Legislature(1995 - 1996)
02/08/1996 03:30 PM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT HOUSE AND SENATE STATE AFFAIRS COMMITTEE
February 8, 1996
3:30 p.m.
SENATE MEMBERS PRESENT
Senator Bert Sharp, Chair
Senator Randy Phillips, Vice Chair
Senator Jim Duncan
Senator Loren Leman
Senator Dave Donley
HOUSE MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Ed Willis
HOUSE MEMBERS ABSENT
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Caren Robinson
COMMITTEE CALENDAR
The final report to the Alaska State Legislature of the State of
Alaska Long-Range Financial Planning Commission (October, 1995) and
related legislation:
SENATE CONCURRENT RESOLUTION NO. 23
Relating to long range financial planning.
SENATE JOINT RESOLUTION NO. 33
Proposing amendments to the Constitution of the State of Alaska
relating to the budget reserve fund.
SENATE JOINT RESOLUTION NO. 34
Proposing an amendment to the Constitution of the State of Alaska
relating to the permanent fund.
SENATE BILL NO. 233
"An Act relating to municipal property tax exemptions for certain
residences and to property tax equivalency payments for certain
residents; and providing for an effective date."
SENATE BILL NO. 234
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
SENATE BILL NO. 235
"An Act relating to excise taxes on alcoholic beverages; and
providing for an effective date."
SENATE BILL NO. 236
"An Act relating to the tax on transfers or consumption of motor
fuel, and repealing the exemption from that tax for motor fuel
which is at least 10 percent alcohol by volume; and providing for
an effective date."
SENATE BILL NO. 237
"An Act relating to motor vehicle registration fees; and providing
for an effective date."
SENATE BILL NO. 210
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
PREVIOUS SENATE ACTION
No previous senate committee action.
WITNESS REGISTER
Brian Rogers, Chairperson
State of Alaska Long-Range Financial Planning Commission
P.O. Box 80690, Fairbanks, AK 99708¶(907) 258-8165
POSITION STATEMENT: Presented overview of the Long-Range
Financial Planning Commission.
Judy Brady, Vice Chairperson
State of Alaska Long-Range Financial Planning Commission
121 West Fireweed Lane, Anchorage, AK 99503¶(907) 258-8165
POSITION STATEMENT: Presented overview of the Long-Range
Financial Planning Commission.
ACTION NARRATIVE
TAPE 96-12, SIDE A
Number 001
CHAIRMAN SHARP called the joint meeting of the House and Senate
State Affairs Committees to order at 3:30 p.m. Members present at
the call to order were Senators Sharp, Phillips, Leman and Duncan,
and Representatives James and Willis. Members absent at the call
to order were Senator Donley, and Representatives Green, Ivan,
Porter, Ogan, and Robinson. Chairman Sharp announced that there
was another meeting in progress, and the other Representatives and
Senators would join the presentation later.
CHAIRMAN SHARP introduced Brian Rogers, Chair, State of Alaska
Long-Range Financial Planning Commission, to the joint committee
members. He announced that Mr. Rogers would present an overview to
the legislature of the Long-Range Financial Planning Commission's
plan.
Number 030
BRIAN ROGERS, Chair, State of Alaska Long-Range Financial Planning
Commission, said he would begin by discussing the overall plan of
the Commission; Judy Brady, Vice Chair, would present a follow-up,
sharing observations regarding the process and the plan. He said
he would then discuss specific legislation and address any
questions.
MR. ROGERS said the Long-Range Financial Planning Commission was
established by the legislature and the Governor in March of 1995.
It was comprised of five members appointed by the Governor, five
members appointed by the Speaker of the House of Representatives
and, five members appointed by the President of the Senate. He
said one-half of the Commission members were Democrats, one-half
Republicans, and one Independent.
MR. ROGERS explained the job of the Commission was to examine the
size of the fiscal gap; look for budget reductions and revenue
increases; examine the state's budget process; consider the impacts
of any changes on local governments; and to hear from the public
about the choices Alaskans faced.
MR. ROGERS presented a slide show demonstration to document his
review of the fiscal gap.
MR. ROGERS asked, "How big is the fiscal gap?" He stated the gap
was $429 million for the current fiscal year (FY96). When the
report was completed, however, the fiscal gap was $524 million.
The presentation included the current revenue projections, however.
He further said the $429 million was almost as much as all the
general fund salaries and benefits paid to all state agency
employees. It was almost as much as the whole Permanent Fund
dividend program, and equaled nearly two-thirds of the entire K-12
public school funding program.
