MacKinnon   requested  that  members   hold  their                                                                    
questions until the conclusion of the presentation.                                                                             
9:05:59 AM                                                                                                                    
GUNNAR   KNAPP,  DIRECTOR   AND   PROFESSOR  OF   ECONOMICS,                                                                    
INSTITUTE  OF SOCIAL  AND ECONOMIC  RESEARCH, UNIVERSITY  OF                                                                    
ALASKA     ANCHORAGE,    introduced     the    presentation,                                                                    
"Observations on Alaska's  Economy and Economic Implications                                                                    
of Alaska's Fiscal Choices" (copy on file).                                                                                     
9:07:31 AM                                                                                                                    
Mr. Knapp presented Slide 2, "Outline":                                                                                         
     •Overview of Alaska's economy                                                                                              
     •Short-run economic impacts of Alaska fiscal options                                                                       
     •Economic  implications  of  how  fast  we  reduce  the                                                                    
     I  am  not  advocating  for or  against  any  bills  or                                                                  
Mr. Knapp relayed  that the presentation would  be a general                                                                    
overview   of  Alaska's   economy   and   would  not   speak                                                                    
specifically   to  the   pros  or   cons  of   any  specific                                                                    
9:08:51 AM                                                                                                                    
Co-Chair  MacKinnon  reiterated  her desire  that  committee                                                                    
members hold questions until the end of the presentation.                                                                       
9:09:16 AM                                                                                                                    
Mr.  Knapp   discussed  Slide  4,  "Thanks   to  the  Alaska                                                                    
Department  of Labor  and  Workforce Development  economists                                                                    
who  do  an excellent  job  tracking  Alaska's economy."  He                                                                    
related that  economists had provided  most of the  data and                                                                    
charts   used  in   the  presentation,   and  that   he  was                                                                    
responsible for the interpretation of the data.                                                                                 
9:09:51 AM                                                                                                                    
Mr. Knapp  reviewed Slide 5,  "Summary of main  points about                                                                    
Alaska's economy":                                                                                                              
     •There is significant concern about:                                                                                       
          -Are we facing a recession?                                                                                           
          -Could what we do to reduce the deficit aggravate                                                                     
          the recession?                                                                                                        
          -Could we be facing a repeat of the 1980s                                                                             
     •Despite these concerns:                                                                                                   
          -The best available evidence is that Alaska's                                                                         
         overall economy is not yet in a recession                                                                              
          -There are important positive indicators in the                                                                       
    •Several sectors of Alaska's economy are declining:                                                                         
          -Oil industry                                                                                                         
          -State government                                                                                                     
     •We probably are facing a recession                                                                                        
     •But it is unlikely that it will be as severe or                                                                           
     damaging as the 1980s recession                                                                                            
Co-Chair MacKinnon welcomed Senator Dunleavy to the table.                                                                      
9:11:27 AM                                                                                                                    
Mr.  Knapp addressed  Slide 6,  "Alaska has  had twenty-five                                                                    
years  of almost  continuous but  slowing economic  growth,"                                                                    
which showed  a graph  of the  number of  jobs in  the state                                                                    
over the previous 25 years.  He noted that growth had slowed                                                                    
since 2009.                                                                                                                     
9:11:43 AM                                                                                                                    
Mr. Knapp  looked at Slide  7, "The best  available evidence                                                                    
is that the  total Alaska economy-as measured  by the number                                                                    
of  jobs-is still  growing, but  at  a very  slow rate."  He                                                                    
indicated  that   the  preliminary  data  for   January  and                                                                    
February 2016 showed  job increases in 2015  at 0.2 percent.                                                                    
He noted that the state's growth  was less than in the Lower                                                                    
48. He  stated that when  the economy outside of  Alaska was                                                                    
doing well, while the state's  economy faltered, it resulted                                                                    
in people seeking opportunities out-of-state.                                                                                   
9:13:06 AM                                                                                                                    
Mr. Knapp turned to Slide  8, "The most recent job estimates                                                                    
show total employment  higher than a year ago."  It showed a                                                                    
bar graph that illustrated month  by month, over a year, the                                                                    
percent  change in  total state  employment.  He noted  that                                                                    
there had been negative changes  in the number over the past                                                                    
year, but  the most recent  three months for which  data was                                                                    
available reflected a slight rise in job numbers.                                                                               
9:13:38 AM                                                                                                                    
Mr.  Knapp  discussed  Slide   9,  "Alaska  personal  income                                                                    
continued to grow  in 2015." The chart showed  that in 2015,                                                                    
personal income in the state had grown significantly.                                                                           
9:13:52 AM                                                                                                                    
Mr. Knapp showed  Slide 10, "Alaska's housing  market is not                                                                  
showing signs  of significant weakness."  He said  that home                                                                    
prices had risen over the past year.                                                                                            
9:14:13 AM                                                                                                                    
Mr. Knapp  looked at Slide  11, "Alaska's housing  market is                                                                    
not showing  signs of significant weakness."  He stated that                                                                  
the foreclosure  rate in the  state was  significantly lower                                                                    
than in the rest of the country, and was declining.                                                                             
9:14:36 AM                                                                                                                    
Mr. Knapp addressed Slide 12,  "Alaska's visitor industry is                                                                    
doing  well." He  relayed that  visitor numbers  were strong                                                                    
and were projected to be high for 2016.                                                                                         
9:14:44 AM                                                                                                                    
Mr. Knapp turned to Slide  13, "Federal job losses have been                                                                    
a significant  drag on  Alaska's economy  in recent  years -                                                                    
but  these job  losses appear  to be  easing." He  said that                                                                    
there  was hope  that the  state would  not continue  to see                                                                    
losses in federal employment.                                                                                                   
9:15:24 AM                                                                                                                    
Mr. Knapp discussed Slide 14,  "But job losses are occurring                                                                    
in  selected economic  sectors…"  He  said that  significant                                                                    
layoffs  by  oil  companies  due  to  low  oil  prices  were                                                                    
affecting hiring in the state.                                                                                                  
Mr.  Knapp  looked  at  Slide  15,  "National  Oil  Industry                                                                    
Employment"  and  pointed  out  a  graph  that  showed  that                                                                    
nationally  there had  been a  drop  in the  oil rig  count,                                                                    
which had resulted in a  drop in oil industry employment. He                                                                    
said that  the state  had not experienced  the same  drop in                                                                    
employment,  in fact;  through the  third  quarter of  2015,                                                                    
North Slope  employment at  Prudhoe Bay  was the  highest it                                                                    
had  ever  been. He  stated  that  significant oil  industry                                                                    
investment reflected that the  oil industry was doing better                                                                    
