Legislature(2019 - 2020)BUTROVICH 205

03/21/2019 01:30 PM STATE AFFAIRS

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

Audio Topic
01:34:11 PM Start
01:34:46 PM SJR6
04:50:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= SB 33 ARREST;RELEASE;SENTENCING;PROBATION TELECONFERENCED
<Bill Hearing Canceled>
*+ SJR 6 CONST AM:APPROP. LIMIT; RESERVE FUND TELECONFERENCED
Heard & Held
-- Public Testimony - Starting at 3:30 p.m. --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         March 21, 2019                                                                                         
                           1:34 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mike Shower, Chair                                                                                                      
Senator John Coghill, Vice Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Scott Kawasaki                                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lora Reinbold                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 6                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating  to  an  appropriation  limit; relating  to  the  budget                                                               
reserve  fund  and establishing  the  savings  reserve fund;  and                                                               
relating to the permanent fund.                                                                                                 
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 33                                                                                                              
"An  Act relating  to pretrial  release; relating  to sentencing;                                                               
relating  to  treatment  program   credit  toward  service  of  a                                                               
sentence  of  imprisonment;  relating to  electronic  monitoring;                                                               
amending  Rules   38.2  and  45(d),  Alaska   Rules  of  Criminal                                                               
Procedure; and providing for an effective date."                                                                                
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SJR  6                                                                                                                  
SHORT TITLE: CONST AM:APPROP. LIMIT; RESERVE FUND                                                                               
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/19       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/19       (S)       STA, JUD, FIN                                                                                          
03/21/19       (S)       STA AT 1:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MIKE BARNHILL, Policy Director                                                                                                  
Office of Management and Budget                                                                                                 
Office of the Governor                                                                                                          
Juneau Alaska                                                                                                                   
POSITION STATEMENT: Participated in the presentation of SJR 6.                                                                
                                                                                                                                
ED KING, Chief Economist for the State of Alaska                                                                                
Office of Management and Budget                                                                                                 
Office of the Governor                                                                                                          
Juneau Alaska                                                                                                                   
POSITION STATEMENT: Participated in the presentation of SJR 6.                                                                
                                                                                                                                
CORI MILLS, Senior Assistant Attorney General                                                                                   
Civil Division                                                                                                                  
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Participated in the presentation of SJR 6.                                                                
                                                                                                                                
WILLIAM MILKS, Assistant Attorney General                                                                                       
Civil Division                                                                                                                  
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Participated in the presentation of SJR 6.                                                                
                                                                                                                                
CORI MILLS, Senior Assistant Attorney General                                                                                   
Civil Division                                                                                                                  
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Participated in the presentation of SJR 6.                                                                
                                                                                                                                
GLENN M PRAX, representing self                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
VICKI JO KENNEDY, representing self                                                                                             
Kodiak Island, Alaska                                                                                                           
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
CHRIS EICHENLAUB, representing self                                                                                             
Eagle River, Alaska                                                                                                             
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
WILLIAM QUAYLE, representing self                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
DEBORAH HOLLAND, representing self                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Stated support for SJR 6                                                                                  
                                                                                                                                
DANIEL SADROSA, representing self                                                                                               
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: STATED support for Governor Dunleavy and SJR                                                              
6.                                                                                                                              
                                                                                                                                
CHARLES SIMON, representing self                                                                                                
Hooper Bay, Alaska                                                                                                              
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
MIKE COONS, representing self                                                                                                   
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
JIMMY SWISHER, representing self                                                                                                
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
SUSAN JORDAN, representing self                                                                                                 
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Stated full support for Governor Dunleavy                                                                 
and SJR 6.                                                                                                                      
                                                                                                                                
KIMBERLY CLARK THIRY, representing self                                                                                         
Anchor Point, Alaska                                                                                                            
POSITION STATEMENT: Stated that she totally supports SJR 6.                                                                   
                                                                                                                                
RYAN MCKEE, State Director                                                                                                      
Americans for Prosperity                                                                                                        
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
PATRICK MARTIN, representing self                                                                                               
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
CARL NORMAN, representing self                                                                                                  
Seward, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SJR 6 and Governor                                                                
Dunleavy.                                                                                                                       
                                                                                                                                
GREG BARLETT, representing self                                                                                                 
Soldotna, Alaska                                                                                                                
POSITION STATEMENT: Stated support for SJR 6 to cap government                                                                
spending and protect the permanent fund dividend.                                                                               
                                                                                                                                
PORTIA NOBLE, Field Director                                                                                                    
Americans for Prosperity (AFP)                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
ELIZABETH DOOLEY, representing self                                                                                             
Trapper Creek, Alaska                                                                                                           
POSITION STATEMENT: Stated support for SJR 6 and Governor                                                                     
Dunleavy.                                                                                                                       
                                                                                                                                
DAVID BOYLE, representing self                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Stated support for SJR 6.                                                                                 
                                                                                                                                
GEORGE PIERCE, representing self                                                                                                
Kasilof, Alaska                                                                                                                 
POSITION STATEMENT: Stated support for SJR 6.                                                                                 
                                                                                                                                
MATHEW SMITH, representing self                                                                                                 
Bethel, Alaska                                                                                                                  
POSITION STATEMENT: Stated support for SJR 6.                                                                                 
                                                                                                                                
CLIFF BROTT, representing self                                                                                                  
Talkeetna, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
THOMAS WILLIAMS, representing self                                                                                              
Peters Creek, Alaska                                                                                                            
POSITION STATEMENT: Testified in support of SJR 6.                                                                            
                                                                                                                                
ROGER BRANSON, representing self                                                                                                
Eagle River, Alaska                                                                                                             
POSITION STATEMENT: Testified in opposition of SJR 6.                                                                         
                                                                                                                                
KELLEY TURENTON, representing self                                                                                              
North Pole, Alaska                                                                                                              
POSITION STATEMENT: Said she opposes SJR 6.                                                                                   
                                                                                                                                
IONE ACAERMANN, representing self                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Stated support for SJR 6 to cap spending and                                                              
protect the PFD.                                                                                                                
                                                                                                                                
CORBIN ARNO, representing self                                                                                                  
Homer, Alaska                                                                                                                   
POSITION STATEMENT: During the hearing  on SJR 6 said he supports                                                             
the Governor's budget and what he is doing.                                                                                     
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:34:11 PM                                                                                                                    
CHAIR  MIKE  SHOWER  called the  Senate  State  Affairs  Standing                                                             
Committee meeting  to order at 1:34  p.m. Present at the  call to                                                               
order  were  Senators  Coghill,  Kawasaki,  Micciche,  and  Chair                                                               
Shower. Senator Reinbold arrived as the meeting was in progress.                                                                
                                                                                                                                
                                                                                                                                
          SJR  6-CONST AM:APPROP. LIMIT; RESERVE FUND                                                                       
                                                                                                                                
1:34:46 PM                                                                                                                    
CHAIR  SHOWER   announced  the  consideration  of   SENATE  JOINT                                                               
RESOLUTION  NO. 6,  Proposing amendments  to the  Constitution of                                                               
the State of Alaska relating  to an appropriation limit; relating                                                               
to the budget  reserve fund and establishing  the savings reserve                                                               
fund; and relating to the permanent fund.                                                                                       
                                                                                                                                
He said the  resolution was introduced by the  Rules Committee at                                                               
the request  of the  Governor. The  intent today  is to  hear the                                                               
introduction,  debate   the  policy,  and  start   taking  public                                                               
testimony at 3:30 pm.                                                                                                           
                                                                                                                                
1:35:30 PM                                                                                                                    
Mike Barnhill, Ed King, and  Cori Mills introduced themselves and                                                               
Mr.  Barnhill noted  that Bill  Milks was  in the  audience as  a                                                               
lifeline, should the need arise.                                                                                                
                                                                                                                                
CHAIR  SHOWER  advised that  he'd  like  to  take time  and  have                                                               
questions answered as they come up.                                                                                             
                                                                                                                                
1:36:44 PM                                                                                                                    
MIKE BARNHILL, Policy Director,  Office of Management and Budget,                                                               
Office of the Governor, Juneau,  thanked the chair for taking the                                                               
additional time with SJR 6. He  said whenever there is a question                                                               
of amending the constitution, it  is important to take extra time                                                               
to  consider all  the relevant  implications and  to take  public                                                               
testimony.                                                                                                                      
                                                                                                                                
MR. BARNHILL explained  that SJR 6 proposes to  amend the current                                                               
constitutional spending  limit in art. IX,  sec. 16, Constitution                                                               
of  the State  of Alaska.  He advised  that he  would review  the                                                               
existing limit  and the reason why  the administration recommends                                                               
a change.                                                                                                                       
                                                                                                                                
MR.  BARNHILL recounted  that in  the early  1980s the  state was                                                               
awash in new oil money  and state spending skyrocketed. According                                                               
to some  reports, state  spending between  1960 and  1982 climbed                                                               
over 9,000  percent. Over this  same time, the  population almost                                                               
doubled and the changes in  inflation a little more than tripled.                                                               
However, the combined  impact was nowhere close  to 9,000 percent                                                               
and there  was legitimate concern about  the legislature possibly                                                               
spending all this new money like  it did with the initial royalty                                                               
bonus in the  early 1970s. The legislature  addressed the concern                                                               
in 1981  in an amendment to  the constitution that was  placed on                                                               
the ballot in 1982.                                                                                                             
                                                                                                                                
MR. BARNHILL  explained that  the base  spending limit  in FY1982                                                               
was $2.5  billion and the  constitutional amendment  allowed that                                                               
limit  to  increase  by  the combined  effect  of  inflation  and                                                               
population  growth  each  year.  Exceptions  to  the  limit  were                                                               
"appropriations    for   Alaska    permanent   fund    dividends,                                                               
appropriations of revenue  bond proceeds, appropriations required                                                               
to pay  the principal and  interest on general  obligation bonds,                                                               
and appropriations of  money received from a  non-State source in                                                               
trust  for a  specific purpose,  including revenues  of a  public                                                               
enterprise  or  public  corporation  of  the  State  that  issues                                                               
revenue  bonds,".  He  noted that  the  constitutional  amendment                                                               
reserved  one third  of  spending for  capital  projects. If  the                                                               
legislature wanted to  spend more than that  on capital projects,                                                               
it would require approval by the voters.                                                                                        
                                                                                                                                
