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Governor Introduces Legislation for Special Session
Includes Spending Limit, Endowment for PF, Tobacco Tax, Workers' Comp


June 23, 2004

Juneau, Alaska - On this first day of the special session of the Legislature Tuesday, Governor Frank Murkowski introduced eight bills and resolutions for the consideration of legislators. The main issue of the special session is to find a solution to the state's long-term fiscal shortfall, including modernizing management of the Permanent Fund to an endowment model, use of some of the Permanent Fund's income, and a constitutional spending limit. The other issues are an increase in the tobacco tax from $1 per pack of cigarettes to $2 per pack, and reform of the workers' compensation claims appeal process.

"Alaskans want and deserve positive action on these three issues, which were left unfinished at the end of the regular session in May," Murkowski said. "I remain optimistic that, by working together, we can make excellent progress on all three. I am particularly hopeful that legislators will keep the right of the people to vote on a fiscal solution in the forefront of their minds, and advance those questions to the ballot in November."

The bills and resolutions the Governor is introducing are:

A resolution relating to an appropriation or "spending" limit (HJR103/SJR103). This resolution gives voters the chance to directly voice their opinions on a spending limit at the ballot box in November. A spending limit is an integral part of the transition to a long-range fiscal plan for Alaska.

"The resolution presents the public with the opportunity to approve a spending limit with enough "teeth" in it to be effective," Murkowski said. "If approved by the Legislature and passed by the voters, it will prevent government from growing too large, too fast. Alaskans want spending controlled to produce a leaner, more efficient, more effective state government."

A joint resolution proposing amendments to the Alaska Constitution relating to and limiting funds removed from the Alaska Permanent Fund for dividends and other purposes to an averaged five percent of market value (POMV) approach (HJR101/SJR101). The question presented to legislators by the joint resolution is whether to allow Alaskans to decide whether management of the Alaska Permanent Fund should be modernized to an endowment concept used by other funds.

The joint resolution contains the same provisions as CS House Joint Resolution 26(FIN), which passed the House of Representatives during the second session of this Legislature. Under the provisions of this joint resolution, the Legislature could appropriate an amount that would not exceed five percent of the averaged market values of the Alaska Permanent Fund for the first five of the six fiscal years immediately preceding the fiscal year in which the money is appropriated. The provisions do not allocate the income for any specific purpose.

"I remain convinced that Alaskans expect us to resolve the state's long-term fiscal problem this year," Murkowski said. "This resolution is an important part of a package for a bi-partisian solution to the state's fiscal gap."

A bill relating to the income of and appropriations from the Alaska permanent fund (HB1003/SB1003), which is substantially the same as CSHB 298(FIN) am, which passed the House during the second regular session, but with a few new provisions.

"A new provision has been added that would adjust the allocation of amounts available for appropriation from the Permanent Fund so that the dividend will be at least $1,000 or more each year," Murkowski said. "I believe this bill provides a vehicle the legislature can use to resolve how the POMV endowment concept would be implemented. The bill would make allocations from Permanent Fund income after the POMV amendment is adopted. These allocations are to municipalities and other communities, and to public education, in addition to the dividend. By placing the implementing provisions in statute, the legislature retains the power to make necessary adjustments to meet unforeseeable events."

A resolution proposing amendments to the Alaska Constitution relating to and limiting appropriations from the Alaska Permanent Fund based on an averaged percent of the fund's market value (HJR102/SJR102).

The resolution outlines a long-term fiscal plan that: 1) changes the structure of the Alaska Permanent Fund to an endowment model; 2) limits the annual payout from the Alaska Permanent Fund to five percent of the fund's value; 3) allocates the annual payout to 50 percent for dividends, 45 percent to public education, including K-12 and the University, and five percent to communities. Individual dividends would be guaranteed to be at least $1,000 or 50 percent of the annual payout, whichever is greater.

"I believe that these allocations reflect the priorities of a majority of the public for the use of the Alaska Permanent Fund," Murkowski said. "Passage of this resolution by the Legislature gives Alaskans a voice on the issue of a long-term fiscal plan. Voters would have the ability to approve the resolution and bring certainty to Alaska's fiscal future for themselves and future generations of Alaskans."

