Legislature(2017 - 2018)BUTROVICH 205
02/13/2018 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 141 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 141-BIENNIAL BUDGET
3:33:00 PM
CHAIR MEYER announced the consideration of SB 141.
3:33:37 PM
PAT PITTNEY, Director, Office of Management and Budget, Office
of the Governor, Juneau, Alaska, explained the impetus of SB 141
as follows:
After watching the last several years of the turmoil
of the late budget and also after examining some
solution to that, we came up with the impetus of the
bill and we also wanted to assure that we don't go
through the exercises that we've gone through for the
last three years and the year-end; it's very
disruptive and creates uncertainty not just for state
employees, but for the fishing industry and the
processors and tourists trying to get on the ferry,
all of that created more uncertainty than are already
economic uncertainty.
She noted that additional testifiers were available for the
committee to question. She added that Deputy Director Fred
Parady has been invited to testify as well. She disclosed that
Mr. Parady has a unique experience from his time in Wyoming
where he served as Speaker of the House in the Wyoming
Legislature, a state which uses the biennial process.
3:36:31 PM
CHAIR MEYER asked Ms. Pittney which other states have gone to a
biennial budgeting process. He said he would tend to agree that
biennial budgeting may be more efficient, but Alaska is tied to
a volatile, single commodity source for its revenue that
requires annual supplemental budgets. He opined that a biennial
budget in Alaska will lead to huge supplemental budgets. He
asked Ms. Pittney if Alaska's unique revenue situation was taken
into consideration.
MS. PITTNEY replied yes. She emphasized that the
administration's plan includes a more stable revenue picture, a
scenario where a biennial budget runs best under. She agreed
that Alaska's revenue is the most volatile of any state by a
"magnitude of seven." She pointed out that even in the state's
fiscal strife, 80 percent of the operating budget does not move
year-to-year and in some cases 90 to 95 percent does not move in
a given year. She emphasized that certainty can be created for
90 percent of the budget items in the Legislature's first year
with a supplemental adjustment made in the second session. She
set forth that a biennial approach separates the budget
discussion and allows more time for policy discussion, an
advantage that should not be undervalued.
3:39:44 PM
GUY BELL, Policy Specialist, Office of Management and Budget,
Office of the Governor, Juneau, Alaska, explained the governor's
intent based on his remarks from the 2018 State of the State
Address as follows:
I am filing legislation that would move us to a more
efficient, effective biennial budget process.
It also would mandate that if the governor does not
produce the next fiscal year's budget by the statutory
deadline of December 15, the governor's pay stops. If
the Legislature doesn't pass a budget by the 90th day
of the legislative session, their pay stops.
He summarized the governor's intent into two components: the
first is to shift Alaska to a biennial budget process and the
second is to set budget completion deadlines with set financial
consequences if the deadlines are not met. He disclosed that SB
141 has 35 sections, but only 5 are substantive in nature and
his presentation only focuses on those sections.
He addressed slide 3: Biennial Budget Proposal, and referenced
as follows:
• Section 17: legislator responsibilities.
• Section 18: governor responsibilities.
• Two single-year appropriations measures adopted the first
session of each legislature would apply to each of the
operating, mental health and capital budgets.
• Second legislative session would be focused on non-budget
matters but will include an interim appropriation bill or
bills authorizing unanticipated operating and capital
expenditures for the second year of the biennium.
3:41:54 PM
SENATOR WILSON referenced a letter submitted by Ronald Snell
from the National Conference of State Legislatures (NCSL)
regarding a biennial budget, specifically the supplemental
appropriations process. He pointed out that the NCSL letter
explained that forecasting is likely to be more accurate in an
annual budget and possibly lessen the need for supplemental
appropriations and special legislative sessions. He noted that
the Legislature's recent supplemental appropriation was $200
million and asked if the administration anticipated the
supplemental to be higher or lower.
