Legislature(1993 - 1994)
02/08/1994 01:30 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 8, 1994
1:30 p.m.
TAPE HFC 94-27, Side 1, #000 - end.
TAPE HFC 94-27, Side 2, #000 - 558.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 1:30 p.m.
PRESENT
Co-Chair Larson Representative Hoffman
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representative Grussendorf
ALSO PRESENT
James Baldwin, Assistant Attorney General, Department of
Law.
SUMMARY INFORMATION
HB 58 "An Act relating to the budget reserve fund
established under art. IX, sec. 17, Constitution
of the State of Alaska."
CSHB 58 (FIN) was HELD in Committee for further
discussion.
SB 178 "An Act relating to civil nuisance actions; and
providing for an effective date."
HCS SB 178 (JUD) was assigned to a subcommittee
consisting of Chair Representative Therriault and
Representatives MacLean and Grussendorf.
SENATE BILL NO. 178
"An Act relating to civil nuisance actions; and
providing for an effective date."
Co-Chair Larson assigned HCS SB 178 (JUD) to a subcommittee
consisting of Representative Therriault as Chair and
Representatives MacLean and Grussendorf.
HOUSE BILL NO. 58
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"An Act relating to the budget reserve fund established
under art. IX, sec. 17, Constitution of the State of
Alaska."
Co-Chair Larson clarified that CSHB 58 (JUD) is the version
before the Committee.
Co-Chair Larson provided members with a proposed committee
substitute for HB 58, prepared by the Department of Law
(copy on file).
Representative Martin MOVED to ADOPT the proposed committee
substitute. Representative Brown OBJECTED for purpose of
discussion. She requested more information on the proposed
committee substitute.
JIM BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
explained that the proposed committee substitute states that
Article IX, sec. 17(b) of the Constitution refers to the
annual recurring unrestricted and undesignated revenues of
the State. He stated that the proposed committee substitute
addresses what is covered by Article IX, sec. 17(b), not
what is not covered.
Mr. Baldwin explained that program receipts are included
under (A)(1)(b). New Language is contained in (1)(A)(2) to
compare revenue sources from year to year. He added that
(1)(A)(3) is a new subsection, to explain that supplements
are not included in calculations of the total amount
appropriated from the Budget Reserve Fund.
Mr. Baldwin noted that subsection (d) contains language to
clarify that a three-fourth vote pertains to any expenditure
other than those necessary to remedy a shortfall situation.
Representative Navarre asserted that the legislation will
set a precedent. He expressed concern that litigation will
result. He maintained that the legislation is in conflict
with other portions of the Constitution. Representative
Martin echoed his concern.
Representative Navarre asserted that the debate and
discussion which took place during deliberations of the
creation of the Budget Reserve Fund were inadequate. He
claimed that under the statutes money in the Permanent Fund
is available for legislative appropriation. He asked the
likelihood of litigation. Mr. Baldwin agreed that
litigation is likely. He stressed that the court would
probably defer to the legislative body which has the power
of appropriation.
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In response to a question by Representative Brown, Mr.
Baldwin explained that other funds are not considered in the
calculations. He referred to the 6 percent for mental
health trust funds. He explained that the funds are
appropriated and restricted by a prior appropriation.
Mr. Baldwin clarified that federal funds are not included in
calculations of revenues used to decide if there has been a
shortfall from the previous year. He noted that the State
cannot control the amount of federal funds received.
Representative Brown pointed out that oil revenues are also
outside of the Legislature's control. Mr. Baldwin suggested
that the inclusion of all funds would require revolving loan
funds to be included and expended prior to Budget Reserve
Fund access. Representative Brown disagreed that revolving
loan funds would have to be liquidated if they were included
in the calculations.
