Legislature(2003 - 2004)
02/02/2004 01:10 PM House JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HJR 9 - CONST AM: APPROPRIATION/SPENDING LIMIT Number 0057 CHAIR McGUIRE announced that the first order of business would be HOUSE JOINT RESOLUTION NO. 9, Proposing amendments to the Constitution of the State of Alaska relating to an appropriation limit and a spending limit. [Before the committee was the proposed committee substitute (CS) for HJR 9, Version 23- LS0435\X, Cook, 1/22/04, which was adopted as a work draft on 1/23/04.] Number 0063 REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, sponsor, indicated that his staff would be presenting a new proposed CS. Number 0089 REPRESENTATIVE SAMUELS moved to adopt the proposed CS for HJR 9, Version 23-LS0435\B, Cook, 1/27/04, as the work draft. The committee took an at-ease from 1:12 p.m. to 1:13 p.m. Number 0109 KELLY HUBER, Staff to Representative Bill Stoltze, Alaska State Legislature, sponsor, relayed that Version B contains some basic changes that were discussed at the resolution's last hearing. For clarification purposes, the title has been changed to correctly reflect the contents of the resolution. On page 2, line 11, the word "natural" has been inserted to reflect that the exemption listed in proposed Section 16(c)(3) of Article IX, Alaska State Constitution, pertains to "a state of natural disaster". Proposed Section 16(c)(6) has been changed such that it no longer pertains to general obligation (GO) bonds. Also for clarification purposes, should the legislature decide to appropriate additional funds via a three-quarter affirmative vote, proposed Section 16(c)(11) states that such would be excluded from the base calculation outlined in proposed Section 16(a). Additionally, proposed Section 16(b) now contains the language regarding appropriating additional funds via a three- quarter vote. Ms. Huber relayed that the drafter had indicated to her that placing that provision before the one pertaining to the exemptions would satisfy the committee's concerns and help the resolution "read" smoother. And although there had at one point been discussion regarding university tuition, Version B does not contain any other changes. CHAIR McGUIRE noted that HJR 9 has been referred to the House Finance Committee, which, she suggested, might be the more appropriate venue for discussion of certain aspects of the resolution. She expressed a preference for allowing the bill to move on to that committee for further review. REPRESENTATIVE STOLTZE expressed his appreciation to the committee for its time, efforts, and debates on HJR 9. Number 0395 REPRESENTATIVE SAMUELS again moved to adopt the CS for HJR 9, Version 23-LS0435\B, Cook, 1/27/04, as the work draft. Number 0411 REPRESENTATIVE GRUENBERG objected for the purpose of discussion. MS. HUBER, in response to a question, confirmed that the language in proposed Section 16(b) of Version B is the same language in proposed Section 16(c) of Version X. She relayed that there were no substantive changes made to that language; instead, it was merely moved to a different location for clarity. She relayed that the drafter is of the opinion that the language itself is sufficiently clear, and moving it to its current location in Version B would assist voters in understanding how the process would work. REPRESENTATIVE GRUENBERG removed his objection. CHAIR McGUIRE asked whether there were further objections to adopting Version B as the work draft. There being none, Version B was before the committee. Number 0541 REPRESENTATIVE OGG [made a motion to adopt] Amendment 1, a handwritten amendment that read [original punctuation provided]: p 2 Line 26 after ; new line 27 new #(11) an appropriation of money from tuition of the University of Alaska; renumber (11) to (12) Number 0582 CHAIR McGUIRE objected for the purpose of discussion. She noted that at the resolution's last hearing, the representative from the Office of Management & Budget (OMB) had commented that there is a tendency, when exemptions are created, to shift money into those exemptions. REPRESENTATIVE STOLTZE said he understood the motivation behind Amendment 1 and relayed that he doesn't have a lot of problems with it as an individual change. He pointed out, however, that he is not sure what such a change could lead to, and predicted that the issue would be taken up again in the House Finance Committee. CHAIR McGUIRE said she did not have a lot of problems with Amendment 1, and surmised that many members are supportive of the university. Number 0686 CHERYL FRASCA, Director, Office of Management & Budget (OMB), Office of the Governor, noted that at a prior hearing, she'd cautioned against using the term, "university receipts" because it would create a much broader category of exemption. She surmised that Amendment 1 appears to be specific to tuition. She pointed out, however, that from a policy point of view, Amendment 1 appears to be saying that it's okay for university tuition to "go up greater than the change in the escalators for the limit itself." CHAIR McGUIRE indicated that the legislature probably has an interest in seeing Alaska's state-run university be successful. She surmised, though, that if tuition went up too high, then enrollment would drop. REPRESENTATIVE SAMUELS expressed a concern that in the future, monies might be called tuition simply so that they would be excluded from the calculation. He asked Ms. Frasca