Legislature(2003 - 2004)
05/08/2003 08:07 AM House STA
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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 [Contains discussion of HJR 26.] Number 2720 CHAIR WEYHRAUCH 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 WEYHRAUCH noted that before the committee is CSHJR 9(W&M). He further noted that two amendments have been offered to the committee. REPRESENTATIVE SEATON moved that the committee adopt Amendment 1, which read as follows: Page 1, line 2, following "limit": Insert "and a spending limit" Page 2, add a new section to read: "(c) If appropriations for a fiscal year exceed the amount that may be appropriated under (a) and (b) of this section, the governor shall reduce expenditures by the executive branch for its operations and administration to the extent necessary to avoid spending more than the amount that may be appropriated under (a) and (b) of this section." CHAIR WEYHRAUCH pointed out that the first change encompassed in Amendment 1 is a title change. REPRESENTATIVE GRUENBERG objected. REPRESENTATIVE SEATON explained that this resolution would implement a constitutional spending cap. However, the problem is that the legislature appropriates and can, and consistently does ignore the constitution in its appropriations. For example, the legislature is supposed to appropriate one-third of all its expenditures for capital projects, but the legislature has consistently ignored that. Therefore, in order to have a true spending limit, a mechanism must be built in. The new subsection (c) that Amendment 1 would add directs the governor to use the line item veto to reduce spending within the administrative branch in order to maintain the appropriation cap. This language merely directs the governor to use the authority that he/she already has. Number 2578 REPRESENTATIVE HOLM asked whether it's appropriate for the legislature to demand, in statute, that the governor use power that he already has and can use at his/her prerogative. REPRESENTATIVE SEATON related his belief that it is appropriate. He explained that the legislature isn't saying it wants a spending cap, it's the people of the state who want a spending cap, one that is real and enforceable. Therefore, this [resolution] would require that the legislature not appropriate more than a certain amount of money and if it does, then the governor would be directed to lower those expenditures with the line item veto power the governor already has. REPRESENTATIVE HOLM noted his agreement with the premise of [the amendment]. He acknowledged that this has grown from the fact that former legislatures and governors haven't lived up to the constitutional mandates of balanced budgets. However, he questioned why one would believe it would happen by merely adding this provision to the constitution. REPRESENTATIVE SEATON explained that the requirement to spend one-third of the budget on capital projects is a requirement on the legislature. He said if the people of Alaska want to direct the governor to exercise authority, that's different than leaving it to the governor to decide whether he/she should override the legislature when the legislature fails to do its job. Number 2434 CHAIR WEYHRAUCH pointed out that there is clearly tension between the legislative and executive branches, which is the nature of the system. Currently, the legislature is binding itself to appropriations. Without proposed subsection (c), the governor would still be able to exercise his/her line item veto prerogative to maintain the governor's constitutional responsibility to uphold the constitution. In so doing the governor could specify that the veto is mandated by the restrictions on the legislature and its appropriations. Therefore, the proposed subsection (c) wouldn't be necessary because [the line item veto] would be inherent in the governor's constitutional responsibility to uphold and defend the constitution. REPRESENTATIVE SEATON said that the above would mean that the governor is taking over and the governor, in lieu of the legislature, is going to be the appropriating authority. Representative Seaton highlighted that this resolution deals with appropriations and it attempts to create a spending limit on the legislature. However, the governor has the authority to actually make expenditures. Representative Seaton specified that he didn't want the governor to have to delve into the appropriation business, which is the section that the resolution addresses. The intent, he related, is to specify that the governor is to exercise his/her spending authority to stay within the appropriation limit placed on the legislature. CHAIR WEYHRAUCH asked whether Representative