03/31/1993 08:40 AM House FIN

  HOUSE BILL NO. 58                                                            
                                                                               
       "An Act relating to the budget reserve fund established                 
       under art. IX,  sec. 17, Constitution  of the State  of                 
       Alaska."                                                                
                                                                               
  DARREL  J.  REXWINKLE, COMMISSIONER,  DEPARTMENT  OF REVENUE                 
  noted that HB 58 would change the Attorney General's opinion                 
  in  regards  to  which  monies  would  be deposited  in  the                 
  Constitutional Budget Reserve Fund.  He observed that HB  58                 
  states that  revenues from  cases that  remain in  "informal                 
  hearing status" for more than 6 months would be deposited in                 
  the Constitutional Budget Reserve Fund.                                      
                                                                               
  Commissioner  Rexwinkle reviewed  the  audit  process.    He                 
  expressed the  concern  that companies  could  determine  by                 
  their action where  money would be deposited.   He theorized                 
  that substantial  amounts could go  into the  Constitutional                 
  Budget Reserve Fund  under the legislation.   He added  that                 
  there is at least $266.6 million dollars in back settlements                 
  that  would need to be deposited.  He observed that there is                 
  not  a  large  General  Fund  balance   to  cover  the  back                 
  settlements.                                                                 
                                                                               
  Representative Brown noted  that under AS 43.05.240  (b), "A                 
  person aggrieved by  the action of the  department in fixing                 
  the amount of  a tax or in  imposing a penalty may  apply to                 
  the department and request a formal hearing. (1) in place of                 
  the  informal  conference  provided  for  in  (a)  of  this,                 
  section, within 60 days from the  date of mailing the notice                 
  required to be  given to the  person by the department;  (2)                 
                                                                               
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  within 30  days after  decision resulting  from an  informal                 
  conference."   She asserted  that a  company can  direct the                 
  procedure in order  to divert money into  the Constitutional                 
  Budget Reserve Fund.                                                         
                                                                               
  Commissioner  Rexwinkle argued  that a formal  conference is                 
  accompanied by additional process.                                           
                                                                               
  Co-Chair MacLean  noted  the retroactive  effective date  of                 
  July 1, 1990.   Co-Chair Larson explained that the effective                 
  date would include the $144.9 million dollar  administrative                 
  settlement in FY  93.   Revenues in FY  93 included  another                 
  $121.3 million dollars.  An additional $13.6 million dollars                 
  were  generated in  interest.   A  total  of $279.8  million                 
  dollars are included  in the Statutory Budget  Reserve would                 
  be affected.  He  added that settlements in FY 94 would also                 
  be leveraged.                                                                
                                                                               
  HB 58 was HELD in Committee.