Representative Grussendorf recounted a brief history of the
passage of HCS CSSJR 5 (FIN)am H which placed on the ballot
the proposal to create a constitutionally protected Budget
Reserve Fund. He was Speaker of the House when HCS CSSJR 5
(FIN)am H was passed by the Legislature and approved by the
voters. He noted that some legislators wanted to create a
means to allow windfall payments to be saved without deposit
into the corpus of the Permanent Fund to assure future
access. Other legislators wanted to assure that the
anticipated revenues would not be spent at once. He
reflected, that as Speaker of the House, he met on the issue
daily, with other legislators, over a three week period. He
stressed that his understanding, at the time, was that
federal funds were not to be included in the calculations of
state revenues used to determine if an appropriation from
the Budget Reserve Fund would be allowed. He added that he
understood that the Earnings Reserve of the Permanent Fund
was to be available. He added that enterprises of the State
such as AIDEA and the Alaska Housing Finance Corporation
would not be included in calculations. He maintained that
unrestricted general funds and the Earnings Reserve Account
were meant to be included.
Representative Hanley observed that section (b) states that:
"If the amount available for appropriation for a fiscal year
is less than the amount appropriation for the previous year,
an appropriation may be made from the budget reserve fund."
He concluded that the program would be used to keep spending
at the same level as the previous year. He added that it
would take a three-fourths vote to spend more than the
previous year. He maintained that the addition of AHFC and
other funds would prevent less money from being available
than what was appropriated in the previous year. He
concluded that (b) did not intend to include the other
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funds.
Representative Grussendorf observed that members supporting
a spending limit plan were involved in the deliberations.
Co-Chair Larson asserted that deliberations on the
constitutional amendment did not maintain that the State is
expected to consume itself prior to access to the Budget
Reserve Fund.
Representative Navarre recalled that he and other members
who favored a spending limit tried to ensure that the Budget
Reserve Fund would work as a spending limit. He asserted
that discussions linked the Budget Reserve Fund to a
spending limit.
(Tape Change, HFC 94-27, Side 2)
Representative Navarre argued that the legislation would
negate the role of the Budget Reserve Fund as a spending
control.
Co-Chair Larson provided members with a memorandum by Mary
Halloran, to Hugh Malone, dated 5/22/90, in regards to the
Budget Reserve Fund (copy on file).
Representative Martin discussed his perception of the Budget
Reserve Fund ballot amendment. He asserted at the time that
the Budget Reserve Fund would be a spending account of the
State's oil windfalls.
Representative Hoffman referred to "unrestricted revenue
accruing to the general fund." He noted that "money is not
restricted by law." He maintained that the Earnings Reserve
Account is not "restricted by law".
In response to a question by Representative Hoffman, Mr.
Baldwin clarified that the legislation is not intended to
include strictly dedicated funds. "It is intended to
include those funds which by statute or by appropriation
have been restricted in the accounting sense." He noted
that the Constitution says that the money should go to the
General Fund unless otherwise provided by law. He concluded
that the Legislature has "otherwise provided by law," by
creating the Earnings Reserve Account within the Permanent
Fund.
Representative Grussendorf observed that the vehicle used to
pass the resolution for creation of the Budget Reserve Fund
was a Senate spending limit bill (SJR 5).
Representative Brown noted that subsection (d) makes
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specific reference to the General Fund. She noted that the
specific language "General Fund" is absent from the
proceeding sections. She discussed the letter by Mary
Halloran. She stated that Ms. Halloran's interpretation is
a good indication of what was meant at the time the
amendment was passed. She concluded that the intent was
that the Budget Reserve Fund be difficult to spend.
In response to a question by Representative Brown, Mr.
Baldwin clarified that the Department of Law does not intend
to issue an opinion regarding the interpretation of Article
IX, sec. 17(b).
Representative Brown asserted that all funds should be
counted in determining the meaning of Article IX, sec.
17(b).
Representatives Navarre and Brown noted that they would not
vote against adoption of the proposed committee substitute,
but that they do not support its contents.
Representative Brown WITHDREW her OBJECTIONS to the motion
to ADOPT the proposed committee substitute. There being NO
OBJECTION, it was so ordered.
CSHB 58 (FIN) was HELD in Committee for further discussion.
ADJOURNMENT
The meeting adjourned at 2:54 p.m.
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