Legislature(2011 - 2012)SENATE FINANCE 532
03/30/2011 09:00 AM FINANCE
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SENATE BILL NO. 97 "An Act authorizing additional appropriations for public education and for community revenue sharing based on the price of Alaska North Slope crude oil, and adjusting the formula for payments to communities." Co-Chair Hoffman proposed committee substitute, work draft #27-LS0626/E. Co-Chair Stedman OBJECTED for purpose of discussion. 10:04:24 AM TIM GRUSSENDORF, STAFF, CO-CHAIR HOFFMAN discussed the changes made in the CS. The first adjustment was for a timeframe in which to calculate the average price of oil. The full year will be used to establish the average price per barrel. He explained the addition of a "safety cushion" of $2 per barrel of oil to ensure that the revenue is available and to prevent overspending of the surplus. Co-Chair Stedman asked about the $2. Mr. Grussendorf responded that the cushion describes the $2 over the average price per barrel. Co-Chair Stedman added $2 dollars of the break even rate of our operating and potential capital budget. The intent was that the original bill was spinning out the percentage of the surplus between 2 and 2.7 percent of the surplus for these programs. The factors chosen will produce a similar number as seen in the original bill. 10:06:21 AM DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION, mentioned that the prior version of the bill was based strictly on the price of oil, which allowed the potential to share wealth that failed to materialize. This version shares wealth only during times of surplus. The surplus is taken for one year, which will determine the amount handed out in the following year. 10:07:28 AM Mr. Teal provided a sectional analysis. He began with Section 1 which relates to supplemental funding for K-12 education. The amount allocated equals $5 million for each dollar difference between the actual price and the trigger price of oil. Section (b) computes the trigger price of oil and states that expenditures will be taken excluding the community revenue sharing payments and the education payments made under this bill. Any deposits to the budget reserve fund are also excluded. The breakeven price of oil is rounded to the nearest dollar with the addition of the mentioned $2. The $2 provides a safety valve that gives sufficient funding to make the appropriation to community revenue sharing and to K-12 and to offset any errors in revenue forecasts. The goal was to avoid sharing money that was not present. 10:10:19 AM Mr. Teal continued with Section 2 and the revenue sharing portion of the CS. He noted that 2(b) corrects an error that is unrelated to the supplemental community revenue sharing and refers to the existing basic revenue sharing program. 10:11:06 AM Mr. Teal described Section 3 and the change of the revenue sharing program enabling the amount distributed to include the basic revenue sharing portion. This section allows the amount calculated under (d) to be distributed. Section 4 mirrors the calculations of the education portion. 10:12:36 AM Co-Chair Hoffman applauded the legislation. He supported sharing the wealth with school districts and municipalities during times of high oil prices. Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. Co-Chair Hoffman MOVED to report CSSB 97 out of Committee with individual recommendations and the accompanying fiscal note. SB 97 was REPORTED out of committee with a "do pass" recommendation and with a new indeterminate fiscal note from the Senate Finance Committee for the Department of Commerce, Community and Economic Development and one new indeterminate fiscal note from the Senate Finance Committee for the Department of Education and Early Development.