Legislature(2017 - 2018)HOUSE FINANCE 519
03/15/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Amendments | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 115 | TELECONFERENCED | |
| += | HB 31 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 15, 2017
4:26 p.m.
4:26:21 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 4:26 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Randall Hoffbeck, Commissioner, Department of Revenue; Rob
Carpenter, Analyst, Legislative Finance Division; Alexei
Painter, Analyst, Legislative Finance Division.
SUMMARY
HB 31 SEXUAL ASSAULT EXAMINATION KITS
HB 31 was SCHEDULED but not HEARD.
HB 115 INCOME TAX; PFD CREDIT; PERM FUND INCOME
HB 115 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster addressed the meeting agenda.
HOUSE BILL NO. 115
"An Act relating to the permanent fund dividend;
relating to the appropriation of certain amounts of
the earnings reserve account; relating to the taxation
of income of individuals; relating to a payment
against the individual income tax from the permanent
fund dividend disbursement; repealing tax credits
applied against the tax on individuals under the
Alaska Net Income Tax Act; and providing for an
effective date."
^AMENDMENTS
4:27:02 PM
Co-Chair Foster asked for verification that Representative
Thompson wanted to move Amendment 12 to the bottom of the
list.
Representative Thompson replied in the affirmative.
Representative Thompson MOVED to ADOPT Amendment 13, 30-
LS0125\E.25 (Nauman, 3/10/17):
Page 2, line 9:
Delete "a new subsection"
Insert "new subsections"
Page 2, following line 18:
Insert a new subsection to read:
'(c) In accordance with AS 37.13.145(b)(1), and
subject to appropriation, 33 percent of the amount
available for distribution under (b) of this section
shall be reserved for dividends. The remainder of the
amount calculated to be available for distribution
under (b) of this section shall be reduced by the
difference between the amount calculated under (1) of
this subsection and the amount under (2) of this
subsection if the amount calculated under (1) of this
subsection exceeds the amount under (2) of this
subsection:
(1) the total amount of oil and gas production taxes
under AS 43.55.011 - 43.55.180, mineral lease rentals,
royalties, royalty sale proceeds, net profit shares
under AS 38.05.180(f) and (g), and federal mineral
revenue sharing payments and bonuses received by the
state from mineral leases that are deposited into the
general fund in the current fiscal year; (2) the sum
of $1,200,000,000."
Co-Chair Seaton OBJECTED for discussion.
Representative Thompson explained the amendment. He
indicated that the amendment set a draw limit in the amount
of $1.2 billion and once triggered the Point of Market
Value (POMV) would be reduced by $1 for every $1 of oil
production tax and royalties that exceeded $1.2 billion.
The limit reduced Permanent Fund (PF) expenditures during
times of higher oil revenues. He continued that "without
the provision there would be no guidance on how to spend
money during times of flush oil revenues." The bill allowed
the legislature to take the full POMV draw "even though oil
revenues were sufficient to cover state spending." Leaving
the excess PF revenues in the fund allowed the fund to
yield higher earnings, "which translated into a larger PF,
larger POMV, and larger Permanent Fund Dividends (PFD)." He
emphasized the amendment directed the state to refrain from
spending savings and protected the investment fund.
Representative Kawasaki referred to a graph provided by the
Legislative Finance Division titled "LFD Fiscal Model"
dated 3/15/17 (copy on file). He deduced that the amendment
limited the payout limit until the price of oil reached
$105/bbl., at that point increased revenue was available
for expenses. Representative Thompson discerned that the
statement was correct. He supported capping the draw when
not all of the funds were needed for government spending.
He wanted to "slow down growing government more and more."
Representative Kawasaki spoke to budget items tied to the
increased price of oil; a volatile commodity. He remembered
that the legislature established fuel triggers for the
marine highway system, reduced the motor fuel tax to zero
for a tax holiday, former Governor Sarah Palin increased
the PFD by $1 thousand, and funding increased for the Low
Income Home Energy Assistance Program (LIHEAP) program. He
felt that the policy calls were either "good or bad"
depending on one's point of view but the decisions were
made in support of the spending at the time. He believed
that the policy calls on spending levels were up to
legislatures of the future to decide.