The resolution was put before the  people in 1982 and passed by a                                                               
substantial margin. The voters reconfirmed  this in 1986 when the                                                               
question  passed   by  an  even   larger  margin.   Mr.  Barnhill                                                               
highlighted that  the 1982  election pamphlet  statement opposing                                                               
the  resolution  supported  a   spending  limit  that  had  fewer                                                               
exceptions. He  stated, "Perhaps somewhat predicting  the future,                                                               
here we are now  in 2019 and it does seem as  if the statement in                                                               
opposition in 1982 had some merit  to it. There may have been too                                                               
many holes  in this particular  spending limit. It  didn't really                                                               
serve to control spending."                                                                                                     
                                                                                                                                
1:41:54 PM                                                                                                                    
CHAIR  SHOWER asked  Mr. Barnhill  to read  the relevant  part of                                                               
[art. IX, sec. 16,] Constitution of  the State of Alaska into the                                                               
record to clarify that the  appropriation limit is already in the                                                               
constitution. The resolution seeks to change the formula.                                                                       
                                                                                                                                
1:42:14 PM                                                                                                                    
MR. BARNHILL read the following:                                                                                                
                                                                                                                                
     ...appropriations from  the treasure made for  a fiscal                                                                    
     year shall  not exceed $2,500,000,000 by  more than the                                                                    
     cumulative  change,  derived  from federal  indices  as                                                                    
     prescribed by  law, in  population and  inflation since                                                                    
     July 1, 1981.                                                                                                              
                                                                                                                                
CHAIR SHOWER reiterated that he wanted  it on the record that SJR                                                               
6 proposes  a change to  the existing appropriation limit  in the                                                               
state constitution.                                                                                                             
                                                                                                                                
SENATOR  COGHILL clarified  that  Mr. Barnhill  was reading  from                                                               
art. 9, sec. 16, Constitution of the State of Alaska.                                                                           
                                                                                                                                
1:43:23 PM                                                                                                                    
EDWARD KING, Chief  Economist for the State of  Alaska, Office of                                                               
Management and Budget, Office of  the Governor, Juneau, discussed                                                               
the existing appropriation  limit in the constitution  and why it                                                               
isn't as effective as hoped.  He requested the committee hold any                                                               
questions about  the mechanics of  the proposal until the  end of                                                               
the presentation when that will be discussed.                                                                                   
                                                                                                                                
MR. KING  displayed slide  4 and explained  that he  adjusted the                                                               
FY75-FY19  UGF spending  (reported  by  legislative finance)  for                                                               
inflation and  population. The graph illustrates  that before oil                                                               
started  flowing  through  TAPS [Trans-Alaska  Pipeline  System],                                                               
about $5,000-$6,000  per person was spent  on government services                                                               
in  2019  dollars.  After  oil   money  started  flowing  to  the                                                               
treasury, the young state radically  increased government. When a                                                               
spending  limit  was placed  in  the  constitution in  1982,  the                                                               
status  quo was  about $2.5  billion. Historically,  that is  the                                                               
most the state has ever spent  on a per capita basis adjusted for                                                               
inflation, yet that is the  limit in the constitution. He pointed                                                               
out  on  slide  5  that  the  black  dot/dash  line  at  the  top                                                               
represents  the current  spending limit  that was  pegged to  the                                                               
$2.5   billion  plus   inflation   and   population  growth.   He                                                               
highlighted that  the line has  climbed more than four  times the                                                               
level it was  in 1982 even though the government  has never grown                                                               
enough to reach that limit.                                                                                                     
                                                                                                                                
He directed  attention to the  stacked chart  on slide 5  that is                                                               
intended  to show  how that  spending limit  has played  out over                                                               
time and how it would  have played out under alternate scenarios.                                                               
He  explained that  the blue  area represents  agency operations;                                                               
the orange area  represents statewide items such  as debt service                                                               
payments,  contributions  to  retirement accounts,  and  oil  tax                                                               
payments;  and  the gray  area  represents  capital spending.  He                                                               
highlighted  that  it  is  capital  spending  that  is  the  most                                                               
reactive to  changes in revenue.  Capital budgets are  large when                                                               
there's money and  they're scaled back when money  is scarce. The                                                               
red  dotted line  at the  bottom  of the  chart illustrates  what                                                               
would have happened  if the 1982 constitutional  limit was pegged                                                               
to  the $1  billion state  spending before  oil money  started to                                                               
flow. That limit would be  equivalent to agency operations today.                                                               
He said  part of the problem  with the current spending  limit is                                                               
that it was  pegged to the escalated spending rather  than to the                                                               
pre-oil-money spending it intended to control.                                                                                  
                                                                                                                                
CHAIR SHOWER asked  how it happened that the red  line is roughly                                                               
equivalent to agency operations today.                                                                                          
                                                                                                                                
MR. KING replied  he applied the constitutional  amendment on the                                                               
first  data point,  which was  1975 rather  than 1982  and that's                                                               
what shows up.                                                                                                                  
                                                                                                                                
CHAIR SHOWER commented that it's quite a coincidence.                                                                           
                                                                                                                                
SENATOR  COGHILL talked  about the  necessity of  looking forward                                                               
and  backward about  a decade  to reflect  catching up  on things                                                               
like deferred  maintenance during  lean times and  paying forward                                                               
during better  financial times.  He said  that is  different than                                                               
annual spending and should be noted.                                                                                            
                                                                                                                                
1:50:10 PM                                                                                                                    
MR. KING  responded that an  effective limit would  force capital                                                               
projects to  be spread out  over time  as opposed to  the current                                                               
boom and bust cycles.  He said another way to look  at that is if                                                               
debt were  issued rather than  spending down savings,  those debt                                                               
service payments would spread the payments out over time.                                                                       
                                                                                                                                
SENATOR COGHILL asked where debt payments appear on the graph.                                                                  
                                                                                                                                
MR. KING  replied debt  service payments  are exempted  under the                                                               
existing  spending  limit  and   would  be  exempted  under  this                                                               
proposal.                                                                                                                       
                                                                                                                                
CHAIR SHOWER asked  if the black dashed line  that represents the                                                               
spending limit if the proposed  spending limit was passed in 1982                                                               
is about $2.2 billion.                                                                                                          
                                                                                                                                
MR. KING said it's about $2.5 billion.                                                                                          
                                                                                                                                
CHAIR SHOWER asked if the red line reflects about $3.5 billion.                                                                 
                                                                                                                                
MR. KING  said it's  about $3.6 billion  and the  statewide items                                                               
and capital  projects in the  FY19 budget would exceed  that cap.                                                               
From $300  million to $400  million would need  to be cut  if the                                                               
proposed spending limit was in place.                                                                                           
                                                                                                                                
MR. KING said  the final point on slide 5  is that the resolution                                                               
proposes  to  factor  just  half  the  inflation  and  population                                                               
growth. The  black dotted line in  the middle of the  graph shows                                                               
how that  would have  played out.  The dashed  black line  at the                                                               
bottom shows what the proposed  limit does with the rolling three                                                               
year  average. For  example, the  proposed  spending limit  would                                                               
have  prevented  the budget  growth  in  2006 that  responded  to                                                               
increased revenues.                                                                                                             
                                                                                                                                
1:53:16 PM                                                                                                                    
MR. KING reviewed the considerations listed on slide 6:                                                                         
                                                                                                                                
   • Not all government spending needs to grow with population                                                                  
        • Teachers and troopers, maybe                                                                                          
        • Regulators and auditors, maybe not                                                                                    
   • For 20 years [between 1985 and 2005], the State did not                                                                    
    need inflation adjustments, even when they were allowed                                                                     
   • A high allowed rate of growth from a record high spending                                                                  
     level leads to an ineffective limit                                                                                        
                                                                                                                                
CHAIR SHOWER  asked if  there was an  explanation for  the second                                                               
point that inflation adjustments weren't needed for 20 years.                                                                   
                                                                                                                                
MR. BARNHILL said when the price  of oil bottomed in 1987 and the                                                               
state was  in a  deep recession  through most  of the  1990s, the                                                               
legislature kept  tight control  on spending. When  oil reemerged                                                               
in  the early  to mid-2000s,  prices  spiked. He  said one  could                                                               
argue that in Alaska spending often chases oil prices.                                                                          
                                                                                                                                
CHAIR SHOWER  asked if the  population outflow in the  late 1980s                                                               
may  have contributed  to the  flat  growth and  little need  for                                                               
services.                                                                                                                       
                                                                                                                                
MR. BARNHILL  said he didn't  have the  data, but he  wouldn't be                                                               
surprised if  there was  some out  migration. He  reiterated that                                                               
the budget likely correlates to the price of oil.                                                                               
                                                                                                                                
1:56:33 PM                                                                                                                    
MR. KING began  the second part of the  presentation titled, "Why                                                               
Amending the  Limit is Necessary."  He directed attention  to the                                                               
graphic on  slide 8 that  depicts the  current path and  where it                                                               
leads. He described it as "the  do nothing scenario" in which the                                                               
PFD disappears,  and ad  hoc draws  deplete the  earnings reserve                                                               
account. At  that point, he said,  the only choice is  to cut the                                                               
budget  or implement  a tax.  Responding to  a question  from the                                                               
chair,  he  clarified  that  the   chart  starts  with  the  FY19                                                               
management plan that grows with inflation and population growth.                                                                
                                                                                                                                
He directed  attention to  slide 9,  "UGF Spending  History," and                                                               
pointed  out that  the  current spending  limit  did not  prevent                                                               
government from growing when oil  prices spiked in 2006, bringing                                                               
a lot  of money  into the treasury.  He highlighted  that without                                                               
change,  a  similar result  can  be  expected if  revenues  spike                                                               
again.                                                                                                                          
                                                                                                                                
CHAIR  SHOWER asked  why he  chose  to spotlight  the do  nothing                                                               
scenario and if he looked at other iterations.                                                                                  
                                                                                                                                
