Legislature(2023 - 2024)ADAMS 519
05/08/2023 10:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HJR2 || HB38 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HJR 2 | TELECONFERENCED | |
| += | HB 38 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 8, 2023
10:03 a.m.
10:03:58 AM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 10:03 a.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Alexei Painter, Director, Legislative Finance Division
SUMMARY
HJR 2 CONST. AM: APPROP LIMIT
HJR 2 was HEARD and HELD in committee for further
consideration.
HB 38 APPROPRIATION LIMIT; GOV BUDGET
HB 38 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting agenda. He noted there
was an amendment deadline for Wednesday at 5:00 p.m. He
noted a request from Representative Josephson to extend an
amendment deadline for HB 50 to Thursday at 5:00 p.m. He
granted the request.
HOUSE JOINT RESOLUTION NO. 2
Proposing amendments to the Constitution of the State
of Alaska relating to an appropriation limit.
HOUSE BILL NO. 38
"An Act relating to an appropriation limit; relating
to the budget responsibilities of the governor; and
providing for an effective date."
10:07:20 AM
Representative Hannan asked Co-Chair Foster to restate the
amendment deadline for the bills.
Co-Chair Foster relayed the information.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
provided a PowerPoint presentation titled "HB 38 and HJR 2
Appropriation Limits," dated May 8, 2023 (copy on file). He
began on slide 2 showing the current constitutional
appropriation limit. He explained that there were two parts
to an appropriation limit: appropriations subject to the
limit and the limit itself.
Mr. Painter moved to slide 3 and addressed appropriations
subject to the current constitutional limit. He noted that
exceptions to the limit included certain fund sources and
purposes. He explained that not all general fund
appropriations were subject to the current limit.
Exclusions included Alaska Permanent Fund Dividends (PFDs),
appropriations of revenue bond proceeds, appropriations
required to pay the principal and interest on general
obligation bonds (i.e., any bond debt repayment was
excluded from the limit), and appropriations of money
received from a non-state source in trust for a specific
purpose, including revenues of a public enterprise or
public corporation of the state that issues revenue bonds.
Mr. Painter detailed that the limitation included federal
funds held in trusts for a specific purpose, statutory
designated program receipts where an outside group
initiated a contract with the state, revenues of a public
enterprise or public corporations (e.g., Alaska Housing
Finance Corporation), and no appropriation in excess of the
limit could be made except to meet a state of disaster
declared by the governor. Additionally, the legislature
could exceed the limit for appropriations to the Permanent
Fund (special appropriations to the Permanent Fund fell
outside the limit). He relayed an attorney general's
opinion [from 1983] indicated that school debt
reimbursement was excluded from the limit. He noted it was
municipal debt, not state debt, but the opinion ruled it
fell under the debt provision; therefore, it was excluded
from the limit. He explained that when the limit was
calculated by the Legislative Finance Division (LFD) and
officially by the Division of Finance it factored in the
exclusions of fund sources and certain types of
expenditures.
10:11:59 AM
Mr. Painter reviewed a pie chart on slide 4 showing
appropriations subject to current constitutional limit, FY
23 management plan. The purple portion of the chart
reflected appropriations subject to the limit at about $5.8
billion. The yellow section reflected PFDs including the
energy relief payment at about $2.1 billion. Bond proceeds
accounted for a small portion of the chart [at
approximately $73.6 million. Appropriations from a non-
state source reflected the majority of the appropriations
[at $8.9 billion]. He explained that nearly half of the
state's appropriations were federal and the segment also
included public corporations, international airports, and
so forth.
10:12:55 AM
Mr. Painter turned to slide 5 and discussed the starting
point and growth rate of the current constitutional limit.
The current limit applied to $2.5 billion as adjusted by
the cumulative change derived from federal indices,
population, and inflation since 1981. He stated there was a
little ambiguity on how to calculate the current
constitutional limit. He detailed that the Division of
Finance under the Department of Administration made the
official calculation by multiplying inflation and
population. For example, if there was a 2 percent growth in
inflation and population, the limit would be multiplied by
1.02 twice. He pointed out that the Municipality of
Anchorage had a tax cap with identical wording, but its
calculation was added. For example, if the two numbers were
2 percent and 3 percent, the two numbers were added
together to equal 5 percent growth. He explained it was a
difference of about $3 billion compounded over 40 years. He
advised making the calculation very clear when designing a
limit. He noted that the current calculation was not clear,
and LFD viewed the language as ambiguous. The official
calculation resulted in a limit of about $11.3 billion in
FY 23.
