Legislature(1993 - 1994)
03/29/1994 08:30 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 361 "An Act making an appropriation to the Department of Education for support of kindergarten, primary, and secondary education and community schools programs; and providing for an effective date." HOUSE BILL NO. 505 "An Act making appropriations to and from the constitutional budget reserve fund under art. IX, sec. 17(c), Constitution of the State of Alaska, for operating and capital expenses of state government for fiscal year 1994; and providing for an effective date." Co-Chair Larson provided members with a proposed committee substitute, work draft #8GH2045\O, dated 3/28/94 (copy on file). He explained that the committee substitute combines HB 505 and HB 361. He noted that section (f) of HB 505 was deleted. He added that the following language questioned by members in section (g), on page 3, lines 9 and 10, of the former version of CSHB 505 (FIN) was also removed. * "Thus, the legislature did not anticipate that all money derived from the settlement of informal tax conferences would be spent." Co-Chair Larson observed that pupil transportation costs increased by approximately $1 million dollars, while debt service decreased by approximately $1 million dollars. 2 Representative Martin MOVED to ADOPT work draft #8GH2045\O, dated 3/28/94. There being NO OBJECTION, it was so ordered. Representative Brown provided members with AMENDMENT 1 (copy on file). Representative Brown discussed Amendment 1. She noted that there are four parts to Amendment 1: Part 1 * Delete page 2, line 18 through line 21; "The attorney general reasoned that section 17 applied to administrative actions that were similar to litigation, such as the formal hearings held by the Department of Revenue." Part 2 * Delete page 2, line 29 through page 3 line 4; "The money in the general fund was available for appropriation by the legislature and would be applied as necessary to meet any fiscal need. Thus, in fiscal year 1992, accounting conventions show that the amounts collected from informal conferences in fiscal years 1991 and 1992 were used to cover the fiscal year 1992 general fund deficit. Had that money not been available, the amount transferred into the general fund from the statutory constitutional budget reserve fund (As 37.05.540) would have been significantly increased." Part 3 * Delete after "1993", page 3, line 9 through line 12; and "Because of this shortfall, any anticipated surplus representing settlements of informal tax conferences, and amounts received from informal tax conference settlements occurring after July 1, 1994, must be expended to fully fund the capital and operation appropriations enacted in 1993." Part 4 * Delete page 3, line 18 through line 22, subsection (h). "On November 19, 1993, the court issued its decision which concluded that art. IX, sec. 17 of the state constitution applied to informal tax conferences. On November 29, 1993, the state presented evidence that retroactive application of the court's ruling, requiring transfer of over $940,000,000 from the general fund, would disrupt state fiances and put at risk the justifiable reliance interest of Alaskans and municipalities throughout the state." 3 Representative Brown noted that part 1 contains reasoning by the Attorney General which was not upheld by the courts. She maintained that this information is irrelevant due to the court's ruling. Representative Brown explained that part 2 was included because she is unclear what accounting conventions are being referred to in this section. Representative Brown disagreed that informal tax settlements referred to in part 3 had to be expended. Representative Navarre referred to page 2, line 29 through page 3 line 4. He pointed out that the statutory Constitutional Budget Reserve Account is a fund in the General Fund. He reflected that the surplus amount, in 1991 and 1992, was greater than the amount received in settlement. Co-Chair Larson MOVED to AMEND Amendment 1, part 2, change page 2, line 21 to page 2, line 30. The amendment to the amendment would leave the statement, "The money in the general fund was available for appropriation by the legislature and would be applied as necessary to met any fiscal need," in the legislation. Representative Navarre suggested that the statement is true but when taken in connection with subsection (d), which says that money from informal conferences was put in the Fund, is misleading. He noted that money put in the Fund, counter to what the courts have said, was not available. Co-Chair Larson argued that the legislature was operating under the Attorney General's opinion that the money was properly deposited. Representative Navarre suggested that the legislation should reflect that the "legislature incorrectly assumed that the money in the General Fund was available for appropriation." Co-Chair Larson disagreed with Representative Navarre's statement. Representative Martin emphasized that when the Minority moved to withdraw $92.0 million dollars in 1991, the Majority stated that they would get a court opinion during the interim. He noted that no opinion was obtained. He disagreed with the deletion of any portion of the subsection. Representative Brown noted that, as a House Finance Committee member, she was the first person to move to withdraw