MR. KING  replied this is  just one of  the scenarios in  the 10-                                                               
year  plan that  was published  this  morning. All  of the  other                                                               
solutions lead  to the same  conclusion. You either pay  taxes to                                                               
support a  larger government and  protect the PFD and  savings or                                                               
you consume all savings and erode  the ability to pay the PFD. He                                                               
stressed that the  only way to avoid those outcomes  is to reduce                                                               
the budget.                                                                                                                     
                                                                                                                                
CHAIR SHOWER observed  that the charts would  look different with                                                               
reductions in government spending.                                                                                              
                                                                                                                                
MR. KING responded that a  chart showing reductions in government                                                               
spending appears later in the presentation.                                                                                     
                                                                                                                                
2:00:47 PM                                                                                                                    
SENATOR MICCICHE  pointed out  that the  chart shows  no midrange                                                               
solutions for  any of  the possibilities and  that will  lead the                                                               
public to  believe that  the PFD  will run out  in 2022.  He said                                                               
it's important for everyone to  understand that nobody is talking                                                               
about doing nothing.                                                                                                            
                                                                                                                                
CHAIR SHOWER  commented that a  salient point is  that government                                                               
spending  needs to  be part  of  the equation  for an  acceptable                                                               
outcome.                                                                                                                        
                                                                                                                                
MR.  KING agreed  and added  that the  chart represents  the most                                                               
extreme of what  could happen, not necessarily  what will happen.                                                               
He  assured members  that his  team  could model  any option  the                                                               
legislature decides to put forward.                                                                                             
                                                                                                                                
2:02:50 PM                                                                                                                    
SENATOR COGHILL asked what's included  in the government spending                                                               
category on slides 9 and 10 and if the PFD is part of that                                                                      
                                                                                                                                
MR. KING said the historical  data does not consider the dividend                                                               
payments  as   unrestricted  general  fund   (UGF)  expenditures.                                                               
Legislative Finance  Division started  including the  dividend in                                                               
UGF  spending about  two years  ago, but  the charts  reflect the                                                               
previous interpretation that dividends are  not a UGF expense. He                                                               
clarified that the transfer from  the CBR to the retirement trust                                                               
is not  considered UGF and is  not included in the  charts. Those                                                               
items   would   not   be  included   in   either   the   existing                                                               
constitutional spending limit or the proposed spending limit.                                                                   
                                                                                                                                
SENATOR COGHILL said, "It's a point  to be made because there was                                                               
some pretty good-sized chunks there."                                                                                           
                                                                                                                                
2:04:17 PM                                                                                                                    
CHAIR SHOWER asked if those expenditures are excluded.                                                                          
                                                                                                                                
MR. KING answered yes.                                                                                                          
                                                                                                                                
MR. KING  turned to  slide 10  and explained  that it's  the same                                                               
graph as  the previous  one but  it's laid out  as a  timeline to                                                               
show  the key  events that  occurred  between FY75  and FY19.  He                                                               
noted that the constitutional spending  limit that passed in 1982                                                               
was prompted  by the  264 percent increase  in UGF  spending over                                                               
the  previous five  years. Then  from about  1982 to  1986 Alaska                                                               
experienced  the  deepest  recession  in its  history.  Peak  oil                                                               
production  occurred in  1988  and from  there  until about  2004                                                               
(other than some  extended capital projects in  the 1990s) agency                                                               
operations were essentially  flat and spending was  held to about                                                               
$2.5  billion; education  funding  didn't  increase, the  student                                                               
population was  stable, the general  population didn't  grow very                                                               
much,  and inflation  wasn't  a large  factor.  In the  2005-2006                                                               
timeframe oil  prices rose to  an historical high, rising  from a                                                               
low of  $9 per barrel  in 1999 to  a high  of $147 per  barrel in                                                               
2008.  Over that  time period,  the  value of  royalty and  taxes                                                               
exceeded the budget  needs by a large margin. Over  those 9 years                                                               
there  was a  261  percent increase  in  spending. This  included                                                               
larger  capital  budgets, changes  in  the  accounting of  budget                                                               
items,  and   increases  in   agency  operations   primarily  for                                                               
education, the university, health  care, and some transportation.                                                               
When oil  prices collapsed in  2014, the legislature  reduced the                                                               
capital budget  practically to zero  and looked at how  to reduce                                                               
spending  overall. Even  with that  effort,  spending remains  $2                                                               
billion higher than it was before the oil spike.                                                                                
                                                                                                                                
MR. KING  said the  threefold increase in  spending in  the early                                                               
1980s  prompted a  discussion about  a spending  limit, but  it's                                                               
clear that  it didn't prevent overspending  from happening again.                                                               
Thus  the conversation  today about  whether that  spending limit                                                               
should be amended.                                                                                                              
                                                                                                                                
CHAIR  SHOWER highlighted  that  there was  no corresponding  261                                                               
percent increase in population over that time period.                                                                           
                                                                                                                                
MR. KING said that's correct, there  was a very minor increase in                                                               
population.                                                                                                                     
                                                                                                                                
CHAIR SHOWER offered his understanding  that there has been a net                                                               
outflow in the last few years.                                                                                                  
                                                                                                                                
MR. KING  replied that's correct,  but births exceeded  deaths in                                                               
the  first three  of  those years  so there  has  been an  actual                                                               
population decrease in just the last year.                                                                                      
                                                                                                                                
2:08:11 PM                                                                                                                    
SENATOR MICCICHE asked if the charts are in real dollars.                                                                       
                                                                                                                                
MR. KING clarified that the  numbers are in nominal dollars; they                                                               
are not inflation adjusted.                                                                                                     
                                                                                                                                
SENATOR  MICCICHE commented  that  the chart  would  show a  very                                                               
different  picture   if  the  numbers   had  been   adjusted  for                                                               
inflation. He highlighted that the  proposed spending limit takes                                                               
both  population and  inflation  into account  so  the effect  of                                                               
inflation has to  be considered when looking  at spending levels.                                                               
He added, "I'd love to see these in real dollars as well."                                                                      
                                                                                                                                
MR. KING  pointed to slide  4 that  shows UGF spending  over time                                                               
that  is adjusted  for inflation  and population.  It illustrates                                                               
that when  the spending  limit passed in  1982, UGF  spending per                                                               
person  was about  $16,000 in  2019 dollars.  He added,  "You can                                                               
just basically draw a straight line  and show what the per capita                                                               
spending would have been and  how it still exceeds those values."                                                               
He said  he'd be happy to  provide a chart that  only adjusts for                                                               
population.                                                                                                                     
                                                                                                                                
SENATOR MICCICHE said he like that.                                                                                             
                                                                                                                                
CHAIR  SHOWER  asked  him  to   send  it  to  the  committee  for                                                               
distribution.                                                                                                                   
                                                                                                                                
SENATOR KAWASAKI  returned to  slide 10 and  pointed out  that in                                                               
part the higher spending in FY05  and beyond related to the joint                                                               
legislative education  task force  and litigation  [Kasayulie and                                                               
Moore  cases] that  came from  that process.  The payback  of the                                                               
underfunded  public employee  and teacher  retirement systems  is                                                               
another part  of that $2  billion increase in spending.  He asked                                                               
if the administration had looked at those factors.                                                                              
                                                                                                                                
MR. KING turned  back to slide 9 and explained  that it shows the                                                               
spending categories  he described.  The blue  category represents                                                               
agency operations,  including costs for Medicaid,  education, and                                                               
the  university system.  Spending in  that category  increased $2                                                               
billion from  2004-2013. The orange category  represents spending                                                               
for  statewide  items,  which  includes   the  payments  for  the                                                               
underfunded pension  liability and  oil tax credits  that through                                                               
legislation  became  budget  items   rather  than  revenue  items                                                               
because the  state was willing to  pay cash for the  credits. The                                                               
gray  category   represents  capital  projects.   Together  those                                                               
increases total $5 billion, he said.                                                                                            
                                                                                                                                
SENATOR COGHILL asked if the  agency operations category includes                                                               
the large deposit in 2013.                                                                                                      
                                                                                                                                
MR. KING  clarified that  the chart  only looks  at expenditures,                                                               
not revenue.                                                                                                                    
                                                                                                                                
2:12:50 PM                                                                                                                    
SENATOR MICCICHE  said he'd like  to see  this modeled on  a more                                                               
apples-to-apples  basis.  The  information in  the  slides  isn't                                                               
consistent,  which  makes  it more  difficult  to  mathematically                                                               
visualize the effect going forward.  He said he strongly supports                                                               
an appropriations limit but "we  might be talking about just that                                                               
lever  of  what interest  should  look  like and  how  population                                                               
adjustments really affect the Alaska economy."                                                                                  
                                                                                                                                
CHAIR SHOWER  asked Mr. King  to respond to the  various requests                                                               
in one document.                                                                                                                
                                                                                                                                
MR. KING clarified that the data  from slides 9 and 10 comes from                                                               
the same data  source, which is the  Legislative Finance Division                                                               
unrestricted general  fund (UGF)  spending history.  "They're all                                                               
representing the same thing so  they are apples-to-apples in that                                                               
context." He  asked if  the request  was to  look at  just agency                                                               
operations.                                                                                                                     
                                                                                                                                
SENATOR MICCICHE  said he'd prepare  a list  of what he  wants to                                                               
see,  but there  was no  particular hurry  because he  would also                                                               
have the opportunity to see this bill in the finance committee.                                                                 
                                                                                                                                
CHAIR  SHOWER  asked Mr.  King  to  answer the  policy  questions                                                               
before the bill leaves this committee.                                                                                          
                                                                                                                                
MR. KING agreed.                                                                                                                
                                                                                                                                
SENATOR MICCICHE stated that, as  a matter of policy, the current                                                               
constitutional  appropriation   limit  does   not  work.   It  is                                                               
exorbitant and is  not tied to spending. At  this point, spending                                                               
to that constitutional limit would  put the state in trouble from                                                               
which it would not be able to recover, he said.                                                                                 
                                                                                                                                