Representative Galvin referred to Mr. Painter's statement
that the Municipality of Anchorage used a different
calculation resulting in a $3 billion difference
[compounded over 40 years]. She asked whether the $11.3
billion [under the current constitutional limit] would be
higher or lower based on the different calculation method.
Mr. Painter responded that the other calculation would be
about $3 billion lower.
Representative Galvin asked if the number would be at $8.3
billion.
Mr. Painter replied that it was in the $8 billion to $9
billion range versus the $11 billion to $12 billion range.
Mr. Painter turned to slide 6 and reviewed a bar chart
showing the constitutional appropriation limit since its
inception [in FY 83]. The blue bar reflected agency
operations, which tended to be the steadiest item. The
green portion of the bars reflected statewide operations
and the red portion reflected the capital budget. He
highlighted that current numbers showed that the state
broke the limit in the first few years. He explained that
at the time, many language appropriations were not counted
in the way they would be counted at present. He elaborated
that under modern accounting the limit had been broken in
the first few years, but under contemporary accounting,
spending had been within the limit. Following the first
several years there was a prolonged period of budgets that
did not grow quickly or keep up with inflation, which
caused a substantial difference between the appropriation
limit and the budget. When the state had significantly more
revenue, expenditures spiked and approached the limit, but
did not reach it. At present, under more constrained
revenue, appropriations were a bit more than $5 billion
beneath the constitutional limit.
Co-Chair Edgmon noted the slide was not new: there had been
many iterations before and would be more in the future. He
thought population growth in the state should be included
on the slide because much of the state's operating budget
was population driven. He cited Medicaid as an example. He
noted that the current proposal did not have a direct link
to population, but he believed it should. He elaborated
that the state's population was getting older. He asked
about the impact of population on overall state spending.
Mr. Painter answered that the slide adjusted for population
and inflation. He stated that population would influence
the number of students in schools and the number of
Medicaid recipients. He expounded that many of the large
budget drivers were driven by the size and composition of
the state's population. He explained that an aging
population meant fewer students in schools. He relayed the
state had seen roughly the same number of students in its
schools for about 25 years despite an increase in
population during the same period. He elaborated that more
people utilized social services as the population aged. The
population had grown and shifted where expenditures
occurred in the budget. He added that an aging population
did not necessarily mean there were lower expenditures, in
some cases, some departments were much higher. He suggested
that one interesting way to view the graph was to adjust
for inflation and population and show the black line
[reflecting the constitutional appropriation limit] as
flat, while showing how expenditures had fluctuated in real
terms rather than showing how the line had fluctuated. He
explained it may appear the state had increased the budget
substantially, but inflation and population had increased
far more than the budget.
Co-Chair Edgmon remarked that Alaska paid for more state
services than any other state in the country based on the
state's constitution. He remarked there was not a cascading
layer of taxes at the county level. He noted Alaska did not
have counties. He believed population had to be a driver in
any spending cap going forward.
10:19:25 AM
Representative Hannan asked if the definition of statewide
operations had been changed in the FY 07/FY 08 timeframe.
She asked why there had been a large jump at the time,
which seemed to be fairly steady proportionally.
Mr. Painter answered it had been driven by two things. The
first was statewide assist retirement. He elaborated that
there had not been a known unfunded liability until FY 03.
The liability was $700 million per year by FY 13. The
second [reason for the increase in statewide operations]
was oil and gas tax credits. He explained that there were a
couple of bills in the 2000s that created tax credits that
were no longer on the books that the state was still paying
off. He noted the expenditure was several hundred million
dollars per year. The two items accounted for most of the
increase in statewide items. Additionally, during that time
there had been the creation of new state funds including
the Higher Education Fund and increasing the Power Cost
Equalization (PCE) Fund. He explained that new funds often
showed up as a statewide item, although any further
appropriations would be outside the limit and would not
necessarily show up on the chart [on slide 6].
10:21:02 AM
Representative Stapp could not think of any example where
population growth did not positively impact gross domestic
product (GDP) output. He noted that the same was true for
population decline. He asked if the assessment was fair.
Mr. Painter answered that it was true to some extent;
however, because the state's economy was driven by resource
extraction, its GDP fluctuations were due to the prices and
quantity of resources being extracted. He stated it was
possible to look at statistics for the oil industry,
timber, fisheries, and mining. He explained that taking out
minerals including oil and gas, the numbers were much more
stable and reflective of overall economic growth. The
fluctuations in value of the state's exports drove much of
the year-to-year fluctuations. The fluctuations were not
directly tied to population, although when oil prices
crashed, there was less activity on the North Slope and the
state's population decreased. There was a relationship
[between population growth and GDP], but it was not as
direct as in many other states because of the large value
of Alaska's natural resources.
