Legislature(1993 - 1994)

03/29/1994 08:30 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  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.                                                        

Document Name Date/Time Subjects