Legislature(2007 - 2008)
02/21/2007 04:01 PM House W&M
| Audio | Topic |
|---|---|
| Start | |
| HB125 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
February 21, 2007
4:01 p.m.
MEMBERS PRESENT
Representative Mike Hawker, Chair
Representative Anna Fairclough, Vice Chair
Representative Bob Roses
Representative Peggy Wilson
Representative Sharon Cissna
Representative Max Gruenberg
MEMBERS ABSENT
Representative Paul Seaton
COMMITTEE CALENDAR
HOUSE BILL NO. 125
"An Act relating to budget planning and a long-range fiscal plan
for the State of Alaska."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 125
SHORT TITLE: LONG-RANGE FISCAL PLAN
SPONSOR(s): WAYS & MEANS
02/08/07 (H) READ THE FIRST TIME - REFERRALS
02/08/07 (H) W&M, FIN
02/14/07 (H) W&M AT 3:30 PM HOUSE FINANCE 519
02/14/07 (H) Heard & Held
02/14/07 (H) MINUTE(W&M)
02/19/07 (H) W&M AT 3:30 PM HOUSE FINANCE 519
02/19/07 (H) Heard & Held
02/19/07 (H) MINUTE(W&M)
02/21/07 (H) W&M AT 3:30 PM HOUSE FINANCE 519
WITNESS REGISTER
JOHN BOUCHER, Senior Economist
Office of Management & Budget (OMB)
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Testified regarding the administration's
position on certain aspects of HB 125.
ACTION NARRATIVE
CHAIR MIKE HAWKER called the House Special Committee on Ways and
Means meeting to order at 4:01:26 PM. Present at the call to
order from the Chair were Representatives Gruenberg, Roses,
Fairclough, and Cissna. Representative Seaton was excused.
Representative Wilson arrived as the meeting was in progress.
HB 125-LONG-RANGE FISCAL PLAN
4:03:44 PM
CHAIR HAWKER announced that the only order of business would be
HOUSE BILL NO. 125, "An Act relating to budget planning and a
long-range fiscal plan for the State of Alaska." [Before the
committee was proposed committee substitute (CS) for HB 125, 25-
LS0546\C, Cook, 2/8/07, which had been adopted as the work draft
on 2/14/07.]
CHAIR HAWKER moved to adopt Amendment 1, which read:
Page 1, lines 6-7, following "fiscal plan"
Delete "covering projected sources and uses of
funds during"
Insert "estimating significant sources and uses
of funds for"
REPRESENTATIVE FAIRCLOUGH objected for purpose of discussion.
4:04:42 PM
CHAIR HAWKER explained that Amendment 1 was intended to address
concerns put forth by the OMB. Amendment 1 is designed to make
it clear that the fiscal plan described in HB 125 is to be a
macro work product which requires that projected sources of
revenue be matched with projected expenses for a 10-year period,
in an aggregate manner rather than department by department.
CHAIR HAWKER explained that replacing the word "covering" with
"estimating" provides better guidance by making it clear that
preparation of a fiscal plan requires inherently imprecise
estimates of future revenues and expenses. Amendment 1 also
proposes to insert "lump-sum" after the word "including" in
Version C, page 1, line 10. Use of the term "lump-sum"
clarifies that the proposed fiscal plan is at the macro level of
financial modeling, and is not designed to be overly complex or
to create false precision by requiring excessive detail.
4:07:36 PM
CHAIR HAWKER explained that Amendment 1 proposes insertion of
"held" following "funds" in Version C, on page 2, line 5, in
recognition that there are numerous state savings accounts such
as the budget reserve fund and the capital income fund.
Amendment 1 clarifies that the fiscal plan designates funds
"held" in these accounts. He went on to say that Amendment 1
further clarifies that the governor has discretion to set forth
recommendations in any fiscal plan; as specified by the language
proposed to be inserted in paragraph (4).
REPRESENTATIVE GRUENBERG questioned whether Amendment 1 would
require the fiscal plan to list all sources of funds, such as
oil revenues, production profits taxes, and federal highway
dollars, for example.
CHAIR HAWKER responded that the Department of Revenue's (DOR)
"Revenue Sources Book" identifies many significant sources of
the state's funds.
REPRESENTATIVE GRUENBERG questioned what level of detail is
anticipated by the term "operating expenditures."
4:12:10 PM
CHAIR HAWKER explained he does not believe there is any
prohibition against a fiscal plan containing a detailed
statement of "operating expenditures" but the bill as proposed
does not mandate that any projected operating expenditures be
broken down any further than into a single line item for the
operating budget.
The committee took an at-ease from 4:15:07 PM to 4:17:23 PM.
REPRESENTATIVE FAIRCLOUGH withdrew her objection to Amendment 1.