Seaton believes Amendment 1 would give the governor more authority over the legislature than currently exists in the constitution. REPRESENTATIVE SEATON replied no. Although Representative Seaton acknowledged that the governor has line item veto power without the adoption of Amendment 1, he specified that the governor doesn't have direction to have a spending limit. Without Amendment 1, the governor would have to determine that the legislature violated its appropriation limit and would have to enter into an appropriations process rather than being directed by the people to exercise the governor's veto authority to the extent a spending cap is desired. CHAIR WEYHRAUCH surmised that Representative Seaton viewed [the proposed subsection (c)] as the "hammer." REPRESENTATIVE SEATON agreed. Without [the proposed subsection (c)], the legislature, if it so desires, will ignore the spending cap. With this language, the legislature will know that it will have to constrain the appropriations into the constitutional limit put in place or the governor will use the line item veto authority to [cap] spending. Number 2225 GINGER BLAISDELL, Staff to Representative John Stoltze, Alaska State Legislature, spoke on behalf of the sponsor of HJR 9. Ms. Blaisdell said she may be able to provide a practical example in which the legislature may intend to keep their appropriations within the appropriation limit, but when the accountants read the language and interpret how the money is used, it may actually exceed the appropriation limit. She pointed out that this happens every year in the difference between the inactive budget in the fiscal summary and the authorized number, which is typically the larger number. In fiscal year (FY03), the enacted budget is $3,399.4 million while the FY03 actual authorized budget, which is done on July 1st after everything has been interpreted and balances of funds have carried forward, was $3,495.9 million. Therefore, there was a $90 million difference. The aforementioned may be an instance in which this instruction to adjust the appropriation would come into effect. REPRESENTATIVE GRUENBERG remarked that the difference in the amounts may have been because of previously appropriated funds that hadn't lapsed. MS. BLAISDELL replied no and explained that there has to be specific language in each fiscal year's appropriation measure that would allow lapsing money to carry forward, remain in a fund, or be deposited back into the general fund. REPRESENTATIVE GRUENBERG interjected that he was referring to capital projects that go for five years, which may be in the [actual authorized budget] figure. MS. BLAISDELL replied no and explained that capital projects are only accounted for at the time of appropriation. She said that the $90 million difference could be due to [anti-lapse] language in the bill. Number 2080 REPRESENTATIVE GRUENBERG returned to [Amendment 1] with which he saw two different problems. As written, this might be read by a court to give the governor the authority to unilaterally reduce [the budget] without the legislature being able to override a line item veto. Therefore, in order to preserve the balance of power, Representative Gruenberg said [Amendment 1] would have to be amended to state that "using his line item veto he shall reduce". Without the aforementioned language, the legislature would have no right to override [the governor's line item veto]. Furthermore, these constitutional provisions are read differently than statute; constitutional provisions are written very sparingly. Representative Gruenberg recommended that a letter of intent from the legislature specifying the legislature's intent that specific language appear in the voter pamphlet would be appropriate because it would become a key part of the legislative history of the constitutional amendment. The courts almost always look to the language that's in the voter pamphlet as the main legislative history of a constitutional amendment. He asked if Representative Seaton would consider the aforementioned approach. Number 1899 CHAIR WEYHRAUCH inquired as to Representative Seaton's thoughts if subsection (c) read as follows: "(c) If appropriations for a fiscal year exceed the amount that may be appropriated under (a) and (b) of this section, the governor shall reduce expenditures by line item veto." REPRESENTATIVE SEATON said the problem with the above language is that [the legislature] doesn't want to tell the governor to reduce the judiciary or the legislative branch. There could be a problem with budgetary crossover between the three branches of government. CHAIR WEYHRAUCH pointed out, "If you don't want to do the legislative branch, you're binding