4:31:42 PM
Representative Thompson deferred to the Department of
Revenue for a comment.
RANDALL HOFFBECK, COMMISSIONER, DEPARTMENT OF REVENUE,
answered that the provision to limit the draw as oil prices
increase was "imbedded in the governor's plan from day
one." He expounded that there were many demands on the use
of the PF making it essential to reduce volatility in
spending; as spending grew it was difficult to reduce w. He
thought that the amendment created a shutoff valve on
spending and as oil prices recovered the draw on the PF was
when necessary. He added that the limit enabled the 5.25
percent POMV draw from the Earnings Reserve Account (ERA)
to be sustainable overtime and allowed for larger draws
during low revenue years.
Vice-Chair Gara requested to see a different chart than the
one on the screen and in the member's packets. He requested
a chart modeling POMV only data. [Legislative Finance
Division Models were interactive] He asked whether the
limit "kicked in" at $80/bbl. Commissioner Hoffbeck replied
that the limit was set at $75/bbl. Vice-Chair Gara asked
when the oil price was predicted to reach $75 or $80 per
barrel. Commissioner Hoffbeck answered that it was between
four and six years - he had to consult the forecast. Vice-
Chair Gara thought that the forecasted time period was
longer. He asked why the deficit lasted longer with the
payout limit (until $100/bbl.) than without it.
Commissioner Hoffbeck answered that the Legislative Finance
Division (LFD) model data showed that with the $1.2 billion
draw limit the budget was not fully balanced without some
additional revenue sources. He indicated that DOR's
modeling did not find as large a gap as LFD's model. He
informed the committee that DOR's modeling was
probabilistic and LFD's modeling was deterministic, which
accounted for any discrepancies between the two models.
4:36:12 PM
Vice-Chair Gara remarked that the amendment was predicated
on oil prices projected five to eight years out that
extended the deficit. He discerned that the limit dictated
to future legislatures that they had to restrict capital
budget expenditures leaving insufficient funds for deferred
maintenance. He understood that the University of Alaska's
deferred maintenance alone was roughly $500 million. He
commented on differing views amongst legislators regarding
increasing budget cuts. He did not believe the legislature
should constrict future legislatures from making their own
decisions appropriate to their circumstances.
Co-Chair Seaton looked at a chart on the left that showed
"UGF Revenue without Payout Limit." The model predicted
that if the budget remained flat deficits were eliminated
at oil prices between $80/bbl. and $85/bbl. assuming the
same budget level eight years in the future or whenever oil
prices reached $85 per barrel. He referred to the chart on
the right titled "UGF Revenue with Payout Limit" that
maintained a deficit at $100/bbl. He asked for clarity.
Commissioner Hoffbeck answered that the model was a "snap
shot in time" based on FY 18 production and not a "time
series" on production or revenue. He clarified that the
model showed a deficit at FY 2018 production at a certain
oil price and at $75/bbl. the payout limit offset the draw.
The chart was a snapshot of a single point in time using
the FY 18 budget. Co-Chair Seaton wanted more clarity
regarding the deficit. He surmised that the state would
still carry a deficit at $100 per barrel with the $1.2
billion limit. Commissioner Hoffbeck affirmed the
statement.
4:40:11 PM
Representative Guttenberg remarked that the chart assumed
numerous things were static; revenue, timeline,
undesignated general funds (UGF), and the Percent of Market
Value (POMV) payout. He asked if "intermediary" charts were
included in the model that showed incremental changes based
on the percent change of $1. Commissioner Hoffbeck asked
for clarification. Representative Guttenberg wondered if
other variables affected the model or would predictable
change result in predictable results. Commissioner Hoffbeck
answered that the model "should simply adjust" any changes
downward or upward. He reminded the committee the charts
represented a snapshot in time. Representative Guttenberg
surmised that the charts did not take inflation, population
shifts, or other factors into effect. He spoke to concerns
about the limit; specifically, the ability to increase
capital budget expenditures. He wondered whether the limit
would be constricting future legislatures. He remarked that
the legislature did not always spend surplus revenues and
he believed the premise that it did was the implied
assumption of the amendment.
