03/21/2019 01:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SJR6 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 33 | TELECONFERENCED | |
| *+ | SJR 6 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
March 21, 2019
1:34 p.m.
MEMBERS PRESENT
Senator Mike Shower, Chair
Senator John Coghill, Vice Chair
Senator Peter Micciche
Senator Scott Kawasaki
MEMBERS ABSENT
Senator Lora Reinbold
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 6
Proposing amendments to the Constitution of the State of Alaska
relating to an appropriation limit; relating to the budget
reserve fund and establishing the savings reserve fund; and
relating to the permanent fund.
- HEARD & HELD
SENATE BILL NO. 33
"An Act relating to pretrial release; relating to sentencing;
relating to treatment program credit toward service of a
sentence of imprisonment; relating to electronic monitoring;
amending Rules 38.2 and 45(d), Alaska Rules of Criminal
Procedure; and providing for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: SJR 6
SHORT TITLE: CONST AM:APPROP. LIMIT; RESERVE FUND
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/30/19 (S) READ THE FIRST TIME - REFERRALS
01/30/19 (S) STA, JUD, FIN
03/21/19 (S) STA AT 1:30 PM BUTROVICH 205
WITNESS REGISTER
MIKE BARNHILL, Policy Director
Office of Management and Budget
Office of the Governor
Juneau Alaska
POSITION STATEMENT: Participated in the presentation of SJR 6.
ED KING, Chief Economist for the State of Alaska
Office of Management and Budget
Office of the Governor
Juneau Alaska
POSITION STATEMENT: Participated in the presentation of SJR 6.
CORI MILLS, Senior Assistant Attorney General
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Participated in the presentation of SJR 6.
WILLIAM MILKS, Assistant Attorney General
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Participated in the presentation of SJR 6.
CORI MILLS, Senior Assistant Attorney General
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Participated in the presentation of SJR 6.
GLENN M PRAX, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
VICKI JO KENNEDY, representing self
Kodiak Island, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
CHRIS EICHENLAUB, representing self
Eagle River, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
WILLIAM QUAYLE, representing self
Juneau, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
DEBORAH HOLLAND, representing self
Anchorage, Alaska
POSITION STATEMENT: Stated support for SJR 6
DANIEL SADROSA, representing self
Wasilla, Alaska
POSITION STATEMENT: STATED support for Governor Dunleavy and SJR
6.
CHARLES SIMON, representing self
Hooper Bay, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
MIKE COONS, representing self
Palmer, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
JIMMY SWISHER, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
SUSAN JORDAN, representing self
Kenai, Alaska
POSITION STATEMENT: Stated full support for Governor Dunleavy
and SJR 6.
KIMBERLY CLARK THIRY, representing self
Anchor Point, Alaska
POSITION STATEMENT: Stated that she totally supports SJR 6.
RYAN MCKEE, State Director
Americans for Prosperity
Wasilla, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
PATRICK MARTIN, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
CARL NORMAN, representing self
Seward, Alaska
POSITION STATEMENT: Testified in support of SJR 6 and Governor
Dunleavy.
GREG BARLETT, representing self
Soldotna, Alaska
POSITION STATEMENT: Stated support for SJR 6 to cap government
spending and protect the permanent fund dividend.
PORTIA NOBLE, Field Director
Americans for Prosperity (AFP)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
ELIZABETH DOOLEY, representing self
Trapper Creek, Alaska
POSITION STATEMENT: Stated support for SJR 6 and Governor
Dunleavy.
DAVID BOYLE, representing self
Anchorage, Alaska
POSITION STATEMENT: Stated support for SJR 6.
GEORGE PIERCE, representing self
Kasilof, Alaska
POSITION STATEMENT: Stated support for SJR 6.
MATHEW SMITH, representing self
Bethel, Alaska
POSITION STATEMENT: Stated support for SJR 6.
CLIFF BROTT, representing self
Talkeetna, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
THOMAS WILLIAMS, representing self
Peters Creek, Alaska
POSITION STATEMENT: Testified in support of SJR 6.
ROGER BRANSON, representing self
Eagle River, Alaska
POSITION STATEMENT: Testified in opposition of SJR 6.
KELLEY TURENTON, representing self
North Pole, Alaska
POSITION STATEMENT: Said she opposes SJR 6.
IONE ACAERMANN, representing self
Juneau, Alaska
POSITION STATEMENT: Stated support for SJR 6 to cap spending and
protect the PFD.
CORBIN ARNO, representing self
Homer, Alaska
POSITION STATEMENT: During the hearing on SJR 6 said he supports
the Governor's budget and what he is doing.
ACTION NARRATIVE
1:34:11 PM
CHAIR MIKE SHOWER called the Senate State Affairs Standing
Committee meeting to order at 1:34 p.m. Present at the call to
order were Senators Coghill, Kawasaki, Micciche, and Chair
Shower. Senator Reinbold arrived as the meeting was in progress.
SJR 6-CONST AM:APPROP. LIMIT; RESERVE FUND
1:34:46 PM
CHAIR SHOWER announced the consideration of SENATE JOINT
RESOLUTION NO. 6, Proposing amendments to the Constitution of
the State of Alaska relating to an appropriation limit; relating
to the budget reserve fund and establishing the savings reserve
fund; and relating to the permanent fund.
He said the resolution was introduced by the Rules Committee at
the request of the Governor. The intent today is to hear the
introduction, debate the policy, and start taking public
testimony at 3:30 pm.
1:35:30 PM
Mike Barnhill, Ed King, and Cori Mills introduced themselves and
Mr. Barnhill noted that Bill Milks was in the audience as a
lifeline, should the need arise.
CHAIR SHOWER advised that he'd like to take time and have
questions answered as they come up.
1:36:44 PM
MIKE BARNHILL, Policy Director, Office of Management and Budget,
Office of the Governor, Juneau, thanked the chair for taking the
additional time with SJR 6. He said whenever there is a question
of amending the constitution, it is important to take extra time
to consider all the relevant implications and to take public
testimony.
MR. BARNHILL explained that SJR 6 proposes to amend the current
constitutional spending limit in art. IX, sec. 16, Constitution
of the State of Alaska. He advised that he would review the
existing limit and the reason why the administration recommends
a change.
MR. BARNHILL recounted that in the early 1980s the state was
awash in new oil money and state spending skyrocketed. According
to some reports, state spending between 1960 and 1982 climbed
over 9,000 percent. Over this same time, the population almost
doubled and the changes in inflation a little more than tripled.
However, the combined impact was nowhere close to 9,000 percent
and there was legitimate concern about the legislature possibly
spending all this new money like it did with the initial royalty
bonus in the early 1970s. The legislature addressed the concern
in 1981 in an amendment to the constitution that was placed on
the ballot in 1982.