whether "tuition" is currently defined. MS. FRASCA said she did not know whether "tuition" is currently defined, but opined that the [meaning of the word] is pretty well understood. She suggested that that issue be researched before the resolution gets to the House Finance Committee in order to ensure that the intent of Amendment 1 is maintained. REPRESENTATIVE OGG, in response to an inquiry, said: In court decisions, [the university has] been recognized ... as a quasi branch of the government, so they're not like an agency; they're a little different. So, like the [Alaska] Court System, the executive, and like the legislature, they have a special place in the [Alaska State] Constitution. ... It says is that there shall be a University of Alaska, that [the] University of Alaska shall be governed by a board of regents, and that [that] board of regents will hire a president who shall be the executive officer of the board. ... Number 0901 And what does that actually mean in terms of how the university operates? It means that the university really has, [on] its own, ... legislative powers, ... a taxing power, and ... judicial powers. And underneath their taxing powers, the issue of tuition comes up. They also have the ability to set their own fees, not subject to the state. And the philosophical underpinnings of these are that if you want your university to have a certain independence from the political process, [when you] start to change the [Alaska State] Constitution as to appropriations and put limits on appropriations - which is the power of the legislature, to appropriate - and you spread it across the whole spectrum, then you start to impact the different parts in the [Alaska State] Constitution. And the way we read this, the other day, it impacts the taxing power of the university to independently fund itself [with] tuition. And tuition is a word of art that the university gives worth to, and it's the charge per credit hour that a student will pay for, and it's set on an annual basis. And it's not ... an easy thing to set that tuition rate because you have to balance ... how much folks can pay, and if you go too high, then less folks will attend the university, and [so] we don't want that cost to be too high. However, you have to have a university that has [the] ability to respond to events that takes place economically in the state, and if you take this ability away from them, you're starting to hamper their ability to respond independently to actions of the legislative branch of ... government. REPRESENTATIVE OGG concluded: So, I think that the university does have a clear idea of what tuition is. It's different than fees - they have a category for fees. They also have receipts, ... and federal receipts and those kinds of things are fairly undefined ... [as are] fees .... But if we narrowed this amendment down to tuition, then it's fairly clear what we're talking about .... So I think it's appropriate to put it in here as an exception; [Amendment 1] allows the university to continue the work that they've been defined to do under the [Alaska State] Constitution. Number 1063 REPRESENTATIVE GRUENBERG, noting that endowments can assist in making universities largely self sufficient, asked whether the sponsor would accept a friendly amendment to broaden Amendment 1 so that it would pertain to revenues such as endowments. If such is not done, he warned, then those funds would simply go into the general fund (GF), rather than to the university as intended, and this would undercut the university's ability to raise money and possibly largely free itself from state funding. REPRESENTATIVE OGG indicated that he would prefer to limit the exemption to tuition. CHAIR McGUIRE suggested that Representative Gruenberg speak with Representative Eric Croft, a member of the House Finance Committee, about possibly exempting endowments. Number 1271 CHAIR McGUIRE removed her objection to Amendment 1, adding that she does not support broadening it. She asked whether there were further objections to Amendment 1. There being none, Amendment 1 was adopted. Number 1394 REPRESENTATIVE GARA made a motion to adopt Amendment 2, a handwritten amendment that read [original punctuation provided]: Delete at p. 1 line 8 , "fifty percent of" Number 1400 CHAIR McGUIRE objected for the purpose of discussion. REPRESENTATIVE GARA, in explanation of Amendment 2, said: [Amendment 2] addresses what I think is a structural problem with this spending cap proposal. ... You can enact policy, as the public's elected representatives, through logic or by formulas. And I think there's a problem when you decide to do things by inflexible formulas. Right now, the spending cap proposal, the way it works, says that no matter how high inflation is, spending must fall behind inflation. So assuming you have even population growth, this spending cap proposal says spending can only go up to reflect half the rate of inflation. Conceptually, I think that will result in schools that are more and more stressed every single year. I think it will result in public safety services that are more and more stressed every single year. And the argument that I hear repeatedly is, "We don't have a fiscal plan, but when we do have a fiscal plan, then we can stop reducing services to our schools ... [and] public safety services." So what [Amendment 2] says is, if you have inflation, we recognize it; and, if inflation causes costs to