Legislature(2007 - 2008)BELTZ 211

04/19/2007 09:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Scheduled But Not Heard
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SCS CSHB 171(STA) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         April 19, 2007                                                                                         
                           9:05 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Lesil McGuire, Chair                                                                                                    
Senator Gary Stevens, Vice Chair                                                                                                
Senator Hollis French                                                                                                           
Senator Lyda Green                                                                                                              
Senator Con Bunde                                                                                                               
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
CS FOR HOUSE BILL NO. 171(STA) am                                                                                               
"An  Act relating  to the  date  and time  for convening  regular                                                               
legislative sessions, certain procedures  of the legislature, the                                                               
date for  organizing the Legislative Budget  and Audit Committee,                                                               
and  deadlines for  certain matters  or  reports to  be filed  or                                                               
delivered  to   the  legislature  or  a   legislative  committee;                                                               
prohibiting bonuses for legislative  employees; and providing for                                                               
an effective date."                                                                                                             
     MOVED SCS CSHB 171(STA) OUT OF COMMITTEE                                                                                   
SENATE BILL NO. 134                                                                                                             
"An Act relating  to the policy of the state  regarding the state                                                               
budget and  the source of  funding used  to cover a  shortfall in                                                               
general fund revenue."                                                                                                          
     HEARD AND HELD                                                                                                             
HOUSE BILL NO. 8                                                                                                                
"An  Act   naming  the  law  enforcement   training  facility  in                                                               
Fairbanks the J. Kevin Lamm Law Enforcement Training Facility."                                                                 
     SCHEDULED BUT NOT HEARD                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 171                                                                                                                  
SHORT TITLE: ACCOMMODATE 90-DAY SESSION                                                                                         
SPONSOR(S): RULES                                                                                                               
03/01/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/01/07       (H)       STA                                                                                                    
03/06/07       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/06/07       (H)       Scheduled But Not Heard                                                                                
03/15/07       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/15/07       (H)       Heard & Held                                                                                           
03/15/07       (H)       MINUTE(STA)                                                                                            
03/22/07       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/22/07       (H)       Heard & Held                                                                                           
03/22/07       (H)       MINUTE(STA)                                                                                            
03/24/07       (H)       STA AT 10:00 AM CAPITOL 106                                                                            
03/24/07       (H)       Heard & Held                                                                                           
03/24/07       (H)       MINUTE(STA)                                                                                            
03/29/07       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/29/07       (H)       Moved CSHB 171(STA) Out of Committee                                                                   
03/29/07       (H)       MINUTE(STA)                                                                                            
03/30/07       (H)       STA RPT CS(STA) NT 1DP 3NR 2AM                                                                         
03/30/07       (H)       DP: COGHILL                                                                                            
03/30/07       (H)       NR: JOHNSON, ROSES, LYNN                                                                               
03/30/07       (H)       AM: GRUENBERG, DOLL                                                                                    
04/03/07       (H)       BEFORE THE HOUSE                                                                                       
04/03/07       (H)       TRANSMITTED TO (S)                                                                                     
04/03/07       (H)       VERSION: CSHB 171(STA) AM                                                                              
04/04/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/04/07       (S)       STA                                                                                                    
04/12/07       (S)       STA AT 9:00 AM BELTZ 211                                                                               
04/12/07       (S)       Heard & Held                                                                                           
04/12/07       (S)       MINUTE(STA)                                                                                            
04/17/07       (S)       STA AT 9:00 AM BELTZ 211                                                                               
04/17/07       (S)       Heard & Held                                                                                           
04/17/07       (S)       MINUTE(STA)                                                                                            
BILL: SB 134                                                                                                                  
SHORT TITLE: FUNDING SHORTFALL POLICY                                                                                           
SPONSOR(S): SENATOR(S) WILKEN                                                                                                   
03/21/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/07       (S)       STA, FIN                                                                                               
04/19/07       (S)       STA AT 9:00 AM BELTZ 211                                                                               
BILL: HB   8                                                                                                                  
SHORT TITLE: J. KEVIN LAMM TRAINING FACILITY                                                                                    
SPONSOR(S): REPRESENTATIVE(S) RAMRAS                                                                                            
01/16/07       (H)       PREFILE RELEASED 1/5/07                                                                                
01/16/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/07       (H)       TRA                                                                                                    
02/15/07       (H)       TRA AT 1:30 PM CAPITOL 17                                                                              
02/15/07       (H)       Heard & Held                                                                                           
02/15/07       (H)       MINUTE(TRA)                                                                                            
03/06/07       (H)       TRA AT 1:30 PM CAPITOL 17                                                                              
03/06/07       (H)       Moved Out of Committee                                                                                 
03/06/07       (H)       MINUTE(TRA)                                                                                            
03/07/07       (H)       TRA RPT 1DP 3NR                                                                                        
03/07/07       (H)       DP: FAIRCLOUGH                                                                                         
03/07/07       (H)       NR: DOOGAN, JOHNSON, JOHANSEN                                                                          
