Legislature(2021 - 2022)SENATE FINANCE 532
03/01/2022 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB151 | |
| SJR12 | |
| SB224 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 151 | TELECONFERENCED | |
| += | SJR 12 | TELECONFERENCED | |
| *+ | SB 224 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 224
"An Act relating to the Alaska marine highway system
fund; relating to the budget reserve fund established
under art. IX, sec. 17(d), Constitution of the State
of Alaska; relating to the Alaska higher education
investment fund; and providing for an effective date."
9:13:21 AM
ERIN SHINE, STAFF, SENATOR CLICK BISHOP, read from a
prepared statement:
• moves the Alaska Marine Highway Fund and the
Alaska Higher Education Investment Fund from the
general fund to the treasury;
• creates a definition for repayment of the
Constitutional Budget Reserve under Alaska
Constitution Article 9, section 17(d); and
• repeals statutes defining which funds are
available for appropriation that was ruled
broadly unconstitutional by the Hickel v Cowper
decision in 1994.
In addition, the application of the language in SB 224
makes the Statutory Budget Reserve not sweepable.
This was determined last year with practice, but this
bill codifies it.
We now have two superior court decisions that helped
draft this bill proposal for your consideration:
Power Cost Equalization Endowment Fund (AFN v.
Dunleavy):
Ruled that PCE was not subject to the sweep because it
failed the two-part test set out in Hickel v Cowper -
PCE is in a separate fund and not the general fund.
Further footnote 77 gave us guidance as it outlined
that the legislature has expressly created many funds
and accounts in the general fund for various purposes
but has also created separate funds outside the
general fund, such as the SBR, which is included in
the state treasury.
Alaska Higher Education Investment Fund (Short v.
Dunleavy):
While HEIF has been ruled to be sweepable the Superior
court also expressly states that the legislature
possesses the power to establish funds as separate
funds outside the general fund.
That is exactly what SB 224 attempts to accomplish.
Why these two accounts?
AMHF: helps give the system stability over fiscal
years. The fare box is deposited each year for future
fiscal years.
HEIF: Also gives stability for Alaska's Performance
Scholarship program recipients and WWAMI students.
This bill does not create dedicated funds the
legislature still maintains its power to appropriate
funds from these accounts for any purpose.
9:15:48 AM
Co-Chair Bishop shared that there were individuals
available for questions.
9:16:02 AM
Co-Chair Stedman requested a sectional analysis.
9:16:16 AM
Ms. Shine discussed the Sectional Analysis (copy on file):
Section 1 AS 19.65.060(a)
Amends to move the Alaska marine highway fund from the
general fund to the state treasury.
Section 2 AS 37.10.440
Adds a new section to 37.10:
? designating the means by which appropriations
from the Constitutional Budget Reserve fund are
paid back to the fund under Article IX, section
17(d), Constitution of the State of Alaska.
? defines the following terms for purposes of
applying Article IX, section 17(d), Constitution
of the State of Alaska:
(1) general fund; and
(2) unreserved, undesignated general fund
balance to be carried forward.
Section 3 AS 37.14.750(a)
Amends to move the Alaska higher education investment
fund from the general fund to the state treasury.
Section 4 Repealed Section
Repeals AS 37.10.420, a section of law invalidated in
Hickel v. Cowper
Section 5 Effective Date
Provides an effective date of June 30, 2022.
9:17:46 AM
Senator Wilson wondered why all funds subject to the sweep
were not being addressed. He asked for a conclusive list of
all sweepable funds.
9:18:39 AM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
replied that the list provided by the Legislative Finance
Division (LFD) included accounts that had balances and the
Office of Management and Budgets (OMB) list was more
expansive. He relayed that the only list of real importance
was the Division of Finances list because they were the
ones that executed the sweep. He said that LFD would
receive a comprehensive financial report, which would
include the list of funds that were swept on June 30, 2021.
9:19:25 AM
Senator Wilson wondered why other funds that could spur
litigation had not been included in the legislation.
9:19:32 AM
Ms. Shine replied that the only the two accounts had been
considered in the process of crafting the bill but that any
legislator could put forth an amendment that considered any
of the other accounts associated with the sweep.
9:19:50 AM
Senator Wilson commented that he preferred not to cherry
pick funds, that all the funds should be considered or
none of the funds should be considered.