them to the executive branch." REPRESENTATIVE SEATON specified that it means everything within the state that's not in the executive or legislative branch. CHAIR WEYHRAUCH proposed then that subsection (c) read as follows: "(c) If appropriations for a fiscal year exceed the amount that may be appropriated under (a) and (b) of this section, the governor shall reduce expenditures in the executive branch by line item veto." REPRESENTATIVE GRUENBERG remarked that he believes this will cause more problems than it will solve. Number 1820 MS. BLAISDELL recalled this being brought up in the House Special Committee on Ways and Means when Tam Cook, Director, Legislative Research and Services, was asked whether the legislature would maintain the power of veto. Ms. Cook said that this is clearly direction to the governor to not spend money that hasn't been appropriated. Therefore, she didn't believe this would be interpreted as a veto issue. REPRESENTATIVE GRUENBERG noted agreement, and related that the way [Amendment 1] is written now, it would divest the legislature of any right to override. MS. BLAISDELL corrected Representative Gruenberg by saying that was the response to adding this language back. Ms. Blaisdell recalled that Ms. Cook had suggested that if HJR 9 or a version of it were to pass, the legislature may need to introduce statutory language setting legislative standards with regard to how the governor would reduce spending. Number 1735 REPRESENTATIVE DAHLSTROM asked if Representative Stoltze is comfortable with Amendment 1. MS. BLAISDELL replied yes. REPRESENTATIVE GRUENBERG recalled that Ms. Cook said the legislature would set the standards. However, Ms. Cook didn't directly say whether the legislature, under this, would retain any authority to veto. Representative Gruenberg said that he didn't believe the legislature would retain any authority to veto. If the legislature doesn't have any authority to veto, he noted that he would have serious legal questions regarding whether the legislature would have any authority to set standards. Number 1639 REPRESENTATIVE SEATON announced that he would accept, as a friendly amendment, Chair Weyhrauch's suggestion that subsection (c) read as follows: "(c) If appropriations for a fiscal year exceed the amount that may be appropriated under (a) and (b) of this section, the governor shall reduce expenditures by the executive branch by line item veto." REPRESENTATIVE LYNN related his understanding that the governor could do a line item veto for anything. CHAIR WEYHRAUCH agreed and pointed out that the proposed subsection (c) eliminates a lot of language. REPRESENTATIVE SEATON interjected that with the approval of this [constitutional] amendment the people would direct the governor to use the line item veto to keep within the spending limit. Number 1516 REPRESENTATIVE GRUENBERG continued to urge that the intent [expressed in Chair Weyhrauch's friendly amendment] be related in a letter of intent. Politically, if this is in the constitution, those who don't like the [friendly] amendment will seize on this portion. These folks will make the argument that this language will insulate the [legislature] from charges of excessive spending. Under current constitutional law, the governor can veto some legislative expenditures if the governor feels the legislature is spending too much. However, this [friendly amendment] wouldn't allow the governor to [veto those]. On the one hand, one doesn't want to upset the balance of power, but on the other hand one doesn't want to leave it open for the argument that the legislature has exempted itself again. REPRESENTATIVE HOLM surmised that this [resolution] attempts to solve the difference between an enacted versus an authorized budget. He asked if this directive to the governor helps solve that. MS. BLAISDELL pointed out that with the friendly amendment the language referring to spending is eliminated. Spending is different than appropriating, she noted. For example, with Medicaid spending the governor has been allowed to spend at a rate greater than the administration knows it has appropriation authority and thus supplemental spending is requested. The aforementioned is a spending issue and has nothing to do with legislative appropriations. Ms. Blaisdell also pointed out that two different directives are given depending upon which language is used from [the friendly amendments]. REPRESENTATIVE HOLM related that he is interested in ensuring that when appropriations are made the spending matches the appropriation. Representative Holm remarked that he didn't know what language is necessary to make this constitutionally mandated. CHAIR WEYHRAUCH said [this resolution] is