MS. PITTNEY replied that there are many factors that impact a
supplemental appropriation. She noted during the current
administration's first year that a buyout for the TransCanada
partnership occurred in addition to a large, special session and
supplemental appropriation in the same component. She conceded
that there will be different reasons for supplemental
appropriations, some due to a revenue issue; however, the state
has managed its finances, even in a deficit situation, by using
its savings to cover its deficit. She explained that even though
Alaska is a revenue volatile state, forecasts are already
anticipated to be wrong. She opined that neither an annual or
biennial budget will impact revenue volatility or the need for
supplemental appropriations. She summarized that supplemental
appropriations could be more than or less than $200 million.
3:45:10 PM
MR. BELL addressed slide 4: Biennial Budget: The Benefits, and
referenced as follows:
• Longer planning horizon.
• Greater funding predictability for the general public,
state and local service providersschool districts; marine
highways; fish and game, etc.
• Shift allocation of state agency energy from budget
development and presentation to improvements to program
efficiency and effectiveness to better serve the public.
• For the Legislature, it provides more time for oversight
activities and policy priorities.
MR. BELL disclosed that the noted benefits for a biennial budget
were paraphrased from a letter submitted by Timothy Keen,
director for the Ohio Office of Budget and Management.
3:47:23 PM
He addressed slide 5: States Using Biennial Budgeting, and
detailed as follows:
• 21 of 50 states use biennial budgeting:
o Connecticut,
o Hawaii,
o Indiana,
o Kentucky,
o Maine,
o Minnesota,
o Montana,
o Nebraska,
o Nevada
o New Hampshire,
o North Carolina,
o North Dakota
o Ohio,
o Oregon,
o Texas,
o Virginia,
o Washington,
o Wisconsin,
o Wyoming,
o (Mixed): Arizona-16 annual budget units,
o (Mixed): Kansas-biennial for all state agencies.
He pointed out that the states that use the biennial budgeting
process represent small and large states, "red and blue states,"
resource and non-resource states, and a wide geographic area as
well.
CHAIR MEYER pointed out that most states use annual budgeting.
MR. BELL answered correct.
He addressed setting deadlines in slides 6 and 7: "Consequences
for Missing Budget Deadlines," and "Appropriations Deadlines
Proposal." He noted that sections 6 and 7 pertain to the
Legislature and section 20 the governor. He detailed as follows:
• Require the Legislature to pass a budget by the deadline
set by the Alaska public in 2006, the 90th day of a
session.
• The consequence for not doing so: Beginning on day 91 of
the legislative session, legislators would forfeit per diem
and their salaries would be withheld until a budget is
passed.
• The governor's salary and per diem would be withheld for as
long as he or she is late in submitting the budget bill to
the legislature and the public after the December 15
statutory deadline.
SENATOR WILSON addressed the governor's December 15 deadline and
asked if the governor's office would be amenable to moving the
deadline up for a two-year budget because the Legislature will
need more time, especially with legislators that are less
familiar with the budget process. He pointed out that the
biennial budget means that House members will be doing the
budget once and Senate members twice.
3:49:55 PM
MS. PITTNEY explained that moving the deadline forward would be
difficult for the first year of the biennial budget but moving
the date forward for the second year is realistic.
SENATOR WILSON called attention to the deadline consequences and
opined that the budget process has many moving parts where the
two houses and the governor's office are dependent on one
another. He inquired if deadline consequences could include the
administration's commissioners and deputy commissioners taking a
loss of pay if the governor did not present a budget on time.
MR. BELL replied that could be considered by the Legislature,
but the Executive Budget Act makes it the governor's
responsibility to submit the budget on time.
3:52:12 PM
CHAIR MEYER commented as follows about the budget process
inherently not being on a level playing field:
It does not appear to me that it is a "level playing
field" because you all work for the governor, so if he
says, "I want the budget by December 1," you are going
to do it; unfortunately, we can say that to the House,
but they don't have to oblige us and they typically
don't. The dilemma is that we can do the budget in 45
days, we've done it in 45 days before, but getting the
other body to agree and sometimes even the governor
intervenes and delays it. Another consideration is if
the governor intervenes and says, "I don't like that
budget, don't pass it," then why should we suffer the
consequences.