03/21/07       (H)       TRANSMITTED TO (S)                                                                                     
03/21/07       (H)       VERSION: HB   8                                                                                        
03/23/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/23/07       (S)       TRA, STA                                                                                               
04/10/07       (S)       TRA RPT  2DP 1NR                                                                                       
04/10/07       (S)       DP: KOOKESH, OLSON                                                                                     
04/10/07       (S)       NR: WIELECHOWSKI                                                                                       
04/10/07       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
04/10/07       (S)       Moved HB   8 Out of Committee                                                                          
04/10/07       (S)       MINUTE(TRA)                                                                                            
04/19/07       (S)       STA AT 9:00 AM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
RYNNIEVA MOSS, Staff                                                                                                            
to Representative Jack Coghill                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions regarding HB 171.                                                                      
TAMARA COOK, Director                                                                                                           
Legislative Legal and Research Services Division                                                                                
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions regarding HB 171.                                                                      
PAM VARNI, Executive Director                                                                                                   
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained an amendment to HB 171.                                                                         
SENATOR GARY WILKEN                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented SB 134 as sponsor.                                                                              
ACTION NARRATIVE                                                                                                              
CHAIR  LESIL MCGUIRE  called the  Senate  State Affairs  Standing                                                             
Committee  meeting  to order  at  9:05:47  AM. Senators  McGuire,                                                             
Stevens, Bunde,  Green, and  French were present  at the  call to                                                               
               HB 171-ACCOMMODATE 90-DAY SESSION                                                                              
CHAIR MCGUIRE announced the consideration  of HB 171. [Before the                                                               
committee was  CSHB 171(STA) am.]  An amendment labeled  KA.1 has                                                               
the  legislative session  start in  February, and  Senator French                                                               
had suggested a January start date.                                                                                             
The committee took an at-ease at 9:07:27 AM.                                                                                  
9:07:34 AM                                                                                                                    
CHAIR MCGUIRE offered Amendment 1, labeled 25-LS0653\KA.1.                                                                      
SENATOR STEVENS suggested that that wasn't the amendment.                                                                       
The committee took an at-ease from 9:08:40 AM to 9:10:24 AM.                                                                
CHAIR  MCGUIRE  withdrew Amendment  1  and  offered Amendment  2,                                                               
labeled 25-LS0653\KA.4, as follows:                                                                                             
     Page 2, line 17, through page 3, line 1:                                                                                   
          Delete all material and insert:                                                                                       
          "Sec.   24.05.090.    Duration   of   legislature;                                                                
     [REGULAR]  sessions. The  legislature shall  convene at                                                                  
     the capital each year on  the second Monday in February                                                                
     [JANUARY]  at  1:00  p.m. Each  [10:00  a.m.;  HOWEVER,                                                                
     FOLLOWING   A   GUBERNATORIAL    ELECTION   YEAR,   THE                                                                    
     LEGISLATURE  SHALL  CONVENE  ON THE  THIRD  TUESDAY  IN                                                                    
     JANUARY  AT  10:00  a.m. EXCEPT  AS  PROVIDED  IN  THIS                                                                    
     SECTION, EACH] legislature has  [SHALL HAVE] a duration                                                                
     of two years  and consists [SHALL CONSIST]  of a "First                                                                
     Regular Session  [,]" that meets [WHICH  SHALL MEET] in                                                                
     the odd-numbered  years, and a "Second  Regular Session                                                                    
     [,]"  that  meets  [WHICH  SHALL  MEET]  in  the  even-                                                                
     numbered years,  and any special session  [OR SESSIONS]                                                                    
     that  the  governor  or  legislature  calls  [MAY  FIND                                                                
     NECESSARY TO CALL]."                                                                                                       
     Page 3, lines 24 - 25:                                                                                                     
          Delete all material.                                                                                                  
          Insert "Legislative Affairs Agency at any time                                                                        
     before February [JANUARY] 1."                                                                                          
SENATOR FRENCH objected,  and he noted the nice  weather and said                                                               
if the session starts in January, "we would be done today."                                                                     
SENATOR  BUNDE  said  Senator  French   makes  a  good  argument;                                                               
however,  consistency is  important for  voters. It  is hard  for                                                               
them to  keep track of when  the legislature is in  Juneau. He is                                                               
tempted by the sunshine, but a consistent date is better.                                                                       
SENATOR  FRENCH  withdrew  his   objection.  Hearing  no  further                                                               
objections, Amendment 2 was adopted.                                                                                            
9:12:30 AM                                                                                                                    
CHAIR  MCGUIRE  said  she  would  like  to  make  two  conforming                                                               
amendments with  respect to the  budget. She offered  Amendment 3                                                               
to change,  on Page 6, line  18, the word "thirtieth"  to "fifth"                                                               
and add a period after day  and strike "in odd numbered years and                                                               
through  the  fifth  day  in even  numbered  years."  Hearing  no                                                               
objections, Amendment 3 was adopted.                                                                                            
CHAIR  MCGUIRE offered  Amendment 4.  On page  6, line  22, after                                                               
"only  through  the",  add   "fifteenth  legislative  day."  Also                                                               
strike:  thirtieth  legislative  day in  odd-numbered  years  and                                                               
through  the fifteenth  legislative day  in even-numbered  years.                                                               
She said  Amendment 4  conforms to the  removal of  the staggered                                                               
start dates. Hearing no objections, Amendment 4 was adopted.                                                                    
CHAIR MCGUIRE then  offered Amendment 5. On Page  7, lines 22-23,                                                               
