Legislature(2023 - 2024)BUTROVICH 205
04/15/2024 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SB20|| SJR4 | |
| SB165 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 20 | TELECONFERENCED | |
| += | SJR 4 | TELECONFERENCED | |
| += | SB 165 | TELECONFERENCED | |
SB 20-APPROPRIATION LIMIT; GOV BUDGET
and
SJR 4-CONST. AM: APPROP LIMIT
1:35:21 PM
CHAIR CLAMAN announced the consideration of SPONSOR SUBSTITUTE
FOR SENATE BILL NO. 20 "An Act relating to an appropriation
limit; relating to the budget responsibilities of the governor;
and providing for an effective date."
and
CHAIR CLAMAN announced the consideration of SPONSOR SUBSTITUTE
FOR SENATE JOINT RESOLUTION NO. 4 Proposing amendments to the
Constitution of the State of Alaska relating to an appropriation
limit.
This is the fourth hearing of SB 20 and SJR 4 in the Senate
Judiciary Committee. CSSSSB 20, version \S, and CSSSSJR 4,
version \U, are before the committee. The intention is to hear
amendments today.
1:35:58 PM
CHAIR CLAMAN moved to adopt Amendment 1, work order 33-
LS0206\S.1, to SB 20.
33-LS0206\S.1
Marx
4/11/24
A M E N D M E N T 1
OFFERED IN THE SENATE
TO: CSSSSB 20(JUD), Draft Version "S"
Page 2, lines 3 - 9:
Delete "12 percent of the average of the value of
the real gross domestic product of the state as
estimated by the federal bureau responsible for
economic analysis according to federal law, expressed
in current dollars, for the five calendar years
immediately preceding the previous fiscal year
[APPROPRIATIONS MADE IN THE PRECEDING FISCAL YEAR BY
MORE THAN FIVE PERCENT PLUS THE CHANGE IN POPULATION
AND INFLATION SINCE THE BEGINNING OF THE PRECEDING
FISCAL YEAR]"
Insert "the average of the appropriations made for
[IN] the preceding five fiscal years, except for
appropriations of money received from a nonstate
source in trust for a specific purpose, plus [YEAR BY
MORE THAN] five percent, plus the change in population
and inflation since the beginning of the preceding
five fiscal years [YEAR]"
Page 2, lines 12 - 19:
Delete "[THE DETERMINATION OF THE CHANGE IN
POPULATION FOR PURPOSES OF THIS SUBSECTION SHALL BE
BASED ON AN ANNUAL ESTIMATE OF POPULATION BY THE
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT. THE
DETERMINATION OF THE CHANGE IN INFLATION FOR PURPOSES
OF THIS SUBSECTION SHALL BE BASED ON THE CONSUMER
PRICE INDEX FOR ALL URBAN CONSUMERS FOR ANCHORAGE
PREPARED BY THE UNITED STATES BUREAU OF LABOR
STATISTICS.]"
Insert "The determination of the change in
population for purposes of this subsection shall be
based on an annual estimate of population by the
Department of Labor and Workforce Development. The
determination of the change in inflation for purposes
of this subsection shall be based on the Consumer
Price Index for all urban consumers for Anchorage
prepared by the United States Bureau of Labor
Statistics."
Page 3, lines 6 - 9:
Delete "a percentage of the average of the value
of the real gross domestic product of the state as
estimated by the federal bureau responsible for
economic analysis according to federal law, expressed
in current dollars, for the five calendar years
immediately preceding the previous fiscal year"
Insert "the average of the appropriations made for
the preceding five fiscal years plus five percent,
plus the change, derived from federal indices as
prescribed by law, in population and inflation since
the beginning of the preceding five fiscal years"
1:36:00 PM
CHAIR CLAMAN objected for purposes of discussion.
