Legislature(2007 - 2008)SENATE FINANCE 532
01/30/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB119 | |
| SJR14 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 119 | TELECONFERENCED | |
| *+ | SJR 14 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE JOINT RESOLUTION NO. 14
Proposing an amendment to the Constitution of the State
of Alaska relating to appropriations from the budget
reserve fund.
CO-CHAIR HOFFMAN, SPONSOR, explained that he introduced the
bill in order to change the constitutional requirements to
extract funds from the budget reserve (CBR) account from
three-fourths to two-thirds of the members of each house of
the legislature. Prior legislators have been reluctant to
pay back the $5.2 billion in the budget reserve because of
the high standard to extract funds. It has been said that
as a result of the three-fourths vote, there have been votes
that required additional appropriations in capital projects
or operating projects. He maintained that was never the
original intent of the constitutional amendment.
Co-Chair Hoffman recalled when the concept of raising the
standard was first brought up in the House. He pointed out
the current financial position in Alaska, where there are
several billions of dollars as potential savings. Co-Chair
Hoffman emphasized that the proper procedure would be to
repay the constitutional budget reserve and return to the
original intent of the constitution. He thought there could
be a simple majority, but that there should be a higher
standard.
9:57:56 AM
Senator Dyson asked about the committee's intention
regarding the bill. Co-Chair Stedman replied that the
intent was to pass it out of committee today. Senator Dyson
requested that SJR 14 be held in committee for a few more
days. Co-Chair Hoffman said he had no problem with that.
9:58:55 AM
Co-Chair Hoffman related that there is an article from the
Juneau Empire stating support for the bill (copy on file.)
He referred to Senator Wilken's support for the ideas found
in bill.
Senator Elton calculated that under a two-thirds requirement
it would take 14 votes in the Senate to access the CBR and
27 in the House, which is only a change of one less in the
Senate and three less in the House. Co-Chair Hoffman agreed
that the problem has been in the House. Three votes
difference in the House lowers the bar quite a bit.
10:00:21 AM
Co-Chair Hoffman MOVED to ADOPT Amendment 1, labeled 25-
LS1350\A.1, Cook, 1/25/08:
Page 1, line 1:
Delete "an amendment"
Insert "amendments"
Page 1, line 2:
Delete "appropriations from"
Page 1, following line 7:
Insert a new resolution section to read:
* Sec. 2. Article IX, sec. 17(d), Constitution of the
State of Alaska is amended to read:
(d) If an appropriation is made from the budget
reserve fund, until the amount appropriated is repaid,
the amount of money in the general fund available for
appropriation at the end of each succeeding fiscal year
shall be deposited in the budget reserve fund. For
purposes of this subsection, each amount deposited into
the fund under (a) of this section shall be treated as
a repayment of money appropriated from the fund. If the
amount deposited under (a) of this section exceeds the
amount due in repayment, the excess amount shall be
treated as a credit to be applied as a repayment of
money appropriated from the fund in the future. The
legislature shall implement this subsection by law."
Renumber the following resolution section accordingly.
Co-Chair Stedman OBJECTED for discussion purposes.
Co-Chair Stedman explained that Amendment 1 moves the
legislature away from the day-to-day, year-to-year
management of the CBR. When remunerations from settlements
are available, the monies go into the CBR as an offset of
what is owed. Most likely there will be sizeable
adjustments any time there is an audit request going out on
PPT. Such a payment would offset what is owed and lower the
debt. The state owes the CBR roughly $5 billion and has
about a $3 billion balance. There is a high probability
that a large sum of that balance could be paid back this
year. Over the next several years the CBR could easily
approach $8 billion to $10 billion. Co-Chair Stedman wanted
the legislature to recognize that when claims were made for
taxes or settlements, they would be returned to the CBR.
There will need to be future discussions regarding what size
the CBR should be.
10:04:02 AM
Senator Elton quoted from the amendment, "for purposes of
this subsection, each amount deposited into the fund". He
asked if income earned by the fund is a deposit or if it
only refers to revenues from the sources stated in the
constitution. Co-Chair Stedman replied that it would not
include realized or unrealized earnings. It is targeting
settlements such as those from oil taxation, which could be
very sizeable.
10:05:04 AM
Senator Dyson thought the amendment did not quite get where
the sponsor wants to go. It makes assumptions about optimal
levels. Senator Dyson reported that he requested a
recommendation of what the ideal level for the CBR is and he
never received an answer. He applauded the intent of the
amendment. He guessed that there was a formula that would
guide the state. He stated support for having a high bar
for removing money when the balance is below the recommended
level and a lower bar when there is plenty of money. He
wondered what other large enterprises use as a guiding
formula for their rainy day accounts. Part of the
discussion should involve expert advice.
10:07:45 AM
Co-Chair Stedman thought that it would be very difficult to
find a comparison to the state with its very large wealth.
He did not think there was an exact model to use for
comparison.
10:09:10 AM
Co-Chair Stedman WITHDREW his OBJECTION to Amendment 1.
There being NO OBJECTION, Amendment 1 was adopted.
Co-Chair Stedman concluded that the intent of the amendment
is to move from crisis management to planning for the
future.
At-ease: 10:09:48 AM
Resume: 10:10:41 AM
Co-Chair Stedman referred the committee to a copy of Article
09, Section (a), of the Constitution of the State of Alaska.
He suggested members read it because it applies to the
amendment and to Senator Elton's question regarding deposits
to the fund.
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