Alaska Legislature: House Finance, 4/28/26, 1:30pm

House Finance Committee to order. Let the record reflect that the time is currently 1:40 PM on Tuesday, April 28th, and present today We do have Representative Allard, Representative Stapp, Representative Moore, Representative Bynum, Co-Chair Schrag, Co-Chair Josephson, Representative Jimmie, Representative Galvin, Representative Tomaszewski, Representative Hannon, myself, Co-Chair Foster. I believe that the Senate is still on the floor in the other body. The first bill up today was supposed to be Senate Bill 86, which is the money transmission and online currency bill. But I think we're going to jump right into the next bill until Senator Keele is able to make it on over.

So we'll first start off with House Bill 77. That's the mail theft bill. And then, time permitting, we'll come back to Senate Joint Resolution 29, the constitutional amendment on education funding bill. So with that, Representative— let's see here. First of all, Representative Colon and her staff, Ms. Emily Durfee, if you could please come up to the table, put yourselves on the record, and give us a brief recap of the bill.

What I'm thinking is get the brief recap, review the fiscal notes. We did not receive any amendments for the bill, and so we'll go from there. So welcome back. Hi, thank you. Thank you, committee.

My name is Julie Calhoun. I represent House District 11, South Anchorage Hillside. For the record, Emily Durfee, staff to Representative Calhoun. Unknown caller. Sorry.

Oh, yeah. So thank you for all the time that we've spent on the bill. Basically, House Bill 77 puts mail theft into state statute. Great. Okay.

With that, if we could jump right into the fiscal notes and see here, we have— oh, wait, no. Did we already— we already went over those. Okay. So I think maybe we're going straight into questions then. And do we have any questions for Representative Kahlum?

Okay. Seeing no questions. Representative Stout. Thank you, Chair Foster. Through the chair, Rep. Kahlum, I just want to thank you for being here and bringing us this great bill.

And obviously I support it because I'm a co-sponsor, so I can't wait to get out of here. Okay. Thank you, Representative. Okay. And any further questions?

Sure. Representative Josephson, then Tomaszewski. Representative Kahlom, you're part of an honored group that had their bill. I think Representative Hannan is one of them, put in an omnibus bill in the other body. Was it written to your fashion in the other body?

Yeah. So through— oh, go ahead. Representative Kahlom. Through the chair to Rep Josephson. So the bill that was put in the omnibus bill on the Senate side is actually the Governor's mail theft bill.

It's not mine.

Since we have a moment, would you like to tell us any differences? Well, there's two big differences. He addresses group theft, I think it's called. Organized theft, that's what it is. Mine doesn't— organized retail theft has that portion.

My bill does not have that. It also— the penalty in his bill is misdemeanor and mine's a felony. Okay. Okay. Representative Tomaszewski.

Thank you, Co-Chair Foster. Thank you, Representative Klom, for putting this work in for this bill. And, you know, mail theft is a problem in my district. I know, and I know it's a problem in many, many areas around the state. And so I think this is a great bill to actually give law enforcement the tools to do something about it.

So thank you for doing this. Thank you. Thank you, Representative. Okay. So as I mentioned, there were no amendments.

And if there are no further questions, I would— Representative Galvin. Thank you. I don't have a question either. I just have a comment. I want to thank you and your staff for the research, because while we may hear a lot of folks on Facebook and certainly on Nextdoor about all of the theft, I really appreciate that we are able to see the numbers of how many Alaskans are affected by mail theft.

So I think it's important that you bring this issue to the public's attention, and these hearings have done that. And whether or not the governor's bill or yours goes through, the work that you've done is very appreciated. I think it's really important that the state of Alaska appreciates that we will not tolerate this and that there needs to be, I think, even further work around public awareness. And I will be fully supporting that piece of it especially. Thank you.

Thank you, Rep. Galvin. Okay, Rep. Sandhanen. Thank you, uh, Co-Chair Foster. Representative Coloma, I just want to follow up and get a little clarification on the Representative Josephson questions. Although the governor's bill is the version was put in the omnibus bill, does it still address individual mail theft versus organized?

So it's organized retail theft, but it still has the elements that yours was a narrow bill addressing? Because you don't have to be part of an organized mail theft ring, it could just an individual. Is that still addressed or does it have to be organized? So through the chair to Rep. Hannon, sort of. So the individual portion of the governor's bill doesn't include a lot of the definitions mine has.

In my opinion, my wording is a little more clear and precise than his. I think overall it does handle individual theft, but it has a little bit more room interpretation. And so that's why we worked with Department of Law to make sure some of the wording was exactly what Department of Law would like to see. And so it does, it does overall address individual theft too. Okay, so one follow-up.

So mail theft, organized retail crime, and lower penalty on both of those than your bill? Correct. Okay, yes, thank you.

Thank you, Co-Chair Foster. Also following up on Co-Chair Josephson's question, is this bill and the administration's mail theft bill that was put into the omnibus on the other side compatible? To the extent that they are not, it is a little awkward, admittedly, to have two bills now moving that I guess touch on the same subject. Do you know, are there plans to modify that bill on the other side to more closely mirror this one? Or do you know what would happen if both bills were to pass?

I can't imagine that would happen, but do you have any thoughts you could offer on the process there? [Speaker] No. [Speaker] Representative Klobuchar. [Speaker] So through the chair to Representative Schraghi, I'm not aware of merging the two. I have had some conversations around that, but I don't, I really can't speak to the intention, what's the end result is going to be.

If so, originally, so I had introduced the mail theft bill before the governor put his retail organized theft bill. The mail part of it kind of came late in his bill. And so, you know, there's a possibility maybe we could merge the two.

But I really can't speak to what the Senate would want to do.

If both bills are to pass, do you know how they work through any— I guess the one that passes latest overrides? I don't honestly know. I don't know that I've ever encountered this circumstance before. Do you know? So through the chair to Rep. Schraggi, I don't think both will pass.

One will pass.

