10/14/2021 10:00 AM House WAYS & MEANS

                HB 141-APPROPRIATION LIMIT; GOV BUDGET                                                                      
                                                                                                                                
10:06:00 AM                                                                                                                   
                                                                                                                                
CHAIR  SPOHNHOLZ  announced  that  the first  order  of business  would                                                         
be   HB  141   HOUSE   BILL   NO.   141,  "An   Act   relating   to   an                                                        
appropriation   limit;  relating  to  the  budget  responsibilities   of                                                        
the governor; and providing for an effective date."                                                                             
                                                                                                                                
10:06:56 AM                                                                                                                   
                                                                                                                                
MEGAN  HOLLAND,  Staff,  Representative   Ivy Spohnholz,  Alaska  State                                                         
Legislature,    on   behalf   of   Representative    Spohnholz,   prime                                                         
sponsor,   presented  an  explanation   of  changes   in  the  proposed                                                         
committee   substitute  (CS),  Version   D,  for HB  141  [included   in                                                        
the   committee    packet],    which   read   as   follows    [original                                                         
punctuation provided]:                                                                                                          
                                                                                                                                
      Section 1:                                                                                                                
                                                                                                                                
      Page 1, line 7                                                                                                            
                                                                                                                                
      The word  "of"  is  added  following   "principal"  to  read                                                              
      "appropriations   required  to  pay  the  principal  of  and                                                              
      interest   on  general   obligation   bonds."   This   is  a                                                              
      grammatical  edit to  improve  the precision  of language.                                                                
                                                                                                                                
      Page 2, lines 18-21                                                                                                       
                                                                                                                                
      New language   allows  exceeding  the  appropriation   limit                                                              
      for capital  investments   and deferred  maintenance   of up                                                              
      to 10% over the limit for that fiscal year.                                                                               
                                                                                                                                
      Section 2:                                                                                                                
                                                                                                                                
      Lines 23-28                                                                                                               
                                                                                                                                
      A conforming   change  that adds  capital  improvements   to                                                              
      the  requirement  that   the  governor  produce   an  annual                                                              
      report with a calculation of the appropriation limit.                                                                     
                                                                                                                                
      Page 2 line 30 - page 3, line 2                                                                                           
                                                                                                                                
      Adds   a  requirement    that   the   legislative    finance                                                              
      division  prepare  a  report  analyzing  the  appropriation                                                               
      limit  and  the  rate  of growth   every  three  years.  The                                                              
      report  would  be submitted   to finance  committee   chairs                                                              
      in each legislative body.                                                                                                 
                                                                                                                                
           Section 4 of bill version G was removed and                                                                          
           sections in version D are renumbered accordingly.                                                                    
                                                                                                                                
           This  section   previously   limited   calculation   of                                                              
           the  revised   appropriation   limit   and  subsequent                                                               
           mandatory   reports   to   appropriations   that   take                                                              
           effect during or after fiscal year 2023.                                                                             
                                                                                                                                
      Section 4:                                                                                                                
                                                                                                                                
      Lines 6-7                                                                                                                 
                                                                                                                                
      Establishes  a  "hard   floor"  by  calculating   the  limit                                                              
      for  fiscal  year  2023,  ($5.771   billion),   and  removes                                                              
      the calculation   for  that  fiscal  year  from  transition                                                               
      language  clarifying  that  spending  for school  bond  debt                                                              
      and state-declared disasters will not be included.                                                                        
                                                                                                                                
10:09:55 AM                                                                                                                   
                                                                                                                                
CHAIR   SPOHNHOLZ   summarized   the  list   of  changes   in  HB  141,                                                         
Version  D,  as explained   by  Ms. Holland.    Essentially,   she said                                                         
the  proposed  CS  would  establish  a  higher  floor  at $5.7  billion                                                         
plus  a  10   percent  additional   spending   allowance   for  capital                                                         
projects  to  allow  for strategic   investments  while  maintaining   a                                                        
meaningful cap.                                                                                                                 
                                                                                                                                