4:43:09 PM
Representative Pruitt commented that the committee was only
looking at FY 18 predicated on the fall forecast. He voiced
that production was also "a piece of the discussion." He
declared that future production would impact the $1.2
billion limit. In addition, if revenues triggered the limit
in the near future, the result would impact the fund. He
underscored that looking at a snapshot was difficult to
determine the role the limit played with balances in the
future. He believed that the amendment was "one of the most
important things the legislature could do." He questioned
what would happen when oil prices dropped again in future
years and felt that embracing the limit was imperative for
budgetary protection in future low revenue years. He
declared that the state would increase spending if oil
prices went up. He implored the legislature to implement
the limit to effectively limit spending. He suggested
expanding the model to include future years in addition to
FY 18.
4:46:44 PM
Representative Kawasaki echoed some of the comments made by
Representative Pruitt. He voiced that a snapshot in time
made it difficult to determine what the budget would look
like in future years. He also requested expanding the
model.
ROB CARPENTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
acknowledged that the model was a snapshot in time. He
explained that LFD had not been able to "figure out" how to
model a time series given that there were so many unknown
variables. He referred to the charts and clarified they
were only for FY 18. The left chart reflected no payout
limit and the right chart represented including a payout
limit. The bottom portion of the graphs showed the
nonvolatile UGF revenue stream that included corporate
income tax and other revenue. Additionally, the bottom
graphs represented the POMV payout that assumed it would be
the same with the limit. He cited the blue bars on the top
left chart that signified volatile revenue; production tax
and royalty, which grew significantly with the price of
oil. He reported that the model demonstrated that at the
projected $4.3 billion budget a fiscal deficit resulted at
$20/bbl. and began to close at $75/bbl. with "extreme
surpluses" as prices increased. He referred to "this side,"
which was the right chart and noted that with the revenue
limit that was implemented at $75/bbl. or $80/bbl. the POMV
payment began to drop dollar for dollar over the $1.2
billion. He related that the limit amount was determined in
SB 26 (Approp Limit & Per Fund: Dividend; Earnings). He
furthered that as the dollar for dollar kicked in at a
price of $100/bbl. the POMV payout was zero. Under the
scenario, a fiscal deficit still existed at $100/bbl. He
maintained that the limit and deficit at $100/bbl.
supported the argument for further budget cuts or the need
for other revenue sources depending on the point of view.
4:50:30 PM
Commissioner Hoffbeck stressed that the limit concept was
only a portion of the governor's fiscal plan and was never
intended to close the fiscal gap. He reminded the committee
that under the governor's fiscal plan, either additional
reductions in spending, additional revenue sources, or a
combination of both were necessary to complete a fiscal
plan.
Representative Grenn asked Mr. Carpenter to scroll down to
show actual numbers [note - model was interactive and not
available on hardcopy]. He asked whether there was a
deficit column. Mr. Carpenter showed a column with deficit
information [not on file].
4:52:21 PM
Representative Ortiz addressed a question to the sponsor of
the amendment. He asked whether the proposal impacted the
"ability in any way" or potential to significantly increase
capital budget expenditures in the future. Representative
Thompson believed the issue needed addressing through
separate legislation "with possibly a look at something in
addition." His current concern was trying to impact future
legislatures and restrict them from growing the budget in
years of "excess funds." He wanted to maintain the amount
in the PF and the Earnings Reserve Account (ERA). He agreed
that oil prices were volatile, but thought it was necessary
to establish something that the state "could depend on if
the prices go crazy" and revenues increased significantly.
He noted that the state was currently producing 50,000
barrels per day more than projected. He believed that the
more money maintained in the PF benefitted the state in the
future.