than expected given the dismal state of the industry.                                                                           
9:17:14 AM                                                                                                                    
Mr. Knapp  turned back  to Slide 14,  which showed  that the                                                                    
industry   was  reporting   sizeable,  year-over-year,   job                                                                    
losses. He  expressed that this  was an area of  concern and                                                                    
uncertainty in  the economy due  to the  unpredictability of                                                                    
the situation.                                                                                                                  
9:17:48 AM                                                                                                                    
Mr.  Knapp  spoke  to  Slide 17,  "Job  losses  in  selected                                                                    
economic sectors .  . ." He thought  one factor contributing                                                                    
to the  problem, and  that was  likely to  make the  loss in                                                                    
construction jobs  grow over  time, was  the fact  that that                                                                    
capital  budget had  been  sharply cut  over  the past  four                                                                    
years. He  spoke to Slide  18, "The capital budget  has been                                                                    
cut very  sharply over  the past  four years."  He discussed                                                                    
the dramatic reduction in capital  budget, which he believed                                                                    
would result  in further reduction  in construction  jobs in                                                                    
the future.                                                                                                                     
9:19:30 AM                                                                                                                    
Mr.  Knapp showed  Slide 19,  "State  Government Job  Losses                                                                    
Growing  2015-2016." The  graph showed  the job  losses over                                                                    
2015 and  2016. He  opined that  the state  could experience                                                                    
further job losses in the future.                                                                                               
9:20:02 AM                                                                                                                    
Mr.  Knapp referred  to Slide  20, "Job  losses in  selected                                                                    
economic  sectors…",  which  illustrated  job  losses  of  5                                                                    
percent, year-after-year, into the future.                                                                                      
9:20:11 AM                                                                                                                    
Mr. Knapp looked  at Slide 21, "We are losing  jobs in high-                                                                    
wage  sectors of  the  economy," which  showed  a bar  graph                                                                    
illustrating  Alaska's  2014  average  annual  earnings.  He                                                                    
noted  that   retail  trade  jobs  had   been  growing,  but                                                                    
specified that those  jobs paid much lower than  oil and gas                                                                    
9:21:01 AM                                                                                                                    
Mr.  Knapp discussed  Slide 22,  "Alaska's Population  Gains                                                                    
Grew With  National Recession --  But Now  Slowing: Alaska's                                                                    
total  2015 population  count was  737,  624." He  explained                                                                    
that the  reason that the  population growth had  slowed was                                                                    
that people were leaving the  state [represented by the blue                                                                    
bars] and  over the  past two years  Alaska had  more people                                                                    
moving out than moving to the state.                                                                                            
9:21:14 AM                                                                                                                    
Mr.  Knapp  turned  to Slide  23,  "Alaska  Migration,  U.S.                                                                    
Jobless rate  Track Together." He indicated  that the reason                                                                    
that people  were leaving that  state was that  the national                                                                    
economy  was   doing  substantially  better   than  Alaska's                                                                    
9:22:01 AM                                                                                                                    
Mr. Knapp  moved to  Slide 24,  "Alaska Department  of Labor                                                                    
and  Workforce Development  economic projections  for 2016…"                                                                    
which depicted  the annual employment  growth in  Alaska. He                                                                    
stated  that several  organizations,  looking  at the  short                                                                    
term future, had projected significant  total job losses for                                                                    
Alaska's economy. He said that  those projections were based                                                                    
on predictions for the  oil industry, construction industry,                                                                    
and state government.                                                                                                           
9:22:45 AM                                                                                                                    
Mr. Knapp showed  Slide 25, "Alaska Department  of Labor and                                                                    
Workforce Development economic  projections for 2016", which                                                                    
charted  the  departments  percent  employment  change  from                                                                    
previous years.                                                                                                                 
9:22:53 AM                                                                                                                    
Mr. Knapp  spoke to  Slide 26,  "Alaska Department  of Labor                                                                    
and  Workforce Development  economic projections  for 2016",                                                                    
which  reflected forecasted  loss of  2,500, or  .7 percent,                                                                    
jobs in  2016. He reiterated  that the projection  was based                                                                    
on  predicted job  losses in  government, the  oil industry,                                                                    
the  construction industry,  and  professional and  business                                                                    
services. He communicated that those  losses could be offset                                                                    
by   continuing  growth   in   health   care,  leisure   and                                                                    
hospitality,     manufacturing,     retail    trade,     and                                                                    
9:23:31 AM                                                                                                                    
Mr. Knapp  discussed Slide 27,  "Alaska Department  of Labor                                                                    
and  Workforce  Development  comparison  of  their  economic                                                                    
projections for  2016 ("ours") with other  projections…" and                                                                    
qualified  that  the  projections were  fairly  similar.  He                                                                    
noted  that  the  projected job  losses  varied  by  region;                                                                    
Southeast  Alaska,   a  government   job  heavy   area,  was                                                                    
predicted to  have more  job losses than  other area  of the                                                                    
9:24:16 AM                                                                                                                    
Mr. Knapp showed Slide 28,  "The Extent Of Job Losses During                                                                    
Alaska's  "Great Recession"  Of The  1980s," which  showed a                                                                    
graph of jobs lost and gained between 1985 and 1988.                                                                            
9:25:04 AM                                                                                                                    
Mr.   Knapp  acknowledged   fears  that   the  state   would                                                                    
experience a recession  similar to the one in  the 1980s. He                                                                    
believed  that even  with the  significant negative  factors                                                                    
that  the state  now  faced, and  the economic  consequences                                                                    
that the state would experience  as the result of responding                                                                    
to the current  deficit, things would be  less dramatic than                                                                    
in the  1980s. He turned  to Slide  29, "The 1980s  and now:                                                                    
What's different?":                                                                                                             
    •Economy (as measured by jobs) is about 50% larger                                                                          
     •Older population bringing in much more retirement                                                                         
     •Alaska Native Corporations bringing significant                                                                           
     income to Alaska                                                                                                           
     •Much larger Permanent Fund dividend a stabilizing                                                                         
     factor in the economy                                                                                                      
     •Visitor industry has grown dramatically                                                                                   
     •Bank lending has been more conservative: people are                                                                       
     less overextended in their borrowing                                                                                       
     •Housing markets are much tighter and stronger                                                                             
    •We have not been experiencing a construction boom                                                                          
Mr. Knapp  turned to Slide  30, "Alaska housing  markets are                                                                    
much stronger now than they were in the 1980s":                                                                                 
     Anchorage residential building permits issued in 1983:                                                                     
     Total Anchorage residential building permits issued,                                                                       
Mr. Knapp reiterated that housing  prices were high and that                                                                    
there were fewer  newly built homes than  when the recession                                                                    