MR. BARNHILL explained that the base spending limit in FY1982
was $2.5 billion and the constitutional amendment allowed that
limit to increase by the combined effect of inflation and
population growth each year. Exceptions to the limit were
"appropriations for Alaska permanent fund dividends,
appropriations of revenue bond proceeds, appropriations required
to pay the principal and interest on general obligation bonds,
and appropriations of money received from a non-State source in
trust for a specific purpose, including revenues of a public
enterprise or public corporation of the State that issues
revenue bonds,". He noted that the constitutional amendment
reserved one third of spending for capital projects. If the
legislature wanted to spend more than that on capital projects,
it would require approval by the voters.
The resolution was put before the people in 1982 and passed by a
substantial margin. The voters reconfirmed this in 1986 when the
question passed by an even larger margin. Mr. Barnhill
highlighted that the 1982 election pamphlet statement opposing
the resolution supported a spending limit that had fewer
exceptions. He stated, "Perhaps somewhat predicting the future,
here we are now in 2019 and it does seem as if the statement in
opposition in 1982 had some merit to it. There may have been too
many holes in this particular spending limit. It didn't really
serve to control spending."
1:41:54 PM
CHAIR SHOWER asked Mr. Barnhill to read the relevant part of
[art. IX, sec. 16,] Constitution of the State of Alaska into the
record to clarify that the appropriation limit is already in the
constitution. The resolution seeks to change the formula.
1:42:14 PM
MR. BARNHILL read the following:
...appropriations from the treasure made for a fiscal
year shall not exceed $2,500,000,000 by more than the
cumulative change, derived from federal indices as
prescribed by law, in population and inflation since
July 1, 1981.
CHAIR SHOWER reiterated that he wanted it on the record that SJR
6 proposes a change to the existing appropriation limit in the
state constitution.
SENATOR COGHILL clarified that Mr. Barnhill was reading from
art. 9, sec. 16, Constitution of the State of Alaska.
1:43:23 PM
EDWARD KING, Chief Economist for the State of Alaska, Office of
Management and Budget, Office of the Governor, Juneau, discussed
the existing appropriation limit in the constitution and why it
isn't as effective as hoped. He requested the committee hold any
questions about the mechanics of the proposal until the end of
the presentation when that will be discussed.
MR. KING displayed slide 4 and explained that he adjusted the
FY75-FY19 UGF spending (reported by legislative finance) for
inflation and population. The graph illustrates that before oil
started flowing through TAPS [Trans-Alaska Pipeline System],
about $5,000-$6,000 per person was spent on government services
in 2019 dollars. After oil money started flowing to the
treasury, the young state radically increased government. When a
spending limit was placed in the constitution in 1982, the
status quo was about $2.5 billion. Historically, that is the
most the state has ever spent on a per capita basis adjusted for
inflation, yet that is the limit in the constitution. He pointed
out on slide 5 that the black dot/dash line at the top
represents the current spending limit that was pegged to the
$2.5 billion plus inflation and population growth. He
highlighted that the line has climbed more than four times the
level it was in 1982 even though the government has never grown
enough to reach that limit.
He directed attention to the stacked chart on slide 5 that is
intended to show how that spending limit has played out over
time and how it would have played out under alternate scenarios.
He explained that the blue area represents agency operations;
the orange area represents statewide items such as debt service
payments, contributions to retirement accounts, and oil tax
payments; and the gray area represents capital spending. He
highlighted that it is capital spending that is the most
reactive to changes in revenue. Capital budgets are large when
there's money and they're scaled back when money is scarce. The
red dotted line at the bottom of the chart illustrates what
would have happened if the 1982 constitutional limit was pegged
to the $1 billion state spending before oil money started to
flow. That limit would be equivalent to agency operations today.
He said part of the problem with the current spending limit is
that it was pegged to the escalated spending rather than to the
pre-oil-money spending it intended to control.
CHAIR SHOWER asked how it happened that the red line is roughly
equivalent to agency operations today.
MR. KING replied he applied the constitutional amendment on the
first data point, which was 1975 rather than 1982 and that's
what shows up.
CHAIR SHOWER commented that it's quite a coincidence.
SENATOR COGHILL talked about the necessity of looking forward
and backward about a decade to reflect catching up on things
like deferred maintenance during lean times and paying forward
during better financial times. He said that is different than
annual spending and should be noted.
1:50:10 PM
MR. KING responded that an effective limit would force capital
projects to be spread out over time as opposed to the current
boom and bust cycles. He said another way to look at that is if
debt were issued rather than spending down savings, those debt
service payments would spread the payments out over time.
SENATOR COGHILL asked where debt payments appear on the graph.
MR. KING replied debt service payments are exempted under the
existing spending limit and would be exempted under this
proposal.
CHAIR SHOWER asked if the black dashed line that represents the
spending limit if the proposed spending limit was passed in 1982
is about $2.2 billion.
MR. KING said it's about $2.5 billion.
CHAIR SHOWER asked if the red line reflects about $3.5 billion.
MR. KING said it's about $3.6 billion and the statewide items
and capital projects in the FY19 budget would exceed that cap.
From $300 million to $400 million would need to be cut if the
proposed spending limit was in place.
MR. KING said the final point on slide 5 is that the resolution
proposes to factor just half the inflation and population
growth. The black dotted line in the middle of the graph shows
how that would have played out. The dashed black line at the
bottom shows what the proposed limit does with the rolling three
year average. For example, the proposed spending limit would
have prevented the budget growth in 2006 that responded to
increased revenues.
1:53:16 PM
MR. KING reviewed the considerations listed on slide 6:
• Not all government spending needs to grow with population
• Teachers and troopers, maybe
• Regulators and auditors, maybe not
• For 20 years [between 1985 and 2005], the State did not
need inflation adjustments, even when they were allowed
• A high allowed rate of growth from a record high spending
level leads to an ineffective limit
CHAIR SHOWER asked if there was an explanation for the second
point that inflation adjustments weren't needed for 20 years.
MR. BARNHILL said when the price of oil bottomed in 1987 and the
state was in a deep recession through most of the 1990s, the
legislature kept tight control on spending. When oil reemerged
in the early to mid-2000s, prices spiked. He said one could
argue that in Alaska spending often chases oil prices.
CHAIR SHOWER asked if the population outflow in the late 1980s
may have contributed to the flat growth and little need for
services.
MR. BARNHILL said he didn't have the data, but he wouldn't be
surprised if there was some out migration. He reiterated that
the budget likely correlates to the price of oil.
1:56:33 PM
MR. KING began the second part of the presentation titled, "Why
Amending the Limit is Necessary." He directed attention to the
graphic on slide 8 that depicts the current path and where it
leads. He described it as "the do nothing scenario" in which the
PFD disappears, and ad hoc draws deplete the earnings reserve
account. At that point, he said, the only choice is to cut the
budget or implement a tax. Responding to a question from the
chair, he clarified that the chart starts with the FY19
management plan that grows with inflation and population growth.