POMV is an accepted method for managing funds. Anchorage, Fairbanks, the North Slope Borough, and Sitka residents have voted to use the POMV model for their municipal trust accounts. Private foundations like the Ford Foundation and about 83 percent of colleges use some form of a POMV payout method.

These allocation provisions have a ten-year "sunset" to allow the Legislature and the voters an opportunity to revisit them to ensure that the allocations continue to meet state needs.

A bill that increases the cigarette excise tax by $1.00 a pack and makes other changes in our current statutes (HB1001/SB1001). The tax on "other tobacco products" such as smokeless tobacco would be increased from 75 percent to 100 percent of the wholesale cost.

"Passage of these tax increases is supported by the health benefits alone," Murkowski said. "Tobacco is the number one preventable cause of death, disability, and chronic illness in Alaska. It is public health enemy number one. I want these tax increases to reduce consumption of tobacco products in Alaska. I particularly want to stop kids from starting to smoke. Such a decrease in tobacco use will benefit adult smokers who decide to quit, teenagers and pre-teens who decide to quit or not start smoking, and Alaskans who choose not to smoke but suffer the ill effects of second hand smoke."

A bill authorizing the issuance of general obligation bonds to finance surface transportation capital improvement projects (HB1005/SB1005). The projects included in the bill address a variety of important surface transportation needs across the state, ranging from congestion relief in Anchorage and Fairbanks, to safety improvements, betterment of driving conditions, and access to critical natural resource and industrial projects. Some of these upgrades are being included to facilitate transfer to local ownership.

"Investment in transportation pays both short- and long-term dividends to the state's economy," Murkowski said. "It would immediately put Alaskans to work in the design and construction of these several surface transportation projects. Long term, it ensures that workers and commodities can move efficiently, and enables new economic activity to occur that in turn creates new family-wage jobs. As such, I consider this bond package a stimulus to the state's economy, and part of the budget solution."

A bill authorizing the issuance of general obligation bonds to finance capital improvement projects for the University of Alaska (HB1004/SB1004). The projects in this bill address a number of the University of Alaska's critical infrastructure needs. The projects include the integrated science facility at the University of Alaska, Anchorage to provide crucial science classroom and instructional labs. Also included are projects that address essential life safety, renovation, and equipment priorities.

"Both of the bonding bills would only take effect once a long-range fiscal plan has been adopted," Murkowski said.

A bill reforming the workers' compensation system (HB1002/SB1002). This bill is based on the many discussions and hearings conducted last session on Senate Bill 311. The bill preserves lay participation in the workers' compensation system, while increasing consistency in decision making and strengthening enforcement. It seeks to improve the market for existing workers' compensation insurers and attract new insurers, without immediate reductions in benefits to injured Alaskan workers.

"Despite the Legislature's best efforts over the years, our current workers' compensation system has not proven responsive to the pressures caused by a growing, changing workforce and increasing costs," Murkowski said. "In order to respond to complaints about the delay in hearings, the Legislature has steadily increased the number of members of the current Alaska Workers' Compensation Board (board) to make up more hearing panels, and removed the requirement that a fully balanced panel be available for hearings. What was originally a three-member board has grown to include 14 volunteer members residing around the state. The original three-member board heard all claims; now panels, whose composition can vary in as many as 300 combinations, hear claims. As a result, the consistency of a single three-member board has been lost."

Under the bill, an administrative law judge in the office of administrative hearings in the Department of Administration would conduct initial hearings on disputes. The bill requires that the administrative law judges who are appointed to conduct workers' compensation hearings have specific expertise in the area of workers' compensation.

A five-member commission would replace the Superior Court at the appeals level. The commission is composed of: one attorney experienced in the practice of workers' compensation law (who will be an employee of the Department of Labor and Workforce Development) and four lay volunteer members. The lay volunteer members would be appointed from both labor and industry and for any given matter, one from each side would sit on the appeal together with the attorney member of the commission. The commission's decisions would be binding legal precedent unless and until overturned on appeal to the Alaska Supreme Court.


Source of News Release:

Office of the Governor
Web Site


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