go up just to provide the same level of services the next year, we allow that to happen. So, ... in the simplest circumstance, the way this [resolution] works right now is, if we have 8 percent inflation next year and zero population growth, to account for the 8 percent inflation, this [resolution] allows spending to go up 4 percent. So we will have to lag 4 percent behind inflation. This [amendment] says that we shouldn't have to keep lagging behind inflation every single year. So I would appreciate your support for [Amendment 2]. Thank you. REPRESENTATIVE STOLTZE in response said: I agreed with the 50 percent amount; I'm pretty much death on indexing, but I think this was a compromise .... It does use factors but inflation isn't one of them, so ... I don't know if that's particularly germane .... REPRESENTATIVE GARA clarified: "I'm sorry. When I said inflation, I meant to say -- instead of using inflation, you've indexed it to growth and personal income, and I meant growth and personal income." Number 1517 REPRESENTATIVE STOLTZE, noting that the indexing aspects of the resolution were incorporated from the governor's proposal, asked Ms. Frasca to comment. MS. FRASCA offered that the change between 2001 and 2002 in personal income was 4 percent, whereas inflation was 2 percent. Additionally, the change between 2000 and 2001 in personal income was 5 percent, whereas inflation was 3 percent. She suggested that using personal income as an aspect of the calculation would allow for a growth in inflation. She elaborated: "Part of the challenge is, ... your revenues don't automatically come in, under our fiscal regime, at the rate of inflation." Some bodies in other states, she noted, can simply raise a tax to correspond with what they want to spend, but under Alaska's current system, that has not been the option taken. She added: So I don't know if it's as logical to always associate what we want to spend with automatically bringing in more revenues to allow us to do that. This requires, if we're not keeping up with the rate of inflation or a desired rate of spending, it means that we have to make choices because we simply don't have more money to keep spending more. And so, as a result, you have to make priorities, and education certainly has been evidenced to be one, since we spend about 35 percent of our entire budget on education .... REPRESENTATIVE OGG said that he didn't like [the concept of] an appropriation limit because it is the duty of the legislature to appropriate, "and the check [and balance] is at the ballot box." Speaking to Amendment 2, he said that if the language regarding the 50 percent is removed, then an increase in military personnel could cause an increase in population and personal income without a corresponding increase in the need for services. He opined that such could result in an increase to the size of government and spending "because you add those two together and you don't divide them." He opined that Amendment 2 could lead to things getting way out of hand depending on any given year's circumstances. He expressed opposition to Amendment 2. Number 1648 REPRESENTATIVE GARA said that Representative Ogg is correct in that there will be various circumstances in the future: unanticipated high inflation; unanticipated high population growth; unanticipated high insurance cost increases "because when insurance companies do terrible in the stock market, they pass the cost off along to us, and stuck with flat funding, that just means, to pay insurance costs, we have to cut services even further." Representative Gara said he agrees with Representative Ogg's premise, which is why he thinks that running government by formula "is not a wise move." If the proposed spending cap passes, he remarked, he said he wants it to reflect the reality that there might be very high inflation costs in the future and the legislature might not want to cut services even further in order address those higher costs. REPRESENTATIVE GARA relayed that if members evinced any support for Amendment 2, he would be willing to amend it for the purpose of addressing Representative Ogg's concern regarding a possible increase in military personnel. In response to Ms. Frasca's statement that education has been a priority and which he surmised was a suggestion that the legislature shouldn't worry about education funding continuing to lag behind inflation, Representative Gara said: The last year of the Knowles Administration, education ... appropriations were $739 million, last year they went down to $729 million, and this year the governor proposes $722 million. In actual dollars, spending is going down while inflation ... [and] insurance costs are going up. And I would suggest to you that without [Amendment 2], that course will continue. At some point, maybe education spending won't continue to go down, but ... if we keep knocking it down and then we hold it stable in the future, we've institutionalized failure. I'm not willing to do that, so I would appreciate support for [Amendment 2]. Number 1761 A roll call vote was taken. Representatives Gara and Gruenberg voted in favor of Amendment 1. Representatives Holm, Samuels, Anderson, Ogg, and McGuire voted against it. Therefore, Amendment 2 failed by a vote of 2-5. Number 1773 REPRESENTATIVE GARA made a motion to adopt [Conceptual] Amendment 3, a handwritten amendment that read [original punctuation provided]: Rewrite Section 16(a) to