Representative Thompson inquired what would happen to the
size of the Permanent Fund over time with a draw limit and
without one. He wondered which option preserved the state's
funds over the long-term.
4:55:07 PM
ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
replied that they could adjust the model to significantly
increase the oil price for a year to see how the scenario
impacted the model with the limit versus no limit. He moved
to another tab on an Excel chart [interactive model - copy
not on file] that showed data for the price of $90/bbl. in
FY 2018 and then returning to the fall forecast prediction.
He reported that the impact was a spike in FY 18 because
"not all of the revenue would go away," but the POMV draw
was "significantly" less. He assumed that the remainder of
the spike would be appropriated to the Constitutional
Budget Reserve (CBR) rather than spent and the remainder of
that amount would remain in the ERA. He delineated that due
to the four times draw provision, a good deal of the amount
would be deposited into the PF principal for inflation
proofing. The value of the Permanent Fund in FY 2026 was
103 percent of real value without the draw limit. If the
draw limit was implemented, the revenue spike in FY 18 was
decreased and the real value in FY 26 was higher at 105
percent. The draw limit resulted in a higher value in the
Permanent Fund, but a lower CBR balance in future years.
Vice-Chair Gara stated that governing for seven years into
the future with a restrictive formula prohibited a future
legislature from raising the dividend. He announced that at
some point he wanted a spending increase for pre-K and the
University and did not see how the limit achieved his
goals. He believed the limit scenario was well out in the
future. He offered that a price of $78/bbl. was not
forecasted until 2024. He suspected they would not reach
the draw limit until well above $80 per barrel factoring in
future production levels. He asked whether future
production predictions could be included in the model. Mr.
Painter replied LFD did not include production as a
variable in the model. Vice-Chair Gara asked whether the
price when the limit kicked in was much higher if
production decreased as the forecast predicted. Mr.
Carpenter answered in the affirmative. Vice-Chair Gara
guessed that the payout limit might not be applicable
through the next 7 to 12 years. He believed they were
spending time on a "mythical" provision that did not meet
his "principles."
Co-Chair Seaton referred to a prior tab showing HB 115 with
an income tax. He asked what the scenario would look like
without the income tax. [The model was changed.]
5:00:33 PM
Co-Chair Seaton consulted the Excel presentation and
surmised that without additional revenues there would be
significant deficits and declining reserves over time with
the payout limit. He believed the result was what the
legislature was trying to avoid in the fiscal plan. He was
concerned that looking at a snapshot in time even at
$95/bbl. per barrel there would still be a considerable
deficit necessitating significant other revenue or ad hoc
draws from the ERA. He believed the amendment would likely
"force" the legislature to take ad hoc draws or money from
the CBR. He was uncertain about a plan that did not
accomplish a balanced budget. He stated the reason for the
income tax was to contribute to solving the deficit. The
amendment would mean insufficient funds and inability to
achieve a balanced budget. He asked whether his assumptions
were correct. Mr. Painter emphasized that the model was
just showing one year. He altered the model to show revenue
flat at $90/bbl. per year without any other adjustments,
which resulted in very little deficit the first two years
but would appear again under the Office of Management and
Budget (OMB) 10 year plan that grew the budget.
Commissioner Hoffbeck reminded the committee that the
models were only projected for the FY 18 and FY 19 budget.
He noted that the draw limit could occur at some point in
the future. If the draw limit was eliminated, the question
was whether a 5.25 percent draw was sustainable over a
significant period. Without the limit and the ability to
take a 5.25 percent draw; a reduced draw would increase the
gap in the short-term; it may close the gap in seven or
eight years, but eliminating the limit made the problem
worse over the next few years.
Co-Chair Seaton asked for verification that the scenario
would be the case if there was no additional revenue. He
countered that if the goal was to have diversified options,
a 5 percent draw was more sustainable with additional
revenue. He asked for the accuracy of his statements.
Commissioner Hoffbeck answered in the affirmative.