MR. ROGERS said the Commission started by building a "base case."
The base case included no changes to revenues currently collected,
such as the fee schedule and the tax regime, and no changes to the
current programs. Inflation was also taken out. The base case
showed revenue dropped over the ten year period while expenditures
increased. He alleged this was not a projection, but rather an
illustration of the population growth impact based on the public
school foundation formula. He further said the goal was to start
from the base case and bring the revenues and expenditures into
balance.
Number 100
MR. ROGERS wondered if the state was crying wolf. He cited in
1989, ISER predicted a gap starting in FY89, and a crash by FY92.
Mr. Rogers stated several reasons why the state had not experienced
the crash yet: For example, the price of oil increased in FY90 and
FY91 due to the Gulf War which provided higher revenues than
forecasted. Furthermore, the budget was cut more than ISER
predicted, and the oil settlements were more significant than
predicted.
MR. ROGERS referred the joint committee members to a graph
comparing the budget history of ISER and the actual prediction
using 1996 dollars. The graph illustrated higher spending for two
years, the same spending for two years, and significant budget cuts
for the last two years.
MR. ROGERS referred the joint committee members to a graph
comparing the price of oil comparing ISER, the actual, and the DOR
mid-case. The graph, he said, did not account for inflation. The
graph illustrated the actual price of oil increased in 1990 and
1991, and the DOR predictions were below what ISER predicted in
1989.
MR. ROGERS referred the joint committee members to a graph
comparing oil production of ISER, the actual, and the DOR mid-case.
The ISER and actual were relatively the same while the actual
dropped a little below. The mid-case showed a higher anticipated
production level. Mr Rogers alleged the crash would not be as bad
because of higher oil production. However, based on the previous
graph illustrating the lower price of oil, the two cancelled each
other out.
MR. ROGERS referred the committee members to a graph of cumulative
settlement amounts comparing ISER, the actual, and the DOR
projection. He stated the graph was based on the settlements from
the last Administration. The projection from DOR was higher than
what the actual and ISER predicted creating a cushion. This he
cited was why the state did not crash land. The DOR projected $5
billion in settlements while ISER predicted $2 billion.
The record reflected the presence of Senator Donley.
MR. ROGERS explained the plan recommended by the Commission. He
said the plan created a new philosophy for state revenues trying to
replace the declining oil revenues with the Permanent Fund income;
enhanced the ability to save for future generations; imposed
spending discipline on the state; defined a role for the Permanent
Fund; cleared up some of the confusion over cash reserves;
suggested embarking upon structural changes in state government;
and involved the public in the decision making process through two
constitutional amendments.
MR. ROGERS further explained the plan cut spending; increased
revenues; established the Permanent Fund as an endowment; and
capped the Permanent Fund dividend pool.
MR. ROGERS said budget cuts were recommended the first three years
of $100 million in nominal dollars. The Commission recommended $40
million in 1996, $30 million in 1997 and $30 million in 1998 which
would reduce the general fund spending from $2,476 billion to
$2,376 billion. He said this was equivalent to a $300 million
reduction in today's dollars, or a 5 percent per year reduction in
existing services. He further said it took $100 million in nominal
cuts and required absorbing $200 million in inflation. The real
reductions, he asserted, would come through legislation.
Number 195
MR. ROGERS explained the Commission's spending side
recommendations. The Commission suggested a retirement incentive
program coupled with a Tier III retirement plan, to reduce
retirement benefits for new employees; new geographic pay
differentials; and a salary and benefits study. The Commission
further recommended consolidating administrative support functions;
reducing growth in formula programs such as the education, health
and social services correction budget; reviewing and combining
plans and where possible considering self-insurance; and repealing
the court challenged longevity bonus phase-out plan, if rejected.
The Commission further suggested repealing senior citizens' tax
exemption as mandatory and replacing it with a local option;
shifting inspection functions to local governments; eliminating
state funding of troopers for road patrols in communities with
population of 2,500 or more; and transferring maintenance of Class
III roads. He stated, if the local populous did not want to pay
for the service, the state should not automatically have to pick-up
the bill. Finally, the Commission recommended reviewing
opportunities for privatization and contracting out; and
considering out-sourcing and in-sourcing to allow state employee
groups to bid against the private sector. He said the state had a
talented work force that was prohibited from existing rules and it
needed the opportunity to do it better.