hit in  the 1980s. He  noted that  another way in  which the                                                                    
situation  differed from  that  of the  1980s  was that  the                                                                    
state  had not  been  experiencing a  construction boom.  He                                                                    
shared  that in  the 1980s,  employment in  construction was                                                                    
high and the  economy was being supported  by people earning                                                                    
money  in   that  field.  He   said  that  the   slowing  in                                                                    
construction  notably contributed  to  the recession  during                                                                    
that time.                                                                                                                      
9:29:50 AM                                                                                                                    
Mr.  Knapp  spoke  to the  number  of  residential  building                                                                    
permits that had  been issued in 1983: 9082.  He pointed out                                                                    
to the committee  that the total from 2006-2015  had been 6,                                                                    
9:30:26 AM                                                                                                                    
Mr. Knapp  discussed Slide 31,  "As Alaska's  population has                                                                    
aged,  retirement income  represents a  significantly larger                                                                    
share of Alaska  income, and a stabilizing  component of the                                                                    
economy." He observed that in  1985, the population was much                                                                    
9:31:12 AM                                                                                                                    
Mr.  Knapp displayed  Slide 32,  "ISER's study  of Short-Run                                                                    
Economic Impacts of Alaska Fiscal Options."                                                                                     
Mr.  Knapp  addressed  Slide  33,   "What  we  studied,  for                                                                    
selected fiscal options…":                                                                                                      
     •Revenue impacts of taxes and dividend cuts                                                                                
          -What share would non-residents pay?                                                                                  
          -What  share  would  be offset  by  lower  federal                                                                    
          -What would  be the relative impacts  on different                                                                    
          income groups?                                                                                                        
     •Short run economic impacts of spending cuts, taxes                                                                        
     and dividend cuts. Per hundred million of deficit                                                                          
          -What would be the impacts on Alaskans' incomes?                                                                      
          -What would be the impacts on Alaska jobs?                                                                            
     •Total economic impacts of reducing the deficit                                                                            
          -What would the total  short-run impacts on income                                                                    
          and  jobs of  reducing  the  deficit by  different                                                                    
     •Regional economic impacts                                                                                                 
          -How would  the impacts of different  options vary                                                                    
          between regions?                                                                                                      
9:32:21 AM                                                                                                                    
Mr.  Knapp  reviewed  Slide 34,"We  only  studied  short-run                                                                    
direct economic  impacts of fiscal  options. There  are many                                                                    
other important potential impacts which we didn't study":                                                                       
     •A few examples of impacts we didn't study:                                                                                
          -Economic  impacts  of  reductions  in  government                                                                    
          -Impacts on investment                                                                                                
          -Impacts on infrastructure  development & resource                                                                    
          -Impacts on labor markets & population                                                                                
     •Our fiscal choices will significantly affect Alaska's                                                                     
     •We should think about not only their short-term                                                                           
     economic impacts but also their longer-term economic                                                                       
     and social impacts.                                                                                                        
Mr. Knapp  warned that  these short  term fiscal  option had                                                                    
important, indirect, and longer  term impacts on the economy                                                                    
that  were more  important in  the long  run. He  offered an                                                                    
analogy of  choosing from 4 different  treatment options for                                                                    
an illness;  the treatment that  would keep  you healthiest,                                                                    
longest, would be the most economical choice.                                                                                   
9:34:20 AM                                                                                                                    
Mr.  Knapp  spoke to  Slide  35,  "Of  all the  options  for                                                                    
reducing the deficit, only saving  less (and using the money                                                                    
to  fund  government)  would   have  no  short-run  economic                                                                    
impacts on the Alaska economy,":                                                                                                
     •Options for saving less include:                                                                                          
          -Reducing inflation-proofing transfers to PF                                                                          
          -Adding less to the PF earnings reserve                                                                               
     •Saving less would not:                                                                                                    
          -take any money out of the economy                                                                                    
          -have any short-run impacts on jobs or income                                                                         
     •But it would reduce:                                                                                                      
          -our future investment earnings                                                                                       
          -how much savings we leave for future Alaskans                                                                        
9:35:41 AM                                                                                                                    
Mr. Knapp discussed  Slide 36, "From 2010 to  2015, we saved                                                                    
an  average  of  $1.4  billion annually  of  Permanent  Fund                                                                    
realized  earnings."  The  blue  line  showed  the  realized                                                                    
earnings and  the brown bars showed  that approximately half                                                                    
of the earnings  were spent on dividends.  He furthered that                                                                    
the  rest   of  the   earnings  had  been   saved  overtime,                                                                    
represented  by the  dark  blue and  lighter  blue bars.  He                                                                    
noted  that the  state  had been  saving approximately  $1.4                                                                    
billion  annually,  and  could potentially  be  reduced.  He                                                                    
mentioned  that the  "re-plumbing"  proposals from  Governor                                                                    
Walker  would effectively  reduce  the amount  put into  the                                                                    
9:37:01 AM                                                                                                                    
Mr. Knapp addressed Slide 37:                                                                                                   
     All of the other options for reducing the deficit,                                                                         
     including spending cuts, taxes, and dividend cuts,                                                                         
    would have significant short-run economic impacts.                                                                          
     They would all take significant amounts of money out                                                                       
     of the economy.                                                                                                            
     But they would do so in different ways, with different                                                                     
     impacts on different Alaskans and different relative                                                                       
     impacts on public and private income & jobs.                                                                               
Mr. Knapp emphasized that any  of these actions taken by the                                                                    
legislature would have an effect on the economy.                                                                                
9:38:04 AM                                                                                                                    
Mr. Knapp  looked at Slide  38, "Alaska Fiscal  Options: Who                                                                    
Would Pay?"  He said that  some of the fiscal  options would                                                                    
have the  effect of reducing  how much money  Alaskans have,                                                                    
either by  taxing them  or by  cutting dividends.  The green                                                                    
bar illustrated the  amount of money the  state could expect                                                                    
from non-residents;  an income tax would  capture money from                                                                    
people  working in  the  state, a  sales  tax would  capture                                                                    
money  from  visitors.  He noted  that  the  numbers  ranged                                                                    
between 7  and 11  percent, which was  a "silver  lining" in                                                                    
that non-residents would  contribute something. He countered                                                                    
that  the contribution  from  cutting  dividends would  come                                                                    
entirely  form Alaskan  residents.  He  elucidated that  the                                                                    