5:05:45 PM
Representative Wilson asked where "the increase in volume
came in." Mr. Carpenter answered that the model was based
on the fall production forecast. The model did not include
production variables. The model showed a one-year snapshot;
therefore, adjusting production was not realistic, but
price variability was. Representative Wilson countered that
if the volume increased "it wouldn't just be about the
price." She thought that the model showed just "one day in
2018 what the budget would look like." She referenced an
earlier comment about the dividend payout. She asked
whether the dividend could increase if the amendment was
adopted and production increased. Mr. Carpenter replied
that the dividend calculation occurred first and added that
the dividend was excluded from the revenue limit.
Subsequently, the 70 percent remainder for the POMV was
subject to the limit. He interpreted Vice-Chair Gara's
comments to mean that if an increased dividend was desired
the amendment would theoretically limit the amount because
the limit reduced the POMV payout. However, he argued that
the dividend was subject to appropriation and a future
legislature could do whatever it chose.
5:08:12 PM
Representative Wilson asked whether the payout limit was
included in the governor's bill. Commissioner Hoffbeck
answered in the affirmative [SB 26]. Representative Wilson
asked for more detail on why the amendment was "the right
way to go." She wondered what the amendment would
accomplish that could not occur without an amendment and
why the payout limit was important to the administration.
Commissioner Hoffbeck replied there were several reasons
why the administration favored the limit. He explained that
high oil prices and a full POMV draw could "overheat
spending." The second reason was related to volatility in
the price of oil. The payout limit provided stability and
tended to smooth the peaks and valleys of volatile revenue.
For instance, a one-year spike might fuel increases in
capital expenditures, but if Pre-K was increased and
revenue dropped the following year, maintaining the
increased level of Pre-K funding might be difficult.
Finally, the impending limit allowed for higher initial
draws on the ERA. Representative Wilson asked where
spending cuts came into play. She remarked that reductions
were not included in the model. She wondered how flat or
slightly decreased spending would come into play in the
model or simply how spending affected the model.
5:11:13 PM
Mr. Carpenter restated that the model showed an FY 18
assumed budget, and with the limit the deficit was
maintained in the higher priced years. He deduced that the
deficit implied a pressure to reduce the budget or generate
additional new revenue. He related that by FY 2023 the fall
forecast predicted oil at $75 per barrel but production was
expected to decrease to 391 thousand barrels per day from
470 thousand barrels per day. He noted that production
could increase or decrease by then. He referred UGF revenue
with a payout limit and pointed to the blue bars
representing volatile revenue. He hypothesized a scenario
of declining production several years out; the blue bars
were lower due to lower revenue, but the POMV payout would
not be reduced as much relative to the revenue decline due
to the $1.2 billion limit. He offered a scenario with a
higher payout limit; the deficit would be eliminated. He
then adjusted the dollar for dollar provision to $0.80 and
$0.80 and relayed that the change also eliminated the
deficit "within the range of prices where the deficit was
reduced."
Co-Chair Seaton wanted to contemplate the payout limit
concept longer to determine all the ramifications. He asked
what effect the income tax under HB 115 had on the models.
Mr. Carpenter showed a chart [interactive - not on file]
that indicated the scenarios with an income tax. Co-Chair
Seaton referred to the models with the payout and no payout
limit. He deduced that the deficit with or without the
limit was eliminated at around $65/bbl. or $75/bbl. He
asked where the income tax revenue was shown on the charts.
Mr. Carpenter answered that the income tax was represented
as non-volatile revenue in red [on the charts]. The deficit
was depicted in orange and was eliminated.
Commissioner Hoffbeck added that the deficit was reduced
before the payout limit went into effect in the income tax
scenario, which was the reason the deficit was eliminated
at the same time with or without the limit.
5:16:17 PM
Representative Guttenberg asked what value the income tax
input was based on. Mr. Painter indicated that the model
included the HB 115 value and only reflected half of the
year's value, due to the first tax collection half way
through the fiscal year (FY 18).
Vice-Chair Gara did not support the amendment at present.