Number 280
MR. ROGERS referred the joint committee members to an expenditure
comparison graph for the next ten years comparing the base case and
the endowment plan. The graph illustrated the base case grew due
to population growth, and the endowment plan decreased the first
four years then remained level for the next six years.
MR. ROGERS referred the joint committee members to a per capita
state spending graph comparing the general fund operations and the
total general fund and dividends. The graph illustrated the
general fund operations and the total general fund and dividends
gradually decreased over a four year period.
MR. ROGERS explained the Commission looked at new taxes and user
fees totalling over $150 million for the next two years. The
Commission suggested a dramatic increase in tobacco and alcohol
taxes of $1 per pack for cigarettes and 10 cents per drink for
alcohol. He stated the tobacco tax was popular in the state of
Alaska. He cited a tobacco tax would raise about $40 million per
year and an alcohol tax would raise about $20 million per year.
The Commission further cited increasing the marine motor fuel tax
from 5 to 8 cents per gallon; doubling motor vehicle license fees;
eliminating the exemption for motor vehicle fees; increasing the
highway motor fuel tax from 8 cents to 22 cents per gallon;
increasing user fees; establishing tourism industry taxes; and
increasing fishery and other resource taxes.
Number 318
MR. ROGERS addressed a "mid-course correction" in 1998 and 1999.
The correction established a follow-up commission to assess the
progress in 1998 and 1999. Furthermore, a new commission would
recommend the next step whether it was more budget cuts, more
revenue increases, more use of Permanent Fund income, or greater
Permanent Fund dividend reductions, for example. The current
Commission recommended to reinstated the individual income tax. In
today's dollars this equated to $200 million. He further cited
each 1 percent of taxes raised about $75 million per year, of
which, nonresidents would pay about 11 percent. This could be
manipulated so that nonresidents paid more than residents by
including property tax credit, for example.
Number 409
MR. ROGERS stated the Permanent Fund was the cornerstone of
Alaska's fiscal future. The Commission suggested establishing the
Permanent Fund as an endowment by setting payout rates of 4 percent
of the average market value for the preceding five years. He
explained, 4 percent was common for funds across the country to
preserve the purchasing power by making large inflation-proofing
deposits in years with good returns and smaller inflation-proofing
deposits in year with bad returns. The purpose was to make a
greater portion of the state's budget a predictable revenue source.
MR. ROGERS stated the endowment plan insured growth of the
Permanent Fund by raising the dedicated percentage of royalties and
bonuses from 25 percent to 50 percent of all fields. The state
constitution required at least 25 percent, and the legislature
required at least 50 percent. He cited the effect was $250 million
of volatile revenues taken from the annual stream and placed into
the Permanent Fund. He further cited the Commission recommended
depositing the entire Permanent Fund Earnings Reserve, and all
amounts in excess of $1.5 billion from the Constitutional Budget
Reserve on an annual basis into the fund. The intention was to
have the money available in the event there was a decline of oil
revenues.
MR. ROGERS reiterated the Commission wanted to replace oil revenue
with income from the Permanent Fund at a 4 percent rate. He
referred the joint committee members to a graph illustrating the
oil revenue and permanent fund income for the next 15 years. When
the use of the permanent fund income was added, the graph in
today's dollars illustrated the state came close to stabilizing,
but there were many unknowns in the later years such as ANWR
creating a shift.
MR. ROGERS explained the Commission recommended stepping down the
dividend payment for the Permanent Fund by $50 million for the next
three years to approximately $990 in 1995, $900 in 1996, $800 in
1997 and $700 in 1998. The current FY96 payment was $565 million.
MR. ROGERS referred the joint committee members to a graph
comparing total expenditures of the current programs and the
Permanent Fund dividend. The graph illustrated a decrease in
expenditures over the next four years then stabilizing.
MR. ROGERS referred the joint committee members to a revenue
sources graph comparing the existing general fund revenues and the
existing Permanent Fund earnings. He said, the 4 percent endowment
earnings contributed the most significantly. The highway motor
fuel tax contributed a smaller amount. The marine motor fuel tax
added a negligible amount compared to the total amount. The
tobacco tax added somewhat. The motor vehicle and user fees,
fishery, resource, tourism and alcohol taxes were a small
proportion of the total. He said other than using the Permanent
Fund earnings, the income tax proposal was the most significant.
