Legislature(1993 - 1994)

02/09/1994 01:30 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                        February 9, 1994                                       
                            1:30 P.M.                                          
                                                                               
  TAPE HFC 94 - 28, Side 1, #000 - end.                                        
  TAPE HFC 94 - 28, Side 2, #000 - end.                                        
  TAPE HFC 94 - 29, Side 1, #000 - #547.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House Finance  Committee meeting                 
  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 Grussendorf    Representative Therriault                      
  Representative Foster                                                        
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative Jeannette James; Representative Jim Nordlund;                 
  Representative Cynthia Toohey; Representative  Bettye Davis;                 
  Renee Chatman, Staff  to Representative Bettye Davis;  James                 
  L.   Baldwin,   Assistant  Attorney   General-General  Civil                 
  Section, Department of Law; Margo Knuth,  Assistant Attorney                 
  General-Criminal  Division,  Department of  Law;  Jay Hogan,                 
  Staff  to Representative  Ron  Larson; Rod  Mourant,  Deputy                 
  Commissioner, Department of Revenue; Diane Schenker, Special                 
  Assistant, Department  of Corrections;  Tamara Brandt  Cook,                 
  Director, Division  of Legal  Services, Legislative  Affairs                 
  Agency; Joseph Dimantio, (teleconference), Anchorage; Sandra                 
  Ray,    (teleconference),     Anchorage;    Lynda     Adams,                 
  (teleconference), Ketchikan; Cheri  Davis, (teleconference),                 
  Ketchikan.                                                                   
                                                                               
  SUMMARY                                                                      
  HB 58     An  Act   relating  to  the  budget  reserve  fund                 
            established under  art. IX, sec.  17, Constitution                 
            of the State of Alaska.                                            
                                                                               
            CS HB 58 (FIN) was  reported out of Committee with                 
            "no  recommendation" and with zero fiscal notes by                 
            the  Department  of  Law  and  the  Department  of                 
            Administration.                                                    
  HB 61     An  Act  relating to  the  offense of  operating a                 
                                                                               
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            motor  vehicle,  aircraft,  or   watercraft  while                 
            intoxicated; and providing for an effective date.                  
                                                                               
            HB   61  was   held   in  Committee   for  further                 
            discussion.                                                        
  HB 128    An  Act  relating  to   early  acknowledgement  of                 
            paternity for the child of an unmarried mother.                    
                                                                               
            CS HB 128 (FIN) was reported out of Committee with                 
            a "do pass" recommendation and  with a zero fiscal                 
            note  by  the  Department  of  Health  and  Social                 
            Services   and  a   fiscal  impact  note   by  the                 
            Department of Health and Social Services.                          
  HOUSE BILL 61                                                                
                                                                               
       "An  Act relating to  the offense of  operating a motor                 
       vehicle, aircraft, or watercraft while intoxicated; and                 
       providing for an effective date."                                       
                                                                               
  REPRESENTATIVE  JIM NORDLUND  explained  that  HB  61  would                 
  reduce the legal definition of intoxication for the crime of                 
  driving while intoxicated  from .10%  to .08% blood  alcohol                 
  content which would mean it would be illegal for a person to                 
  be in  control of a  motor vehicle, aircraft,  or watercraft                 
  with a blood alcohol level of .08% or greater.                               
                                                                               
  Five states have  already lowered their legal  definition of                 
  intoxication  to  .08%.   All  of  Canada has  a  .08% blood                 
  alcohol threshold, and all European nations prohibit driving                 
  with a .08% or lower blood alcohol level.                                    
                                                                               
  Scientific  evidence  has  established that  the  risk  of a                 
  driver being involved in a serious of fatal  crash increased                 
  as  the alcohol concentration  in the body  increased.  Many                 
  studies have shown  that measurable impairment to  operate a                 
  motor vehicle begins in most drivers  at or below .05% blood                 
  alcohol level, and that all drivers  are impaired at a blood                 
  alcohol level of .08%.                                                       
                                                                               
  Representative  Nordlund  explained  that  establishing  the                 
  allowable blood  alcohol level  at .08%  would increase  the                 
  probability of  obtaining  convictions  for  drunk  driving.                 
  Because the law  will increase the certainty  of conviction,                 
  it would be more  effective than current law to  deter drunk                 
  driving and to reduce the number of alcohol related crashes.                 
                                                                               
  In  addition to  the  inherent  benefits  of the  bill,  the                 
  National Highway Traffic Safety Administration has  notified                 
  the State that Alaska currently receives $688,000 in federal                 
  funds  annually  for  Highway  Safety  Planning and  may  be                 
                                                                               
                                2                                              
                                                                               
                                                                               
  eligible for a 30% or more increase if House Bill 61 passes.                 
  If similar legislation  had passed  last year, Alaska  would                 
  have already received the benefits of the increase.                          
                                                                               
  Representative Nordlund  provided the Committee with  a copy                 
  of two amendments.  (Copies on file).                                        
                                                                               
  JOSEPH DIMANTIO, DIRECTOR, ALASKA COUNCIL FOR THE PREVENTION                 
  OF  DRUG AND ALCOHOL  ABUSE, (TESTIFIED VIA TELECONFERENCE),                 
  ANCHORAGE, spoke in support of the proposed legislation.                     
                                                                               
  SANDRA  RAY, EXECUTIVE  DIRECTOR  OF  MOTHERS AGAINST  DRUNK                 
  DRIVING, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, spoke in                 
  support of HB 61.                                                            
                                                                               
  LYNDA  ADAMS,  ALASKANS FOR  DRUG  FREE USE,  (TESTIFIED VIA                 
  TELECONFERENCE), KETCHIKAN, spoke in support of the proposed                 
  legislation.                                                                 
                                                                               
  CHERI  DAVIS,  ALASKANS FOR  DRUG  FREE USE,  (TESTIFIED VIA                 
  TELECONFERENCE), KETCHIKAN, spoke in support of HB 61.                       
                                                                               
  DIANE   SCHENKER,   SPECIAL    ASSISTANT,   DEPARTMENT    OF                 
  CORRECTIONS,  explained that  the Department  of Corrections                 
  will revise last year's  fiscal note to reflect  the expense                 
  incurred.                                                                    
                                                                               
  MARGO KNUTH, ASSISTANT  ATTORNEY GENERAL-CRIMINAL  DIVISION,                 
  DEPARTMENT OF LAW, noted that the Department of Law strongly                 
  supports the  proposed  legislation.   She  emphasized  that                 
  alcohol  is  Alaska's  number  one  crime  problem  and  the                 
  legislation would help to address that concern.                              
                                                                               
  Discussion   followed   regarding   the   accuracy  of   the                 
  Intoximeter 3000 reading.  The  intoximeter is calibrated at                 
  least  every sixty days  and has been  proven to have  a one                 
  percent margin of error.                                                     
                                                                               
  HB 61 was HELD in Committee for further discussion.                          
  HOUSE BILL 128                                                               
                                                                               
       "An Act  relating to early acknowledgement of paternity                 
       for the child of an unmarried mother."                                  
                                                                               
  RENEE  CHATMAN,  STAFF   TO  REPRESENTATIVE  BETTYE   DAVIS,                 
  explained  that  the non-support  of  children has  become a                 
  national epidemic with one-fourth of  children in the United                 
  States now living with  a single parent and an  estimated 60                 
  percent  spending at  least  part of  their  childhood in  a                 
  single-parent home.  In  also most half of these  cases, the                 
  absent parent does  not pay  child support.   Many of  these                 
                                                                               
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  children   are   born   out-of-wedlock   and  paternity   is                 
  established  in  only  30  percent  of  such  cases.    That                 
  interprets into  70 percent  of out-of-wedlock  births where                 
  there is no proof of paternity and no means to collect child                 
  support.                                                                     
                                                                               
  She added, the  proposed legislation  would add language  to                 
  A.S. 18.50 and would require the State registrar  to prepare                 
  a paternity acknowledgment  form to be  used at the time  of                 
  birth.   The form,  signed by  both parents,  will list  the                 
  father's  full  name and  social  security number  and would                 
  require the signature  of a  notary public.   The bill  also                 
  would  lay  out specific  responsibilities  of hospitals  or                 
  midwives to get  the proper information  on the form and  to                 
  distribute   appropriate   paternity   materials  from   the                 
  Department of Health and Social Services.                                    
                                                                               
  The legislation is  an attempt to get acknowledgment  at the                 
  time  when a  father is  particularly willing  to  develop a                 
  relationship  with  the  child,  which  would  benefit  both                 
  parties.  The child  would have the security of  knowing who                 
  his/her father  is and  could  gain access  to support  from                 
  Social Security, survivor and veteran benefits  and worker's                 
  compensation.   The  child  would also  be  entitled to  the                 
  father's inheritance, health insurance and would have access                 
  to the family medical history.                                               
                                                                               
  Ms.  Chatman provided the Committee  with Amendment #1 & #2.                 
  (Copies  on file).   The  amendments were  submitted at  the                 
  request of  the  Alaska Child  Support Enforcement  Division                 
  (CSED) and would be necessary to bring CSED into  compliance                 
  with the recent paternity changes resulting from the changes                 
  of the Reconciliation  Act of 1993.   If the amendments  are                 
  not added to  the legislation, CSED could  jeopardize losing                 
  funds.                                                                       
                                                                               
  ROD  MOURANT,  DEPUTY COMMISSIONER,  DEPARTMENT  OF REVENUE,                 
  noted  that the  Department strongly  endorses the  proposed                 
  legislation.   The establishment  of paternity  is the  most                 
  time consuming and expensive work done by the Department  of                 
  Revenue's Child Support Enforcement Division.                                
                                                                               
  REPRESENTATIVE  CYNTHIA  TOOHEY  spoke  in  support  of  the                 
  proposed legislation.                                                        
                                                                               
  Representative Parnell MOVED  to adopt Amendment #1.   There                 
  being NO OBJECTION, it was adopted.                                          
                                                                               
  Co-Chair MacLean  MOVED to adopt Amendment #2.   There being                 
  NO OBJECTIONS, it was adopted.                                               
                                                                               
  Representative Martin MOVED to report CS SS HB 128 (FIN) out                 
                                                                               
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  of Committee  with individual  recommendations and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CC SS HB  128 (FIN) was reported out of Committee with a "do                 
  pass"  recommendation and  with a  zero fiscal  note by  the                 
  Department of Health and Social Services and a fiscal impact                 
  note by the Department of Health and Social Services.                        
                                                                               
  (Tape Change HFC 94-28, Side 2).                                             
  HOUSE BILL 58                                                                
                                                                               
       "An Act relating to the budget reserve fund established                 
       under art.  IX, sec. 17,  Constitution of the  State of                 
       Alaska."                                                                
                                                                               
