03/02/1994 01:30 PM House FIN

  HB 505    An  Act  making  appropriations  to  and from  the                 
            constitutional budget reserve  fund under art. IX,                 
            sec. 17(c),  Constitution of the  State of Alaska,                 
            for  operating  and  capital  expenses  of   state                 
            government for fiscal year 1994; and providing for                 
            an effective date.                                                 
                                                                               
            HB   505  was  HELD   in  Committee   for  further                 
            discussion.                                                        
  HOUSE BILL 505                                                               
                                                                               
       "An  Act  making   appropriations  to   and  from   the                 
       constitutional budget  reserve fund under art. IX, sec.                 
       17(c),  Constitution  of  the  State  of   Alaska,  for                 
       operating and capital expenses  of state government for                 
                                                                               
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       fiscal year 1994; and providing for an effective date."                 
                                                                               
  SHELBY STASTNY,  DIRECTOR, OFFICE OF MANAGEMENT  AND BUDGET,                 
  OFFICE  OF  THE  GOVERNOR,  provided   an  overview  of  the                 
  Governor's  position  on  HB 505.    The  Governor  does not                 
  support the changes made by the House Judiciary Committee.                   
                                                                               
  Mr. Stastny explained the Administration's concerns with the                 
  Constitutional Budget  Reserve Fund amendment  which directs                 
  the  amount  necessary to  be  placed  into that  fund.   He                 
  pointed out the history of  prior action regarding the fund.                 
  Last Year the Attorney General was consulted and stated that                 
  informal settlements were not  "administrative proceedings".                 
  The Attorney General added that those funds should be placed                 
  into the General Fund and not into the Constitutional Budget                 
  Reserve  Fund.    Mr.  Stastny  advised  that  the  Governor                 
  accepted the opinion of the Attorney General.  This decision                 
  was challenged in court.                                                     
                                                                               
  Mr. Stastny continued, that there has been a decision by the                 
  Supreme Court regarding the placement of the  funds into the                 
  budget  reserve  fund.    This  decision  has  been  upheld.                 
  Litigants recommended that an injunction  be placed upon the                 
  Administration in  order that the  funds be placed  into the                 
  Constitutional  Budget  Reserve Fund.    The judge  issued a                 
  supplemental opinion stating that the money should have been                 
  transferred into that fund.  The judge observed that:                        
                                                                               
       1.   This  was  not  only  an  Administration   problem                 
            because  the Legislature knew  the money  had been                 
            placed into the general  fund and had appropriated                 
            from  the general  fund  rather than  placing  the                 
            funds into the Constitutional Budget Reserve Fund;                 
            and that                                                           
                                                                               
       2.   The Legislature's involvement in appropriating the                 
            money was improper.                                                
                                                                               
  HB 505 provides  that the  Legislature participate with  the                 
  Administration in  appropriating the money from  the general                 
  fund  into  the  Constitutional Budget  Reserve  Fund.   The                 
  legislation would  then appropriate  that money  out of  the                 
  Budget Reserve Fund into the general fund in two increments.                 
  One amounting to  $416 million  dollars, the calculation  of                 
  the  necessary  amount   to  the  Budget  Reserve   Fund  as                 
  appropriated last year.                                                      
                                                                               
  Co-Chair  Larson inquired  where  settlement money  received                 
  since May,  1993, is located.  Mr.  Stastny understood funds                 
  to be in the constitutional Budget Reserve Fund.                             
                                                                               
  (Tape Change, HFC 94-46, Side 2).                                            
                                                                               
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  Mr.  Stastny   discussed   the   legal   interpretation   of                 
  transferring money from  the Budget Reserve Fund  for public                 
  purposes.  He stated that the House Judiciary version of the                 
  legislation would create a legal problem for the State.                      
                                                                               
  Representative Brown asked  which funds had been  improperly                 
  placed in the General Fund in  FY91.  Mr. Stastny understood                 
  that when  the attorney  general's opinion  was issued,  the                 
  Department  of  Revenue  returned  the settlements  received                 
  after the constitutional amendment's passage and then  tried                 
  to conform the deposits into  the appropriate account.   Co-                 
  Chair Larson asked  that a financial  sheet be submitted  to                 
  the  Committee  explaining  which  funds are  available  for                 
  distribution and where those funds are located.  Mr. Stastny                 
  provided  the  Committee   with  a  handout  of   FY94  fund                 
  sufficiency  balances  in  the   General  Fund  group  dated                 
  1/28/94.  [Attachment #4].                                                   
                                                                               
  Representative Brown questioned the status of the Governor's                 
  employment and fish  tax legislation.   Mr. Stastny  replied                 
  that  the  employment  tax  will  be introduced  very  soon,                 
  although the fisheries tax might not be introduced this year                 
  as  a  result  of the  current  difficulties  facing Alaskan                 
  fisheries.  He added that passing a tax bill in an  election                 
  year would be difficult.                                                     
                                                                               
  Co-Chair  Larson  opened  for  discussion   the  subject  of                 
  repayment of a  loan which had been  forgiven by legislative                 
  action.   The  $441 million  dollar loan  originated to  the                 
  Permanent Fund Corporation and was distributed.                              
                                                                               
  Representative   Brown  provided   the  Committee   with  an                 
  amendment to  HB 505  (JUD) which  would delete  "findings".                 
  [Attachment #3].  She asked that the amendment be considered                 
  and incorporated into the House Finance Committee substitute                 
  version of the legislation.                                                  
                                                                               
  HB 505 was HELD in Committee for further consideration.