Hmm. Representative Stapp. I just want to say double the, double the mail theft, double the punishment, double the fun. Mr. Co-Chair, thanks. Representative Leininger.

Thank you, Co-Chair Foster. I just guess my, my only concern is that we're here having a conversation about what the Senate is doing in an omnibus bill. As we are aware, a bill moving through the Senate that is not on the floor and passed is subject to many changes. We're witnessing that today. Uh, legislation that they have on the floor, I think there was, uh, 10 amendments or so, 7 or 8, 10 amendments on that bill that dramatically change intent and the language of the bill.

Um, I say we do our work in front of us, move our legislation through our process. If the Senate chooses not to move the bill forward, if it gets to the Senate, they will choose not to move the bill forward and they will pick whatever bill they like. So I support this bill as it is and support us moving it through the process. Chair, can I respond? Representative Klobuchar.

Through the chair to Rep. Bynum, I agree with that. I would make clear that I have— I don't really care whose name is on it. I just want it addressed. I have been open to merging the two. I have been open to taking the best of both bills and putting them in one.

I'm still open to that. Doesn't have to have my name on it.

Okay. Seeing no further questions or comments, I would entertain a motion. Representative Sharkey.

Yes, Co-Chair Josephson, I move House Bill 77, work order 34-LS011— excuse me, let me restate that. House Bill 77, work order 34-LS0144/o, Out of committee with individual recommendations and attached fiscal note.

Is that committee substitute? Is that Representative Tomschewski? Is that what you— is that what—. It does not say committee substitute. Let me verify the work order here.

Version O. Yeah, version O should be accurate. So I don't think that's necessary. Okay.

Yes, I think we're okay here. Okay, seeing no objection, uh, House Bill 77, which is 34-LS0144-0, is moved out of House Finance with individual recommendations and attached fiscal notes. And if we could have folks please sign the committee report. And Representative Colon, any parting words? No, Chair, thank you so much for the time.

Great discussion, great debate. I really appreciate it. Great. Thank you very much. So with that, just take a real quick brief at ease, let folks sign the committee report.

Brief at ease.

Okay, House Finance back on record at 1:52 PM, and, um, we're awaiting the, uh, completion of a Senate floor, so we're going to jump over to Senate Joint Resolution 29. That is the constitutional amendment on education funding, and I'd like to invite up Senator Hoffman's staff, Mr. Tim Gruesendorf, if you could come to the table. And let's see here, I believe that Ms. Marie Marks should be online any moment. Just so folks know, we do also have Pam Leary, Director of the Treasury Division, as well as Carol Beecher, Director of Elections. And let's see, in terms of the lineup for questions, we next had Representative Galvin, Bynum, and Josephson.

And we do have remarks online now. So with that, Representative Galvin, do you need a moment or are you ready to answer the— ask the question? Thank you, Co-Chair Foster. In this case, I don't have a question. I just had a brief comment that I noticed in our packets We have two full sets of letters from Alaskans, and I concur with them.

It seems like most of them, I think 99% of them, say thank you for putting this resolution together. They support having a set-aside, if you will, a fund, another fund specific for education. And they also, all of them say that is very different than putting money in it. And there has, in all of these, I just wanted to put on the public record that we are reading them and we see that almost each and every one of them say that we also need to fund public education and it's not the same as putting money in it. So I just wanted to bring that up for public for the public awareness, and also I do appreciate the conversation earlier around the PCE fund and how that has made a difference.

And so I will be hopeful for this fund and supportive. I would like a very small amendment, and I'm happy to speak with the sponsor about that, but that's all I have. Thank you. Just a comment. Okay.

Also, just so folks know, we do have Margaret Berggrud online. She's with Legislative Legal, and I'm guessing maybe she is the author of the resolution. So just so you know, she's available for questions. In the lineup, I do have Representative Bynum and Josephson. Representative Bynum.

Thank you, Co-Chair Foster. Just for our knowledge, you said that the Leg Legal is on the phone? Correct, Ms. Marie Marks and Margaret Berggrud. Thank you. Through the chair to Ledge Legal, in the way I read the language of the bill is that the legislature has the authority to create the fund.

Sounds like we have the authority that when we do create the fund to put parameters on what the fund actually will do, as long as it's, as long as it is targeted toward public education. So the question I have is if we have the authority to create the fund, do we also then have the authority to disband the fund? And if so, how?

Ms. Marks, if you could put yourself on the record.

Yeah, for the record, this is Marie Marks with Legislative Legal Services. Through the Chair, Representative Bynum, did you say ban the fund, as B-A-N the fund? Is to remove the fund through legislative action. So if we create the fund, it says that we may create a fund for this purpose, which then would have constitutional protections from sweeping it and then also being able to use the funds for other things. For example, in the higher ed fund, there was $100 million removed from that for general fund purposes to balance the budget.

We wouldn't be able to do that in this case. But would we, by a simple vote of 21, 11, and 1, be able to remove the fund from law if we chose to do so? [Speaker] Marie Marks, Legislative Legal Services. Through the Chair, Representative Bynum, it's implied since the resolution used the permissive term "may" that the legislature may establish it and the legislature may repeal that. That would be through a bill repealing the fund.

As you noted, it's majority vote. If the legislature or the committee would like to make that explicit, we— the SGR 29 could be amended to explicitly state that the legislature may enact, repeal, or reenact the fund. But I think it's implied by the permissive use of the word may in SGR 29. Follow-up. Follow-up.

Thank you. As a follow-up to that then, if we were to create the fund and then there were to be transfers of assets into the fund like lands, Those aren't—.

Things that can be spent. How would we— how would the legislature, if they decided to not have the fund anymore, divest itself of the transfer of lands into the fund?

Marie Marks, Legislative Legal Services. Through the Chair, Representative Bynum, for practical purposes, what would likely happen is the land would be sold. And the proceeds of the sale then would be spent on public education in order to empty the fund of money and assets, um, since those items placed in the fund, the money and land placed in the fund, um, are protected for the purpose of public education. And so for practical purposes, the answer to your question is, is the land would likely be sold, um, and the proceeds then be used for public education. Okay.