He requested a model that included FY 2024's forecasted
production; the year the oil prices were forecasted at
approximately $80 per barrel. He suspected the payout limit
would be moved well into the future. He reiterated his
concerns about the payout limit and the constraints on
education and university spending, increasing the dividend,
and fixing state infrastructure.
Representative Grenn referred to the graph with capital
budget projections from FY 19 through FY 26 [not on file].
He asked what the projected capital budget average was and
guessed the spending level was approximately $180 million.
Mr. Carpenter concurred that spending was assumed flat at
$180 million based on match money and a reasonable amount
for deferred maintenance needs. He voiced that the amount
was "completely arbitrary."
Representative Thompson realized the charts showed a
snapshot for FY 18. He surmised that since there was a 5-
year lag for the POMV average, the more money left in the
PF the larger the POMV and the smaller the potential
deficit. He wondered whether his statement was correct.
Commissioner Hoffbeck answered in the affirmative. He added
that the more the PF grew the larger the POMV draw and more
money would be available for government services and the
dividend.
Co-Chair Seaton noted that a draw limit under $95/bbl.
would not grow the draw limit; the limit would produce a
smaller draw. He believed committee members would need to
think about the issue further. He requested tabling the
amendment until a later time for further consideration.
Commissioner Hoffbeck pointed out that the dividend was
calculated before a draw limit was factored in. He reported
that the dividend would always be paid against the maximum
draw.
Co-Chair Seaton MOVED to table the amendment.
Representative Pruitt asked whether there was a reason for
tabling the amendment versus holding the amendment until a
later time.
Co-Chair Foster stated the amendment would be rolled to the
bottom of the amendment packet.
5:22:12 PM
Representative Thompson WITHDREW Amendment 14, 30-
LS0125\E.29 (Nauman, 3/10/17) and Amendment 15, 30-
LS0125\E.30 (Nauman, 3/12/17) (copy on file).
Representative Wilson MOVED to ADOPT Amendment 16, 30-
LS0125\E.23 (Nauman, 3/12/17) (copy on file):
Page 1, line 5, following "Act;':
Insert "authorizing an advisory vote to approve
legislative action that appropriates money from the
earnings reserve account for a purpose other than a
payment of a permanent fund dividend and making the
legislative action contingent on the advisory vote
receiving an affirmative majority vote;"
Page 10, following line 24:
Insert new bill sections to read:
"Sec. 16. The uncodified law of the State of Alaska is
amended by adding a new section to read: ADVISORY
VOTE. At a special election to be held in substantial
compliance with the election laws of the state,
including absentee voting and the preparation,
publication, and mailing of an election pamphlet under
AS 15.58, the lieutenant governor shall place before
the qualified voters of the state a question advisory
to the legislature and the governor. The election
pamphlet for the special election must comply with AS
15.58.020(a)(6), including the requirement that it
contain statements that advocate voter approval or
rejection of the question. Notwithstanding AS
15.80.005 and other laws relating to preparation of
the ballot proposition, the question shall appear on
the ballot in the following form:
QUESTION
Do you approve of the passage by the Alaska State
Legislature of a bill that allows the legislature to
appropriate money from the earnings reserve account
for a purpose other than a payment of a permanent fund
dividend?
Yes[ ] No[ ]
Sec. 17. The uncodified law of the State of Alaska is
amended by adding a new section to read:
NOTICE TO THE REVISOR OF STATUTES. The director of
elections shall notify the revisor of statutes when
the results of the election have been certified under
AS 15.15.450 if the advisory vote authorized in sec.
16 of this Act receives an affirmative majority vote.
Sec. 18. The uncodified law of the State of Alaska is
amended by adding a new section to read:
CONDITIONAL EFFECT. Sections 4 and 6 of this Act take
effect only if the director of elections notifies the
revisor of statutes under sec. 17 of this Act that the
question in the advisory vote under sec. 16 of this
Act received an affirmative majority vote.
Sec. 19. If, under sec. 18 of this Act, secs. 4 and 6
of this Act take effect, they take effect on July 1 of
the year following the year in which the notice is
given under sec. 18 of this Act.