MR. BELL replied that the next two slides address what Chair
Meyer commented about; however, in terms of what would happen if
the governor vetoed the budget, then that is the governor's
choice. He explained that if the budget has passed both bodies,
the Legislature has done its work and, "The clock stops
ticking."
SENATOR COGHILL said he will look at the constitutional issue
regarding SB 141. He recalled that there have been times where
there was a bad working relationship between the governor and
the Legislature where the governor did not entertain amendments
to the budget and that made it difficult for department heads to
get information to the Legislature. He said the governor
potentially could "slow roll" the Legislature to not be able to
pass a budget without the working pieces that ultimately leads
to the Legislature passing a budget for its own self-interest
that does not serve Alaskans.
3:54:28 PM
MS. PITTNEY explained that SB 141 assumes a good faith
discipline.
SENATOR COGHILL asserted that the balance-of-power structure
needs to be addressed. He emphasized that he does not disrespect
the idea of a biennial budget but questioned the use of
penalties to achieve the goal.
3:56:00 PM
MR. BELL addressed slide 8: Recent Alaska History Budget Bills,
and referenced as follows:
• 2017:
o Deadline (90th Day): 4/16/2017;
o Operating Budget Passage Date: 6/22/2017;
o Difference: 67;
o Capital Budget Passage Date: 7/27/2017;
o Difference: 103.
• 2016:
o Deadline (90th Day): 4/17/2016;
o Operating Budget Passage Date: 5/31/2016;
o Difference: 44;
o Capital Budget Passage Date: 5/31/2016;
o Difference: 44.
• 2015:
o Deadline (90th Day): 4/19/2015;
o Operating Budget Passage Date: 4/27/2015;
o Difference: 8;
o Capital Budget Passage Date: 4/27/2015;
o Difference: 8.
• 2014:
o Deadline (90th Day): 4/20/2014;
o Operating Budget Passage Date: 4/20/2014;
o Difference: 0;
o Capital Budget Passage Date: 4/25/2014;
o Difference: 5.
• 2013:
o Deadline (90th Day): 4/14/2013;
o Operating Budget Passage Date: 4/14/2013;
o Difference: 0;
o Capital Budget Passage Date: 4/14/2013;
o Difference: 0.
• 2012:
o Deadline (90th Day): 4/15/2012;
o Operating Budget Passage Date: 4/15/2012;
o Difference: 0;
o Capital Budget Passage Date: 4/15/2012;
o Difference: 0.
• 2011:
o Deadline (90th Day): 4/17/2011;
o Operating Budget Passage Date: 5/6/2011;
o Difference: 19;
o Capital Budget Passage Date: 5/14/2011;
o Difference: 27.
SENATOR WILSON noted that slide 8 supports Senator Coghill's
previous statement that the past 2 years were impacted by the
varied make up of the different legislative bodies.
MR. BELL opined that the incentives and consequences in SB 141
may drive consensus on the budget.
3:57:56 PM
SENATOR WILSON noted that slide 9 referenced California's budget
proposition and asked him to verify that California is not a
biennial state.
MR. BELL answered correct.
SENATOR WILSON pointed out that the proposition in California
was strictly consequence driven whereas SB 141 addresses both a
biennial budget and consequences. He asked why the
administration did not consider focusing on one concept rather
than two. He remarked that he did not know if either a biennial
budget or consequences for not passing a budget is more
important.
MS. PITTNEY replied that the concepts address two separate
issues and both concepts are important.
3:59:50 PM
MR. BELL addressed slide 9: California Example, and referenced
as follows:
• State of California Proposition 25, passed in 2010:
o Constitutional amendment requiring its legislature to
pass a budget on time or forfeit pay for each day the
budget is delayed.
o 1980 to 2010: 25 budgets passed late.
o 2008: the budget was 100 days late.
o 2011: the first year under Proposition 25, after
legislator pay was cut off the budget was passed 12
days late.
o Since 2012 the California legislature has passed the
budget on time each year.
He revealed that only California has a constitutional amendment
that requires its legislature to pass a budget by a deadline. He
opined that Proposition 25 has been effective in California.
CHAIR MEYER asked if the proposed legislation has ever been
considered on the federal level.