allow appropriations to reach the FY 2003 level, adjusted for inflation and population growth. Number 1781 CHAIR McGUIRE objected for the purpose of discussion. REPRESENTATIVE GARA, in explanation of Conceptual Amendment 3, said: This is a different approach. The argument that we have received, that we have heard many times, is that ... we need to cut education funding, need to cut this kind of funding and that kind of funding because we don't have a fiscal plan yet. And you know what? If we keep not coming up with a fiscal plan, I might be able to buy that argument, but one of these days we'll get our act together and we'll have a fiscal plan. And the premise is that we have to cut because we don't have a plan yet. At some point we will have a plan, and [Conceptual Amendment 3] says we should [have] the base year's appropriation as being FY 2003: we should allow spending to keep up with inflation in relation to that benchmark year - 2003. ... Another problem with the way the spending cap is written right now is that it doesn't reflect this reality. It says, if next year we decide to cut the budget by $100 million because we found some real savings that are temporary - ... for example, for some reason fewer people get sick and we need to spend less money on Medicaid, or for some reason we have a temporary plummet in the number of students but the following year they go up - the way the spending cap works is, if we economize by cutting costs in response to real cost-saving possibilities that we have one year, but they're only temporary cost savings and we have to go back to the same level again the following year, we can't do that. It says that if you economize one year as a legislature and cut the heck out of things because you found some one-time opportunities to do that, then you're stuck at that level the next year. REPRESENTATIVE GARA continued: Number 1837 That's the problem we have in Anchorage; it is a huge problem in Anchorage. In Anchorage, we gave away property tax relief one year and we couldn't go back to the prior year's appropriation level, adjusted for inflation, again. It's hampered the city of Anchorage very much to have this kind of provision in here that doesn't reflect reality. So I think you should have a [base] year and you should live within your means based on that base year's appropriations adjusted for inflation. But if you're smart one year or able to find temporary cost savings but not able to do it the next year, the [proposed] ... spending cap doesn't allow you to deal with the reality of the following year. It says you're stuck at the level of spending that you engaged in, in the year that you found the temporary savings. ... Again, running government by a formula instead of by logic, I think, is a problem. But if we're going to do it, I think we need to get rid of that glitch in the spending cap. REPRESENTATIVE HOLM said: I'm getting [a] little upset by the constant talk of a fiscal plan ... when no one knows what it means, nor does no one propose one. And so to argue that we don't have a fiscal plan, when no one has one and no other state has one, I know that my personal fiscal plan is that my expenditures meet my revenue. The state of Alaska, in the reverse, says we need to match our revenue to our expenditures. And because of that, I think it's very inappropriate for us to pass [Conceptual Amendment 3], so ... that's my reality check. Number 1943 A roll call vote was taken. Representatives Gara and Gruenberg voted in favor of Conceptual Amendment 3. Representatives Samuels, Anderson, Ogg, Holm, and McGuire voted against it. Therefore, Conceptual Amendment 3 failed by a vote of 2-5. Number 1954 REPRESENTATIVE GARA made a motion to adopt Amendment 4, a handwritten amendment that read [original punctuation provided]: Insert@ p.2 line 28 "(12) an amount that exceeds the prior years budget needed to reduce kindergarten through 12th Grade class sizes." Number 1960 CHAIR McGUIRE objected. Representative GARA, in explanation of Amendment 4, said: [Amendment 4] is designed to protect our ability to educate our children in a proper way. Across the state we've heard school districts say that they've got to fire teachers [and] that class sizes have to [increase], and I see no end in sight in this trend. [Amendment 4] says that if you need to add an appropriation to help reduce class sizes, you can do that outside of the spending cap. National organizations, ... from the federal government on down, have recognized that kids really thrive in small class sizes, especially in lower grades, between 15 to 18 kids. We can't do that in Anchorage anymore at today's budget amount, and in many places across the state, we can't do that. And, instead of actually getting closer to the 15-to-18-student-per-class class limit, we're getting further away from it. On top of that, I know [Chair McGuire] and other members of this legislature did statewide education hearings a number of years ago, and what they also heard is that we're having a hard time attracting new teachers to the state because our salaries are starting to lag. That's a problem we can't even begin to address. Of the other problems we're dealing with [regarding] education, that's one that is so far off our radar screen, our ability to address at this point, it seems like it will never be addressed. So, ... I don't like the trend in education funding in the state, I don't like the fact that it's