He directed attention to slide 9, "UGF Spending History," and
pointed out that the current spending limit did not prevent
government from growing when oil prices spiked in 2006, bringing
a lot of money into the treasury. He highlighted that without
change, a similar result can be expected if revenues spike
again.
CHAIR SHOWER asked why he chose to spotlight the do nothing
scenario and if he looked at other iterations.
MR. KING replied this is just one of the scenarios in the 10-
year plan that was published this morning. All of the other
solutions lead to the same conclusion. You either pay taxes to
support a larger government and protect the PFD and savings or
you consume all savings and erode the ability to pay the PFD. He
stressed that the only way to avoid those outcomes is to reduce
the budget.
CHAIR SHOWER observed that the charts would look different with
reductions in government spending.
MR. KING responded that a chart showing reductions in government
spending appears later in the presentation.
2:00:47 PM
SENATOR MICCICHE pointed out that the chart shows no midrange
solutions for any of the possibilities and that will lead the
public to believe that the PFD will run out in 2022. He said
it's important for everyone to understand that nobody is talking
about doing nothing.
CHAIR SHOWER commented that a salient point is that government
spending needs to be part of the equation for an acceptable
outcome.
MR. KING agreed and added that the chart represents the most
extreme of what could happen, not necessarily what will happen.
He assured members that his team could model any option the
legislature decides to put forward.
2:02:50 PM
SENATOR COGHILL asked what's included in the government spending
category on slides 9 and 10 and if the PFD is part of that
MR. KING said the historical data does not consider the dividend
payments as unrestricted general fund (UGF) expenditures.
Legislative Finance Division started including the dividend in
UGF spending about two years ago, but the charts reflect the
previous interpretation that dividends are not a UGF expense. He
clarified that the transfer from the CBR to the retirement trust
is not considered UGF and is not included in the charts. Those
items would not be included in either the existing
constitutional spending limit or the proposed spending limit.
SENATOR COGHILL said, "It's a point to be made because there was
some pretty good-sized chunks there."
2:04:17 PM
CHAIR SHOWER asked if those expenditures are excluded.
MR. KING answered yes.
MR. KING turned to slide 10 and explained that it's the same
graph as the previous one but it's laid out as a timeline to
show the key events that occurred between FY75 and FY19. He
noted that the constitutional spending limit that passed in 1982
was prompted by the 264 percent increase in UGF spending over
the previous five years. Then from about 1982 to 1986 Alaska
experienced the deepest recession in its history. Peak oil
production occurred in 1988 and from there until about 2004
(other than some extended capital projects in the 1990s) agency
operations were essentially flat and spending was held to about
$2.5 billion; education funding didn't increase, the student
population was stable, the general population didn't grow very
much, and inflation wasn't a large factor. In the 2005-2006
timeframe oil prices rose to an historical high, rising from a
low of $9 per barrel in 1999 to a high of $147 per barrel in
2008. Over that time period, the value of royalty and taxes
exceeded the budget needs by a large margin. Over those 9 years
there was a 261 percent increase in spending. This included
larger capital budgets, changes in the accounting of budget
items, and increases in agency operations primarily for
education, the university, health care, and some transportation.
When oil prices collapsed in 2014, the legislature reduced the
capital budget practically to zero and looked at how to reduce
spending overall. Even with that effort, spending remains $2
billion higher than it was before the oil spike.
MR. KING said the threefold increase in spending in the early
1980s prompted a discussion about a spending limit, but it's
clear that it didn't prevent overspending from happening again.
Thus the conversation today about whether that spending limit
should be amended.
CHAIR SHOWER highlighted that there was no corresponding 261
percent increase in population over that time period.
MR. KING said that's correct, there was a very minor increase in
population.
CHAIR SHOWER offered his understanding that there has been a net
outflow in the last few years.
MR. KING replied that's correct, but births exceeded deaths in
the first three of those years so there has been an actual
population decrease in just the last year.
2:08:11 PM
SENATOR MICCICHE asked if the charts are in real dollars.
MR. KING clarified that the numbers are in nominal dollars; they
are not inflation adjusted.
SENATOR MICCICHE commented that the chart would show a very
different picture if the numbers had been adjusted for
inflation. He highlighted that the proposed spending limit takes
both population and inflation into account so the effect of
inflation has to be considered when looking at spending levels.
He added, "I'd love to see these in real dollars as well."
MR. KING pointed to slide 4 that shows UGF spending over time
that is adjusted for inflation and population. It illustrates
that when the spending limit passed in 1982, UGF spending per
person was about $16,000 in 2019 dollars. He added, "You can
just basically draw a straight line and show what the per capita
spending would have been and how it still exceeds those values."
He said he'd be happy to provide a chart that only adjusts for
population.
SENATOR MICCICHE said he like that.
CHAIR SHOWER asked him to send it to the committee for
distribution.
SENATOR KAWASAKI returned to slide 10 and pointed out that in
part the higher spending in FY05 and beyond related to the joint
legislative education task force and litigation [Kasayulie and
Moore cases] that came from that process. The payback of the
underfunded public employee and teacher retirement systems is
another part of that $2 billion increase in spending. He asked
if the administration had looked at those factors.
MR. KING turned back to slide 9 and explained that it shows the
spending categories he described. The blue category represents
agency operations, including costs for Medicaid, education, and
the university system. Spending in that category increased $2
billion from 2004-2013. The orange category represents spending
for statewide items, which includes the payments for the
underfunded pension liability and oil tax credits that through
legislation became budget items rather than revenue items
because the state was willing to pay cash for the credits. The
gray category represents capital projects. Together those
increases total $5 billion, he said.
SENATOR COGHILL asked if the agency operations category includes
the large deposit in 2013.
MR. KING clarified that the chart only looks at expenditures,
not revenue.
2:12:50 PM
SENATOR MICCICHE said he'd like to see this modeled on a more
apples-to-apples basis. The information in the slides isn't
consistent, which makes it more difficult to mathematically
visualize the effect going forward. He said he strongly supports
an appropriations limit but "we might be talking about just that
lever of what interest should look like and how population
adjustments really affect the Alaska economy."
CHAIR SHOWER asked Mr. King to respond to the various requests
in one document.
MR. KING clarified that the data from slides 9 and 10 comes from
the same data source, which is the Legislative Finance Division
unrestricted general fund (UGF) spending history. "They're all
representing the same thing so they are apples-to-apples in that
context." He asked if the request was to look at just agency
operations.
SENATOR MICCICHE said he'd prepare a list of what he wants to
see, but there was no particular hurry because he would also
have the opportunity to see this bill in the finance committee.
CHAIR SHOWER asked Mr. King to answer the policy questions
before the bill leaves this committee.