2:17:15 PM                                                                                                                    
MR.  KING turned  to  slide  11 that  looks  at the  hypothetical                                                               
scenario of  the spending cap  proposed by  SJR 6 having  been in                                                               
place before oil prices spited.  He clarified that the chart only                                                               
shows agency  operations and  the capital  budget. He  shared his                                                               
reasoning  that the  statewide items  that did  occur would  have                                                               
occurred in  a different  way. For example,  "the oil  tax credit                                                               
system probably  would not  have become a  budget item.  It would                                                               
have been  restricted to  reducing revenues  and the  payment for                                                               
unfunded liabilities would probably  have become either bond debt                                                               
or found some  other way of meeting those  obligations outside of                                                               
the limit."                                                                                                                     
                                                                                                                                
He pointed to the  gray dashed line at the top  of the graph that                                                               
represents  the  existing   constitutional  spending  limit.  The                                                               
estimated  actual UGF  spending,  not statewide  items, that  did                                                               
occur is the solid blue line.  The gray dashed line at the bottom                                                               
reflects what  spending would have been  had SJR 6 been  in place                                                               
starting in FY00.  He highlighted that had  the proposed spending                                                               
cap been in  place before oil prices spiked,  spending would have                                                               
been about $29 billion lower than it actually has been.                                                                         
                                                                                                                                
CHAIR SHOWER asked for confirmation  that the $29 billion is only                                                               
UGF spending,  not the unfunded pension  obligations that Senator                                                               
Coghill mentioned.                                                                                                              
                                                                                                                                
MR.  KING  confirmed  that  is only  UGF  agency  operations  and                                                               
capital budget items.                                                                                                           
                                                                                                                                
SENATOR MICCICHE  emphasized that people need  to understand that                                                               
that  Alaska  would   be  a  very  different   place  under  this                                                               
relatively flat  spending scenario.  Financial growth  would have                                                               
been more  limited, social programs would  have been dramatically                                                               
limited,  and  the  population  would  be  lower.  He  said  it's                                                               
important for  people to understand  that many  different factors                                                               
may have  affected how  Alaska may have  been managed.  This just                                                               
illustrates what wouldn't have occurred for spending.                                                                           
                                                                                                                                
2:21:26 PM                                                                                                                    
SENATOR   KAWASAKI  mentioned   the   $2   billion  in   deferred                                                               
maintenance and  the shrinking  size of  the capital  budgets. He                                                               
asked if  any thought had  been given to  how the state  will pay                                                               
for the  assets it  owns when  it is  already struggling  with $2                                                               
billion in deferred maintenance.                                                                                                
                                                                                                                                
MR. BARNHILL said there is already  an effort to balance the huge                                                               
number of  competing demands within the  existing revenue. Should                                                               
the proposed spending limit pass,  he said addressing things like                                                               
deferred  maintenance  would probably  be  stretched  out over  a                                                               
longer period.                                                                                                                  
                                                                                                                                
SENATOR KAWASAKI noted that the  legislature allocated $5 million                                                               
to deferred maintenance  for the university when  the backlog was                                                               
about $1  billion. He said  whatever appropriations limit  is put                                                               
in place,  it should take  into account  the things that  are not                                                               
being paid  for right now.  In addition to  deferred maintenance,                                                               
he specifically mentioned the unmet  needs for law enforcement in                                                               
rural  Alaska,  the   constitutional  obligation  for  education,                                                               
health and social services, and public health and welfare.                                                                      
                                                                                                                                
MR. BARNHILL  said the administration understands  that. He added                                                               
that  Ms.  Mills will  discuss  ways  of doing  capital  projects                                                               
within the proposed spending limit.                                                                                             
                                                                                                                                
SENATOR  COGHILL said  it would  be instructive  to see  what the                                                               
yellow bars [slide 11] would look  like if the capital budget was                                                               
excluded. [The bars represent the  money that could not have been                                                               
spent if the proposed spending limit  had been in place.] He also                                                               
highlighted the  consent decrees  such as  Molly Hootch  that the                                                               
state has had to live under at great cost.                                                                                      
                                                                                                                                
CHAIR SHOWER said he was adding  that to the list of requests for                                                               
updated slides.                                                                                                                 
                                                                                                                                
SENATOR MICCICHE related  that when he became  mayor of Soldotna,                                                               
he cut  the budget 12  percent and kept  it flat for  five years.                                                               
Spending  was  so  constricted  that   it  didn't  keep  up  with                                                               
inflation and  costs popped  for the next  mayor. He  opined that                                                               
the legislature  needs to decide  on a realistic trend  line that                                                               
accurately   accounts  for   inflation  and   demand  and   meets                                                               
constitutional obligations  going forward.  He wondered  how much                                                               
of  the flat  spending in  the 1990s  blossomed into  unavoidable                                                               
expenditures in the mid-2000s.                                                                                                  
                                                                                                                                
2:27:43 PM                                                                                                                    
MR. BARNHILL  said he  recalls a catchup  mentality in  the early                                                               
2000s, but he doesn't believe  it accounted for all the increased                                                               
spending.  He  posited  that  there  is  a  distinct  correlation                                                               
between  increases in  the  price  of oil  and  increases in  the                                                               
budget. He  said Alaskans  spend more because  they have  more to                                                               
spend.                                                                                                                          
                                                                                                                                
2:29:34 PM                                                                                                                    
SENATOR  MICCICHE  clarified  that   his  earlier  comment  about                                                               
increased spending in the mid-2000s  referred to catchup spending                                                               
from  2005-2008. He  didn't believe  there was  any justification                                                               
for  the   increased  spending  in  2011-2013.   "That  slope  is                                                               
unsustainable by any metrics."                                                                                                  
                                                                                                                                
CHAIR   SHOWER   commented   that   changes   to   the   existing                                                               
constitutional  spending limit  should  not limit  growth in  the                                                               
future.                                                                                                                         
                                                                                                                                
SENATOR COGHILL said increases in  the health and social services                                                               
budget and  rising healthcare  costs have hit  the state  hard. A                                                               
question  that  has  to  be answered  is  whether  that  downward                                                               
pressure be sustained if society  wants increased coverage on the                                                               
public and private level,                                                                                                       
                                                                                                                                
CHAIR SHOWER  said part  of the conversation  is about  setting a                                                               
baseline.                                                                                                                       
                                                                                                                                
MR.  BARNHILL said  we're all  here  trying to  strike the  right                                                               
balance.                                                                                                                        
                                                                                                                                
MR. KING  summarized that  the graph on  slide 11  represents the                                                               
financial cost of  decisions that were made  about funding agency                                                               
operations and  what it would  have meant if  different decisions                                                               
had been made.                                                                                                                  
                                                                                                                                
2:34:58 PM                                                                                                                    
MR. KING turned  to slide 12. He explained that  the graph on the                                                               
left  illustrates what  would have  happened to  the size  of the                                                               
permanent fund if the proposed  spending cap been in place before                                                               
oil prices  spiked and  agency operations were  forced to  be $29                                                               
billion  lower. The  graph on  the right  shows what  happened to                                                               
that $29  billion under the  existing spending limit.  He pointed                                                               
out that leaving the money in  the permanent fund and allowing it                                                               
to grow leads  to a very different situation than  where the fund                                                               
is  today. The  financial cost  of that  $29 billion  spread over                                                               
nearly 20  years didn't seem like  a lot as it  was happening but                                                               
looking back at  what would have happened if that  limit had been                                                               
in place  clearly illustrates that  the conversation  today would                                                               
be  very different.  The  permanent fund  would  have about  $130                                                               
billion, POMV  draws could  be very large,  the budget  would not                                                               
have grown  to the  point that  cuts would  be needed,  and there                                                               
would be enough money in the bank for full PFDs.                                                                                
                                                                                                                                
MR. KING said  he agrees with Senator Micciche  that Alaska would                                                               
be very different  today if the proposed spending  limit had been                                                               
in place  the last  20 years, but  the point of  the slide  is to                                                               
illustrate  the financial  implications of  those decisions  over                                                               
time.                                                                                                                           
                                                                                                                                
CHAIR SHOWER commented  that the point is well taken  that if the                                                               
money was saved rather than  appropriated there would be a larger                                                               
balance in the permanent fund.                                                                                                  
                                                                                                                                
SENATOR  MICCICHE  said  the  system   doesn't  work  exactly  as                                                               
described but  he does  agree that  savings invested  wisely over                                                               
that time frame  would have had a significant  benefit. The dream                                                               
is that  the saving  level would eventually  be sustainable  so a                                                               
POMV  type  payout  would  pay  for the  cost  of  government  in                                                               
perpetuity without taxes and with a healthy dividend.                                                                           
                                                                                                                                
2:38:07 PM                                                                                                                    
CORI MILLS,  Senior Assistant  Attorney General,  Civil Division,                                                               
Department of  Law, Juneau, clarified  that, as  proposed, excess                                                               
revenues  would  be  deposited   into  the  permanent  fund.  She                                                               
described it as similar to the CBR sweep.                                                                                       
                                                                                                                                
SENATOR  MICCICHE  responded that  he  understands  that but  the                                                               
point  is  that the  chart  illustrates  something that  has  not                                                               
occurred. "I want to make  sure that people aren't confused about                                                               
the  difference  between the  last  20  years  and the  next  [20                                                               
years]."                                                                                                                        
                                                                                                                                
CHAIR SHOWER said he agrees that  the chart is theoretical but it                                                               
illustrates that savings matter in the quest for sustainability.                                                                
                                                                                                                                
MR. KING  clarified that the  assumptions in the chart  were that                                                               
SJR 6 was enacted  in 2000. This is not how  things played out or                                                               
how  would have  played  out if  the  legislature made  different                                                               
decisions, he said.                                                                                                             
                                                                                                                                
2:41:05 PM                                                                                                                    
MR.  KING said  the graph  on slide  13 shows  what actually  did                                                               
happen  between FY11  and FY19.  He pointed  out that  the yellow                                                               
expenditure  line  exceeded the  gray  revenue  line starting  in                                                               
FY13. This  forced a drawdown  in both the  CBR and the  SBR from                                                               
$16 billion to $2 billion.                                                                                                      
                                                                                                                                
SENATOR  MICCICHE  asked  him  to  point out  the  value  of  the                                                               
approximately $8 billion in extra  deposits that were made to the                                                               
permanent fund and the power that's had over time.                                                                              
                                                                                                                                