been going down, and if we're ever going to reverse that trend and ever going to give children equal opportunities to succeed in life, we're going to have to give small class sizes at some point. We can't do that the way the spending cap is written, and so I urge passage of [Amendment 4]. Number 2022 REPRESENTATIVE ANDERSON relayed that he is very supportive of lower classroom sizes, but remarked that he did not think that Amendment 4 would accomplish what its sponsor intends and would instead debilitate the resolution. He offered his belief that Amendment 4 is ambiguous in terms of the way money is spent for education. Representative Anderson surmised that Representative Stoltze has indicated that classroom and education funding can still be elevated using the equation laid out in HJR 9 without Amendment 4. REPRESENTATIVE STOLTZE pointed out that education funding is a formula, and surmised that reductions have occurred, not because the legislature hasn't put extra money in the education budget, but because it is a population/enrollment derived formula. He said that he supports education and believes in prioritizing. Historically, he suggested, the legislature has prioritized education funding even when oil revenues were low, and said he couldn't imagine the legislature ever not having a commitment to addressing education [funding] "balanced higher than all other needs." He went on to say that he is not sure that Amendment 4 does what the sponsor intends as artfully as it could. CHAIR McGUIRE remarked that one of the frustrations of serving in state government is that when constituents complain about the lack of money going into the classroom, in point of fact, the legislature does not get to choose how funds are spent; funding is based on a formula and monies are dispersed by the school districts - by the school boards themselves. She noted that the legislature has instituted a requirement that at least 70 percent of funds must go to the classroom. After expressing agreement with the sentiment behind Amendment 4, she pointed out that it ends up being ambiguous because it is really difficult to determine what monies will reduce classroom size, especially given that the legislature cannot micromanage where those monies actually go. Noting that some would argue that a certain amount of money must go toward school administrative costs and that it would be difficult to separate those funds from others, she suggested that this, too, contributes to Amendment 4's ambiguity. Number 2199 CHAIR McGUIRE predicted that many suggestions for reducing classroom size will be made without any proof that those ideas will actually accomplish that goal. Because education funding is done by formula, she remarked, perhaps members' efforts would be better spent in attempting to modify that formula - established by the 20th legislature's SB 36 - adding that she and many others think that it is a flawed formula [because] it is based on population. Thus, she mentioned, although it appears that school funding has been reduced by $7.8 million, according to the formula, this merely reflects a reduction in population. In conclusion, she said she felt that Amendment 4 is flawed, suggested that members' votes on it are not a reflection of their feelings regarding classroom sizes, and posited that all House Judiciary Standing Committee members would like to reduce classroom sizes K-12. REPRESENTATIVE GARA opined that Amendment 4 is not vague; rather, it gives the legislature the opportunity to direct more money toward teachers so that classroom size can be reduced. It says that the legislature shall have the discretion to appropriate an amount that exceeds the prior year's budget if that money goes to reducing classroom size, and that, he predicted, would be accomplished by hiring more teachers or teacher aids. Education is not funded by formula, he opined, adding that although the law is a formula law, ultimately the legislature is responsible for deciding whether to fund it. According to a Legislative Legal and Research Services memorandum, he explained, of the roughly $7 million reduction in education funding proposed by the governor this year, only $2 million is related to decreased student enrollment and the other $5 million is not. Number 2279 REPRESENTATIVE GARA went on to say: We know from the [Legislative Legal and Research Services] report that since 1998, school funding - in real dollars adjusted for inflation - has gone down by about $45 million. That doesn't reflect $45 million worth of fewer students ...; most of it is other factors apart from declining student enrollment. Since 1992, if you take into account inflation and adjustments for inflation, according to the [Legislative Legal and Research Services] report, education has fallen by $30 million; again, that doesn't reflect a $30 million decrease in student enrollment, [though] some of it does - ... most of it is a decrease in funding just generally, in real dollars. So I guess I cannot accept the [sponsor's] view [of], "Don't worry about education, we'll always fund it just right." I mean, even without this ... constitutional amendment that we have here, we've just let education funding fall behind inflation. We just have; it's just not arguable. REPRESENTATIVE GARA indicated that he agrees with Chair McGuire's point that it is frustrating to not be able to control what school districts do with education funding after it is