Legislature(1993 - 1994)
03/29/1994 08:30 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 29, 1994
8:30 a.m.
TAPE HFC 94-97, Side 1, #000 - end.
TAPE HFC 94-97, Side 2, #000 - end.
TAPE HFC 94-98, Side 1, #000 - 432.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 8:30 a.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
Representative Jim Nordlund; Paul Fuhs, Acting Commissioner,
Department of Commerce and Economic Development; Guy Bell,
Director of Administrative Services, Department of Commerce
and Economic Development.
SUMMARY INFORMATION
HB 358 "An Act allowing a mobile home owner to request a
certificate of title from the Department of Public
Safety."
HB 358 was HELD in Committee for further
discussion.
HB 361 "An Act making an appropriation to the Department
of Education for support of kindergarten, primary,
and secondary education and community schools
programs; and providing for an effective date."
HB 361 was HELD in Committee for further
discussion.
HB 370 "An Act making appropriations for the operating
and loan program expenses of state government and
to capitalize funds; and providing for an
effective date."
HB 370 was HELD in Committee for further
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discussion.
HB 505 "An Act making appropriations to and from the
constitutional budget reserve fund under art. IX,
sec. 17(c), Constitution of the State of Alaska,
for operating and capital expenses of state
government for fiscal year 1994; and providing for
an effective date."
CSHB 505 (FIN) was reported out of Committee with
a "do pass" recommendation.
HOUSE BILL NO. 358
"An Act allowing a mobile home owner to request a
certificate of title from the Department of Public
Safety."
Co-Chair Larson notified members of his intention to waive
HB 358 from Committee.
HOUSE BILL NO. 361
"An Act making an appropriation to the Department of
Education for support of kindergarten, primary, and
secondary education and community schools programs; and
providing for an effective date."
HOUSE BILL NO. 505
"An Act making appropriations to and from the
constitutional budget reserve fund under art. IX, sec.
17(c), Constitution of the State of Alaska, for
operating and capital expenses of state government for
fiscal year 1994; and providing for an effective date."
Co-Chair Larson provided members with a proposed committee
substitute, work draft #8GH2045\O, dated 3/28/94 (copy on
file). He explained that the committee substitute combines
HB 505 and HB 361. He noted that section (f) of HB 505 was
deleted. He added that the following language questioned by
members in section (g), on page 3, lines 9 and 10, of the
former version of CSHB 505 (FIN) was also removed.
* "Thus, the legislature did not anticipate that all
money derived from the settlement of informal tax
conferences would be spent."
Co-Chair Larson observed that pupil transportation costs
increased by approximately $1 million dollars, while debt
service decreased by approximately $1 million dollars.
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Representative Martin MOVED to ADOPT work draft #8GH2045\O,
dated 3/28/94. There being NO OBJECTION, it was so ordered.
Representative Brown provided members with AMENDMENT 1 (copy
on file). Representative Brown discussed Amendment 1. She
noted that there are four parts to Amendment 1:
Part 1 * Delete page 2, line 18 through line 21;
"The attorney general reasoned that section 17
applied to administrative actions that were
similar to litigation, such as the formal hearings
held by the Department of Revenue."
Part 2 * Delete page 2, line 29 through page 3 line 4;
"The money in the general fund was available for
appropriation by the legislature and would be
applied as necessary to meet any fiscal need.
Thus, in fiscal year 1992, accounting conventions
show that the amounts collected from informal
conferences in fiscal years 1991 and 1992 were
used to cover the fiscal year 1992 general fund
deficit. Had that money not been available, the
amount transferred into the general fund from the
statutory constitutional budget reserve fund (As
37.05.540) would have been significantly
increased."
Part 3 * Delete after "1993", page 3, line 9 through
line 12; and
"Because of this shortfall, any anticipated
surplus representing settlements of informal tax
conferences, and amounts received from informal
tax conference settlements occurring after July 1,
1994, must be expended to fully fund the capital
and operation appropriations enacted in 1993."
Part 4 * Delete page 3, line 18 through line 22,
subsection (h).
"On November 19, 1993, the court issued its
decision which concluded that art. IX, sec. 17 of
the state constitution applied to informal tax
conferences. On November 29, 1993, the state
presented evidence that retroactive application of
the court's ruling, requiring transfer of over
$940,000,000 from the general fund, would disrupt
state fiances and put at risk the justifiable
reliance interest of Alaskans and municipalities
throughout the state."
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Representative Brown noted that part 1 contains reasoning by
the Attorney General which was not upheld by the courts.
She maintained that this information is irrelevant due to
the court's ruling.
Representative Brown explained that part 2 was included
because she is unclear what accounting conventions are being
referred to in this section.