making it constitutionally mandated. REPRESENTATIVE HOLM pointed out that the constitution also mandates that there should be a balanced budget, but that hasn't been done. REPRESENTATIVE GRUENBERG informed the committee that he has been researching this matter and has been told that Alaska doesn't have a constitutional balanced budget amendment, although there is a statute that requires it. REPRESENTATIVE SEATON reminded members that there is a constitutionally mandated capital expenditure provision that has been consistently ignored. REPRESENTATIVE GRUENBERG acknowledged that, but pointed out that the constitutionally mandated capital expenditure is too high. REPRESENTATIVE SEATON reminded everyone that this only occurs if the legislature's budget increases by 2 percent twice. Hopefully, this year's budget will decrease. MS. BLAISDELL mentioned that even with all the decreases and reductions there is an increase of $124 million [in this year's budget]. CHAIR WEYHRAUCH reminded the committee that before it is the earlier mentioned friendly amendment to Amendment 1. REPRESENTATIVE DAHLSTROM objected. REPRESENTATIVE SEATON asked if printing the intent language in the voter pamphlet would suffice in instructing the executive branch. Number 0999 CHAIR WEYHRAUCH pointed out that the court always looks to what the constitution says as well as the legislative history. The first interpreter will be the attorney general when he/she advises the governor. If the matter is challenged by a court, then the court will probably review what the legislature did in adopting the language. If the legislature adopts a letter to accompany this resolution and indicates the intent of the legislature, it would, he believes, have great weight with respect to the court's ultimate decision. REPRESENTATIVE HOLM remarked that without an elected attorney general it becomes a "sticky wicket" because an appointed attorney general is being asked by the individual who appointed him/her to render a decision. CHAIR WEYHRAUCH commented that folks have to be intellectually honest. Furthermore, there is always the court system and the legislature can sue the governor as well. Number 0912 REPRESENTATIVE GRUENBERG highlighted that constitutional amendments are voted on by the people, and therefore ultimately the court reviews the wording of the constitution. In the aforementioned it becomes a legislature of the number of people who vote. The court would say that the people were voting on the amendment as it was specifically presented in the voter pamphlet. Therefore, Representative Gruenberg again recommended passing a letter of intent along with the resolution. REPRESENTATIVE SEATON requested that Chair Weyhrauch withdraw his friendly amendment to Amendment 1. CHAIR WEYHRAUCH withdrew his friendly amendment to Amendment 1. REPRESENTATIVE SEATON clarified the friendly amendment to Amendment 1. "(c) If appropriations for a fiscal year exceed the amount that may be appropriated under (a) and (b) of this section, the governor shall reduce expenditures by line item veto to avoid spending more than the amount that may be appropriated under (a) and (b) of this section." REPRESENTATIVE DAHLSTROM inquired as to why the language "operation and administration" need to be left out. REPRESENTATIVE SEATON answered: It's just words. What we're doing is also taking out "the executive branch" because once we put in "line item veto" that gets us out of this problem ... that we're going to get beat up because we're insulating ourselves and putting it off on somebody else. But we could always come back into special session to override line item vetoes. ... This means that he has the same authority he does for appropriating that reduction between legislative, judicial, and executive branch. And most of it's going to be in the executive branch because that's what he controls. REPRESENTATIVE DAHLSTROM inquired as to how the legislature can come back into session without the governor calling the legislature back. CHAIR WEYHRAUCH explained that the legislature can call itself back. He posed the following scenario: If the legislature exceeds the amount of appropriations under [subsections] (a) and (b), the governor exercises the line item veto to get ... appropriations below [subsections] (a) and (b), the legislature doesn't like what the governor did, [the legislature] comes back into session to override line item vetoes, puts it back above the spending limit (indisc. - coughing) never ending thing. So, what I suppose is ... we'll have to decide it politically where we're deciding to cut and where to spend because the governor said I'm going to keep doing this until we reach the limit. ... And we'll just