Legislature(1999 - 2000)
05/23/1999 01:20 PM Senate JUD
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* first hearing in first committee of referral
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+ teleconferenced
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SENATE JUDICIARY COMMITTEE
FIRST SPECIAL SESSION OF THE 21ST LEGISLATURE
May 23, 1999
1:20 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Rick Halford, Vice-Chairman
Senator Dave Donley
Senator Johnny Ellis
MEMBERS ABSENT
Senator John Torgerson
OTHERS PRESENT
Senator Lyda Green
Senator Jerry Ward
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 28
Proposing an amendment to the Constitution of the State of Alaska
relating to the appropriation limit.
PREVIOUS SENATE COMMITTEE ACTION
SJR 28 - No previous Senate action.
WITNESS REGISTER
Tam Cook, Director
Division of Legal Services
Legislative Affairs Agency
130 Seward St.
Juneau, AK 99081-1182
POSITION STATEMENT: Discussed the legitimacy of the hearing
David Teal, Director
Division of Legislative Finance
PO Box 113200
Juneau, AK 99811-3200
POSITION STATEMENT: Answered questions about SJR 28
ACTION NARRATIVE
TAPE 99-38, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:20 p.m. Present were Senators Halford, Donley, Ellis
and Taylor. Senators Green and Ward were also present. The
committee took up SJR 28.
SJR 28-CONST AM: APPROPRIATION LIMIT
SENATOR ELLIS raised a point of order and stated SJR 28 does not
conform to the call of the special session and therefore is not
properly before the Legislature at this time. He stated he does
not object to scheduling SJR 28 to be discussed in a work session,
but he does object to hearing it in an official committee meeting.
He asked Chairman Taylor to request a legal opinion from the
Director of the Division of Legal Services on the question.
SENATOR DONLEY informed committee members that according to Ms.
Cook, it would not be consistent with the call for the Legislature
to act on this legislation on the House and Senate floors, but it
is within the call for committees to take up individual bills that
pertain to the subject matter of the special session.
SENATOR ELLIS stated he interprets the "Legislature" to include
subdivisions of it as well as the Legislature as a whole. He asked
that Ms. Cook be in attendance to address the question if Chairman
Taylor plans to proceed.
CHAIRMAN TAYLOR said he would request her attendance.
Number 054
SENATOR HALFORD noted there is no reason the committee cannot
continue to consider this legislation at the committee level. He
stated he does not think it is reasonable to call a special session
on a fiscal plan and exclude a constitutional limitation on
spending as part of the plan.
SENATOR DONLEY commented he spoke with Ms. Cook about the
Legislature's ability to deliberate legislation anticipating that
the Governor may expand the call of the special session. He added
the Governor cannot limit action during the special session to
specific pieces of legislation, the Governor can only limit it to
specific subjects.
CHAIRMAN TAYLOR pointed out that he concluded, from a memo written
by Ms. Cook on the previous day, that the committee had the
authority to proceed with this legislation.
Number 114
SENATOR ELLIS asked why the committee would want to work on
legislation and move it to the floor where no action could be
taken. He asked that the committee vote on whether the Chair's
ruling to proceed with the hearing is proper. CHAIRMAN TAYLOR
agreed.
SENATOR HALFORD interjected and said he would like to wait to hear
from Ms. Cook who would be arriving shortly. CHAIRMAN TAYLOR
announced the vote would be delayed until Ms. Cook addressed the
committee.
Number 125
SENATOR DONLEY, sponsor of SJR 28, said the legislation amends the
existing appropriation limit in the Alaska Constitution to better
reflect a dramatic change in Alaska's revenue picture. In
addition, the existing appropriation limit never worked as
anticipated and has never been effective in restraining spending.
Over the years, several attorneys general opinions have been
written on the meaning of the constitutional limit; those opinions
counter the plain English meaning of the language and allow the
Legislature and government to avoid the requirement that one-third
of the budget be appropriated for capital expenditures. The
average person can no longer read the existing constitutional
language and understand what it means since legal opinions say
otherwise. According to the simple English explanation of a one-
third spending limit on the capital budget, the Legislature
exceeded that limit by $361 million in the FY 2000 operating
budget. If one interprets the language to exclude federal and
other revenue sources, the Legislature is about $3 billion under
the limit. He maintained it is important to clarify which funding
sources that constitutional provision applies to so that it has a
meaningful effect upon the state budgetary process.