  Representative Brown  provided the Committee  with Amendment                 
  Representative Hanley OBJECTED.                                              
                                                                               
  Representative Brown explained that Amendment #1 stated that                 
  all money that may  be withdrawn by the Legislature  "shall"                 
  be included, unless  it has  already been appropriated,  and                 
  can    be    withdrawn   without    further   appropriation.                 
  Representative  Brown  pointed  out the  problem  of  having                 
  "quasi"  dedicated funds or attempts to hoard off money from                 
  the General Fund.  She stated it would not be appropriate to                 
  be excluding those funds.   There is no legal basis for  it.                 
  Representative   Brown  stated  that   Ms.  Cook   with  the                 
  Legislative Affairs  Agency, Legal  Services, felt  that the                 
  proposed    legislation  was  not   in  agreement  with  the                 
  Constitution   and  would   be   an  overreaching   attempt.                 
  Representative  Brown stated that Amendment #1 addresses the                 
  legal opinion and advice of that Agency.                                     
                                                                               
  Representative   Brown   thought  Amendment   #1   would  be                 
  consistent and  would make  sense for  Alaska over  the long                 
  term and suggested that both  the Majority and the  Minority                 
  partake in decisions made regarding the Budget Reserve.                      
                                                                               
  Representative Hanley  recommended clarifying the  record to                 
  describe  the  terms  "or the  money  in  funds or  accounts                 
  designated by laws as outside of  the general fund" and what                 
  they included.                                                               
                                                                               
  Co-Chair Larson provided the Committee with copies of Alaska                 
  Statutes  Section 37.05.146  which defines  program receipts                 
  and non-general fund program receipts.  [Attachment #1].                     
                                                                               
  Representative  Grussendorf  referenced  A.S. 37.05.146  and                 
  pointed out that  (J) lists  the permanent fund.   He  added                 
                                                                               
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  that  the  Constitution and  the  articles dealing  with the                 
  Permanent Fund does  implicate the interest earned  could be                 
  used for the operation and capital budget.  He stressed that                 
  language  was  in  the  Constitution  and those  funds  were                 
  available  as a  pool  of  money  to  be  considered  before                 
  touching     the     Constitutional      Budget     Reserve.                 
  Constitutionally, the Permanent Fund  earnings are available                 
  to the legislative body.   He emphasized the corpus  of that                 
  account would not be available.                                              
                                                                               
  Co-Chair MacLean asked  if the income of  the Permanent Fund                 
  could be used.  Representative  Grussendorf replied it could                 
  be used.  He  pointed out that the Earnings  Reserve Account                 
  had  been  used to  pay  off  "hold harmless"  items  in the                 
  General Fund.                                                                
                                                                               
  Representative Martin  asked for  the legal  opinion of  the                 
  Legislative   Affairs   Agency.      Representative   Martin                 
  understood that the Permanent  Fund earnings were considered                 
  part of the Permanent Fund Corporation and would be separate                 
  from General Funds.  He  suggested that this information  be                 
  made clear to the people of the State.                                       
                                                                               
  Representative Brown disagreed  with Representative  Martin.                 
  It was her understanding  that in the lower  Court decision,                 
  the judge totally objected at  looking at legislative intent                 
  as  having  anything  to  do   with  the  interpretation  of                 
  "administrative  proceedings".   He  stated  that  "what the                 
  legislative  body  thought  was  relevant  was  not".    She                 
  requested that Tam Cook testify  regarding what is meant  by                 
  "money in funds or accounts designated  by law as outside of                 
  the general fund".                                                           
                                                                               
  TAMARA  BRANDT COOK,  DIRECTOR, DIVISION OF  LEGAL SERVICES,                 
  LEGISLATIVE  AFFAIRS,  responded to  Representative Hanley's                 
  question regarding "  money in funds or  accounts designated                 
  by  law as  outside of the  General Fund".   She pointed out                 
  that the categories established  in separate paragraphs (1),                 
  (2), and (3) of the amendment apply to the repayment section                 
  of  the  Constitutional  provision, Subsection  (D).    That                 
  section   differs  as  it  specifically  provides  that  the                 
  repayment is going to:                                                       
                                                                               
       1.   Come out of general fund money, and;                               
       2.   Will give  the Legislature the power  to implement                 
            that section.                                                      
                                                                               
  To that  extent, it  is different  from the  others, as  the                 
  Constitution states that the repayment  money will come from                 
  general  fund  revenues  only.   The  Constitution  does not                 
  define that word.                                                            
                                                                               
                                                                               
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  The first category  is an attempt to  define it.  It  states                 
  that money in funds or accounts  which are designated by law                 
  as outside the general fund are not used for repayment.  Ms.                 
  Cook said there is at least one significant account which is                 
  currently outside the General  Fund as a matter of law - the                 
  Earnings Reserve  Account which  is in  the Permanent  Fund.                 
  Essentially,  what  this  says  is,  "When  the  Legislature                 
  establishes an account, the  Legislature can designate,  for                 
  purposes  of this provision, whether it is inside or outside                 
  the Permanent Fund", for purposes of the repayment.                          
                                                                               
  Representative  Hanley  asked  if  that  was  the  repayment                 
  provision and not what is available for appropriation.   Ms.                 
  Cook  pointed out  that  the language  earlier  in the  bill                 
  points  out   two  important  differences  when  looking  at                 
  appropriations from the Budget Reserve Fund.  Ms. Cook noted                 
  that the committee substitute does  not include the language                 
  that refers to the  General Fund in applying the  formula of                 
  funds available for appropriation.  It does exist in Section                 
  (D) but  does not exist  in Section (B).   In addition,  she                 
  added,  there  is   not  language  which  would   allow  the                 
  Legislature  to implement  the section  which  would clearly                 
  give  the Legislature some  discretion for  interpreting the                 
  language.                                                                    
                                                                               
  She felt  that a  court would  be "literal  minded" when  it                 
  attempts  to  ascertain   which  funds  are   available  for                 
  appropriation for purposes of applying the formula that lets                 
  the Legislature appropriate from the  Budget Reserve Fund to                 
  meet shortfalls.                                                             
                                                                               
  Ms.  Cook  stated that  the test  she  used in  drafting the                 
  amendment is that one could argue to a court forcefully that                 
  surely  the  amount  available  for  appropriation  was  not                 
  intended   to   include   amounts    already   appropriated.                 
  Logically, that  must be  so, because  if not  so, then  the                 
  entire  structure  of  the  Budget  Reserve  Fund  unravels.                 
  Section (B) then could not be applied.                                       
                                                                               
  If reappropriation  would have  to be  considered, Ms.  Cook                 
  asked herself how many  years back would it be  necessary to                 
  check for unaccounted balances.   She said this would  be "a                 
  nightmare"  and  felt that  even  the most  determined court                 
  would be willing to agree that if the funds had already been                 
  appropriated, they would not  be available for appropriation                 
  within the terms of this language.   That is essentially the                 
  test which Ms. Cook said she tried to establish at the first                 
  part of Amendment #1.                                                        
                                                                               
  Representative Hanley  asked, for  example, if the  Railbelt                 
  Energy Fund money  had been appropriated by  the Legislature                 
  as specifically, not to be withdrawn from the State Treasury                 
                                                                               
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  without further appropriation,  would it be available.   Ms.                 
  Cook explained the reason  she used that formula.   She said                 
  the Legislature can  appropriate funds  to AHFC for  grants,                 
  however, only if appropriations are made for the grants each                 
  year.  She added, it would be difficult to stand in front of                 
  the courts each  year and state that the money  would not be                 
  available for appropriation.  She  said within the structure                 
  of the fund which has been  established, it is a requirement                 
  that   no  expenditures  can  be  made  without  an  act  of                 
  appropriation as  a legal  matter.   There are  quite a  few                 
  funds like that.  Most of  AHFC funds do not have that  type                 
  of language.                                                                 
                                                                               
  Ms. Cook continued, stating that in fact the Railbelt Energy                 
  Fund,  is  now  depleted  and  it  is no  longer  an  issue.                 
  However, when it  was a large  fund, it was established  and                 
  the Legislature stated specifically that  money could not be                 
  used from that  fund without an  act of appropriation.   The                 
  Legislature also stated as  a result of the manner  in which                 
  it was established, that money within the fund would be used                 
  for certain limited purposes.   The Legislature kept control                 
  over the fund by requiring additional appropriations.                        
                                                                               
  She  added that it will be  difficult to convince a court of                 
  law that such money is not  available for appropriation when                 
  the  statute  itself   clearly  states   that  it  must   be                 
  appropriated "again" before it can be expended.                              
                                                                               
  Representative Martin pointed out that  he had introduced HB
  35.  He  did not know  that Representative Barnes had  asked                 
  Ms.   Cook  for   an   opinion   pertaining  to   repayment.                 
  Representative Martin  understood that the  earnings reserve                 
  account was under  the Permanent Fund Corporation  and would                 
  not normally be considered as part of the General Funds.  He                 
  asked if this was correct.                                                   
                                                                               
  Ms.  Cook  stated that  the  Earnings Reserve  Account money                 
  could not be used for  repayment, because the statute states                 
  that the account is established in  the Permanent Fund.  The                 
  Permanent Fund is established as  a matter of constitutional                 
  law and therefore a court would recognize that the Permanent                 
  Fund is outside of  the General Fund.  Because  the statutes                 
  says the Earnings Reserve Account is  in the Permanent Fund,                 
  under   the   constitutional   provision  establishing   the                 
  Permanent Fund, there  is a provision which states  that the                 
  income can go to the General Fund or as is designated by the                 
  Legislature.                                                                 
                                                                               
  Ms. Cook said this is a situation where the Constitution has                 
  given the Legislature  the authority to identify  where this                 
  money will go.  The Legislature has chosen to keep the money                 
  within the  Permanent Fund itself, separated  for accounting                 
                                                                               
                                8                                              
                                                                               
                                                                               
  purposes.  For this  reason, Ms. Cook did not feel  that the                 
  money could be placed under  the repayment requirement.  She                 
  believed that the funds would be subject to appropriation.                   
                                                                               
  Representative Martin stated that the court can not tell the                 
  government to reappropriate the money.  He thought that only                 
  the Legislature  has the  responsibility to  make whole  the                 
  constitutional budget  account.   He asked  if the  Governor                 
  could take  the  earnings  reserve  or  any  money  that  is                 
  available and put it into  the Constitutional Budget Reserve                 
  Account.  Ms. Cook thought that  the Governor could not take                 
  the  Earnings  Reserve Account,  however, she believed  that                 
  the Governor could "correct an accounting error".                            
                                                                               
