MINUTES SENATE FINANCE COMMITTEE March 26, 1999 9:45 AM TAPES SFC-99 # 67, Side A CALL TO ORDER The first portion of the meeting was held on the Balance Budget discussions. Minutes for that portion are separate. Co-Chair John Torgerson reconvened the meeting at approximately 9:45 AM. PRESENT Senator John Torgerson, Senator Sean Parnell, Senator Randy Phillips, Senator Dave Donley, Senator Loren Leman, Senator Gary Wilken, Senator Al Adams and Senator Lyda Green. Also Attending: DOUG GARDNER, Assistant Attorney General, Oil, Gas and Mining Section, Civil Division, Department of Law. SUMMARY INFORMATION SJR 9-CONST. AM: WAYS AND MEANS BILLS Senator Dave Donley testified to the bill. It was held in committee. SB 51-LICENSING OF COSMETOLOGISTS This bill was reported out of committee with a new fiscal note. HJR 12-NO FED. CLAIM ON STATE TOBACCO SETTLEMENT The committee heard testimony from the sponsor and the Department of Law. The committee amended the bill and moved it from committee. SENATE JOINT RESOLUTION NO. 9 Proposing amendments to the Constitution of the State of Alaska relating to ways and means bills. This was the first hearing for this bill, which was sponsored by the Senate Finance Committee. Senator Dave Donley spoke to the bill, saying it was a simple concept that would provide a third exceptions to the single subject bill. Currently there were two exceptions, a reviser bill and an appropriations bill. This would add an exception for a ways and means bill. Ways and means bills would be confined to changes in the law determined by the Legislature to be necessary to implement appropriations. The idea was that in a downward budgetary cycle, many of the changes the Legislature had to achieve to reduce state expenditure had to be done in the statutes. They could not simply be done through the budget document. It was very complicated because the budget cycle and the bill cycle were different. Without this legislation, every change in statute that was necessary would need to be done with independent bills because of the single-subject rule. All the dollar amounts were implemented in a single appropriation bill. This would allow a single ways and means bill to implement the complementing changes in the budget bill. The real problems was that the budget cycle was difference than the legislative cycle in that the legislation had two years to work through the process. It was difficult for one bill to be blocked by a single committee and held up, while the budget bill still proceeds. If the ways and means legislation doesn't make it through the process, then the budget bill won't work any more. What happens is most of the cuts just don't get made. He continued saying, "You can't have an efficient way of looking at the budget and really downsizing state government from a programmatic point of view." What was left would be budgets that simply cut across the board and all the same programs were still preserved in statute. That was not an efficient way to deal with downsizing spending. He qualified that there would be a danger of abuse by the Legislature, but he felt the same danger existed on other levels and the Legislature was responsible enough to not abuse those. This would allow more important programs to be run efficiently while less important programs were reduced. Co-Chair John Torgerson agreed with the bill but had concerns with the special session provision feeling that it may lead to lengthy sessions. Senator Dave Donley had discussed the matter with the drafters. It was hard to know the exact circumstances with the special sessions. There may be times when the Legislature wanted that tool available. If a ways and means bill had failed in regular session but the budget bill passed, the special session would be a way for the body to come back and readdress the issue. Senator Sean Parnell had given it thought also. The language in Section 1 detailing special sessions only dealt with those called by the Governor. The previous sentence detailed how special sessions could be called by the Governor or by a vote of two-thirds of the Legislature. He wondered if there a reason it was limited to a special session called by the Governor. Senator Dave Donley replied that reason it was applied to specific special sessions called by the governor was because the Governor set the perimeter of those special session. However, the Legislature itself may need to address the ways and means items, so this would give the Legislature the authority to do that even if the Governor did not issue a call. If the Legislature called the special session, it could place the ways and means bill on the agenda. The Governor could then not preclude the Legislature from considering the matter. Co-Chair John Torgerson asked if, with the two-thirds vote requirement, could a member of the Legislature hold out their vote unless a concession was made for a separate, unrelated item to be added to the ways and means bill. He wondered if that could jeopardize the vote on a special session. Senator Dave Donley felt that was always a concern with the special session vote. However, the Legislature had only called itself back into a special session twice in the past. So he didn't think it would be any more of a problem than with other subject matters. Senator Sean Parnell then asked for clarification that this section was in no way meant to preclude or limit the Legislature's ability to include a ways and means