Legislature(2003 - 2004)

05/02/2003 07:13 AM W&M

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HJR  9-CONST AM: APPROPRIATION/SPENDING LIMIT                                                                                 
                                                                                                                                
Number 1737                                                                                                                     
                                                                                                                                
CO-CHAIR  WHITAKER 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.   [Contains discussion                                                               
of HB 11]                                                                                                                       
                                                                                                                                
CO-CHAIR  WHITAKER  announced  that  CS  for  HJR  9  (W&M),  23-                                                               
LS0435\D, Cook, 4/30/04,  is before the committee.   He asked the                                                               
members  to  look  at  the last  chart  reviewed  [titled  "State                                                               
Expenditures with Constitutional Spending  Limit HJR 9, 2% Annual                                                               
Budget Increase"], where  a 2 percent increase  requires a simple                                                               
majority  vote.   If  the legislature  chooses  to exercise  that                                                               
option, then he  asked members to look at the  chart titled "CBRF                                                               
End-of-Year Balance" [second chart  in the packet], which assumes                                                               
a  2 percent  spending  increase  and no  other  new  taxes.   He                                                               
pointed out that  this chart shows what happens to  the CBR given                                                               
an  annual 2  percent increase  in spending.   Co-Chair  Whitaker                                                               
asked the  members to  compare this  chart to  the chart  that is                                                               
being handed  out [titled "CBRF  End-of-Year Balance,  Assumes 5%                                                               
POMV,  $300 Million  Annual Sales  Tax,  and Passage  of HB  11",                                                               
(Assumes House  FY 2004 budget  as the  base, with a  3% spending                                                               
increase and no other new taxes)]  and note what happens when the                                                               
legislature spends 3 percent.   Although 3 percent does not sound                                                               
like much,  this chart  shows what happens  very quickly  [to the                                                               
CBR].   Co-Chair Whitaker urged the  members to keep in  mind the                                                               
assumptions upon  which this discussion  is based -  $300 million                                                               
of new taxes and HB 11 having been in place a year and a half.                                                                  
                                                                                                                                
Number 1919                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  told the  members  that  there is  one                                                               
other factor  that has not  been discussed.   That factor  is the                                                               
affect  of   required  federal  programs  and   unfunded  federal                                                               
mandates  or  federal programs  that  continue  with the  federal                                                               
dollars going away after a period of  time.  He also said that it                                                               
would be  important to consider  the "Stevens'" factor,  which is                                                               
what happens when  Senator Stevens is no longer in  Congress.  He                                                               
asked  if Mr.  Persily  would  comment on  any  or  all of  those                                                               
issues.                                                                                                                         
                                                                                                                                
MR.  PERSILY said  if  he  understood Representative  Gruenberg's                                                               
point  correctly  in  referring to  the  constitutional  spending                                                               
limit  [HJR  9],  federal  funds   are  exempted  from  the  cap.                                                               
However, it would  be a difficulat situation  for the legislature                                                               
if a program  that previously received federal funds  did not, in                                                               
a subsequent,  year.  He noted  that there are escape  clauses in                                                               
that  a  two-thirds  vote  [of   the  legislature]  can  increase                                                               
[spending]  an additional  2 percent,  and a  three-quarters vote                                                               
[of the legislature] can increase [spending] another 2 percent.                                                                 
                                                                                                                                
Number 2030                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG clarified his  question by asking if the                                                               
Department of Revenue can estimate  the impact that would have on                                                               
this chart.                                                                                                                     
                                                                                                                                
MR. PERSILY  asked Representative Gruenberg which  chart would he                                                               
prefer he use.                                                                                                                  
                                                                                                                                
CO-CHAIR WHITAKER noted that the  committee recognizes that there                                                               
is  a factor  there; this  is only  an estimate  and it  would be                                                               
difficult to quantify.                                                                                                          
                                                                                                                                
MR. PERSILY  responded that he  really could  not guess.   Of the                                                               
federal  money that  comes  to Alaska,  much of  it  goes out  in                                                               
grants and  federal payroll and  a significant amount  of federal                                                               
money  is earmarked  for transportation  projects.   Mr.  Persily                                                               
said he  could not  estimate how  much money  that goes  into the                                                               
operating  budget might  have to  be replaced  by [general  fund]                                                               
money if the  federal money stopped [coming in], or  how much the                                                               
legislature might want to replace  as opposed to just letting the                                                               
programs go  away.  Common sense  says that if the  federal money                                                               
is cut  back, the state would  definitely end up with  some holes                                                               
in its budget, he said.                                                                                                         
                                                                                                                                