  Ms. Cook  stated that the  court has said,  "The Legislature                 
  has placed money into the wrong  account in the General Fund                 
  and it  should have gone  somewhere else".   As a  matter of                 
  correcting an accounting  error, the Governor can  order the                 
  Department of Revenue  to return money from the General Fund                 
  to the Budget Reserve Fund.                                                  
                                                                               
  Ms. Cook stated that  under the terms of the  Superior Court                 
  order, which  has not currently  modified it on  the Supreme                 
  Court level, essentially, the Governor  has been directed by                 
  the end of the legislative session, to replace the money "as                 
  an  accounting matter".    The obvious  result  is that  the                 
  Legislature ends up with a depleted  General Fund.  Ms. Cook                 
  said  the  fact  that  the  General  Fund  is  substantially                 
  decreased  is a  matter  for the  Legislature  to deal  with                 
  through the appropriation process.                                           
                                                                               
  Representative Martin asked  Ms. Cook what she  believed was                 
  meant by  the people  voting on  the amendment  of what  was                 
  available for use.   He asked if  the public was aware  that                 
  the earnings reserve must be used first, before touching the                 
  Constitutional Budget Reserve.                                               
                                                                               
  Ms. Cook replied  that she could  not speculate on what  the                 
  public thought when they  were in the position of  voting on                 
  this issue.   She  does believe  that there  is wide  spread                 
  misconception about the legal status of the Earnings Reserve                 
  Fund.   Very  often  in the  press,  it is  referred  to  as                 
  Permanent Fund money and seems to be "somewhat lumped in the                 
  mind of the public as part of the  constitutionally mandated                 
  Permanent Fund".  Ms. Cook believes that  as a result of the                 
  "popular  press"  some  people  do  not make  a  distinction                 
  between income  of the Permanent  Fund and principle  of the                 
  Permanent  Fund.   She is not  sure that all  members of the                 
  public  do  not  actually understand  there  is  an Earnings                 
  Reserve Account which  is made up  entirely of income.   She                 
  has seen  in the  press a  great many  allegations that  the                 
  State  is  "robbing" the  Permanent  Fund when  there  is an                 
                                                                               
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  appropriation from  the Earnings  Reserve Account.   From  a                 
  legal point of view, that is  not accurate because the State                 
  can not rob the Permanent Fund principle and the earnings as                 
  income has always been able to be appropriated.                              
                                                                               
  Representative  Martin asked  if the earnings  reserve would                 
  need to be used before the  Constitutional Budget Reserve is                 
  touched.  Ms.  Cook believed that  it would have to  be used                 
  because    the   Budget   Reserve    Fund   as   a   created                 
  constitutionally created  entity clearly  prevails over  any                 
  politically established fund that identifies money that does                 
  not  have  constitutional protection.    That money  is more                 
  vulnerable than the Budget Reserve Fund under the form which                 
  requires the majority vote.                                                  
                                                                               
  With regard to the requirement of  a three quarter vote, Ms.                 
  Cook stated, this vote is not  based on the formula of funds                 
  available  for  appropriation.    To  the  extent  that  the                 
  Legislature  is trying to access  to the Budget Reserve Fund                 
  under Section 17(B), the issue  is essentially, "What is the                 
  court going to do with applying the formula and ascertaining                 
  what funds  are available  for appropriation  for the  given                 
  fiscal year".   If  there is  a large  pot of  money in  the                 
  Earnings Reserve  Account, Ms.  Cook believes  a court  will                 
  find that money is available  for appropriation for purposes                 
  of applying the formula.                                                     
                                                                               
  Ms. Cook  proceeded, that  should the  State have a  billion                 
  dollars  and  no money  in  the  General Fund,  there  is no                 
  requirement  to  use the  Earnings  Reserve Account  per se.                 
  Although, if  it is unused,  it may be  part of the  formula                 
  which  is  used  to ascertain  whether  the  Legislature can                 
  access money in the Budget Reserve Fund.                                     
  Representative Martin asked  if the  money is being  divided                 
  into two sections, funds that are  left over and funds which                 
  are going to  be appropriated  (re: dividends and  inflation                 
  proofing).                                                                   
                                                                               
  Ms.  Cook responded that  if money is  appropriated from the                 
  Earnings Reserve Account for the purposes of dividends, then                 
  that accounts for a portion as  it has been appropriated and                 
  will  no longer be in  that account.   If it is appropriated                 
  for the current  fiscal year,  it surely  was available  for                 
  appropriation during  that fiscal  year.   According to  Ms.                 
  Cook, the formula  requires the Legislature to look  at what                 
  was  actually  appropriated  in  the  prior fiscal  year  to                 
  ascertain the  level that  it may  reach during  the current                 
  fiscal year.   In the recent history of our State, there has                 
  always  been  during  a  prior  fiscal year,  a  substantial                 
  appropriation for the  Permanent Fund dividends.   From that                 
  point of view,  since the prior  fiscal year already had  an                 
  appropriation for permanent fund  dividends then that should                 
                                                                               
                               10                                              
                                                                               
                                                                               
  increase the amount available for appropriation.                             
                                                                               
  Representative  Grussendorf  commented on  the Undistributed                 
  Income Account and his original desire to call that  account                 
  the  Budget  Reserve  Account.     He  eventually  supported                 
  earmarking the  funds as the  Earnings Reserve Account.   He                 
  supported Ms. Cook's argument.   The Permanent Fund requires                 
  that all the earnings from the  corpus would be available to                 
  the General Fund unless provided for  by law.  He emphasized                 
  that  has  occurred particularly  in  three categories.   He                 
  believed the money would be  available for appropriation and                 
  questioned  whether  the  earnings reserve  funds  would  be                 
  considered funds designated  by law  as outside the  General                 
  Fund.  Representative  Grussendorf stated that the  Earnings                 
  Reserve Account was  available to go into  the General Fund.                 
  He asked Ms. Cook if it would be required to be used.                        
                                                                               
  Ms. Cook stated it would, although  it would not be required                 
  to be used for repayment and should the situation at the end                 
  of  a  fiscal  year  present  the  State  with  a  repayment                 
  requirement  for  a  prior  appropriation  from  the  Budget                 
  Reserve Account.  The Earnings Reserve Account is an example                 
  of a fund  which would not need to be given up in repayment.                 
  She  added,  that it  would  be  counted and  available  for                 
  appropriation but under Section (D) if there were a balance,                 
  it would not be required to be transferred for repayment.                    
                                                                               
                                                                               
  Co-Chair Larson asked if a  deficit balance could be carried                 
  into  FY95.     Ms.   Cook  questioned   the  provision   on                 
  "indebtedness".  She stated that she was not certain whether                 
  the Alaska  Constitution requires  a balanced  budget.   She                 
  thought that  a deficit  could be  carried forward  although                 
  eventually there could be a cash  flow situation which would                 
  preclude expenditures or delay them.                                         
                                                                               
  Co-Chair  Larson asked  for examples  in each  of  the three                 
  provisions specified in  Amendment #1.  Ms.  Cook referenced                 
  (1) and  stated that a "fund  which is designated by  law as                 
  outside of  the General Fund" would be  the Earnings Reserve                 
  Account of the Permanent  Fund.  A fund which  is designated                 
  by the law as  inside would be the Statutory  Budget Reserve                 
  Fund.   With regard  to most  funds, the  statute is  either                 
  silent on where  it is located  from an accounting point  of                 
  view or it specifically  states that the fund is  within the                 
  General Fund.                                                                
                                                                               
  Ms. Cook referenced  (2), "money  that by law,  may be  used                 
  only for a specific purpose that precludes placing it in the                 
  budget  reserve fund"  is an  attempt by Counsel  to address                 
  true  trust  funds.   The  three  groups apply  only  to the                 
  repayment  requirement.   The  requirement  applies only  to                 
                                                                               
                               11                                              
                                                                               
                                                                               
  General Fund money  and also states that the Legislature has                 
  the power to  implement the  requirement.    She added  that                 
  there is a need to make as provision for  trust funds.   She                 
  cited the  example an  individual  who leaves  money to  the                 
  State  of   Alaska  to  be  used  for  a  scholarship  fund.                 
  Scholarships would be the only thing the funds could be used                 
  for.  The  terms of the trust  would be violated if  used to                 
  repay the Budget Reserve Fund.                                               
                                                                               
  Ms.  Cook referenced stating that  if the Legislature had in                 
  fact  appropriated money  in a  position where  it could  be                 
  expended, that money could be  taken and used for  repayment                 
  even  though  the  money  is  in  the General  Fund  and  is                 
  obligated at a specific point in time.  An example would  be                 
  the  entire operating  budget  or the  money  which goes  to                 
  Alaska Housing Finance Corporation (AHFC).                                   
                                                                               
  Ms. Cook used the reference of AHFC because there has been a                 
  lot of talk  of use of AHFC  funds.  AHFC has  nearly twenty                 
  different established funds and accounts.   Virtually all of                 
  them,  the  language which  establishes  the  accounts says,                 
  "this  money  can be  used  by  AHFC for  mortgage  loans as                 
  security for  bonds, for insurance reserves".  There is also                 
  language establishing the funds which allows AHFC to use the                 
  money without the Legislature having to  be involved.  There                 
  are a couple of accounts in AHFC, Senior Housing for example                 
  where language  says AHFC  can not expend  funds unless  the                 
  Legislature appropriates it on a project specific basis.                     
                                                                               
  Representative  Therriault  asked   where  the  Science  and                 
  Technology  Fund would  be located.   Ms. Cook  believed the                 
  fund to be  outside the general fund as far as the repayment                 
  portion is concerned.                                                        
                                                                               
                                                                               
  Representative Therriault  asked if the Railbelt Energy Fund                 
  money would have been available for appropriation.  Ms. Cook                 
  noted that she feared that a  court could reach that result,                 
  however,   said that  opinion is extremely  speculative as a                 
  court has not looked at this concern.   She thought that the                 
  Railbelt Fund  would be more vulnerable than the Science and                 
  Technology Fund which  is an endowment with  the intent that                 
  it will generate  income, the  income will be  used and  the                 
  money  has been  appropriated.   Ms.  Cook advised  that the                 
  Railbelt  Energy Fund  was essentially  a "savings  account"                 
  created by  statute which  could not  be "touched by  anyone                 
  without specific appropriation by the Legislature.                           
                                                                               
  (Tape Change HFC 94-29, Side 1).                                             
                                                                               
  Representative  Navarre  referenced  Representative Larson's                 
  question regarding carrying  a deficit  forward.  He  stated                 
                                                                               
                               12                                              
                                                                               
                                                                               
  that as a matter of public policy,  this would not be a good                 
  idea.   He noted his  concern that then the  budget would be                 
  based on projections  which would  create an intentional  or                 
  unintentional deficit.                                                       
                                                                               