bill, should the Legislature call itself into special session. Senator Dave Donley affirmed. Senator Sean Parnell made comments asking why would the Legislature want to have ways and means bill during a special session because that could complicate matters and the special session may never successfully adjourn. He posed a scenario where the Legislature passed a budget and a related ways and means bill, but the Governor vetoed both. He did not want to limit the Governor's ability to call a special session on a budget matter without a ways and means bill. He assumed the ways and means bill would have to be vetoed in its entirety and therefore the Governor may wish to call a special session to negotiate the ways and means bill. Senator Dave Donley responded saying that was a thought process that went into this provision. If the Governor did veto and then didn't put it in the call for a special session, the Legislature would be left with the dilemma to either override the veto or do nothing. He suggested considering adding a provision to give middle ground options. Co-Chair John Torgerson commented that a ways and means bill would not necessarily have to be acted upon during a special session. It would be treated the same as any other bill as far as the process was concerned. That made him more comfortable. He could see the advantages of using a special session to address a ways and means bill. Senator Al Adams noted that the way this was written the ways and means bill would have a broad title. He felt that in doing this legislation, the Legislature was going in the opposite direction. He wanted to have former Governor Jack Coghill and Judge Tom Stewart, who served on the constitutional convention to scrutinize the bill and give suggestions. Senator Al Adams thought this bill would set the state up for abuse in the form of riders added to a ways and means bill. He believed ways and means bills should be contained in a single subject to prevent unrelated materials added to the process. If a single subject provision was not inserted, he suggested adding a new Section 15 that was in the constitution so the Governor could strike the riders in a line item veto capacity. Senator Al Adams noted that there would be changes to political parties in control of state government. Therefore, there needed to be a safeguard to allow the Governor the power to veto rider items. Senator Dave Donley thought that was Senator Al Adams was saying was that the Governor had line item veto power on appropriation bills and perhaps the Governor should have the power to do same with a ways and means bill as well. Senator Al Adams affirmed. Senator Dave Donley said the Governor could have this ability to make the budget and the ways and means bills balance. He felt the committee should have a discussion on that point. Senator Sean Parnell wanted to know if the President of the US had that authority. Senator Dave Donley replied that the President of the US did not and in fact, had fewer executive powers than the Governor of Alaska did. The president did not have line item veto although Congress had attempted to give that authority. The US Supreme Court ruled it could not be granted without a US Constitutional Amendment. Co-Chair John Torgerson pointed out to Senator Al Adams the bottom of page 2, relating to how the ways and means bill shall be confined to changes in law determined by the Legislature to be necessary to implement appropriations. He asked if Senator Al Adams thought that would cause additional riders. Co-Chair John Torgerson understood that to be pretty restrictive. Senator Al Adams said he would like to get different legal opinions from the Legal Service Division and the Department of Law on that point so the committee could fully understand. He wanted to prevent any abuse of that power. He didn't think all the members of the committee understood that portion. Co-Chair John Torgerson noted the Attorney General testified on the bill in the Senate Judiciary Committee but didn't speak to this particular issue. He had comments on the broad title saying it could have good and bad implications but that the good might carry the bad. He also had problems with the special sessions. Senator Al Adams thought Senator Dave Donley saw the importance of the needed checks and balances and felt that the committee could work something out to solve the problem. Co-Chair John Torgerson asked if it would then become a revision of law or a constitutional amendment. Senator Al Adams commented that the legalities needed to be looked at either way. Senator Dave Donley wanted the nine members of the committee to be comfortable with the bill. He asked for their input. There were ways to increase the checks and balances. He supported the bill as is but would also support Senator Al Adams's suggestions. He discussed other options. He spoke of other discussions about the revisers bill. The reviser of statutes had the responsibility of **. He considered having the head of * and the head of Division of Legislative Finance be the head, but *. There were ways to get to that concern. Senator Al Adams asked if the check and balances matter was discussed in the Senate Judiciary Committee. Senator Dave Donley said it had been. Co-Chair John Torgerson didn't remember the line item veto being discussed. Co-Chair John Torgerson announced he would request the Legal Services Division to draft an amendment. He would also ask the