Representative Bynum. Thank you. And then my second question was, is there was conversation earlier today about the yield competitive market rates. The way that the fund sounds like it's currently being set up is just a fund that you're able to spend down to zero, effectively. What is the intention of being able to list a fund with competitive rates if we're able to spend all the money in the fund?

I can understand that being language if it was an endowment, but as far as just a safe, secure place to put money, I'm just trying to understand how that language would work.

Further remarks, legislative legal services. Through the chair, Representative Bynum, I think it is a policy call on whether to and how much money is retained in the fund. And what that language provides is to the extent that money is retained in the fund, it shall be invested so that it yields competitive market rates. If the legislature, of course, is not retaining money in the fund, then that— it would only apply to money that's actually retained in the fund. So there is no requirement that the legislature actually retain a certain amount of money in the fund.

It just provides provides that to the extent money is invested and does stay in the fund, that it's invested to yield competitive market rates. Thank you. Okay. Representative Josephson and then Hannan. Representative Josephson.

Yes, thank you, Chairman Foster. Question for Ms. Marks. Ms. Marks, there was discussion this morning about what we mean when we say public education. I learned that I can actually do searches on this ALEG device. And so I went to our Alaska Court System Law Library and found there were 49 decisions that mention public education and definition.

Definition, I think, is what I found. I guess not surprisingly, the one that comes closest, although I did this quickly, was the Molly Hooch decision. At footnote 28, it talks about who's covered when we say public education, and it talks about how different states mean different things. I couldn't find any other authority, including in statute. Is that your understanding as well, that there's nothing in a Supreme Court decision or statute that actually defines public education?

Ms. Marks? Yeah, remarks, Legislative Legal Services. Through the chair, Representative Josephson, that is correct. The term public education, as stated in SGR 29, is not defined in Alaska Constitution, state statutes, and I could not even find it in a legal dictionary such as Black's Law Dictionary. Okay, follow-up.

My next area of inquiry, I was confused about the discussion of how to get money into the fund. So I believe you said that if we had a $50 head tax, those dollars could not be put into the fund.

And it's just interesting. The fund is clearly a dedicated fund. And so we're making an exception to the rule with the resolution. I'm all about that. That's fine.

But how do you get money in there? You seem to say that if you took $50 from every Alaskan, and we had a law that said we are putting it in the fund, that that might violate a dedicated funds provision at Section 7.

But I guess my question is, what if we made a special appropriation? What if we said, alright, we have laundered these dollars, and by that what I mean is they are not attributable to a $50 head tax, They're just oil revenue. And we want to put $100 million in. Could we put the $100 million in? Again, for the record, remarks Legislative Legal Services.

Through the Chair, Representative Josephson, the Legislature may appropriate money into the fund, any money it wants from any revenue stream, education tax or proceeds. May. What the language of SGR 29 does not allow is the dedication, meaning the automatic transfer without appropriation of a stream of revenue into the fund. So the legislature could do it but would not be required to dedicate that stream of revenue into the fund. If the legislature would like to allow the dedication of a revenue stream, then SGR 29 should be amended to specifically allow the proceeds of a state tax or license dedicated to and deposited deposited into the fund by law, meaning the legislature would not have to appropriate that money.

By law, the revenue would automatically be deposited into the public education fund. Okay, follow up, follow up. All right, so we come across this from time to time where we're just one touch away without the, the direct dedication in the language, so the money could fall into the general fund. Now we can put it in the dedicated fund. It's, it's, um, almost ritualistic at that point.

As long as we're vigilant and we do it. But we don't have to talk about it in this resolution. It just can't be done directly from, for example, a head tax.

For the record, we mark legislative legal services through the chair, Representative Josephson, correct. It can't be deposited into the Constitutional Education Fund without an appropriation. Thank you. Okay. Next up, I've got Representative Hannan.

Thank you, Co-Chair Foster. Ms. Marks, you responded to Representative Bynum that even though if SJR 29 passes and is affirmed by the voters, it could be undone by the 21 and 11 membership of the future legislature. Because it's just permissive. But if on line 6 the word may was changed to shall, would that forestall that action?

Remarks. Legislative Legal Services through the chair, Representative Hammond. Yes. Okay. Thank you.

Questions? Representative Schraggi and then Bynum. Thank you, Co-Chair Foster. To Legislative Legal, in response to a question from Representative Josephson, I think it was stated that you could not dedicate, say, an education head tax to the fund. But if you listed the specific revenue stream, you could, could you not?

If this constitutional amendment was amended to say the proceeds from an education head tax, could you not dedicate that revenue stream to this fund?

Remarks. Legislative Legal Services through the chair. Representative, correct. If the Constitution is amended, so If SJR 29 language was amended to explicitly allow for that dedication, then that would be legally permissible. Thank you, Representative Bynum.

Thank you, Co-Chair Foster. Just a few thoughts on this. I mean, we talk about whether or not we want to put in a constitutional amendment that says you shall do this, or you may do this. You shall dedicate Head Tax dollars into a fund. But then the legislature needs to take action.

And so, I mean, the action of the legislature, because there isn't a prevailing threshold for vote change, is 21, 11, and 1 in general. And so that means that the will of the legislature is, is if you want to prioritize education, you do so. So some of the things that are kind of confusing to me a bit about what's in front of us now is, is how is it different than what we currently do? So we already have an education fund that we don't sweep, that when we put money in it, it stays in there. We technically can forward money into it, and then it would be available.

But it's going to be at the discretion of the legislature on whether or not you continue to fund that. But as far as priorities go, when we look at what we've been doing over the last recent— you know, over recent years here, The number one funded item that we have in our budget from UGF is education. We spend over $1.4 billion in education for K through 12, and we spend over $300 million a year for the university from UGF. So I would say that the will of the legislature is that we do prioritize these things.