  Co-Chair MacLean asked if funds established by statute would                 
  be available for repayment with the proposed amendment.  Ms.                 
  Cook   replied that the Legislature  would need to designate                 
  that  the fund is outside the General Fund or outside of the                 
  General Fund for purposes of this constitutional provisions.                 
  She believed  that the  Legislature could  do this,  because                 
  under Subsection (D)  of the Constitutional provision  it is                 
  stated  that the  Legislature shall implement  that section.                 
  At this  point, money  has not  been  appropriated from  the                 
  Budget  Reserve Fund.   There  is no  Subsection (D)  budget                 
  repayment requirement.  The repayment requirement  will only                 
  occur if there  is money available at the end of the year in                 
  the General Fund and has not been expended.                                  
                                                                               
  Co-Chair MacLean  asked if there  were funds which  would be                 
  scrutinized.  Ms. Cook stated that it would be helpful if it                 
  were clear in  the statute that funds would not  be used for                 
  repayment.   Otherwise, if the account is an account created                 
  where the  money can be  used without a  further act  by the                 
  Legislature, that money would  not be deemed to be  used for                 
  repayment.   Most of the accounts are of that nature such as                 
  an account which is established for the use of grants.                       
                                                                               
  Co-Chair  Larson  noted  concern  with  the  rights  of  the                 
  citizen.   He thought  that the amendment  would create more                 
  problems than those being settled.                                           
                                                                               
  Representative Brown asked if Ms. Cook  had checked CS HB 58                 
  (FIN).    She asked  how the  approach  to repayment  in the                 
  legislation would differ from that  recommended in Amendment                 
                                                                               
  Ms.  Cook  referenced Subsection  (b),  Page 2,  which would                 
  specifically identify  a portion  of the  General Fund,  the                 
  unreserved  and  undesignated  General Fund  balance.    She                 
  presumed that  evidence could  be presented  to  a court  to                 
  identify that money.  She  thought that approach could work.                 
  She cautioned the inclusion of a certain date and time.  Ms.                 
  Cook  explained the courts  reaction to "legislative intent"                 
  regarding constitutional amendments.   She disagreed stating                 
  that the court for years have expounded on what the founding                 
  fathers did when interpreting  constitutional provisions.                    
                                                                               
  JAMES L. BALDWIN, ASSISTANT ATTORNEY  GENERAL, DEPARTMENT OF                 
  LAW, made general comments  upon the testimony of Ms.  Cook.                 
  He stated  that it is hard to believe  that one could have a                 
  definite opinion as  to what  Amendment #1 would  mean.   He                 
                                                                               
                               13                                              
                                                                               
                                                                               
  said that is  why the Department of Law supports legislation                 
  which will provide definition for the Constitution.                          
                                                                               
  He explained that the Department can  not suggest the way in                 
  which the  Constitution could be interpreted.  He offered to                 
  suggest reasonable interpretations  and then leave it  up to                 
  the Legislature to provide  the best policy call for  how it                 
  should be interpreted.                                                       
                                                                               
  Mr. Baldwin stated that Subsection (d) of the Constitutional                 
  amendment, states that the Legislature "shall" implement  it                 
  by  law.     Generally,  those   types  of  provisions   are                 
  interpreted  as mandatory  directive to the  Legislature, by                 
  law, for some  way to implement it.    It does  not preclude                 
  the Legislature, or establish a  presumption that it can not                 
  be done, as to the other provisions.   He added, it would be                 
  very difficult  to determine the  real meaning and  there is                 
  some degree of  latitude to arrive at a  rational definition                 
  of the terms used.                                                           
                                                                               
  Mr.  Baldwin  stated  that  there  is  a  high  probably  of                 
  litigation concerning the meaning of the provision.  It will                 
  definitely  concern the enactments  passed through the House                 
  Finance Committee.  He stated that the Department is looking                 
  for tools to help  in defending the State and  defending the                 
  ultimate  interpretation which  is applied  when enacting  a                 
  budget for next year.                                                        
                                                                               
  Mr. Baldwin  advised members that legislation which provides                 
  a set  definition,  and enactment  by the  Legislature of  a                 
  budget  which   is  consistent,  there  will   be  something                 
  substantial  to  work  with  which  will the  odds  increase                 
  considerably  in  being able  to  prevail in  supporting the                 
  interpretation adopted to address the budget bills and major                 
  appropriation bills.                                                         
                                                                               
  Comparing  Amendment  #1  to the  House  Judiciary   version                 
  language, Mr. Baldwin  said there is merely  a refinement on                 
  the words which are used  to describe the amounts  available                 
  for appropriation for  figuring out  the central method  for                 
  calculating  what  is  available  for  appropriation.    The                 
  Department could live with the Judiciary language,  although                 
  it did state what "isn't" included  rather that stating what                 
  "is".   The  approach  being proposed  is  identify what  is                 
  available  for  appropriation  so  the  State would  not  be                 
  involved in accounting terms.                                                
                                                                               
  Mr. Baldwin stated that should the Committee elect, it would                 
  be  acceptable  to  place  Amendment  #1  into  Section  (d)                 
  although  he did  not believe  it would  be as  good as  the                 
  language proposed by the Department.   Mr. Baldwin addressed                 
  federal funds.  He believed Amendment #1 would address money                 
                                                                               
                               14                                              
                                                                               
                                                                               
  used  only for  a specific  purpose and  noted  that federal                 
  funds cover a  wide range of types  of funds and usage.   He                 
  felt that the proposed House Finance Committee version would                 
  be a good approach.                                                          
                                                                               
  Mr. Baldwin said the language drafted by Law was prepared by                 
  budget  writers  to be  a budget  writing  tool.   The State                 
  "looks"  into  the  future one  year  when  formulating that                 
  budget and looks  back to see  what is carried forward  from                 
  the  previous  year.    He  emphasized  that  the  committee                 
  substitute work draft would assist in that endeavor.                         
                                                                               
  He  stated  that  the  argument  questioning what  would  be                 
  accomplished  with  all other  reserve funds  is irrelevant.                 
  Each  fund  was   created  by  the  Legislature   with  good                 
  intentions.  He said those funds were established by law and                 
  "deserve respect".                                                           
                                                                               
  Representative Navarre asked if the  safest position for the                 
  Legislature   would   be   to   appropriate   out   of   the                 
  Constitutional Budget Reserve  by a three quarter  vote, and                 
  that  anything else  to define  available  for appropriation                 
  would likely lead to litigation.                                             
  Mr.  Baldwin thought  in order  to comply  with the  court's                 
  order  for  FY94,  it would  be  the  recommendation of  the                 
  Department to  do it by  three quarters vote  simply because                 
  there are appropriations on the  books and expenditures made                 
  by third parties  in connections with those  appropriations,                 
  amounts advanced by the State Treasury, and the State should                 
  not do anything to throw into question the validity of those                 
  actions.                                                                     
                                                                               
  Representative  Martin asked  with  that  opinion why  would                 
  there be a separation  between Section (b) and  Section (c).                 
  He thought that  Section (c) would  make it clear, with  the                 
  understanding  with Legislative  shortfalls are  coming from                 
  the prior  years.   Mr. Baldwin  agreed with  Representative                 
  Martin.  He added, that there would be a great potential for                 
  litigation.   He  reiterated his  legal advise  would be  to                 
  solicit  and  receive   a  three  quarter  vote   for  FY94.                 
  Representative  Martin replied,  if the shortfall  from this                 
  year is  to be made up, a simple  majority should be able to                 
  make that decision.  Mr. Baldwin stated that the risks would                 
  be   increased   by   taking   a   simple   majority   vote.                 
  Representative Martin summed up that Section (B) would allow                 
  a  simple  majority and  Section  (C)  would  mean  a  three                 
  quarters vote.                                                               
                                                                               
  Representative Brown referenced  Section 2, the  retroactive                 
  clause to July 1, 1993.  She asked the purpose in making the                 
  proposal retroactive.  Mr. Baldwin stated that this would be                 
  applied to  FY94, in order for any  decisions to be made for                 
                                                                               
                               15                                              
                                                                               
                                                                               
  restoration  of  the funding  in  compliance with  the court                 
  order, this interpretation would have to be in effect at the                 
  time   of  the   appropriations   which   are  in   dispute.                 
  Representative Brown asked the effect  of not including that                 
  provision in the bill.   Mr. Baldwin thought it may have the                 
  same  effect.    The  retroactive  provision would  make  it                 
  absolutely clear, stating  this is how  it should have  been                 
  for FY94.  He was not sure that the provision was absolutely                 
  necessary although it would provide clarity.                                 
                                                                               
  Representative Hoffman  questioned the amount  available for                 
  appropriation.  He noted the discrepancy between Mr. Baldwin                 
  and Ms. Cook on the Permanent Fund earnings.  Representative                 
  Hoffman questioned if  the Legislature had the  authority to                 
  make the appropriation.                                                      
                                                                               
  Mr. Baldwin replied that the Legislature does have the power                 
  to  appropriate  the money.   He  thought  there could  be a                 
  problem  in  how   that  power  could  be  exercised.    The                 
  justification for  not considering  it to  be available  for                 
  appropriation in the context  of which that term is  used in                 
  the  amendment  is  because  it   is  a  separate  provision                 
  established by  statute.   Representative Hoffman  disagreed                 
  with Mr. Baldwin.                                                            
                                                                               
  A roll  call vote was taken on the MOTION to adopt Amendment                 
                                                                               
       IN FAVOR:      Grussendorf, Hoffman, Navarre, Brown.                    
       OPPOSED:       Hanley,  Martin,   Parnell,  Therriault,                 
                      Larson, MacLean.                                         
                                                                               
  Representative Foster was not present for the vote.                          
                                                                               
  The MOTION FAILED (4-6).                                                     
                                                                               
  Representative Martin MOVED  that CS HB 58 (FIN) be reported                 
  out   of   Committee   with    individual   recommendations.                 
  Representative Navarre OBJECTED.                                             
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Hanley,  Martin,  Parnell,   Therriault,                 
                      MacLean, Larson.                                         
       OPPOSED:       Hoffman, Navarre, Brown, Grussendorf.                    
                                                                               
  Representative Foster was not present for the vote.                          
                                                                               
  The MOTION PASSED (6-4).                                                     
                                                                               
  CS  HB  58 (FIN)  was  reported  out of  Committee  with "no                 
  recommendations"  and   with  zero   fiscal  notes   by  the                 
                                                                               
                               16                                              
                                                                               
                                                                               
  Department of Law and the Department of Administration.                      
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 4:00 P.M.                                           
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                        February 9, 1994                                       
                            1:30 P.M.                                          
                                                                               