some of the  burden felt by residents could be  eased by the                                                                    
fact  that  federal  income  taxes   would  be  reduced.  He                                                                    
explained that the  state income tax could  be deductible on                                                                    
federal income tax; federal income  taxes on dividends would                                                                    
be reduced, which would offset a reduction in the dividend.                                                                     
9:40:54 AM                                                                                                                    
Mr.  Knapp  addressed Slide  39,  "We  estimated effects  of                                                                    
taxes and dividend cuts for  10 groups of Alaska households,                                                                    
grouped by  their per-capita cash  income in 2013,  from the                                                                    
lowest 10% to the highest  10%." He discussed the graph that                                                                    
divided  Alaskan   households  into   10  groups   based  on                                                                    
household  income. He  highlighted  that there  was a  great                                                                    
disparity  between  the  rich  and poor  in  the  state.  He                                                                    
expounded   that  the   highest,  to   10  percent,   income                                                                    
households  in  the state  had  an  average income  of  over                                                                    
$200,000,  while the  lowest had  an average  household cash                                                                    
income of $14,000.                                                                                                              
9:42:04 AM                                                                                                                    
Mr.  Knapp  discussed  Slide 40,  "The  three  lowest-income                                                                    
groups had average household incomes of less than $45,000.                                                                      
9:42:07 AM                                                                                                                    
Mr. Knapp looked at Slide  41, "How options affect different                                                                    
groups:  income reduction  per person."   He  explained that                                                                    
the graph summarized how the  tax and dividend options would                                                                    
affect  how  much  money  people  would  have  left  over  a                                                                    
disposable  income.  He pointed  out  to  the committee  the                                                                    
brown  line on  the chart,  which illustrated  that dividend                                                                    
cuts  would  disproportionally  affect  the  poor.  He  then                                                                    
pointed  out that  an  income  tax would  disproportionately                                                                    
affect  the  highest  income families.  He  summarized  that                                                                    
income  taxes  versus  dividend cuts  would  affect  various                                                                    
income groups  in different ways.  He said that  sales taxes                                                                    
and property taxes would reflect more of a middle ground.                                                                       
9:44:21 AM                                                                                                                    
Mr. Knapp turned to slide  42, "How options affect different                                                                    
groups:   percentage  income   reduction  per   person."  He                                                                  
explained  that the  largest  impact would  be  felt by  the                                                                    
lowest income households, who saw their dividends cut.                                                                          
9:45:00 AM                                                                                                                    
AT EASE                                                                                                                         
9:45:23 AM                                                                                                                    
Mr. Knapp turned to slide 43:                                                                                                   
     Short-run economic impacts of spending cuts depend on                                                                      
     what is cut                                                                                                                
     What  is  cut affects  the  extent  to which  the  cuts                                                                    
     directly  affect  jobs  and income  of  government  and                                                                    
     contractor   workers  and   the  resulting   multiplier                                                                    
     effects on the economy.                                                                                                    
     What is cut also affects the extent to which the cuts                                                                      
     have other short-run impacts on the economy, such as:                                                                      
          -Transportation (Marine Highway service, road                                                                         
          plowing, etc.)                                                                                                        
          -Resource    management   (fish    catches,   mine                                                                    
     You can't generalize about economic impacts of                                                                             
     spending cuts. Our estimates illustrate a range of                                                                         
     potential impacts.                                                                                                         
Mr.  Knapp emphasized  that the  effect on  the economy  was                                                                    
very dependent upon the where the cuts were made.                                                                               
9:47:21 AM                                                                                                                    
Mr. Knapp  looked at Slide  44, "Income Impacts."  The slide                                                                    
contained  a bar  graph that  detailed the  estimated income                                                                    
impacts per $100 million of  deficit reduction ($ millions).                                                                    
The  low   and  high  estimated  were   based  on  different                                                                    
assumptions about how households  and markets would react to                                                                    
changes  in  disposable  income. The  slide  reinforced  the                                                                    
argument  that actual  impacts  of  broad-based and  capital                                                                    
spending  cuts  could  be   significantly  higher  or  lower                                                                    
depending on how cuts were made.                                                                                                
9:49:15 AM                                                                                                                    
Mr.  Knapp  moved to  Slide  45,  "Job Impacts."  The  graph                                                                    
estimated job impacts per $100  million of deficit reduction                                                                    
(FTE jobs). He  noted that the job impacts  would be highest                                                                    
because  of  cuts  in  government  spending.  He  said  that                                                                    
cutting out a job  through cutting government spending would                                                                    
result in the loss of the  job, and the income that would be                                                                    
spent as  a result of being  paid for the job.  He said that                                                                    
both the cutting of jobs  and the cutting of dividends would                                                                    
reduce the spending in the economy.                                                                                             
9:50:16 AM                                                                                                                    
Mr. Knapp  looked at  Slide 46,  "Alaskan Summary  of Fiscal                                                                    
Options  & Estimated  Impacts per  $100  Million of  Deficit                                                                    
9:50:41 AM                                                                                                                    
Mr.  Knapp turned  to  Slide 47,  "The  Permanent Fund  "re-                                                                    
plumbing"  proposals  would  reduce the  deficit  through  a                                                                    
combination  of  cutting  dividends  and  saving  less."  He                                                                    
postulated  that some  of the  funds from  the ERA  would be                                                                    
diverted in order  to pay for state  government. He believed                                                                    
that  the dividend  cuts would  have  a high  effect on  the                                                                    
economy,  while saving  less  would have  no  effect on  the                                                                    
9:51:41 AM                                                                                                                    
Mr.  Knapp  spoke  to  Slide  48,  "Examples  of  Ranges  of                                                                    
Estimated  Economic  Impacts  Per $100  Million  of  Deficit                                                                    
Reduction Resulting from  Selected Potential Combinations of                                                                    
Fiscal  Options."  The slide  showed  a  table that  plotted                                                                    
examples of potential combinations  of options and the range                                                                    
of estimated impacts.                                                                                                           
9:52:18 AM                                                                                                                    
Mr.  Knapp moved  to  Slide 49,  "Estimated  income and  job                                                                    
impacts of  reducing the deficit by  different amounts using                                                                    
different options."                                                                                                             
9:53:01 AM                                                                                                                    
Mr.  Knapp   addressed  Slide  50,  "How   big  is  Alaska's                                                                    
economy?"  He noted  that in  2014, personal  income in  the                                                                    
state was $39 billion and total employment was 465,130.                                                                         
9:53:34 AM                                                                                                                    
Mr.  Knapp  looked at  the  table  on Slide  51,  "Estimated                                                                    
percentage  income  impacts  of   reducing  the  deficit  by                                                                  