CHAIR CLAMAN said that the goal of Amendment 1 is to replace
Gross Domestic Product (GDP) (as a tool for analysis) with an
average of appropriations over the last five years from non-
state sources (excluding federal monies), adjusted for
population and inflation plus five percent. He stated that this
number would becoming the new spending cap. He explained that
this would theoretically increase over time (adjusting alongside
state spending) and, while capped, would provide some
flexibility for additional spending as needed. He indicated that
this would be better than a number that may become antiquated
over time.
1:37:12 PM
SENATOR KAUFMAN asked if past modeling was considered. He said
that in the previous legislature, this model was considered
alongside various others during presentations to the House
Special Committee on Ways and Means. He recalled committee
members' surprise at the superior performance of the GDP-based
cap. He explained that the GDP-based cap was more organic,
rather than a hard line reacting to inflation (which the state
has no control over). Removing this linkage resulted in
problematic behavior.
1:38:17 PM
CHAIR CLAMAN asked for clarification that the GPD-based cap
responded better to market conditions than simply adjusting for
inflation.
1:38:44 PM
SENATOR KAUFMAN clarified that modeling done previously (which
is available on his website), shows the organic nature of the
curves, which ebb and flow with the economy. There is no
ratcheting effect (which is associated with adjusting for
inflation). He briefly described how inflation-based models
function and opined that these tend to be used due to a lack of
adequate state-by-state GDP measurements. However, these
measurements are now reliably available. He explained that the
GDP-based model has repeatedly behaved more realistically than
inflation/population-based models. He reiterated that the state
cannot influence inflation - and said that the beneficial
linkage is broken when utilizing those models.
1:40:31 PM
SENATOR TOBIN asked what states offer a spending cap - and, of
these, which states have GDP-based cap.
1:41:32 PM
SENATOR KAUFMAN replied that he does not have a state-by-state
accounting and deferred to Mr. Harvey. He said that states use a
variety of measurements, including personal income (which has
been discussed as a potential for Alaska). He opined that there
is no GDP productivity measurement because the information was
not previously aggregated. He added that GDP provides a more
realistic and encompassing measurement than other options.
1:42:54 PM
MATTHEW HARVEY, Staff, Senator James Kaufman, Alaska State
Legislature, Juneau, Alaska, said that Colorado has a personal
income-based "tax and expenditure limit" (i.e. spending cap). He
said that this cap was created before the federally driven,
nation-wide improvements on data collection, aggregation, and
reporting that made it possible to use GDP as a metric. He
briefly described how variables are "stacked" to reach GDP.
1:44:19 PM
CHAIR CLAMAN opined that that Anchorage's municipal tax cap is
more akin to a revenue cap than a spending cap. He explained
that Anchorage's cap is based on the previous year's budget and
adjusted upward or downward based on shifts in inflation and
population. He said that this was used as a model for Amendment
1 and added that he likes the idea of tying spending to revenue.
He opined that using an average from the previous 5 years would
provide more balance than simply using the previous year's
budget. He reiterated that the 5-year average would be adjusted
for population and inflation, plus five percent. This would
provide room for increased spending while remaining realistic to
the limits. He opined that each method has limitations that will
become clear over time.
1:46:53 PM
SENATOR KAUFMAN expressed appreciation for this perspective
alongside several concerns. He said that not referencing the
economy is a lost opportunity, as it serves as a reminder to the
legislature when determining the state's budget. This allows for
the consideration of the productive economy's ability to fund
the state's needs. He acknowledged that this is supplemented by
federal monies that are subject to their own sourcing
limitations.
1:47:38 PM
SENATOR KIEHL joined the meeting.
1:47:39 PM
SENATOR KAUFMAN reiterated that inflation is out of the state's
control, while the productive economy provides an opportunity
for change as needed. In addition, the structure of the
Anchorage tax cap can create a ratchet effect. He briefly
described how this occurred with the Covid-19 pandemic. He
contrasted the rigidity of inflation-based measurements with the
fluidity of GDP-based measurements.