Department of Law to testify. Co-Chair John Torgerson ordered the bill held in committee. CS FOR SENATE BILL NO. 51(L&C) "An Act relating to barbers, hairdressers, manicurists, and cosmetologists; providing that the only qualification necessary for licensure as a manicurist, other than payment of fees, is completion of a class that is 12 hours in duration, addresses relevant health, safety, and hygiene concerns, and is offered through a school approved by the Board of Barbers and Hairdressers; and providing for an effective date." This was the second hearing for this bill. Co-Chair John Torgerson noted material relating to the manicurist training was available for reference. He said the board member who had wished to testify at the last hearing had submitted written comments, which were distributed to the committee members. Senator Randy Phillips shared that he tried to contact a manicurist business in his district to hear their comments of the bill and got no response. Senator Randy Phillips offered a motion to move from committee CS SB 51 (L&C) from committee with the fiscal note adopted by the Senate Finance Committee. Senator Lyda Green objected for question. She referred to the earlier discussion on the money involved and asked if the amended fiscal note reflected the change of funds to the Department of Environmental Conservation. Co-Chair John Torgerson clarified that Department of Environmental Conservation changed the fiscal note so it followed the intent that a fee would be assessed to the licensees to cover the costs of Department of Environmental Conservation's inspections. Senator Al Adams added that the fees would also cover publications. Without objection, CS SB 51 (L&C) was reported out of committee. CS FOR HOUSE JOINT RESOLUTION NO. 12(FIN) Relating to federal claims against funds obtained by settlement of state tobacco litigation. JOHN MANLEY, staff to Representative John Harris the prime sponsor of the bill, testified before the committee. He said that HJR 12 would send a message to the President of the US and to Congress that the State Of Alaska brought a lawsuit to the tobacco companies and came to a settlement, which the federal government was not involved. Therefore, they were not entitled to a share of the money. The state stood to receive about $669 million from the settlement over the next 25 years. If the federal government had its way in exercising its prerogative under the proposed US Senate bill, they could take as much as $400 million of that amount. Therefore, the resolution asked that Congress pass a law directing federal agencies to not take that money. Co-Chair John Torgerson referred to page 2 line 16 and 17 that basically stated that the president was to review the fact of the settlement and refrain from taking steps to recoup dollars, which the federal government was not entitled. He asked if the sponsor was saying that the federal government might be entitled to some of the settlement. That was his interpretation. John Manley replied that intention was they would not be entitled to any of the settlement. Co-Chair John Torgerson stated that was not what the statement said. It needed clean up. John Manley suggested that portion of the language should be removed. John Manley shared that the federal government felt they are entitled to two-thirds of the settlement under the Social Security Act. Co-Chair John Torgerson detailed the language discrepancy. Senator Sean Parnell moved to adopt Amendment #1. This would delete language on page 2 beginning with line 16, "review the facts related to the tobacco settlement with the State Of Alaska" and then at line 17 insert a period after "dollars" and delete the remainder of the line. He read the revised language into the record. This would comply with line, which stated that the State Of Alaska was entitled to all the funds. Without objection it was adopted. Senator Lyda Green suggested adding Senator Kay Bailey- Hutchinson to the list of recipients of the resolution. She was the co-sponsor of the federal legislation to claim the funds, SB 36 to page 2 after Senator Trent Lott. John Manley did not oppose this. Senator Lyda Green moved to adopt Amendment #2. Without objection, it was adopted. DOUG GARDNER, Assistant Attorney General, Oil, Gas and Mining Section, Civil Division, Department of Law, came to the table to answer any questions of the committee. Senator Al Adams asked if there was a fear that the federal government could take a portion, such as two-thirds, of the money that was entitled to Alaska. Doug Gardner said it was a real concern and that the federal legislation was attached to an emergency spending appropriation and had 99 co-sponsors. Senator Sean Parnell moved to report SCS CS HJR 12 (FIN) as amended out of committee. There was no objection and it was so ordered. Co-Chair John Torgerson announced committee substitutes were distributed for SB 33, SB 24 and SB 101. He had scheduled SB 101 and SB 24 for Monday morning. He told the committee next week's meetings would begin at 8:00 AM each morning to hear bills for one hour. The meetings would continue at 9:00 AM with Balanced Budget Presentations. Senator Al Adams asked if the committee would have fiscal notes on SB 24 by Monday. There was discussion between him and Co-Chair John Torgerson about the implications of Section 4 to the fiscal notes. ADJOURNED Senator Torgerson adjourned the meeting at 10:23 AM. SFC-99 (7) 3/26/99