different  amounts using  different  options." He  explained                                                                    
that the table  offered ball-park estimates of  the scale of                                                                    
impacts from reducing the deficit at different magnitudes.                                                                      
9:54:53 AM                                                                                                                    
Mr.  Knapp discussed  Slide  52,  "Estimated percentage  job                                                                  
impacts of  reducing the deficit by  different amounts using                                                                  
different options."                                                                                                             
9:55:21 AM                                                                                                                    
Mr. Knapp  looked at Slide  53, "Income  distribution varies                                                                    
for different regions  of Alaska." He noted  that Juneau was                                                                    
the  highest income  region in  the state  and the  Kusilvak                                                                    
Census  Area was  the  lowest  - in  the  state  and in  the                                                                    
country.  He  reiterated that  dividend  cuts  would have  a                                                                    
greater effect  on lower income  Alaskans and an  income tax                                                                    
would affect more high income Alaskans.                                                                                         
9:56:26 AM                                                                                                                    
Mr. Knapp spoke  to Slide 54. The chart listed  the share of                                                                    
state  government   jobs  in   wage  and   salary  earnings.                                                                    
Regional  economic  impacts  of state  spending  cuts  would                                                                    
depend  on how  important state  government jobs  and income                                                                    
were in  the regional economy.  Some regions were  much more                                                                    
dependent  than  others.  He pointed  out  that  Juneau  was                                                                    
highly dependent on state government  jobs, more so than the                                                                    
North Slope Borough - which had no state jobs.                                                                                  
9:56:56 AM                                                                                                                    
Mr. Knapp looked at Slide 55.  The chart listed the share of                                                                    
local government jobs in wage  and salary earnings. Regional                                                                    
economic   impacts  of   cuts  to   revenue  sharing,   K-12                                                                    
education, and  other ways that  state spending  helped fund                                                                    
local  government  would  depend   on  how  important  local                                                                    
government jobs  were in the regional  economy. Some regions                                                                    
were  much more  dependent than  others. He  noted that  the                                                                    
poorer areas of Western Alaska  had a relatively far greater                                                                    
dependence  on local  government, much  of which  was school                                                                    
district employment.                                                                                                            
9:58:07 AM                                                                                                                    
Mr.  Knapp looked  at Slide  57, "We  have lost  billions of                                                                    
dollars of oil revenues":                                                                                                       
     We will experience significant economic impacts of                                                                         
     adjusting to lower oil revenues.                                                                                           
     •Impacts of spending cuts we've already made:                                                                              
          -Impacts of capital budget cuts on construction                                                                       
          -Delayed because capital projects take several                                                                        
          -Actual capital spending will decline as money                                                                        
         from past large capital budgets runs out                                                                               
    •Impacts of future adjustments we will have to make                                                                         
          -Spending cuts                                                                                                        
          -Dividend cuts                                                                                                        
     •It's not a question of whether we will face these                                                                         
          -It's only a question of when.                                                                                        
Mr.  Knapp asserted  that  the  most optimistic  projections                                                                    
showed  the state  having billions  of dollars  less in  oil                                                                    
revenue  than in  the  recent past.  He  contended that  the                                                                    
state  would need  to  adjust  to the  loss  of oil  revenue                                                                    
sooner rather than later.                                                                                                       
9:59:49 AM                                                                                                                    
Mr. Knapp showed Slide 58, "Alaskans are justifiably                                                                            
concerned about the impacts of deficit reduction on an                                                                          
already weakened economy":                                                                                                      
     •We are already experiencing the impacts of:                                                                               
          -Oil industry job losses                                                                                              
          -Past state capital budget reductions                                                                                 
          -State government job losses                                                                                          
          -Mining industry downturn                                                                                             
          -Low salmon prices                                                                                                    
     •These impacts would be increased by large:                                                                                
          -Spending cuts                                                                                                        
          -New taxes                                                                                                            
          -Dividend cuts                                                                                                        
10:00:43 AM                                                                                                                   
Mr. Knapp moved to Slide 59:                                                                                                    
     We can reduce the direct short-run economic impacts of                                                                     
     reducing the deficit by continuing to draw down our                                                                        
     Continued large deficits and draws from our savings                                                                        
     would also have significant negative economic impacts.                                                                   
10:01:25 AM                                                                                                                   
Mr. Knapp looked at slide  60, "Negative economic impacts of                                                                    
continued large  deficits…" He stated rating  agencies would                                                                    
certainly downgrade  the state's credit rating  if the state                                                                    
continued to run large deficits  and did not show creditably                                                                    
that  it  had  if  financial house  in  order,  which  would                                                                    
increase future borrowing costs.                                                                                                
10:01:50 AM                                                                                                                   
Mr. Knapp discussed Slide 61,  "Negative economic impacts of                                                                    
continued large  deficits…" The slide reflected  the loss of                                                                    
future  investment  income for  every  $1  billion that  the                                                                    
state drew down from savings.                                                                                                   
10:02:48 AM                                                                                                                   
Mr. Knapp spoke  to Slide 62, "Negative  economic impacts of                                                                    
continued large deficits…":                                                                                                     
     Potential future insufficiency of cash in Permanent                                                                        
     Fund earnings reserve to cover otherwise sustainable                                                                       
     payouts of Permanent Fund investment earnings in low-                                                                      
     earnings years.                                                                                                            
10:04:05 AM                                                                                                                   
Mr. Knapp addressed Slide 63,  "Negative economic impacts of                                                                    
continued large deficits . . .":                                                                                                
     Lack of time for new taxes to begin to bring in                                                                            
     revenues before we really need the money.                                                                                  
10:04:37 AM                                                                                                                   
Mr. Knapp spoke  to slide 64, "Negative  economic impacts of                                                                    
continued large  deficits . .  .": He said that  the biggest                                                                    
negative  impact of  continued large  deficits would  be the                                                                    
continued and growing uncertainty  about Alaska's fiscal and                                                                    
economic future among  Alaskans, Alaska businesses, Resource                                                                    
industries, and Public and private employees.                                                                                   
10:05:23 AM                                                                                                                   
Mr.  Knapp  turned  to slide  65,"Economic  implications  of                                                                    