Co-Chair Edgmon relayed that he viewed the topic a bit
differently because 70 percent of the state's population
resided within the Railbelt. He remarked that the GDP was
an academic term that fluctuated given one-time events that
may have no impact on the cost of living in 30 percent of
the state population, which lived off the road system. He
opined that population, being directly involved in the
spending cap, had a better tie-in to cost of living or the
ability for the state to provide the equal amount of
services in rural areas compared to urban areas. He
remarked that GDP numbers were very different and impacted
the state in different areas. He thought the GDP
calculation was abstract in many respects and did not
reflect the actual cost of providing services in outlying
areas.
Representative Galvin looked at the black line on slide 6
and asked if it reflected the current constitutional
appropriation limit.
Mr. Painter replied, "If we spent to the limit every year,
yes."
Representative Galvin noted that the state had clearly not
spent to the spending limit. She highlighted there had been
substantial inflationary costs in 2021 and 2022, yet there
had not been a rise in appropriations. She stressed that
regardless of population size, the state still had to
deliver certain public services whether there were three
people or 33 people needing the service. She remarked that
the price of oil and diesel had increased substantially.
She thought they were seeing an explanation as to why
schools and other public services had been flatlined and
legislators were frustrated to see there was not sufficient
money to spend on wages and healthcare benefits. She
presumed the money just had not been there. She asked for
verification that the chart did not include the PFD.
Mr. Painter confirmed that the PFD was not included as an
expenditure subject to the limit; therefore, it was not
included in the chart.
Representative Galvin opined that if the PFD was one of the
largest expenditures, it should be included as part of the
equation. She asked Mr. Painter to comment on the "sky
high" inflation in 2021 and 2022, yet no increase was seen
on the graph [on slide 6]. She thought it indicated there
had been no money to deliver services or the state had
decided to make sure the PFD was large enough. She asked
what it would look like if the PFD was included in the
discussion.
10:26:45 AM
Mr. Painter replied that there were a couple of slides
later on in the presentation showing the PFD under the
proposed legislation. There was a substantial increase in
spending in FY 23, but there was a drop in FY 22 because
spending had largely followed available revenue.
Representative Galvin asked if some of it was related to
federal COVID-19 pass through funding. Alternatively, she
wondered if the slide only included state funding.
Mr. Painter replied that all federal funds were excluded
because they were held in trust for a particular purpose.
The one exception was using American Rescue Plan Act (ARPA)
revenue replacement, which spent the same as undesignated
general fund (UGF).
10:27:51 AM
Mr. Painter turned to slide 7 and discussed the capital
budget exclusion in the current constitutional limit. The
current limit specified that at least one-third was to be
reserved for capital projects and loan appropriations. He
relayed that the language was sometimes interpreted to mean
that one-third of the budget should be capital and two-
thirds should be operation. He explained that it was not
really how the language read. He clarified that the
language meant that within the limit at least one-third was
to be reserved for capital projects. He returned to slide 6
and explained that of the [constitutional appropriation
limit of] $11.3 billion, one-third may be for capital and
two-thirds may be for operating. He stated that
essentially, there was a separate limit for the operating
budget that was two-thirds of the overall limit, and the
capital budget could be any amount, but up to one-third was
reserved for that purpose. He explained that the language
essentially was setting a lower limit for the operating
budget. There were also provisions allowing the legislature
to exceed the capital project appropriation limit if passed
in a similar manner to a general obligation bond bill. He
elaborated that because general obligation bond debt was
excluded, the limit specified that if the money was
available, the issue could be sent to the voters for
approval, which would enable the state to exceed the limit.
Representative Hannan asked if there were any years where
the budgets had been two-thirds operating and one-third
capital.
Mr. Painter answered there had not been a year where one-
third of the budget went to capital funds during the
current appropriation limit. He noted there were a couple
of years (e.g., 2014) where the operating budget exceeded
the two-thirds. In the early years of the limit there was
an attorney general opinion ruling that during years of
constrained revenue, the funds should not necessarily go
towards the capital budget. He did not know if FY 08 would
qualify as a year of constrained revenue, but it was a year
the two-thirds limit had been violated.