after the  word "sessions", strike: or  following a gubernatorial                                                               
election  year within  the first  30 days  after the  legislature                                                               
convenes  in regular  session. "What  we're doing  is taking  out                                                               
that reference  to the staggering  that the other body  had." The                                                               
House version  had January and  February start dates,  she noted,                                                               
with conforming budget language.                                                                                                
SENATOR STEVENS said it is not budget, but the names of persons.                                                                
CHAIR MCGUIRE agreed, and the other  was for the budget. She said                                                               
she is  just trying  to clean  up the  references to  a staggered                                                               
start  date.  The language  is  no  longer necessary  unless  the                                                               
legislature wants staggered start dates.                                                                                        
SENATOR GREEN  said, "This puts  it at nearly what  the procedure                                                               
is now because it's at February fifteenth every year."                                                                          
9:16:54 AM                                                                                                                    
RYNNIEVA  MOSS,  Staff  to Representative  Jack  Coghill,  Alaska                                                               
State Legislature, said Section 5 needs to be amended.                                                                          
CHAIR MCGUIRE heard no objection, so Amendment 5 was adopted.                                                                   
MS. MOSS  said she assumes  that if the legislature  is convening                                                               
the  second  Monday  of  February  it would  want  a  February  1                                                               
deadline for prefiled bills.                                                                                                    
CHAIR MCGUIRE said Amendment 2 has done that.                                                                                   
9:18:57 AM                                                                                                                    
SENATOR  BUNDE offered  Amendment  6,  labeled 25LS0653\KA.5,  as                                                               
     Page 3, following line 30:                                                                                                 
     Insert new bill sections to read:                                                                                          
        "* Sec. 6. AS 24.10.130(b) is amended to read:                                                                      
          (b)  Legislators and officers and employees of                                                                        
     the legislative branch of government  are entitled to a                                                                    
     per diem allowance while the  legislature is in regular                                                                
     or special session if authorized  by the policy adopted                                                                
     under  (c) of  this section,  except that  a legislator                                                                
     who resides in the state  capital may not receive a per                                                                
     diem  allowance. A  legislator  may  receive a  stipend                                                                
     while the  legislature is not in  session if authorized                                                                
     by the policy adopted under (c) of this section.                                                                       
        * Sec. 7. AS 24.10.130(c) is amended to read:                                                                         
          (c)  The Alaska Legislative Council shall adopt a                                                                     
     policy  regarding  reimbursement  for  moving  expenses                                                                    
     applicable  to all  legislators and  an applicable  per                                                                    
     diem allowance and stipend policy.  The policy must set                                                                
     conditions for  the reimbursement for  moving expenses,                                                                
     [AND] payment of per  diem during legislative sessions,                                                                
     and  payment of  stipends  during  the interim  between                                                                
     sessions. The  policy must  also prescribe  the amounts                                                                
     of reimbursement, per diem, and  the stipend adapted to                                                                
     the  special   needs  of  the  legislative   branch  as                                                                    
     determined by the council."                                                                                                
     Renumber the following bill sections accordingly.                                                                          
SENATOR  BUNDE said  the  legislature is  divided  on the  90-day                                                               
session,  but the  people have  spoken. He  said the  people also                                                               
spoke  during   the  Jan  Faiks  era   expressing  concern  about                                                               
legislative pay. Changes were made  in response to public outcry,                                                               
and those  should be cleaned  up, he said. Amendment  6 addresses                                                               
"mislabeling."  Members  get  a  salary and  per  diem  while  in                                                               
session.  During  the interim  the  legislators  can qualify  for                                                               
money labeled as per diem, but it  is not per diem; it is more of                                                               
a stipend. A  cynic would say the salary is  disguised by calling                                                               
it per diem instead of a stipend.  If it is a stipend, the Juneau                                                               
legislators are paid more than  others because they receive a per                                                               
diem during session even though they  live in their own homes. It                                                               
more  accurately  portrays  the legislators'  salary  during  the                                                               
interim  as a  stipend and  "when  we live  in our  own homes  we                                                               
shouldn't qualify for per diem."                                                                                                
9:21:53 AM                                                                                                                    
SENATOR STEVENS objected.                                                                                                       
SENATOR BUNDE  said it is wise  to make sure that  amendments fit                                                               
under  the  title  of  the  bill,  and  Amendment  6  was  deemed                                                               
appropriate for HB 171.                                                                                                         
CHAIR MCGUIRE  referred to Webster's Dictionary  and said stipend                                                               
is a regular fixed payment as a salary or allowance.                                                                            
SENATOR STEVENS withdrew his objection.                                                                                         
SENATOR GREEN asked if stipend is used anywhere else in statute.                                                                
9:23:15 AM                                                                                                                    
CHAIR  MCGUIRE  asked  about a  policy  change  with  legislative                                                               
council that  allowed lawmakers who  worked more than  four hours                                                               
per day to receive a per diem of  maybe $100 per day, and how the                                                               
amendment might impact that.                                                                                                    
TAMARA COOK,  Director, Legislative  Legal and  Research Services                                                               