  TAPE HFC 94 - 28, Side 1, #000 - end.                                        
  TAPE HFC 94 - 28, Side 2, #000 - end.                                        
  TAPE HFC 94 - 29, Side 1, #000 - #547.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House Finance  Committee meeting                 
  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 Grussendorf    Representative Therriault                      
  Representative Foster                                                        
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative Jeannette James; Representative Jim Nordlund;                 
  Representative Cynthia Toohey; Representative  Bettye Davis;                 
  Renee Chatman, Staff  to Representative Bettye Davis;  James                 
  L.   Baldwin,   Assistant  Attorney   General-General  Civil                 
  Section, Department of Law; Margo Knuth,  Assistant Attorney                 
  General-Criminal  Division, Department  of  Law; Jay  Hogan,                 
  Staff  to Representative  Ron  Larson; Rod  Mourant,  Deputy                 
  Commissioner, Department of Revenue; Diane Schenker, Special                 
  Assistant, Department  of Corrections;  Tamara Brandt  Cook,                 
  Director,  Division of  Legal Services,  Legislative Affairs                 
  Agency; Joseph Dimantio, (teleconference), Anchorage; Sandra                 
  Ray,    (teleconference),     Anchorage;    Lynda     Adams,                 
  (teleconference), Ketchikan; Cheri  Davis, (teleconference),                 
  Ketchikan.                                                                   
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 58     An  Act   relating  to  the  budget  reserve  fund                 
            established under  art. IX, sec.  17, Constitution                 
            of the State of Alaska.                                            
                                                                               
                               17                                              
                                                                               
                                                                               
            CS HB 58 (FIN) was  reported out of Committee with                 
            "no recommendation" and with  zero fiscal notes by                 
            the  Department  of  Law  and  the  Department  of                 
            Administration.                                                    
                                                                               
  HB 61     An  Act  relating to  the  offense of  operating a                 
            motor  vehicle,  aircraft,  or   watercraft  while                 
            intoxicated; and providing for an effective date.                  
                                                                               
            HB   61  was   held   in  Committee   for  further                 
            discussion.                                                        
                                                                               
  HB 128    An  Act  relating  to  early  acknowledgement   of                 
            paternity for the child of an unmarried mother.                    
                                                                               
            CS HB 128 (FIN) was reported out of Committee with                 
            a "do pass" recommendation and  with a zero fiscal                 
            note  by  the  Department  of  Health  and  Social                 
            Services   and  a   fiscal  impact  note   by  the                 
            Department of Health and Social Services.                          
                                                                               
  HOUSE BILL 61                                                                
                                                                               
       "An Act relating  to the offense  of operating a  motor                 
       vehicle, aircraft, or watercraft while intoxicated; and                 
       providing for an effective date."                                       
                                                                               
  REPRESENTATIVE  JIM NORDLUND  explained  that  HB  61  would                 
  reduce the legal definition of intoxication for the crime of                 
  driving while intoxicated  from .10%  to .08% blood  alcohol                 
  content which would mean it would be illegal for a person to                 
  be in  control of a  motor vehicle, aircraft,  or watercraft                 
  with a blood alcohol level of .08% or greater.                               
                                                                               
  Five states have  already lowered their legal  definition of                 
  intoxication  to  .08%.   All  of  Canada has  a  .08% blood                 
  alcohol threshold, and all European nations prohibit driving                 
  with a .08% or lower blood alcohol level.                                    
                                                                               
  Scientific  evidence  has  established that  the  risk  of a                 
  driver being involved in a  serious of fatal crash increased                 
  as the alcohol  concentration in the  body increased.   Many                 
  studies have shown  that measurable impairment to  operate a                 
  motor vehicle begins in most drivers  at or below .05% blood                 
  alcohol level, and that all drivers  are impaired at a blood                 
  alcohol level of .08%.                                                       
                                                                               
  Representative  Nordlund  explained  that  establishing  the                 
  allowable blood  alcohol level  at .08%  would increase  the                 
  probability  of  obtaining  convictions for  drunk  driving.                 
  Because the law  will increase the certainty  of conviction,                 
                                                                               
                               18                                              
                                                                               
                                                                               
  it would be more  effective than current law to  deter drunk                 
  driving and to reduce the number of alcohol related crashes.                 
                                                                               
  In  addition to  the  inherent  benefits  of the  bill,  the                 
  National Highway Traffic Safety Administration has  notified                 
  the State that Alaska currently receives $688,000 in federal                 
  funds  annually  for  Highway  Safety  Planning and  may  be                 
  eligible for a 30% or more increase if House Bill 61 passes.                 
  If similar legislation  had passed  last year, Alaska  would                 
  have already received the benefits of the increase.                          
                                                                               
  Representative Nordlund  provided the Committee with  a copy                 
  of two amendments.  (Copies on file).                                        
                                                                               
  JOSEPH DIMANTIO, DIRECTOR, ALASKA COUNCIL FOR THE PREVENTION                 
  OF  DRUG AND ALCOHOL  ABUSE, (TESTIFIED VIA TELECONFERENCE),                 
  ANCHORAGE, spoke in support of the proposed legislation.                     
                                                                               
  SANDRA  RAY, EXECUTIVE  DIRECTOR  OF  MOTHERS AGAINST  DRUNK                 
  DRIVING, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, spoke in                 
  support of HB 61.                                                            
                                                                               
  LYNDA  ADAMS,  ALASKANS FOR  DRUG  FREE USE,  (TESTIFIED VIA                 
  TELECONFERENCE), KETCHIKAN, spoke in support of the proposed                 
  legislation.                                                                 
                                                                               
  CHERI  DAVIS,  ALASKANS FOR  DRUG  FREE USE,  (TESTIFIED VIA                 
  TELECONFERENCE), KETCHIKAN, spoke in support of HB 61.                       
                                                                               
  DIANE   SCHENKER,   SPECIAL    ASSISTANT,   DEPARTMENT    OF                 
  CORRECTIONS, explained  that the  Department of  Corrections                 
  will revise last year's  fiscal note to reflect the  expense                 
  incurred.                                                                    
                                                                               
  MARGO KNUTH, ASSISTANT  ATTORNEY GENERAL-CRIMINAL  DIVISION,                 
  DEPARTMENT OF LAW, noted that the Department of Law strongly                 
  supports the  proposed  legislation.   She  emphasized  that                 
  alcohol  is  Alaska's  number  one  crime  problem  and  the                 
  legislation would help to address that concern.                              
                                                                               
  Discussion  followed   regarding   the   accuracy   of   the                 
  Intoximeter 3000 reading.  The  intoximeter is calibrated at                 
  least every  sixty days  and has been  proven to have  a one                 
  percent margin of error.                                                     
                                                                               
  HB 61 was HELD in Committee for further discussion.                          
                                                                               
  HOUSE BILL 128                                                               
                                                                               
       "An Act  relating to early acknowledgement of paternity                 
       for the child of an unmarried mother."                                  
                                                                               
                                                                               
                               19                                              
                                                                               
                                                                               
  RENEE  CHATMAN,  STAFF   TO  REPRESENTATIVE  BETTYE   DAVIS,                 
  explained  that  the non-support  of  children has  become a                 
  national epidemic with one-fourth of  children in the United                 
  States now living with  a single parent and an  estimated 60                 
  percent  spending at  least  part of  their  childhood in  a                 
  single-parent home.  In  also most half of these  cases, the                 
  absent parent does  not pay  child support.   Many of  these                 
  children  are   born   out-of-wedlock   and   paternity   is                 
  established  in  only  30  percent  of  such  cases.    That                 
  interprets into  70 percent  of out-of-wedlock  births where                 
  there is no proof of paternity and no means to collect child                 
  support.                                                                     
                                                                               
  She added, the  proposed legislation  would add language  to                 
  A.S. 18.50 and would require  the State registrar to prepare                 
  a paternity acknowledgment  form to be  used at the time  of                 
  birth.   The form,  signed by  both parents,  will list  the                 
  father's  full  name and  social  security number  and would                 
  require the signature  of a  notary public.   The bill  also                 
  would  lay  out specific  responsibilities  of hospitals  or                 
  midwives to get  the proper information  on the form and  to                 
  distribute   appropriate   paternity   materials  from   the                 
  Department of Health and Social Services.                                    
                                                                               
  The legislation is an  attempt to get acknowledgment  at the                 
  time  when a  father  is particularly  willing to  develop a                 
  relationship  with  the  child,  which  would  benefit  both                 
  parties.  The child  would have the security of  knowing who                 
  his/her  father is  and could  gain access  to support  from                 
  Social Security, survivor and veteran benefits  and worker's                 
  compensation.    The child  would  also be  entitled  to the                 
  father's inheritance, health insurance and would have access                 
  to the family medical history.                                               
                                                                               
  Ms.  Chatman provided the Committee with  Amendment #1 & #2.                 
  (Copies  on file).   The  amendments  were submitted  at the                 
  request of  the  Alaska Child  Support Enforcement  Division                 
  (CSED) and would be necessary  to bring CSED into compliance                 
  with the recent paternity changes resulting from the changes                 
  of the Reconciliation  Act of 1993.   If the amendments  are                 
  not added to  the legislation, CSED could  jeopardize losing                 
  funds.                                                                       
                                                                               
  ROD  MOURANT, DEPUTY  COMMISSIONER,  DEPARTMENT OF  REVENUE,                 
  noted  that the  Department strongly  endorses the  proposed                 
  legislation.   The establishment  of paternity  is the  most                 
  time consuming and expensive work  done by the Department of                 
  Revenue's Child Support Enforcement Division.                                
                                                                               
  REPRESENTATIVE  CYNTHIA  TOOHEY  spoke  in  support  of  the                 
  proposed legislation.                                                        
                                                                               
                                                                               
                               20                                              
                                                                               
                                                                               
  Representative Parnell MOVED  to adopt Amendment #1.   There                 
  being NO OBJECTION, it was adopted.                                          
                                                                               
  Co-Chair MacLean  MOVED to adopt Amendment #2.   There being                 
  NO OBJECTIONS, it was adopted.                                               
                                                                               
  Representative Martin MOVED to report CS SS HB 128 (FIN) out                 
  of Committee  with individual  recommendations and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CC SS HB 128 (FIN) was reported out of Committee with  a "do                 
  pass" recommendation  and with  a  zero fiscal  note by  the                 
  Department of Health and Social Services and a fiscal impact                 
  note by the Department of Health and Social Services.                        
                                                                               
  (Tape Change HFC 94-28, Side 2).                                             
                                                                               
  HOUSE BILL 58                                                                
                                                                               
       "An Act relating to the budget reserve fund established                 
       under art. IX,  sec. 17, Constitution  of the State  of                 
       Alaska."                                                                
                                                                               