Number 2226                                                                                                                     
                                                                                                                                
REPRESENTATIVE   OGG  asked   if   these  calculations   included                                                               
consideration  for  economic  growth,   a  flat  economy,  or  an                                                               
economic decline.                                                                                                               
                                                                                                                                
MR.  PERSILY  replied  that  those  factors  were  omitted.    He                                                               
explained that he  was thinking with a fiscal  note mentally when                                                               
making up  the charts.   He  explained that  fiscal notes  do not                                                               
factor  in  growth or  inflation,  they  are  flat lined.    This                                                               
assumes that a $300 million broad based  tax in FY 06 is going to                                                               
generate $300 million  in tax revenue in FY 12.   He advised that                                                               
the  Department of  Revenue will  make up  another set  of graphs                                                               
assuming  some  reasonable  growth   factor.    Looking  at  this                                                               
cumulatively, for example,  if there were $300  million in annual                                                               
broad  based  tax  revenues  starting   in  FY  06  and  if  with                                                               
inflation, population  growth, and economic development  it could                                                               
be increased  3 percent per  year, the cumulative result  by 2012                                                               
would be an additional $200  million.  Mr. Persily commented that                                                               
factoring that in can be a significant gain.                                                                                    
                                                                                                                                
Number 2336                                                                                                                     
                                                                                                                                
CO-CHAIR WHITAKER  asked if a  growth factor was included  in the                                                               
POMV.  He  also asked if there was growth  factor included in the                                                               
$300 million  in taxes.   In response  to Mr.  Persily's negative                                                               
response, he asked if the  same assumptions were used with regard                                                               
to growth  on [tax revenues],  what would the  cumulative numbers                                                               
be.                                                                                                                             
                                                                                                                                
MR. PERSILY replied  that by FY 12 it would  be cumulatively $200                                                               
million in additional revenue for the CBR.                                                                                      
                                                                                                                                
CO-CHAIR  HAWKER  commented that  in  not  including the  [growth                                                               
factor] in  some ways  it mitigates  not including  the inflation                                                               
factor in the base general fund.                                                                                                
                                                                                                                                
Number 2415                                                                                                                     
                                                                                                                                
MR. PERSILY  pointed out that the  State of Alaska does  not have                                                               
any revenue source  that grows with economic activity.   If there                                                               
were a broad base  [tax], whether it is a sales  tax or an income                                                               
tax,  hopefully there  would  be increased  revenue  to meet  the                                                               
increased  needs as  the population  grows, inflation  grows, and                                                               
the demand for services increases.   Although there would be some                                                               
growth in revenue,  it certainly would not be enough  to cover it                                                               
all, he said.                                                                                                                   
                                                                                                                                
REPRESENTATIVE OGG  asked if there  is economic growth  factor in                                                               
the HB 11 option.                                                                                                               
                                                                                                                                
MR. PERSILY  explained that HB 11  is a function of  the price of                                                               
oil and how much oil is pumped  out of the ground.  These numbers                                                               
are  based on  the spring  of FY  03 revenue  oil forecast  which                                                               
[assumes]  a  long-term  oil  price   of  $22  [per  barrel]  and                                                               
production holding steady at about 1 million barrels per day.                                                                   
                                                                                                                                
REPRESENTATIVE OGG  asked if there  is a growth  factor [included                                                               
in the forecast].                                                                                                               
                                                                                                                                
MR.  PERSILY   replied  no  growth  factor   would  be  included.                                                               
However, if  there were additional discoveries  that number would                                                               
increase.                                                                                                                       
                                                                                                                                
CO-CHAIR  WHITAKER pointed  out  that that  number will  increase                                                               
sometime in the future, perhaps even before 2012.                                                                               
                                                                                                                                
Number 2540                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE  asked Mr. Persily  to give the  members an                                                               
idea how this  picture would look without the  $300 million sales                                                               
tax.  What would the impact be on either chart, she asked.                                                                      
                                                                                                                                