We do put $1.4+ billion into that education fund every year, and it is spent only for the purpose of K-12. The next thing that we have in our budget, it's— those two things are constitutional, by the way. So the education system of education that we establish is already in the Constitution, and we do that, and we're subject to lawsuit, as you know, if we don't do that. And then the second item that we put money toward is public welfare and health. And we spend well over $1.2 billion a year in that.

Again, another constitutional obligation. So I think about when we talk about what are our priorities, the priorities of the legislature are going to be dictated by the majorities of both houses and the governor signing those things into law. And I'm not sure that I understand exactly how what we're going to be doing with this amendment is going to actually change that other than It makes us feel good about what— you know, feel good with the idea that we want to have a dedicated fund. But we still, as a legislature, need to establish it because there isn't a two-thirds threshold for establishing a constitutional law. It's only the resolution that would be required.

And so I think I have some concerns about that, that by simple majority of the legislature we would be able to do something that is constitutional. We see that happening in the legislature today in the other body. Something constitutional obligation with a simple majority vote. So I think that's problematic. We heard a little bit about power cost equalization.

Power cost equalization is not constitutional, yet we continue to prioritize it and protect it and put large sums of money into that endowment. So, you know, I think it's a good idea. I think it's a good idea in general, but I don't know that it's going to actually accomplish anything different. And when I read the law currently, The way it is, I mean, sure, could you pass it and put it in? I don't have a problem with it the way that it's currently written, but I don't know that it's actually going to prioritize education in any way, shape, or form.

So I'm just a little skeptical on how we're actually going to improve education. And then finally, if we did change this to say you shall do this and you shall put taxes in that do this, I'd be question whether or not we could actually get the resolution passed through our body with the appropriate number of votes. So I think it's just something to think about. Okay, Representative Sharkey. Thank you, Chair Foster.

Yeah, I, you know, share some of the questions about where this fund will go and what will ultimately be used for down the line, whether or not revenue streams will be dedicated to it. But I do see— I just wanted to, you know, add to the conversation that I do see I think there's some real value in creating this fund. One of the things that I've experienced over the years is sometimes a hesitation to save money for the future, because if you do not spend the money now, it is left to someone else to decide what to do with that money at a later time. And while I may be very willing to save money for our students' futures, I don't know that a future legislature will use the money in that way, and they could spend it on anything they may want. What this fund would allow us to do is in times where there are surplus revenues, be able to put that money away in a parking lot as we've described it here at this table, and know that while future legislators may be able to spend it how they wish, they will only be able to do so within the bounds of public education.

And so, is this perfect, perfectly fleshed out? Policy proposal? No, I think this is an iterative process and we will have to rely on future legislatures to appropriate funds into this fund and to determine how we want to utilize it in the budgetary process. But I do see some real value in us being able to create a parking lot for public education. Many of us want to invest more in public education both now and in the future to make sure that our students and our state therefore are set up for success.

And I, I see real value in establishing a guarded place for us to put funds where we know maybe not exactly how those funds are going to be used, but we know that those funds will go towards public education. So all that is to say that I really appreciate this idea being brought forward. I don't have any amendments myself and look forward to seeing this advance at some point. So thank you, Co-Chair Foster. Representative Bynum.

Thank you, Co-Chair Foster. If legal is still on the phone, I did have one quick question for them, and it really is about transfers from other funds. Um, Ms. Marks, are you available? Where is it? Yeah, thank you.

Uh, through the chair to Ms. Marks, right now when we look at the ERA, we can spend money from the ERA with a 21 simple majority vote. Is there anything prohibiting the legislature from making a $7 billion transfer from the ERA into this fund? And then the second part of that question is that there's $20 billion of unrealized gains in the permanent fund. And that's not a part of the protected corpus. Is there anything prohibiting the legislature with a simple 21 majority, 21-11-1 vote, of transferring those unrealized gains from the permanent fund into this fund if it were created?

Ms. Marks.

Again, yeah, Marie Marks, Legislative Legal Services. Through the chair, Representative Bynum, any money that's available for appropriation, the legislature is free to appropriate into the fund. Including money that you described as available for appropriation.

Follow-up? Follow-up? Would that include transfers of assets that are unrealized?

Uh, remarks, Legislative Legal Services. I am not familiar with the Alaska Permanent Fund.

Statutes. I could definitely look into that and get back to you. I'd probably consult with Emily Nauman in our office who drafts in that area, but I'd be happy to get back to you on that question. Coach Fosch, if we could get that answer, that'd be very helpful. Thank you.

Okay, any further questions? Okay, Representative Tomaszewski. Thank you, Co-Chair. Just a question on— we have a memo from the Lieutenant Governor's office in this packet about Co-Chair Sharagi's question. He asked about the pro and con statements of the official election pamphlet, and it says if the bill passes into law, the legislature will be asked to provide pro and con statements.

And then she letter— Director Beecher later states that the Division of Election will provide the requirements for inclusion in the official election pamphlet. Did we get Were we provided the requirements from the Division of Elections on the inclusion of the— to the official election pamphlet? Does anyone know? Ms. Beecher, if you could put yourself on the record.

Good afternoon. This is Carol Beecher. I'll ask the Division of Elections through the chair of Representative Bynum, I believe that was, the rules for for all of the different ways that it goes into the template are in— sorry, in the AS1580. We did not provide that, but we can do that. We can provide all of the requirements to you.

Okay, thank you. And I'll just follow up. Follow up. So when you state that the legislature will be asked to provide the pro and con statements, statements. There's quite a few of us here in the legislature.

Can you be a little more specific?

Through the chair, um, sorry, I'm on the telephone. The way that we usually do it is the entity that introduced the proposition is asked to provide the closed statement, and then The Lieutenant Governor's office staff are the ones who reach out for the con statement. So I don't have the specifics on how they do that, but we could provide that to you as well. Okay, thank you. Chair Foster, Senator Bynum, can we correct for the record that that was Representative Tomaszewski asking the questions and not myself?