Representative Brown disagreed that informal tax settlements
referred to in part 3 had to be expended.
Representative Navarre referred to page 2, line 29 through
page 3 line 4. He pointed out that the statutory
Constitutional Budget Reserve Account is a fund in the
General Fund. He reflected that the surplus amount, in 1991
and 1992, was greater than the amount received in
settlement.
Co-Chair Larson MOVED to AMEND Amendment 1, part 2, change
page 2, line 21 to page 2, line 30. The amendment to the
amendment would leave the statement, "The money in the
general fund was available for appropriation by the
legislature and would be applied as necessary to met any
fiscal need," in the legislation. Representative Navarre
suggested that the statement is true but when taken in
connection with subsection (d), which says that money from
informal conferences was put in the Fund, is misleading. He
noted that money put in the Fund, counter to what the courts
have said, was not available.
Co-Chair Larson argued that the legislature was operating
under the Attorney General's opinion that the money was
properly deposited. Representative Navarre suggested that
the legislation should reflect that the "legislature
incorrectly assumed that the money in the General Fund was
available for appropriation." Co-Chair Larson disagreed
with Representative Navarre's statement.
Representative Martin emphasized that when the Minority
moved to withdraw $92.0 million dollars in 1991, the
Majority stated that they would get a court opinion during
the interim. He noted that no opinion was obtained. He
disagreed with the deletion of any portion of the
subsection.
Representative Brown noted that, as a House Finance
Committee member, she was the first person to move to
withdraw the $92.0 million dollars from the General Fund and
deposit the money into the Constitutional Budget Reserve
Account. She emphasized that the House of Representatives
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passed a letter of intent saying that they disagreed with
the Attorney General's opinion.
Representative Martin OBJECTED to the amendment to Amendment
1. A roll call vote was taken on the motion.
IN FAVOR: Brown, Foster, Grussendorf, Hoffman, Larson,
MacLean
OPPOSED: Hanley, Martin, Navarre, Parnell, Therriault
The MOTION PASSED (6-5).
Representative Grussendorf MOVED TO DIVIDE Amendment 1.
There being NO OBJECTION, Amendment 1 was divided into four
parts.
Representative Brown MOVED to ADOPT part 1 of Amendment 1,
Delete page 2, line 18 through line 21. Representative
Martin OBJECTED. A roll call vote was taken on the motion.
IN FAVOR: Brown, Grussendorf, Hanley, Hoffman, Navarre
OPPOSED: Foster, Martin, Parnell, Therriault, MacLean,
Larson
The MOTION FAILED (5-6).
There being NO OBJECTION, part 2 of Amendment 1 was adopted
as amended.
Representative Brown MOVED to ADOPT part 3, Amendment 1,
delete after "1993", page 3, line 9 through line 12. A roll
call vote was taken on the motion.
IN FAVOR: Brown, Hoffman, Grussendorf, Navarre, MacLean
OPPOSED: Foster, Hanley, Martin, Parnell, Therriault,
Larson
The MOTION FAILED (5-6).
Representative Brown WITHDREW part 4, Amendment 1.
Representative Navarre MOVED that $945.0 million dollars
plus interest be transferred from the General Fund to the
Constitutional Budget Reserve Account and than appropriated
back from the Constitutional Budget Reserve Account to the
General Fund to cover FY 94 appropriations; and that FY 95
appropriations in HB 505 be made from the General Fund.
In response to a question by Representative Hoffman, Co-
Chair Larson asserted that $600.0 to $650.0 million dollars
from the General Fund was spent on educational needs in FY
94. He conceded that money misplaced into the General Fund
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was diluted throughout state government.
Representative Brown spoke in support of Representative
Navarre's motion to amend. She questioned how the motion
would impact the effective date clauses. She noted that new
language would be needed to provide for the transfer from
the Constitutional Budget Reserve Account back to the
General Fund. She observed that the motion should be
amended to specify an effective date for that portion of the
transfer.
Representative Navarre noted that it is not clear whether
the money is accounted as being in the General Fund or the
Constitutional Budget Reserve Account. He added that an
immediate effective date would be appropriate for all
sections except for the educational appropriations from the
General Fund, which would have a July 1, 1994 effective
date. He asserted that the retroactive portion, for FY 94
education spending would not be necessary if the transfer is
made from the General Fund to the Constitutional Budget
Reserve Account and back to the General Fund.
Discussion pursued regarding the need to retain retroactive
effective dates. Representative Navarre suggested that the
transfer from the Constitutional Budget Reserve Account to
the General Fund contain a retroactive effective date.
Representative Martin argued that the effective dates should
remain as their are in CSHB 505 (FIN).