MR. PERSILY highlighted  that the first chart  uses the following                                                               
assumptions:   no spending increase,  no sales tax revenue  in FY                                                               
04 of  about $125  million because  it is a  fraction of  a year.                                                               
Under the aforementioned  scenario, the state would  not get $300                                                               
million per year in  FY 05 through FY 12, so  there would be $2.5                                                               
billion less  revenue.  If  the $300  million broad base  tax did                                                               
not exist  and in  FY 12  the legislature put  60 percent  of the                                                               
permanent fund  distribution into public services  and 40 percent                                                               
into dividends, the CBRF would be  more than a billion dollars in                                                               
the hole  instead of ending  FY 12 with a  $1 billion and  a half                                                               
[in  the CBRF].   It  would  make a  significant difference,  Mr.                                                               
Persily commented.                                                                                                              
                                                                                                                                
Number 2703                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  said he wanted to  correct one statement                                                               
made by  Mr. Persily.   He  said Mr.  Persily forgot  to indicate                                                               
that  oil and  gas production  growth  does have  a positive  tax                                                               
impact.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  if there  is any  way to  display                                                               
these same types of graphics  showing the current situation in FY                                                               
03 or FY 04.  What he would  like to see, he said, is a base line                                                               
start because it would show the  impacts of no action on the CBRF                                                               
and the spending  lines would be used as starting  points.  Also,                                                               
as Representative  Heinze asked, it  would be interesting  to see                                                               
the  impacts  of  HB 11  or  the  lack  of  that component.    He                                                               
commented  that he  is not  shilling for  HB 11,  but he  said he                                                               
believes  that  a chart  would  show  the failure  or  cumulative                                                               
impact  in 10  years.   There  would either  be  no dividends  or                                                               
decreased dividends.   This would  show the  long-term cumulative                                                               
affect of a small component as  well as help to make judgments as                                                               
to   the  importance   of   taxation   and  spending   variables.                                                               
Representative Rokeberg said  another chart he would  like to see                                                               
is a 1 percent decrease in spending.                                                                                            
                                                                                                                                
Number 2936                                                                                                                     
                                                                                                                                
CO-CHAIR HAWKER  responded that those  charts will be  before the                                                               
committee tomorrow.                                                                                                             
                                                                                                                                
REPRESENTATIVE  HOLM  questioned   whether  the  legislature  has                                                               
considered  reducing  spending  and  whether  the  administration                                                               
plans some kind of reduction in spending.                                                                                       
                                                                                                                                
CO-CHAIR WHITAKER commented that  is certainly something that the                                                               
legislature can  do.  The  legislature has reduced the  budget in                                                               
the past and can certainly do it again.                                                                                         
                                                                                                                                
REPRESENTATIVE  GRUENBERG  surmised  that the  charts  take  into                                                               
consideration that  as the CBR goes  down it will earn  less, and                                                               
therefore there will be some kind of geometric affect.                                                                          
                                                                                                                                
MR. PERSILY responded that is  correct.  These charts assume that                                                               
whatever balance is in the  CBR generates investment earnings and                                                               
[those earnings]  are put  back in for  appropriation.   The less                                                               
money in  the CBR, the less  it earns, and the  less is available                                                               
for appropriation.                                                                                                              
                                                                                                                                
Number 3147                                                                                                                     
                                                                                                                                
REPRESENTATIVE BILL STOLZE, Alaska  State Legislature, as sponsor                                                               
of  HJR 9,  commented on  the committee  substitute and  answered                                                               
questions from the members.   He observed that the CS liberalizes                                                               
the constitutional  spending limit significantly.   It allows for                                                               
three times the increases that  the original resolution proposed.                                                               
He asked  why a section  was taken  out that would  have directed                                                               
the  governor to  make necessary  reductions  in expenditures  to                                                               
meet the  spending limit.   He  said he was  not involved  in the                                                               
process [of writing the CS].                                                                                                    
                                                                                                                                
CO-CHAIR  WHITAKER responded  that  the section  that would  have                                                               
required   the  governor   to   make   necessary  reductions   in                                                               
expenditures to  meet the spending  limit was removed  because of                                                               
concerns that the governor would  be constrained and left without                                                               
the option of  spending in a manner deemed appropriate.   He said                                                               
there was  the recognition  that there  would be  consequences to                                                               
that change in terms of budgets ramifications.                                                                                  
                                                                                                                                
REPRESENTATIVE STOLTZE  said he  wanted it  noted on  record that                                                               
this is the Co-Chair's choice, and not his.                                                                                     
                                                                                                                                
