Legislature(2005 - 2006)BUTROVICH 205

02/10/2005 08:30 AM JUDICIARY


Download Mp3. <- Right click and save file as

Audio Topic
09:09:14 AM Start
09:09:14 AM SJR1
09:35:42 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SJR 1 CONST. AM: APPROPRIATION LIMIT
Moved CSSJR 1(JUD) Out of Committee
             SJR 1-CONST. AM:  APPROPRIATION LIMIT                                                                          
9:09:14 AM                                                                                                                    
CHAIR RALPH SEEKINS announced SJR 1 to be up for consideration.                                                                 
                                                                                                                                
SENATOR FRED DYSON, sponsor of SJR 1, said he prepared                                                                          
amendments for SJR 1 and they are incorporated in a CS, version                                                                 
F. One amendment on page 1, lines 8-9, says:                                                                                    
                                                                                                                                
     except  as  provided  in this  section,  appropriations                                                                    
     made for  a current  fiscal year  shall not  exceed the                                                                    
     amount  appropriated  for  the fiscal  year  two  years                                                                    
     preceding  the current  fiscal year  by  more than  the                                                                    
     product of that prior year's ...                                                                                           
                                                                                                                              
The second change adds a new section on page 5, lines 7-10, as                                                                  
follows:                                                                                                                        
                                                                                                                               
     (m)  If  the  legislature,  by law,  declares  that  an                                                                    
     extraordinary    circumstance    exists,    upon    the                                                                    
     affirmative vote of at least  two-thirds of the members                                                                    
     of   each   house,   the  legislature   may   pass   an                                                                    
     appropriation  that  exceeds  the  appropriation  limit                                                                    
     under  this   section  to  address   the  extraordinary                                                                    
     circumstance.                                                                                                              
                                                                                                                                
CHAIR SEEKINS asked if the standard procedure applies by leaving                                                                
language regarding vetoes and overrides out.                                                                                    
                                                                                                                                
9:11:21 AM                                                                                                                    
SENATOR DYSON replied yes.                                                                                                      
                                                                                                                                
SENATOR HUGGINS moved to adopt CSSJR 1(JUD), version F.                                                                         
                                                                                                                                
CHAIR SEEKINS objected for purposes of discussion.                                                                              
                                                                                                                                
MR.  LUCKY  SCHULZ,  staff  to   Senator  Dyson,  explained  that                                                               
language   saying  "for   the  current   fiscal  year"   is  used                                                               
consistently throughout the rest of the document.                                                                               
                                                                                                                                
9:12:17 AM                                                                                                                    
CHAIR SEEKINS  directed attention to  page 4, line 27,  and asked                                                               
if there were questions.                                                                                                        
                                                                                                                                
MR. SCHULZ  explained that subsection  (m) was added to  give the                                                               
Legislature the ability to declare extraordinary circumstances.                                                                 
                                                                                                                                
9:14:48 AM                                                                                                                    
SENATOR FRENCH  asked what is  required to  declare extraordinary                                                               
circumstances.  Does he  envision one  bill passing  through both                                                               
houses by  a two-thirds  majority and that  bill would  contain a                                                               
declaration that there's an extraordinary circumstance?                                                                         
                                                                                                                                
SENATOR  DYSON  indicated  yes,  that  he  anticipates  that  the                                                               
Legislature calls  itself into session  or, if it is  in session,                                                               
the  bill is  introduced. If  the bill  passes, then  there is  a                                                               
declaration of extraordinary circumstances.                                                                                     
                                                                                                                                
9:15:44 AM                                                                                                                    
SENATOR FRENCH  clarified that it's one  legislative vehicle that                                                               
requires the appropriation.                                                                                                     
                                                                                                                                
SENATOR DYSON agreed  and said, therefore, it is  exempt from the                                                               
constitutional limit on spending.                                                                                               
                                                                                                                                
9:16:08 AM                                                                                                                    
SENATOR  HUGGINS  asked what,  "(4)  a  plan for  recovering  the                                                               
amount of money  appropriated under this subsection."  on page 5,                                                               
lines 2-3, means.                                                                                                               
                                                                                                                                
