Legislature(2003 - 2004)
04/15/2004 09:08 AM House RLS
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HJR 9-CONST AM: APPROPRIATION/SPENDING LIMIT CHAIR ROKEBERG announced that the next 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. CHAIR ROKEBERG explained his intention to bring up HJR 9 in order to have a very minor discussion. He noted that the committee packet should include a suggested amendment by Representative Hawker, who he wanted to explain the amendment. He announced that HJR 9 would be set aside without taking up the amendment. Number 372 REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, spoke to his suggested amendment, which read: Page 3, line 17: Delete "Reconsideration" Insert "Repeal" Page 3, lines 25 - 30: Delete all material. Insert "Section 16 of Article IX (appropriation limit) is repealed July 1, 2009." REPRESENTATIVE HAWKER explained that the amendment would provide a hard sunset to HJR 9 so that it didn't constitutionally bind future legislatures. Although Representative Stoltze, the sponsor of HJR 9, is very receptive to the discussion of the issue, he would prefer that it occur on the House floor rather than through a House Rules Standing Committee hearing, Representative Hawker related. Representative Hawker explained that this resolution would place a constitutional amendment before the voters to limit future appropriations by a formula. Therefore, the concern is the inability to prognosticate the future with any particular accuracy or to anticipate what future legislatures may face. Some believe the aforementioned is [acceptable] because they don't want to allow spending in the state to expand very far. However, others don't want to bind future legislatures inappropriately due to the inability to predict the future. Representative Hawker related that the public has expressed the need to have reassurance that the legislature wouldn't embark upon a campaign of frivolous spending. To that end, HJR 9 was introduced. REPRESENTATIVE HAWKER acknowledged that the resolution does require that it reappear on the ballot after six years, but noted that it would require an affirmative vote to approve the spending limit. Representative Hawker stated that he subscribes to a theory of a window of constraint to provide assurance to the public and establish credibility to the legislature. However, to make it a permanent change is of concern because to create an algorithm regarding what state spending should be in 15 years is problematic. Out of respect for the sponsor of HJR 9, Representative Hawker requested that the committee consider the debate, but take up the amendment on the House floor. CHAIR ROKEBERG asked if the House Finance Committee discussed having automatic reconfirmation similar to the state's constitutional convention provision in order to have a review without having to go through the process and the amendment again. Number 426 REPRESENTATIVE HAWKER said he understood Chair Rokeberg to be referring to a future vote that would be required to reaffirm this particular resolution rather than requiring a vote to negate the resolution. He said the House Finance Committee did discuss that, although it wasn't made as much an issue as was looking at the algorithm. CHAIR ROKEBERG turned attention to page 1, line 10, of CSHJR 9(FIN), and asked whether the matter of [the appropriation limit being] 75 or 100 percent of the sum is an issue that needs illumination. REPRESENTATIVE HAWKER stated that the question is probably best directed to the sponsor of HJR 9. However, he offered his view. He recalled that this resolution was introduced and heard in the House Special Committee on Ways and Means, of which he is the chair, last year. The House Special Committee on Ways and Means reported the resolution out with an algorithm creating tiered percentages that required different levels of legislative approval. He explained that [the first] 2 percent [increase] would require a simple majority vote of the legislature while the next 2 percent [increase] would require a two-thirds vote, and the third 2 percent [increase] would require a three-quarter vote. The aforementioned would essentially allow 6 percent inflation in the budget with increasing legislative concurrence. Through the process, the discussion highlighted that there are certain fallacies with the [tiered approach]. Therefore, he suggested that a better bench mark would be to use inflation and the state's population growth. Allowing the state's budget to grow based on inflation and the state's population sounds easy until one attempts to put the concept into words. REPRESENTATIVE HAWKER pointed out that it would be simple to specify that [the calculation] go back two years and take into account inflation and population and add those two together for one year and say that is what the state's budget can grow for the next year. However, the aforementioned produces a very erratic growth pattern because of the possible variance in spending of any given year. Therefore, the model used by the permanent fund dividend was used and thus an average of three year's percentage changes [is used]. In order to do a look back, one has to go back almost two years in order to reach a year that has closed out [budget] for which the percentages can be used. He recalled that the language specified "the earliest three of four prior fiscal years". He explained, "We'd leave this year that we're currently in open, but we're budgeting a year hence so there's a two-year gap between the empirical CPI [consumer price index] and population information and the year you're budgeting." Therefore, if the average inflation and population for those three years is taken and applied to the average budget for those three years, an entire year's worth of inflation and population growth isn't being recognized. The aforementioned is tantamount to keeping the inflating factors a year in arrears. The above is the problem with converting a simple idea and turning it to practical, implementable words that don't "box us into some place we don't want to be." Therefore, the formula [in CSHJR 9(FIN)] specifies that if the first three to four years of inflation is added up and 75 percent of it is taken, it would provide a 1.5 factor growth on the numbers from two year's ago. REPRESENTATIVE HAWKER opined that all the formulas have been equally valid intellectual exercises. However, the decision before [the legislature] is whether there is a "right answer." CHAIR ROKEBERG announced that HJR 9 would be held over and that he anticipated it being before the full House next week.
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