        · Alaska businesses postpone investment                                                                                 
        · Alaskans postpone spending and investment                                                                             
        · Young Alaskans leave                                                                                                  
        · The best employees leave                                                                                              
        · Resource industries invest elsewhere                                                                                  
     People focus on the negative  impacts of what is coming                                                                    
     rather than on moving forward.                                                                                             
10:06:39 AM                                                                                                                   
Mr. Knapp addressed Slide 66:                                                                                                   
     We  face  a  tradeoff between  the  short-run  negative                                                                    
     economic  impacts  of  reducing  the  deficit  and  the                                                                    
     significant short-run  and longer-run  economic impacts                                                                    
     of not reducing the deficit.                                                                                               
10:07:08 AM                                                                                                                   
Mr. Knapp looked at Slide 67, "How can we minimize the                                                                          
economic impacts of adjusting to permanently lower oil                                                                          
     •Probably not by fully closing the deficit this year.                                                                      
     •Certainly  not by  running another  huge deficit  this                                                                  
10:07:51 AM                                                                                                                   
Mr. Knapp turned to Slide 68, "We will have a smoother                                                                          
economic tradition to the reality of lower oil revenues if                                                                      
     •Significantly reduce the deficit this year                                                                                
     •Make real choices about how we will reduce the rest                                                                       
          -Even if we implement them over several years                                                                         
     •Reduce  uncertainty  and  build confidence  about  our                                                                    
     economic future                                                                                                            
10:08:28 AM                                                                                                                   
Mr. Knapp addressed Slide 69:                                                                                                   
     If the fall  in our oil revenues was  temporary then it                                                                    
     would make  sense to run  deficits to help  support the                                                                    
     economy. But the fall in our oil revenues is not                                                                         
     temporary. We can't indefinitely support the economy                                                                       
     by running deficits.                                                                                                       
10:09:17 AM                                                                                                                   
Mr. Knapp concluded with Slide 70:                                                                                              
     Not paying for what we spend this year means that our                                                                      
     children will pay for what we spend this year.                                                                             
10:09:59 AM                                                                                                                   
Co-Chair MacKinnon thanked Mr. Knapp for his presentation.                                                                      
10:10:09 AM                                                                                                                   
Senator Dunleavy  asked how  many years,  realistically, the                                                                    
process would be  for Alaska to regain  economic footing. He                                                                    
wondered  what   kind  of  action  the   state  should  take                                                                    
immediately.  He  believed  more reductions  were  necessary                                                                    
before revenue measures were considered.                                                                                        
10:12:12 AM                                                                                                                   
Mr. Knapp  thought there was a  trade-off, negative economic                                                                    
impact of  acting immediately  versus the  negative economic                                                                    
impact  of  doing  nothing.  He   said  that  there  was  an                                                                    
advantage  to  taking  time in  making  important  decisions                                                                    
about taxes and spending  cuts; however, the state's savings                                                                    
were down  to a level  that did not  allow for much  time to                                                                    
delay.  He  stated that  he  did  not  know the  answer.  He                                                                    
guessed that since there was  an urgency to make significant                                                                    
progress in reducing the deficit,  the thing that would have                                                                    
the  biggest, most  obvious, impact  should  be done  first.                                                                    
Leaving the most complicated,  and/or minimally effective in                                                                    
raising revenue, for a later date.                                                                                              
Mr. Knapp  urged the committee  to limit the amount  of time                                                                    
spent on the  exact way to design a tax  that would bring in                                                                    
$20 million. He thought that  focusing on the Permanent Fund                                                                    
proposals was a smart place  to begin because that was where                                                                    
very large  amounts of money,  that could make  a meaningful                                                                    
reduction in the deficit, would be realized.                                                                                    
10:15:43 AM                                                                                                                   
Mr. Knapp stated he was  very cognizant of the complexity of                                                                    
the Permanent Fund proposals.                                                                                                   
10:16:10 AM                                                                                                                   
Senator Dunleavy  asked whether waiting a  year would result                                                                    
in lost opportunities or gained opportunities.                                                                                  
Mr.  Knapp thought  one  year  was both  a  lost and  gained                                                                    
opportunity.  He said  that billion  dollar deficits  were a                                                                    
major lost opportunity  for the future. He  countered that a                                                                    
year could  also buy  time for  clearer thinking  and making                                                                    
better choices.                                                                                                                 
10:16:51 AM                                                                                                                   
Co-Chair MacKinnon  stated that Mr. Knapp's  approach to the                                                                    
problem mirrored that of the  committee. She relayed that in                                                                    
a  press conference  the committee  had committed  to taking                                                                    
the highest priority issues, with  the largest impact, first                                                                    
at the table.                                                                                                                   
10:17:13 AM                                                                                                                   
Vice-Chair Micciche pointed out  that early ISER studies had                                                                    
counted  on revenue  that was  no longer  a possibility.  He                                                                    
said that the  study made the claim that the  state could do                                                                    
a sustainable draw  without requiring new taxes  to fill the                                                                    
deficit. He  wondered whether  it would  be possible  to fix                                                                    
the fiscal gap problems without additional taxes.                                                                               
Mr.  Knapp replied  that  the state  needed  to determine  a                                                                    
sustainable level of spending  that could be reached without                                                                    
taxes or dividend cuts. He  said that the answer depended on                                                                    
assumptions  about future  oil  revenues.  He lamented  that                                                                    
there  was no  sure  answer, only  an  either optimistic  or                                                                    
pessimistic attitude toward the  oil revenue outlook and the                                                                    
future  of Permanent  Fund  investment  earnings. He  opined                                                                    
that the  state did not have  a better handle on  the future                                                                    
revenue  outlook. He  reiterated that  an agreement  on what                                                                    
size budget was sustainable  was imminent. He counselled the                                                                    
committee to  determine what  a long  term savings  goal for                                                                    
the state.  He thought that  a semantic conversation  on the                                                                    
word "sustainable" could help.  He said that these variables                                                                    
meant that  the amount that would  need to be saved  for the                                                                    
future could  vary widely. He  said that his best  guess for                                                                    
future  oil revenue  was $2billion  to $2.5  billion in  oil                                                                    
revenue  moving  forward  and   $2.5  billion  on  potential                                                                    
Permanent Fund earnings, which meant  $4 to $4.5 billion was                                                                    
the  amount  of  money  that would  be  available  for  both                                                                    