MR. KING agreed.
SENATOR MICCICHE stated that, as a matter of policy, the current
constitutional appropriation limit does not work. It is
exorbitant and is not tied to spending. At this point, spending
to that constitutional limit would put the state in trouble from
which it would not be able to recover, he said.
2:17:15 PM
MR. KING turned to slide 11 that looks at the hypothetical
scenario of the spending cap proposed by SJR 6 having been in
place before oil prices spited. He clarified that the chart only
shows agency operations and the capital budget. He shared his
reasoning that the statewide items that did occur would have
occurred in a different way. For example, "the oil tax credit
system probably would not have become a budget item. It would
have been restricted to reducing revenues and the payment for
unfunded liabilities would probably have become either bond debt
or found some other way of meeting those obligations outside of
the limit."
He pointed to the gray dashed line at the top of the graph that
represents the existing constitutional spending limit. The
estimated actual UGF spending, not statewide items, that did
occur is the solid blue line. The gray dashed line at the bottom
reflects what spending would have been had SJR 6 been in place
starting in FY00. He highlighted that had the proposed spending
cap been in place before oil prices spiked, spending would have
been about $29 billion lower than it actually has been.
CHAIR SHOWER asked for confirmation that the $29 billion is only
UGF spending, not the unfunded pension obligations that Senator
Coghill mentioned.
MR. KING confirmed that is only UGF agency operations and
capital budget items.
SENATOR MICCICHE emphasized that people need to understand that
that Alaska would be a very different place under this
relatively flat spending scenario. Financial growth would have
been more limited, social programs would have been dramatically
limited, and the population would be lower. He said it's
important for people to understand that many different factors
may have affected how Alaska may have been managed. This just
illustrates what wouldn't have occurred for spending.
2:21:26 PM
SENATOR KAWASAKI mentioned the $2 billion in deferred
maintenance and the shrinking size of the capital budgets. He
asked if any thought had been given to how the state will pay
for the assets it owns when it is already struggling with $2
billion in deferred maintenance.
MR. BARNHILL said there is already an effort to balance the huge
number of competing demands within the existing revenue. Should
the proposed spending limit pass, he said addressing things like
deferred maintenance would probably be stretched out over a
longer period.
SENATOR KAWASAKI noted that the legislature allocated $5 million
to deferred maintenance for the university when the backlog was
about $1 billion. He said whatever appropriations limit is put
in place, it should take into account the things that are not
being paid for right now. In addition to deferred maintenance,
he specifically mentioned the unmet needs for law enforcement in
rural Alaska, the constitutional obligation for education,
health and social services, and public health and welfare.
MR. BARNHILL said the administration understands that. He added
that Ms. Mills will discuss ways of doing capital projects
within the proposed spending limit.
SENATOR COGHILL said it would be instructive to see what the
yellow bars [slide 11] would look like if the capital budget was
excluded. [The bars represent the money that could not have been
spent if the proposed spending limit had been in place.] He also
highlighted the consent decrees such as Molly Hootch that the
state has had to live under at great cost.
CHAIR SHOWER said he was adding that to the list of requests for
updated slides.
SENATOR MICCICHE related that when he became mayor of Soldotna,
he cut the budget 12 percent and kept it flat for five years.
Spending was so constricted that it didn't keep up with
inflation and costs popped for the next mayor. He opined that
the legislature needs to decide on a realistic trend line that
accurately accounts for inflation and demand and meets
constitutional obligations going forward. He wondered how much
of the flat spending in the 1990s blossomed into unavoidable
expenditures in the mid-2000s.
2:27:43 PM
MR. BARNHILL said he recalls a catchup mentality in the early
2000s, but he doesn't believe it accounted for all the increased
spending. He posited that there is a distinct correlation
between increases in the price of oil and increases in the
budget. He said Alaskans spend more because they have more to
spend.
2:29:34 PM
SENATOR MICCICHE clarified that his earlier comment about
increased spending in the mid-2000s referred to catchup spending
from 2005-2008. He didn't believe there was any justification
for the increased spending in 2011-2013. "That slope is
unsustainable by any metrics."
CHAIR SHOWER commented that changes to the existing
constitutional spending limit should not limit growth in the
future.
SENATOR COGHILL said increases in the health and social services
budget and rising healthcare costs have hit the state hard. A
question that has to be answered is whether that downward
pressure be sustained if society wants increased coverage on the
public and private level,
CHAIR SHOWER said part of the conversation is about setting a
baseline.
MR. BARNHILL said we're all here trying to strike the right
balance.
MR. KING summarized that the graph on slide 11 represents the
financial cost of decisions that were made about funding agency
operations and what it would have meant if different decisions
had been made.
2:34:58 PM
MR. KING turned to slide 12. He explained that the graph on the
left illustrates what would have happened to the size of the
permanent fund if the proposed spending cap been in place before
oil prices spiked and agency operations were forced to be $29
billion lower. The graph on the right shows what happened to
that $29 billion under the existing spending limit. He pointed
out that leaving the money in the permanent fund and allowing it
to grow leads to a very different situation than where the fund
is today. The financial cost of that $29 billion spread over
nearly 20 years didn't seem like a lot as it was happening but
looking back at what would have happened if that limit had been
in place clearly illustrates that the conversation today would
be very different. The permanent fund would have about $130
billion, POMV draws could be very large, the budget would not
have grown to the point that cuts would be needed, and there
would be enough money in the bank for full PFDs.
MR. KING said he agrees with Senator Micciche that Alaska would
be very different today if the proposed spending limit had been
in place the last 20 years, but the point of the slide is to
illustrate the financial implications of those decisions over
time.
CHAIR SHOWER commented that the point is well taken that if the
money was saved rather than appropriated there would be a larger
balance in the permanent fund.
SENATOR MICCICHE said the system doesn't work exactly as
described but he does agree that savings invested wisely over
that time frame would have had a significant benefit. The dream
is that the saving level would eventually be sustainable so a
POMV type payout would pay for the cost of government in
perpetuity without taxes and with a healthy dividend.
2:38:07 PM
CORI MILLS, Senior Assistant Attorney General, Civil Division,
Department of Law, Juneau, clarified that, as proposed, excess
revenues would be deposited into the permanent fund. She
described it as similar to the CBR sweep.
SENATOR MICCICHE responded that he understands that but the
point is that the chart illustrates something that has not
occurred. "I want to make sure that people aren't confused about
the difference between the last 20 years and the next [20
years]."
CHAIR SHOWER said he agrees that the chart is theoretical but it
illustrates that savings matter in the quest for sustainability.
MR. KING clarified that the assumptions in the chart were that
SJR 6 was enacted in 2000. This is not how things played out or
how would have played out if the legislature made different
decisions, he said.