MR. ROGERS referred the joint committee members to a graph of the
endowment plan illustrating the close of the fiscal gap comparing
revenues and expenditures. A deficit would exist for the next
three fiscal years balancing in FY00 followed by a surplus for a
few years which would go to the Constitutional Budget Reserve Fund
(CBRF).
MR. ROGERS referred the joint committee members to a graph of the
Permanent Fund principal comparing the base case and the endowment
plan. The Permanent Fund illustrated more significant growth under
the endowment plan. The chart, however, did not reflect the recent
book value which changed the numbers the first two years.
MR. ROGERS stated, in conclusion, the plan made the Permanent Fund
the cornerstone of Alaska's fiscal future; closed the fiscal gap by
the year 2000; ensured growth of the Permanent Fund to offset
declining oil and gas revenues; stabilized and diversified the
state's revenues; controlled state general fund spending; and
maintained a reserve to dampen the effect of oil price swings.
MR. ROGERS cited 22 percent of the gap was closed through program
cuts, 14 percent by taking money from the Constitutional Budget
Reserve Fund, 32 percent by using the Permanent Fund earnings, 13
percent by reducing Permanent Fund dividends, 3 percent by using
user fees, and 15 percent by increasing taxes. Mr. Rogers said,
the numbers, however, changed after the year 2000. He cited the
program cuts stayed the same at 21 percent; new taxes increased
from 15 percent to 22 percent; the Constitutional Budget Reserve
Fund dropped from 14 percent to 3 percent; and the Permanent Fund
Earnings increased by 5 percent.
MR. ROGERS rhetorically asked what would happen if nothing was done
and the spending and revenues continued at the current rate. He
alleged the money would run out in the Constitutional Budget
Reserve Fund by Halloween in the year 2000. The state would be
about $700 million to $800 million in deficit and faced with
cutting programs, increasing taxes, cutting the dividend, or using
Permanent Fund Earnings, for example.
Number 433
MR. ROGERS stated the Commission's job was not to develop the most
popular plan. He said the current plan was not the preferred plan
for any of the 15 Commission members. However, for 11 out of the
15, it was the plan most members could live with. In conclusion,
he urged the legislators to use the plan as a starting point. He
stated there were several pieces to build from and cited the target
balance year, the comparison of plans, and the current fiscal year
target. Mr. Rogers said if the legislature worked on the above
three pieces, the goals of the Commission would be met.
MR. ROGERS introduced Judy Brady, Vice Chair, State of Alaska Long-
Range Financial Planning Commission.
Number 465
CHAIRMAN SHARP announced the teleconference sites today were:
Glennallen, Kenai, Anchorage and Fairbanks.
Number 467
JUDY BRADY, Vice Chair, State of Alaska Long-Range Financial
Planning Commission, shared with the committee members three
observations made as the Commission struggled with a plan. She
cited the first frustration regarded the budget figures. It took
about one-half of the time together to agree on a base case. Ms.
Brady cited the discussion included questions such as what would be
used for inflation; what would be used for population; what was a
real cut; what was smoke and mirrors; what really influenced the
fiscal gap and what did not; and how should the Commission treat
the Permanent Fund and the reserves. She stated, for closure, the
Commission needed to agree on the base case and the budget figures.
MS. BRADY stated the second frustration was how to weigh the
consequences. She cited everyone wanted to solve the problems with
the least amount of harm. She wondered if $100 million taken off
the table meant the same in terms of consequences if the Permanent
Fund was taxed or if $100 million was cut over a three year period.
She questioned what it meant to the people of Alaska; the rural
versus urban communities; and the wage earner versus the non-wage
earner. Ms. Brady said there were a variety of opinions among the
Commission members regarding the consequences. She also stated the
Commission members realized through the process they did not know
as much about Alaska as believed in the beginning. She asserted
many communities did not know how dependent they were on state
spending. She reiterated that to resolve the issues a plan was
needed to agree on the principles of the consequences, and the
information gaps needed to be filled-in to reach decisions.
MS. BRADY stated the third frustration for the Commission was the
complexity. She asserted the Commission was trying to prevent a
recession before it happened. The Commission did not agree on any
isolated piece of the solution such as an income tax. The
Commission's discussions ended in deadlock because no one wanted to
be first to take the brunt of the solution for fear it would be the
only thing that would happen.
MS. BRADY reiterated the frustrations of the Commission were over
the budget figures, what was necessary to close the gap, how big
the gap would be over the next five years, the consequences, and
the complexity.