4:18:05 PM
REPRESENTATIVE GRUENBERG then objected to Amendment 1, stating
that he would like to see expenditures broken down by
department. He said he is not comfortable with the term "lump-
sum" because in his view, for a fiscal plan to be helpful it may
need to set forth more than one figure.
REPRESENTATIVE GRUENBERG moved the following conceptual
amendment to Amendment 1:
Page 1, line 11 following "operating expenses";
Insert "by department"
CHAIR HAWKER objected to the conceptual amendment to Amendment
1. He explained that the conceptual amendment would require
work that is inherently impossible for an administration to
achieve. Furthermore, it would not be appropriate to ask for
operating expenses to be projected by department for a 10-year
forecast. He reminded the committee that in his opinion, the
fiscal plan described in Version C should focus on aggregate
amounts. First, the fiscal plan is to consider general revenue
trends and give the legislation a macro view of the state's
projected revenues and expenses. Second, if the fiscal plan
requires departmental detail, it may set up unhealthy tensions
between departments as it may require the administration to
choose specific amounts for each department.
4:23:46 PM
REPRESENTATIVE ROSES opined that a 10-year fiscal plan should
provide a framework within which to do more detailed budget
work.
REPRESENTATIVE FAIRCLOUGH noted her opposition to the conceptual
amendment to Amendment 1.
REPRESENTATIVE GRUENBERG withdrew his conceptual amendment to
Amendment 1.
CHAIR HAWKER reminded the committee that the motion to adopt
Amendment 1 is before it.
REPRESENTATIVE GRUENBERG withdrew his objection to Amendment 1.
There being no objection, Amendment 1 was adopted.
REPRESENTATIVE FAIRCLOUGH stated that she has discussed with
accountants and other legislative members her concern that the
requirement for a fiscal plan to cover a 10-year period is
onerous, but apparently a 10-year time period is consistent with
some bonding policies and other strategies the legislature may
be considering later. She announced that she does not plan to
offer an amendment reducing the fiscal plan outlook from 10
years to 6 years.
4:27:58 PM
CHAIR HAWKER suggested that committee members consider concerns
that they may have about HB 125, and that perhaps it could be
moved from committee after one more hearing.
REPRESENTATIVE GRUENBERG inquired whether there should be
language in the bill about the details of any legislative
response to the executive's fiscal plan.
CHAIR HAWKER related his belief that consideration of an
appropriate legislative response is one of great merit.
Although he said he does not know exactly what form the
legislative response should take, he is receptive to the idea,
as he believes are other members of the committee.
REPRESENTATIVE GRUENBERG queried the committee for suggestions
on how to proceed with a section detailing the legislative
response to a fiscal plan.
CHAIR HAWKER responded that the committee should be careful not
to require an over-formulated legislative response, such as a
vote, because it is difficult for the legislature to agree on
some issues, especially something with a 10-year forecast. If
an administration used the fiscal plan to set forth strong
policy recommendations, there may be more objection by the
legislature. However, he suggested that some sort of
legislative acknowledgement is reasonable.
4:31:19 PM
REPRESENTATIVE GRUENBERG questioned whether Version C, page 1,
line 5, should be amended to read "submit to the legislature"
rather than "submit."
CHAIR HAWKER replied that in the context of the entire statute
[AS 37.07.020] he does not believe the aforementioned change is
necessary.
REPRESENTATIVE CISSNA referenced the history of long-range
planning efforts and opined that they do not really seem to go
forward. She questioned how one could make past information
available to later legislatures.
CHAIR HAWKER stated that he believes there is a good legislative
record, and referenced the "Revenue Sources Book" as a very
helpful source of information, reminding the committee that past
versions of that book are available.
REPRESENTATIVE CISSNA voiced that it can be difficult to know
what type of information is available that would describe steps
taken by prior legislatures.
CHAIR HAWKER responded that the fiscal plan requirement of HB
125 may alleviate some of Representative Cissna's concerns as he
hopes that it will assist in creating a simple, yet precise
document for future legislatures and administrations to build
upon year-by-year.
4:38:46 PM
REPRESENTATIVE CISSNA suggested language to this effect could
perhaps be added to Version C on page 2, line 9.
CHAIR HAWKER mentioned that the committee could entertain an
amendment in the permissive vein to accomplish the prior point.
REPRESENTATIVE CISSNA offered that she would bring forth such an
amendment.
REPRESENTATIVE GRUENBERG referred to Version C, page 1, line 8,
and suggested that he may propose additional language somewhere
in that section to allow an administration to provide additional
details in its fiscal plan. Furthermore, he noted that while
one legislature cannot bind a future legislature, it may be
possible to amend HB 125 to provide guidance for future
legislatures.