10:30:56 AM
Representative Josephson asked if a lawsuit would have been
viable in the two years mentioned by Mr. Painter.
Mr. Painter answered that the state likely did violate the
two-thirds limit, but no one had challenged it at the time.
He stated that the timing of the constitutional
appropriation limit meant that any challenge would have to
be made after the fiscal year closed and the expenditures
had been made. He explained it was a bit of a challenge to
determine what the consequences would be if a lawsuit was
filed. He believed it was something the current bills and
others tried to address by making it possible to calculate
the limit ahead of time. He explained that under the
current constitutional limit, a violation was not known
ahead of time. He elaborated that after the fact someone
could have challenged what the legislature had done;
however, at the time the limit had been breached he was not
sure there had been awareness they were in danger of going
over the limit.
Mr. Painter turned to slide 8 and addressed the current
statutory appropriation limit, which was established a few
years after the constitutional appropriation limit. He
relayed it was based on appropriations made in a fiscal
year rather than for a fiscal year (supplementals were
counted in the year appropriated, not the year they were
effective). He pointed to the previous session as an
example of why the current statutory appropriation limit
existed. The current statutory limit, limited spending
growth to population plus inflation plus 5 percent. He
stated it seemed very high.
Mr. Painter highlighted that in 2022, there was 8 percent
inflation plus 5 percent and around zero population growth
for a total of 13 percent growth. There was also a large
spike in revenue (far more than 13 percent) in the same
year and the legislature grew spending by 56 percent of
UGF. The current statutory limit specified that the
legislature could only spend up to 13 percent of the
revenue spike. He stated it was not designed to be a path
for the legislature to follow and he thought the LFD graphs
were perhaps misleading because they were shown as path. He
explained that in reality it was a year-to-year limit
indicating to the legislature that it could only spend up
"x percent" more than it had the previous year regardless
of the size of a spike in revenue. He relayed that the
limit had been broken repeatedly, which was allowable
because the legislature's constitutional power of
appropriation trumped the statute. The statutory limit
allowed the legislature to move things freely across
supplementals and non-supplementals. He highlighted that in
2022 there were a number of capital projects that had a
supplemental effective date because "that was when revenue
was available"; however, the funding did not particularly
apply to that given year.
10:34:28 AM
Mr. Painter turned to a graph on slide 9 showing the
current statutory appropriation limit. The graph showed the
legislature had broken the statutory appropriation limit
"quite often" and by a substantial amount in FY 22
(applying to FY 22 and FY 23 appropriations made in the
last session). The limit had been violated by a bit in FY
18 and FY 20 and in quite a few years as the budget was
growing through FY 12. The intention of the statute was to
lop off spikes when a spike in revenue occurred.
Representative Hannan stated that wildfires tended to be a
large supplemental expenditure. She stated that one good
policy model was to put more money into the wildfire
operation upfront to avoid always backfilling with funding.
She asked what would make the most sense within the current
statutory appropriation limit. She asked if the legislature
should exclude wildfire and supplemental because of its
unpredictability from the calculation.
Mr. Painter responded it would fall under the state of
disaster. He explained that the way the limits worked did
not really give the best incentives. He detailed that the
governor generally only declared the disaster when money
was needed beyond what had already been appropriated. He
furthered that if the legislature appropriated zero,
everything would be a state of disaster, or the legislature
could appropriate more upfront and there would not be a
state of disaster. He stated that under the statutory limit
when there was growth from year-to-year it was perhaps not
as big of a concern as long as there was a relatively
stable budget and any disaster funding that had not been
counted did not perhaps cause issues. The constitutional
model with a fixed point could not be gamed by zeroing it
out. He remarked that on a scale of billions of dollars,
the amount was relatively small and was not a huge lever.
He stated it was perhaps a little questionable as currently
written and perhaps there could be clarification to ensure
the legislature did not have the incentive to underfund
wildfires to get under the limit.
10:37:23 AM
Mr. Painter read from slide 10 titled "HB 38 and HJR 2":
• Uses similar appropriations included and excluded as
current limits
• Sets limit as percentage of private sector GDP for
both constitutional and statutory limits current CS
is 11% for HB 38 and 13% for HJR 2
• Each percentage in the limit equals $475 million of
spending in FY24
Mr. Painter elaborated on the third bullet point above and
indicated that in future years the amount would vary as GDP
grew.