1:49:28 PM
SENATOR TOBIN commented that this is expanding beyond her area
of expertise. She turned her attention to public schools, which
are heavily dependent on state funds, and which have unique
needs related to the Alaska's geographical size and population
distribution. She expressed concern that a spending cap tied to
GDP may result in reduced education spending in years when state
spending is limited. She emphasized the need for school
buildings to remain open and noted that inflation may result in
higher funding needs. She offered the example of teacher
incentives, which would be severely impacted by tying the
spending cap to GDP. She reiterated that education funding is
directly impacted by state spending. She expressed concern that
drastically reducing state spending may likewise reduce the
state's ability to provide high-quality public education - thus
reducing Alaska's population retention rate. A reduction in
population would then further reduce state spending - creating a
negative feedback loop.
1:52:17 PM
SENATOR KAUFMAN replied that a GDP-based cap would provide
funding reliability, which he opined is the biggest threat to
education in Alaska. He described the current, reactive method
of budget planning and contrasted this with a method that would
operate with a comfortable percentage and prevent "peak
spending" - instead rolling savings forward for use when needed.
He argued that choosing a comfortable percentage would avoid the
spending constriction described in the education funding
example. He explained that the GDP-based measurement modeling
used various percentages designed to take the excess during a
boom year and that it would respond to shifts instead of
remaining fixed. He commented that the current budgeting method
uses the best year to estimate spending, which often leads to
shortfalls. He opined that reactive budgeting is largely
responsible for limiting the state's workforce development. He
explained how rolling savings forward could be used to address
issues as they arise and prevent overspending - thus resulting
in greater reliability. He commented that it initially seems
counterintuitive and argued that spending control and financial
discipline would result in steady yearly spending.
1:56:33 PM
SENATOR KIEHL briefly commented on the absence of revenue tied
to GPD.
1:56:43 PM
CHAIR CLAMAN withdrew his objection to Amendment 1.
1:56:45 PM
SENATOR KAUFMAN objected to Amendment 1.
1:56:53 PM
CHAIR CLAMAN found objection and asked for a roll call vote.
1:56:56 PM
A roll call vote was taken. Senator Claman voted in favor of
Amendment 1 and Senators Kaufman, Kiehl, Tobin voted against it.
The vote was 1:3.
CHAIR CLAMAN announced that Amendment 1 failed on a vote of 1
yea and 3 nays.
1:57:39 PM
SENATOR KAUFMAN moved to adopt Amendment 2, work order 33-
LS0206\S.2, to SB 20.
33-LS0206\S.2
Marx
4/11/24
A M E N D M E N T 2
OFFERED IN THE SENATE
TO: CSSSSB 20(JUD), Draft Version "S"
Page 1, lines 5 - 6:
Delete "[APPROPRIATIONS TO THE PERMANENT FUND OR FOR
ALASKA PERMANENT FUND DIVIDENDS,]"
Insert "appropriations [TO THE PERMANENT FUND OR] for
the costs of managing the Alaska permanent fund
[DIVIDENDS],"
Page 3, line 10, following "(2)":
Insert "appropriations for the costs of managing
the Alaska permanent fund,"
1:57:41 PM
CHAIR CLAMAN objected for purposes of discussion.
1:57:47 PM
SENATOR KAUFMAN said that Amendment 2 addresses various
Permanent Fund clerical management concerns.
1:58:29 PM
SENATOR KIEHL asked if there is a comparable treatment for
investment management fees that the Alaska Retirement Management
(ARM) Board incurs - and whether they would receive the same
treatment as the Permanent Fund Corporation's investment
management fees. He opined that this is the laudable goal of
Amendment 2.
1:59:00 PM
SENATOR KAUFMAN deferred to Mr. Harvey.
1:59:06 PM
MR. HARVEY replied that there are currently no exemptions for
ARM investment management fees. He explained that Amendment 2
applies to investment management fees for a broader, public,
market-based investment corporation, in the event that the
markets are contracyclical to Alaska's performance.
1:59:51 PM
SENATOR KIEHL expressed his support for Amendment 2 and
encouraged the sponsor to consider including the ARM Board's
investment management fees in a future amendment.