9:20:25 AM
Senator Hoffman disagreed. He believed that the funds
should be a priority because of their size and because of
the number of Alaskans effected by the programs they
funded. He contended that focusing on the two programs set
the stage for other funds to follow.
9:21:51 AM
Co-Chair Stedman agreed that the two funds were of utmost
importance and should be protected.
9:23:00 AM
Senator Olson wondered whether any alternative approaches
to protect the funds had been considered.
9:23:19 AM
Ms. Shine clarified that all the funds would be available
for appropriation because they were not dedicated funds.
She said that there were two pieces of legislation working
through the other body that offered alternative approaches.
She said that general fund had never been defined in
statute or in the constitution and the bill attempted to do
so for clarification.
9:24:03 AM
Senator Olson stressed that the PCE ruling came from the
Superior Court and wondered what would happen if the ruling
was overturned.
9:24:19 AM
Ms. Shine deferred to Legislative Legal Services.
9:24:39 AM
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES (via
teleconference), replied that the case found that the PCE
fund was not sweepable could be challenged in the future,
but it was the opinion of the division that most lower
courts would uphold prior Superior Court opinions. She said
that there was always a risk of litigation.
9:27:01 AM
Senator Olson asked whether Ms. Wallace agreed with the
Superior Court decision that the AMHS Vessel (Hickel v.
Cowper) fund should require future appropriations.
9:27:23 AM
Ms. Wallace replied that the approach used in the bill was
to remove funds from the general fund and put them in
separate accounts created by the legislature. She said
another alternative for avoiding the sweep, addressed in
Hickel v. Cowper, was that funds that do not require
further appropriating from the legislature would not be
subject to the sweep. She stated that some statutes could
be reconfigured to set up a formula to allow payment to be
made without appropriation. She added that choosing an
approach would be a policy decision by the legislature.
9:28:50 AM
Senator Olson surmised that Ms. Wallace agreed with the
process the committee was currently undergoing concerning
the legislation.
9:28:59 AM
Ms. Wallace replied that her office would never comment on
policy and added that she believed that the bill could
withstand legal scrutiny.
9:29:38 AM
Senator Wielechowski wondered whether there was a risk to
defining funds that might be outside the general fund. That
the court could assume funds that were not addressed could
be considered within the general fund.
9:30:12 AM
Ms. Wallace replied that it was difficult to answer the
question generally and that each fund would need to be
scrutinized. She said that any specific challenge or debate
would be specific to each fund's creation and the power of
the legislature to create funds separate from the general
fund. She relayed that the more specific the legislature
could be on the matter, the better.
9:32:08 AM
Co-Chair Bishop OPENED public testimony.
9:32:26 AM
JAMES SQUYRES, SELF, RURAL DELTANA (via teleconference),
testified against the bill.
9:34:32 AM
CYRUS COOPER, SELF, HEALY (via teleconference), spoke
against the legislature.
9:36:57 AM
Co-Chair Bishop CLOSED public testimony.
9:37:29 AM
Senator Olson wondered whether there was a consideration of
putting the Higher Education Investment Fund (HEIF) in
statute to protect funding for medical students.
9:37:55 AM
Ms. Shine replied that the bill ultimately protected the
HEIF from the sweep and would protect Washington, Wyoming,
Alaska, Montana, and Idaho (WWAMI) funds for Alaskan
medical students.
Senator Olson wondered whether the bill would provide
adequate protection of the funds.
Ms. Shine read from Page 15 of the Short v. Dunleavy case
brief:
If the legislature believes these programs should be
funded, it possesses the power to establish the HEIF
as a separate fund outside the general fund of to
appropriate money from other sources
9:39:05 AM
Co-Chair Stedman clarified that the funds were still
subject to appropriation. The legislature could appropriate
al of the money from each fund, every year, if it chose to
do so.
9:39:57 AM
Co-Chair Bishop discussed housekeeping.
SB 224 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 224 ver A. Sectional Analysis 02.23.2022.pdf |
SFIN 3/1/2022 9:00:00 AM |
SB 224 |
| SJR 12 Responses to SFIN Committee Questions.pdf |
SFIN 3/1/2022 9:00:00 AM |
SJR 12 |
| SB 224 Opposition Asplund.pdf |
SFIN 3/1/2022 9:00:00 AM |
SB 224 |