Representative Matt Claman's Alaska Matters
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Protecting Your Rights: Serving Sand Lake, Spenard, and Turnagain
April 15, 2017
In this issue:
• Budget: Revised Senate Bill 26 & House
Bill 111
• Eliminating Civil Settlement Reporting
Requirements
• Sham Jam
• Community Events

Dear Friends and Neighbors,

We’re in the last days of the 90-day legislative session and the House and Senate are picking up the pace as the deadline approaches. The legislature will likely go past the 90-day deadline as we work to finish as soon as possible. The budget remains our top priority and we’re committed to working together to create a responsible action plan for Alaska.

Budget: Revised Senate Bill 26 and House Bill 111

Two weeks ago, we reported on the two proposals for the Permanent Fund restructure. This week, we look at how the proposals have changed.

At the beginning of the year, the Alaska House Majority Coalition identified four pillars of a responsible action plan for Alaska: (1) structured use of the Permanent Fund Earnings Reserve while protecting the Dividend, (2) reformation of the oil tax system (3) new revenue from a broad-based tax, and (4) smart budget cuts. Senate Bill 26 contains provisions for a sustainable draw from the Earnings Reserve and protects the Dividend, while House Bill 115 produces new revenue through a broad-based tax. House Bill 111 reforms subsidies to Alaska’s oil and gas industry.

The House Substitute for SB 26 passed the House of Representatives by a vote of 22-18. Before passing the House, the House Finance Committee made substantial changes to the Senate’s version of the bill. These changes created a sustainable draw from the earnings of the Alaska Permanent Fund while still paying out Dividends and protecting the principal of the fund. The House made the following changes to the Senate version:

  • The annual Percent of Market Value (POMV) draw of 5.25% from the total value of the Permanent Fund will continue for 2 years, and then revert to a 5.00% POMV annual draw. Under the Senate version, the 5.25% draw continued for 3 years.
  • For FY18, which begins on July 1, 2017, the draw from the Permanent Fund Earnings Reserve will be approximately $2.5B. 33% of the draw will be used for Dividends while the remaining 67% will be placed in the General Fund. The Senate version allocated only 25% to Dividends and the remaining 75% to the General Fund. The result of the House version is a decrease in the deposit into the General Fund from $1.8B to $1.7B, and an increase in the Dividend from $1000 to $1250.
  • The House version protects the Alaska Permanent Fund Principal by inflation proofing the fund every year with 0.25% of the POMV sustainable draw. 
  • The Senate version also included an appropriation limit—a spending cap of $4.1 billion. The House removed this proposed appropriation limit.
  • The revised version of SB 26 also adds conditional language that links the Permanent Fund provisions to a comprehensive financial plan. SB 26 will only take effect if the Alaska Legislature also passes oil and gas subsidies reform and approves a broad-based revenue measure to support public education, which bears the brunt of the Senate’s proposed budget cuts this year.

The bill now goes back to the Senate for concurrence. If the Senate does not accept the changes made in the House, a Conference Committee of members from both bodies will have the task of resolving the differences between the two versions.

House Bill 111, which we wrote about in February, was also revised by the House Finance Committee. The version that passed the House Resources Committee increased a company’s minimum tax rate from 4 percent to 5 percent, reduced the Net Operating Losses (NOL) credits, capped cash subsidy payments at $35 million per year and reduced the per-barrel tax credit. The House Finance Committee made further revisions to the bill. The new version restructured NOL credits by eliminating the credits for all North Slope production while maintaining the credits for the ‘Middle Earth’ area—the non-North Slope or Cook Inlet areas. The House Finance version also limits the companies to collecting the credits only for the field where they earn the credits. The revised bill lowers tax rates from 35 percent to 25 percent when oil prices are under $160 per barrel. It also hardens the minimum tax floor by mandating that no credits can bring the tax rate below the current minimum production tax rate of 4 percent. Finally, the bill requires the taxpayers to disclose credit and lease expenditure reports to the Department of Natural Resources.