MR. SCHULZ answered that the intent  to provide for a plan to get                                                               
back to  a normal level  of appropriations and  expenditures when                                                               
an extraordinary circumstance exceeds the limit.                                                                                
                                                                                                                                
     For instance,  if we're  going to  build a  natural gas                                                                    
     line, there's  rationale for spending  the money  if in                                                                    
     the future  you see a  return on the investment  to get                                                                    
     us  back  to  a  better situation.  It  is  essentially                                                                    
     saying you're  going to  have to  demonstrate favorable                                                                    
     return   on  the   investment   for  that   short-range                                                                    
     circumstance.                                                                                                              
                                                                                                                                
9:17:43 AM                                                                                                                    
SENATOR HUGGINS asked if money  was left over after going through                                                               
the process, was there a process to deal with it.                                                                               
                                                                                                                                
MR. SCHULZ didn't believe so.                                                                                                   
                                                                                                                                
SENATOR  THERRIAULT  pointed  out that  operating  appropriations                                                               
couldn't  live beyond  the fiscal  year; a  capital appropriation                                                               
generally has five years and then lapses to the general fund.                                                                   
                                                                                                                                
9:19:47 AM                                                                                                                    
SENATOR HUGGINS asked if this is not applicable to an emergency.                                                                
                                                                                                                                
SENATOR DYSON replied that is right.                                                                                            
                                                                                                                                
CHAIR  SEEKINS said  the plan  may be  to increase  taxes or  use                                                               
funds from  the earnings reserve.  It doesn't mean that  the plan                                                               
has to be executed at that time.                                                                                                
                                                                                                                                
MR.  SCHULZ  explained  the  plan  is  requirement  so  that  the                                                               
Legislature  has  a  certain  amount  of  information  when  it's                                                               
declared.                                                                                                                       
                                                                                                                                
9:20:54 AM                                                                                                                    
SENATOR HUGGINS  said the computation  language on page  2, lines                                                               
4-10 is  simple, but he is  concerned that it is  a mushy process                                                               
that  would  allow two  different  people  to  come up  with  two                                                               
different solutions.                                                                                                            
                                                                                                                                
MR. SCHULZ  replied that the  data used is procured  from various                                                               
entities  on a  timely basis.  It comes  in at  the same  time as                                                               
population and  inflation data. Some  of it comes from  a federal                                                               
agency and some from a state agency.                                                                                            
                                                                                                                                
CHAIR  SEEKINS said  he thought  it came  from the  Department of                                                               
Labor and  Workforce Development. He  explained that the  CPI may                                                               
be  a   little  more  inflated   because  it  is  based   on  new                                                               
construction rather  than on  the selling price  of homes  in the                                                               
marketplace. Relating it to personal  income is pegging it to the                                                               
overall  financial  experience of  the  people  in the  State  of                                                               
Alaska.                                                                                                                         
                                                                                                                                
SENATOR  HUGGINS   said  his  concern   is  that   two  different                                                               
mathematicians could  substitute language  in their  equation and                                                               
come up with different answers when they should be the same.                                                                    
                                                                                                                                
CHAIR SEEKINS quipped, "I'm not sure we could ever do that."                                                                    
                                                                                                                                
9:24:00 AM                                                                                                                    
SENATOR  DYSON   explained  that   experts  would   provide  that                                                               
information to the  Legislature; it would deliberate  and have to                                                               
agree on what the numbers are.                                                                                                  
                                                                                                                                
9:25:01 AM                                                                                                                    
SENATOR  FRENCH asked  for more  information on  the base  number                                                               
that will be used.                                                                                                              
                                                                                                                                
SENATOR DYSON said  spirited discussions had taken  place on what                                                               
base number to  use. They are moving away from  using the rolling                                                               
five-year  average and  started this  year with  the February  10                                                               
budget estimate and the PERS/TRS issue.                                                                                         
                                                                                                                                
9:26:52 AM                                                                                                                    
SENATOR FRENCH  said if this measure  passes, it would be  on the                                                               
ballot  in 2006.  The Legislature  would be  working on  the 2008                                                               
budget in  the session  of 2007  and it would  then be  using the                                                               
spending cap.  He asked if  the theory would  be to look  back to                                                               
2006 as the base number.                                                                                                        
                                                                                                                                
