Legislature(2005 - 2006)
02/18/2005 08:29 AM House W&M
| Audio | Topic |
|---|---|
| Start | |
| HB52 | |
| HB143 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 52-LONG-RANGE FISCAL PLAN CHAIR WEYHRAUCH announced that the first order of business would be HOUSE BILL NO. 52 "An Act relating to adoption and revision of a comprehensive long-range fiscal plan for the State of Alaska." 8:31:35 AM REPRESENTATIVE GRUENBERG relayed that he and Representative Harris, originally introduced HB 52 during the Twenty-Third legislature and in its previous incarnation it was House Bill 493. The first section of HB 52, contains legislative findings that indicate the areas for which the legislature is responsible, such as: public health and welfare, public education, development of natural resources, public safety, public facilities, and environmental protection. In order to carry out these responsibilities the legislature must budget a reasonable level of expenditures to finance the operations of state government. There is often a significant disparity between the revenue sources used and the expenditures necessary to maintain a reasonable level of state services, he noted. He related that revenue sources fluctuate and Alaska needs stability. For several years, the legislature has addressed the disparity by drawing against the balance in the constitutional budget reserve fund (CBR), which has been declining to a level that requires the development of a sound fiscal plan. The long- range comprehensive fiscal plan will encourage the discipline necessary to ensure the budget remains balanced and properly planned, which will stabilize the state's economy. REPRESENTATIVE GRUENBERG said that he was "surprised" that no statute existed requiring the state to adopt and maintain a stable long-term fiscal plan. This legislation would require the legislature to adopt and annually revise a comprehensive long-range fiscal plan to balance state revenue and expenditures for the current and succeeding four years. The plan, he explained, must set out projected revenue available and anticipated expenditures for the operation of state government for each fiscal year. For each fiscal year of projected expenditures that exceed projected revenue, the plan must include proposals to achieve the following: balance the budget, encourage real economic growth and stability, improve the high quality of life, develop natural resources, provide education, maintain public health and safety, and ensure that state government provides services as efficiently as practical, while, reducing state expenditures where possible. Furthermore, the legislature must: protect the principal of the permanent fund in accordance with the constitutional mandate, use the earnings of the fund to provide for inflation-proofing, maintain a strong dividend program, and repay the legislature's legal flexibility to determine the appropriate use of the remaining earnings of the fund. The legislature must examine and plan for ways to raise the necessary revenue for the operation of state government while maintaining a stable tax environment. The plan must contain provisions to maintain the integrity of the CBR, which was established under the constitution to ensure that a prudent minimal balance in the fund remains available to provide funding for emergencies. 8:37:02 AM REPRESENTATIVE GRUENBERG, in response to Representative Seaton, related that the expenditures of the state have never surpassed the revenue sources of the state. 8:37:46 AM REPRESENTATIVE GRUENBERG, in response to Representative Wilson, said that HB 52 directs the legislature to consider all the revenue sources of the state, such as: the permanent fund, the permanent fund dividend, the CBR, the ERA [Earnings Reserve Account], and the enactment of taxes. How the legislature appropriates those funds is under its jurisdiction, he highlighted. 8:39:06 AM KEVIN RITICHE, Executive Director, Alaska Municipal League (AML), relayed that the AML and its members support the proposal for a long-range fiscal plan. He related that many municipalities have a five-year plan to balance the budget. He said, "The only thing more dangerous than planning, is not planning." 8:39:59 AM MR. RITCHIE, in response to Chair Weyhrauch, related that many municipalities, like Juneau, try to "look ahead five years." 8:40:08 AM MR. RITCHIE, in response to Chair Weyhrauch, said he could not answer whether any ordinance or statute used the term "long- range fiscal plan." He explained that the City and Borough of Juneau had a five-year fiscal plan, but it was not called a "long-range fiscal plan" in the ordinance. 8:40:36 AM REPRESENTATIVE ROKEBERG noted that, although he could not recall the exact statute, in his research for balancing the budget he found a statuary requirement existed for a long-range projection. 8:40:52 AM REPRESENTATIVE WILSON commented that she has received numerous emails and letters from statewide municipalities and organizations "begging" the legislature to propose a long term fiscal plan, similar to the proposal of HB 52. 8:41:29 AM REPRESENTATIVE ROKEBERG said that the legislature needs to adopt a long-range fiscal plan and not just a bill that talks about it. He expressed concern that the bill would deflect from the urgency to adopt such a plan. 8:41:41 AM CHAIR WEYHRAUCH related that a bill is merely "fluff" compared to the substance. 8:41:53 AM TADD OWENS, Executive Director, Resource Development Council for Alaska, Inc., said the council has been concerned about the state structural fiscal imbalance for over a decade. Although, the council's board has yet to take a formal position on HB 52, the council is "anxious to work with the legislature on any and all ideas to move the state closer to a long range fiscal plan," he said. This year's budget surplus offers the legislature the opportunity to make "tough decisions" regarding fiscal responsibility over the long term, he noted. 8:43:33 AM CHAIR WEYHRAUCH noted that Mr. Owens' position mirrors that of the "Chamber, AARP, and many other [institutions]." 8:43:40 AM MR. OWENS, in response to Representative Seaton, relayed that the council's [opinion that] the state is not in a situation where there is no revenue or revenue options to cover the expenditures, rather it's an allocation issue. The council believes that particular steps should be taken to address the long-term fiscal imbalance, such as: budget discipline, uses for the permanent fund earnings for something other than dividends alone, a constitutional amendment for percent of market value (POMV), and, if necessary, the institution of a statewide tax. 8:46:28 AM MR. OWEN, in response to Representative Rokeberg, said that the council is wrestling with a long-range comprehensive fiscal plan versus making incremental improvements to the status quo when possible. However the council is willing to work on any idea that would "drive the state forward," he related. 8:48:17 AM REPRESENTATIVE GRUENBERG clarified that HB 52 is not an alternative to an actual fiscal plan because both are necessary in order for the state to plan ahead. 8:48:48 AM MR. OWENS related that the council wants what is best for the state, and if the combined efforts of both HB 52 and a [long- range] fiscal plan perpetuate that process, then the council supports both actions. 8:49:15 AM CHAIR WEYHRAUCH stated that the aforementioned issues are important to consider when attempting to resolve the fiscal gap.
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