10:38:14 AM
Mr. Painter turned to a graph on slide 11 reflecting the
versions of HB 38 and HJR 2. The bars reflected the
appropriations subject to the limit, the shaded areas in
the background reflected revenue, the blue line reflected
the proposed statutory limit [HB 38], the red line
represented the proposed constitutional limit [HJR 2], and
the black line reflected the current constitutional limit.
FY 24 was indicated with a black vertical line, followed by
projections for future years. The slide used 11 percent and
13 percent of GDP, which reflected the current bill
versions. He relayed that the next few slides would show
different versions of the bill and the inclusion of the PFD
as requested by the committee.
Representative Josephson looked at the projected growth in
GDP. He believed it was inarguable that operating budgets
contributed to GDP. He asked if it was realistic the growth
identified on the graph [on slide 11] would occur if
downward pressure was put on operating budgets.
Mr. Painter answered that projecting GDP was very difficult
and there was not an official Alaska GDP estimate or
projection. He explained that the Department of Labor and
Workforce Development or any other institution did not have
a responsibility to make a projection. He explained that
LFD was making up the 1.5 percent [GDP growth] number. The
number was based on historical averages, and he was not
comfortable speculating what influenced GDP because there
was no official projection in the state.
Representative Josephson considered a scenario where there
was population growth toward the beginning of the next
decade. He elaborated on a scenario where the state would
need more teachers, but could not hire them; therefore, the
teachers could not afford to buy homes. He asked if the
scenario would impact GDP.
Mr. Painter confirmed that any fiscal policy choice would
impact GDP.
10:41:10 AM
Mr. Painter turned to slide 12 showing the original version
of the bills, which included 11.5 percent of GDP for the
statutory appropriation limit and 14 percent of GDP for the
constitutional appropriation limit. He relayed the .5
percent difference was about $237 million and the 1 percent
difference was about $475 million respectively. The graph
showed that in FY 24 the original version of the bill, the
statutory appropriation limit was a bit closer to the
current budget as proposed by the House. The previous limit
was substantially under the House budget.
Representative Galvin asked about operating versus capital
and how Alaska had behaved as a state historically. She
remarked that it felt like the lines had been pretty muddy.
She elaborated that she saw many things in the operating
budget that she could imagine being called capital and vice
versa. She asked Mr. Painter to comment on the topic. She
asked if the bills would result in more "jockeying around"
in order to make things add up in the right place.
Mr. Painter answered there were legal definitions for the
difference between operating and capital. He stated that
generally when appropriation bills were drafted the
legislature was stricter about trying to put operating
items in the capital budget because the capital budget had
a longer lapse timeframe. Whereas the legislature was a
little less strict on putting capital items into the
operating budget because with only one year to spend the
money it was a disadvantage. There was some muddying
because the legislature retained the power of
appropriation, and could put things in whatever bill it
wanted and call them whatever it wanted despite the
opinions of LFD and Legislative Legal Services. He stated
that LFD would often give guidance on which budget it
believed items belonged. He did not believe there would be
any difference in how operating and capital were treated in
the bills. He was not sure there would be an incentive to
try to muddy the waters. He stated that under the current
limit there were some exclusions for capital projects, but
only if approval could be obtained from voters, which was a
fairly high bar. He was not sure whether that was retained
in HJR 2.
Representative Galvin remarked that Mr. Painter had stated
there was currently a bit of muddying occurring, but it was
based on what the legislature had chosen to do. She asked
if the parameters [in the bills] added more clarity and
transparency or less.
Mr. Painter did not know that the bill would necessarily
change what the legislature would choose to call a capital
or operating item. Generally, the legislature tried to
follow the statute that set out what qualified as a capital
project and what qualified for the capital lapse provisions
that were more favorable.
10:45:07 AM
Representative Josephson asked if the budget passed in 2022
would have required a two-thirds vote from both chambers to
exceed the cap on capital budgets in light of generous
Infrastructure Investment and Jobs Act (IIJA) funding.
Mr. Painter replied that the federal appropriations were
outside of the limit, but match would be included. He
relayed that the FY 23 operating budget exceeded the limit
contemplated under the original [bill] version; therefore,
it would have required an additional vote.
Representative Josephson asked if members from both
chambers (frequently minority members) could leverage their
vote in exchange for additional capital dollars, which
would grow the capital budget.
Mr. Painter replied that it was similar to the dynamic with
the Constitutional Budget Reserve (CBR) where people could
use it for leverage and often that leverage was additional
spending rather than reduced spending. He relayed that any
higher vote threshold could be leveraged for more spending.