  Representative Brown provided  the Committee with  Amendment                 
  Representative Hanley OBJECTED.                                              
                                                                               
  Representative Brown explained that Amendment #1 stated that                 
  all money that may be  withdrawn by the Legislature  "shall"                 
  be included, unless  it has  already been appropriated,  and                 
  can    be    withdrawn   without    further   appropriation.                 
  Representative  Brown  pointed  out the  problem  of  having                 
  "quasi" dedicated funds or attempts to  hoard off money from                 
  the General Fund.  She stated it would not be appropriate to                 
  be excluding those  funds.  There is no  legal basis for it.                 
  Representative   Brown  stated  that   Ms.  Cook   with  the                 
  Legislative Affairs  Agency, Legal  Services, felt  that the                 
  proposed    legislation  was  not   in  agreement  with  the                 
  Constitution   and   would  be   an   overreaching  attempt.                 
  Representative  Brown stated that Amendment #1 addresses the                 
  legal opinion and advice of that Agency.                                     
                                                                               
  Representative   Brown  thought   Amendment   #1  would   be                 
  consistent and  would make  sense for Alaska  over the  long                 
  term  and suggested that both  the Majority and the Minority                 
  partake in decisions made regarding the Budget Reserve.                      
                                                                               
  Representative Hanley recommended  clarifying the record  to                 
  describe  the  terms  "or the  money  in  funds  or accounts                 
  designated by laws as outside of  the general fund" and what                 
  they included.                                                               
                                                                               
                               21                                              
                                                                               
                                                                               
  Co-Chair Larson provided the Committee with copies of Alaska                 
  Statutes  Section 37.05.146  which defines  program receipts                 
  and non-general fund program receipts.  [Attachment #1].                     
                                                                               
  Representative  Grussendorf  referenced  A.S. 37.05.146  and                 
  pointed out that  (J) lists  the permanent fund.   He  added                 
  that  the  Constitution and  the  articles dealing  with the                 
  Permanent Fund does  implicate the interest earned  could be                 
  used for the operation and capital budget.  He stressed that                 
  language  was  in  the  Constitution  and those  funds  were                 
  available  as  a  pool  of  money  to be  considered  before                 
  touching     the     Constitutional      Budget     Reserve.                 
  Constitutionally, the Permanent Fund earnings are  available                 
  to the legislative body.   He emphasized the corpus  of that                 
  account would not be available.                                              
                                                                               
  Co-Chair MacLean asked  if the income of the  Permanent Fund                 
  could be used.  Representative  Grussendorf replied it could                 
  be used.  He  pointed out that the Earnings  Reserve Account                 
  had  been  used to  pay  off  "hold harmless"  items  in the                 
  General Fund.                                                                
                                                                               
  Representative Martin  asked for  the legal  opinion of  the                 
  Legislative   Affairs   Agency.      Representative   Martin                 
  understood that the Permanent  Fund earnings were considered                 
  part of the Permanent Fund Corporation and would be separate                 
  from  General Funds.  He  suggested that this information be                 
  made clear to the people of the State.                                       
                                                                               
  Representative Brown disagreed  with Representative  Martin.                 
  It was her understanding  that in the lower Court  decision,                 
  the judge totally objected at  looking at legislative intent                 
  as  having  anything  to  do   with  the  interpretation  of                 
  "administrative  proceedings".   He  stated  that  "what the                 
  legislative  body  thought  was  relevant  was  not".    She                 
  requested  that Tam Cook testify  regarding what is meant by                 
  "money in funds or accounts designated  by law as outside of                 
  the general fund".                                                           
                                                                               
  TAMARA  BRANDT COOK,  DIRECTOR, DIVISION OF  LEGAL SERVICES,                 
  LEGISLATIVE  AFFAIRS,  responded to  Representative Hanley's                 
  question regarding "  money in funds or  accounts designated                 
  by law  as outside of  the General  Fund".  She  pointed out                 
  that the categories established  in separate paragraphs (1),                 
  (2), and (3) of the amendment apply to the repayment section                 
  of  the  Constitutional  provision, Subsection  (D).    That                 
  section   differs  as  it  specifically  provides  that  the                 
  repayment is going to:                                                       
                                                                               
       1.   Come out of general fund money, and;                               
       2.   Will give  the Legislature the power  to implement                 
                                                                               
                               22                                              
                                                                               
                                                                               
            that section.                                                      
                                                                               
  To that  extent, it  is different  from the  others, as  the                 
  Constitution states that the repayment  money will come from                 
  general  fund  revenues  only.   The  Constitution  does not                 
  define that word.                                                            
                                                                               
  The first category  is an attempt  to define it.   It states                 
  that money in funds or accounts  which are designated by law                 
  as outside the general fund are not used for repayment.  Ms.                 
  Cook said there is at least one significant account which is                 
  currently outside the General Fund as a  matter of law - the                 
  Earnings Reserve  Account which  is in  the Permanent  Fund.                 
  Essentially,  what  this  says  is,  "When  the  Legislature                 
  establishes an account, the  Legislature can designate,  for                 
  purposes of this provision, whether it  is inside or outside                 
  the Permanent Fund", for purposes of the repayment.                          
                                                                               
  Representative  Hanley  asked  if  that  was  the  repayment                 
  provision and not what is  available for appropriation.  Ms.                 
  Cook pointed  out  that the  language  earlier in  the  bill                 
  points  out   two  important  differences  when  looking  at                 
  appropriations from the Budget Reserve Fund.  Ms. Cook noted                 
  that the committee substitute does  not include the language                 
  that refers to the  General Fund in applying the  formula of                 
  funds available for appropriation.  It does exist in Section                 
  (D) but does  not exist  in Section (B).   In addition,  she                 
  added,  there  is   not  language  which  would   allow  the                 
  Legislature  to implement  the section  which  would clearly                 
  give  the Legislature some  discretion for  interpreting the                 
  language.                                                                    
                                                                               
  She felt  that a  court would  be "literal  minded" when  it                 
  attempts  to  ascertain   which  funds  are   available  for                 
  appropriation for purposes of applying the formula that lets                 
  the Legislature appropriate from the  Budget Reserve Fund to                 
  meet shortfalls.                                                             
                                                                               
  Ms.  Cook  stated that  the test  she  used in  drafting the                 
  amendment is that one could argue to a court forcefully that                 
  surely  the  amount  available  for  appropriation  was  not                 
  intended   to   include   amounts    already   appropriated.                 
  Logically, that  must be  so, because  if not  so, then  the                 
  entire  structure  of  the  Budget  Reserve  Fund  unravels.                 
  Section (B) then could not be applied.                                       
                                                                               
  If reappropriation  would have  to be  considered, Ms.  Cook                 
  asked herself how many  years back would it be  necessary to                 
  check for unaccounted balances.   She said this would  be "a                 
  nightmare"  and  felt that  even  the most  determined court                 
  would be willing to agree that if the funds had already been                 
  appropriated, they would not  be available for appropriation                 
                                                                               
                               23                                              
                                                                               
                                                                               
  within the terms of this language.   That is essentially the                 
  test which Ms. Cook said she tried to establish at the first                 
  part of Amendment #1.                                                        
                                                                               
  Representative Hanley  asked, for  example, if  the Railbelt                 
  Energy Fund money  had been appropriated by  the Legislature                 
  as specifically, not to be withdrawn from the State Treasury                 
  without further appropriation,  would it be available.   Ms.                 
  Cook explained the reason  she used that formula.   She said                 
  the Legislature can  appropriate funds  to AHFC for  grants,                 
  however, only if appropriations are made for the grants each                 
  year.  She added, it would be difficult to stand in front of                 
  the  courts each year and state  that the money would not be                 
  available for appropriation.  She  said within the structure                 
  of the fund which has been  established, it is a requirement                 
  that  no  expenditures  can  be  made   without  an  act  of                 
  appropriation as  a legal  matter.   There are  quite a  few                 
  funds like  that.  Most of AHFC funds  do not have that type                 
  of language.                                                                 
                                                                               
  Ms. Cook continued, stating that in fact the Railbelt Energy                 
  Fund,  is  now  depleted  and  it  is no  longer  an  issue.                 
  However, when it  was a large  fund, it was established  and                 
  the Legislature stated specifically that  money could not be                 
  used from that  fund without an  act of appropriation.   The                 
  Legislature also stated as  a result of the manner  in which                 
  it was established, that money within the fund would be used                 
  for certain limited purposes.   The Legislature kept control                 
  over the fund by requiring additional appropriations.                        
                                                                               
  She added that it  will be difficult to convince  a court of                 
  law that  such money is not available for appropriation when                 
  the  statute  itself   clearly  states   that  it  must   be                 
  appropriated "again" before it can be expended.                              
                                                                               
  Representative Martin pointed out that  he had introduced HB
  35.  He  did not know  that Representative Barnes had  asked                 
  Ms.   Cook  for   an   opinion   pertaining  to   repayment.                 
  Representative Martin  understood that the  earnings reserve                 
  account was under  the Permanent Fund Corporation  and would                 
  not normally be considered as part of the General Funds.  He                 
  asked if this was correct.                                                   
                                                                               
  Ms.  Cook  stated that  the  Earnings Reserve  Account money                 
  could  not be used for repayment, because the statute states                 
  that the account is established in  the Permanent Fund.  The                 
  Permanent Fund is established as  a matter of constitutional                 
  law and therefore a court would recognize that the Permanent                 
  Fund is outside of  the General Fund.  Because  the statutes                 
  says the  Earnings Reserve Account is in the Permanent Fund,                 
  under   the   constitutional   provision  establishing   the                 
  Permanent Fund, there is  a provision which states  that the                 
                                                                               
                               24                                              
                                                                               
                                                                               
  income can go to the General Fund or as is designated by the                 
  Legislature.                                                                 
                                                                               
  Ms. Cook said this is a situation where the Constitution has                 
  given the Legislature  the authority to identify  where this                 
  money will go.  The Legislature has chosen to keep the money                 
  within the Permanent  Fund itself, separated for  accounting                 
  purposes.   For this reason, Ms. Cook  did not feel that the                 
  money  could be placed under the repayment requirement.  She                 
  believed that the funds would be subject to appropriation.                   
                                                                               
  Representative Martin stated that the court can not tell the                 
  government to reappropriate the money.  He thought that only                 
  the Legislature  has the  responsibility to  make whole  the                 
  constitutional budget  account.   He asked  if the  Governor                 
  could  take  the  earnings  reserve  or any  money  that  is                 
  available and put it into  the Constitutional Budget Reserve                 
  Account.  Ms. Cook thought that  the Governor could not take                 
  the  Earnings  Reserve Account,  however, she believed  that                 
  the Governor could "correct an accounting error".                            
                                                                               