10:11:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   JOSEPHSON   moved  to  adopt  the  proposed  committee                                                         
substitute  (CS)  for  HB  141, labeled  32-LS0454\D,   Marx,  10/4/21,                                                         
as  the  working  document.    There  being  no  objection,   Version  D                                                        
was before the committee.                                                                                                       
                                                                                                                                
10:11:49 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
10:13:08 AM                                                                                                                   
                                                                                                                                
CHAIR  SPOHNHOLZ  explained   that  there  were  two spending   caps  in                                                        
existence:   a constitutional   spending   cap that  allowed   for $9.8                                                         
billion  in  spending   and  a statutory   spending  cap  that  allowed                                                         
for  $5.8  billion   in  spending.    She  noted  that  there   were  no                                                        
enforcement   or  accountability   measures   in  place,  opining  that                                                         
the  constitutional    cap  was  too   high,  and  the   statutory   cap                                                        
didn't  have  the appropriate  "feedback   loops."   She reported   that                                                        
CSHB  141(W&M)  would  allow  reestablish   the  spending  cap  at $5.7                                                         
billion  plus  10  percent   for capital   investment  and  set  future                                                         
appropriation   limits  based  on an  average  for the  previous  three                                                         
fiscal   years'   UGF  budget   when   adjusted   by  the   greater   of                                                        
population   or  inflation.     Further,  she   pointed  out  that   the                                                        
limit  would   exclude  spending   for  state-declared   disasters   and                                                        
dividends.    Additionally,   the  bill  required  that  the  Office  of                                                        
the  Governor   calculate   the  appropriation   limit  each  year   and                                                        
submit  it  with the  annual  budget  request,  which  she  believed  to                                                        
be  the  most   important  part   of  the  legislation,   as  it  would                                                         
create  an  accountability  measure   for the  administration   and  the                                                        
legislature   to  consider  the  spending  cap.    She  emphasized   the                                                        
importance   of  considering   whether  the  capital   budget  and   the                                                        
permanent   fund   dividend   (PFD)   should  be   excluded   from   the                                                        
spending   cap  and  encouraged   substantive   discussions   on  these                                                         
matters.                                                                                                                        
                                                                                                                                
10:16:31 AM                                                                                                                   
                                                                                                                                
CHAIR  SPOHNHOLZ,   in response   to a  question  from  Representative                                                          
Josephson,   said the  bill,  as  drafted,  excluded   dividends.    She                                                        
reiterated   her  belief  that  the  decision  to  include  or  exclude                                                         
dividends from the spending cap was an important policy call.                                                                   
                                                                                                                                
10:18:30 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   WOOL  pointed   out  that  the  dividend  was  treated                                                         
like  a  budget   appropriation.     He  opined   that  such  a  large,                                                         
fluctuating budget item should be included in the spending cap.                                                                 
                                                                                                                                
CHAIR SPOHNHOLZ acknowledged his position.                                                                                      
                                                                                                                                
10:20:07 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   STORY  agreed   with  Representative   Wool  that   the                                                        
dividend  should  be included  in  the spending  cap  in an  attempt  to                                                        
protect   Alaska's   resources.      She  addressed   the   concept   of                                                        
accountability and asked the sponsor to expound on that.                                                                        
                                                                                                                                
CHAIR  SPOHNHOLZ   discussed  the  importance   of  a spending   cap  as                                                        
part  of a comprehensive   fiscal  plan.   She shared  her  belief that                                                         
strategic  investments   in the  Alaska  Permanent   Fund managing   the                                                        
growth  of  government  incrementally,   as  opposed  to  rapid  "booms                                                         
and busts," would be good for everyone.                                                                                         
                                                                                                                                
10:24:58 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   JOSEPHSON   opined  that  there  would  be  bipartisan                                                         
division amongst legislators on this issue.                                                                                     
                                                                                                                                
10:25:58 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   PRAX  believed  that  if  the  dividend  was  included                                                         
in  the spending  cap,  the  legislature  would  not  be resolving   the                                                        
conflict regarding spending.                                                                                                    
                                                                                                                                
10:27:36 AM                                                                                                                   
                                                                                                                                
CHAIR SPOHNHOLZ announced that CSHB 141(W&M) was held over.