HB 111 as revised by the House Finance Committee increases state revenues by $100-200 million at oil prices between $40-100 per barrel. The House passed the bill on Tuesday by a vote of 21-19. The legislation now moves to the Senate for consideration.

Eliminating Civil Settlement Reporting Requirements: House Bill 104

Earlier this week, the Senate voted unanimously to pass House Bill 104, which eliminates the requirement to report civil case settlements. The House Judiciary Committee introduced the legislation earlier this session.

In 1997, the legislature passed tort reform legislation. One part of the legislation required that the Alaska Judicial Council report on closed civil cases, using data from forms completed by attorneys and parties in the cases. Since then, as required by statute, the Judicial Council has collected data provided by attorneys and litigants and produced three reports. In its last report in November 2011, the Alaska Judicial Council reported that from January 2001 through December 2010, 88,873 cases resolved in the Alaska Court system were subject to the reporting requirement. Because each case had at least two parties, the Council should have received 177,746 or more reports. Unfortunately, the Council only received 23,257 reports, approximately 13 percent of the reports it should have received. The low response rate made the data collected unreliable for analysis.

Eliminating the reporting requirement has received support from attorneys and civil litigants. The existing reporting requirement was burden for those who adhered to it and unenforceable for those who didn’t. Preparation and filing of these forms imposes a financial cost on individual Alaskans and businesses with little public benefit.

House Bill 104 passed the Alaska State Senate by a unanimous vote.  The bill unanimously passed the Alaska House of Representatives on February 27.  HB 104 now goes to Governor Walker for his consideration.

32nd Annual Sham Jam

In March, our office staff, in collaboration with other Young Democrats in Juneau, planned and organized the 32nd annual Sham Rock’n’Roll party—lovingly nicknamed Sham Jam. Sham Jam is a long-standing event that offers legislative staff, legislators, and residents of Juneau an opportunity to celebrate St. Patrick’s Day and give back to the local community. This year, we raised $4,375 for The Canvas, a community outreach organization under the non-profit REACH, that provides studio, pottery, and gallery facilities for adults with disabilities in the Juneau arts community.


Rep. Claman, Rep. Kito, Sen. Egan and legislative staffers meet members of The Canvas on the House Floor.

Community Events

Mark your calendar for these upcoming events:

Anchorage Senior Citizens Advisory Commission Survey

The Senior Citizens Advisory Council is asking for your help to measure the issues and concerns of Anchorage seniors. Your input will help the council to focus its policy concerns for the future. Take the survey hereThe deadline for the survey is Thursday, April 21st at noon.

Alaska Historical Commission Meeting

When: Monday, April 24th from 9am to 11am.
Where: Spruce Room, BP Energy Center – 900 East Benson Blvd.
The Alaska Historical Meeting will hold an open meeting to discuss the Fourth Avenue Theatre’s future. The commission will be considering the theatre’s historical status and options for its preservation.  The meeting is open to the public and any person or group wishing to address the commission on this topic is invited to participate in the public comment session starting at 9:45am.

Chester Creek Flooding Project - Open House

When: Wednesday, April 26th from 5:30pm to 7:30pm.
Where: Multipurpose Room, Stellar Secondary School – 2508 Blueberry Road.
Come review alternatives proposed in the Chester Creek Flooding Draft Design Study Report that addresses flooding issues in the project area. The Municipality will be gathering public feedback on the proposed solutions.

As always, please let us know if you have any question or concerns.

Sincerely,

signed: Matt Claman

    Rep. Matt Claman

    P.S. follow me on Facebook and Twitter

Contact Information

(907) 465-4919

Rep.Matt.Claman@akleg.gov

State Capitol Bldg. Rm 405
Juneau, Alaska 99801

www.repmattclaman.com

Contact the Governor

550 West 7th Avenue, Suite 1700
Anchorage, AK 99501
T (907) 269-7450 F (907) 269-7461
EMAIL: Governor Bill Walker

STATE of ALASKA
http://alaska.gov/

State Info (907) 269-5111

Serving the Anchorage Neighborhoods of
Sand Lake, Spenard, and Turnagain

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