2:41:05 PM
MR. KING said the graph on slide 13 shows what actually did
happen between FY11 and FY19. He pointed out that the yellow
expenditure line exceeded the gray revenue line starting in
FY13. This forced a drawdown in both the CBR and the SBR from
$16 billion to $2 billion.
SENATOR MICCICHE asked him to point out the value of the
approximately $8 billion in extra deposits that were made to the
permanent fund and the power that's had over time.
MR. BARNHILL said he didn't have the specific data but since the
1970s the legislature has made special appropriations of between
$7 billion and $8 billion to the principal of the permanent
fund, in addition to the statutorily required inflation
proofing. The result is a $60 billion permanent fund today
versus what would be a considerably smaller fund had
policymakers not been forward thinking, he said.
2:44:06 PM
SENATOR KAWASAKI asked what the balance of the CBR fund should
be right now.
MR. BARNHILL replied the payback obligation is greater than $10
billion and perhaps as high as $12 billion.
MR. KING offered to follow up with the exact number because
there is some debate about what it is.
2:45:17 PM
MR. BARNHILL reviewed the following three constitutional
amendments that are the centerpiece of the Dunleavy policy
proposal to provide sustainability, predictability, and
affordability for Alaska:
• SJR 6: Sets an annual spending and savings rule to
stabilize spending and grow the Permanent Fund.
• SJR 5: Changes to the current PFD formula would require a
vote of the people Alaska is an owner state.
• SJR 4: Requires a vote of the people before the
implementation or increase of any tax.
2:46:59 PM
MR. KING turned to slide 16 that represents the complete picture
of Governor Dunleavy's plan over the next 30 years. He said the
plan includes a constitutionally protected PFD, budget growth
that is limited by SJR 6, and spending that is in line with
current revenues - including the allowed draw from the ERA. The
Governor's desire to protect savings, protect the PFD, and not
require taxes is achievable but it is largely dependent on SJR
6, which prevents the growth of government spending.
CHAIR SHOWER asked for an explanation of the excess savings
draws in 2036-2050.
MR. KING explained that it reflects the gap that will be created
as production decreases and there is a corresponding decline in
revenue. He noted that a future legislature might elect to fill
the gap by increasing the POMV draw to 6 percent.
CHAIR SHOWER observed that one assumption is that the corpus of
the permanent fund will continue to grow.
MR. KING said that's correct. The graphic reflects the statutory
inflation proofing and the growth through royalty deposits. Over
time the principal account and the ERA are growing and the
combination generates new revenue that could fill that future
gap. He added that the gap might not exist if there is future
development.
SENATOR MICCICHE pointed out that this is the $1.6 billion
budget reduction that includes the 25 percent cut to education
and reallocation of oil and gas property taxes from communities
to the state. The first chart illustrated the do nothing
scenario and this is the other bookend. He asked if that's
correct.
MR. KING confirmed that the graphic represents all the
Governor's proposals, which includes the $1.2 billion reduction
to government spending and $400 million in property taxes
diverted to the state.
CHAIR SHOWER said it might be helpful for the finance committee
to look at the effect of pulling different levers.
MR. KING said he would be very willing to work with the
Legislative Finance Division on different proposals and how they
compare to this plan.
CHAIR SHOWER said that kind of information will be important for
the next committee.
2:52:34 PM
MS. MILLS reviewed the following bullet points that explain the
appropriation limit proposed by SJR 6:
• Current appropriation limit is so high that the limit is
never met
• Constitutional Amendment changes the current appropriation
limit to be more meaningful and impactful over time
• Deposits excess revenues annually into savings
• Changes the Constitutional Budget Reserve Fund to the
Savings Reserve Fund and limits spending and fund size
MS. MILLS provided the following sectional analysis for SJR 6:
Appropriation Limit: Section 1(a)
Appropriation Limit -- Appropriations made for a
fiscal year shall not exceed the average of the
appropriations made in the previous three fiscal years
by more than fifty percent of the cumulative change in
population and inflation since January 1 of the
previous calendar year, derived from federal indices
as prescribed by law, or two percent, whichever is
less."
She highlighted that this new calculation for the appropriation
limit is the new baseline that seeks to keep downward pressure
on the growth curve.
• Provides a list of exceptions for spending that
falls outside the appropriation limit cap
• Examples: permanent fund dividends and money
placed in the fund; money for disasters;
obligations and proceeds from GO bonds and
revenue bonds
• Most substantial change from existing exceptions-
-capital spending is not an exception and falls
within the appropriation limit cap. The
administration's policy choice is GO bonds.
She noted that general obligation (GO) bonds go to the voters
for approval.
2:56:18 PM
SENATOR MICCICHE asked if the savings reserve fund would remain
separate from the permanent fund.
MS. MILLS said that's correct. She directed attention to slide
24 that shows how the existing budget reserve fund works and how
the proposed savings reserve fund will work. She explained that
the proposed savings reserve fund will receive tax and royalty
settlements (just as it does now) as well as the new portion of
excess revenues based on priorities in the new appropriation
limit. This is to ensure that the fund has sufficient revenue
for an entire year of government spending. The second major
change is that the resolution repeals the 3/4 vote possibility
to appropriate the money for any public purpose. Instead, the
legislature may, by majority vote, appropriate only the amount
to fill the gap between revenues in the general fund and the
appropriation limit.
SENATOR MICCICHE stated support for the elimination of the 3/4
vote. He questioned the reason for using 66 percent of average
CPI for growth.
MS. MILLS replied it was a policy call by the Administration to
keep downward pressure on spending while maintaining a growth
curve. This also recognizes the spending exceptions that are
available for disasters and things like that.
MR. BARNHILL said he believes that it's 50 percent.
3:01:08 PM
CHAIR SHOWR recessed the meeting until 3:30.
3:34:08 PM
CHAIR SHOWER reconvened the meeting and advised that public
testimony would be heard following the presentation on SJR 6.
All members were present.
3:35:24 PM
MS. MILLS explained that when the committee recessed the
discussion was about the appropriation limit and the exceptions
in Section 1, subsection (a) of the resolution. She summarized
that capital spending is included in the appropriation limit
cap. Capital projects outside the limit would be paid for with
the proceeds from GO bonds.
SENATOR KAWASAKI asked if it was a policy call to tie the
appropriation limit to the lesser of 2 percent or 50 percent of
the cumulative change in population and inflation.
MS. MILLS replied those were policy calls that were intended to
keep downward pressure on the spending curve.
SENATOR KAWASAKI, noting that capital spending falls within the
appropriation cap, asked how less populated areas of the state
will do capital projects because they won't be able to compete
for funding by GO bond.
MR. BARNHILL explained that general obligation bonds have
historically been used for an array of projects statewide and
that won't change.
SENATOR KAWASAKI acknowledged the answer.