  Ms. Cook stated  that the court  has said, "The  Legislature                 
  has placed money into the wrong  account in the General Fund                 
  and it  should have gone  somewhere else".   As a  matter of                 
  correcting an accounting  error, the Governor can  order the                 
  Department of Revenue to return money from the  General Fund                 
  to the Budget Reserve Fund.                                                  
                                                                               
  Ms. Cook stated that  under the terms of the  Superior Court                 
  order,  which has not  currently modified it  on the Supreme                 
  Court level, essentially, the Governor  has been directed by                 
  the end of the legislative session, to replace the money "as                 
  an  accounting matter".    The obvious  result  is that  the                 
  Legislature ends up with a depleted  General Fund.  Ms. Cook                 
  said  the  fact  that  the  General  Fund  is  substantially                 
  decreased is  a  matter for  the  Legislature to  deal  with                 
  through the appropriation process.                                           
                                                                               
  Representative Martin asked  Ms. Cook what she  believed was                 
  meant by  the people  voting on  the amendment  of what  was                 
  available for use.   He asked  if the public was  aware that                 
  the earnings reserve must be used first, before touching the                 
  Constitutional Budget Reserve.                                               
                                                                               
  Ms. Cook replied  that she could  not speculate on what  the                 
  public thought when they  were in the position of  voting on                 
  this issue.   She  does believe  that there  is wide  spread                 
  misconception about the legal status of the Earnings Reserve                 
  Fund.    Very  often in  the  press,  it is  referred  to as                 
  Permanent Fund money and seems to be "somewhat lumped in the                 
  mind of the public as  part of the constitutionally mandated                 
  Permanent Fund".  Ms. Cook believes that as a result  of the                 
                                                                               
                               25                                              
                                                                               
                                                                               
  "popular  press"  some  people  do  not make  a  distinction                 
  between income  of the Permanent  Fund and principle  of the                 
  Permanent  Fund.  She  is not sure  that all members  of the                 
  public  do  not  actually understand  there  is  an Earnings                 
  Reserve Account which  is made up  entirely of income.   She                 
  has seen  in the  press a  great many  allegations that  the                 
  State  is  "robbing" the  Permanent  Fund when  there  is an                 
  appropriation from  the Earnings  Reserve Account.   From  a                 
  legal point of view, that is  not accurate because the State                 
  can not rob the Permanent Fund principle and the earnings as                 
  income has always been able to be appropriated.                              
                                                                               
  Representative  Martin asked  if the earnings  reserve would                 
  need to  be used before the Constitutional Budget Reserve is                 
  touched.   Ms. Cook believed that  it would have  to be used                 
  because    the   Budget   Reserve    Fund   as   a   created                 
  constitutionally created  entity clearly  prevails over  any                 
  politically established fund that identifies money that does                 
  not  have  constitutional protection.    That money  is more                 
  vulnerable than the Budget Reserve Fund under the form which                 
  requires the majority vote.                                                  
                                                                               
  With regard to the requirement of  a three quarter vote, Ms.                 
  Cook stated, this vote is not based on the  formula of funds                 
  available  for  appropriation.    To  the  extent  that  the                 
  Legislature  is trying to access to  the Budget Reserve Fund                 
  under  Section 17(B), the issue is essentially, "What is the                 
  court going to do with applying the formula and ascertaining                 
  what funds  are available  for appropriation  for the  given                 
  fiscal year".   If  there is  a large  pot of  money in  the                 
  Earnings Reserve  Account, Ms.  Cook believes  a court  will                 
  find that money is available  for appropriation for purposes                 
  of applying the formula.                                                     
                                                                               
  Ms. Cook  proceeded, that should  the State  have a  billion                 
  dollars  and  no money  in  the  General Fund,  there  is no                 
  requirement  to  use the  Earnings  Reserve Account  per se.                 
  Although, if it  is unused,  it may be  part of the  formula                 
  which  is  used  to ascertain  whether  the  Legislature can                 
  access money in the Budget Reserve Fund.                                     
  Representative Martin asked  if the  money is being  divided                 
  into two sections, funds that are  left over and funds which                 
  are going to  be appropriated  (re: dividends and  inflation                 
  proofing).                                                                   
                                                                               
  Ms. Cook responded  that if money  is appropriated from  the                 
  Earnings Reserve Account for the purposes of dividends, then                 
  that accounts for a portion as  it has been appropriated and                 
  will no longer be  in that account.   If it is  appropriated                 
  for  the current  fiscal year,  it surely was  available for                 
  appropriation during  that fiscal  year.   According to  Ms.                 
  Cook, the formula requires  the Legislature to look  at what                 
                                                                               
                               26                                              
                                                                               
                                                                               
  was  actually  appropriated  in  the  prior fiscal  year  to                 
  ascertain the  level that  it may  reach during  the current                 
  fiscal year.  In the recent history of our State, there  has                 
  always  been  during  a  prior  fiscal year,  a  substantial                 
  appropriation for the  Permanent Fund dividends.   From that                 
  point of view,  since the prior  fiscal year already had  an                 
  appropriation for permanent fund dividends  then that should                 
  increase the amount available for appropriation.                             
                                                                               
  Representative  Grussendorf  commented on  the Undistributed                 
  Income Account and his original  desire to call that account                 
  the  Budget  Reserve  Account.     He  eventually  supported                 
  earmarking the funds  as the Earnings  Reserve Account.   He                 
  supported Ms. Cook's argument.   The Permanent Fund requires                 
  that all the earnings from the  corpus would be available to                 
  the General Fund unless provided for  by law.  He emphasized                 
  that  has  occurred particularly  in  three categories.   He                 
  believed the money would be  available for appropriation and                 
  questioned  whether  the  earnings reserve  funds  would  be                 
  considered funds designated  by law  as outside the  General                 
  Fund.  Representative  Grussendorf stated that the  Earnings                 
  Reserve Account  was available to go into  the General Fund.                 
  He asked Ms. Cook if it would be required to be used.                        
                                                                               
  Ms. Cook stated it would, although  it would not be required                 
  to be used for repayment and should the situation at the end                 
  of  a  fiscal  year  present  the  State  with  a  repayment                 
  requirement  for  a  prior  appropriation  from  the  Budget                 
  Reserve Account.  The Earnings Reserve Account is an example                 
  of a fund which would not need to be given up  in repayment.                 
  She  added, that  it  would  be  counted and  available  for                 
  appropriation but under Section (D) if there were a balance,                 
  it would not be required to be transferred for repayment.                    
                                                                               
                                                                               
  Co-Chair  Larson asked if a deficit balance could be carried                 
  into  FY95.     Ms.   Cook  questioned   the  provision   on                 
  "indebtedness".  She stated that she was not certain whether                 
  the Alaska  Constitution requires  a balanced  budget.   She                 
  thought that  a deficit  could be  carried forward  although                 
  eventually there  could be a cash flow situation which would                 
  preclude expenditures or delay them.                                         
                                                                               
  Co-Chair  Larson asked  for  examples in  each of  the three                 
  provisions specified in  Amendment #1.  Ms.  Cook referenced                 
  (1) and  stated that a  "fund which is designated  by law as                 
  outside of the  General Fund" would be  the Earnings Reserve                 
  Account of the Permanent  Fund.  A fund which  is designated                 
  by the law as  inside would be the Statutory  Budget Reserve                 
  Fund.   With regard  to most  funds, the  statute is  either                 
  silent on where  it is located  from an accounting point  of                 
  view or it specifically  states that the fund is  within the                 
                                                                               
                               27                                              
                                                                               
                                                                               
  General Fund.                                                                
                                                                               
  Ms. Cook referenced  (2), "money  that by law,  may be  used                 
  only for a specific purpose that precludes placing it in the                 
  budget  reserve fund"  is an  attempt by Counsel  to address                 
  true  trust  funds.   The  three  groups apply  only  to the                 
  repayment  requirement.   The  requirement  applies  only to                 
  General Fund money and also states that the  Legislature has                 
  the power to  implement the  requirement.    She added  that                 
  there is a need to make as provision  for  trust funds.  She                 
  cited  the example  an individual  who leaves  money to  the                 
  State  of  Alaska  to  be  used  for   a  scholarship  fund.                 
  Scholarships would be the only thing the funds could be used                 
  for.  The  terms of the trust  would be violated if  used to                 
  repay the Budget Reserve Fund.                                               
                                                                               
  Ms.  Cook referenced stating that if  the Legislature had in                 
  fact  appropriated money  in a  position  where it  could be                 
  expended,  that money could be  taken and used for repayment                 
  even  though  the  money  is  in  the General  Fund  and  is                 
  obligated at a  specific point in time.  An example would be                 
  the  entire  operating budget  or  the money  which  goes to                 
  Alaska Housing Finance Corporation (AHFC).                                   
                                                                               
  Ms. Cook used the reference of AHFC because there has been a                 
  lot of talk  of use of AHFC  funds.  AHFC has  nearly twenty                 
  different established funds and accounts.   Virtually all of                 
  them,  the  language which  establishes  the  accounts says,                 
  "this  money  can be  used  by  AHFC for  mortgage  loans as                 
  security for bonds, for insurance reserves".   There is also                 
  language establishing the funds which allows AHFC to use the                 
  money without  the Legislature having to be involved.  There                 
  are a couple of accounts in AHFC, Senior Housing for example                 
  where language says  AHFC can  not expend  funds unless  the                 
  Legislature appropriates it on a project specific basis.                     
                                                                               
  Representative  Therriault  asked  where   the  Science  and                 
  Technology Fund  would be  located.   Ms. Cook  believed the                 
  fund to be outside the general  fund as far as the repayment                 
  portion is concerned.                                                        
                                                                               
                                                                               
  Representative Therriault  asked if the Railbelt Energy Fund                 
  money would have been available for appropriation.  Ms. Cook                 
  noted that she feared that a  court could reach that result,                 
  however,  said  that opinion is  extremely speculative as  a                 
  court has not looked at this concern.  She thought that  the                 
  Railbelt Fund would be more vulnerable than  the Science and                 
  Technology Fund  which is an endowment with  the intent that                 
  it will generate  income, the  income will be  used and  the                 
  money  has been  appropriated.   Ms. Cook  advised that  the                 
  Railbelt  Energy Fund  was essentially  a "savings  account"                 
                                                                               
                               28                                              
                                                                               
                                                                               
  created by  statute which  could not  be "touched by  anyone                 
  without specific appropriation by the Legislature.                           
                                                                               
  (Tape Change HFC 94-29, Side 1).                                             
                                                                               
