04/26/1994 09:10 AM Senate FIN

                                                                               
  SENATE JOINT RESOLUTION NO. 52                                               
                                                                               
       Proposing amendments to  the Constitution of the  State                 
       of Alaska relating to the budget reserve fund.                          
                                                                               
  Co-chair  Pearce directed  that  SJR 52  be  brought on  for                 
  discussion.   She  then explained  that  Jim Baldwin  of the                 
  Dept. of Law worked with members on language for both  SB 56                 
  and  SJR  52  to  bring  both  pieces  of  legislation  into                 
  compliance  with  the state  argument  presently  before the                 
  supreme court.  The Co-chair further advised that the  House                 
  is working on similar legislation.                                           
                                                                               
  (Senator Kerttula arrived at this time.)                                     
                                                                               
  Co-chair  Pearce  next  directed  attention  to  a  proposed                 
  Amendment No.  1 and  asked that  Mr. Baldwin  speak to  the                 
  amendment.  JIM BALDWIN,  Assistant Attorney General,  Dept.                 
  of Law, explained that the  amendment would remove reference                 
  to  "funds" and insert "revenue of the state."  The Dept. of                 
  Law argued in court that the amount referred to in 17(b) was                 
  "revenues  of  the  state"  and   not  an  amount  that  was                 
  "accessible" to the legislature.  Use  of the words "revenue                 
  of the state" excludes federal funds which were not intended                 
  to be included in the mix.                                                   
                                                                               
  Mr.  Baldwin  suggested  that the  original  resolution  was                 
  deficient in one respect.  The term  "funds" appears nowhere                 
  else in the Constitution whereas the term "revenue" does and                 
  is better understood.  The term "unrestricted revenue of the                 
  state" was also used  since that terminology is used  in the                 
  Dept. of Revenue  revenue forecast.   It is a familiar  term                 
  and  should  be given  the same  meaning  as applied  by the                 
  department.  Mr. Baldwin further advised:                                    
                                                                               
       [I] also added the idea that . . . even though . .                      
       .  it  was  general  fund  money  that it  not  be                      
       considered to be held in trust upon receipt.   And                      
       I think  that this would pick up the mental health                      
       trust money which is subject to a first call trust                      
       under federal law . . . .                                               
                                                                               
  "Unrestricted money of the state" means money in the general                 
                                                                               
                                                                               
  fund from state  sources (the intent  is to exclude  federal                 
  funds)  that  is  not   held  in  trust  or  has   not  been                 
  appropriated for a particular purpose or to  a separate fund                 
  or account established by law within the general fund.  That                 
  would exclude special general fund account group funds.                      
                                                                               
  Rather than repeal the  repayment obligation, Sec. 2  of the                 
  resolution is in line with the  Dept. of Law argument before                 
  the court  that  the  source  of  money  for  repayment  was                 
  intended to be the general fund  carry-forward.  In terms of                 
  the annual financial report that means the "unreserved fund-                 
  designated balance of the general fund at year end."  Carry-                 
  forward  amounts  for  continuing   appropriations,  capital                 
  appropriations, etc. would  not be included.   The foregoing                 
  reflects language used in the  annual financial report.  The                 
  hope is that  in construing this  section, reliance will  be                 
  placed upon use of  terminology in that report.   The report                 
  is  required   by   law  and   issued   by  the   Dept.   of                 
  Administration.                                                              
                                                                               
  Senator Rieger  asked if,  under Sec.  1, the  carry-forward                 
  balance would fall under the  label "unrestricted revenue of                 
  the state."  Mr. Baldwin responded affirmatively.                            
                                                                               
  Referring to proposed  language for  Sec. 2, Senator  Rieger                 
  asked how it would tie into ongoing litigation.  Mr. Baldwin                 
  noted a policy  call by  the legislature whether  or not  it                 
  wants to  propose repeal.   He  explained that, in  drafting                 
  amendment language,  he was asked  to "bring forward  a bill                 
  that was consistent  with the  state's position."   Proposed                 
  language highlights  Dept. of  Law arguments.   He  stressed                 
  that he was  not attempting to  talk the legislature out  of                 
  repeal.  Senator Rieger noted that House legislation mirrors                 
  the original Senate approach and continues to contain repeal                 
  language.                                                                    
                                                                               
  Co-chair   Frank  asked  how   amendments  proposed  by  the                 
  resolution  would  appear  on  the   ballot.    Mr.  Baldwin                 
  responded,  "That's a  good question  . .  . .   He  further                 
  remarked, "I've never seen one quite like this, where just a                 
  word is  being changed  or  a line  is being  deleted."   He                 
  acknowledged that it would be difficult to present the issue                 
  to the voters and voiced his  belief that voters concentrate                 
  on the ballot description--the ballot language  put together                 
  by the Attorney General and Lt. Governor.                                    
                                                                               
  Discussion followed  between Mr. Baldwin and  Co-chair Frank                 
  regarding   the  process   involved  in   developing  ballot                 
  language.                                                                    
                                                                               
  Senator Rieger observed that the  first portion of Amendment                 
  No. 1 contains a definition for "unrestricted revenue of the                 
  state."  He then  asked if there was need  for definition of                 
  "undesignated balance" as well.   Mr. Baldwin explained that                 
                                                                               
                                                                               
  the  term   is  used  by  "generally  acceptable  government                 
  accountants."    It is  also  used  in the  state  financial                 
  report.  He acknowledged that he struggled  with the concept                 
  of attempting  to use both terms in the same sense, but they                 
  are different.   Mr. Baldwin explained that when viewing the                 
  general  fund  at the  end  of  the fiscal  year,  there are                 
  "reservations" and "designations."  They are not the same as                 
  an encumbrance or  an obligation.  Funding  contained within                 
  capital appropriations  which  continues for  two  or  three                 
  years is  not obligated  or encumbered.   Those moneys  are,                 
  however, designated balances for appropriations made by  the                 
  legislature.   They are  thus not  included in  the year-end                 
  balance.                                                                     
                                                                               
  Co-chair  Frank asked  if a  constitutional  amendment could                 
  include findings to further explain the issue on the ballot.                 
  Mr.  Baldwin   attested  to   limited  duration   transition                 
  provisions  "in  the back  of  the Constitution."   Co-chair                 
  Frank voiced need to provide a brief description of what the                 
  legislature  is  attempting to  do.    He then  expressed  a                 
  preference  for moving  toward  requiring the  three-quarter                 
  vote  and repealing  repayment provisions.    Senator Rieger                 
  concurred in need for clarification and simplification.  Mr.                 
  Baldwin suggested  that a simple  fix for the  problem might                 
  consist of a  provision saying  that "The legislature  shall                 
  implement 17(b) by law."  Trade-offs and other  issues could                 
  then be dealt  with next session.  Co-chair  Frank concurred                 
  in that approach.                                                            
                                                                               
  Co-chair Pearce suggested that SJR  52 be HELD in  committee                 
  for development of simplified language that can be concurred                 
  in by the House.