MR. BARNHILL said he didn't have  the specific data but since the                                                               
1970s the legislature has made  special appropriations of between                                                               
$7  billion and  $8 billion  to  the principal  of the  permanent                                                               
fund,  in   addition  to   the  statutorily   required  inflation                                                               
proofing.  The  result is  a  $60  billion permanent  fund  today                                                               
versus   what  would   be  a   considerably   smaller  fund   had                                                               
policymakers not been forward thinking, he said.                                                                                
                                                                                                                                
2:44:06 PM                                                                                                                    
SENATOR KAWASAKI  asked what the  balance of the CBR  fund should                                                               
be right now.                                                                                                                   
                                                                                                                                
MR. BARNHILL replied  the payback obligation is  greater than $10                                                               
billion and perhaps as high as $12 billion.                                                                                     
                                                                                                                                
MR.  KING offered  to follow  up  with the  exact number  because                                                               
there is some debate about what it is.                                                                                          
                                                                                                                                
2:45:17 PM                                                                                                                    
MR.   BARNHILL  reviewed   the  following   three  constitutional                                                               
amendments  that  are  the centerpiece  of  the  Dunleavy  policy                                                               
proposal   to   provide   sustainability,   predictability,   and                                                               
affordability for Alaska:                                                                                                       
                                                                                                                                
   • SJR 6: Sets an annual spending and savings rule to                                                                         
     stabilize spending and grow the Permanent Fund.                                                                            
                                                                                                                                
   • SJR 5: Changes to the current PFD formula would require a                                                                  
     vote of the people Alaska is an owner state.                                                                               
                                                                                                                                
   • SJR 4: Requires a vote of the people before the                                                                            
     implementation or increase of any tax.                                                                                     
                                                                                                                                
2:46:59 PM                                                                                                                    
MR. KING turned to slide  16 that represents the complete picture                                                               
of Governor Dunleavy's  plan over the next 30 years.  He said the                                                               
plan  includes a  constitutionally protected  PFD, budget  growth                                                               
that  is limited  by SJR  6, and  spending that  is in  line with                                                               
current revenues -  including the allowed draw from  the ERA. The                                                               
Governor's desire  to protect savings,  protect the PFD,  and not                                                               
require taxes  is achievable but  it is largely dependent  on SJR                                                               
6, which prevents the growth of government spending.                                                                            
                                                                                                                                
CHAIR  SHOWER asked  for  an explanation  of  the excess  savings                                                               
draws in 2036-2050.                                                                                                             
                                                                                                                                
MR. KING explained that it reflects  the gap that will be created                                                               
as production decreases  and there is a  corresponding decline in                                                               
revenue. He noted  that a future legislature might  elect to fill                                                               
the gap by increasing the POMV draw to 6 percent.                                                                               
                                                                                                                                
CHAIR SHOWER observed  that one assumption is that  the corpus of                                                               
the permanent fund will continue to grow.                                                                                       
                                                                                                                                
MR. KING said that's correct.  The graphic reflects the statutory                                                               
inflation proofing and the growth  through royalty deposits. Over                                                               
time  the principal  account  and  the ERA  are  growing and  the                                                               
combination  generates new  revenue that  could fill  that future                                                               
gap. He  added that the  gap might not  exist if there  is future                                                               
development.                                                                                                                    
                                                                                                                                
SENATOR  MICCICHE  pointed out  that  this  is the  $1.6  billion                                                               
budget reduction  that includes the  25 percent cut  to education                                                               
and reallocation of  oil and gas property  taxes from communities                                                               
to  the  state.  The  first  chart  illustrated  the  do  nothing                                                               
scenario  and this  is  the  other bookend.  He  asked if  that's                                                               
correct.                                                                                                                        
                                                                                                                                
MR.  KING   confirmed  that  the   graphic  represents   all  the                                                               
Governor's proposals,  which includes the $1.2  billion reduction                                                               
to  government  spending  and  $400  million  in  property  taxes                                                               
diverted to the state.                                                                                                          
                                                                                                                                
CHAIR SHOWER said  it might be helpful for  the finance committee                                                               
to look at the effect of pulling different levers.                                                                              
                                                                                                                                
MR.  KING  said  he  would  be very  willing  to  work  with  the                                                               
Legislative Finance Division on  different proposals and how they                                                               
compare to this plan.                                                                                                           
                                                                                                                                
CHAIR SHOWER said that kind of information will be important for                                                                
the next committee.                                                                                                             
                                                                                                                                
2:52:34 PM                                                                                                                    
MS. MILLS reviewed the following bullet points that explain the                                                                 
appropriation limit proposed by SJR 6:                                                                                          
                                                                                                                                
   • Current appropriation limit is so high that the limit is                                                                   
     never met                                                                                                                  
   • Constitutional Amendment changes the current appropriation                                                                 
     limit to be more meaningful and impactful over time                                                                        
   • Deposits excess revenues annually into savings                                                                             
   • Changes the Constitutional Budget Reserve Fund to the                                                                      
     Savings Reserve Fund and limits spending and fund size                                                                     
                                                                                                                                
MS. MILLS provided the following sectional analysis for SJR 6:                                                                  
                                                                                                                                
     Appropriation Limit: Section 1(a)                                                                                          
                                                                                                                                
     Appropriation  Limit  --   Appropriations  made  for  a                                                                    
     fiscal  year  shall  not  exceed  the  average  of  the                                                                    
     appropriations made in the  previous three fiscal years                                                                    
     by more than fifty percent  of the cumulative change in                                                                    
     population  and  inflation  since   January  1  of  the                                                                    
     previous  calendar year,  derived from  federal indices                                                                    
     as  prescribed by  law, or  two  percent, whichever  is                                                                    
     less."                                                                                                                     
                                                                                                                                
She highlighted that this new calculation for the appropriation                                                                 
limit is the new baseline that seeks to keep downward pressure                                                                  
on the growth curve.                                                                                                            
                                                                                                                                
        • Provides a list of exceptions for spending that                                                                       
          falls outside the appropriation limit cap                                                                             
        • Examples: permanent fund dividends and money                                                                          
          placed in the fund; money for disasters;                                                                              
          obligations and proceeds from GO bonds and                                                                            
          revenue bonds                                                                                                         
        • Most substantial change from existing exceptions-                                                                     
          -capital spending is not an exception and falls                                                                       
          within   the   appropriation    limit   cap.   The                                                                    
          administration's policy choice is GO bonds.                                                                           
                                                                                                                                
She noted that general obligation (GO) bonds go to the voters                                                                   
for approval.                                                                                                                   
                                                                                                                                
2:56:18 PM                                                                                                                    
SENATOR MICCICHE asked  if the savings reserve  fund would remain                                                               
separate from the permanent fund.                                                                                               
                                                                                                                                
MS. MILLS  said that's correct.  She directed attention  to slide                                                               
24 that shows how the existing  budget reserve fund works and how                                                               
the proposed savings  reserve fund will work.  She explained that                                                               
the proposed  savings reserve fund  will receive tax  and royalty                                                               
settlements (just as  it does now) as well as  the new portion of                                                               
excess  revenues based  on priorities  in  the new  appropriation                                                               
limit. This  is to  ensure that the  fund has  sufficient revenue                                                               
for  an entire  year  of government  spending.  The second  major                                                               
change is  that the resolution  repeals the 3/4  vote possibility                                                               
to appropriate  the money  for any  public purpose.  Instead, the                                                               
legislature may,  by majority vote,  appropriate only  the amount                                                               
to fill  the gap  between revenues  in the  general fund  and the                                                               
appropriation limit.                                                                                                            
                                                                                                                                
SENATOR MICCICHE  stated support for  the elimination of  the 3/4                                                               
vote. He  questioned the reason  for using 66 percent  of average                                                               
CPI for growth.                                                                                                                 
                                                                                                                                
MS. MILLS replied  it was a policy call by  the Administration to                                                               
keep  downward pressure  on spending  while maintaining  a growth                                                               
curve.  This also  recognizes the  spending  exceptions that  are                                                               
available for disasters and things like that.                                                                                   
                                                                                                                                
MR. BARNHILL said he believes that it's 50 percent.                                                                             
                                                                                                                                
3:01:08 PM                                                                                                                    
CHAIR SHOWR recessed the meeting until 3:30.                                                                                    
                                                                                                                                
3:34:08 PM                                                                                                                    
CHAIR  SHOWER  reconvened the  meeting  and  advised that  public                                                               
testimony would  be heard  following the  presentation on  SJR 6.                                                               
All members were present.                                                                                                       
                                                                                                                                
3:35:24 PM                                                                                                                    
MS.  MILLS  explained  that  when   the  committee  recessed  the                                                               
discussion was  about the appropriation limit  and the exceptions                                                               
in Section  1, subsection (a)  of the resolution.  She summarized                                                               
that  capital spending  is included  in  the appropriation  limit                                                               
cap. Capital  projects outside the  limit would be paid  for with                                                               
the proceeds from GO bonds.                                                                                                     
                                                                                                                                
SENATOR  KAWASAKI asked  if  it  was a  policy  call  to tie  the                                                               
appropriation limit to  the lesser of 2 percent or  50 percent of                                                               
the cumulative change in population and inflation.                                                                              
                                                                                                                                
MS. MILLS replied  those were policy calls that  were intended to                                                               
keep downward pressure on the spending curve.                                                                                   
                                                                                                                                
SENATOR KAWASAKI,  noting that capital spending  falls within the                                                               
appropriation cap,  asked how less  populated areas of  the state                                                               
will do  capital projects because  they won't be able  to compete                                                               
for funding by GO bond.                                                                                                         
                                                                                                                                
MR.  BARNHILL  explained  that   general  obligation  bonds  have                                                               
historically been  used for  an array  of projects  statewide and                                                               
that won't change.                                                                                                              
                                                                                                                                
SENATOR KAWASAKI acknowledged the answer.                                                                                       
                                                                                                                                