SENATOR DONLEY explained that he chose the $2 billion amount
because the current FY 2000 budget proposal contains general fund
expenditures of $2,266,000,000. SJR 28 allows an escalator of the
base $2 billion limit up to $2.2 billion with a two-thirds vote of
each house. The limit will require a reduction of about $66
million in general funds in the first year. The concept of what
escalator is used in a fiscal year needs to be addressed. Existing
language in the Constitution references an escalator factor based
on population and inflation. The cost-of-living indicators are
available two years prior to the budget cycle. That issue can be
addressed by statute.
SENATOR DONLEY stated the most important question, other than the
actual dollar amount assigned, is how to treat funds expended by
and received from public corporations, such as the Alaska Housing
Finance Corporation.
SENATOR HALFORD suggested treating those corporations under the
limit, while recognizing that the $2 billion will have to be
changed to pick up the indexes because under the current limit they
are not considered in the calculation of that category.
Number 227
CHAIRMAN TAYLOR informed Ms. Cook that Senator Ellis raised a point
of order at the beginning of the meeting. He asked her to respond
to that point of order.
TAMARA COOK, Director of the Division of Legal Services,
Legislative Affairs Agency, reiterated the question before the
committee is whether the committee may meet formally on SJR 28
during the special session. She stated she agrees with Senator
Ellis in that SJR 28 does not appear to be within the call of the
special session, which was precise. MS. COOK noted the Governor's
call does not contain the state's long-term financial plan as a
general subject despite what the press has reported.
MS. COOK stated the issue, with respect to the committee meeting,
is what the constitutional provision means that says the Governor
may limit the subject of a special session. She said the
Constitution refers to limiting legislation, which she interprets
to mean the consideration of, or passage of, specific legislation
by each body is limited to the subject. In jurisdictions other
than Alaska, in which a legislature failed to adhere to the
limitations of a governor's call, the remedy was to invalidate the
legislation enacted. She indicated one might argue on policy or
legal grounds that the type of work that a standing committee can
do should be limited, but she thinks it is unlikely that the Alaska
court would seek any action against a committee that operated
during a special session, even on a topic outside of the call. She
concluded that the Constitution prevents the Senate from enacting
SJR 28 during the special session but it does not go so far as to
control the activities of the legislative committees during a
special session. She noted this question has never been addressed
by the Alaska court nor can she find any useful precedent from any
other jurisdiction.
Number 282
SENATOR WARD informed committee members that the subject matter of
SJR 28 was incorporated into another bill by the Senate Finance
Committee yesterday. He asked Ms. Cook if they were wrong to do
that.
MS. COOK replied:
"Through the Chair, Senator Ward, as far as I know - the only
thing that I have seen at all has been the notion of including
a question about something like SJR 28, an amendment to the
Constitution in an advisory vote, which is a different matter
because the Proclamation particularly permits advisory votes
on long term fiscal plans and I think that, if you phrase it
as an advisory vote about amending the state Constitution,
that that actually probably fits within the Proclamation. But
it is a different thing from actually placing the
constitutional amendment before the voters."
CHAIRMAN TAYLOR noted the subtle distinction is whether an advisory
vote or an actual binding vote on a constitutional amendment is to
be placed before the voters. Advisory votes on long term fiscal
plans would fit within the Governor's call.
SENATOR WARD questioned whether the Governor does not want any
constitutional amendments to be addressed during this special
session.
CHAIRMAN TAYLOR said the Governor specifically did not provide for
that within the call.
MS. COOK indicated the Governor's Proclamation was specific in
discussing an advisory vote on something that she considers to be
general: a long term financial plan. If the committee is talking
about an advisory vote context, she believes the Legislature could
put any number of items, for example a tax, on the advisory vote
because such things could impact a long term financial plan. The
key is that the Governor has limited his proclamation to advisory
votes only.
Number 315
SENATOR DONLEY stated with that reasoning, SJR 28 would be a proper
vehicle with which to place an advisory vote before the public on
whether or not to place a constitutional amendment before the
public on an issue that would impact long range fiscal planning.
MS. COOK replied she thinks that is incorrect because in order to
get an advisory vote placed on the ballot, she would want to argue
that a law has been enacted. She added even the Legislature would
never want to take the position that the Lieutenant Governor could
act outside of the law to place questions on the ballot. A Senate
joint resolution does not require enactment of a law, in fact it
can't because a law is subject to veto and a Governor has no right
to veto a proposed constitutional amendment. She noted a resolution
and bill have different legal significance.