Yes, that was Representative Tomaszewski. Thank you. Okay, further questions? I don't see any. So, Mr. Gryzendorf, did you have anything?

Through the chair to the committee, one thing I'd like to— I didn't mention before, and just someone mentioned it to me after the testimony this morning, is I know that both bodies have talked a lot about forward funding education, and if there is an excess of money, this is also a way to forward a place where you could park money and forward fund education for the next year. So the folks in the, you know, the school districts and everyone know that the money is there so they don't have to be guessing what— at what level they're going to get funded. So there is— it can serve that purpose also, is to forward fund a year of education if the body so chose to do that. Okay. See some possible questions.

Almost set an amendment deadline. Representative— Mr. Gussendorf. Representative Staff. Yeah, thank you, Chair Foster. Through the chair to Mr. Gussendorf, I mean, nothing really prevented the legislature last year from forward funding education for this year if they had— other than revenues, though, Mr. Gussendorf, right?

I mean, I know.

I know there's issue with forward funding across multiple legislatures, but you could, you could forward fund now, couldn't you, in the same legislative session? Through the Chair. Mr. Gruessendorf. Through the Chair, Representative Stapp, you probably could, but the legislature probably could always come back in and spend that money on other things. I mean, if it's just, if it's sitting there, they can reappropriate, they can, they will still have access to that money.

Even though it was stated that it was there for that purpose. If you put it in an account like this, I mean, they could choose not to withdraw it from that account, but that's a tough decision because it could only be used for that purpose.

One quick one to Ms. Marks, actually. Representative Stepp. Thank you, Co-Chair Foster. Through the Chair to Ms. Marks. Ms. Marks, I'm going to give you a quick thought experiment.

Let's say I have money in this fund, it's appropriated for school base student allocation money, and then let's say it's a multi-year appropriation. I reappropriate for construction of a new building. Couldn't I in theory do that based on the kind of the loose nature of the language in this constitutional amendment because it's all education purposes? Ms. Marks, um, for the record remarks, Legislative Legal Services through the chair, Representative Stopp.

The money in the education fund would need to be tracked and kept track of through accounting mechanism, and every dollar in that fund would have to be spent for the purpose of public education. So no, it would not be able to be reappropriated for a purpose other than public education. Follow-up? It's not technically the question I asked because the definition of education is very broad. Let's say I forward-funded education this year.

A new legislature comes in. They are now in the appropriation year of that. I reappropriate for a different purpose of education. What would prevent me from doing that? Through the Chair.

Marie Marks, Legislative Legal Services. Through the Chair, Representative Staub. Yes, with that clarification, I apologize, I misunderstood that question. As long as the money is being spent for the purpose of public education, it could be reappropriated for different purposes.

Okay. Thank you. I thought maybe Representative Tomaszewski, were you going to have a question? No? Okay.

Representative Sharkey. Yeah. Thank you. And to Marie Marks, there is nothing as of right now that would prevent capital appropriations from being made. You could make capital appropriations as the constitutional amendment is currently written, as long as those capital appropriations relate to public education.

Is that your understanding as well?

Marie Marks, Legislative Legal Services, through the chair. Yes, that is correct. Okay, thank you. I mean, just as a comment, you know, I think there may be value in keeping that flexibility despite the intent to have it go towards programmatic educational expenses. I just know that when we're amending the Constitution, it's generally best to retain a lot of flexibility because the sideboards on a constitutional provision are— they are what they are, and you can regret them later sometimes.

So anyways, appreciate the clarification. Thank you. Representative Josephson.

Ms. Marsh, we were close to wrapping up and then the curiosity bug struck again. This morning you talked about how the Public Education Trust Fund, because it dates from the territorial period, is a dedicated fund. But I think you said we're not allowed to increase it in any substantial way. Is that right?

For the record, Mary Marks with Legislative Legal Services. Through the chair, Representative Josephson, yes, likely yes, because the fund is reconstituted from land that was given to us by the federal government. It's that value of that land that is protected, and if the legislature adds additional money to it outside of that original dedicated amount, it risks losing the dedicated fund status of the public education— the public trust fund. Representative Josephson. And so, so, um, through the chair, Ms. Marks, this is a second dedicated fund that would enjoy less prohibition on increase.

For example, we, we could spend we could appropriate into it, we could spend from it. We would have lots and lots of flexibility even though we are creating a second dedicated education fund. Is that right?

Remarks. Legislative Legal Services through the chair, Representative Josephson. Correct. Thank you. Representative Sharkey.

Yeah, thank you, Co-Chair Foster. Since I don't think we have the senator for the The next bill, I'll maybe ask a couple additional questions on this. I was holding off because I didn't feel it was directly relevant, but I think we have a little bit of time. So in the Constitution, Article IX, Section 7, on dedicated funds, there's two exemptions as I understand it. One, for a requirement by the federal government for state participation in federal programs.

The second exemption is the continuance of any dedication prior to statehood, and I'm paraphrasing the Constitution. Is it the first part of that or both parts of that that protect the public school trust fund?

Marie Marks, Legislative Legal Services. Through the chair, Representative Sharkey, that's a good question. I believe there are strong arguments that it is both.

Okay. Okay. Thank you. Okay. Further questions?

Seeing none, I represent a vote. We got a couple. Representative Bynum and Stepp. Representative Bynum. Thank you, Co-Chair Foster.

Through the chair to Ms. Marks, earlier today when we asked about this fund. The question was whether or not the legislature could identify that fund as being the constitutionally protected fund. And the answer that we got then was—. Seemed like it was that we maybe couldn't because it would put those funds in jeopardy. But if we were identifying that as the fund that was created, because it's already created and just pointing to that through statute that that was going to be the constitutionally protected fund.

Would it not be constitutionally protected if this passed by the voters?

For the record again, Marie Marks, Legislative Legal Services. Through the Chair, Representative Bynum, that's an issue that I will have to do more analysis on. It's an interesting question because it's the public school trust fund. The public trust fund is a federal trust and there's federal trust principles involved. And so there's more restrictions than if the legislature had just created it itself in the Constitution.

