Legislature(2003 - 2004)
03/19/2003 01:32 PM Senate JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SJR 3-CONST AM: APPROPRIATION/SPENDING LIMIT
SENATOR DYSON, sponsor of SJR 3, told members that former
Senator Donley proposed a constitutional spending limit last
year when the Legislature was discussing the state's fiscal
difficulties. It passed the Senate but not the House. As he read
through Senator Donley's committee discussions and notes he
found that in 1981 a previous constitutional amendment
established a spending limit with an escalator clause that would
have set last year's general fund spending limit at over $6
billion. It also contained a provision that if court interpreted
that the spending limit was reached, one-third must be spent on
capital projects. The upshot is that constitutional spending
limits never worked.
SENATOR DYSON explained that Senator Donley's proposal said any
spending increase would be limited to 4 percent of the amount
spent two years earlier. To spend another 2 percent, a two-
thirds vote was required and to spend 2 percent beyond that, a
three-quarter vote was required.
SJR 3 is virtually the same resolution that passed the Senate
last year. It excludes payments to the railroad, the permanent
fund, money traded between state agencies, dividends and pass
through money from the federal government. It will require a
supermajority vote to increase the budget more than 4 percent
every two years.
2:49 p.m.
SENATOR THERRIAULT asked if SJR 3 is a reintroduction of Senator
Donley's resolution.
SENATOR DYSON said it is.
SENATOR ELLIS noted that Governor Murkowski has said he does not
support a constitutional spending limit because he plans to
exercise fiscal discipline. He asked Senator Dyson if he changed
the Governor's mind.
SENATOR DYSON said he has not. He has had significant
discussions with Ms. Frasca of the Office of Management and
Budget (OMB) and he hopes someone from the Administration will
be present today to suggest improvements.
SENATOR THERRIAULT said the constitution expressly gives the
Legislature the power, without interaction with the Governor, so
it is not necessary to change his mind.
SENATOR ELLIS said although it is not required, it is advisable.
SENATOR FRENCH referred to a statement made earlier by Senator
Dyson about how governments have a hard time breaking the habit
of spending other's money and remarked that Alaska is a perfect
example of the fallacy of that position because the Legislature
has cut spending over the last decade.
SENATOR DYSON said it is quite surprising to see that the
Legislature is spending less now per capita than it was pre-
Prudhoe Bay. However, he does not believe the general population
believes that legislators are trustworthy without the
Legislature voluntarily putting significant restrictions upon
itself. He said he hopes the Legislature acts responsibly and
doesn't need to impose the limit. However, Senator Donley found
that for the spending limit to come into play, the Legislature
would have to spend more money than what is allowed, someone
would have to file suit, and the court would have to rule that
the Legislature acted unconstitutionally.
SENATOR ELLIS asked Senator Dyson if he said this resolution is
largely a public relations exercise to build trust.
SENATOR DYSON said he believes, and it was Senator Donley's
position, that this must be done to build the public's
confidence that the Legislature is operating within boundaries
that are not easily mutable. He said he suspects everyone agrees
something needs to be done to bring in more revenue, but Senator
Donley believes the public will not support any new revenue
sources unless they trust the Legislature with their money. He
said this would help. His last point was that someone must take
court action to impose the limit and he suspects that action
will seldom be invoked, but it's a good exercise in discipline.
SENATOR FRENCH asked Senator Dyson for a copy of the background
materials he referenced.
SENATOR THERRIAULT said that Senator Donley was concerned that
the public was convinced that the Legislature had been prudent
and would continue to be prudent. He asked if the existing
spending limit set $2.5 billion as the base and ratcheted it up
every year.
SENATOR DYSON said that is correct; the escalator clause
provides for inflation and population increases.
SENATOR THERRIAULT said that points out why statutory programs
should never automatically be inflation proofed - spending would
shoot through the roof.
There being no further questions or testimony, Chair Seekins
told members he would bring this legislation before the
committee at a later time. He then announced the committee would
take up SB 45.
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