Number 3344                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG,  commenting as a lawyer,  remarked that                                                               
the language  on page 2,  Section 16(c), lines 17-21,  would have                                                               
resulted  in allowing  the governor  to  reduce expenditures  and                                                               
divest  the  legislature  of  the  authority  to  override  those                                                               
vetoes.  He asked if that was Representative Stoltze's intent.                                                                  
                                                                                                                                
REPRESENTATIVE STOLTZE replied that  he believed the language was                                                               
clear and  that [his intent] was  that he wanted the  governor to                                                               
comply with the spending limit.                                                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  reiterated his belief that  a lawyer or                                                               
judge  would  interpret the  language  to  mean that  it  clearly                                                               
divests the legislature of any participation in the process.                                                                    
                                                                                                                                
REPRESENTATIVE  STOLTZE clarified  that his  intent was  that the                                                               
legislature  pass  the  budget.   The  governor  could  call  the                                                               
legislature back  into session,  or the legislature  could demand                                                               
to come back into session with  the requisite number of votes, he                                                               
said.   Representative Stolze said  he does not believe  there is                                                               
an abrogation [of powers].                                                                                                      
                                                                                                                                
Number 3557                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved to  adopt a conceptual amendment to                                                               
CSHJR 9, Version H.  He  said the amendment would remove language                                                               
on page 2, lines 11-16.                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG objected for purposes of discussion.                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  explained   the  current  [work]  draft                                                               
allows  for  three  incremental  increases of  2  percent.    The                                                               
proposed amendment would eliminate the  second level of 2 percent                                                               
increase  and a  two-thirds vote  of each  house.   Therefore, it                                                               
would  limit the  cap  to 4  percent with  a  standard 2  percent                                                               
increase and would require a  three-quarter vote for any increase                                                               
in the budget.   Representative Rokeberg said that  the 6 percent                                                               
increase annually  really does not  look like much of  a spending                                                               
cap to him, and that is the rationale for this amendment.                                                                       
                                                                                                                                
CO-CHAIR WHITAKER  stated that  Conceptual Amendment  1 to  HJR 9                                                               
would delete subsection (b), page 2, lines 10-16.                                                                               
                                                                                                                                
Number 3721                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG objected.                                                                                              
                                                                                                                                
REPRESENTATIVE WILSON  said that  she really  has a  problem with                                                               
this amendment  because in thinking  realistically of  the future                                                               
of  the  state  she  sees  many problems,  such  as  the  teacher                                                               
shortage.  This  is a crisis situation and she  predicted that in                                                               
order to attract teachers it  will be necessary to increase their                                                               
pay.   Representative Wilson  said that  if the  legislature puts                                                               
itself in too tight  of a box, the state will  be in big trouble.                                                               
She emphasized that the legislature  needs to think realistically                                                               
and face the future.                                                                                                            
                                                                                                                                
REPRESENTATIVE KOHRING  asked for  the sponsor's reaction  to the                                                               
Conceptual Amendment 1.                                                                                                         
                                                                                                                                
REPRESENTATIVE STOLTZE responded that  it is an improvement [from                                                               
the committee substitute].                                                                                                      
                                                                                                                                
A  roll   call  vote  was  taken.     Representatives  Weyhrauch,                                                               
Rokeberg, Kohring,  Heinze, Whitaker,  and Hawker voted  in favor                                                               
of  Conceptual Amendment  1.   Representatives Moses,  Gruenberg,                                                               
and Wilson voted  against it.  Therefore,  Conceptual Amendment 1                                                               
passed by a vote of 6-3.                                                                                                        
                                                                                                                                
Number 3921                                                                                                                     
                                                                                                                                
CO-CHAIR HAWKER  moved Amendment 2 [23-LS0435\H.1,  Cook, 5/1/03]                                                               
which read as follows:                                                                                                          
                                                                                                                                
     Page 2, line 16, following "made":                                                                                         
          Insert ", excluding appropriations listed in                                                                          
     (a)(1) - (10) of this section"                                                                                             
                                                                                                                                
     Page 2, line 22, following "made":                                                                                         
          Insert ", excluding appropriations listed in                                                                          
     (a)(1) - (10) of this section"                                                                                             
                                                                                                                                