be back here for special session after special session arguing about where the line item veto should or shouldn't be. MS. BLAISDELL remarked that she believes the above possibility is why there was the recommendation to enact statute that would instruct the governor on how to reduce spending. Number 0522 REPRESENTATIVE GRUENBERG clarified that the legislature can come back into [special] session by the governor calling it back into session, which is the most common matter. The legislature can call itself back into [special] session if the majority of each house so desires, which is rare. CHAIR WEYHRAUCH referred Representative Dahlstrom to Article II, Section 9, which specifies the parameters of special sessions. REPRESENTATIVE GRUENBERG interjected that an override of a line item veto requires a three-quarters vote. In the past, leaders have been polled. REPRESENTATIVE SEATON reminded everyone that a three-quarter vote must be obtained in order to tap that second 2 percent. Therefore, this is a high bar because [the legislature] has difficulty in controlling spending. He pointed out that just acting on appropriations and not on spending is problematic. Number 0335 REPRESENTATIVE DAHLSTROM recalled that certain items didn't need to be mentioned because clarification was provided in the voter pamphlet. Therefore, she asked if anything a candidate says in the voter pamphlet would hold up in court. CHAIR WEYHRAUCH responded that it was probably different because when one is voting on a person, one isn't binding anyone to what the candidate says, save the candidate. Candidate's comments in the voter pamphlet are different than a constitutional [amendment] or statute [in which the pamphlet] is treated like legislative history. REPRESENTATIVE GRUENBERG clarified that what he has said holds true to initiatives or referendums. However, because it's a collective statement that goes to all the voters, it would be more carefully reviewed than a candidate's statements. CHAIR WEYHRAUCH referred to Article II, Section 16, and highlighted the following language: "Bills to raise revenue and appropriation bills or items, although vetoed, become law by affirmative vote of three-fourths of the membership of the legislature. Other vetoed bills become law by affirmative vote of two-thirds of the membership of the legislature." CHAIR WEYHRAUCH reminded the committee that there was no objection to Representative Seaton's friendly amendment to Amendment 1. There being no objection, the friendly amendment to Amendment 1 was adopted. After the adoption of this friendly amendment to Amendment 1, Amendment 1 as amended read: Page 1, line 2, following, "limit": Insert "and a spending limit" Page 2, add a new section to read: "(c) If appropriations for a fiscal year exceed the amount that may be appropriated under (a) and (b) of this section, the governor shall reduce expenditures by line item veto to avoid spending more than the amount that may be appropriated under (a) and (b) of this section." CHAIR WEYHRAUCH clarified that now Amendment 1 as amended is before the committee. REPRESENTATIVE GRUENBERG objected. TAPE 03-58, SIDE A Number 0031 MS. BLAISDELL, in response to Representative Holm, said that she didn't have an opinion on the friendly amendment to Amendment 1. Including "spending" [on page 1, line 2] does support the change in the title. Therefore, she said she believes [Amendment 1 as amended] is fine. In response to Representative Lynn, Ms. Blaisdell agreed that she sees no problem with Amendment 1 [as amended]. REPRESENTATIVE SEATON added that he has spoken with Representative Stoltze who is in favor of Amendment 1, although he hadn't spoken with him regarding Amendment 1 as amended. A roll call vote was taken. Representatives Holm, Seaton, Dahlstrom, and Lynn voted in favor of Amendment 1, as amended. Representatives Gruenberg and Weyhrauch voted against it. Therefore, Amendment 1, as amended, was adopted by a vote of 4- 2. Number 0240 CHAIR WEYHRAUCH, in explanation of his vote on the amendment, directed attention to Article IX, Section 16, which he characterized as one of the most obtuse, confusing, and poorly worded amendments he has ever read. He expressed his desire to keep Alaska's constitution as clean and simple as possible. Although he is going to err on the side of simplicity, he noted that he reserved the right to change his vote on this matter later. Number 0395 REPRESENTATIVE DAHLSTROM moved that the committee adopt Amendment 2, which read: Page 2, beginning on line 19 (changes as follows): Section 30. Application, [Repeal] Reconsideration of Appropriation and Spending Limit. (a) The 2004 amendment relating to an appropriation limit (art.IX, sec. 16) first applies to appropriations made for fiscal year 2006 and applies [each fiscal year] thereafter [until fiscal year 2013]. (b) [Section 16 of Article IX is repealed July 1, 2012] The lieutenant governor shall place the ballot title and proposition for the 2004 amendment relating to an appropriation and spending limit (art. IX, Sec. 16) on the ballot again at the general election in 2010 and every six years thereafter unless it is rejected. If the majority of those voting on the proposition rejects the amendment, Section 16 of Article IX is repealed on the date the election is certified. REPRESENTATIVE GRUENBERG objected for purposes of discussion. Number 0510 MS. BLAISDELL explained that under the current language [in the resolution] the constitutional appropriation and spending limit would be repealed after six years, with no further consideration required. Amendment 2 removes the language "Repeal" and asks for reconsideration. She informed the committee that she had assumed that Amendment 1 would pass, and therefore she reinserted the language "and spending" as well as Representative Stoltze's original language that would instruct the constitutional appropriation spending limit to be placed on the ballot every six years. Therefore, the public would vote on whether it wanted to continue it as is, or choose to change it, or repeal it. REPRESENTATIVE SEATON related his understanding that [Amendment 2] would mean that this constitutional provision would be placed on the ballot every six years for reconfirmation. MS. BLAISDELL highlighted that page 14 of her handout entitled, "HJR 9 Constitutional Appropriation and Spending Limit," provides a simplified explanation of Amendment 2. If Amendment 2 isn't adopted, the constitutional appropriation spending limit would be repealed at the end of 2012, at which point there would be no limit. Number 0699 REPRESENTATIVE HOLM said that he has a real problem with [Amendment 2] because theoretically, the constitution is already revisited every 10 years. Representative Holm remarked that the reliance on the constitution is at a different level than statutes. He asked Ms. Blaisdell if any other constitution has a proviso similar to the one being proposed here. MS. BLAISDELL noted that she worked with the National Conference of State Legislatures (NCSL) on this and found that there are no other states or territories that have any type of constitutional sunset clause. Therefore, were this to pass, Alaska would be the first. Ms. Blaisdell related that the intent of this sunset clause is so that [the appropriation cap] doesn't become exponentially out of control as is the case with the original constitutional appropriation limit. This [sunset clause] would probably mean that reviewing the constitutional appropriation limit would become a priority. REPRESENTATIVE HOLM said that he thinks of the constitution in terms of being almost unchangeable versus the volatility of the statutes. Therefore, he viewed this notion as problematic. REPRESENTATIVE SEATON noted that he didn't view Amendment 2 or Sections 2 and 3 as being necessary. If [the appropriation cap] isn't working, the legislature has the ability to propose a new constitutional amendment at any time. He said he wasn't in favor of [Amendment 2]. Number 0989 MS. BLAISDELL, in response to Representative Dahlstrom, answered that Representative Stoltze isn't in favor of a repeal clause in which the appropriation limit would go away. Ms. Blaisdell mentioned that timing of an appropriation and spending limit is critical. If the Arctic National Wildlife Refuge (ANWR) were to open and the [appropriation] limit ended in eight years, there would be an enormous spike [in spending] similar to that in 1980, which caused some of the failure in 1985 and 1986. Therefore, Ms. Blaisdell didn't believe Representative Stoltze would be in favor of the appropriation limit merely being repealed. However, Representative Stoltze might be more favorable to the removal of the entire section, although she recalled that he was in favor of the sunset provision. REPRESENTATIVE GRUENBERG recalled his prior experience in the legislature when there was more money. At that time, money that isn't available today was available for operating capital and social projects. As a result, when that money was available it benefited the state, a state that needs to develop itself. If ANWR and a gas pipeline were in place, Representative Gruenberg said he wouldn't want to have to amend the constitution to do what is necessary. CHAIR WEYHRAUCH directed the committee's attention to the motion to adopt Amendment 2. REPRESENTATIVE GRUENBERG maintained his objection to Amendment 2. A roll