2:00:04 PM
CHAIR CLAMAN withdrew his objection to Amendment 2. Finding no
further objection, Amendment 2 was adopted.
2:00:13 PM
CHAIR CLAMAN moved to adopt Amendment 3, work order 33-
LS0206\S.3, to SB 20.
33-LS0206\S.3
Marx
4/15/24
A M E N D M E N T 3
OFFERED IN THE SENATE
TO: CSSSSB 20(JUD), Draft Version "S"
Page 1, lines 5 - 6:
Delete "[APPROPRIATIONS TO THE PERMANENT FUND OR FOR
ALASKA PERMANENT FUND DIVIDENDS,]"
Insert "appropriations to the [PERMANENT FUND OR FOR]
Alaska permanent fund [DIVIDENDS],"
Page 3, line 10, following "(2)":
Insert "appropriations to the Alaska permanent fund,"
Page 3, line 15:
Delete "to the permanent fund and"
2:00:19 PM
CHAIR CLAMAN objected for purposes of discussion.
CHAIR CLAMAN said that Amendment 3 clarifies a previous question
related to whether appropriations to the Permanent Fund should
be excluded from the spending cap. He explained that Amendment 3
ensures that permanent fund dividends (PFD) are included within
the spending cap for the calculation, while appropriations made
to the Permanent Fund principal are excluded.
2:01:55 PM
CHAIR CLAMAN withdrew his objection to Amendment 3. Finding no
further objection, Amendment 3 was adopted.
2:02:03 PM
CHAIR CLAMAN brought up SJR 4 and moved to adopt Amendment 1,
work order 33-LS0205\U.1, to SJR 4.
33-LS0205\U.1
Marx
4/11/24
A M E N D M E N T 1
OFFERED IN THE SENATE
TO: CSSSSJR 4(JUD), Draft Version "U"
Page 1, line 14, through page 2, line 4:
Delete "a percentage of the average of the value
of the real gross domestic product of the State as
estimated by the federal bureau responsible for
economic analysis according to federal law, expressed
in current dollars, for the five calendar years
immediately preceding the prior fiscal year. The
percentage shall be established by law that is not a
law enacted as an appropriation bill or fifteen
percent, whichever is less."
Insert "the average of the appropriations made
for the preceding five fiscal years, except for
appropriations of money received from a non-State
source in trust for a specific purpose, plus five
percent, plus the change, derived from federal indices
as prescribed by law, in population and inflation
since the beginning of the preceding five fiscal
years."
2:02:17 PM
CHAIR CLAMAN objected for purposes of discussion, then withdrew
Amendment 1.
2:02:59 PM
SENATOR KAUFMAN moved to adopt Amendment 2, work order 33-
LS0205\U.2, to SJR 4.
33-LS0205\U.2
Marx
4/11/24
A M E N D M E N T 2
OFFERED IN THE SENATE
TO: CSSSSJR 4(JUD), Draft Version "U"
Page 1, lines 5 - 6:
Delete "[APPROPRIATIONS FOR ALASKA PERMANENT FUND
DIVIDENDS,]"
Insert "appropriations for the costs of managing
the Alaska permanent fund [DIVIDENDS],"
2:03:01 PM
CHAIR CLAMAN objected for purposes of discussion.
2:03:04 PM
SENATOR KAUFMAN said that Amendment 2 includes the same clerical
improvement as Amendment 2 to SB 20.
2:03:14 PM
CHAIR CLAMAN withdrew his objection. Finding no further
objection, Amendment 2 was adopted. He noted that the topic of
retirement fund investments could be taken up in the Senate
Finance Committee as it is the next committee of referral.
2:03:41 PM
SENATOR KIEHL moved to adopt Amendment 3, work order 33-
LS0205\U.3, to SJR 4.