Division,  said  the amendment  would  have  to fall  within  the                                                               
portion  of   the  title  that   speaks  to  procedures   of  the                                                               
legislature, but  she doesn't know  how narrowly the  court would                                                               
define  legislative procedures.  Compensation of  legislators may                                                               
be an  administrative procedure. But  the title is  not specific,                                                               
so  it would  probably  survive. The  legislative council  policy                                                               
would need to  be changed to conform to the  amendment because it                                                               
provides  for  per diem  for  legislators  who reside  in  Juneau                                                               
during session.  The way it  is written, the council  would still                                                               
be  free to  allow a  stipend  for some  number of  hours that  a                                                               
legislator works in  the interim, but how that will  work will be                                                               
subject to legislative  council policy. Right now it  has a four-                                                               
hour work test in order to get the per diem during the interim.                                                                 
9:26:20 AM                                                                                                                    
CHAIR MCGUIRE  read the description  of per  diem: For or  by the                                                               
day; A daily fee or allowance.                                                                                                  
SENATOR STEVENS said per diem  should not apply to someone living                                                               
in their own home.                                                                                                              
SENATOR  BUNDE  said the  accepted  notion  of  per diem  is  for                                                               
expenses for  being out  of one's domicile.  Session per  diem is                                                               
not taxed,  but salaries, stipends,  and interim "per  diem" are.                                                               
The "per  diem" that is  paid to  Juneau residents is  taxed, and                                                               
that is an important test.                                                                                                      
MS. COOK said  the state compensation statutes  for the executive                                                               
branch allows per diem for traveling employees.                                                                                 
9:28:50 AM                                                                                                                    
SENATOR GREEN  said parts  of the state  have large  districts. A                                                               
legislator may not be spending the  night out of the home, but it                                                               
is not a cheap adventure. Travel merits something, she said.                                                                    
SENATOR  FRENCH  asked   the  difference  in  the   per  diem  of                                                               
legislators who live in Juneau.                                                                                                 
MS. MOSS  said people in  Juneau get  75 percent of  the standard                                                               
per diem. For federal tax codes,  a person has to travel 50 miles                                                               
in order to get per diem.                                                                                                       
CHAIR MCGUIRE  said the  Anchorage lawmakers  who collect  it are                                                               
taxed  on it.  But for  Senator Olson  who might  be traveling  a                                                               
great distance, the per diem is not taxed.                                                                                      
9:31:12 AM                                                                                                                    
MS. MOSS said  in order to claim a per  diem deduction for taxes,                                                               
a person has to travel more than 50 miles.                                                                                      
SENATOR  BUNDE said  all legislators  are  taxed on  it. He  said                                                               
Senator Kookesh  has a district  larger than the state  of Texas,                                                               
and  he should  be  able  to claim  travel  expenses, but  that's                                                               
different   from  the   taxable   interim  per   diem.  He   said                                                               
Representative Salmon eats up the per  diem in one hour of flight                                                               
within his district. The amendment  is simply focusing on calling                                                               
salary a salary.                                                                                                                
CHAIR  MCGUIRE said  she is  concerned about  doing more  interim                                                               
work, and there was a very  heated debate about if that amount is                                                               
something that people could live on.  "The concern that I have is                                                               
if we  adopt the  amendment today  … the  policy for  leg council                                                               
will not  follow, so we'll  be back to  the days we  were before.                                                               
Second of all, I'm concerned about  … I don't think the semantics                                                               
are as  different as  you think  they are,  but I  don't disagree                                                               
that we  call it per diem."  She views herself as  still at home,                                                               
going  back to  her district  almost every  weekend. There  is no                                                               
question that  most lawmakers  work more than  full time  but are                                                               
paid  a set  salary.  The  per diem  helps  supplement that.  She                                                               
doesn't think  she is trying to  hide anything, "but I  think the                                                               
reality of  it is that  some people don't collect  retirements to                                                               
help live, and so it's a question."                                                                                             
9:34:12 AM                                                                                                                    
SENATOR FRENCH objected to the amendment.  This is a new level of                                                               
complexity  without enough  discussion.  "I don't  see that  it's                                                               
necessary at all." It is not fair  to keep people who live in the                                                               
Capital  to not  get  per diem.  The  legislative salary  doesn't                                                               
require  anyone to  show up  to work.  "If you  show up  for work                                                               
everyday, you have to drive to  work, dry clean your clothes, you                                                               
have to  have meal  expenses, you have  living expenses  that are                                                               
incurred  because  of the  fact  that  you  come to  the  capital                                                               
everyday, and  that's partly  what the  per diem  compensates you                                                               
for is  that you're here  operating in the  world. You and  I pay                                                               
rent in  the town." Maybe  people who  live in Juneau  should get                                                               
paid less.  The amendment says  they get none whatsoever,  and it                                                               
is  aimed at  three  people who  are  not here  to  speak to  the                                                               
amendment. It's worth  a discussion, but the  committee is trying                                                               
to move a 90-day bill.                                                                                                          
SENATOR STEVENS  asked if  this issue could  be addressed  by the                                                               