dividends and government combined.                                                                                              
10:21:53 AM                                                                                                                   
Mr.  Knapp relayed  that if  the committee  did not  want to                                                                    
change dividends there would be  approximately $3 billion to                                                                    
fund government.  He thought  that number  was low  and that                                                                    
new revenues would  be needed. He said the only  way to find                                                                    
out  if the  gap  could be  filled  without taxing  Alaskans                                                                    
would  be to  determine  a realistic  spending limit  moving                                                                    
forward, while also determining a goal for dividends.                                                                           
10:23:33 AM                                                                                                                   
Mr.  Knapp stated  that  his instincts  told  him the  state                                                                    
could not solve the problem without new revenue measures.                                                                       
10:23:41 AM                                                                                                                   
AT EASE                                                                                                                         
10:24:22 AM                                                                                                                   
Vice-Chair Micciche referred to  Slide 67, which referred to                                                                    
not running  a large deficit  in the current year.  He asked                                                                    
how  to  differentiate  between a  sustainable  draw  and  a                                                                    
"relatively"  sustainable draw.  He  asserted  that no  draw                                                                    
would be deficit spending and unsustainable.                                                                                    
10:25:21 AM                                                                                                                   
Mr.  Knapp stated  that sustainably  saving  less meant,  on                                                                    
average,  what  the  expected earnings  would  be  from  the                                                                    
Permanent  Fund,  and what  the  average  savings would  be.                                                                    
Drawing  down  the  ERA  would  not  equate  to  sustainable                                                                    
10:25:59 AM                                                                                                                   
Senator Bishop  commented that Page  4 of  the presentation.                                                                    
He relayed that he appreciated  the sentiment on Page 69. He                                                                    
agreed  that the  state could  not indefinitely  support the                                                                    
economy   by  running   deficits.  He   believed  that   the                                                                    
legislature  needed  to  act immediately  because  a  dollar                                                                    
spent in deficit spending today  was a dollar that would not                                                                    
be recovered.                                                                                                                   
10:28:20 AM                                                                                                                   
Co-Chair Kelly referred  to Page 68 of  the presentation. He                                                                    
asserted  that Mr.  Knapp's  original  presentation had  not                                                                    
been embraced by the administration.  He quoted the original                                                                    
     "We will  have a smoother economic  transition to lower                                                                    
     oil revenue  if we make significant  progress this year                                                                    
     than if  we fail to  make significant progress  at all,                                                                    
     or if we fully close the deficit this year."                                                                               
Co-Chair  Kelly was  concerned that  Mr. Knapp  had adjusted                                                                    
his   rhetoric   in   response    to   feedback   from   the                                                                    
administration. He  encouraged Mr.  Knapp not to  get pulled                                                                    
in to the  politics of the situation. He  referred to recent                                                                    
layoffs  in  the oil  industry.  He  asked whether  the  job                                                                    
losses discussed on Slide 24 used a 20 to 1 multiplier.                                                                         
10:31:18 AM                                                                                                                   
Mr. Knapp responded that  anytime multipliers were discussed                                                                    
it was necessary  to define what was meant  by a multiplier.                                                                    
He said that every time an  oil company stated that they had                                                                    
laid  off a  certain  number  of employees  it  was safe  to                                                                    
assume  each job  loss  affected several  more  jobs in  the                                                                    
state. He  felt that a  20 to 1  multiplier was too  large a                                                                    
Mr. Knapp asserted  that he believed in the  rhetoric of his                                                                    
current   presentation.   He   thought   that   there   were                                                                    
significant,  negative  economic  impacts  of  reducing  the                                                                    
deficit this year.  He added that he had  been troubled that                                                                    
this  had been  interpreted  as nothing  needed  to be  done                                                                    
immediately. He  clarified that the state  faced a difficult                                                                    
and uncertain  trade-off; he  thought that  something needed                                                                    
to be  done this year,  but that doing everything  this year                                                                    
that  the administration  suggested  would not  be the  best                                                                    
solution. He stated that he had  focused on the problem as a                                                                    
professional  economist, examining  the different  ways that                                                                    
all of the  different choices would affect  the economy, and                                                                    
had  given his  best  professional opinion.  He assured  the                                                                    
committee  that   he  was  not   trying  to  say   what  was                                                                    
politically  popular  on  either side  of  this  complicated                                                                    
10:33:39 AM                                                                                                                   
Co-Chair   Kelly  expressed   confidence   in  Mr.   Knapp's                                                                    
conclusions.  He felt  that  all options  should  be on  the                                                                    
table and at a certain  point revenue measures would need to                                                                    
be discussed.  He believed a  serious progress needed  to be                                                                    
made this in in budget  reductions and use of investments so                                                                    
that   the  state   could  provide   a  shock   absorber  to                                                                    
fluctuating  oil prices.  He expressed  concern that  people                                                                    
were   uncomfortable    discussing   systemic    change   to                                                                    
government, which  he believed should  be one of  the issues                                                                    
on the  table. He spoke  of legislation under  discussion in                                                                    
committee  that  dealt  with  some of  the  "dumb  that  was                                                                    
hardwired   into   government."   He   believed   that   the                                                                    
administration  was trying  to protect  the current  size of                                                                    
government, which he did not  believe needed to be sustained                                                                    
at  current levels.  He thought  that  the discussion  about                                                                    
reducing the  size of  government had to  occur, as  well as                                                                    
discussions surrounding using investment income.                                                                                
10:37:01 AM                                                                                                                   
Senator  Hoffman  referred to  Slide  5,  which discussed  a                                                                    
summary  of main  points about  Alaska's  economy. He  noted                                                                    
that there had  been no mention of local  governments in the                                                                    
presentation. He  asked Mr.  Knapp to  comment where  he saw                                                                    
local governments and their economies  in the current fiscal                                                                    
Mr. Knapp thought that local  governments were going to play                                                                    
an  important  role  in  the  matter.  He  said  that  local                                                                    
governments, including school  districts, were major drivers                                                                    
of the economy. He felt that  it would be important into the                                                                    
future to  clearly define the responsibilities  of state and                                                                    
local  governments.  He  relayed   the  state  could  reduce                                                                    
spending   by   shifting   more  responsibility   to   local                                                                    
governments,  which could  result  in an  increase in  local                                                                    
taxes,  user fees,  and other  revenue measures.  He thought                                                                    
that the legislature made  concerning state government would                                                                    
directly impact local governments.                                                                                              
10:40:10 AM                                                                                                                   
Senator  Hoffman  referred  to  Slide  38,  which  discussed                                                                    
Alaska's fiscal options  and who should pay,  and asked what                                                                    
