Legislature(2003 - 2004)
04/08/2003 07:00 AM House W&M
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
April 8, 2003
7:00 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Jim Whitaker, Co-Chair
Representative Cheryll Heinze
Representative Bruce Weyhrauch
Representative Peggy Wilson
Representative Max Gruenberg
MEMBERS ABSENT
Representative Vic Kohring
Representative Norman Rokeberg
Representative Carl Moses
OTHER LEGISLATORS PRESENT
Representative Ralph Samuels
Representative Dan Ogg
COMMITTEE CALENDAR
ADMINISTRATION PRESENTATION: FISCAL SITUATION OF THE STATE
TAPES
03-1, SIDE(S) A & B
CO-CHAIR JIM WHITAKER called the House Special Committee on Ways
and Means meeting to order at 7:00 a.m. Representatives Hawker,
Whitaker, Heinze, and Wilson were present at the call to order.
Representatives Weyhrauch and Gruenberg arrived as the meeting
was in progress. Representatives Samuels and Ogg also were
present.
SUMMARY OF INFORMATION
[Committee packets contained an 18-page handout from the Office
of Management & Budget dated March 14, 2003; a 1-page document
entitled "F. Constitutional Budget Reserve"; and a 1-page graph
labeled "Why are you doing all this now?"]
WILLIAM A. CORBUS, Commissioner, Department of Revenue,
introduced four people from the department: Tomas H. Boutin,
Deputy Commissioner; Steve Porter, Deputy Commissioner; Gary
Bader, Chief Investment Officer; and Charlene Morrison, Deputy
Controller. He discussed the mission of controlling state
spending and being more efficient. As of April 13, he reported,
the general fund (GF) has $153.5 million and the Constitutional
Budget Reserve (CBR) has $1.943 billion. He said the long-term
financial situation is this: Alaska is vulnerable financially.
Alaska has the CBR, established by constitutional amendment. In
the last 12 years, $7 billion was deposited from settlements
with oil companies. In the last 10 years, $5 billion has been
spent, and thus $2 billion remains. He said about 80 percent of
the state's annual revenues come from the oil industry. Oil
prices are volatile, however, and recently dropped about $12 a
barrel in less than a month.
COMMISSIONER CORBUS discussed suggestions that have been offered
such as using the permanent fund to help pay the cost of
government; he noted that several entities have offered
potential solutions. He concluded by saying the system is
vulnerable to lower oil prices and that this problem needs to be
addressed. He indicated the administration looks forward to
working with the legislature towards a solution. In response to
questions, he said other states have problems more serious than
those in Alaska, which has the permanent fund, the CBR, and
relatively low personal taxes. However, the forecast
illustrates a problem in holding expenditures down.
TOMAS H. BOUTIN, Deputy Commissioner, Department of Revenue, in
response to questions, said a change in bond rating would affect
all outstanding public debt and all prospective Alaska debt.
COMMISSIONER CORBUS said a major concern is a sudden drop in oil
price, if it drops and stays there. In response to questions
about any "rabbits in a hat," he suggested the Department of
Natural Resources should address those, since there is an effort
[by the administration] to increase oil flow and so forth.
MR. BOUTIN, in response to further questions, said a negative
credit change would increase the cost of debt in the future,
since the value of the security depends on the credit rating.
The credit rating is a snapshot of all potential and existing
revenue, as well as the state's call on those revenues.
COMMISSIONER CORBUS, in response to comments, mentioned the
federal government, oil, myriad other revenues, corporate income
tax, fish taxes, and user fees as potential sources of revenue.
In response to a request, he offered to provide more information
during the interim.
[Side B begins]
[Members discussed how dire the situation is, the need to
address it, and the committee's role in contemplating solutions
after obtaining information from the administration, the
university, and so forth.]
JAY HOGAN, Deputy Director, Office of Management & Budget,
Office of the Governor, suggested it would be nice to focus on
leaving a sum in the CBR and repaying money voluntarily in times
of high income; however, it hasn't been paid back to date.
ANNOUNCEMENTS
There were no committee announcements.
COMMITTEE ACTION
The committee took no action.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
7:59 a.m.
NOTE: The meeting was recorded but no log notes are available.
A copy of the tape(s) may be obtained by contacting the House
Records Office at State Capitol, Room 3, Juneau, Alaska 99801
(mailing address), (907) 465-2214, and after adjournment of the
second session of the Twenty-Third Alaska State Legislature this
information may be obtained by contacting the Legislative
Reference Library at (907) 465-3808.
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