SCS CSHB 505(FIN) AM S: "An Act making appropriations to the constitutional budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska; making an appropriation to the Department of Education for support of kindergarten, primary, and secondary education and community schools programs and for school construction debt retirement; and making appropriations from the constitutional budget reserve fund under art. IX, sec. 17(c), Constitution of the State of Alaska; and providing for an effective date."
00SENATE CS FOR CS FOR HOUSE BILL NO. 505(FIN) am S 01 "An Act making appropriations to the constitutional budget reserve fund 02 established under art. IX, sec. 17, Constitution of the State of Alaska; making 03 an appropriation to the Department of Education for support of kindergarten, 04 primary, and secondary education and community schools programs and for school 05 construction debt retirement; and making appropriations from the constitutional 06 budget reserve fund under art. IX, sec. 17(c), Constitution of the State of Alaska; 07 and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. FINDINGS AND INTENT. (a) Following ratification by the voters, art. IX, 10 sec. 17, of the Constitution of the State of Alaska, took effect on January 2, 1991. This 11 amendment 12 (1) created a constitutional budget reserve fund; 13 (2) required that the proceeds of certain tax and mineral revenue disputes be 14 deposited into that fund; and
01 (3) established limitations on the legislature's ability to appropriate money 02 from that fund. 03 (b) That amendment dedicates to the constitutional budget reserve fund money from 04 mineral lease bonuses, rentals, royalties, royalty sale proceeds, federal mineral revenue sharing 05 payments or bonuses, and taxes imposed on mineral income, production, or property received 06 by the state after July 1, 1990, "as a result of the termination, through settlement or otherwise, 07 of an administrative proceeding or of litigation in a State or federal court." 08 (c) Following the ratification of the budget reserve amendment, the Department of 09 Revenue requested that the attorney general determine whether the term "administrative 10 proceeding" in art. IX, sec. 17, of the Constitution of the State of Alaska, applied to informal 11 conferences and audits or only to formal hearings. On April 24, 1992, the attorney general 12 issued a formal opinion concluding that informal conferences do not constitute "administrative 13 proceedings" for the purposes of art. IX, sec. 17, of the Constitution of the State of Alaska. 14 The attorney general reasoned that sec. 17 applied to administrative actions that were similar 15 to litigation, such as the formal hearings held by the Department of Revenue. The opinion 16 concluded that informal conferences held for purposes of discussion and negotiation "fall 17 outside the ambit of the common understanding of litigation or legal contests." 18 (d) Since July 1, 1990, the state has engaged in several formal administrative hearings 19 and judicial proceedings to resolve oil and gas tax and mineral royalty disputes. Revenue 20 from the termination of these disputes has been deposited into the constitutional budget reserve 21 fund. During this period, the state also received oil and gas or mineral tax revenue from audit 22 assessments in the informal conference phase. In conformance with the April 24, 1992 23 opinion of the attorney general, the Department of Revenue deposited in the general fund all 24 revenue resulting from settlement of informal tax conferences. 25 (e) During the 1993 legislative session, the legislature passed several appropriation 26 bills. For example, HB 45, the education budget, was passed by the House February 22, 1993, 27 by a vote of 36-0, and was passed by the Senate March 15, 1993, by a vote of 15-4. Senate 28 Bill 60, regarding school construction grants, was passed by the Senate April 24, 1993, by a 29 vote of 12-8, and by the House May 11, 1993, by a vote of 39-1, and the Senate concurred 30 in the final version by a vote of 17-3 on May 11, 1993. Other appropriations passed by the 31 legislature in 1993 include HB 55, the operating budget; SB 183, the capital budget; and
01 SB 126, intertie loans and grants and power cost equalization fund. For fiscal year 1994, the 02 legislature approved appropriations from the general fund in excess of $3,163,100,000. 03 (f) In passing the appropriation bills in 1993, the legislature authorized the expenditure 04 of anticipated revenue in the general fund, including amounts deposited in that fund as a result 05 of settlement of informal tax conferences. At the time the legislature passed those 06 appropriations for fiscal year 1994, revenue forecasts showed a surplus in the general fund. 07 Thus, the legislature did not anticipate that all money derived from the settlement of informal 08 tax conferences would be spent. Due to the unanticipated decrease in state revenue, the state 09 treasury has less money than was anticipated at the time that the legislature made its 10 appropriations in 1993. Because of this shortfall, any anticipated surplus representing 11 settlements of informal tax conferences, and amounts received to date from informal tax 12 conference settlements must be expended to fully fund the capital and operation appropriations 13 enacted in 1993. 