Renumber the following bill sections accordingly.
Page 10, line 29:
Delete '16"
Insert'16-20"
Page 10, line 31:
Delete "sec. 17"
Insert 'sec. 21"
Representative Guttenberg OBJECTED.
Representative Wilson MOVED Conceptual Amendment 1. The
amendment to Amendment 16 would delete the following
language on page 1, lines 4 through 5 "and making the
legislative action contingent on the advisory vote
receiving an affirmative majority vote."
There being NO OBJECTION, Conceptual Amendment 1 to
Amendment 16 was ADOPTED.
Representative Wilson spoke to the reason for removing the
language. She reported that she received a legal opinion
stating that the contingency language was unconstitutional.
She spoke to Amendment 16. She felt that the provisions in
HB 115 affected all of Alaskans and contained "big" issues
that were new to Alaskans. She had heard from constituents
that felt they wanted to "weigh in" on the decisions. She
acknowledged that the advisory vote did not force the
legislature the "abide" by the results; but hoped to start
a dialogue regarding the issues.
Co-Chair Seaton was opposed to the amendment. He stated
that the bill was trying to address and fix a problem. He
believed they would not be able to move forward during the
current 30th Legislature unless there was a special
election. He did not favor waiting until after the next
general election. He indicated that the delay would impose
the status quo and worried that the delay would "eat up the
remaining funds in the CBR." He concluded that the
amendment would suspend legislative work and delay a
decision by the legislature on a fiscal plan.
5:26:17 PM
Co-Chair Foster mentioned that the committee would need to
address a technical amendment on page 2, line 8 through
line 10 of the bill regarding the "conditional affect
language." He requested that someone from Legal Services
address the technical issue.
Representative Wilson discerned that the technical
correction corresponded to her conceptual amendment that
removed language from the title and removed conditional
language within the bill. She wanted to withdraw her
previous conceptual Amendment 1 [Note: the amendment to
Amendment 16 had previously been adopted and was not
withdrawn. A subsequent conceptual amendment was offered to
fix the issue].
5:27:26 PM
AT EASE
5:28:25 PM
RECONVENED
Representative Wilson MOVED Conceptual Amendment 2 to
Amendment 16.
Vice-Chair Gara OBJECTED for discussion.
Representative Wilson explained the amendment would apply
to page 2, lines 6 through 10 of Amendment 16. The intent
was to remove language to ensure the legislation was not
contingent on a vote. She clarified that the amendment
called for an advisory vote.
Co-Chair Seaton observed that Section 19 of Amendment 16
read "If, under sec. 18 of this Act..." He reasoned that if
Section 18 was removed he did not know if the rest of the
amendment was accurate.
Representative Wilson asked whether the Co-Chairs were
planning on passing any of the amendments during the
current meeting. She wanted to roll the amendment to the
bottom and asked for more time to consult with Legislative
Legal Services to draft a correct amendment.
Representative Pruitt asked about the special election
portion of the amendment. He inquired about the cost of a
special election. He suspected that a referendum might he
offered on the issue. He presented a scenario where the
amendment question was on the ballot during the general
election along with the plebiscite. He wondered whether the
two ballot questions would conflict with each other.
5:31:24 PM
Vice-Chair Gara believed the amendment sponsor was trying
to address a legislative legal memo that stated the
conditional language that made HB 115 contingent on an
advisory vote was unconstitutional. He suggested that a
broad conceptual amendment that removed all contingency
language from the amendment was sufficient. He requested
the sponsor make a broad conceptual amendment in order to
move the discussion on Amendment 16 forward.
Representative Wilson believed some good questions were
raised and she wanted to ensure that the amendment was
correct. She believed that if the citizens of Alaska felt
the need for a referendum she "did not want the amendment
to get in the way." She wanted to get the issue right - she
did not want her amendments to cause problems with the
bill. She believed people had the right to a voice in
decisions regarding "major" policy shifts. She declared
that the bill could pass in the current year and did not
stop any progress on addressing a fiscal plan. She
reiterated that the nature of an advisory vote did not
commit the legislature to the outcome. She concluded that
the advisory vote was an "extra step" and "forced" a larger
discussion. She wanted to ensure the citizens of Alaska
were part of the conversation. She restated her desire to
rewrite the amendment and offer it at a later date.
