1997-01-16                     Senate Journal                      Page 0068
SB 55                                                                        
SENATE BILL NO. 55 BY THE SENATE RULES COMMITTEE                               
BY REQUEST OF THE GOVERNOR, entitled:                                          
                                                                               
An Act relating to the definition of certain state                            
receipts; and providing for an effective date.                                 
                                                                               
was read the first time and referred to the Labor and Commerce,                
Resources, Judiciary and Finance Committees.                                   
                                                                               
Fiscal note published today from the Governor's Office.                        
                                                                               
                                                                               

1997-01-16                     Senate Journal                      Page 0069
SB 55                                                                        
Governor's transmittal letter dated January 16:                                
                                                                               
Dear President Miller:                                                         
                                                                               
As my Administration and the legislature work to cut the budget, we            
are faced with an accounting Catch-22: some increases in state                 
spending have absolutely no effect on the fiscal gap.  They are                
actually good for the state economy.  Denying increases for                  
economic development permitting, test fisheries or other services that         
users are willing to entirely pay for might help the bottom line for           
the state budget but they make no sense for the state economy.  To             
avoid an increase in the bottom line, totally unrelated programs are           
often cut to meet budget caps.  This makes no sense from the                   
customer side of the counter.                                                  
                                                                               
In other cases, such as professional licensing or the regulation of            
insurance companies and utilities, the legislature has passed laws             
requiring the states responsibilities be fully fee-supported by the            
users.  The fee is to be no more and no less than the cost of                  
protecting the public interest.  If an increase in the number of               
engineers or teachers needing licenses requires an increase in the cost        
of providing that service, should some other public service be                 
penalized an equivalent amount?  Of course not.                                
                                                                               
Last year I proposed a way to eliminate this Catch-22 without                  
limiting public disclosure of all state expenditures or the legislatures       
authority to appropriate.  A version of my proposal was merged with            
SB265, a bill which cured the Catch-22 for test fisheries.                     
Reintroduced in the Special Session as SB1009, it passed the House             
and was expected to pass the Senate when the clock ran out.                    
                                                                               
I am reintroducing a designated program receipts bill with two                 
updates.  As before, it establishes a category of program receipts             
generated by state government activities and treats them the same              
way we currently handle fund sources such as university tuition, gifts         
and grants.  In reviewing the bill for this year, we realized that two         
technical additions to the statute would be in order.  One adds the            
term corporate receipts to the statutory list of program receipts,             
codifying  the  longstanding  treatment  of receipts generated by our          

1997-01-16                     Senate Journal                      Page 0070
SB 55                                                                        
public corporations (such as AHFC and AIDEA).  The other adds                  
earnings of the Childrens Trust which, I am very pleased to say,               
now has earnings for you to appropriate.                                       
                                                                               
Designated program receipts would still be appropriated by the                 
legislature, but they would not be included in the tally of unrestricted       
general funds.  For information purposes, both my FY97 and FY98                
budgets have shown general fund spending with and without                      
designated program receipts to make it very clear that increases in            
services paid for entirely with designated program receipts do not             
widen the budget gap. We would continue that practice.                         
                                                                               
This bill makes common sense changes to our budget process                     
without sacrificing fiscal information or legislative prerogative.  I          
urge your favorable consideration.                                             
                                                                               
						Sincerely,                                                               
						/s/                                                                      
						Tony Knowles                                                             
						Governor