flat rate had been used in the flat tax projection.                                                                             
Mr. Knapp replied that he did not know.                                                                                         
Senator   Hoffman  had   heard  that   the  flat   rate  was                                                                    
approximately 6 percent of the federal rate.                                                                                    
10:41:09 AM                                                                                                                   
Mr.  Knapp agreed  to get  back  to the  committee with  the                                                                    
information. He  added that the numbers  in the presentation                                                                    
had  been  standardized  to  the  effect  per  $100  million                                                                    
10:41:25 AM                                                                                                                   
Senator  Bishop  requested   clarification  on  Mr.  Knapp's                                                                    
statement  that,   "doing  everything   is  not   best."  He                                                                    
concurred  that  the state  should  not  implements a  broad                                                                    
based suite  of taxes all  at one  time, but they  should be                                                                    
meted out over time.                                                                                                            
Mr. Knapp believed that if  the state tried to eliminate the                                                                    
deficit  with a  combination  of spending  cute, taxes,  and                                                                    
smaller dividends all  this year, the impact  on the economy                                                                    
would be enormous  very quickly. He thought  that phasing in                                                                    
the solutions,  while using savings  to fill gaps,  could be                                                                    
less harsh.  He asserted that  the state was not  broke; the                                                                    
state had savings enough to reduce the deficit for a while.                                                                     
10:44:13 AM                                                                                                                   
Senator  Hoffman referred  to his  statement that  the state                                                                    
was  broke,  and  he  clarified  that  in  the  current  and                                                                    
subsequent fiscal  year, the state  would burn  through $7.7                                                                    
billion. He  thought that the  state needed to  take drastic                                                                    
measures or the  state would be bankrupt. He  hoped that the                                                                    
people of Alaska realized the state was in a fiscal crisis.                                                                     
10:45:20 AM                                                                                                                   
Senator  Olson  asked Mr.  Knapp  what  specific action  the                                                                    
legislature should take to begin  to solve Alaska's economic                                                                    
Mr. Knapp said  that he practiced neutrality in  his role as                                                                    
ISER  director. He  thought that  the choices  would reflect                                                                    
political value judgements and well  as hard numbers. He did                                                                    
not think that it was his place to answer the question.                                                                         
He  advised  that  the  state   begin  partially  using  the                                                                    
investment  earnings of  the permanent  fund to  address the                                                                    
deficit.  He   pointed  out  to   the  committee   that  the                                                                    
investment  earnings  were  higher  that  oil  revenues.  He                                                                    
believed that  great thought should  be given to the  use of                                                                    
the  earnings,  but  that  time   was  of  the  essence.  He                                                                    
highlighted  that people  who believed  that Permanent  Fund                                                                    
earnings should  not be touched by  definition believed that                                                                    
drastic cuts  to state government  should be made  and taxes                                                                    
increased. He urged the committee  to develop a responsible,                                                                    
sustainable way to  use the earnings that  would provide for                                                                    
the needs of Alaskans for state services.                                                                                       
10:50:33 AM                                                                                                                   
Senator Olson wondered  which bill Mr. Knapp  would have his                                                                    
own child invest in: SB 114 or SB 128.                                                                                          
Mr. Knapp replied  that he leaned toward  the POMV approach.                                                                    
He believed  that strong  arguments could  be made  for both                                                                    
pieces of legislation.                                                                                                          
10:51:38 AM                                                                                                                   
Co-Chair  MacKinnon  referenced  Slides  41  and  53,  which                                                                    
looked at how the  options affected different groups: income                                                                    
reduction  per person,  and how  income distribution  varied                                                                    
for different regions of  Alaska, respectively. She wondered                                                                    
whether  data on  which individual  Alaskans were  receiving                                                                    
services  from programs  that received  the most  government                                                                    
funds.  She   highlighted  that  some  Alaskans   were  more                                                                    
dependent on  government subsidies;  beyond the  dividend or                                                                    
their  work  they  were   receiving  food  stamps,  Medicaid                                                                    
services,  or  other  services   for  which  the  state  was                                                                    
contributing. She said that when  looking at the income base                                                                    
and comparing a dividend impact  on an individual, versus an                                                                    
income tax, when 48 percent  of Alaskan's would not pay. She                                                                    
wondered about the 48 percent  that would not pay the income                                                                    
tax  and queried  the impact  percentage for  subsidies that                                                                    
they received from  state government. She believed  it was a                                                                    
question of fairness.                                                                                                           
Mr. Knapp  stated that ISER  had not studied the  topic, but                                                                    
thought  it was  an important  question. He  thought it  was                                                                    
important  to  look  at  the  distribution  of  benefits  of                                                                    
10:53:51 AM                                                                                                                   
Co-Chair MacKinnon asked who paid  for the study of the data                                                                    
on Slide 41.                                                                                                                    
Mr. Knapp  replied that he  had approached  the Commissioner                                                                    
of DOR,  who had provided  $30,000 of the funds  to research                                                                    
the data, and the Office  of Management and Budget (OMB) had                                                                    
contributed $30,000;  both DOR and  OMB had left  the design                                                                    
of the study to ISER.                                                                                                           
10:55:56 AM                                                                                                                   
Co-Chair MacKinnon  wanted to know  if DOR and OMB  could do                                                                    
some research  and answer  her question  about how  much the                                                                    
state was  already investing in certain  individual families                                                                    
livelihoods, before  valuing a  dividend deduction  versus a                                                                    
state income tax.                                                                                                               
Mr.  Knapp assured  Co-Chair MacKinnon  that he  thought the                                                                    
topic was important.                                                                                                            
10:56:48 AM                                                                                                                   
Co-Chair MacKinnon  referred to Slide 54.  She requested the                                                                    
actual number of state jobs deployed in each region.                                                                            
Co-Chair MacKinnon  referred to Slide 55.  She requested the                                                                    
dollar  value of  the  percentage in  order  to augment  the                                                                    
information as the committee considered the information.                                                                        
Dr. Knapp replied  that he would provide  the information to                                                                    
the committee.                                                                                                                  
SB  114  was  HEARD  and   HELD  in  committee  for  further                                                                    
SB  128  was  HEARD  and   HELD  in  committee  for  further                                                                    
10:57:08 AM                                                                                                                   
Vice-Chair Micciche hoped to ask Dr. Knapp more questions                                                                       
at a later date.                                                                                                                
Co-Chair MacKinnon stated that she would be sure that he                                                                        
was available to the committee for further discussion.                                                                          

Document Name Date/Time Subjects
SB 128 - 114 Public Testimony Support 5.pdf SFIN 3/30/2016 9:00:00 AM
SB 128
SB 128 - 114 Public Testimony Opposition 5.pdf SFIN 3/30/2016 9:00:00 AM
SB 128
SB 128 - SB 114 033016 Gunnar Knapp-Presentation for Senate Finance Committee Corrected.pdf SFIN 3/30/2016 9:00:00 AM
SB 114
SB 128