call vote was taken. Representative Lynn voted in favor of Amendment 2. Representatives Seaton, Gruenberg, Holm, Dahlstrom, and Weyhrauch voted against it. Therefore, Amendment 2 failed by a vote of 1-5. REPRESENTATIVE LYNN remarked that when the state is flushed with money, perhaps that is the time when the coffers of the bank should be filled. REPRESENTATIVE GRUENBERG pointed out that the state does have a spending limit of sorts in the permanent fund because the [state] is prohibited from spending all of the money and at least 25 percent has to be placed in the permanent fund. Number 1440 REPRESENTATIVE SEATON moved that the committee adopt Conceptual Amendment 3, as follows: Page 2: Delete lines 17-23. REPRESENTATIVE GRUENBERG objected. REPRESENTATIVE SEATON said that this automatic repeal of the appropriation limit seems inappropriate because if the constitutional amendment doesn't have any more term than a statute, it isn't worth it. Therefore, he recommended implementing the constitutional amendment and if it doesn't work, the matter can be revisited. REPRESENTATIVE GRUENBERG pointed out that the legislature doesn't know the state of the economy in 2012. He explained that [Section 2] basically says that if the [legislature] wishes to continue with this spending limit it should be put before the voters in or before 2012. Therefore, there would be another review of the matter by the voters. He reiterated that he is opposed to Conceptual Amendment 3. Number 1610 CHAIR WEYHRAUCH announced that he supported Conceptual Amendment 3 simply because this should look more like a constitutional amendment than a statute. As a body, the legislature has the ability to [call itself] into session and the people have the ability to petition to call the legislature back in to session. Furthermore, this is making a policy decision and the legislature ought to live with it or not adopt it. REPRESENTATIVE GRUENBERG pointed out that currently there is an unintelligible, unenforceable spending limit in the constitution, Article IX, Section 16. "If we had had this kind of thing in, we might have amended it before now," he remarked. MS. BLAISDELL informed the committee that if Representative Seaton's amendment doesn't pass, a small technical amendment changing the title of Section 30 to "Repeal of Appropriation and Spending Limit" would be required. Number 1700 A roll call vote was taken. Representatives Dahlstrom, Holm, Seaton, and Weyhrauch voted in favor of Conceptual Amendment 3. Representatives Lynn and Gruenberg voted against it. Therefore, Conceptual Amendment 3 passed by a vote of 4-2. CHAIR WEYHRAUCH directed attention to page 1, line 6, which encompasses a 10-point spending plan. He asked if paragraph (2) could be deleted. MS. BLAISDELL directed the committee to page 10 of her handout, which specifies that paragraph (1) refers to an appropriation into the Alaska Permanent Fund. There have been times in which revenues were above the 25 percent or 50 percent mandated deposit and thus, at those times, more money has been placed into the principle of the fund. She explained that paragraph (2) refers to expenditures out of the Alaska Permanent Fund. Number 1840 CHAIR WEYHRAUCH pointed out that under HJR 26 and the accompanying statutory scheme there would be a 60:40 split. He inquired as to the synergy between HJR 26 and the statutory scheme implementing it and paragraphs (1) and (2) of HJR 9. MS. BLAISDELL explained that HJR 9 instructs how the base will be calculated for the 2 percent growth while HJR 26 instructs the use of permanent fund money to become available for expenditure. Therefore, it's the difference between a revenue source and an expenditure source. If the permanent fund appropriations or deposits aren't excluded from the base, fluctuations in the permanent fund may not be reflective of an appropriation limit. For example, if the permanent fund dropped this year to $500, it could adjust the base spending limit by a little over $750 million. She pointed out that HJR 26 is the revenue stream and HJR 9 is the appropriation limit. REPRESENTATIVE GRUENBERG posed a situation in which HJR 9 and HJR 26 go before the voters. He pointed out that HJR 26 eliminates the difference between principle and income in the permanent fund. Therefore, the concept of income from the fund, particularly with the possibility of HB 298, is going to potentially change to include unrealized income. He related his belief that [HJR 9] may have to be drafted such that it would accommodate the passage or failure of HJR 26. Furthermore, if there is a balanced budget constitutional amendment, it will interplay with HJR 9 as well. He indicated that there may be a time at