legislative council or if it needs to be in statute.                                                                            
9:36:08 AM                                                                                                                    
SENATOR BUNDE said  the interim per diem has existed  for over 15                                                               
years.  Perhaps if  the  members ask  them  politely they  might.                                                               
Juneau legislators  could get a  stipend during the  interim, "as                                                               
we all  should." He  said it is  a bad precedent  to tax  the per                                                               
diem  for Juneau  legislators but  not others.  It should  not be                                                               
left under the rug like it has for 15 to 16 years.                                                                              
MS. MOSS said  the reason Juneau members' per diem  is taxable is                                                               
because they don't travel 50 miles.                                                                                             
SENATOR  STEVENS said  if the  amendment fails  he would  like it                                                               
addressed by the legislative council.  It is important, but it is                                                               
happening too fast.                                                                                                             
9:39:09 AM                                                                                                                    
CHAIR  MCGUIRE  said  she  will  do  so.  There  have  been  many                                                               
discussions about  lawmaker salaries and the  link to employment.                                                               
She noted  that she has  a juris  doctorate degree and  she can't                                                               
get a job. It  is a very good point and  should be discussed, but                                                               
not on the fly. Other state  have commissioned a group to look at                                                               
the issue as a whole, including  what type of outside work should                                                               
be allowed, per diem, and the  90-session. Her vote against it is                                                               
not  a  vote  against  the  concept, but  it  needs  to  be  more                                                               
thoroughly vetted.                                                                                                              
A roll call was taken. Senator  Bunde voted in favor of Amendment                                                               
6,  and  Senators  French,  Green,  Stevens,  and  McGuire  voted                                                               
against it. Therefore, Amendment 6 failed on a vote of 1 to 4.                                                                  
9:41:27 AM                                                                                                                    
CHAIR  MCGUIRE  moved  Amendment  7,  labeled  25-LS0653\K.A,  as                                                               
     Page 8, lines 1-9:                                                                                                         
          Delete all material.                                                                                                  
The committee took an at-ease from 9:41:51 AM to 9:42:51 AM.                                                                
CHAIR MCGUIRE  said Amendment 7 refers  to the report on  the 90-                                                               
day regular session, and it was requested by Senator Cowdery.                                                                   
SENATOR GREEN objected to get an explanation.                                                                                   
CHAIR MCGUIRE said Senator Cowdery felt  that a report on the 90-                                                               
day session was unnecessary.                                                                                                    
SENATOR GREEN  said Section 24  said any assignments to  be given                                                               
to the council shall be by resolution.                                                                                          
9:43:55 AM                                                                                                                    
SENATOR FRENCH asked if the committee wants to have a report.                                                                   
SENATOR GREEN  said, "We  have to  do it  by resolution;  I don't                                                               
plan to do the resolution."                                                                                                     
SENATOR FRENCH asked why it is in the bill.                                                                                     
MS. MOSS said the original bill  had a sunset clause to force the                                                               
legislature  to go  back  and revisit  the  90-day session.  This                                                               
language replaces that idea.                                                                                                    
CHAIR MCGUIRE said it was  probably without awareness of the site                                                               
that Senator Green just gave.  She added that she would entertain                                                               
a resolution  should any  committee member  request a  report but                                                               
the thought was that the effects  will be what they are. A report                                                               
from the legislature won't mean a whole lot, she opined.                                                                        
9:45:30 AM                                                                                                                    
SENATOR  GREEN   removed  her   objection.  Hearing   no  further                                                               
objections, Amendment 7 was adopted.                                                                                            
CHAIR  MCGUIRE  moved  Amendment 8,  labeled  25-LS0653\KA.2,  as                                                               
     Page 4, following line 9:                                                                                                  
          Insert a new bill section to read:                                                                                    
        "* Sec. 7.  AS 24.20.140 is amended by  adding a new                                                                
     subsection to read:                                                                                                        
          (b)  In addition to transfers under (a) of this                                                                       
     section, the council may  direct the executive director                                                                    
     to  transfer  amounts  from  any  appropriation  to  an                                                                    
     office, agency, or committee  in the legislative branch                                                                    
     to  an appropriation  for  another  office, agency,  or                                                                    
     committee in  the legislative branch. A  transfer under                                                                    
     this  subsection  may only  be  made  with the  written                                                                    
     approval  of  the head  of  the  legislative office  or                                                                    
     agency  or the  chair  of the  committee  to which  the                                                                    
     appropriation  was  originally  made,  and  the  amount                                                                    
     transferred from that appropriation  may not exceed the                                                                    
     amount indicated in the written approval."                                                                                 
     Renumber the following bill sections accordingly.                                                                          
     Page 8, line 10:                                                                                                           
          Delete all material and insert:                                                                                       
        "*  Sec. 19.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          RETROACTIVITY. Section 7 of this Act is                                                                               
     retroactive to January 1, 2007.                                                                                            
        *  Sec. 20.  Sections  7  and 19  of  this Act  take                                                                  