3:37:23 PM                                                                                                                    
MR.  KING directed  attention to  slide  20 that  is intended  to                                                               
demonstrate that there is spending  that occurs within the budget                                                               
process  that is  not subject  to the  appropriation cap.  If the                                                               
budget is  between $4 billion  and $5 billion, spending  from all                                                               
sources may be between $11 billion  and $12 billion. He said this                                                               
graphic is intended  to illustrate that the exemptions  add up to                                                               
quite a bit of money.                                                                                                           
                                                                                                                                
SENATOR REINBOLD  said she  believes in  a total  cap to  reel in                                                               
government.  She  asked   him  to  talk  in   more  detail  about                                                               
designated general  funds (DGF) because it  was her understanding                                                               
that all DGF was subject to the cap.                                                                                            
                                                                                                                                
MS. MILLS  pointed to the DGF  exceptions listed in Section  1 on                                                               
page 2 of the resolution. These include:                                                                                        
                                                                                                                                
        • money held in trust by the state or received from                                                                     
          the federal government for a particular purpose;                                                                      
          and                                                                                                                   
        • to pay obligation or spend the proceeds or                                                                            
          revenue of State general obligation bonds and                                                                         
          revenue bonds;                                                                                                        
                                                                                                                                
She summarized  that these are  revenue bonds and things  held in                                                               
trust by the state for different purposes.                                                                                      
                                                                                                                                
MR. KING  added that AHFC  issuing bonds and spending  that money                                                               
is  an example  of designated  funds  that would  fall under  the                                                               
exemption,  but items  currently  designated  through the  budget                                                               
process such as  taxes for special purposes would  not fall under                                                               
the exemption.                                                                                                                  
                                                                                                                                
SENATOR REINBOLD said she doesn't  want to motivate any agency to                                                               
increase  costs for  the private  sector. She  then asked  if the                                                               
resolution addresses the PERS/TRS liability.                                                                                    
                                                                                                                                
MR. BARNHILL  replied appropriations  to pay down  the retirement                                                               
system liabilities  aren't explicitly covered in  the resolution.                                                               
He noted that  there was some discussion during the  recess as to                                                               
whether a  lumpsum payment to  PERS/TRS would fall under  the cap                                                               
or not. He  offered to follow up with advice  from the Department                                                               
of Law.                                                                                                                         
                                                                                                                                
SENATOR KAWASAKI asked  if the state match for  the federal funds                                                               
received  from the  2008 American  Recovery and  Reinvestment Act                                                               
would fall inside or outside the cap.                                                                                           
                                                                                                                                
MR. KING  replied the state portion  would be within the  cap but                                                               
the federal dollars would not.                                                                                                  
                                                                                                                                
SENATOR MICCICHE  asked what would happen  if SJR 6 were  to pass                                                               
and the  voters decided they wanted  to put DGF into  the general                                                               
fund with the understanding that it  would be used to improve the                                                               
road to  the Kenai, even  though a dedicated fund  isn't allowed.                                                               
He commented that it seems that this would be a problem.                                                                        
                                                                                                                                
MS.  MILLS  clarified  that  the  resolution  does  not  restrict                                                               
passing a  measure to raise  revenue; it restricts  spending once                                                               
the revenues come in. In that  example the revenue could be spent                                                               
up to the cap and the excess would go into savings.                                                                             
                                                                                                                                
SENATOR  MICCICHE countered  that, as  currently written,  voters                                                               
would  not have  the option  of using  DGF if  they decided  they                                                               
wanted to pay  for something outside the cap. He  said that's the                                                               
reason that DGF has traditionally been left out of certain caps.                                                                
                                                                                                                                
MR. KING described  three ways the provisions in SJR  6 would not                                                               
prevent  increased  spending if  the  people  wanted to  pay  for                                                               
something  outside the  cap. One  way would  be to  issue general                                                               
obligation bonds  and use the proceeds  to build the road  to the                                                               
Kenai,  for example.  Another way  would  be to  create a  public                                                               
corporation and issue revenue bonds,  the proceeds of which would                                                               
not be  subject to  the cap.  Third, SJR 6  does not  limit local                                                               
governments from issuing  bonds or raising revenues  to deal with                                                               
local issues.                                                                                                                   
                                                                                                                                
SENATOR  MICCICHE  said  he  understands  what  he's  saying  but                                                               
bonding for  a project is  an extra step  that would add  cost to                                                               
the  project. The  fact remains  that including  DGF removes  the                                                               
potential for the voters to  decide they want something above the                                                               
cap for a  specific purpose. He said this is  an aspect that he's                                                               
identified as potentially problematic.                                                                                          
                                                                                                                                
MR. KING agreed  that if the people generally want  to spend more                                                               
on something  like education, the  provisions in SJR 6  would not                                                               
allow that to occur.                                                                                                            
                                                                                                                                
SENATOR MICCICHE said if the  legislature restricts the growth of                                                               
government  substantially,  the  voters may  collectively  decide                                                               
they want  something different. "We just  may need to think  of a                                                               
way for  that to occur if  they make that choice  in the future,"                                                               
he said.                                                                                                                        
                                                                                                                                
3:49:38 PM                                                                                                                    
MR. KING  said that idea  of allowing  the limit to  be increased                                                               
with a  vote of the people  is not unprecedented and  it could be                                                               
considered if it was of interest to the committee.                                                                              
                                                                                                                                
SENATOR REINBOLD questioned the 2  percent provision in Section 1                                                               
and  restated  her  commitment  for   a  firm  cap  with  minimal                                                               
opportunity for loopholes.                                                                                                      
                                                                                                                                
CHAIR SHOWER asked Mr. King to continue the presentation.                                                                       
                                                                                                                                
MR. KING  advised that slide  21 is the algebraic  annotation for                                                               
the spending  limit that Senator Coghill  requested. For example,                                                               
if spending increased  for three years from $5.4  billion to $5.5                                                               
billion  to  $5.6  billion,  inflation   was  2.25  percent,  and                                                               
population growth  was 1 percent  this results in a  $5.6 billion                                                               
limit. He  said this  is quite  limiting with  growth effectively                                                               
0.8 percent.                                                                                                                    
                                                                                                                                
SENATOR  MICCICHE  calculated  that   a  one  percent  population                                                               
reduction would  result in  a limit  that was  substantially less                                                               
than the year before.                                                                                                           
                                                                                                                                
MR. KING agreed with the calculation.                                                                                           
                                                                                                                                
He turned to  slide 22 and explained it's an  illustration of how                                                               
the  existing cap  versus the  proposed cap  looks over  time. He                                                               
said it's  important to remember  that if the resolution  were to                                                               
pass,  the   limit  is   based  on  a   three  year   average  of                                                               
appropriations.  Because  the  resolution would  take  effect  in                                                               
FY22,  the FY19,  FY20, and  FY21 budgets  would derive  what the                                                               
FY23 budget would  be. He noted that the chart  assumes the three                                                               
previous years  would start with FY20  so the cap for  FY23 would                                                               
be well  below what it's  been in  recent years. It  reflects the                                                               
0.8 percent growth.                                                                                                             
                                                                                                                                
CHAIR  SHOWER  asked if  this  assumption  started with  Governor                                                               
Dunleavy's initial [$3.6] billion reduction.                                                                                    
                                                                                                                                
MR.  KING agreed  and reminded  members  that the  limit is  very                                                               
responsive to what the legislature does.                                                                                        
                                                                                                                                
3:54:00 PM                                                                                                                    
MS. MILLS turned to slide 23  and described the provisions of the                                                               
appropriation limit  in subsections (b)  and (c) of Section  1 of                                                               
the bill. These new subsections  prioritize where excess revenues                                                               
would be deposited.                                                                                                             
                                                                                                                                
     Priority 1: Pay back the permanent fund principal 50%                                                                      
     percent of the income that was deposited into the ERA                                                                      
     that fiscal year                                                                                                           
                                                                                                                                
      Priority 2: [if money remains after priority 1] Get                                                                       
     savings reserve fund balance up to appropriation limit                                                                     
     (formerly the CBR)                                                                                                         
                                                                                                                                
      Priority 3: [if money remains after priority 2] Put                                                                       
        money into permanent fund principal to continue                                                                         
     growing the fund                                                                                                           
                                                                                                                                
CHAIR SHOWER mentioned the idea of  amending this area to use the                                                               
excess funds  for things other  than just paying the  money back.                                                               
He clarified the assumption of not exceeding the limit.                                                                         
                                                                                                                                
MS. MILLS  confirmed that these subsections  address where excess                                                               
revenues will go. She noted  that putting excess revenue into the                                                               
permanent fund principal would make  those funds unavailable, but                                                               
the  proposed savings  reserve  fund "has  a  valve for  spending                                                               
everything  but the  income  on the  permanent  fund." She  noted                                                               
there are other options to consider.                                                                                            
                                                                                                                                
CHAIR SHOWER  mentioned the potential to  negotiate spending more                                                               
in years of excess to assuage  the concerns that this limit could                                                               
handcuff the legislature's  ability to spend more  where and when                                                               
it makes sense, without growing the operating budget.                                                                           
                                                                                                                                
MR. KING  pointed out that  the resolution has an  exception that                                                               
debt service payments  are outside the cap.  He acknowledged that                                                               
language  could be  added to  make it  more explicit  that excess                                                               
revenue could be used to pay off bonds, for example.                                                                            
                                                                                                                                
CHAIR  SHOWER  articulated  his preference  to  pay  outright  as                                                               
opposed to bonding.                                                                                                             
                                                                                                                                
3:59:27 PM                                                                                                                    
MR.  KING  concluded the  presentation  by  reviewing the  bullet                                                               
points on slide 25:                                                                                                             
                                                                                                                                
        • The current spending limit is ineffective and to                                                                      
          change it an amendment to the constitution is                                                                         
          required.                                                                                                             
        • Without an effective limit, government spending                                                                       
          will continue to grow.                                                                                                
        • Without an effective savings rule, future                                                                             
          generations will have less than we have today.                                                                        
        • Growth in government will lead to a depletion in                                                                      
          savings, the erosion of the PFD program, or the                                                                       
          introduction of broad-based taxes                                                                                     
        • Given time, it will require all three                                                                                 
                                                                                                                                
CHAIR SHOWER asked Mr. King to go over the three new slides.                                                                    
                                                                                                                                