3:37:23 PM
MR. KING directed attention to slide 20 that is intended to
demonstrate that there is spending that occurs within the budget
process that is not subject to the appropriation cap. If the
budget is between $4 billion and $5 billion, spending from all
sources may be between $11 billion and $12 billion. He said this
graphic is intended to illustrate that the exemptions add up to
quite a bit of money.
SENATOR REINBOLD said she believes in a total cap to reel in
government. She asked him to talk in more detail about
designated general funds (DGF) because it was her understanding
that all DGF was subject to the cap.
MS. MILLS pointed to the DGF exceptions listed in Section 1 on
page 2 of the resolution. These include:
• money held in trust by the state or received from
the federal government for a particular purpose;
and
• to pay obligation or spend the proceeds or
revenue of State general obligation bonds and
revenue bonds;
She summarized that these are revenue bonds and things held in
trust by the state for different purposes.
MR. KING added that AHFC issuing bonds and spending that money
is an example of designated funds that would fall under the
exemption, but items currently designated through the budget
process such as taxes for special purposes would not fall under
the exemption.
SENATOR REINBOLD said she doesn't want to motivate any agency to
increase costs for the private sector. She then asked if the
resolution addresses the PERS/TRS liability.
MR. BARNHILL replied appropriations to pay down the retirement
system liabilities aren't explicitly covered in the resolution.
He noted that there was some discussion during the recess as to
whether a lumpsum payment to PERS/TRS would fall under the cap
or not. He offered to follow up with advice from the Department
of Law.
SENATOR KAWASAKI asked if the state match for the federal funds
received from the 2008 American Recovery and Reinvestment Act
would fall inside or outside the cap.
MR. KING replied the state portion would be within the cap but
the federal dollars would not.
SENATOR MICCICHE asked what would happen if SJR 6 were to pass
and the voters decided they wanted to put DGF into the general
fund with the understanding that it would be used to improve the
road to the Kenai, even though a dedicated fund isn't allowed.
He commented that it seems that this would be a problem.
MS. MILLS clarified that the resolution does not restrict
passing a measure to raise revenue; it restricts spending once
the revenues come in. In that example the revenue could be spent
up to the cap and the excess would go into savings.
SENATOR MICCICHE countered that, as currently written, voters
would not have the option of using DGF if they decided they
wanted to pay for something outside the cap. He said that's the
reason that DGF has traditionally been left out of certain caps.
MR. KING described three ways the provisions in SJR 6 would not
prevent increased spending if the people wanted to pay for
something outside the cap. One way would be to issue general
obligation bonds and use the proceeds to build the road to the
Kenai, for example. Another way would be to create a public
corporation and issue revenue bonds, the proceeds of which would
not be subject to the cap. Third, SJR 6 does not limit local
governments from issuing bonds or raising revenues to deal with
local issues.
SENATOR MICCICHE said he understands what he's saying but
bonding for a project is an extra step that would add cost to
the project. The fact remains that including DGF removes the
potential for the voters to decide they want something above the
cap for a specific purpose. He said this is an aspect that he's
identified as potentially problematic.
MR. KING agreed that if the people generally want to spend more
on something like education, the provisions in SJR 6 would not
allow that to occur.
SENATOR MICCICHE said if the legislature restricts the growth of
government substantially, the voters may collectively decide
they want something different. "We just may need to think of a
way for that to occur if they make that choice in the future,"
he said.
3:49:38 PM
MR. KING said that idea of allowing the limit to be increased
with a vote of the people is not unprecedented and it could be
considered if it was of interest to the committee.
SENATOR REINBOLD questioned the 2 percent provision in Section 1
and restated her commitment for a firm cap with minimal
opportunity for loopholes.
CHAIR SHOWER asked Mr. King to continue the presentation.
MR. KING advised that slide 21 is the algebraic annotation for
the spending limit that Senator Coghill requested. For example,
if spending increased for three years from $5.4 billion to $5.5
billion to $5.6 billion, inflation was 2.25 percent, and
population growth was 1 percent this results in a $5.6 billion
limit. He said this is quite limiting with growth effectively
0.8 percent.
SENATOR MICCICHE calculated that a one percent population
reduction would result in a limit that was substantially less
than the year before.
MR. KING agreed with the calculation.
He turned to slide 22 and explained it's an illustration of how
the existing cap versus the proposed cap looks over time. He
said it's important to remember that if the resolution were to
pass, the limit is based on a three year average of
appropriations. Because the resolution would take effect in
FY22, the FY19, FY20, and FY21 budgets would derive what the
FY23 budget would be. He noted that the chart assumes the three
previous years would start with FY20 so the cap for FY23 would
be well below what it's been in recent years. It reflects the
0.8 percent growth.
CHAIR SHOWER asked if this assumption started with Governor
Dunleavy's initial [$3.6] billion reduction.
MR. KING agreed and reminded members that the limit is very
responsive to what the legislature does.
3:54:00 PM
MS. MILLS turned to slide 23 and described the provisions of the
appropriation limit in subsections (b) and (c) of Section 1 of
the bill. These new subsections prioritize where excess revenues
would be deposited.
Priority 1: Pay back the permanent fund principal 50%
percent of the income that was deposited into the ERA
that fiscal year
Priority 2: [if money remains after priority 1] Get
savings reserve fund balance up to appropriation limit
(formerly the CBR)
Priority 3: [if money remains after priority 2] Put
money into permanent fund principal to continue
growing the fund
CHAIR SHOWER mentioned the idea of amending this area to use the
excess funds for things other than just paying the money back.
He clarified the assumption of not exceeding the limit.
MS. MILLS confirmed that these subsections address where excess
revenues will go. She noted that putting excess revenue into the
permanent fund principal would make those funds unavailable, but
the proposed savings reserve fund "has a valve for spending
everything but the income on the permanent fund." She noted
there are other options to consider.
CHAIR SHOWER mentioned the potential to negotiate spending more
in years of excess to assuage the concerns that this limit could
handcuff the legislature's ability to spend more where and when
it makes sense, without growing the operating budget.
MR. KING pointed out that the resolution has an exception that
debt service payments are outside the cap. He acknowledged that
language could be added to make it more explicit that excess
revenue could be used to pay off bonds, for example.
CHAIR SHOWER articulated his preference to pay outright as
opposed to bonding.
3:59:27 PM
MR. KING concluded the presentation by reviewing the bullet
points on slide 25:
• The current spending limit is ineffective and to
change it an amendment to the constitution is
required.
• Without an effective limit, government spending
will continue to grow.
• Without an effective savings rule, future
generations will have less than we have today.
• Growth in government will lead to a depletion in
savings, the erosion of the PFD program, or the
introduction of broad-based taxes
• Given time, it will require all three
CHAIR SHOWER asked Mr. King to go over the three new slides.
