05/09/2003 02:00 PM Senate JUD

         SJR  3-CONST AM: APPROPRIATION/SPENDING LIMIT                                                                      
                                                                                                                                
CHAIR SEEKINS announced SJR 3 to be up for consideration.                                                                       
                                                                                                                                
SENATOR DYSON, sponsor of SJR 3,  said he served six years on the                                                               
Anchorage  Assembly and  saw  a  tax cap  limit  there work  very                                                               
effectively.  It  allowed  the  tax revenues  to  expand  as  the                                                               
population  and  CPI  expanded and  allowed  for  voter  approved                                                               
projects. The  bill before  them doesn't  limit taxes;  it limits                                                               
spending. It limits  it to something like the same  sort of thing                                                               
-  the  growth, inflation  and  the  things  that are  outside  a                                                               
general fund budget.                                                                                                            
                                                                                                                                
He   received   a   proposed  committee   substitute   from   the                                                               
administration, version  D, that  significantly expands  the list                                                               
of items that  are not under the cap, but  he wants the committee                                                               
to  confine  itself  to  discussing   the  appropriateness  of  a                                                               
constitutional cap  and then send  it on  to Finance to  hash out                                                               
the items.                                                                                                                      
                                                                                                                                
CHAIR  SEEKINS said  he finds  that  there are  16 other  states,                                                               
including    Alaska,   that    already   have    an   ineffectual                                                               
constitutional spending limit.                                                                                                  
                                                                                                                                
SENATOR  OGAN said  one  loophole to  get around  a  vote of  the                                                               
people is  through lease purchase options,  which the Legislature                                                               
did  previously with  courthouses. He  thinks there  should be  a                                                               
definition of  a lease purchase,  although he isn't sure  this is                                                               
where it should be.                                                                                                             
                                                                                                                                
He is also  concerned that the four percent per  year is a little                                                               
high and  wants some  spreadsheets on what  that would  amount to                                                               
every year.                                                                                                                     
                                                                                                                                
SENATOR  DYSON  said the  D  version  outlines (instead  of  four                                                               
percent) an average of the  CPI and population growth, which ends                                                               
up  being,  with a  2.5  percent  population  growth and  a  four                                                               
percent CPI, an expansion of 3.25 percent.                                                                                      
                                                                                                                                
SENATOR  FRENCH asked  what effect  it  would have  had on  state                                                               
spending  if this  had been  in place  at the  time of  the state                                                               
constitution.                                                                                                                   
                                                                                                                                
CHAIR  SEEKINS said  he is  concerned  about what  they could  do                                                               
constitutionally.                                                                                                               
                                                                                                                                
SENATOR DYSON argued  that we have had  a constitutional spending                                                               
limit in place since 1981 and  it hasn't been challenged, but the                                                               
question  is whether  it's appropriate.  His  preference is  that                                                               
they  pass something  like  the  A version  and  let the  Finance                                                               
Committee deal with suggestions from  the administration in the D                                                               
version.                                                                                                                        
                                                                                                                                
SENATOR OGAN said he doesn't  see language that repeals the other                                                               
constitutional spending limit, which hasn't been challenged.                                                                    
                                                                                                                                
SENATOR FRENCH pointed out that it's in the A version.                                                                          
                                                                                                                                
SENATOR  OGAN said  the existing  spending limit  is ignored.  He                                                               
wonders whether  future Legislatures will  ignore it, if  this is                                                               
put into law.                                                                                                                   
                                                                                                                                
CHAIR SEEKINS said he would hold the bill for further                                                                           
information and discussion. There being no further business to                                                                  
come before the committee, he adjourned the meeting at 3:20 p.m.