appropriated. Additionally, aside from the aforementioned 70 percent requirement, he predicted that there is probably not a lot more the legislature could do in that regard. "The bottom line is," he concluded, "if we appropriate less money in real dollars every single year, class sizes are going to go up; that's all there is to it." He asked members to support Amendment 4. REPRESENTATIVE OGG noted that vagueness is in the eye of the beholder, and offered his belief that if one is going to craft something for placement in the Alaska State Constitution, one needs to be very careful and precise with the wording. He opined that Amendment 4 could be read a couple of ways, and he surmised that the legislature did not want to be handing citizens and future legislatures an argument as to exactly what such a provision would mean. He said he would be opposing Amendment 4. REPRESENTATIVE HOLM said he agrees with Representative Ogg's comments. TAPE 04-9, SIDE B Number 2391 REPRESENTATIVE HOLM concurred that the current system does not allow the legislature to dictate to school districts how to spend their money. Instead, money goes to a city or borough government, which in turn distributes that money to its school districts based on their budgets and, therefore, it is the school districts themselves that determine classroom size. He went on to say: We, as a society, have done a lot of things to stop classroom sizes from being small. We have added ADA [Americans with Disabilities Act] programs, which completely dictate how monies are spent in different areas. We've added a lack of discipline in classrooms, which really dictate how carefully people can learn; sometimes they can't learn at all because one or two students in the room take the teacher's time 100 percent, and so the ones who are going to produce something in society, many times, are the ones that are the most hurt. So, a lot of the things that we do in our zeal to protect our education system sometimes, I might argue, really work in the reverse. But as a practical matter, ... we can't make those specifications as to the number of children that are in classrooms in the [Alaska State] Constitution, nor should we. MS. FRASCA, in the issue of education funding, said: We tend to look at what we're getting for the $722 million that we are investing as opposed to what we're not getting for the $40 million that we're not spending. But I'd also like to point out that the formula is written so that communities, those that could afford it, participate in the cost of education. And under the existing formula, Anchorage ..., for example, ... could be, under the state law, contributing [$12.5 million] more than it currently is. Juneau [and] Kenai are currently ... just about up to the max that they could contribute. So, for those with a community that education [is] of such a high priority, they might look to see what they're capable of doing, as well. Thank you. CHAIR McGUIRE said, "Point taken." REPRESENTATIVE GARA relayed that if members are in opposition to Amendment 4 because of its current wording, then he would be willing to accept an amendment to Amendment 4 for the purpose of clarifying the language. If, however, members have "substantive" opposition, then he understands. He, too, acknowledged Ms. Frasca's point, and asked whether she is suggesting that Anchorage should increase its taxes. MS. FRASCA said no; rather, she is simply pointing out that the current education funding formula recognizes local community contributions. REPRESENTATIVE SAMUELS, turning to the issue of the requirement that 70 percent of the funds that school districts receive must go into the classroom, remarked that some of the same school districts consistently ask for a waiver from the state, and the state keeps granting those waivers. "So we can't kid ourselves; we passed a law that we're very proud of, and then we had a waiver and everybody's percentage stays the same," he added. Number 2233 A roll call vote was taken. Representatives Gara and Gruenberg voted in favor of Amendment 4. Representatives Anderson, Ogg, Holm, Samuels, and McGuire voted against it. Therefore, Amendment 4 failed by a vote of 2-5. Number 2217 REPRESENTATIVE ANDERSON moved to report the proposed CS for HJR 9, Version 23-LS0435\B, Cook, 1/27/04 [as amended] out of committee with individual recommendations and the accompanying fiscal notes. Number 2199 REPRESENTATIVE OGG objected for the purpose of discussion. He went on to say: It's tough. It's tough to put a limit on appropriations, and it is very hard for me, given the history of America: that we fought very hard that decisions would be made by the majority. And when ... our Founding Fathers did that, they said ... appropriation power: 51 percent, ... or one past half. And I think the [founders] of the Alaska [State] Constitution did exactly the same thing, and the first section in the taxing power says that there shall now [be] no limits on taxing in this state by the legislature's power to do that. And I think that's an important power that the people have given to us, the legislature; that's a responsibility. Unfortunately, in the past, when we had an overflow of oil money, some of the legislators felt the pressure that we're spending too much and put in an appropriation limit ... that does put a limit, however ineffective as it is. But it was the legislature that tied their own hands at that point, not trusting their ability