5:33:26 PM
Representative Kawasaki remarked that the committee kept
rolling down amendments. He wanted to deal with the
amendments during the meeting.
5:34:17 PM
Representative Wilson wanted to hear from Legislative Legal
Services. She emphasized her wish to not include something
problematic in the bill that would interfere with a
referendum.
Representative Pruitt was uncertain of the timeframe for
the bill's movement through the process. He stressed his
support for the sponsor to have the time to propose an
amendment that she felt secure offering.
5:35:50 PM
Co-Chair Seaton was opposed to the basic premise of the
Amendment 16. He did not want to either delay work on a
fiscal plan or make it irrelevant due to the outcome of an
advisory vote. He thought the legislature's job was to
create a fiscal plan. He opined that if the public wanted a
plebiscite on the fiscal plan that was a "separate" result
and did not detract from the current work on a plan. He was
opposed to the basic part of the amendment asking for an
advisory vote. He opined that there was no use going
through all the committee work if an advisory vote
nullified the use of the ERA. He favored voting on the
amendment in the immediate future.
5:37:58 PM
Vice-Chair Gara commented that he wanted to respect the
amendment sponsor's ability to make her amendment. However,
he stressed that the legislature was running out of time
during its 90-day session and felt that all of the delays
halted progress.
Representative Pruitt wanted to focus on the concept of
giving the amendment sponsor more time. He thought that
substantial concerns over Amendment 16 were discovered
during the meeting. He noted that he had been provided the
Legislative Legal Services Memo [Voter Approval of
Legislation HB 115 30-LS0125\E] (copy on file) during the
meeting. He understood the bill's time sensitivity but
emphasized that he was arguing for the ability of a member
to ensure she was providing an amendment she had confidence
offering. He thought that there were other committee
members who supported Amendment 16.
5:40:56 PM
Co-Chair Foster wanted to ensure that the committee
understood the substance of the amendment in order to move
forward.
Representative Grenn had been comfortable with the initial
conceptual amendment before he received the legal memo. He
would like to see the maker of the amendment be given time
to bring forward an amendment she was confident would
accomplish her objective.
Representative Tilton voiced support for allowing time for
the amendment sponsor to address the issues. She did not
believe it would add much more time to the schedule.
Representative Wilson apologized that she had never thought
about the possibility of a referendum happening
simultaneously with her ballot question. She stressed that
it was not her intent to slow down the bill's progress or
reverse anything. Her largest concern that she could not
presently answer was how her ballot question would
interfere with a simultaneous plebiscite on the question.
She voiced that the whole purpose of the amendment was to
give the public an opportunity to weigh in.
5:44:17 PM
Co-Chair Foster allowed the amendment sponsor time to clear
the issues up. He asked if the same issue applied to
Amendment 17. Representative Wilson answered in the
affirmative.
Representative Thompson asked to hear Amendment 12 the next
time the bill was heard.
HB 115 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster announced the schedule for the following
day.
5:46:35 PM
ADJOURNMENT
The meeting was adjourned at 5:46 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 115 3-14 amendments, OMB budget.pdf |
HFIN 3/15/2017 1:30:00 PM |
HB 115 |
| HB 115 3-14 amendments, flat budget.pdf |
HFIN 3/15/2017 1:30:00 PM |
HB 115 |
| HB 115 Modeling Revenue Limit Static.pdf |
HFIN 3/15/2017 1:30:00 PM |
HB 115 |
| HB 115 Legal Opinion to Amendments 16-17.pdf |
HFIN 3/15/2017 1:30:00 PM |
HB 115 |
| HB 115 DOR Response Letter to House Finance Committee - 3.23.17.pdf |
HFIN 3/15/2017 1:30:00 PM |
HB 115 |