the $92.0 million dollars from the General Fund and deposit the money into the Constitutional Budget Reserve Account. She emphasized that the House of Representatives 4 passed a letter of intent saying that they disagreed with the Attorney General's opinion. Representative Martin OBJECTED to the amendment to Amendment 1. A roll call vote was taken on the motion. IN FAVOR: Brown, Foster, Grussendorf, Hoffman, Larson, MacLean OPPOSED: Hanley, Martin, Navarre, Parnell, Therriault The MOTION PASSED (6-5). Representative Grussendorf MOVED TO DIVIDE Amendment 1. There being NO OBJECTION, Amendment 1 was divided into four parts. Representative Brown MOVED to ADOPT part 1 of Amendment 1, Delete page 2, line 18 through line 21. Representative Martin OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hanley, Hoffman, Navarre OPPOSED: Foster, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (5-6). There being NO OBJECTION, part 2 of Amendment 1 was adopted as amended. Representative Brown MOVED to ADOPT part 3, Amendment 1, delete after "1993", page 3, line 9 through line 12. A roll call vote was taken on the motion. IN FAVOR: Brown, Hoffman, Grussendorf, Navarre, MacLean OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, Larson The MOTION FAILED (5-6). Representative Brown WITHDREW part 4, Amendment 1. Representative Navarre MOVED that $945.0 million dollars plus interest be transferred from the General Fund to the Constitutional Budget Reserve Account and than appropriated back from the Constitutional Budget Reserve Account to the General Fund to cover FY 94 appropriations; and that FY 95 appropriations in HB 505 be made from the General Fund. In response to a question by Representative Hoffman, Co- Chair Larson asserted that $600.0 to $650.0 million dollars from the General Fund was spent on educational needs in FY 94. He conceded that money misplaced into the General Fund 5 was diluted throughout state government. Representative Brown spoke in support of Representative Navarre's motion to amend. She questioned how the motion would impact the effective date clauses. She noted that new language would be needed to provide for the transfer from the Constitutional Budget Reserve Account back to the General Fund. She observed that the motion should be amended to specify an effective date for that portion of the transfer. Representative Navarre noted that it is not clear whether the money is accounted as being in the General Fund or the Constitutional Budget Reserve Account. He added that an immediate effective date would be appropriate for all sections except for the educational appropriations from the General Fund, which would have a July 1, 1994 effective date. He asserted that the retroactive portion, for FY 94 education spending would not be necessary if the transfer is made from the General Fund to the Constitutional Budget Reserve Account and back to the General Fund. Discussion pursued regarding the need to retain retroactive effective dates. Representative Navarre suggested that the transfer from the Constitutional Budget Reserve Account to the General Fund contain a retroactive effective date. Representative Martin argued that the effective dates should remain as their are in CSHB 505 (FIN). In response to a question by Representative Brown, Co-Chair Larson clarified that the amount removed from the Constitutional Budget Reserve Account would be $909.1 million dollars for FY 94 and $738.5 million dollars for FY 95. He noted that section 8 would be included in the $909.1 million dollars for FY 95. Representative Brown observed that all but approximately $50.0 million dollars from the Constitutional Budget Reserve Fund would be spent. Representative Navarre referred to section 9. He noted that section 9 requires a three-quarters vote, absent the constitutional authority to spend the funds. Co-Chair Larson agreed that section 9 ties appropriations to Article IX, section 17 (c) of the Constitution of the state of Alaska, requiring a three-quarter majority of both houses of the legislature to adopt the legislation. Representative Navarre restated his motion to amend. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson 6 The MOTION FAILED (4-7). Representative Martin suggested that the Committee should reconsider the adoption of part 2, Amendment 1. Co-Chair referred to page 2, lines 26 through 30. He emphasized that the statements contained in these sections indicate when money was deposited by the Department of Revenue and when it was used. Representative Brown questioned whether the findings sections should be retroactive. She pointed out that there are several areas where finding sections are retroactive to a point in 1993 but references events which occurred in 1994. Discussion pursued regarding the effective date of the findings sections. (Tape Change, HFC 94-97, Side 2) Representative Brown MOVED TO TABLE CSHB 505 (FIN). Representative Martin OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (4-7). Representative Martin MOVED to report CSHB 505 (FIN) out of Committee with individual recommendations. A roll call vote was taken on the motion. IN FAVOR: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson OPPOSED: Brown, Grussendorf, Hoffman, Navarre The MOTION PASSED (7-4). CSHB 505 (FIN) was reported out of Committee with a "do pass" recommendation.