And so I will absolutely be happy to do that analysis and get back to you on that question. My concern is that it's not just a fund established by the Alaska Constitution. It is a federal trust that has federal trust principles that the legislature still has to abide by, even if the legislature changed the Constitution. Thank you. Okay.

Representative Stout.

Yeah, thank you, um, Co-Chair Foster. Through the chair to Mr. Gussendorf, and this will kind of be my last. I have a—. I'm reading the minutes from the Alaska Constitutional Convention And there is 200 pages of conversation of why they did— framers of the Constitution did not want to do this, right, regarding earmarks and dedicating funds and dedicating revenues for specific purposes. And I guess my question would be, you know, like the votes on this stuff was 44 to 7 not to do that.

And I'm just curious why we would think that we would want to take a kind of drastic departure from our constitutional framework when we talk about establishing dedicated funds. They refer to them as earmarks, but we would have dedicated revenue services through the chair. Mr. Gruessendorf. Through the chair, Representative Stepp, I did not read all those pages. So I am not involved in the discussion.

It happened a long time ago and education has bubbled up to the top. I mean, it was when they created the Constitution, I know that, but times have changed a little bit and this issue is coming before the legislature a lot and what level the legislature has been able to fund education at and are we meeting the constitutional mandate that we provide an adequate public education for the, for the our students. So this is just a request to ask the people of the state of Alaska.

If this is worthy enough to be a very top priority and get priority status within the dedicated fund part of the Constitution, and the people will let us know, that's the best poll we can take, is the poll of the voters to tell the legislature, you know, once and for all, or maybe not once and for all, but let us know at what level their support is to do something like this. And the reason for this coming before you is to just let the people vote and let us know what they think should be the priority and where the dedicated funds, if it's worthy of being a dedicated fund within our Constitution, one of very few. [FOREIGN LANGUAGE] Representative. Thank you. And through the co-chair, so you kind of, you kind of hit on what I had said earlier, that this is kind of a poll.

And I feel like, because you just said it, putting this amendment through or this resolution through to give it to the voters to vote on, it needs to be very clear that this is no guarantee. Like we had stated before, it's a constitutional door knock. Doors open, but we don't necessarily walk through. Because you don't want to deceive the public in saying, hey, we are going to do this and we are going to have funds earmarked, because that is what you were doing, for this. Where the funds come from, we don't have any idea.

How we are going to get the funds, we don't really know. But we might. That has to be clear. And I don't think that this resolution is very clear on that. He could respond if he wants.

Through the Chair, Representative Ballard. It is—. I did make it sound like it's a poll, but on the other hand, the people will get the chance to vote, and I think it will be very clear in the language for the pros and cons. Both sides will probably make it very clear that there's no absolutely guarantee that there's going to be funds put in here. The legislature— right now the legislature may put funds in there.

And they will— but it's a place to do it if they choose to. And, you know, it's just like putting money into the CBR, putting money in the SBR, except this will be used for strictly education. And hopefully— I fully expect those, if it gets to the ballot, that the pros and cons will both put a little statement in there relating to this is no guarantee that the money is going to be there. It's— should it— should we create a fund to show that— that put something in place? Because you got to start somewhere.

Put something in place, and hopefully future legislatures will, and the state is in a position to where they can put money into the account. So constitutionally, we're already obligated to pay for education, correct? Through the chair, correct. I'm not really sure why we're doing this other than to circumvent the system and maybe pay for pre-K and other things that we don't need to do. Thank you.

It's just a comment. I don't need a response. Thank you. I don't see any further questions. I believe we do have some information forthcoming.

Ms. Marie Marks, if you could submit your information in writing, as well as Ms. Carol Beecher, we'll have that both in writing before our next meeting, and then we can also review it at the next meeting. I would like to set an amendment deadline for SJR 29, and that would be for this Friday, May 1st, at noon. And if you could submit those to Ms. Helen Phillips or my staff, Mr. Rhoad Anderson. And so if we could take maybe just a 60-minute— 60-second at ease, and just to grab some coffee, stretch your legs, and then we will go to the last bill of the day, and that is SB 86, the money transmission and online currency bill. So we're going to take a 1 minute, um, eddies.

Okay, I'm going to call this meeting of the House Finance Committee back to order at 2:34 PM on Tuesday, April 28th, 2026. And if we could have Senator Keele come up for SB 86, that is the Money Transmission and Online Currency Bill, as well as his staff, Ms. Aurora Hawk. Um, the plan today is to receive a brief recap of the bill, and then we'll come back to member questions. We have in previous hearings received the introduction, fiscal note review, and already done public testimony. So my intention is to receive the recap and go through questions, and then we'll set an amendment deadline.

And so also available for questions, we do have Tracy Reno, Director of the Division of Banking, as well as Dean Fleer, Financial Examiner of the Division of Banking and Securities. So with that, welcome, Senator Kiel. Thank you, Mr. Chairman and members of the House Finance Committee. For your records, my name is Jesse Keele, and I have the privilege of serving as the senator from Senate District B in northern Southeast Alaska.

With me this afternoon is Aurora Hawk of my staff. And thank you for bringing Senate Bill 86 back before your committee. I appreciate the instruction that it's to be a brief recap since we just came off the Senate floor on the pension bill, and nobody's brief on those.

[FOREIGN LANGUAGE] Uh, Mr. Chairman, Senate Bill 86, uh, does a couple of things. It modernizes Alaska's money transmission laws and the basic safety and soundness regulations that we have under those laws. It makes the operations of the Division of Banking and Securities more efficient. Uh, goes to a nationwide, uh, model act put together by the Conference of State Bank Supervisors working together with industry.

And it explicitly includes cryptocurrency in the value that can be transmitted that subjects a business to these basic safety and soundness rules. This is not, as we said in the initial presentation, the kind of regulation we do with insurance, where we regulate rates and allowable returns. This is no crooks in the corporate ladder. This is executing the customer's instructions timely. This is having cash or allowable investments to cover the money that an Alaskan entrusts to a business for transmission, or having the cryptocurrency in the customer's wallet that the customer entrusts to them, and not diverting that to other uses.