Number 528
MR. ROGERS referred the joint committee members to SCR 23. He said
the Commission did not have to follow the single-subject rule
which, he alleged, was a luxury. He stated SCR 23 expressed the
legislative sentiment regarding the financial plan that would give
the flexibility to make modifications to meet the constituency
needs and validate the legislative process. The resolution
suggested using the plan of the Commission as a starting point,
narrowing the fiscal gap to $387 million, reserving the right to
change the mix of spending reductions and revenue increases,
closing the fiscal gap by the year 2000, adopting to annually
balance state revenue with expenditures, adopting the
recommendation to report annually to the people, urging Alaskans to
learn about the fiscal situation, and urging the Twentieth Alaska
State Legislature to create and appoint a Long-Range Financial
Planning Commission successor. Mr. Rogers stated SCR 23 set a
broad framework for discussion and urged the legislators to adopt
or modify the plan to meet the legislative goals.
Number 564
CHAIRMAN SHARP thanked Mr. Rogers and Ms. Brady for their work. He
said the Commission was successful by including more Alaskans and
involving them in the process. He said there were difficulties but
the Commission offered options and recommendations. He asked Mr.
Rogers which bills he would like to discuss today.
Number 574
MR. ROGERS replied there were other substantive legislation such as
the Tier III retirement program, the retirement incentive program,
and the salary and benefit survey. He said the legislature did not
give the Commission enough time to complete their job - May 1 to
October 1 - therefore the Commission did not flush-out the complete
legislative package.
Number 580
REPRESENTATIVE JAMES said the Commission behaved marvelously for
the huge challenge that was before them, given the short length of
time. She stated the plan had a lot of merit. However, the
consequences of the plan distressed her because of the various
sector responses. From her perspective, she asserted, the plan was
very serious. Representative James thanked Mr. Rogers for his
efforts and appreciated his concerns for the legislators having
served in the legislature himself. She stated when all was said
and done he would be able to see his fingerprints.
TAPE 96-12, SIDE B
Number 999
MR. ROGERS said the Commission recognized passing legislation took
a lot of time and work. It was harder to work with 60 people than
15 people. He cited the goals of the Commission would be met if
the legislature would be able to meet some budget targets by the
end of the session. It would be good for Alaska as well as the
bond market and business climate. He further stated economic
development was not included as a recommendation because it was
discovered it generally did not pay its own way. He said economic
development required more services creating a larger gap. He
stated that it was a very perverse situation and most other states
had a form of taxation so that economic development yielded enough
to cover the state expenditures. The current situation, he
alleged, created a disincentive.
Number 981
REPRESENTATIVE JAMES responded she agreed with Mr. Rogers that
economic development by itself could not help the state treasury.
However, economic development went hand-in-hand with an income tax
to develop the infrastructure needed. She stated it must not be
left out of the formula otherwise there would be a worse problem
with a declining population and more and more people needing
government services because they could not find work.
MR. ROGERS said the Commission agreed with Representative James.
REPRESENTATIVE JAMES replied she was glad Mr. Rogers broached the
subject. however, she was disappointed to not see economic
development included in the plan, but she understood it was
difficult to address.
MR. ROGERS responded there was the possibility of pairing economic
development discussions with a broad based tax, but there was not
enough time. He said certain economic development paid its own
way, and recommended looking at balancing that.
Number 966
SENATOR RANDY PHILLIPS announced in about one week he would be
forwarding to Mr. Rogers the views of his district regarding the
plan, and suggested he take a good hard look at it because it would
be interesting.
Number 963
MR. ROGERS reiterated the goal of the Commission was to not find
the most politically popular set of recommendations, but rather to
recommend a balanced plan that would get the most votes. He said
he would be very interested to see how the constituents would
replace the pieces they did not like.
SENATOR RANDY PHILLIPS said he would mail it to all the members
next week.
Number 960
SENATOR LEMAN said he appreciated the work of the Commission and
the information presented. He cited the reduction recommendations
were fairly modest, and the plan lacked specific reductions in
other areas of the formula programs which were a big part of
government cost. He stated this legislature was unable to address
significant budget reductions in the education; and Health,
Education and Social Services (HESS) budget, for example. He
commented there were ways to do it, and wondered if the Commission
spend time addressing formula programs.