Representative Josephson remarked that even though it may
sound like cronyism or crass politics, it had a rationality
as well. He stated that human behavior suggested that sort
of thing could happen. He asked if his statement was fair.
Mr. Painter replied it was more political territory than he
wanted to weigh in on.
10:47:23 AM
Mr. Painter turned to a graph on slide 13 showing the
Senate version of the bills SB 20 and SJR 4 that had
been amended upwards to 12 percent and 15 percent of GDP
respectively. The numbers had been selected because they
were in line with the governor's FY 24 budget (the numbers
were slightly different than current House budget).
Mr. Painter moved to slide 14 titled "HB 38 and HJR 2
Current CS with Statutory PFD (11% and 13% of GDP)." The
purple section of the bars reflected the addition of the
statutory PFD. He reminded committee members that the PFD
was excluded from the current limit and the current bills.
He noted that LFD had been asked to show how the PFD
compared to the appropriations under the limit.
Representative Hannan asked for verification that because
the PFD was excluded from the current constitutional limit,
LFD had not included it in the operating monies. She asked
for verification that the operating budget portion of the
bars did not include the PFD that had not been paid, even
in the years that did not include a statutory [PFD].
Mr. Painter answered that the historical numbers reflected
what had been paid and the statutory [PFD] was reflected in
the projections going forward. He pointed to FY 23 and FY
24 and clarified that the bars reflected the PFD that had
been distributed and not what the statutory number had been
in those years.
Representative Hannan asked if Mr. Painter had stated that
the slide reflected the payment of full statutory PFDs even
in years the full amount had not been paid.
Mr. Painter answered that the slide showed the amount
actually paid for all years, whether the statute had been
followed or not.
Mr. Painter turned to slide 15 titled "HB 38 and HJR 2
Current CS with 50/50 PFD (11% and 13% of GDP)." The graph
reflected the PFD at 50 percent of the percent of market
value (POMV) going forward, which was the amount included
in the House budget. He noted the PFD shown in the
historical bars reflected the actual amount paid.
10:50:16 AM
Mr. Painter turned to slide 16 titled "HB 38 and HJR 2
Current CS with 75/25 PFD (11% and 13% of GDP)." The slide
showed the 75/25 where 25 percent of the POMV draw went to
the PFD as contemplated current Senate budget.
Co-Chair Edgmon stated that it was obvious that under the
proposed spending cap something would have to give, whether
it was the PFD, spending and operating, or capital budgets,
in order to meet the spending cap threshold or trigger a
supermajority vote.
Mr. Painter confirmed that as currently written, the
spending cap would be significantly below the current
version of the House budget. He explained that meeting the
11 percent [of GDP under HB 38] would require reducing the
budget to meet the number or changing the number in the
bill (as done in the Senate version of the bill).
Co-Chair Edgmon stated it would also speak to the 11.5
percent and 14 percent of GDP [modeled on slide 12] and the
12 and 15 percent of GDP [modeled on slide 13]. He remarked
that all of the modeling presumed a spending cap as
proposed would mean something would have to give down the
road whether on the budget side or PFD side.
Mr. Painter answered that because the PFD was not included
in the limit, the 12 to 15 percent of GDP would be close to
expected spending assuming spending was fairly flat going
forward, but a lower number would require spending
reductions.
Co-Chair Edgmon stated it was the reason the bills gave him
pause because currently the way the bills were written
would mean reductions would be on the social services side
in the capital and operating budgets. He believed the
legislature needed to take a hard look at the issue.
10:52:36 AM
Representative Stapp looked at slide 13 showing the graph
using 12 and 15 percent of GDP [under SB 20 and SBR 4
respectively]. He asked for verification that the spend
under the proposed statutory limit [SB 20] included the
capital budget as well.
Mr. Painter responded affirmatively.
Co-Chair Foster reviewed the schedule for the afternoon.
ADJOURNMENT
10:54:24 AM
The meeting was adjourned at 10:54 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 38 - HJR 2 LFD 5-8-23.pdf |
HFIN 5/8/2023 10:00:00 AM |
HB 38 HJR 2 |
| HB 138 AML - Spending Cap 050923.pdf |
HFIN 5/8/2023 10:00:00 AM |
HB 138 |
| HJR 2 Amendments 1-4 Stapp 051123.pdf |
HFIN 5/8/2023 10:00:00 AM |
HJR 2 |
| HB 38 Amendments 1-4 051123.pdf |
HFIN 5/8/2023 10:00:00 AM |
HB 38 |