MR. BELL disclosed that U.S. Congressman Paul Ryan is a strong
advocate of biennial budgeting. He said there have been some
initiatives at the federal level, "But nothing has gotten a lot
of traction."
CHAIR MEYER asked if Congressman Ryan supports the consequences
of cutting pay and per diem.
MR. BELL replied that he would have to find out.
SENATOR COGHILL noted that the president brought up biennial
budgeting, but the concept was probably not well received.
4:02:19 PM
CHAIR MEYER opened and closed public testimony.
SENATOR COGHILL suggested that SB 141 should continue to be
reviewed by the committee. He said there are some legitimate
questions that must be answered by the committee regarding the
constitution and state statutes. He pointed out that there are
principles in the constitution that need to be watched regarding
separation and balance of powers. He said the biennial budget
would change the dynamics but questioned whether the process
would change outcomes.
CHAIR MEYER pointed out that in 1940, 44 states had a biennial
budget and now 21 states have a biennial budget.
4:04:32 PM
SENATOR GIESSEL stated that she shared Senator Coghill's
question regarding the separation of powers. She remarked that
the legislation sounds like it gives the executive branch
"dictatorial powers" and control over the legislative branch.
She emphasized that the Legislature is "the people's body."
CHAIR MEYER said he shared the same concerns that Senator
Giessel has. He remarked that getting the budget done by
December 15 is much easier for the governor. He agreed with
Senator Wilson to move the budget completion date up to provide
more time for the Legislature to work on the budget before
session started. He pointed out that the budget director works
for the governor and that person will make sure the budget is
done by December 15. He reiterated that the finance chairman in
the House does not work for the Senate and completing the budget
is out of the Senate's control. He noted that Senator Giessel
mentioned that the Legislature is "the people's body" and opined
that some people maybe do not want the budget as proposed and
want the Legislature to make changes. He said he does not think
anyone in the Legislature wants to be in session longer than 90
days to collect a salary or per diem and questioned whether the
proposed consequences would provide an incentive. He asserted
that legislators are at the capitol to do their jobs.
4:06:30 PM
SENATOR COGHILL remarked that he is not unsympathetic with the
continual budget cycle and is open to the discussion. He
reiterated that he questioned what changes would occur in a
biennial budget because modifications would have to occur every
year. He said he doubted that the Legislature would impose
penalties upon itself if deadlines were not met. He opined that
a budget deadline should be 120 days rather than 90 days because
120 days is a hard deadline. He opined that the governor should
face consequences for calling back the Legislature when there is
dissatisfaction with a policy. He reiterated that the balance of
power as well as authority must be addressed.
4:09:28 PM
CHAIR MEYER said Senator Coghill brought up good points. He
pointed out that sometimes a policy question gets leveraged
against the budget and delays the budget process. He concurred
that a number of people are impacted by uncertainty of the
budget process and that uncertainly as to whether people will
have a job weighs on the Legislature as well. He said
fortunately the budget has been done before the new fiscal year
starts, but the Legislature has come back the last several years
for special sessions for non-budgetary issues where penalties
should be considered as well.
He thanked the administration for bringing the biennial budget
concept forward. He noted that the concept has been brought up
in the past. He opined that looking at the biennial concept
"minus other items" should be considered.
4:11:15 PM
CHAIR MEYER [held SB 141 in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 141 Version A.PDF |
SSTA 2/13/2018 3:30:00 PM |
SB 141 |
| SB 141 Sectional Analysis.pdf |
SSTA 2/13/2018 3:30:00 PM |
SB 141 |
| SB 141 Biennial Budget Presentation.pdf |
SSTA 2/13/2018 3:30:00 PM |
SB 141 |
| SB 141 Support Ohio OMB Biennial Budget Letter 02012018.pdf |
SSTA 2/13/2018 3:30:00 PM |
SB 141 |
| SB 141 Fiscal Note.pdf |
SSTA 2/13/2018 3:30:00 PM |
SB 141 |
| SB 141 NCSL April 2011.pdf |
SSTA 2/13/2018 3:30:00 PM |
SB 141 |