4:43:05 PM
REPRESENTATIVE FAIRCLOUGH suggested that the governor could
present a fiscal plan to a committee, so there could be language
inserted in Version C requiring a fiscal plan be submitted to a
finance committee or subcommittee. She also suggested that the
legislature could require a report to be submitted to the clerk
and distributed to the entire body. These options would not
require a formal action by the legislature.
REPRESENTATIVE GRUENBERG referred to Version C, page 1, lines 4-
6, which requires that an administration submit a plan, and
queried to whom that plan should be submitted.
4:44:32 PM
CHAIR HAWKER put forth that AS 37.07.020(a) states that the
governor's budget and appropriations bills "shall be delivered
to the rules committee of each house before the fourth
legislative day of the next regular session ...." Furthermore,
AS 37.07.070(b) states that in addition to the budget and bills
submitted under subsection (a), the governor "shall submit a
capital improvements program and financial plan," which also
suggests submittal to the chairs of the rules committees for the
House and Senate, he said.
REPRESENTATIVE GRUENBERG stated he would feel more comfortable
if the fiscal plan was submitted to the presiding officers of
the House and Senate.
CHAIR HAWKER said that an early draft of HB 125 proposed that
the fiscal plan be submitted to the Senate president, the
Speaker of the House of Representatives, and the chair or co-
chairs of any existing finance committees.
REPRESENTATIVE GRUENBERG pointed out that the House and Senate
Rules Standing Committees introduce legislation at the request
of the governor.
4:46:36 PM
REPRESENTATIVE WILSON said she would like to hear a presentation
of the governor's fiscal plan and queried whether it would be
appropriate to require presentation of a fiscal plan to the
entire legislature, both House and Senate.
CHAIR HAWKER acknowledged that such a presentation would be
valuable. However, he said he recognizes that a governor's time
is valuable, so he is not sure if requiring an address to both
bodies of the legislature would be necessary. He suggested that
in addition to delivery of a written fiscal plan to the Senate
President, the Speaker of the House of Representatives, and the
chair or co-chairs of any existing Finance committees, perhaps
the bill could also require the administration to make a
presentation to both House and Senate finance committees.
4:48:46 PM
REPRESENTATIVE GRUENBERG recalled that in past years the
governor gave a State of the State and a Budget Address to the
whole legislature, although this was not done in recent years.
He suggested that perhaps it would be appropriate to bring back
some type of broad overview for the entire legislative body.
CHAIR HAWKER said he was looking to Representative Gruenberg to
coordinate an amendment regarding this issue.
REPRESENTATIVE GRUENBERG asked the committee its opinion
regarding any legislative response to a fiscal plan.
CHAIR HAWKER replied that he would like to see a streamlined
process with an effective result. He said that he was
comfortable with a requirement that OMB present the
administration's fiscal plan to the entire legislative body.
4:51:06 PM
REPRESENTATIVE FAIRCLOUGH suggested that requiring OMB to
present a fiscal plan could be inserted by adding a paragraph
(11) to, Section 3 on pages 3-4. She opined that it may be
helpful for OMB to present a fiscal plan due to that
department's skill and familiarity with budget issues. She
stated that it may not be worthwhile to have a requirement that
OMB present a fiscal plan to the House Special Committee on Ways
and Means because this committee is a special committee, which
must be re-authorized each [legislature].
REPRESENTATIVE CISSNA indicated she agrees with the idea of a
presentation to less than the whole body so as to make it more
of a deliberative exchange than a presentation.
REPRESENTATIVE WILSON opined that it may be appropriate to
schedule a presentation so that all interested parties can
attend.
4:55:07 PM
REPRESENTATIVE GRUENBERG suggested that some language be
inserted through a new paragraph (11) on page 4, line 18,
detailing that perhaps the fiscal plan be presented by OMB to
the appropriate committees at a time that does not conflict with
other committees' schedules.
CHAIR HAWKER noted that the language could be "shall" be
presented at a time that is available to all legislators to make
clear that the presentation should not conflict with other
legislative commitments.
4:56:22 PM
REPRESENTATIVE ROSES referenced page 5, lines 2-7, which states
that the "governor shall present the proposed comprehensive
operating capital improvements programs and fiscal plan
[FINANCIAL PLAN] in a message to a joint session of the
legislature before the fourth legislative day ...." He
questioned whether that applies to the legislative response that
the committee is currently debating.
CHAIR HAWKER indicated that the aforementioned message to the
legislature is the process of transmitting the documents to the
legislature.
4:57:13 PM
REPRESENTATIVE FAIRCLOUGH opined that a presentation, such as
one to both legislative bodies, is more formal and does not lend
itself to dialogue. In contrast, a presentation to a committee
can allow for dialogue and questions, which may be a more useful
format.
REPRESENTATIVE ROSES agreed that there is a distinction between
a formal presentation and a more informal, interactive
presentation.