MR. KING said one of the  slides is a simple inflation adjustment                                                               
to the total  appropriations. The second slide is  in response to                                                               
the request  to show  capital expenditures  as a  standalone. The                                                               
third slide represents inflation adjusted agency operations.                                                                    
                                                                                                                                
4:01:37 PM                                                                                                                    
MR. BARNHILL  thanked the  committee for taking  the time  for an                                                               
extended hearing. He  said the team would be happy  to return for                                                               
further discussions in a hearing  or individual offices to answer                                                               
questions.                                                                                                                      
                                                                                                                                
CHAIR SHOWER  said he'd like  the team  to return on  Tuesday for                                                               
continued discussion.                                                                                                           
                                                                                                                                
SENATOR  REINBOLD thanked  the presenters  and  related that  her                                                               
"No" votes on  the budget the last four years  were largely based                                                               
on the issue of a meaningful appropriation limit.                                                                               
                                                                                                                                
CHAIR  SHOWER agreed  that  it's about  time  for an  appropriate                                                               
spending limit. He opined that  the public will generally support                                                               
the resolution. He thanked the presenters.                                                                                      
                                                                                                                                
SENATOR   MICCICHE   thanked   the   presenters   and   expressed                                                               
appreciation to  the administration.  He emphasized the  need for                                                               
an appropriation  limit accompanied by a  cascading savings plan.                                                               
"Had it happened  many years ago we wouldn't be  in the situation                                                               
we're in," he said.                                                                                                             
                                                                                                                                
4:04:00 PM                                                                                                                    
CHAIR SHOWER opened public testimony on SJR 6.                                                                                  
                                                                                                                                
4:04:34 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
4:05:22 PM                                                                                                                    
CHAIR SHOWER reconvened  the meeting and laid  out the guidelines                                                               
for public testimony.                                                                                                           
                                                                                                                                
4:06:11 PM                                                                                                                    
GLENN M PRAX, representing self,  Fairbanks, thanked the Governor                                                               
for  introducing SJR  6  and expressed  hope  that the  committee                                                               
would pass  it along so the  people would have an  opportunity to                                                               
vote on  the constitutional amendment.  He opined that  Section 2                                                               
that  changes how  the  money is  spent out  of  the new  savings                                                               
reserve  fund  is the  most  important  section. He  agreed  with                                                               
Senator Micciche that  the 3/4 vote has worked  backward from the                                                               
way it was intended. It allows  the minority to hold the majority                                                               
hostage  to increase  spending in  times when  it should  be cut.                                                               
"That is  a good reason that  we're in the pickle  we're in now,"                                                               
he  said. He  advised  the  committee to  look  carefully at  the                                                               
language to ensure it is as  explicit as possible about where the                                                               
money  can  be spent.  He  voiced  support  for using  a  savings                                                               
account  and   stated  agreement  with  Senator   Reinbold  about                                                               
focusing  on  limiting government.  He  offered  his belief  that                                                               
legislators generally  hear more  from people who  want increases                                                               
in government  spending, but that  isn't the case  when elections                                                               
are held. Thus,  it's very appropriate for this measure  to go to                                                               
the people for a vote, he said.                                                                                                 
                                                                                                                                
SENATOR  REINBOLD  expressed  appreciation for  his  encyclopedic                                                               
knowledge and excellent testimony.                                                                                              
                                                                                                                                
4:09:12 PM                                                                                                                    
VICKI JO  KENNEDY, representing self,  Kodiak Island,  said she's                                                               
proud  of the  Governor and  she believes  SJR 6  is needed.  She                                                               
mentioned the 30th anniversary of  11 million gallon Exxon Valdez                                                               
oil  spill  catastrophe  and  warned   of  the  potential  for  a                                                               
similarly   catastrophic  financial   failure.   She  urged   the                                                               
committee to  take the  time to  get the  proposed constitutional                                                               
amendment  right for  the people  of Alaska.  "We're counting  on                                                               
you," she said                                                                                                                  
                                                                                                                                
4:11:31 PM                                                                                                                    
CHRIS  EICHENLAUB, representing  self, Eagle  River, agreed  with                                                               
Senator Micciche  that the  constitutional spending  limit should                                                               
have been  amended years ago.  He related the advice  he received                                                               
years  ago to  stop digging  when you  find yourself  in a  hole,                                                               
which Governor Dunleavy  has done. He described SJR 6  as a great                                                               
way to get Alaska's fiscal house in order.                                                                                      
                                                                                                                                
4:13:16 PM                                                                                                                    
WILLIAM QUAYLE, representing self,  Juneau, opined that the state                                                               
should  declare  gold  and  silver   as  currency  and  fund  the                                                               
constitutional  savings  accounts  with  gold  because  there  is                                                               
potential for  it to  increase in value.  He also  stated support                                                               
for  a  state lottery,  particularly  during  tourist season.  In                                                               
conclusion  he  said he  favors  the  capitalist way  of  solving                                                               
Alaska's fiscal problems.                                                                                                       
                                                                                                                                
4:15:06 PM                                                                                                                    
DEBORAH  HOLLAND, representing  self,  Anchorage, stated  support                                                               
for SJR 6,  Governor Dunleavy's stance on the PFD,  and the state                                                               
budget.  She emphasized  that the  money that  was withheld  from                                                               
recent PFDs  would be  very helpful to  the people  that suffered                                                               
damages  in  the last  earthquake.  She  concluded her  testimony                                                               
saying, "I'm for  whatever the Governor has put forward  in SJR 6                                                               
because I  trust him  and I  trust that you  will spend  the time                                                               
needed to evaluate this and make the right decision."                                                                           
                                                                                                                                
4:16:36 PM                                                                                                                    
DANIEL SADROSA,  representing self,  Wasilla, stated  support for                                                               
Governor Dunleavy and SJR 6. He  shared that he and his wife live                                                               
on  a VA  pension and  the PFD  would help  with the  damage they                                                               
suffered in  the earthquake.  He opined that  money is  wasted in                                                               
forward  spending. He  concluded restating  support for  Governor                                                               
Dunleavy.                                                                                                                       
                                                                                                                                
4:17:56 PM                                                                                                                    
CHARLES  SIMON,  representing  self,  Hooper  Bay,  testified  in                                                               
support  of SJR  6. He  said he  agrees with  the Governor  about                                                               
capping  state  spending  so  Alaskans can  get  their  PFDs.  He                                                               
continued to  say that he'd  like the Governor to  reconsider the                                                               
proposed  cuts to  education.  Noting that  the  small and  rural                                                               
schools are suffering the most,  he voiced concern that kids from                                                               
these  areas   wouldn't  be  able   to  get  into   colleges  and                                                               
universities.  He pointed  out that  home schooling  and boarding                                                               
schools cost  money. He  said he  supports funding  for education                                                               
but all other areas should have a cap.                                                                                          
                                                                                                                                
4:20:03 PM                                                                                                                    
MIKE COONS,  representing self, Palmer,  testified in  support of                                                               
SJR 6.  He said people  like programs  that make life  easier and                                                               
produce  products  like  roads,  safety,  and  a  good  education                                                               
system.  Alaska   has  the  resources  that   make  these  things                                                               
possible, but  it is also  a debtor state.  People tend to  use a                                                               
plastic  card in  their daily  lives and  worry about  paying the                                                               
bill later.  These same people  elect representatives  that spend                                                               
more than existing revenues and worry  about paying the bill at a                                                               
later time.  He said the  time has come  to stop digging  and not                                                               
only fill  that hole but  also cap it so  we can't dig  again. He                                                               
said SJR 6 does that and he  looks forward to its passage and the                                                               
ensuing fight in the House.                                                                                                     
                                                                                                                                
4:21:55 PM                                                                                                                    
JIMMY  SWISHER,  representing  self,  Wasilla,  thanked  Governor                                                               
Dunleavy for  introducing SJR  6 to  cap government  spending. He                                                               
said it will  hurt everybody but protecting the  PFD will provide                                                               
an offsetting bit of candy for everyone.                                                                                        
                                                                                                                                
4:22:51 PM                                                                                                                    
SUSAN JORDAN,  representing self, Kenai, stated  full support for                                                               
Governor  Dunleavy  and  SJR  6.   She  said  it's  time  to  cap                                                               
government spending, protect the PFD,  and get back to reasonable                                                               
spending.  She  noted  that   educators  advocate  for  increased                                                               
spending for  education but  she wonders  when enough  is enough.                                                               
She urged the committee to stand tough.                                                                                         
                                                                                                                                
4:24:16 PM                                                                                                                    
KIMBERLY  CLARK THIRY,  representing self,  Anchor Point,  stated                                                               
that she  totally supports SJR  6. She thanked the  committee for                                                               
being  so diligent  and  working to  eliminate  any loopholes  to                                                               
expand spending.  The budget  needs to be  cut and  everyone will                                                               
feel some  of the  pain, she  said. That  is what  makes Alaskans                                                               
band  together and  help their  neighbors. This  is a  bipartisan                                                               
issue.  She offered  her view  that the  PFD should  be protected                                                               
because  it does  more  for  the economy  than  any other  single                                                               
action.  She  concluded  stating  full  support  for  SJR  6  and                                                               
Governor Dunleavy.                                                                                                              
                                                                                                                                
4:27:07 PM                                                                                                                    
RYAN MCKEE,  State Director,  Americans for  Prosperity, Wasilla,                                                               
said  the state  is  in a  budget crisis  and  both parties  bear                                                               
responsibility. He  said the  state needs  to amend  the existing                                                               
constitutional spending  limit because  it is  unreasonably high.                                                               
As proposed, SJR  6 would contain the growth  of government while                                                               
still  providing essential  state services.  Voters appear  to be                                                               
very supporting of limiting  spending, recognizing that willpower                                                               
alone  is  no  match  for the  temptation  to  overspend.  Excess                                                               
revenues could be returned to  savings to rebuild those accounts.                                                               
He urged support for SJR 6.                                                                                                     
                                                                                                                                
4:28:37 PM                                                                                                                    
PATRICK  MARTIN, representing  self, Wasilla,  said he  voted for                                                               
Governor Dunleavy  and he believes he  is trying to do  his best.                                                               
He promised the people he would  cut spending and that's what SJR                                                               
6 will do.  He urged the legislature to cut  the budget and "make                                                               
it happen" because the current path is one of no return.                                                                        
                                                                                                                                