Number 946
MR. ROGERS responded the Commission looked at the formula programs
and spent a good deal of time on the public school foundation
formula. At the same time, however, there was another task force
working on the formula so it was set aside. Similarly, in the
welfare reform area, the Governor and the legislature were close to
passing legislation this year and recognized the difficulties. He
said there would be harm done to some areas of the budget if it was
looked at from the status quo, but if it was looked at in fairness,
harm took on a different meaning. He cited there was a wide
variety of opinions expressed to the Commission regarding the
Permanent Fund Dividend Program. Some Alaskans thought it was
absurd the state gave money to every resident when it was short of
cash, and some Alaskans believed it was a sacred right. Similarly,
some Commission members saw cutting the dividend as taking money
away from Alaskans, while others saw it as money yet to be given,
therefore, not taken away. He said the universal entitlement
programs were the hardest to address in any state government, and
the dividend program was a universal entitlement.
Number 916
SENATOR DUNCAN appreciated the work the Commission had done to
produce a good foundation to resolve the fiscal problems in Alaska.
He stated it took a multi-faceted approach. He cited it was
commonly heard from the public to solve the fiscal crisis by
cutting spending only when, clearly as the Commission recognized,
a reduction in spending alone would not close the fiscal gap. He
further stated he appreciated the approach of responsible
reductions, the need to stabilize revenues, and the need to look at
the Permanent Fund as the final element of any plan to close the
fiscal gap. On the other hand, he was concerned about some of the
recommendations. He asserted he was not criticizing the Long-Range
Financial Planning Commission and if any body should be criticized
it should be the legislature because it did not give the Commission
enough time and money. He said he was afraid the suggestions made
might lead the public to believe this was an easy task when it was
not. He cited the education formula program. He was not sure how
to decrease the education budget when the population was
increasing. The growth was natural, he stated. The inefficiencies
needed to be reduced, but not the growth for proper education. He
also cited the correctional system. There was an increasing
population and tougher crime laws that required more spending. He
cautioned the public that talking about reducing government
spending and actually doing it were two different things. He said
he was not convinced a great reduction was possible in the overall
growth and education funding or the correction program. He further
cited the Tier III retirement program might not be in the best
interest of Alaska as it tried to attract and retain quality school
teachers and state employees. He further said the revenue base
needed to be stabilized and suggested looking at the income tax
over a consumer tax because it captured lost income. He cited
approximately $900 million in salaries went outside Alaska. He
said there were other alternatives to the Permanent Fund and
thanked the Commission for considering them. In conclusion, he
stated, the Commission did a good job, but he disagreed with some
of the specifics. He asked Mr. Rogers why the nonresident income
tax was deferred to the year 2002, and to respond in general to his
allegation the cuts were not as easy as the plan implied.
Number 861
MR. ROGERS responded the Commission discussed the target amount to
cut, and the affects of inflation. The majority of the Commission
members believed reaching $100 million over three years was a real
challenge because of the $200 million worth of inflation. There
were also unfunded needs that needed to be addressed during the
period, such as the maintenance of roads, harbors, airports, and
highways. He said the state's infrastructure was declining in
value because it was not being maintained. He also cited the
federal government's budget problems and wondered if more financial
responsibilities would be shifted to the states. The Commission
did not leave room to accommodate those issues, it just said to set
the target level. He reiterated it would be a very difficult task.
The legislature cut the budget in the past two years, and the
Commission was asking for even greater cuts. He said it was
assumed the legislature made the easier cuts before the harder
ones.
MR. ROGERS said the Commission projected the growth in the school
and corrections areas. The Commission did not expect the programs
to stop growing, but that the rate of increase would slow down
which required changing elements of the formula. The majority of
the Commission members felt that the income tax would not be
supported until the budget cut targets were reached. Some felt the
tobacco tax, for example, had more wide-spread support and the
Commission members had to give up something to put together a plan.
Number 814
CHAIRMAN SHARP said a moving five year plan was realistic because
it allowed gradual implementations and measurements. The
measurements would determine the effects of the implementations
that could change the plan the following year.
Number 802
MR. ROGERS wished the legislators good luck and hoped an agreement
could be reached between the House, Senate and Governor. The vast
majority of Alaskans believed closing the fiscal gap was a top
priority for this legislature.
Number 798
CHAIRMAN SHARP again thanked Mr. Rogers and Ms. Brady for their
efforts these past six months. The plan provided a lot of tools
and everyone would put a lot of effort forward to see what could be
put together. Thank you again.
ADJOURNMENT
CHAIRMAN SHARP recessed the Senate State Affairs Committee meeting
and adjourned the Joint House and Senate State Affairs Committee
meeting at 4:45 p.m.
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