Legislature(2023 - 2024)ADAMS 519
05/04/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| SB98 | |
| SB25 | |
| HB125 | |
| HB38 | |
| HB81 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 25 | TELECONFERENCED | |
| += | HB 125 | TELECONFERENCED | |
| + | HB 81 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 98 | TELECONFERENCED | |
| += | HB 38 | TELECONFERENCED | |
HOUSE BILL NO. 38
"An Act relating to an appropriation limit; relating
to the budget responsibilities of the governor; and
providing for an effective date."
3:01:40 PM
REPRESENTATIVE WILL STAPP, SPONSOR, introduced himself and
asked his staff to continue with the PowerPoint
presentation "HJR2 GDP Based Spending Cap" dated May 2,
2023 (copy on file). He reminded the committee that the
bill was previously heard in committee [05/02/23 10:34
A.M.]
3:02:16 PM
BERNARD AOTO, STAFF, REPRESENTATIVE WILL STAPP, continued
on slide 9 titled Current Statutory Limit:
• Currently set under AS 37.05.540(b)
• Enacted in 1986
• Mostly aligns with Appropriations Limit under Article
IX of the Alaska State Constitution.
• "Appropriations from the treasury made in a fiscal
year may not exceed appropriations made in the
preceding fiscal year by more than five percent plus
the change in population and inflation since the
beginning of the preceding fiscal year."
• Change in population is based on an annual estimate by
the Department of Labor & Workforce Development.
• Change in inflation is based on Consumer Price Index
(CPI) Anchorage as prepares by the US Bureau of Labor
Statistics.
Mr. Aoto furthered that the statute also carved out the
exceptions to the appropriation limit in Article 9, Section
16 of the Alaska Constitution and added exceptions to
include the Alaska Mental Heath settlement income account
and specific appropriations made to Alaska Mental Health
Trust Authority (AMHTA) fund.
Mr. Aoto continued on slide 10 titled What does HB 38
do?:
• Aligns with the constitutional proposal in HJR 2 and
uses the trailing average of the 5 previous calendar
years of Real Gross Domestic Product (GDP) for the
State as the metric for the limit.
• Calculating Real GDP
• Takes data for standard GDP calculations by government
agencies, subtracts government spending, and adjust
for inflation.
• 11% of the total average is the limit for all
appropriations not listed as exceptions.
• If enacted by FY24, that would equal approximately
$4.9 B.
Mr. Aoto advanced to slide 11 titled "Appropriations
Subject to Limit:
Subject to Limit:
Unrestricted General Funds (UGF) Operating
Expenditures
UGF Capital Expenditures (some exceptions)
Payments for Retirement benefits
Not Subject to Limit:
Permanent Funds Dividends
Appropriations to Permanent Fund/PCE Endowment
Appropriations to a State Savings Account (ex. CBR,
MHTF*)
Appropriations to capitalize state retirement accounts
Direct spending from a Disaster Declaration
Proceeds of bonds that are approved by voters
Appropriations made from Mental Health Trust
Settlement Income Account (AS 37.14.036)
Mr. Aoto elaborated that HB 38 had the same exceptions as
HJR 2, however it maintained the added exceptions for the
appropriations made from the Mental Health Trust Settlement
Income Account (AS 37.14.036) and the Alaska Mental Health
Trust fund. The sponsor had consulted with Legislative
Legal Services regarding the exceptions, and it was
determined that the exceptions were placed in statute as
part of the settlement of the Weiss v State of Alaska case,
the Supreme Court decision that established the AMHTA.
Mr. Aoto continued to slide 12 [no title]. He noted that
the slide contained the same raw data as he presented in
the HJR 2 discussion.
3:05:38 PM
Mr. Aoto advanced to slide 13 [no title]. He pointed to the
graph that depicted the statutory amount and noted that the
blue bars were associated with appropriations subject to
the limit. He detailed that the bar for FY 2024 was
excluded because it included the supplemental amount, which
was currently unknown. He pointed out that the current
statutory limit had instability and rose and fell which
made it difficult to plan year to year. He exemplified the
difference between FY 2009 when the appropriation was under
$5 billion and in FY 2008 it was over $7 billion.
3:07:25 PM
Mr. Aoto turned to slide 14 titled Two Primary Goals:
1. Create an effective appropriations limit to allow
the state more stable long term fiscal viability.
2. Align Alaska Statute with Constitutional proposal.
Mr. Aoto moved to slide 15 [untitled] that included a graph
depicting the current Constitutional Limit and Statutory
Limit and proposals in HB 38 and HJR 2.
Representative Stapp further explained that the orange line
on the graph represented the existing Constitutional limit,
and the blue line was the current statutory limit. He
pointed out that they were not in alignment; the statutory
limit was highly variable versus the Constitutional limit
that was more consistent. He argued that the Constitutional
limit had rendered itself ineffective. He referenced the
FY 2024 limit that was over $10 billion.