Mr. Chairman, it's a long bill. There's lots of other details. We went through most of them the other day, but that is the basic recap. Fundamental safety and soundness regulation to help protect Alaskans from scam, from diversion or dissipation of their assets.

Great. Thank you very much. And when we left off at our last meeting, I had a question line, and first in line was Representative Galvin, then Allard and Bynum. I think you could pull me out. I don't even remember.

Okay. I figured that might be the case. That's why we like to do the recaps. Maybe it jogs folks' minds. Sometime.

So with that, I think we've got a nice little summary of the bill and just want to open it up to questions if folks have any questions. Representative Ballard. Thank you. Through the co-chair, Senator Keele, I know this could be a little bit an unusual question, but I wasn't able to listen to how this kind of went down in Senate.

Something that some of your colleagues might have mentioned, pros and cons. Can you share that with the committee? Senator Kuehl. Thank you, Mr. Chairman. In response to Representative Allard's question, I was fortunate to have unanimous support on the Senate floor, so I'm going to lean heavily on that.

Oh, thank you. One of the topics that was discussed was the fiscal impact of the bill. And I know that the committee reviewed the fiscal note. There's been a new one that corrects just a typo. This bill does require some new positions.

Those are entirely funded by receipts from the industry. It is 100% designated general fund. So there is no new UGF expense. And there's another benefit to the bill on the fiscal side. The Division of Banking and Securities will rework change how they charge for licenses, these new money service licenses, and go to a tiered system.

They have— they will do that by regulation. They have talked about following the Texas model that tiers those costs by the amount of value the company transmits. May I? Representative Valarie. Thank you.

And through the co-chair. So I just have a couple of questions then. Is part of this bill being able to protect those also that are investing so nobody's getting— I guess I'm going to use the word scammed. Mr. Chairman, in answer to Representative Allard, the, the bill, by having an Alaska regulator with a clear oversight, will help with that significantly. I won't promise you perfect.

Correct. The bill also does not control what cryptocurrencies or crypto coins a person may buy. There was some discussion in one of the Senate committees about restricting certain kinds of— I think the term was meme coin. That is not in the bill. That remains a risk that an Alaskan may choose to take.

It's not a risk I would take, but that remains up to the individual. And then one more follow-up. Thank you, Co-Chair. Senator Kiel, I know that our congressman is working on things with Bitcoin and crypto and other things. Were you able to find out anything where the federal government is also laying out guidelines and maybe align for better protection?

And is it in this bill? Mr. Chairman, in answer to Representative Allard's question, The bill is designed around a one-regulator model, so that should the federal government start to regulate these businesses, look over for safety and soundness, for no criminals, etc., we would not have a double regulation. As the bill is currently written, and as federal law currently stands, I'm not aware of any conflicts. Okay. And then, just a quick comment.

Yes, the fiscal note hurts my tummy, but I know at times we have to take those leaps with our fiscal notes in order to protect our Alaskans. It's hard sometimes to stomach huge fiscal notes, but I could see supporting it. So thank you for bringing it forward. I appreciate it. Thank you.

Okay, in the lineup, I have Representative Josephson, Representative Bynum, Representative Staff, Representative Tomczewski. Representative Josephson. Thank you, Mr. Chairman. Senator Kiel, it's come to my attention that the bill is a fine bill, but that there may be an issue about passing an interest in virtual currency through— either through intestacy or perhaps by will. The verb that's used is to escheat, and you may have heard about this issue.

Have you heard any hallway talk about need for a friendly amendment relative to the transfer of the interest to the next party of interest? Mr. Chairman, in answer to Co-Chair Josephson's question, I am not aware of any difficulties with passing interest in virtual currency through the probate process. There is a question of escheatment, or escheatment, I don't know the exact pronunciation, that we have been working with some folks on, and it has to do with unclaimed property. If a company that holds a virtual currency for an Alaskan cannot find that Alaskan, the Alaskan no longer responds and does not transact on the account, they are they meet the same rules that we have for other forms of unclaimed property.

It may be necessary to put some tweaks in the law to handle that well. Alaska's unclaimed property system right now is really set up primarily around cash coming in and cash going— being held as unclaimed property and then potentially after extended period as sheeting.

And so that may need some clarification. We have, we have been working on that and are working to find a friendly amendment. Yes, it's all I needed. Thank you. Representative Bynum.

Thank you, Co-Chair Foster, through the Chair, Senator Keele. Two quick questions for you. I hope they're quick. The first one is, does a bill like HB 280, the multistate tax, apply to these companies, and if so, do we know how they would be impacted? Senator Kiel.

Thank you, Mr. Chairman. In answer to Senator Bynum's question— Representative Bynum's question, sorry. I'll tell my senator that you said that. Wishful thinking sometimes sneaks in, Mr. Chairman.

I did mention where I was just a minute ago, right? Sorry, Mr. Chairman. In answer to Representative Bynum's question, I believe that the companies that are subject to licensure under this bill are primarily headquartered out of state. And so I think there is likely significant overlap with those affected by House Bill 280. I do not believe that anything in Senate Bill 86 changes how that other piece of legislation would affect these companies up or down.

Thank you. And then my second— thank you, through the chair— my second question is, my understanding of the bill is when we're talking about cryptocurrency, that those that are exchange or, you know, involved in the exchange of cryptocurrency or holding cryptocurrency, that this does put protections in place for those that are that have ownership of that cryptocurrency. I'm just trying to understand how this is different than normal banking practices that are covered under FDIC or UCUA protections, which only protect up to $250,000 of a depositor's deposit. And so I'm just trying to understand if, if this bill basically puts protections on all deposits. So if I'm depositing, as an example, $1 million of crypto Do I have that protection that it's absolutely protected no matter what, as opposed to what we're doing with federally or federally insured banks and/or credit unions that are insured?