SENATOR DONLEY asked whether it would be appropriate to work on an
advisory vote resolution that references a specific bill which
contains a constitutional amendment, so that the public will know
the details of the proposal the legislature is asking them to vote
on, even though the bill is not enacted.
MS. COOK said that is a policy matter rather than a legal problem
and that it certainly could be used to justify this particular use
of committee time.
Number 342
SENATOR HALFORD asked Senator Ellis whether his point of order was
resolved by Ms. Cook's testimony. SENATOR ELLIS maintained his
point of order because the work the committee will take up does not
conform to the call. He asked for a vote on that point.
SENATOR HALFORD asked if that point is contrary to the written
opinion of legal counsel. SENATOR ELLIS said he does not believe
so.
SENATOR HALFORD read from the second sentence of Ms. Cook's memo:
"In my opinion, the Constitution does not prohibit committee action
during a special session."
SENATOR ELLIS stated he perceives that the purpose of the meeting
is to move a constitutional amendment forward, and that action does
not conform to the call. He repeated that convening a work session
on this subject is not objectionable to him, however official
committee action is out of order. He maintained that if the
committee's intent is to move SJR 28 during this special session to
prepare it for floor action during the next regular session, the
legislation will be weakened if a legal challenge occurs.
SENATOR DONLEY said that is a ridiculous legal analysis since the
Chair could waive SJR 28 to its next committee of referral at any
time.
CHAIRMAN TAYLOR said the legal opinion discussed today expands his
perception of a special session. He noted he is curious as to what
additional committee actions could occur to move legislation that
may be outside of the call yet germane, and how legislation may be
advanced in anticipation of a subsequent special session or the
next general session. He stated he believes SJR 28 is before the
committee appropriately and that the committee has the authority to
act on it.
A roll call vote was taken on the motion to sustain the Chair's
ruling to continue the hearing on SJR 28. The motion carried with
Senators Halford, Donley, and Taylor voting "yea," and Senator
Ellis voting "nay."
Number 391
SENATOR WARD requested the Senate Judiciary Committee send a letter
to the Governor asking him to expand the call of the special
session to consider reductions in state spending. He then gave the
following testimony.
"Mr. Chairman, I would like to come and speak on behalf of
this proposal, as well as this proposal that was presented
yesterday at the full Finance Committee, which received an 8
to 1 vote and has been placed into an advisory vote. I find
that it's very curious that this Administration has allowed
the opportunity to have a straw poll on such an important
question but not a constitutional amendment. I think that
this is very interesting that the government doesn't really
want the people to decide in a lawful manner whether it's
nothing to be left to chance.
On the subject of a spending limit. I believe that this
particular bill - I am very pleased that I was given the
opportunity to sign on as a cosponsor after the sponsors
introduced the legislation and I think that this is something
that is absolutely - it is one of the most important pieces of
legislation that we have down here at this time. There's
tremendous talk about budget shortfalls and about the growth
of government. This year, Mr. Chairman, we're going to be
spending more money than we spent last year. One of the
things that I want to draw to the attention of this committee
as to why I signed on to this legislation, and I think that it
needs to be addressed, is whether it's - tens of millions of
dollars go into the Denali Commission or Alaska Railroad
spending money on I don't know what, but there's a lot of
government monies that are going that are not contained in
this bill at this time. But I think that the public in
general understands the concept, and the concept is [indisc.]
and living within your means. Government has clearly shown to
the citizens of the State of Alaska they don't have the
political will to live within their means and they need to be
put on an allowance. And, whether it's Proposition 13 or a
tax cap of Anchorage, the system does work and the citizens
should have a right to tell their legislature and their
governor that we believe that you need to have a ceiling.
You're good people and all that stuff, but you need to be put
on an allowance and live within this. I think that this
simple act will do more for benefitting the State of Alaska
than any other. I think that it will cause prioritizing of
state functions and I think that this is good. I think that
we will, instead of taking the what I've heard it referred to
as an over across the board cut, and things like that, I think
that it will cause a looking at entire departments to see if
this is what the Constitution has said that we should do. We
all know we're supposed to do education, public safety, and
things like that, but I could find nowhere in the Constitution
that we're supposed to do science and technology, Mr.
Chairman. Those kind of things, with a spending cap, would
stand on their own or fall on their own, and I think this is
something that would be very good for the citizens. With
that, I just wanted to come down and say that I was very
pleased when Senate Finance put this into theirs, but now that
I truly understand that it's no more than a straw poll beauty
contest, it's pretty well, in my opinion, meaningless. I
think that we need a constitutional amendment. If we wouldn't
have had a constitutional amendment on the Permanent Fund, I
think the system would have already stolen it. With that I
really urge the passage of this."