which there will have to be a decision made regarding whether to combine some of these amendments into a single ballot measure. Number 2069 REPRESENTATIVE SEATON posed a scenario in which the percent of market value (POMV) proposal goes into effect and 60 percent of that is used for state funds. He asked if that is covered in paragraph (2) of CSHJR 9(W&M). He also asked if the section dealing with government is included in paragraph (1). MS. BLAISDELL clarified that HJR 26 isn't incorporated into either of these two scenarios. One is a specific deposit into the permanent fund while the other is a specific payment out of the permanent fund or a dividend to the people. REPRESENTATIVE SEATON surmised then that any other appropriation out of the permanent fund, on a POMV basis, for state government would [be calculated in the base]. MS. BLAISDELL agreed. REPRESENTATIVE GRUENBERG inquired as to how to deal with inflation as well as unforeseen crises that aren't "disasters". CHAIR WEYHRAUCH remarked that he wanted those to be dealt with in the House Judiciary Standing Committee. He then turned attention to page 2, lines 11-16, of CSHJR 9(W&M), particularly the language excluding the appropriations listed in (a)(1)-(10) and pointed out that paragraph (8) is a reappropriation. He asked if the language on page 2, lines 11-16, should also refer to reappropriation. MS. BLAISDELL informed the committee that currently a reappropriation hasn't been counted in the fiscal summary, but is basically shown as a zero appropriation amount because it was accounted for in a prior fiscal year. CHAIR WEYHRAUCH inquired as to why this [constitutional] amendment even needs reappropriation addressed at all. MS. BLAISDELL answered, clarification, because technically the legislature is appropriating that money. CHAIR WEYHRAUCH asked if the language specified that appropriations and reappropriations are being excluded in (a)(1)-(10) would provide more clarity. MS. BLAISDELL replied no because reappropriations are appropriated each year. She related her belief that it's an issue of semantics. CHAIR WEYHRAUCH suggested moving the language in paragraph (8) to after "to" on page 1, line 9, to be followed by the language "and to an appropriation" and then list the paragraphs. The paragraphs would no longer need to say "an appropriation". He explained that he was seeking to wordsmith this resolution to make it as simple as possible. MS. BLAISDELL said that would make total sense. CHAIR WEYHRAUCH moved that the committee adopt Conceptual Amendment 4, which would on page 1, line 9, after "to", insert, "a reappropriation of money already appropriated under an unobligated appropriation that is not void under Section 13 of this article and to an appropriation" and on page 1, lines 10 - page 2, line 7, delete "an appropriation" at the beginning of paragraphs (1)-(10). There being no objection, Conceptual Amendment 4 was adopted. Number 2507 REPRESENTATIVE GRUENBERG moved that the committee adopt Conceptual Amendment 5 as follows: Page 1, line 7 and page 2, line 14, after "two percent": Insert "(excluding inflation)" REPRESENTATIVE SEATON objected. REPRESENTATIVE GRUENBERG explained that he is trying to say that there is a concept of inflation, but no one knows how much it will be in any year. However, the inflation could considerably reduce the 2 percent and thus there would be no ability to even keep pace with inflation. Therefore, he wanted to be sure that if there is inflation that it's considered. REPRESENTATIVE HOLM offered a friendly amendment to Conceptual Amendment 5 such that it would insert "(including inflation)" rather than "(excluding inflation)". He explained that he believes this [resolution] attempts to formulate a way in which to limit the growth of government. He indicated that he was trying to [accomplish what Representative Gruenberg described] while keeping the lid down on the ability of government to grow. He pointed out that 2 percent plus 5 percent inflation sums 7 percent growth. However, 2 percent, including inflation means that it can be 5 percent and maintain 2 percent as the upper limit. CHAIR WEYHRAUCH announced that he was going to vote against Conceptual Amendment 5 because he believes it should be brought up in the House Finance Committee where the full ramifications can be considered. REPRESENTATIVE GRUENBERG withdrew Conceptual Amendment 5. [The friendly amendment to Conceptual Amendment 5 was considered withdrawn.] REPRESENTATIVE HOLM moved to report CSHJR 9(W&M), as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHJR 9(STA) was reported from the House State Affairs Standing Committee.
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