MR. KING said one of the slides is a simple inflation adjustment
to the total appropriations. The second slide is in response to
the request to show capital expenditures as a standalone. The
third slide represents inflation adjusted agency operations.
4:01:37 PM
MR. BARNHILL thanked the committee for taking the time for an
extended hearing. He said the team would be happy to return for
further discussions in a hearing or individual offices to answer
questions.
CHAIR SHOWER said he'd like the team to return on Tuesday for
continued discussion.
SENATOR REINBOLD thanked the presenters and related that her
"No" votes on the budget the last four years were largely based
on the issue of a meaningful appropriation limit.
CHAIR SHOWER agreed that it's about time for an appropriate
spending limit. He opined that the public will generally support
the resolution. He thanked the presenters.
SENATOR MICCICHE thanked the presenters and expressed
appreciation to the administration. He emphasized the need for
an appropriation limit accompanied by a cascading savings plan.
"Had it happened many years ago we wouldn't be in the situation
we're in," he said.
4:04:00 PM
CHAIR SHOWER opened public testimony on SJR 6.
4:04:34 PM
At ease
4:05:22 PM
CHAIR SHOWER reconvened the meeting and laid out the guidelines
for public testimony.
4:06:11 PM
GLENN M PRAX, representing self, Fairbanks, thanked the Governor
for introducing SJR 6 and expressed hope that the committee
would pass it along so the people would have an opportunity to
vote on the constitutional amendment. He opined that Section 2
that changes how the money is spent out of the new savings
reserve fund is the most important section. He agreed with
Senator Micciche that the 3/4 vote has worked backward from the
way it was intended. It allows the minority to hold the majority
hostage to increase spending in times when it should be cut.
"That is a good reason that we're in the pickle we're in now,"
he said. He advised the committee to look carefully at the
language to ensure it is as explicit as possible about where the
money can be spent. He voiced support for using a savings
account and stated agreement with Senator Reinbold about
focusing on limiting government. He offered his belief that
legislators generally hear more from people who want increases
in government spending, but that isn't the case when elections
are held. Thus, it's very appropriate for this measure to go to
the people for a vote, he said.
SENATOR REINBOLD expressed appreciation for his encyclopedic
knowledge and excellent testimony.
4:09:12 PM
VICKI JO KENNEDY, representing self, Kodiak Island, said she's
proud of the Governor and she believes SJR 6 is needed. She
mentioned the 30th anniversary of 11 million gallon Exxon Valdez
oil spill catastrophe and warned of the potential for a
similarly catastrophic financial failure. She urged the
committee to take the time to get the proposed constitutional
amendment right for the people of Alaska. "We're counting on
you," she said
4:11:31 PM
CHRIS EICHENLAUB, representing self, Eagle River, agreed with
Senator Micciche that the constitutional spending limit should
have been amended years ago. He related the advice he received
years ago to stop digging when you find yourself in a hole,
which Governor Dunleavy has done. He described SJR 6 as a great
way to get Alaska's fiscal house in order.
4:13:16 PM
WILLIAM QUAYLE, representing self, Juneau, opined that the state
should declare gold and silver as currency and fund the
constitutional savings accounts with gold because there is
potential for it to increase in value. He also stated support
for a state lottery, particularly during tourist season. In
conclusion he said he favors the capitalist way of solving
Alaska's fiscal problems.
4:15:06 PM
DEBORAH HOLLAND, representing self, Anchorage, stated support
for SJR 6, Governor Dunleavy's stance on the PFD, and the state
budget. She emphasized that the money that was withheld from
recent PFDs would be very helpful to the people that suffered
damages in the last earthquake. She concluded her testimony
saying, "I'm for whatever the Governor has put forward in SJR 6
because I trust him and I trust that you will spend the time
needed to evaluate this and make the right decision."
4:16:36 PM
DANIEL SADROSA, representing self, Wasilla, stated support for
Governor Dunleavy and SJR 6. He shared that he and his wife live
on a VA pension and the PFD would help with the damage they
suffered in the earthquake. He opined that money is wasted in
forward spending. He concluded restating support for Governor
Dunleavy.
4:17:56 PM
CHARLES SIMON, representing self, Hooper Bay, testified in
support of SJR 6. He said he agrees with the Governor about
capping state spending so Alaskans can get their PFDs. He
continued to say that he'd like the Governor to reconsider the
proposed cuts to education. Noting that the small and rural
schools are suffering the most, he voiced concern that kids from
these areas wouldn't be able to get into colleges and
universities. He pointed out that home schooling and boarding
schools cost money. He said he supports funding for education
but all other areas should have a cap.
4:20:03 PM
MIKE COONS, representing self, Palmer, testified in support of
SJR 6. He said people like programs that make life easier and
produce products like roads, safety, and a good education
system. Alaska has the resources that make these things
possible, but it is also a debtor state. People tend to use a
plastic card in their daily lives and worry about paying the
bill later. These same people elect representatives that spend
more than existing revenues and worry about paying the bill at a
later time. He said the time has come to stop digging and not
only fill that hole but also cap it so we can't dig again. He
said SJR 6 does that and he looks forward to its passage and the
ensuing fight in the House.
4:21:55 PM
JIMMY SWISHER, representing self, Wasilla, thanked Governor
Dunleavy for introducing SJR 6 to cap government spending. He
said it will hurt everybody but protecting the PFD will provide
an offsetting bit of candy for everyone.
4:22:51 PM
SUSAN JORDAN, representing self, Kenai, stated full support for
Governor Dunleavy and SJR 6. She said it's time to cap
government spending, protect the PFD, and get back to reasonable
spending. She noted that educators advocate for increased
spending for education but she wonders when enough is enough.
She urged the committee to stand tough.
4:24:16 PM
KIMBERLY CLARK THIRY, representing self, Anchor Point, stated
that she totally supports SJR 6. She thanked the committee for
being so diligent and working to eliminate any loopholes to
expand spending. The budget needs to be cut and everyone will
feel some of the pain, she said. That is what makes Alaskans
band together and help their neighbors. This is a bipartisan
issue. She offered her view that the PFD should be protected
because it does more for the economy than any other single
action. She concluded stating full support for SJR 6 and
Governor Dunleavy.
4:27:07 PM
RYAN MCKEE, State Director, Americans for Prosperity, Wasilla,
said the state is in a budget crisis and both parties bear
responsibility. He said the state needs to amend the existing
constitutional spending limit because it is unreasonably high.
As proposed, SJR 6 would contain the growth of government while
still providing essential state services. Voters appear to be
very supporting of limiting spending, recognizing that willpower
alone is no match for the temptation to overspend. Excess
revenues could be returned to savings to rebuild those accounts.
He urged support for SJR 6.
4:28:37 PM
PATRICK MARTIN, representing self, Wasilla, said he voted for
Governor Dunleavy and he believes he is trying to do his best.