to make decisions that the public and the people who voted in our constitution said, "This is your responsibility." My concern ... is that when we set appropriation limits, we do not give ourselves, as a legislature representing the people of this state, the ability to respond to events as they occur. And I think that that's what our [Alaska State] Constitution has been set up for, is to give us that ability, and we are the representatives of the people - we're a republican form of government - and it is our duty. And should we do our duty wrong, [then] every two years - at least the House members - we're subject to the vote of the people. And if we spend too much, then the folks will say your doing that, and they will take you out of office and somebody else who's a little more fiscally responsible will be elected. I think that's the power that I recognize, when we move this through committee, we're giving up; we're giving up that responsibility to the voters. I have real problems with [proposed Section 16(b)], which shifts it to ... three-fourths of the members of each house. Number 2109 REPRESENTATIVE OGG continued: It can be viewed a couple ways. It can be viewed that some folks in a majority feel that their viewpoint isn't getting across, and so in order to tie the hands of the majority, you increase that power a little higher in order to vote yourself the ability to respond to circumstances. That's one edge of the sword. The other edge of the sword is that with the Constitutional Budget Reserve, we are actually empowering a minority, and all we have to do is look south to California - they have a two-thirds requirement to pass their annual budget - and look at the state of their financial affairs if you give up to the minority. And so when you put this three-quarter vote in here, you're asking for "Christmas trees." It's very difficult. I can see doing this for a period of time, and I think that the ... sponsor does address that [in] six years, but to put it in the hands of the public and not in the hands of the legislature, to renew this, seems to be giving up our authority again on taxing and appropriation. And I'd much prefer to see something that says in here that this would be good for six years and then the legislature would have to decide on their own whether they wanted to reenact this. This is called sort of a hard date and not a soft date; this just happens over time. I won't be making those amendments here, but I want it to be clear on the record that these are problems for me, and I think they should be problems for the legislature. When we change the [Alaska State] Constitution I think we need to be very careful [because] you start to shift the relationship between the legislature and the people of this state and our form of government, and I have great concerns that this goes down a road that says, "We the legislature don't trust ourselves; we need to handcuff ourselves because we have all this money." ... It seems the big problem is that [when] we have excess oil monies, we've put it into a permanent fund and we're wrestling with how to fund state government out of that, and perhaps a way to do this is to narrow this to appropriations from that fund and [thereby] not impact our ability to tax. Number 2014 REPRESENTATIVE OGG concluded: I don't think there's any question about our ability to tax. You tax too much, they'll have somebody else in your seat .... So that balance is in the [Alaska State] Constitution. But the only thing that's out of balance is this permanent fund; we have such excess of money. So as this thing goes through, I certainly hope that that issue will be addressed ... Perhaps we can just narrow this to the permanent fund itself and not to the whole spectrum of our powers of taxation and appropriation. CHAIR McGUIRE offered her belief that all of the committee members have struggled with the very concerns raised by Representative Ogg. The power to appropriate is the legislature's one power, and if the constitutional amendment proposed by HJR 9 is adopted by the voters, then that power would be eliminated, at least in part. She said she hopes that more improvements will be made to the resolution as it goes through the process. Alaska is one of the few states that has continued to reduce government spending over the last decade, she remarked, and relayed that her concern centers around the possibility that a future legislature will reverse that trend; thus HJR 9 is just a small measure towards, yes, tying the hands of future legislatures. CHAIR McGUIRE mentioned her approval for the provision requiring voter reauthorization every six years. She opined that "this whole sweep with the CBR [Constitutional Budget Reserve]" is not working as intended, "where we're bribing votes and ... pushing the budget up beyond what we thought it would be and certain people who give those votes get a little bit more in their community for capital projects, and I think it's appalling." "I know for sure that's not how it was intended," she added. She mentioned that she could envision the three-quarter vote requirement of HJR 9 engendering the same sort of situations that are occurring with the CBR, thereby rendering the resolution ineffectual. CHAIR McGUIRE relayed that her constituency simply does not trust the legislature to not spend more money than it needs to. She noted that when oil revenues were high in 1980s, the legislature spent money on