Number 3934                                                                                                                     
                                                                                                                                
CO-CHAIR  WHITAKER  objected  and  noted  that  Amendment  2  was                                                               
developed  by  Legislative  Legal  and  Research  Services.    He                                                               
explained  that Amendment  2 clarifies  that  if the  legislature                                                               
does  obtain the  supermajority level  for expenditures,  it does                                                               
not become part of the base for future appropriations.                                                                          
                                                                                                                                
REPRESENTATIVE WILSON asked for further explanation of the bill.                                                                
                                                                                                                                
CO-CHAIR HAWKER  told the  members that this  Amendment 2  adds a                                                               
line on page 2, line 22, at  the end of the paragraph, which says                                                               
if  the  legislature  makes an  appropriation  that  exceeds  the                                                               
amount allowable  under this [constitutional] amendment,  it will                                                               
require three-quarters  of each  house of  the legislature  to do                                                               
it; [Amendment  2] makes  it very  clear that  the amount  of the                                                               
appropriation may not  exceed 2 percent.  The 2  percent is based                                                               
on the  amount appropriated  in the  two fiscals  years preceding                                                               
the years for which the appropriations  are made.  That 2 percent                                                               
does not apply  to those exceptional items in  Section 16 (a)(1)-                                                               
(10), on  page 1,  lines 10-16  and page  2, lines  1-10.   It is                                                               
strictly  a  2 percent  increment  based  on  the base  level  of                                                               
government expenditures.   This  would not include  the permanent                                                               
fund  distributions, disaster  response, general  obligation bond                                                               
issues, reappropriation money, and all  the other items listed in                                                               
(1)-(10).   This amendment would clearly  restrict the overriding                                                               
capacity  of   the  legislature  to   the  base  amount   in  the                                                               
constitutional amendment.                                                                                                       
                                                                                                                                
The committee took an at-ease from 7:55 to 7:56 a.m.                                                                            
                                                                                                                                
Number 4300                                                                                                                     
                                                                                                                                
CO-CHAIR WHITAKER withdrew  his objection to Amendment  2.  There                                                               
being no objection, Amendment 2 was adopted.                                                                                    
                                                                                                                                
Number 4351                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  proposed Amendment  3.    He asked  the                                                               
members to  look at  Version A  of HJR 9,  which is  the original                                                               
version of  the bill as  offered by the sponsor.   Representative                                                               
Rokeberg explained  that on  page 2,  lines 17-21,  the provision                                                               
that  the sponsor  talked  about with  respect  to directing  the                                                               
governor to  make a cut in  funding if the legislature  failed to                                                               
do  so, should  be reinserted.   He  said that  he would  like to                                                               
insert  that   language  in   as  subsection   (c)  on   page  2.                                                               
Representative Rokeberg read [subsection  (c) of Version A] which                                                               
said:   "(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  operation  and  administration  to  the  extent                                                               
necessary  to avoid  spending more  than the  amount that  may be                                                               
appropriated under  (a) and (b)  of this section."   He commented                                                               
that this was  excised from the original resolution  and he would                                                               
like to reinsert this language.                                                                                                 
                                                                                                                                
Number 4614                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved Amendment 3 as follows:                                                                           
                                                                                                                                
     On page 2, line 17,                                                                                                        
     Insert the following:                                                                                                      
     "(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   operation  and                                                                
     administration  to   the  extent  necessary   to  avoid                                                                
     spending more than the amount  that may be appropriated                                                                
     under (a) and (b) of this section."                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG objected.                                                                                              
                                                                                                                                
TAPE 03-21, SIDE B                                                                                                            
Number 4650                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG told  the members  he is  not sure  how                                                               
this  amendment  would  work,  and would  have  no  objection  to                                                               
Amendment 3;  however, he sees  two different ways  this language                                                               
could  be  interpreted.    For example,  the  language  could  be                                                               
interpreted  to  mean  that  even  though  $1  million  has  been                                                               
appropriated  for the  Alaska Department  of Fish  and Game,  the                                                               
governor  does not  need  to spend  all of  that  money and  [the                                                               
administration] should make its best efforts  not to do so.  This                                                               
language  could  also   be  interpreted  to  mean   that  if  the                                                               
legislature appropriated  too much  money under  the Constitution                                                               
[under   this   amendment],   the   governor   could   veto   the                                                               
appropriations  bill and  the legislature  would constitutionally                                                               
have no  power to override  that veto.   Representative Gruenberg                                                               
highlighted the  legal importance  of knowing  the intent  of the                                                               
amendment.  It has got to be  clear in the language, he said, and                                                               
asked for the intent of this language.                                                                                          
                                                                                                                                