3:09:23 PM
Representative Ortiz asked if the bars on slide 15 included
past or current spending on the Permanent Fund Dividend
(PFD).
Mr. Aoto responded that the PFD was an exception to the
appropriations limit and was not reflected in the bars.
Representative Ortiz thought it was odd that the largest
expenditure was not a part of the appropriation limit.
Representative Stapp responded that prior to the
Wielechowski case, the PFD appropriation was never part of
GF. He agreed that the PFD appropriation was the largest
each year. However, he argued that the year to year
inconsistency in the appropriation warranted a separate
solution and if it was included in the modeling, the bill
would be taking a position what the amount of the dividend
should be. He offered to include it in the model if it
helped answer the question. Representative Ortiz understood
that it was a big issue and likely should be kept separate.
However, if the overall goal was a spending cap, it seemed
that the amount spent on the PFD should be considered.
3:11:36 PM
Representative Galvin thought the bill was a good exercise
in realizing the need to level out the states spending.
She cited the graph lines for HB 38 and HJR 2 and noted her
concern that it was inadequate for education spending. She
appreciated the need for a reliable spending limit,
especially to promote trust in government, but she observed
that education spending had not grown to keep pace with
costs. She shared that among her two children that were
born 10 years apart, the older one had much more
educational opportunities in public education than her
younger child. She asked for comment. Representative Stapp
reminded Representative Galvin that the green and black
lines were amended downward in a previous committee of
referral. He was attempting to provide structural balance
and consistency to long-term appropriations and government.
The lines changed if the percentages were amended and might
be conducive to Representative Galvins concerns. He
reiterated that the blue and orange lines were not
consistent and opined that they incentivized bad behavior.
He wanted a long-term vision for future Alaskans by
operating under fiscal constraints. Representative Galvin
recalled that the bill included an appropriation amount
that correlated to roughly the Consumer Price Index (CPI.)
She opined that the legislature needed to determine the
appropriate level of education spending and also an
acknowledgement that government spending could not remain
flat considering inflationary costs. She asked whether
Representative Stapp agreed.
3:15:21 PM
Mr. Aoto answered that she was correct. He added that both
of the current limits each presented a different challenge
because the metric had to be anchored to something. He
elaborated that the Constitutional limit was anchored to a
set amount on a set date that only allowed it to increase
and not adjust to different economic drivers. The statutory
limit changed so drastically from year to year being
predicated on the prior years spending that it could not be
consistently accounted for. He commented that the bills
offered a set amount that adjusted to economic drivers,
which was the Gross Domestic Product (GDP).
Representative Stapp interjected that the benefits of the
bills were that it adjusted the limit based off of
performance based metrics. He reported that the
Constitutional limit stipulated that one-third of the
appropriation limit should be allocated towards capital
investments in the state. He deduced that the authors were
considering building Alaskas future.
Representative Ortiz also believed that considering the
long-term interests of the state was beneficial. He pointed
to the HB 38 limit line on the graph and calculated that in
FY 2023 the state appropriated an amount that was higher
than what was in the states long-term interest. He deduced
that Representative Stapp was inferring that spending above
the limit was money ill-spent. Representative Stapp
reminded Representative Ortiz that in a prior committee the
metrics were amended downward and in the original bills
the line did not exceed the graph.
3:18:59 PM
Co-Chair Foster asked if Representative Stapp could provide
a copy of what the prior graph looked like prior to the
amendments. Representative Stapp agreed to provide the
information and he believed that there was a happy medium
that could be found to apply a structural limitation to
budgetary practices and not intentionally apply excessive
downward pressure on the states current situation.
3:19:55 PM
Co-Chair Foster set an amendment deadline for HB 38 and HJR
2 for the following Wednesday May 10, 2023, at 5:00 P.M. in
order to allow for some modeling and further discussion.
HB 38 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 81 Sectional Analysis .pdf |
HFIN 5/4/2023 1:30:00 PM STRA 3/21/2024 1:30:00 PM |
HB 81 |
| HB 81 Supporting Documents.pdf |
HFIN 5/4/2023 1:30:00 PM |
HB 81 |
| HB 81 Sponsor Statement.pdf |
HFIN 5/4/2023 1:30:00 PM STRA 3/21/2024 1:30:00 PM |
HB 81 |
| SB25 Fund Backup Information - LFD Presentation extract 050423.pdf |
HFIN 5/4/2023 1:30:00 PM |
SB 25 |
| HB 125 Public Testimony Rec'd by 050423.pdf |
HFIN 5/4/2023 1:30:00 PM |
HB 125 |