Senator Kyl. Thank you, Mr. Chairman. In answer to Representative Bynum's question, I appreciate the opportunity to clarify. This bill doesn't— does not touch banks, and it does not touch credit unions. Therefore, it does not create any coverage under the Federal Deposit Insurance Corporation or the National Credit Union— is it Administration?

The— anyway, the comparable $250,000 federal guarantee.

If an Alaskan has cryptocurrency— the bill uses the term virtual currency— has virtual currency with a company that is significantly at risk as compared to if they held a comparable amount of dollars at a bank or a credit union.

But there's a— there are a couple of substantial differences.

Primary among them is that a bank or a credit union may take the dollars that an Alaskan has on deposit and invest many of those in loans and other allowable things that are the activities of the bank or the credit union. A money services licensee, under Senate Bill 86, may not. They must hold your asset in trust for you. Um, so, in that sense, You have a potentially reduced risk. They're not off loaning it out or putting it in their, their hedge fund.

However, we do not offer a risk-free asset. We do not offer a risk-free corporation or investment. What Senate Bill 86 does do is make crystal clear that in Alaska, if a company holding your virtual currency goes bankrupt,.

They can't settle their debts with your asset. That belongs to you.

Follow-up? So, just for clarification, the model being used for those virtual currency companies is basically doing fee-for-service, and when they are holding your virtual currency, that they have to hold your virtual currency. So, it is almost like a safety deposit box that is protected. You are just paying a monthly fee for those services. Is that kind of what the model is for what these companies are doing?

Senator Kyl. Mr. Chairman, I might defer to the folks at the Division of Banking and Securities for a little more detail on how those who would be regulated make their money. At least I hope they know. They are not going to regulate the returns of these companies. But if I may, I would like to ask the Division of Banking and Securities if they could help with Representative Bynum's question.

Ms. Tracy Reno, could you put yourself on the record? Through the Chair, Tracy Reno, Division of Securities. My answer to that question is basically that we are regulating the movement of money, not the holding of the money. So when we are looking at something, we are making sure that when a customer says, "I want X amount of dollars to go to my aunt," it gets there. The money is disclosed on the fees and the cost to change it into another currency, whether it's cryptocurrency or pesos or whatever.

So there's disclosures. The money is transmitted— when, where, how. So we're controlling or regulating the movement of the money. If someone chooses to have a wallet with a cryptocurrency exchange, that is something separate. If there's an investment of cryptocurrency, that's a security.

That could— that's something separate. So this is the movement of money when someone transmits as it's to or from or within the state of Alaska. Does that answer your question? That's good. Thank you.

Okay. And next question to Representative Tomaszewski.

Thank you, Co-Chair Foster, to the chair. So I guess that kind of brings me into— that answer brings me into my question. You're talking about virtual wallets. So someone who has crypto in a virtual wallet and wants to transfer that to another virtual wallet, that is something that the— this bill is going to look at and regulate. Is that—.

Is that what I'm understanding? Senator Kiel. Mr. Chairman, in answer to Representative Thomas-Schäfsky's question, for the vast majority of folks who transact in virtual currencies, yes. However, you don't have to use a business to move virtual currency. It is possible to do direct wallet-to-wallet transfers that don't involve a licensee.

If that is your choice, you may do that, and the bill will not implicate you. Nobody gets a license. The vast majority of folks will have their wallet with Robinhood or Coinbase or pick a corporation, they will be licensed.

Okay. And a follow-up. Representative Tomaszewski. Yes. So I don't know if I'd consider Robinhood a wallet.

But if I was to take cryptocurrency out of my individual wallet, my, my virtual wallet, and move it to Robinhood, then that would be something that would be tracked. Mr. Chairman, to answer Representative Tomaszewski, um, it, it— Robinhood would be a licensee. They would have to keep records. I don't want to give the impression that the government is going to track and maintain a database of transactions. That will not be the Okay, follow-up, follow-up.

Yes, I wouldn't want the government to ever do that. They certainly don't do that with my own bank account and my own dollars. But it's something I'm interested in, in wondering if this bill has anything to do with blockchain technology and if it gets into any of those transactions on the blockchain technology. Ledger.

Mr. Chairman, in answer to Representative Tomaszewski, the vast majority of cryptocurrency transactions do involve blockchain ledgers. They are, for lack of a better term, I'll reveal my ignorance a little bit, they are recorded through the blockchain. Although there have been some virtual currencies that do not have a blockchain, they tend to be disfavored in the market, I've noticed. This bill is technology neutral. If it meets the definition of virtual currency and a business moves it to, from, or within Alaska, that business must be licensed and meet the requirements.

But we don't tell them what they take or don't take, move or don't move. That's up to the individual business. Follow-up? Okay, thank you. And so as far as the blockchain technology, you mentioned that some use blockchain that's not up to par, but in general, blockchain technology, that is a very secure way to move and to keep really good records of the transactions that happen within that blockchain.

Am I correct in that? Do you know, Mr. Chairman, that that matches my understanding? Yes. Okay. Thank you very much.

Okay. I don't have any further members' names on my list for questions.

And so with that, I would like to go ahead and set the bill aside for now and set an amendment deadline for Friday, May 1st at 5 p.m. And so Senator Keele, do you have anything you'd like to add before we close the day out here? Thank you. Excuse me. Thank you, Mr. Chairman. There have been a couple of little tweaks that we have been discussing with people, and I think that there will be a few amendments that come to the committee that most of— well, the ones we're aware of, we would consider friendly amendments.

And so I look forward to working with the members of your committee, with you and your staff, for those little refinements. And thank you very much for the committee's time this afternoon. Great. Thank you very much for being here. And so just to announce our next meeting, that is tomorrow at 9:00 a.m. And at that meeting, we'll hear Senate Bill 130.

That's the Fisheries Production Development Tax Credits. And so if there's nothing else to come before the committee, we'll be adjourned at 2:55 p.m. Thank you.