     effect immediately under AS 01.10.070(c).                                                                                  
        * Sec.  21. Sections 1  - 6 and 8  - 18 of  this Act                                                                  
     take effect January 1, 2008."                                                                                              
9:46:09 AM                                                                                                                    
PAM   VARNI,  Executive   Director,  Legislative   Affairs,  said                                                               
Amendment 8 will  help the legislature in the  future. Since 1960                                                               
there  has been  a statute  to allow  the legislative  council to                                                               
direct  the  executive  director  to transfer  amounts  from  one                                                               
appropriation to another if the  transfer is considered necessary                                                               
to accomplish  the work  of the  council. That  has been  done at                                                               
least 30 times  since 1960 to accomplish projects  or for special                                                               
sessions.  This  year  the  council is  in  a  "minus  situation"                                                               
because the  previous legislature had four  special sessions. The                                                               
amendment  gives the  council the  authority to  transfer amounts                                                               
from  any  appropriation  in  the  legislative  branch  and  also                                                               
protects   people.  Whenever   transferring   amounts  from   one                                                               
component to another,  someone would always check  with people in                                                               
charge of those funds to make  sure that there is no problem with                                                               
using  their funds.  The recent  legislative  council action  had                                                               
permission  from  the  Legislative  Audit  and  Budget  chair  to                                                               
transfer two session expenses. "So  this just really clearly puts                                                               
out and  gives the authority  to transfer within  the legislative                                                               
branch  so that  there will  not be  any question  in the  future                                                               
whether  it's next  year or  ten years  from now,  and let's  say                                                               
budget and  audit is in  a minus situation,  legislative council,                                                               
who really does a lot of  the administrative work and sets policy                                                               
for the legislature, will have the ability to do that."                                                                         
9:50:14 AM                                                                                                                    
SENATOR  BUNDE asked  if Amendment  8 limits  where money  can be                                                               
transferred  from. A  rogue  council might  take  money from  the                                                               
school budget.                                                                                                                  
MS. VARNI said money has  never been transferred from outside the                                                               
legislative  branch;   this  only   concerns  money   within  the                                                               
legislative  branch and  between  the  three appropriations.  She                                                               
said her understanding has been  that the council had the ability                                                               
to  transfer  between them.  Recently  that  was questioned,  and                                                               
Amendment  8  says that  the  council  can transfer  between  the                                                               
three, but it  requires written permission from those  who are in                                                               
charge of the funds being taken.  It is just housekeeping for the                                                               
legislative branch, she said.                                                                                                   
SENATOR FRENCH asked if line 4 implies a vote of the council.                                                                   
9:53:12 AM                                                                                                                    
MS. COOK  said it requires action  by the council, and  the chair                                                               
couldn't do it alone.                                                                                                           
SENATOR GREEN asked  if this was brought about by  the money that                                                               
was just put in the supplemental.                                                                                               
MS. VARNI said yes.                                                                                                             
SENATOR  GREEN said  it caused  quite a  stir, because  there had                                                               
been approval for  money to be transferred within  the agency and                                                               
then it  was shown  it wasn't  a proper transfer,  "so we  had to                                                               
include  that language  in the  supplemental budget  to authorize                                                               
that transfer." It just allows action during those times.                                                                       
SENATOR GREEN withdrew her objection. Amendment 8 was adopted.                                                                  
MS. MOSS  said someone from  the Alaska Public  Office Commission                                                               
said its  final report is due  on February 15, which  is close to                                                               
the start of session, but it might not pose a problem.                                                                          
SENATOR  GREEN moved  HB  171, as  amended,  from committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
SENATOR BUNDE  said he sees a  serious absence of people  to pick                                                               
up the apples that they dropped out of the applecart.                                                                           
CHAIR MCGUIRE announced that without  objection SCS CSHB 171(STA)                                                               
has moved from the Senate State Affairs Committee.                                                                              
The committee took an at-ease from 9:56:59 AM to 9:57:39 AM.                                                                
                SB 134-FUNDING SHORTFALL POLICY                                                                               
9:57:39 AM                                                                                                                    
CHAIR MCGUIRE announced the consideration of SB 134.                                                                            
SENATOR GARY  WILKEN, Alaska State Legislature,  presented SB 134                                                               
as sponsor. He said the last  Alaska Oil and Gas Report announced                                                               
that  anxiety mounts  as production  declines. The  oil producers                                                               
told  the  legislature  that  production  was  declining  by  six                                                               
percent,  and  the  Department  of  Revenue  (DOR)  said  it  was                                                               
declining by 0.9 percent. Either way,  there needs to be a fiscal                                                               
bridge  to the  gasline, he  said.  The desire  for a  long-range                                                               
fiscal plan  is a  common refrain.  He suggested  thinking beyond                                                               
one  year.  Senator Dyson  has  a  bill  asking the  governor  to                                                               
forecast ahead 15 years.                                                                                                        
10:00:25 AM                                                                                                                   
SENATOR WILKEN  said his  bill starts the  discussion. SB  134 is                                                               
policy, not law. The legislature could  put it in and take it out                                                               