In response to a question by Representative Brown, Co-Chair
Larson clarified that the amount removed from the
Constitutional Budget Reserve Account would be $909.1
million dollars for FY 94 and $738.5 million dollars for FY
95. He noted that section 8 would be included in the $909.1
million dollars for FY 95. Representative Brown observed
that all but approximately $50.0 million dollars from the
Constitutional Budget Reserve Fund would be spent.
Representative Navarre referred to section 9. He noted that
section 9 requires a three-quarters vote, absent the
constitutional authority to spend the funds. Co-Chair
Larson agreed that section 9 ties appropriations to Article
IX, section 17 (c) of the Constitution of the state of
Alaska, requiring a three-quarter majority of both houses of
the legislature to adopt the legislation.
Representative Navarre restated his motion to amend. A roll
call vote was taken on the motion.
IN FAVOR: Brown, Grussendorf, Hoffman, Navarre
OPPOSED: Foster, Hanley, Martin, Parnell, Therriault,
MacLean, Larson
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The MOTION FAILED (4-7).
Representative Martin suggested that the Committee should
reconsider the adoption of part 2, Amendment 1. Co-Chair
referred to page 2, lines 26 through 30. He emphasized that
the statements contained in these sections indicate when
money was deposited by the Department of Revenue and when it
was used.
Representative Brown questioned whether the findings
sections should be retroactive. She pointed out that there
are several areas where finding sections are retroactive to
a point in 1993 but references events which occurred in
1994. Discussion pursued regarding the effective date of
the findings sections.
(Tape Change, HFC 94-97, Side 2)
Representative Brown MOVED TO TABLE CSHB 505 (FIN).
Representative Martin OBJECTED. A roll call vote was taken
on the motion.
IN FAVOR: Brown, Grussendorf, Hoffman, Navarre
OPPOSED: Foster, Hanley, Martin, Parnell, Therriault,
MacLean, Larson
The MOTION FAILED (4-7).
Representative Martin MOVED to report CSHB 505 (FIN) out of
Committee with individual recommendations. A roll call vote
was taken on the motion.
IN FAVOR: Foster, Hanley, Martin, Parnell, Therriault,
MacLean, Larson
OPPOSED: Brown, Grussendorf, Hoffman, Navarre
The MOTION PASSED (7-4).
CSHB 505 (FIN) was reported out of Committee with a "do
pass" recommendation.
HOUSE BILL NO. 370
"An Act making appropriations for the operating and
loan program expenses of state government and to
capitalize funds; and providing for an effective date."
PAUL FUHS, ACTING COMMISSIONER, DEPARTMENT OF COMMERCE AND
ECONOMIC DEVELOPMENT discussed program receipts. He noted
that three-fourths of the department's budget is comprised
of program receipt authority. He noted that the
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Subcommittee's proposed budget represents a 10 percent
general fund reduction for the Department of Commerce and
Economic Development. He estimated the reduction at $800.0
thousand dollars beyond the proposed House Majority cap. He
observed that there has been a $5.5 million dollar reduction
over FY 93.
Representative Navarre MOVED to ADOPT AMENDMENT 1 (copy on
file). Amendment 1 would reinstate $130.0 general fund
dollars for the Alaska Film Office. Co-Chair MacLean
OBJECTED. She maintained that the Division's staff can
provided technical assistance to film companies.
Representative Navarre maintained that every dollar invested
in this component achieves a 93 to 1 return. A roll call
vote was taken on the MOTION to adopt AMENDMENT 1.
IN FAVOR: Brown, Grussendorf, Hoffman, Navarre
OPPOSED: Foster, Hanley, Martin, Parnell, Therriault,
MacLean, Larson
The MOTION FAILED (5-6).
Representative Navarre MOVED to ADOPT AMENDMENT 2 (copy on
file). Amendment 2 would add $1.5 million general fund
dollars for the Alaska Tourism Marketing Council.
Co-Chair MacLean asserted that the Subcommittee's reduction
of $3.0 million dollars is high. She MOVED to AMEND
Amendment 2 to delete "$1.5" and insert "1.0" million
dollars. She noted that provisions contained in the ominous
bill are aimed at raising program receipts through program
fees in the Department of Commerce and Economic Development.
Discussion pursued regarding potential fee increases.
Representative Martin OBJECTED to the motion to amend.
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Hoffman, Navarre, Parnell,
Therriault, Foster, Hanley, MacLean, Larson
OPPOSED: Martin
The MOTION PASSED (5-6).
Representative Parnell MOVED to AMEND Amendment 2 to change
the funding source from the General Fund to International
Trade Offices. Co-Chair MacLean spoke against the amendment
to the amendment. Commissioner Fuhs expressed opposition to
the amendment to the amendment. He emphasized the
importance of the International Trade Offices. He discussed
funding for international offices through the Division of
Tourism.