ridiculous things; so now, when the legislature is trying to do worthwhile things like reduce classroom size, the public doesn't trust the legislature. Should a gas pipeline be built or the Arctic National Wildlife Refuge (ANWR) be opened, she predicted, in order to get to a percentage of market value or to a consideration of a broad- based tax, the concept embodied in HJR 9 will have to be in place. Number 1821 REPRESENTATIVE GRUENBERG remarked: People talk about wanting to have a legislature, but yet they tie the legislature's hands. But if you were to say, "Let's not have a legislature," people would be really upset about that. So the question is, when is it enough, when is it too much. And I think that we have to trust the wisdom of the system of government [that] we have - that's a representative democracy; we obviously all do because we're all here, and if we didn't like it, we'd live out in the woods and wouldn't care and wouldn't live under anybody's law. ... People do vote, more or less, and I think we have to trust their good judgment, and trust our good judgment in the future, and trust the people who served in the past - I was here in the middle of the '80s and, sure, there were some mistakes made, but we did some good things too - and trust the fact that [future legislatures] need to have the ability to make these decisions. And if we take their ability away from them, that not only mistrusts them but it mistrusts the people who vote for them, because it says, "You don't have the sense to elect good people ... and your kids won't have the good sense to elect good people; we know more, not only than you do now," if we pass this out, "but we know more than you'll ever know because we won't let you ever do it - ever, ever do it." And I've got real problems with this kind of a thing. To paraphrase Patrick Henry, "I may disagree with how they vote, but I will defend to the death their right to vote." CHAIR McGUIRE remarked that the good news about HJR 9 is that [if it is passed by the legislature] it will go before the voters; perhaps they will decide that what it proposes is unnecessary. Number 1704 REPRESENTATIVE GARA said: The frustrating thing today is the same frustration each of us share during the course of the legislative session. It's that good policy, what's right for the community, doesn't fit into a two-sentence sound bite. Unfortunately, the media says that we have to explain our policy in a sound bite. Campaigns say that we have to explain our policy [on] a little card, and ... people who train people how to run say, "Two sentences, anything more and nobody is going to read it." And at some point I think as leaders we have to stand up and say, "We have to do what's right even if we can't explain it in two sentences, even if we can't explain it on Channel 2 news or Channel 11 news or Channel 13 news if they don't have enough time to give us more than two sentences." So ... the sound bite, "Cut government" or "leave spending the same" ... will generally resonate. And it's generally, frankly, what this body has done over the last number of years. If you don't duck your head in the sand, and take a look at spending compared to inflation - so real dollars spending - it really hasn't been out of whack this last decade. But we're playing to the sound bite .... It's so hard to say, "Spending hasn't been out of whack in these last number of years," and it's so easy to say, "Let's impose a spending limit" - that sounds so good. Here are some of the real problems, though. As leaders, we have to recognize there are going to be years where insurance costs skyrocket, and in order to deal with that, under a spending cap, you're probably going to have to find some cuts in some very unpopular areas. You're going to have to deal with time when pension costs skyrocket, ... to no fault of anybody's, and that's happening this year; municipalities, for example, are facing an extra $35 million, roughly, in pension costs that they have to cover under the [Teachers' Retirement System (TRS)] and [Public Employees' Retirement System (PERS)]. They didn't ask for it; it's a stock market thing. You can't write a spending cap that deals with unforeseeable consequences without making the spending cap useless. And so I guess I do agree that our job is to lead, and our job is to take flack if we've done it wrong. But our job is not to come up with only those policies that we can sell in a two-second sound bite. And because the realities are much more complex than the factors that are addressed in this version of the spending cap, I can't support it. And frankly, if a spending cap were written properly, which essentially would say, "Leave the legislature the discretion to deal with unforeseen circumstances," it wouldn't mean anything. I guess you'd be left at a place where the legislature makes those decisions. I don't see that as a bad thing; I see that as democracy. And I agree with Representative Ogg, that if my constituents decide that I've done this irresponsibly, they'll throw me out of office. Number 1565 REPRESENTATIVE OGG withdrew his objection to the motion to report the proposed CS for HJR 9, Version 23-LS0435\B, Cook, 1/27/04 [as amended] out of committee. Number 1559 CHAIR McGUIRE asked whether there were further objections. There being none, CSHJR 9(JUD) was reported from the House Judiciary Standing Committee.
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