  Representative  Navarre  referenced  Representative Larson's                 
  question regarding carrying  a deficit  forward.  He  stated                 
  that as a  matter of public policy, this would not be a good                 
  idea.   He noted his  concern that then  the budget would be                 
  based on projections  which would  create an intentional  or                 
  unintentional deficit.                                                       
                                                                               
  Co-Chair MacLean asked if funds established by statute would                 
  be available for repayment with the proposed amendment.  Ms.                 
  Cook  replied  that the Legislature would  need to designate                 
  that the fund is  outside the General Fund or outside of the                 
  General Fund for purposes of this constitutional provisions.                 
  She believed  that the  Legislature could  do this,  because                 
  under Subsection (D)  of the Constitutional provision  it is                 
  stated  that the  Legislature shall implement  that section.                 
  At this  point,  money has  not been  appropriated from  the                 
  Budget Reserve  Fund.   There  is no  Subsection (D)  budget                 
  repayment requirement.  The repayment requirement  will only                 
  occur if there is money available at the end of the  year in                 
  the General Fund and has not been expended.                                  
                                                                               
  Co-Chair  MacLean asked if  there were funds  which would be                 
  scrutinized.  Ms. Cook stated that it would be helpful if it                 
  were clear in the statute  that funds would not be used  for                 
  repayment.  Otherwise, if the account is  an account created                 
  where the  money can be  used without a  further act by  the                 
  Legislature, that money would  not be deemed to be  used for                 
  repayment.  Most of the accounts  are of that nature such as                 
  an account which is established for the use of grants.                       
                                                                               
  Co-Chair  Larson  noted  concern  with  the  rights  of  the                 
  citizen.  He  thought that the  amendment would create  more                 
  problems than those being settled.                                           
                                                                               
  Representative Brown asked if Ms. Cook  had checked CS HB 58                 
  (FIN).    She asked  how the  approach  to repayment  in the                 
  legislation would differ from that  recommended in Amendment                 
                                                                               
  Ms.  Cook  referenced Subsection  (b),  Page 2,  which would                 
  specifically identify  a portion  of the  General Fund,  the                 
  unreserved  and  undesignated  General Fund  balance.    She                 
  presumed that  evidence  could be  presented to  a court  to                 
  identify that money.  She thought that approach could  work.                 
  She cautioned the inclusion of a certain date and time.  Ms.                 
  Cook  explained the courts  reaction to "legislative intent"                 
  regarding constitutional amendments.   She disagreed stating                 
                                                                               
                               29                                              
                                                                               
                                                                               
  that the court for years have expounded on what the founding                 
  fathers did when interpreting  constitutional provisions.                    
                                                                               
  JAMES L. BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT  OF                 
  LAW, made general comments  upon the testimony of Ms.  Cook.                 
  He stated  that it is hard to believe  that one could have a                 
  definite opinion as  to what  Amendment #1 would  mean.   He                 
  said that is why the Department of Law  supports legislation                 
  which will provide definition for the Constitution.                          
                                                                               
  He explained that the Department can  not suggest the way in                 
  which the Constitution could be interpreted.   He offered to                 
  suggest reasonable interpretations  and then leave it  up to                 
  the Legislature to provide  the best policy call for  how it                 
  should be interpreted.                                                       
                                                                               
  Mr. Baldwin stated that Subsection (d) of the Constitutional                 
  amendment, states that the Legislature "shall" implement  it                 
  by  law.     Generally,  those   types  of  provisions   are                 
  interpreted  as mandatory  directive to the  Legislature, by                 
  law, for some  way to implement it.    It does  not preclude                 
  the Legislature, or establish a presumption that it can  not                 
  be done, as  to the other provisions.  He added, it would be                 
  very difficult  to determine the  real meaning and  there is                 
  some degree of latitude  to arrive at a  rational definition                 
  of the terms used.                                                           
                                                                               
  Mr.  Baldwin  stated  that  there  is  a  high  probably  of                 
  litigation concerning the meaning of the provision.  It will                 
  definitely  concern the enactments  passed through the House                 
  Finance Committee.  He stated that the Department is looking                 
  for tools to help  in defending the State and  defending the                 
  ultimate  interpretation which  is applied  when enacting  a                 
  budget for next year.                                                        
                                                                               
  Mr. Baldwin  advised members that legislation which provides                 
  a  set definition,  and enactment  by the  Legislature  of a                 
  budget  which   is  consistent,  there  will   be  something                 
  substantial  to  work  with  which  will the  odds  increase                 
  considerably  in  being able  to  prevail in  supporting the                 
  interpretation adopted to address the budget bills and major                 
  appropriation bills.                                                         
                                                                               
  Comparing  Amendment  #1  to the  House  Judiciary   version                 
  language, Mr. Baldwin  said there is merely a  refinement on                 
  the  words which are used  to describe the amounts available                 
  for appropriation for  figuring out  the central method  for                 
  calculating  what  is  available  for  appropriation.    The                 
  Department could live with the Judiciary language,  although                 
  it did  state what "isn't" included rather that stating what                 
  "is".   The  approach  being proposed  is  identify what  is                 
  available  for  appropriation  so  the  State would  not  be                 
                                                                               
                               30                                              
                                                                               
                                                                               
  involved in accounting terms.                                                
                                                                               
  Mr. Baldwin stated that should the Committee elect, it would                 
  be  acceptable  to  place  Amendment  #1  into  Section  (d)                 
  although  he did  not believe  it would  be as  good  as the                 
  language proposed by the Department.   Mr. Baldwin addressed                 
  federal funds.  He believed Amendment #1 would address money                 
  used  only for  a  specific purpose  and noted  that federal                 
  funds cover a  wide range of types  of funds and usage.   He                 
  felt that the proposed House Finance Committee version would                 
  be a good approach.                                                          
                                                                               
  Mr. Baldwin said the language drafted by Law was prepared by                 
  budget  writers  to be  a budget  writing  tool.   The State                 
  "looks"  into  the  future one  year  when  formulating that                 
  budget and looks  back to see  what is carried forward  from                 
  the  previous  year.    He  emphasized  that  the  committee                 
  substitute work draft would assist in that endeavor.                         
                                                                               
  He  stated  that  the  argument  questioning what  would  be                 
  accomplished  with  all other  reserve funds  is irrelevant.                 
  Each  fund  was   created  by  the  Legislature   with  good                 
  intentions.  He said those funds were established by law and                 
  "deserve respect".                                                           
                                                                               
  Representative Navarre asked if the  safest position for the                 
  Legislature   would   be   to   appropriate   out   of   the                 
  Constitutional Budget Reserve  by a three quarter  vote, and                 
  that  anything else  to define  available  for appropriation                 
  would likely lead to litigation.                                             
  Mr. Baldwin  thought in  order  to comply  with the  court's                 
  order  for  FY94,  it would  be  the  recommendation  of the                 
  Department to  do it by  three quarters vote  simply because                 
  there are appropriations on the  books and expenditures made                 
  by third parties  in connections with those  appropriations,                 
  amounts advanced by the State Treasury, and the State should                 
  not do anything to throw into question the validity of those                 
  actions.                                                                     
                                                                               
  Representative  Martin asked  with  that  opinion why  would                 
  there be a separation  between Section (b) and Section  (c).                 
  He thought that  Section (c) would  make it clear, with  the                 
  understanding with  Legislative shortfalls  are coming  from                 
  the prior  years.   Mr. Baldwin  agreed with  Representative                 
  Martin.  He added, that there would be a great potential for                 
  litigation.   He  reiterated his  legal advise  would  be to                 
  solicit  and  receive   a  three  quarter  vote   for  FY94.                 
  Representative  Martin replied,  if the shortfall  from this                 
  year is to be  made up, a simple majority should  be able to                 
  make that decision.  Mr. Baldwin stated that the risks would                 
  be   increased   by   taking   a   simple   majority   vote.                 
  Representative Martin summed up that Section (B) would allow                 
                                                                               
                               31                                              
                                                                               
                                                                               
  a  simple  majority and  Section  (C)  would  mean  a  three                 
  quarters vote.                                                               
                                                                               
  Representative Brown referenced  Section 2, the  retroactive                 
  clause to July 1, 1993.  She asked the purpose in making the                 
  proposal retroactive.  Mr. Baldwin stated that this would be                 
  applied to FY94, in order  for any decisions to be made  for                 
  restoration  of  the funding  in  compliance with  the court                 
  order, this interpretation would have to be in effect at the                 
  time   of  the   appropriations   which   are  in   dispute.                 
  Representative Brown asked the effect  of not including that                 
  provision in the bill.  Mr. Baldwin  thought it may have the                 
  same  effect.    The  retroactive  provision would  make  it                 
  absolutely clear,  stating this is  how it should  have been                 
  for FY94.  He was not sure that the provision was absolutely                 
  necessary although it would provide clarity.                                 
                                                                               
  Representative Hoffman  questioned the amount  available for                 
  appropriation.  He noted the discrepancy between Mr. Baldwin                 
  and Ms. Cook on the Permanent Fund earnings.  Representative                 
  Hoffman questioned if  the Legislature had the  authority to                 
  make the appropriation.                                                      
                                                                               
  Mr. Baldwin replied that the Legislature does have the power                 
  to  appropriate  the money.   He  thought  there could  be a                 
  problem  in  how  that  power  could  be  exercised.     The                 
  justification for  not considering  it to  be available  for                 
  appropriation in the context  of which that term is  used in                 
  the  amendment  is  because  it   is  a  separate  provision                 
  established  by statute.   Representative  Hoffman disagreed                 
  with Mr. Baldwin.                                                            
                                                                               
  A roll call vote was taken  on the MOTION to adopt Amendment                 
                                                                               
       IN FAVOR:      Grussendorf, Hoffman, Navarre, Brown.                    
       OPPOSED:       Hanley,  Martin,  Parnell,   Therriault,                 
                      Larson, MacLean.                                         
                                                                               
  Representative Foster was not present for the vote.                          
                                                                               
  The MOTION FAILED (4-6).                                                     
                                                                               
  Representative Martin MOVED that CS HB 58 (FIN)  be reported                 
  out   of   Committee   with    individual   recommendations.                 
  Representative Navarre OBJECTED.                                             
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Hanley,  Martin,   Parnell,  Therriault,                 
                      MacLean, Larson.                                         
       OPPOSED:       Hoffman, Navarre, Brown, Grussendorf.                    
                                                                               
                               32                                              
                                                                               
                                                                               
  Representative Foster was not present for the vote.                          
                                                                               
  The MOTION PASSED (6-4).                                                     
                                                                               
  CS  HB  58 (FIN)  was  reported  out of  Committee  with "no                 
  recommendations"  and  with   zero  fiscal   notes  by   the                 
  Department of Law and the Department of Administration.                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 4:00 P.M.                                           
                                                                               
                                                                               
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