4:58:38 PM
JOHN BOUCHER, Office of Management & Budget (OMB), Office of the
Governor, said that in his experience, the initial presentations
by the administration are generally revenue and the budget. He
suggested that a presentation which includes revenue, the
budget, and a fiscal plan may be appropriate. The format of the
presentation may be a judgment call depending on the policy
focus for that year; for example, this year there is a focus on
the unfunded pension plan liabilities. If there is a strong
policy component to the governor's fiscal plan, an oral
presentation may be more appropriate than just submission of a
written fiscal plan, he opined.
5:00:35 PM
REPRESENTATIVE GRUENBERG suggested that any amendment regarding
the legislative response to the fiscal plan coordinate and
dovetail into AS 37.07.060 so that they work together, noting
that he did not recall the governor giving a separate budget
address the past four years. He queried whether the committee
thought there should be a statutory requirement that the
governor make a separate budget address to the legislature.
CHAIR HAWKER opined that requiring a separate budget address
imposes a greater duty on the governor than is appropriate.
5:02:57 PM
REPRESENTATIVE GRUENBERG put forth that in addition to a
possible amendment to Version C, Section 1, the committee may
propose to amend AS 37.07.040, Version C, Section 3, by adding a
new paragraph (11) to require that OMB orally present and
discuss the governor's fiscal plan to the committees.
5:03:57 PM
CHAIR HAWKER cautioned that the term "orally" may be a bit vague
as it could encompass a variety of multi-media presentations.
He also pointed out that the Executive Budget Act, AS
37.07.014(c), states that the "legislature shall analyze the
comprehensive operating and capital improvements programs and
financial plans recommended by the governor," and suggested this
provision may also require amendment to coordinate with any
further amendments to Version C.
REPRESENTATIVE FAIRCLOUGH suggested that the term "address"
means the listener will sit passively and listen to decisions
that have already been made, while the term "presentation"
encompasses an interactive process.
5:06:18 PM
REPRESENTATIVE WILSON agreed that dialogue is important and
useful because it allows for questions to clarify certain
points. She went on to say it may be appropriate for the OMB to
present the fiscal plan.
CHAIR HAWKER requested that Representative Gruenberg draft an
amendment for Version C, taking into consideration today's
discussion.
5:07:44 PM
MR. BOUCHER suggested that if the fiscal plan was separate from
the governor's budget, its presentation could be a discretionary
item; noting that when there is a new administration, the
legislature may not want to hear the prior year's fiscal plan.
REPRESENTATIVE FAIRCLOUGH stated she believes the committee has
considered the issues faced by a new administration, and is
contemplating a possible future amendment allowing a new
administration a year to develop a fiscal plan.
CHAIR HAWKER related that he desires the fiscal plan be designed
to be an iterative process so that a new administration can pick
up and go forward; yearly review is critical to that process.
5:10:22 PM
REPRESENTATIVE FAIRCLOUGH explained that her concern is timing,
and questioned whether a new governor could have a fiscal plan
prepared by December 15th.
CHAIR HAWKER emphasized that there is professional staff in DOR
and OMB who can work on the baseline assumptions in any fiscal
plan, which is why HB 125 specifically makes permissive the
inclusion of policy initiative in a fiscal plan. An
administration can decide whether to include optional policy
recommendations in its fiscal plan. He said he believes it is
important to consider a fiscal plan as part of an annual
iterative process to assess the state's financial health in
light of the volatility of natural resource revenues.
5:14:21 PM
CHAIR HAWKER clarified that he would like Representative
Gruenberg to consider drafting an amendment to Version C
detailing the appropriate legislative response to any fiscal
plan, while Representative Fairclough could consider whether to
allow a grace period for a new administration to submit a fiscal
plan.
5:15:13 PM
REPRESENTATIVE FAIRCLOUGH stated that she will not be offering
an amendment regarding when the administration must submit a
fiscal plan. However, if the administration offered any
proposed amendment regarding when a fiscal plan should be
presented, she said she is willing to present it to the
committee.
REPRESENTATIVE CISSNA referenced the challenge of a 90-day
session and that perhaps there would be a need to schedule some
work sessions.
CHAIR HAWKER responded that the issue of implementation of a 90-
day legislative session involves a great deal of scheduling, a
task which has been assumed by the chairs of the House and
Senate Rules Standing Committees. He opined that it would be
appropriate to leave the aforementioned issue in that venue,
although it may be appropriate to forward some comments on this
issue to those committees.
REPRESENTATIVE GRUENBERG summarized that the committee has
considered the possibility that the OMB make a presentation to
finance and other special committees. Furthermore, there was
discussion of adding a paragraph to AS 37.07.040(c) regarding
the legislative response. He indicated he would draft an
amendment regarding the appropriate legislative response to a
fiscal plan.
[HB 125 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
5:21:01 PM.
| Document Name | Date/Time | Subjects |
|---|