REPRESENTATIVE  STOLTZE commented  that  he would  have a  better                                                               
appreciation for  the members' concerns  about passing  powers to                                                               
the governor if Representative Gruenberg  had not voted for a $20                                                               
million  unallocated reduction  for  the governor  to  make as  a                                                               
budget amendment.                                                                                                               
                                                                                                                                
Number 4354                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  agreed  that  Representative  Gruenberg                                                               
raised  a very  good and  interesting point  with respect  to the                                                               
amendment and the issue of constitutional separation of powers.                                                                 
                                                                                                                                
REPRESENTATIVE  GRUENBERG  reiterated  that   he  would  have  no                                                               
problem   with  Amendment   3  if   the  intent   is  the   first                                                               
interpretation of the amendment.                                                                                                
                                                                                                                                
REPRESENTATIVE  ROKEBERG   commented  that  there  may   be  some                                                               
ambiguity  in  the amendment  and  would  like to  get  counsel's                                                               
opinion on this issue.                                                                                                          
                                                                                                                                
CO-CHAIR  HAWKER  responded  that  he   does  not  have  a  legal                                                               
background so his  approach is the doctrine of common  sense.  If                                                               
the  purpose  of  [HJR  9]  is  as stated  on  page  1,  line  6,                                                               
"Appropriations made  for a fiscal  year shall not  exceed", [the                                                               
word] "shall"  seems to be an  imperative.  He asked  the members                                                               
to  look at  the  proposed additional  language  which says,  "If                                                               
appropriations  exceed".    There  seems to  be  a  contradiction                                                               
within the amendment itself, he  commented.  Co-Chair Hawker said                                                               
that with  all due  respect, this  is a  constitutional amendment                                                               
proposition  and it  appears  that this  language  would build  a                                                               
conundrum into the Constitution.                                                                                                
                                                                                                                                
Number 4214                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  responded   that  everyone  knows  that                                                               
because  of supplemental  appropriations [the  budget can  exceed                                                               
the  spending  limit].    The  other factor  is  if  there  is  a                                                               
legislature or governor that is  predisposed to [increase] rather                                                               
than  decrease  spending,  there  could   be  the  problem  of  a                                                               
constitutional challenge.  He said  he looks at this amendment as                                                               
a further check on that separation of  powers.  He went on to say                                                               
that the  ability of the  legislature to  override by veto  is an                                                               
important question.                                                                                                             
                                                                                                                                
CO-CHAIR  WHITAKER  pointed  out   that  the  next  committee  of                                                               
referral  is  the House  Judiciary  Standing  Committee where  he                                                               
believes that issue will be discussed at great length.                                                                          
                                                                                                                                
Number 4052                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON told  the members  that he  believes there                                                               
are constraints put  on the legislature that  prevent the members                                                               
from living  up to  this matter  in the  amount spent  on capital                                                               
expenditures.   He noted that  he is  in favor of  this amendment                                                               
because it  inserts a  dual requirement  that if  the legislature                                                               
does not appropriate the way  the Constitution says, which is now                                                               
the case with  the capital budget, then the  governor is directed                                                               
to  make these  changes.   Representative  Seaton summarized  his                                                               
comments by saying he thinks the amendment is appropriate.                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  commented   that  his  question  still                                                               
remains  unanswered,  and asked  if  Ms.  Cook would  provide  an                                                               
interpretation.                                                                                                                 
                                                                                                                                
Number 4003                                                                                                                     
                                                                                                                                
TAMARA COOK,  Director, Legislative Legal and  Research Services,                                                               
Alaska State Legislature,  provided a legal opinion on  HJR 9 and                                                               
proposed  amendments, and  answered questions  from the  members.                                                               
Ms. Cook asked if Representative  Gruenberg's question is whether                                                               
the  legislature  would retain  veto  power  if the  language  in                                                               
subsection  (c)  from  the  original  bill  is  reinserted.    In                                                               
response to Representative  Gruenberg's affirmative response, she                                                               
commented  that  everyone  who  has touched  upon  the  issue  is                                                               
correct, this  is an issue  that needs to  be addressed.   If the                                                               
issue is  not addressed  she believes  the legislature  would not                                                               
have veto  power because  the override  power applies  to vetoes.                                                               
This is clearly  not a veto; it is direction  to the governor not                                                               
to spend money that has, in fact, been appropriated.                                                                            
                                                                                                                                