later. He  said, "We would  put in  the Executive Budget  Act two                                                               
statements:  It's  the  policy  of   the  state  to  formulate  a                                                               
responsible, sustainable  budget. It  is the policy  that amounts                                                               
necessary to cover  projected shortfalls during a  fiscal year be                                                               
appropriated  equally  from  the  Constitutional  Budget  Reserve                                                               
(CBR) and the Earnings Reserve  Account of the permanent fund. It                                                               
would be used  only when needed, he added. He  pointed to a graph                                                               
of expenditures and  revenue. He assumes an  increase in spending                                                               
of three  percent, and  he showed the  fall revenue  forecast. He                                                               
thanked  staff  from  the permanent  fund  division,  legislative                                                               
finance,  and the  Office of  Management and  Budget for  helping                                                               
with the data and graphs.                                                                                                       
10:04:10 AM                                                                                                                   
CHAIR MCGUIRE noted  a 2006 and 2007 spike in  revenues and asked                                                               
how they figure  into the "little pots of money  that we have set                                                               
aside for savings."                                                                                                             
SENATOR  WILKEN  said, "That  would  be  what's coming  into  our                                                               
checkbook."  He said,  "We write  checks out  of our  check book,                                                               
which is filled  up by the general fund." He  said checks written                                                               
for  permanent fund  dividends are  an  expense. The  legislature                                                               
saved $650  million last  year and "people  on the  campaign were                                                               
talking about  how we spent  everything…we wrote a check  and put                                                               
it in a saving account."                                                                                                        
CHAIR  MCGUIRE asked  if that  $650 million  savings is  absorbed                                                               
into the red input line.                                                                                                        
10:05:35 AM                                                                                                                   
SENATOR WILKEN  said yes, "we  spend our savings." Alaska  is not                                                               
going  to be  saving  next  year. Last  year  there  was a  $10.2                                                               
billion budget.  Three components are  88 percent of  the budget.                                                               
In  2004, the  two  numbers were  essentially  the same.  Federal                                                               
funds are falling  away, and 85 percent of what  the state spends                                                               
is from  oil and gas. Things  can change quickly. The  next graph                                                               
is titled  Fy07 General Fund  Budget. The budget of  the governor                                                               
is balanced at $52 per barrel.  Today it is $62.64. He noted that                                                               
three or  four years the state  was "rolling in clover"  when oil                                                               
hit  $30 per  barrel. If  the price  were $30  today, [the  state                                                               
would have a deficit of] $1.8 billion.                                                                                          
10:08:47 AM                                                                                                                   
SENATOR  WILKEN showed  the effect  of the  escalator in  the PPT                                                               
[profit-based petroleum production tax of 2006].                                                                                
SENATOR  BUNDE said  next  year the  chart will  be  out of  date                                                               
because production will be down.  The opportunity for change will                                                               
magnify as production declines.                                                                                                 
SENATOR WILKEN said there are  three big variables: expenses, oil                                                               
production, and  oil price. "We start  to fall away next  year or                                                               
the  year after."  He said  to expect  gas revenue  in 2016,  and                                                               
Alaska needs a bridge until then.                                                                                               
10:11:51 AM                                                                                                                   
SENATOR WILKEN  said the  state has used  the cushion.  He showed                                                               
the CBR balance and the draws for  FY94 to FY07. The CBR has been                                                               
used four times. He said he  forgot that Alaska drew $884 million                                                               
out of  the CBR in 2002,  almost $500 million the  next year, and                                                               
then about $46 million for the  last four years. The average draw                                                               
has been  $275 million for the  14 years. He said  the CBR peters                                                               
out in  2013 or 2014, so  there will be no  more cushion. Cutting                                                               
government sounded easy before he  arrived at the capitol. If the                                                               
state  cut  out public  radio  and  television, as  discussed  by                                                               
Senator Bunde,  and it  cut out  state parks,  libraries, museums                                                               
and the  one percent  for arts,  the total  savings would  be $17                                                               
million. It is not worth the  emails that he would get. The state                                                               
needs to  save up to  hundreds of millions, so  if it got  rid of                                                               
road  maintenance,  the troopers,  the  marine  highway, and  the                                                               
universities, it would  save $430 million, "but  we wouldn't have                                                               
any troopers but we wouldn't need  them because we don't have any                                                               
roads to drive on and we're not educating people so…."                                                                          
10:15:14 AM                                                                                                                   
SENATOR WILKEN said  his intent is to show that  the state is not                                                               
going  to cut  its way  out of  the deficits.  He spoke  of other                                                               
options, like income  tax, alcohol tax, corporate  income tax and                                                               
sales tax.  "Or we can  start to talk  about the earnings  of the                                                               
permanent  fund,  which in  January  31,  2007 had  $4.7  billion                                                               
sitting in  it." He suggests  filling the gap  with contributions                                                               
from the CBR and the earnings  reserve account. Given a three per                                                               
cent growth, the  bridge is built from equal  draws. The earnings                                                               
reserve of the  permanent fund is available, always  has been, by                                                               
a vote of 21 in the House and 11 in the Senate.                                                                                 
10:17:43 AM                                                                                                                   
SENATOR  BUNDE  said  the  state  already  spends  the  earnings,                                                               