14 (g) On July 12, 1993, the senate majority filed suit challenging the Department of 15 Revenue action of depositing into the general fund revenue resulting from informal tax 16 conferences. Halford v. Hickel, (3AN-93-6297 CI). On July 27, 1993, former Governor Steve 17 Cowper filed a similar complaint captioned Cowper v. Hickel (3AN-93-6848 CI). The cases 18 were consolidated. 19 (h) On November 19, 1993, the court issued its decision which concluded that art. IX, 20 sec. 17, of the Constitution of the State of Alaska, applied to informal tax conferences. On 21 November 29, 1993, the state presented evidence that retroactive application of the court's 22 ruling, requiring transfer of over $940,000,000 from the general fund, would disrupt state 23 finances and put at risk the justifiable reliance interests of Alaskans and municipalities 24 throughout the state. 25 (i) The superior court dismissed the state's request that the ruling be applied 26 prospectively only. The court found the evidence of hardship "very compelling," but noted 27 that the hardship could be relieved if the legislature reappropriated the money for fiscal year 28 1994. The court ordered the governor to fully restore the constitutional budget reserve fund 29 with interest and to comply with its decision by the end of the 1994 legislative session. The 30 superior court noted "it is not clear that the Governor could legally remove the improperly 31 placed funds from the general fund [to the Budget Reserve Fund] without an appropriation
01 authorizing it." 02 (j) Following appeal to the Alaska Supreme Court, the court in Hickel v. Halford 03 (Supreme Court No. S-6124/6134) (Alaska Jan. 27, 1994) determined that all income that 04 resulted from the settlement or other termination of informal administrative proceedings 05 involving certain taxes since July 1, 1990, should have been deposited into the budget reserve 06 fund created by art. IX, sec. 17, of the Constitution of the State of Alaska. 07 (k) The Alaska Supreme Court ordered the governor to restore the constitutional 08 budget reserve fund, with interest from the date of receipt by the state of money described in 09 (j) of this section. 10 (l) The amount required to restore the constitutional budget reserve fund consistent 11 with the initial judicial interpretation is $932,762,996, plus interest that would have been 12 earned upon investment of this money, calculated from the date of receipt by the state. 13 (m) The amount required to restore the constitutional budget reserve fund consistent 14 with the subsequent judicial interpretation (Hickel v. Halford (Supreme Court No. 4069) 15 (Alaska April 4, 1994)) is $73,275,478, plus interest that would have been earned upon 16 investment of this money, calculated from the date of receipt by the state. 17 (n) As of April 1994, there is not sufficient unappropriated money in the general fund 18 to allow the governor to unilaterally transfer the money needed to fully restore the 19 constitutional budget reserve fund. 20 (o) It is the intent of the legislature that the orders of the Alaska Supreme Court and 21 the Alaska Superior Court be complied with by appropriations from the general fund to the 22 constitutional budget reserve fund, retroactive to July 1, 1993, of the principal and interest that 23 should have been deposited into that budget reserve fund. This appropriation will restore all 24 money to the constitutional budget reserve fund that should have been deposited there since 25 July 1, 1990, under the provisions of art. IX, sec. 17, of the Constitution of the State of 26 Alaska. 27 * Sec. 2. The sum of $932,762,996 is appropriated from the general fund to the budget 28 reserve fund established by art. IX, sec. 17, Constitution of the State of Alaska, to comply 29 with the order in Hickel v. Halford (Supreme Court No. S-6124/6134) (Alaska Jan. 27, 1994). 30 * Sec. 3. The sum of $73,275,478 is appropriated from the general fund to the budget 31 reserve fund established by art. IX, sec. 17, Constitution of the State of Alaska, to comply
01 with the decision in Hickel v. Halford (Supreme Court No. 4069) (Alaska April 4, 1994). 02 * Sec. 4. An amount equal to the interest that would have been earned on money received 03 by the state after June 1, 1990, as a result of tax assessments or termination through settlement 04 or otherwise of administrative proceedings involving taxes imposed on mineral income, 05 production, or property, and subsequently deposited in the general fund, is appropriated from 06 the general fund to the budget reserve fund established by art. IX, sec. 17, Constitution of the 07 State of Alaska, to comply with the order in Hickel v. Halford (Supreme Court No. S-6124/6134)(Alaska Jan. 27, 08 1994) and the decision in Hickel v. Halford (Supreme Court No. 09 4069) (Alaska April 4, 1994). 