MS.  COOK  told  the  members  that she  does  not  know  of  any                                                               
mechanism in the Constitution whereby  the legislature can veto a                                                               
decision  of the  [governor] not  to  spend money  that has  been                                                               
appropriated.   She  pointed out  that the  Sheffield case  dealt                                                               
with that situation  with the North Star Borough.   In that case,                                                               
then-Governor  Bill  Sheffield  ordered a  reduction  in  certain                                                               
expenditures due to  the state facing a decrease  in revenues and                                                               
a budget  that was not  balanced.  The time  for him to  veto the                                                               
appropriation  had long  since expired.   He  was not  vetoing an                                                               
appropriation in the  sense that the legislature  would then have                                                               
something to  override.   He was  directing the  executive branch                                                               
[of  government] not  to  spend  money that  had,  in fact,  been                                                               
appropriated, she  said.  That  [action] resulted  in litigation.                                                               
She  pointed  out  that  the  reductions  by  [the  then-Governor                                                               
Sheffield] were  overturned in court.   The legislature responded                                                               
by  coming  back into  session  and  ratifying those  reductions.                                                               
Ultimately the  decisions that then-Governor Sheffield  made were                                                               
upheld by  the action of the  legislature.  She said  that as she                                                               
reads  this provision,  absence any  clarification, she  believes                                                               
[the amendment]  would be  building that  kind of  situation into                                                               
the  Constitution.   She said  that what  this does  is tell  the                                                               
governor  that  despite   the  fact  that  the   money  has  been                                                               
appropriated, it  will be  the governor's  decision not  to spend                                                               
it.   In fact, the governor  must decide not to  spend some money                                                               
that  is appropriated  to the  Executive Branch  since he  cannot                                                               
reduce  money   to  the  Judicial  or   Legislative  Branches  of                                                               
government.  The governor must elect  to not spend some money if,                                                               
in fact, the  money appropriated exceeds the spending  limit as a                                                               
constitutional matter.                                                                                                          
                                                                                                                                
Number 3710                                                                                                                     
                                                                                                                                
REPRESENTATIVE   ROKEBERG   withdrew  Conceptual   Amendment   3.                                                               
However,  he said  he  hopes  it will  be  considered during  the                                                               
bill's referral to the House Judiciary Standing Committee.                                                                      
                                                                                                                                
Number 3627                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG said he does  support a mechanism to get                                                               
state  spending under  control; however,  he is  not sure  how it                                                               
should be done.  Representative  Gruenberg expressed concern that                                                               
this measure may tie the hands  of the legislature at a time when                                                               
it  is  important   to  have  options  to   make  very  difficult                                                               
decisions.  He  pointed to the 1970s where  the state experienced                                                               
runaway  inflation,  which is  something  beyond  the control  of                                                               
legislature in the constitutional sense.   Another issue might be                                                               
some  kind of  situation that  does not  fall into  one of  these                                                               
escape clauses.  He expressed  concern that the committee adopted                                                               
Amendment 1 and thus eliminated  subsection (b), which would have                                                               
been helpful.  On page 2,  line 20, the resolution specifies that                                                               
the legislature  cannot under any circumstances  exceed 2 percent                                                               
of the previous amount.  That  2 percent figure is going be grave                                                               
and in stone.   Representative Gruenberg said he  would feel more                                                               
comfortable about  this resolution if  there were some  method of                                                               
giving the legislature, under some  circumstances, the ability to                                                               
get  around  that.   Representative  Gruenberg  pointed out  that                                                               
something  may  occur  that  no  one  in  this  room  could  have                                                               
foreseen,   something    that   could   require    an   immediate                                                               
appropriation; the  only way that  the legislature would  be able                                                               
to  make  that appropriation  is  by  amending the  Constitution,                                                               
which could not be done until the next general election.                                                                        
                                                                                                                                
Number 3237                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE  moved to report  CSHJR 9, as  amended, out                                                               
of  House Special  Committee on  Ways and  Means with  individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no objection,  CSHJR 9(W&M) was  reported from the  House Special                                                               
Committee on Ways and Means.                                                                                                    
                                                                                                                                

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