MR. SCHULZ answered that an  established number would be used for                                                               
transitional purposes that  give them the ability to  look at the                                                               
expected PERS/TRS needs and others like it.                                                                                     
                                                                                                                                
SENATOR  FRENCH  asked  what  the   number  is  for  a  frame  of                                                               
reference.                                                                                                                      
                                                                                                                                
MR. SCHULZ  replied that  his crystal  ball isn't  very effective                                                               
right now,  but he  is currently using  the governor's  number of                                                               
$3.282 billion from 2006, because that is the best guess he has.                                                                
                                                                                                                                
SENATOR FRENCH  referred to the  chart indicating a  6.35% annual                                                               
change and he  asked if that is the difference  between last year                                                               
and this year.                                                                                                                  
                                                                                                                                
MR. SCHULZ replied that that is  the difference between FY 05 and                                                               
FY 06.                                                                                                                          
                                                                                                                                
SENATOR  FRENCH asked  if the  spending  cap had  been in  place,                                                               
would that great an increase have been allowed.                                                                                 
                                                                                                                                
MR. SCHULZ replied  that he thought so, but the  House and Senate                                                               
argued over that number last year.                                                                                              
                                                                                                                                
9:30:31 AM                                                                                                                    
SENATOR FRENCH restated his question.                                                                                           
                                                                                                                                
     If you  took FY  04 actuals and  used the  formula that                                                                    
     this spending cap envisions...would  you have been able                                                                    
     to get to a 6.35%  increase in government spending this                                                                    
     year?                                                                                                                      
                                                                                                                                
MR.  SCHULZ   replied,  "I   don't  know,   because  we   used  a                                                               
transitional  number  and I  have  not  applied  it to  what  the                                                               
actuals were in FY 04."                                                                                                         
                                                                                                                                
9:31:03 AM                                                                                                                    
SENATOR DYSON  said data indicates  that the population  is going                                                               
up 1.5%  to 2.0%  and inflation  has increased  2% or  3%; adding                                                               
those  for  two years  would  be  very  close. The  Governor  did                                                               
something  interesting  with  the budget  by  spreading  spending                                                               
backwards  and forwards,  but this  proposal would  not allow  as                                                               
much of an expansion as the governor is requesting.                                                                             
                                                                                                                                
SENATOR FRENCH  said he saw $196  of growth in the  FY 06 column,                                                               
which  is far  greater  than  any other  number  he  sees in  the                                                               
future.  He sensed  that his  formula wouldn't  allow such  a big                                                               
expansion.                                                                                                                      
                                                                                                                                
SENATOR DYSON explained that the  formula is trying to anticipate                                                               
capital infusion.                                                                                                               
                                                                                                                                
9:33:03 AM                                                                                                                    
CHAIR SEEKINS  said he thought  it would lag  behind a bump  or a                                                               
decrease  in   population.  He  asked   if  there   were  further                                                               
questions. He  removed his  objection to  adopting version  F and                                                               
asked if there were any further objections.                                                                                     
                                                                                                                                
SENATOR  HUGGINS moved  to  pass CSSJR  1(JUD),  version F,  from                                                               
committee with attached fiscal note.                                                                                            
                                                                                                                                
SENATOR THERRIAULT said  he always reserves the right  to look at                                                               
the  financial  implications  and  this  may  come  back  to  the                                                               
committee.                                                                                                                      
                                                                                                                                
CHAIR SEEKINS  responded that he  told the Senate  President that                                                               
the sponsor and  committee would like to  reserve the opportunity                                                               
to request  it back  to look at  the constitutional  issues after                                                               
the  Finance Committee  was done.  He saw  no problem  with that,                                                               
whatsoever.  There were  no further  objections and  CSSJR 1(JUD)                                                               
moved from  committee. There  being no  further business  to come                                                               
before the committee, he adjourned the meeting at 9:35:42 AM.                                                                 

Document Name Date/Time Subjects