4:31:28 PM                                                                                                                    
CARL NORMAN,  representing self, Seward, testified  in support of                                                               
SJR  6  and  Governor  Dunleavy.  He opined  that  the  state  is                                                               
fortunate  to  have  a  governor who  has  fiscal  awareness  and                                                               
exhibits  tremendous  fiduciary  ability. It's  refreshing  after                                                               
years of  exponential spending  and growth.  For years  the state                                                               
has ignored  the business principle  that spending more  than the                                                               
revenue stream is unstainable. He  emphasized that state spending                                                               
should  be  capped at  the  level  of  incoming revenue,  not  an                                                               
unrealistically high mythical number.                                                                                           
                                                                                                                                
4:33:48 PM                                                                                                                    
GREG  BARLETT, representing  self, Soldotna,  stated that  he was                                                               
calling  to put  on  the record  his  support for  SJR  6 to  cap                                                               
government spending and protect the permanent fund dividend.                                                                    
                                                                                                                                
4:34:11 PM                                                                                                                    
PORTIA  NOBLE, Field  Director, Americans  for Prosperity  (AFP),                                                               
Anchorage, commended  Governor Dunleavy for starting  the process                                                               
to  curb  government  spending.   She  said  the  current  fiscal                                                               
situation  is  critical  and jeopardizes  future  generations  of                                                               
Alaskans. By  voting in favor of  SJR 6, the legislature  has the                                                               
opportunity to  reasonably limit  growth and state  spending. She                                                               
referenced a February 2019 social  media campaign asking Alaskans                                                               
to sign a petition to support  a state spending cap. The campaign                                                               
reached 1,500  Alaskans and 477 of  those signed in support  of a                                                               
spending  cap. She  said  that is  evidence  of the  overwhelming                                                               
support  of  grassroots  activists and  individuals  who  support                                                               
reining  in  spending.  She  said  AFP  has  always  supported  a                                                               
spending cap.  She concluded her comments  highlighting a Dittman                                                               
Research poll  that showed  that over 60  percent of  Alaskans of                                                               
all political persuasions support  a constitutional spending cap.                                                               
This is  evidence that this  is a nonpartisan issue  supported by                                                               
most Alaskans, she said.                                                                                                        
                                                                                                                                
4:36:18 PM                                                                                                                    
ELIZABETH  DOOLEY,  representing   self,  Trapper  Creek,  stated                                                               
support for SJR 6 and  Governor Dunleavy. She said protecting the                                                               
PFD and putting a spending cap  on the legislature is a long time                                                               
coming. She  agreed with an  earlier comment that paying  cash is                                                               
preferable to relying on credit.  She also asked the committee to                                                               
relay the  sentiment that  the people don't  feel their  voice is                                                               
being heard.                                                                                                                    
                                                                                                                                
4:37:33 PM                                                                                                                    
DAVID  BOYLE,  representing  self,   Anchorage,  stated  that  he                                                               
supports SJR  6. He said it  is a herculean task  for legislators                                                               
to place  a spending cap on  the state. It's somewhat  similar to                                                               
politicians voting  for term  limits. He  said it's  obvious that                                                               
the current constitutional  spending cap has never  worked and he                                                               
wonders if that might have  been the original intent. After years                                                               
of  watching committee  meetings  he's noticed  that budgets  are                                                               
seldom cut  and that  baseline budgeting  grows spending  and big                                                               
government.  Evidence  of that  is  that  Alaska has  the  second                                                               
highest ratio in the nation  of state employees to private sector                                                               
employees. He  opined that legislators  need help  in controlling                                                               
spending and  SJR 6 is the  tool that will do  that. Please trust                                                               
the people and let them vote, he said.                                                                                          
                                                                                                                                
4:39:15 PM                                                                                                                    
GEORGE  PIERCE, representing  self, Kasilof,  stated that  he was                                                               
calling in  support of SJR  6. He  pointed out that  the Governor                                                               
ran  on the  platform of  returning  the PFD  and establishing  a                                                               
sustainable budget  and that's  what he's  doing. "I  applaud him                                                               
for that  and I  expect you to  do the same  thing," he  said. He                                                               
suggested raising  taxes on oil  and mining to  increase revenue.                                                               
"Stop the wasteful spending," he said.                                                                                          
                                                                                                                                
4:40:13 PM                                                                                                                    
MATHEW SMITH,  representing self, Bethel, stated  support for SJR                                                               
6. He said the people  wanted the dividend protected and spending                                                               
capped. He  opined that oil wells  are coming online in  the next                                                               
year or  so that will  produce 100,000  barrels a day.  That will                                                               
bring in $36 million a year  for the budget so it's not necessary                                                               
to  take people's  dividends, he  said. The  people in  the Delta                                                               
rely on  it. The governor  and a lot  of legislators ran  on that                                                               
platform and he doesn't want any flip-flopping.                                                                                 
                                                                                                                                
4:41:55 PM                                                                                                                    
CLIFF BROTT,  representing self, Talkeetna, testified  in support                                                               
of SJR  6. He offered  his belief that  the Governor ought  to do                                                               
what he said he would do and  that's to rein in spending. He said                                                               
he  and his  neighbors depend  on  the dividend  for food,  fuel,                                                               
propane,  and  wood  to  get  through  the  winter.  "Taking  our                                                               
dividend  when  there's so  many  other  ways  to make  money  is                                                               
ridiculous," he said.                                                                                                           
                                                                                                                                
4:43:00 PM                                                                                                                    
THOMAS  WILLIAMS, representing  self, Peters  Creek, said  he was                                                               
calling in  favor of the  proposed constitutional  amendments. He                                                               
believes the state definitely needs  a spending cap and a savings                                                               
plan because  spending has  been out of  control. This  should be                                                               
one  of the  first things  the legislature  passes because  it is                                                               
important to have  the state's fiscal house in order.  He said he                                                               
was speaking as  a father of five, home  educator, small business                                                               
owner, and  retired veteran.  "This is very  important to  us and                                                               
please pass these constitutional amendments," he said.                                                                          
                                                                                                                                
4:44:32 PM                                                                                                                    
ROGER  BRANSON,  representing  self, Eagle  River,  testified  in                                                               
opposition of  SJR 6. He said  he's made many trips  to Juneau to                                                               
lobby and this  year he was struck by the  fishbowl effect in the                                                               
capitol  and  Juneau  itself.  He's   also  been  struck  by  the                                                               
collection of  wisdom and institutional knowledge  in the Senate.                                                               
He wonders  how many people will  look at the glass  as half full                                                               
as  opposed  to   half  empty.  Personally,  he's   come  to  the                                                               
conclusion  that  his best  days  are  ahead; he's  prepared  for                                                               
whatever is  to come. He  referenced slide 5 of  the presentation                                                               
that looks  at historical UGF  spending compared to  the existing                                                               
constitutional limit.  He suggested  that when  spending exceeded                                                               
the limit the legislators at the  time also thought the best days                                                               
were ahead.  They were investing  in projects  and infrastructure                                                               
that would support  a better future. He opined  that the greatest                                                               
investment has  been in people  and those investments  should not                                                               
be wasted.  He said  he opposes  SJR 6 as  written and  asked the                                                               
committee to think about whether  Alaska's best days are ahead or                                                               
already past.                                                                                                                   
                                                                                                                                
4:47:22 PM                                                                                                                    
KELLEY  TURENTON,   representing  self,  North  Pole,   said  the                                                               
government should honor and respect  the people of Alaska and let                                                               
them  have  their  full  PFD.  Find  cuts  elsewhere,  she  said.                                                               
Responding  to  a  question  from the  chair  about  whether  she                                                               
supports or opposes SJR 6, she said "oppose."                                                                                   
                                                                                                                                
4:48:42 PM                                                                                                                    
IONE  ACAERMANN, representing  self, Juneau,  stated support  for                                                               
SJR 6 to cap spending and protect the PFD.                                                                                      
                                                                                                                                
4:49:07 PM                                                                                                                    
CORBIN ARNO, representing self, Homer,  during the hearing on SJR                                                               
6 said he supports the Governor's budget and what he is doing.                                                                  
                                                                                                                                
4:50:00 PM                                                                                                                    
CHAIR SHOWER held  public testimony open on SJR  6 and encouraged                                                               
written testimony at  senate.state.affairs@akleg.gov. He held SJR                                                               
6 in committee.                                                                                                                 
                                                                                                                                
4:50:57 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair  Shower   adjourned  the  Senate  State   Affairs  Standing                                                               
Committee meeting at 4:50 p.m.                                                                                                  

Document Name Date/Time Subjects
SSTA OFFICIAL AGENDA MEMO.pdf SSTA 3/21/2019 1:30:00 PM
agenda
SJR 6 Sponsor Statement.pdf SJUD 4/1/2019 1:30:00 PM
SSTA 3/21/2019 1:30:00 PM
SSTA 3/25/2019 5:00:00 PM
SJR 6
SJR006A.PDF SJUD 4/1/2019 1:30:00 PM
SSTA 3/21/2019 1:30:00 PM
SSTA 3/25/2019 5:00:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 6
SJR 6 Slide Show Presentation & Analysis.pdf SSTA 3/21/2019 1:30:00 PM
SSTA 3/25/2019 5:00:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 6
SJR 6 ver A Sectional 3.21.19.pdf SJUD 4/1/2019 1:30:00 PM
SSTA 3/21/2019 1:30:00 PM
SSTA 3/25/2019 5:00:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 6
SJR 6 Fiscal Note.PDF SJUD 4/1/2019 1:30:00 PM
SSTA 3/21/2019 1:30:00 PM
SSTA 3/25/2019 5:00:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 6
SJR 6 Additional Slides.pdf SSTA 3/21/2019 1:30:00 PM
SSTA 3/25/2019 5:00:00 PM
SSTA 3/26/2019 1:30:00 PM
SJR 6
03.27.2019 - SJR6 MORE Responses to SSTA.pdf SSTA 3/21/2019 1:30:00 PM
SJR 6