including  $1.7  billion  for the  dividend,  the  hold  harmless                                                               
provisions, and several  other things. The precedent  is set. The                                                               
pie chart had $1.7 billion revenue from the permanent fund.                                                                     
SENATOR WILKEN said hold harmless  costs about $34 million and it                                                               
costs money  to make  money, so  "we do  spend the  earnings." He                                                               
warned  that everyone  will  say that  the  legislature can't  be                                                               
trusted and  it will steal  the fund. So  he asked: "How  much of                                                               
the  corpus  has  the  legislature  been  responsible  for?"  The                                                               
legislature should be proud that it  has put in 65 percent of it.                                                               
It also  inflation proofed it  with $10 billion.  The legislature                                                               
has certainly been a good steward.  "We can manage getting at the                                                               
permanent fund,"  he said. He  warned that opponents  will accuse                                                               
them of robbing the fund, "and the bumper stickers roll out."                                                                   
10:20:50 AM                                                                                                                   
SENATOR   WILKEN  said   the  principle   is  protected   by  the                                                               
constitution, and  it will be  generations before Alaskans  go to                                                               
the ballot  box and vote to  spend the permanent fund;  it's just                                                               
not  going  to  happen.  The earnings  brought  to  the  earnings                                                               
reserve  account was  $4.7 billion  by the  end of  January. This                                                               
year, $878 million  will be used for dividends,  $860 million for                                                               
inflation proofing, and $2.9 billion  will be left and available.                                                               
The crown  jewels of a fiscal  plan are the CBR  and the earnings                                                               
reserve account; "I  just can't say enough  about that sentence."                                                               
It is the only legislature in  America deciding how to manage $40                                                               
billion for 665,000 residents. He  said some people won't support                                                               
the idea because  there is no income tax and  43 states have one.                                                               
"But no other state has $40  billion." Every minute of every hour                                                               
of every day there are millions  of decisions made on Wall Street                                                               
about people investing  money, and each one is  to create wealth.                                                               
Alaska is part of that  game. People invest in corporate America,                                                               
real estate,  bonds, and  the last six  months of  2006, Alaska's                                                               
investments were earning  $734,000 per hour, and  "we didn't lift                                                               
a finger … we're  putting it in faster than we  can take it out."                                                               
That's  the plan.  It  is  a whole  other  industry that  creates                                                               
wealth for  the people of Alaska.  It is all about  taking a one-                                                               
time  resource to  create wealth  for  the future.  But the  next                                                               
question will be: "What about my check?"                                                                                        
10:25:04 AM                                                                                                                   
SENATOR WILKEN showed ten years  ahead. "Let's just say we filled                                                               
every fiscal gap…let's call it  $250 million." The effect on each                                                               
PFD check would  be nothing the first year, $2.00  the next year,                                                               
$20.00 in  five years, and $89.00  in 10 years. "You  make a good                                                               
investment; the money just keeps showing up."                                                                                   
SENATOR STEVENS asked if the check decrease is cumulative.                                                                      
SENATOR  WILKEN said  that  is the  effect of  the  draw of  $250                                                               
million every  year for  10 years.  In 10  years, each  PFD check                                                               
will be $2,250 instead of  $2,339. With the draw, the accumulated                                                               
ten checks  would be $19,073  instead of $19,409-a  difference of                                                               
$336 over  the ten  years. He  showed a graph  with the  draw and                                                               
without the draw.  The permanent fund stays  awfully healthy, and                                                               
after 10  years it will  be $4.5  billion less than  $60 billion.                                                               
What does  the decline  in the  PFD check mean  to a  family? The                                                               
third year the  loss will be worth two cups  of coffee, year-five                                                               
it will cost a hair cut, and year-ten it will cost one car tire.                                                                
10:29:52 AM                                                                                                                   
SENATOR  WILKEN compared  alternative revenue  sources. Using  an                                                               
income tax to  fill the fiscal gap would cost  $1,000 to a family                                                               
of  four,  and  using  a  sales tax  would  cost  $950.  "I  like                                                               
everybody paying a  little rather than a few paying  a lot." This                                                               
is our  bridge to the  future gas  line. He summarized  by saying                                                               
that the bill bridges Alaska revenue  needs until the gas line is                                                               
completed  and   it  establishes  accountability  by   forming  a                                                               
spending partnership with all Alaskans.                                                                                         
10:33:13 AM                                                                                                                   
SENATOR  WILKEN said  SB 134  provides  benefits when  needed--it                                                               
only happens when there is  a deficit. It minimizes the financial                                                               
impact  on families,  doubles the  life of  the CBR,  answers the                                                               
call  from D.C.  for Alaskans  to help  themselves, and  provides                                                               
Alaska with a stable and dependable long-term fiscal plan.                                                                      
SENATOR BUNDE  asked about the  notion of putting new  money into                                                               
the economy.                                                                                                                    
SENATOR WILKEN said  an income tax just moves  money around. This                                                               
is new money coming from Wall  Street and it is powerful. It gets                                                               
the full multiplier effect.                                                                                                     
SB 134 was held over.                                                                                                           
CHAIR  MCGUIRE  adjourned  the  Senate  State  Affairs  Committee                                                               
meeting at 10:35:34 AM.                                                                                                       

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