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Representative Brown provided members with AMENDMENT 3 (copy
on file). She discussed amendment 3 as it relates to
amendment 2. She observed that amendment 3 would close the
international trade offices in Japan, Korea and Taiwan.
Representative Martin stressed the importance of
international trade. Representative Grussendorf objected to
the amendment to amendment 2, to change the funding source.
Co-Chair MacLean detailed projects promoted by the
international trade offices.
Representative Brown referred to newspaper accounts that the
Tokyo Office has stopped providing assistance to small
businesses and is concentrating almost exclusively on
natural gas marketing. Commissioner Fuhs disagreed with
Representative Brown's assessment of the Tokyo office's
promotion of Alaskan products and businesses. He detailed
smaller projects supported by the international offices. He
maintained that 95 percent of the work done by international
offices is on behalf of smaller projects.
A roll call vote was taken on the MOTION to add $1.0 million
dollars to the Alaska Tourism Marketing Council and delete
$696.0 thousand dollars from the Offices of International
Trade.
IN FAVOR: Therriault, Brown, Hoffman, Navarre, Parnell
OPPOSED: Grussendorf, Foster, Hanley, Martin, Larson
MacLean
The MOTION FAILED (5-6).
A roll call vote was taken on the MOTION to adopt AMENDMENT
2 as amended to $1.0 million dollars.
IN FAVOR: Brown, Hoffman, Grussendorf, Navarre, MacLean
OPPOSED: Foster, Hanley, Martin, Parnell, Therriault,
Larson
The MOTION FAILED (5-6).
Representative Brown MOVED to ADOPT AMENDMENT 3 (copy on
file). Representative Martin OBJECTED. Representative
Brown emphasized that funding of the International Trade
component is a lower priority than the state's mandatory
obligations.
Co-Chair MacLean spoke against amendment 3. Commissioner
Fuhs noted that the International Trade component was
reduced 25 percent by the House Finance Subcommittee.
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Representative Parnell MOVED to AMEND Amendment 3 to add an
increment of $696.0 thousand dollars to the Alaska Tourism
Council. Co-Chair MacLean OBJECTED. A roll call vote was
taken on the MOTION.
IN FAVOR: Therriault, Brown, Hoffman, Navarre, Parnell
OPPOSED: Grussendorf, Foster, Hanley, Martin, Larson
MacLean
The MOTION FAILED (5-6).
Representative Brown observed that amendment 3 would retain
funding for the Anchorage International Trade Office.
A roll call vote was taken on the MOTION to adopt AMENDMENT
3.
IN FAVOR: Hanley, Hoffman, Navarre, Parnell, Therriault,
Brown
OPPOSED: Grussendorf, Martin, Foster, MacLean, Larson
The MOTION PASSED (6-5).
Representative Navarre MOVED to ADOPT AMENDMENT 4 (copy on
file). He explained that amendment 4 would eliminate the
$125.0 increment to the grants line for rural tourism and
increase the Alaska Tourism Marketing Council by $125.0
thousand dollars. He observed that this was the only
increment in the Department of Commerce and Economic
Development. He noted emphasized that the Alaska Tourism
Marking Council supports tourism statewide.
Co-Chair MacLean OBJECTED. She noted that the Alaska
Tourism Marketing Council does not have rural
representation.
(Tape Change, HFC 94-98, Side 1)
Commissioner Fuhs expressed opposition to amendment 4. He
explained the functions of the rural tourism grant.
Representative Navarre WITHDREW AMENDMENT 4.
Representative Brown MOVED to ADOPT AMENDMENT 5 (copy on
file). She explained that amendment 5 would reduce personal
services in AIDEA by $450.0 thousand dollars. The amendment
would eliminate two of the four deputy director positions.
She emphasized the need to prioritize the budget. She added
that the $200.0 thousand dollar increment in the contractual
line, for new feasibility studies on energy resources would
also be deleted.
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Commissioner Fuhs stressed that the deputy director
positions represent specialized skills in finance and
project development. He emphasized that the positions help
to maintain a high credit rating. Discussion pursued in
regards to the feasibility studies.
A roll call vote was taken on the MOTION to adopt AMENDMENT
5.
IN FAVOR: Therriault, Brown
OPPOSED: Grussendorf, Hoffman, Navarre, Foster, Hanley,
Martin, Parnell, MacLean, Larson
The MOTION FAILED (2-9).
HB 370 was HELD in Committee for further discussion.
ADJOURNMENT
The meeting adjourned at 10:45 a.m.
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