33-LS0205\U.3
Marx
4/13/24
A M E N D M E N T 3
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: CSSSSJR 4(JUD), Draft Version "U"
Page 1, line 2:
Delete "and the budget reserve fund"
Page 2, line 30, through page 3, line 4:
Delete all material.
Renumber the following bill sections accordingly.
Page 3, line 7:
Delete "(a)"
Page 3, lines 11 - 13:
Delete all material.
2:03:43 PM
CHAIR CLAMAN objected for purposes of discussion.
2:03:46 PM
SENATOR KIEHL said that Amendment 3 relates to the cap on
withdrawals from the Constitutional Budget Reserve (CBR) in a
given year and how this impacts the minimum savings balance
required to manage steep decreases in resource-based revenue. He
pointed out that it is currently difficult to reach the
necessary savings balance. He emphasized the importance of
savings, as some aspects of the state's revenue picture are
particularly volatile. He questioned the value of including a
constitutional requirement to maintain adequate savings to fund
four years of resource collapse. He recommended simplification
by removing this limit.
2:05:04 PM
SENATOR KAUFMAN said that the intent is to stimulate, motivate,
healthy economic considerations - never to make savings
difficult. He said he does not have concerns about Amendment 3.
2:05:31 PM
CHAIR CLAMAN expressed support for the language that Amendment 3
removes.
2:05:40 PM
CHAIR CLAMAN maintained his objection to Amendment 3 and asked
for a roll call vote.
2:05:51 PM
A roll call vote was taken. Senators Kaufman, Kiehl, Tobin voted
in favor of Amendment 3 and Senator Claman voted against it. The
vote was 3:1.
CHAIR CLAMAN announced that Amendment 3 was adopted on a vote of
3 yeas and 1 nay.
2:06:20 PM
CHAIR CLAMAN moved to adopt Amendment 4, work order 33-
LS0205\U.4, to SJR 4.
33-LS0205\U.4
Marx
4/15/24
A M E N D M E N T 4
OFFERED IN THE SENATE
TO: CSSSSJR 4(JUD), Draft Version "U"
Page 1, lines 5 - 6:
Delete "[APPROPRIATIONS FOR ALASKA PERMANENT FUND
DIVIDENDS,]"
Insert "appropriations to the [FOR] Alaska
permanent fund [DIVIDENDS],"
2:06:27 PM
CHAIR CLAMAN objected for purposes of discussion.
CHAIR CLAMAN explained that, like Amendment 4 to SB 20,
Amendment 4 would exclude appropriations to the Permanent Fund
from the spending cap while including PFDs.
2:06:56 PM
CHAIR CLAMAN withdrew his objection to Amendment 4. He found no
further objection, and Amendment 4 was adopted.
2:07:20 PM
SENATOR KAUFMAN expressed his appreciation for considering both
SB 20 and SJR 4.
2:07:43 PM
CHAIR CLAMAN brought up SB 20 and solicited the will of the
committee.
2:07:46 PM
SENATOR KIEHL moved to report CSSSSB 20, work order 33-LS0206\S,
as amended, from committee with individual recommendations and
attached fiscal note(s).
2:08:05 PM
CHAIR CLAMAN found no objection, and CSSSSB 20(JUD) was reported
from the Senate Judiciary Standing Committee.
2:08:19 PM
CHAIR CLAMAN brought up SJR 4 and solicited the will of the
committee.
2:08:20 PM
SENATOR KIEHL moved to report CSSSSJR 4, work order 33-LS0205\U,
as amended, from committee with individual recommendations and
attached fiscal note(s).
2:08:41 PM
CHAIR CLAMAN found no objection and CSSSSJR 4(JUD) was reported
from the Senate Judiciary Standing Committee
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 20 Amendment S.3.pdf |
SJUD 4/15/2024 1:30:00 PM |
SB 20 |
| SJR 4 Amendment U.3.pdf |
SJUD 4/15/2024 1:30:00 PM |
SJR 4 |
| SJR 4 Amendment U.4.pdf |
SJUD 4/15/2024 1:30:00 PM |
SJR 4 |