He promised the people he would cut spending and that's what SJR
6 will do. He urged the legislature to cut the budget and "make
it happen" because the current path is one of no return.
4:31:28 PM
CARL NORMAN, representing self, Seward, testified in support of
SJR 6 and Governor Dunleavy. He opined that the state is
fortunate to have a governor who has fiscal awareness and
exhibits tremendous fiduciary ability. It's refreshing after
years of exponential spending and growth. For years the state
has ignored the business principle that spending more than the
revenue stream is unstainable. He emphasized that state spending
should be capped at the level of incoming revenue, not an
unrealistically high mythical number.
4:33:48 PM
GREG BARLETT, representing self, Soldotna, stated that he was
calling to put on the record his support for SJR 6 to cap
government spending and protect the permanent fund dividend.
4:34:11 PM
PORTIA NOBLE, Field Director, Americans for Prosperity (AFP),
Anchorage, commended Governor Dunleavy for starting the process
to curb government spending. She said the current fiscal
situation is critical and jeopardizes future generations of
Alaskans. By voting in favor of SJR 6, the legislature has the
opportunity to reasonably limit growth and state spending. She
referenced a February 2019 social media campaign asking Alaskans
to sign a petition to support a state spending cap. The campaign
reached 1,500 Alaskans and 477 of those signed in support of a
spending cap. She said that is evidence of the overwhelming
support of grassroots activists and individuals who support
reining in spending. She said AFP has always supported a
spending cap. She concluded her comments highlighting a Dittman
Research poll that showed that over 60 percent of Alaskans of
all political persuasions support a constitutional spending cap.
This is evidence that this is a nonpartisan issue supported by
most Alaskans, she said.
4:36:18 PM
ELIZABETH DOOLEY, representing self, Trapper Creek, stated
support for SJR 6 and Governor Dunleavy. She said protecting the
PFD and putting a spending cap on the legislature is a long time
coming. She agreed with an earlier comment that paying cash is
preferable to relying on credit. She also asked the committee to
relay the sentiment that the people don't feel their voice is
being heard.
4:37:33 PM
DAVID BOYLE, representing self, Anchorage, stated that he
supports SJR 6. He said it is a herculean task for legislators
to place a spending cap on the state. It's somewhat similar to
politicians voting for term limits. He said it's obvious that
the current constitutional spending cap has never worked and he
wonders if that might have been the original intent. After years
of watching committee meetings he's noticed that budgets are
seldom cut and that baseline budgeting grows spending and big
government. Evidence of that is that Alaska has the second
highest ratio in the nation of state employees to private sector
employees. He opined that legislators need help in controlling
spending and SJR 6 is the tool that will do that. Please trust
the people and let them vote, he said.
4:39:15 PM
GEORGE PIERCE, representing self, Kasilof, stated that he was
calling in support of SJR 6. He pointed out that the Governor
ran on the platform of returning the PFD and establishing a
sustainable budget and that's what he's doing. "I applaud him
for that and I expect you to do the same thing," he said. He
suggested raising taxes on oil and mining to increase revenue.
"Stop the wasteful spending," he said.
4:40:13 PM
MATHEW SMITH, representing self, Bethel, stated support for SJR
6. He said the people wanted the dividend protected and spending
capped. He opined that oil wells are coming online in the next
year or so that will produce 100,000 barrels a day. That will
bring in $36 million a year for the budget so it's not necessary
to take people's dividends, he said. The people in the Delta
rely on it. The governor and a lot of legislators ran on that
platform and he doesn't want any flip-flopping.
4:41:55 PM
CLIFF BROTT, representing self, Talkeetna, testified in support
of SJR 6. He offered his belief that the Governor ought to do
what he said he would do and that's to rein in spending. He said
he and his neighbors depend on the dividend for food, fuel,
propane, and wood to get through the winter. "Taking our
dividend when there's so many other ways to make money is
ridiculous," he said.
4:43:00 PM
THOMAS WILLIAMS, representing self, Peters Creek, said he was
calling in favor of the proposed constitutional amendments. He
believes the state definitely needs a spending cap and a savings
plan because spending has been out of control. This should be
one of the first things the legislature passes because it is
important to have the state's fiscal house in order. He said he
was speaking as a father of five, home educator, small business
owner, and retired veteran. "This is very important to us and
please pass these constitutional amendments," he said.
4:44:32 PM
ROGER BRANSON, representing self, Eagle River, testified in
opposition of SJR 6. He said he's made many trips to Juneau to
lobby and this year he was struck by the fishbowl effect in the
capitol and Juneau itself. He's also been struck by the
collection of wisdom and institutional knowledge in the Senate.
He wonders how many people will look at the glass as half full
as opposed to half empty. Personally, he's come to the
conclusion that his best days are ahead; he's prepared for
whatever is to come. He referenced slide 5 of the presentation
that looks at historical UGF spending compared to the existing
constitutional limit. He suggested that when spending exceeded
the limit the legislators at the time also thought the best days
were ahead. They were investing in projects and infrastructure
that would support a better future. He opined that the greatest
investment has been in people and those investments should not
be wasted. He said he opposes SJR 6 as written and asked the
committee to think about whether Alaska's best days are ahead or
already past.
4:47:22 PM
KELLEY TURENTON, representing self, North Pole, said the
government should honor and respect the people of Alaska and let
them have their full PFD. Find cuts elsewhere, she said.
Responding to a question from the chair about whether she
supports or opposes SJR 6, she said "oppose."
4:48:42 PM
IONE ACAERMANN, representing self, Juneau, stated support for
SJR 6 to cap spending and protect the PFD.
4:49:07 PM
CORBIN ARNO, representing self, Homer, during the hearing on SJR
6 said he supports the Governor's budget and what he is doing.
4:50:00 PM
CHAIR SHOWER held public testimony open on SJR 6 and encouraged
written testimony at [email protected]. He held SJR
6 in committee.
4:50:57 PM
There being no further business to come before the committee,
Chair Shower adjourned the Senate State Affairs Standing
Committee meeting at 4:50 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SSTA OFFICIAL AGENDA MEMO.pdf |
SSTA 3/21/2019 1:30:00 PM |
agenda |
| SJR 6 Sponsor Statement.pdf |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM |
SJR 6 |
| SJR006A.PDF |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Slide Show Presentation & Analysis.pdf |
SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 ver A Sectional 3.21.19.pdf |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Fiscal Note.PDF |
SJUD 4/1/2019 1:30:00 PM SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| SJR 6 Additional Slides.pdf |
SSTA 3/21/2019 1:30:00 PM SSTA 3/25/2019 5:00:00 PM SSTA 3/26/2019 1:30:00 PM |
SJR 6 |
| 03.27.2019 - SJR6 MORE Responses to SSTA.pdf |
SSTA 3/21/2019 1:30:00 PM |
SJR 6 |