Number 436
SENATOR DONLEY said he is trying to deal with the issue of how to
address direct expenditures by public corporations for their
activities. He thought that any dividends coming to the state,
even if the dividends are for the activities of the corporation,
should be counted in the total, but the direct activities of the
corporations that do not involve state money should be outside of
the limit.
DAVID TEAL, Director of the Division of Legislative Finance, stated
he reads SJR 28 to do that already. The operations of the Alaska
Railroad, AHFC, AIDEA and the Science and Technology Foundation
would be excluded from the expenditures, however the dividends from
AIDEA and AHFC are counted as revenue.
SENATOR DONLEY asked Mr. Teal what language in the resolution leads
him to that opinion.
MR. TEAL replied it is an appropriation limit rather than a
spending limit therefore it only takes into account appropriations
by the Legislature, not total state expenditures. The money spent
by corporations is not appropriated money.
CHAIRMAN TAYLOR asked if the Division of Legislative Finance has
looked at the average state income over the years because it has
fluctuated every year and any parameters set should be based on
Alaska's history and experience.
MR. TEAL stated the Division has both revenue and appropriation
history dating back about 20 years. He noted the appropriation
limit is based on past appropriations rather than on revenue. A
constitutional provision exists that says the state cannot deficit
spend; the proposed limit will state that if revenues are high,
spending will be restrained further than the available revenues
allow.
CHAIRMAN TAYLOR said his concern is the constitutional admonition
that the Legislature cannot deficit spend which will somehow
prevent the Legislature from doing so. He said a prime example is
the fact that government spending was $1.2 billion more than its
revenue; that expenditure came out of reserve funds. He noted at
that rate, the state is spending 50 percent more than it receives.
MR. TEAL said that is precisely the point of a long term plan.
TAPE 99-38, SIDE B
CHAIRMAN TAYLOR stated he becomes very concerned when people talk
about plans that extend more than three to five years into the
future. He noted the price of a barrel of oil has fluctuated 50
percent over the past four months and asked how one could be
comfortable with a 20 year plan. He asked Mr. Teal to prepare
something for the committee showing an average budget from
historical data.
Number 507
SENATOR HALFORD referred to a handout and explained it shows that
$70 billion of unearned income went through the political process
in the State of Alaska over the past 30 years. He stated that
skews any analysis of what we get, what we got, and what we can
afford and it should scare everyone to death in terms of the
capacity of this system to absorb and expend unbelievable amounts
of money. Public support of some kind of a constitutional spending
limit confirms the people's fear of government spending.
SENATOR DONLEY maintained that the work that needs to be done on
SJR 28 lends itself to the committee substitute process. He
offered to bring a proposal back to the committee.
CHAIRMAN TAYLOR announced a Senate Judiciary meeting would start at
11:00 a.m the next day.
SENATOR ELLIS asked Chairman Taylor if he intends to follow up on
Senator Donley's suggestion to request that the Governor expand the
call of the special session to include a constitutional spending
limit. CHAIRMAN TAYLOR said he would be happy to send a letter.
SENATOR ELLIS said if the letter is written on behalf of the
committee, he objects to it because the matter is complicated and
will require a time commitment that members are not willing to
make.
CHAIRMAN TAYLOR said he would note Senator Ellis's objection.
CHAIRMAN TAYLOR asked Mr. Teal the status of outstanding taxes owed
to the state by the oil industry as well as the current status of
settlements.
MR. TEAL replied most of the big settlements have already occurred
and that the settlements now go directly into the Constitutional
Budget Reserve (CBR). The anticipated flow of those settlements is
approximately $120 million per year over a ten year period, however
the amount is not necessarily the same each year.
CHAIRMAN TAYLOR asked if that money is part of the Finance
Committee's projections for new revenue. MR. TEAL said it is
considered existing revenue and is built into the cash flow
projections for the CBR.
CHAIRMAN TAYLOR asked Mr. Teal if tax payments are current. MR.
TEAL did not know but said the Departments of Revenue and Law could
collectively answer that question.
CHAIRMAN TAYLOR asked if that information could be received in a
generic fashion to avoid the confidentiality hoops. MR. TEAL
stated he could try to get that information however he suggested it
might be better for Chairman Taylor to request it.
CHAIRMAN TAYLOR thanked everyone for participating and announced
the committee would meet at 11:00 a.m. the following day. He
adjourned the meeting at 2:12 p.m.
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