10 * Sec. 5. (a) The sum of $696,527,188 is appropriated from the general fund and from 11 other funds in the amounts listed to the Department of Education for the purposes expressed 12 and allocated in the amounts listed for operating expenditures for the fiscal year ending 13 June 30, 1995: 14 FUND SOURCE AMOUNT 15 General fund $635,181,888 16 General fund/mental health trust income account 17 (AS 37.14.011) 8,054,500 18 Public school trust fund (AS 37.14.110) 6,816,600 19 School fund (AS 43.50.140) 2,668,100 20 P.L. 81-874 21,806,100 21 Federal receipts other than 22 P.L. 81-874 22,000,000 23 PURPOSE ALLOCATION AMOUNT 24 Foundation program $629,938,000 25 Child nutrition/student lunch program 22,000,000 26 Cigarette tax distribution 2,668,100 27 Tuition students 1,887,600 28 Boarding home grants 355,000 29 Youth in detention 800,000 30 Pupil transportation 31,638,148 31 Schools for the handicapped 3,447,600
01 Community schools 600,000 02 Additional district support 3,192,740. 03 (b) The amount allocated under (a) of this section for additional district support is 04 further allocated to the following school districts in the amounts listed: 05 SCHOOL DISTRICT ALLOCATION AMOUNT 06 Annette Island School District $166,530 07 Cordova School District 217,160 08 Craig City School District 151,890 09 Dillingham City School District 250,100 10 Galena City School District 156,160 11 Hoonah City School District 126,270 12 Hydaburg City School District 102,480 13 Kake City School District 136,640 14 Kashunamiut School District 206,180 15 Klawock City School District 158,600 16 Nenana City School District 164,090 17 Nome City School District 264,740 18 Pelican City School District 56,730 19 Petersburg City School District 199,470 20 St. Mary's School District 119,560 21 Skagway City School District 115,290 22 Tanana City School District 122,000 23 Unalaska City School District 200,690 24 Wrangell City School District 151,890 25 Yakutat City School District 126,270. 26 * Sec. 6. (a) The sum of $103,345,264 is appropriated from the general fund to the Alaska 27 debt retirement fund (AS 37.15.011). 28 (b) The sum of $103,345,264 is appropriated from the Alaska debt retirement fund 29 (AS 37.15.011) to the Department of Education for state aid for costs of school construction 30 under AS 14.11.100. 31 * Sec. 7. (a) The sum of $416,600,000 is appropriated under art. IX, sec. 17(c), of the
01 Constitution of the State of Alaska, from the budget reserve fund established by art. IX, 02 sec. 17, of the Constitution of the State of Alaska, to the general fund. 03 (b) The appropriation made by (a) of this section is to fund the portion of the fiscal 04 year 1994 appropriations enacted in 1993 that was intended to be funded from amounts 05 deposited in the general fund representing a portion of the revenue received from informal tax 06 conference settlements and tax assessments. 07 (c) The sum of $516,162,996 is appropriated under art. IX, sec. 17(c), of the 08 Constitution of the State of Alaska, from the budget reserve fund established by art. IX, sec. 09 17, of the Constitution of the State of Alaska, to the general fund. 10 (d) The sum of $73,275,478 is appropriated under art. IX, sec. 17(c), of the 11 Constitution of the State of Alaska, from the budget reserve fund established by art. IX, sec. 12 17, of the Constitution of the State of Alaska, to the general fund. 13 (e) The appropriations made by (c) and (d) of this section are to fund the portion of 14 the fiscal year 1994 appropriations enacted in 1993 that was anticipated as being funded from 15 the general fund but, due to shortfalls created by declining state oil revenue, requires 16 expenditure of revenue received from informal tax conference settlements and tax assessments. 17 * Sec. 8. An amount equal to the amount appropriated by sec. 4 of this Act is appropriated 18 under art. IX, sec. 17(c), Constitution of the State of Alaska, from the budget reserve fund 19 established by art. IX, sec. 17, Constitution of the State of Alaska to the general fund. 20 * Sec. 9. In addition to the amounts appropriated by secs. 7 and 8 of this Act, if the 21 unrestricted state revenue available for appropriation in fiscal year 1994 is insufficient to cover 22 the fiscal year 1994 general fund appropriations, the amount necessary to balance revenue and 23 general fund appropriations is appropriated under art. IX, sec. 17(c), Constitution of the State 24 of Alaska from the budget reserve fund established under art. IX, sec. 17, Constitution of the 25 State of Alaska, to the general fund. 26 * Sec. 10. The appropriations from the budget reserve fund (art. IX, sec. 17, Constitution 27 of the State of Alaska) contained in secs. 7 - 9 of this Act are made under art. IX, sec. 17(c), 28 Constitution of the State of Alaska. 29 * Sec. 11. Sections 2 - 4 of this Act are retroactive to July 1, 1993. 30 * Sec. 12. The appropriations contained in secs. 2 - 6 of this Act take effect only if the 31 appropriations from the budget reserve fund contained in secs. 7 - 9 of this Act take effect.
01 * Sec. 13. This Act takes effect immediately under AS 01.10.070(c).