Legislature(2001 - 2002)
02/06/2002 01:12 PM House JUD
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* first hearing in first committee of referral
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SJR 23 - CONST AM: APPROPRIATION/SPENDING LIMIT Number 1565 CHAIR ROKEBERG announced that the final order of business before the committee would be CS FOR SENATE JOINT RESOLUTION NO. 23(FIN) am, Proposing amendments to the Constitution of the State of Alaska relating to an appropriation limit and a spending limit. [Before the committee was version 22-LS0734\P, Cook, 9/4/01, which was adopted as a work draft on 10/19/01.] Number 1576 SENATOR DAVE DONLEY, Alaska State Legislature, testifying as the sponsor of SJR 23, explained that SJR 23 proposes a constitutional amendment to modify the existing appropriation limit in the Alaska State Constitution. He remarked that subsequent to the interim meeting in which SJR 23 was heard the first time, he took members' input and crafted another proposed committee substitute (CS) for consideration. Number 1600 REPRESENTATIVE COGHILL moved to adopt the proposed House committee substitute (HCS), version 22-LS0734\R, Cook, 2/4/02, as a work draft. There being no objection, Version R was before the committee. SENATOR DONLEY explained that the first change incorporated in Version R allows for a higher level of spending with a [three- fourths] vote so that there would be a three-step process. "You'd have a standard 2 percent annual increase ... available with a simple majority vote; ... a 3 percent increase ... available with a two-thirds vote; and a 4 percent increase available with a [three-fourths] vote." He noted that the committee made this suggestion back in October regarding a third level for dealing with unexpected growth. He pointed out that there are already provisions that exclude any disasters or emergency funding, so they don't count towards this limit. This aforementioned third level would deal with any increased need for services that a particularly large influx of people to Alaska in a given year might generate. SENATOR DONLEY said that the second change incorporated in Version R clarifies that only amounts paid out in permanent fund dividends (PFDs) are excluded from the spending limit. The phrasing in the prior version, he noted, could have possibly been interpreted as excluding administrative costs of the Permanent Fund Dividend Division from the spending limit, and that was not the intent. He opined that one of the biggest flaws with the existing appropriation limit is that nobody knows how to define [it]; "you've got to guess that it's over $6 billion, but a lot of the terms are so vague that it's imprecise in its definition." In order to be as precise as possible with the definition in [SJR 23], he noted, he has tried to keep in mind lessons learned from over a decade of experience with the existing limit, as well as from past problems encountered regarding definitions. Number 1720 SENATOR DONLEY said that the third change incorporated in Version R involves inclusion of a "specific-dollar starting amount" for the first two fiscal years in which the amendment would apply. He noted that there was some concern with the formula in a prior version of SJR 23 because the starting years would have been based on years for which the levels were unknown, since a budget has not yet been formulated. So it was unclear what would happen in the "out" years, and if there was a big change between this year [and] last year, or this year [and] next year, he said, "you could have a spending limit that kind of bounced along." To keep that from happening, to have a nice solid, reasonable increase projected, by going to fixed points for just the first two years, he offered, "you've created a situation where you could have ... a smooth spending increase on the out years." He noted, however, that after that, [a smooth spending increase] will be dependent upon what expenditures are made, so if, in a subsequent year, the legislature and the governor chose not to spend up to the limit, it would just "kind of flatten out and then go up from there." SENATOR DONLEY said that those numbers were derived by simply taking the fiscal year 2002 (FY 02) amount of $2.4 billion - rounded off - and increasing that by 4 percent, which produced the number for the first year - the FY [04] spending amount. In response to a question, he confirmed that his letter dated 2/5/02 states "$3.2 billion" and that this number is correct. Under the appropriation limit, he explained, it doesn't exactly correlate with just general funds; the actual amount under the constitutional definition is a higher level than just general funds. SENATOR DONLEY opined that [Version R] is rather generous. To recap some of what was heard on 10/19/02, he said: We had testimony from economists that said that this seemed like a reasonable amount of growth to allow for, based on past experience, and it also seemed like it was a reasonable time period to provide for an automatic review, which we have done. ... After a certain number of years there's an automatic review, and the feeling was that that was an appropriate amount of time to go back and allow the voters to take another look at it, make sure its working; if it [is] not, they are guaranteed an opportunity to take it off the books. Number 1901 And that it would seem probably rather generous to those of us that would really like to [have] state spending hold the line and not increase, but [at] the same time, I think it is a reasonable compromise ... and it's vastly superior to the existing constitutional language, which everybody agrees makes no sense. It's hard to figure out what it exactly does mean; the average citizen reading the constitution would not get [an] accurate conveyance of how it's currently being interpreted. There's the "one-third for capital" provision, which has never been followed, Mr. Chairman, [and] this is very misleading to ... have in the [Alaska State] Constitution. ... It's completely ineffectual, because even the best guess of what the current limit is, is over $6 billion, so it's almost twice as much as this particular proposal would allow. SENATOR DONLEY continued: So although this is not proposed as an "end all, be all" solution to the current fiscal gap, it's a vast improvement - working with the knowledge we've gathered over more than a decade of experience with existing constitutional language - [in] trying to come up with a reasonable, effective, constitutional spending limit. REPRESENTATIVE MEYER said that he agrees "something like this is needed first, before we can even talk about tapping into somebody's permanent [fund] dividend or even [having] a new tax increase." He asked what the inflation rate has been over the last several years, and whether it has been approximately what is being proposed in [SJR 23] - "about 2 percent each year." SENATOR DONLEY said that according to his recollection it has been about 1.7 percent. Number 2047 DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance Division, Alaska State Legislature, confirmed that amount, but noted that the "permanent fund uses about a 3 [to] 3.25 percent for long-range inflation." REPRESENTATIVE MEYER sought confirmation that if an emergency arose and additional money was needed, then "with a [three- fourths] vote, we can go above that amount for emergencies." SENATOR DONLEY reiterated that emergency funding is excluded from the spending limit. "We have a definition that the governor could follow for ... an emergency situation or for disaster funding, and both those aren't counted," he added; "they wouldn't go into the base for future years because by their very definition, they're an extraordinary expenditure for one particular year." He noted that those expenditures would not even require a two-thirds vote. He continued: "But let's say there was some sort of unforeseen ... special circumstances that didn't really classify ... as an emergency or a disaster; then, by using the [three-fourths vote], you could certainly argue for accessing more money." REPRESENTATIVE MEYER opined that the Municipality of Anchorage's tax cap serves as a spending cap because property taxes are the only source of income. He mentioned, however, that he does not think that a similar tax cap would work on a statewide basis, since he does not agree with the premise that "taxes are needed first." "I think we first need to get our spending in line," he stated, and asked Senator Donley whether he agreed. SENATOR DONLEY said: I've heard a lot of support for this proposal from folks who say that a lot of local governments already live within restraints upon their budgeting process. Whether it's a tax cap or a spending cap, these are pretty common in local government and they've worked real well. If the voter's don't want them, they can always take them off by initiative or [by voting] to amend their charters. But they haven't. ... Obviously, the tax cap in Anchorage has been very popular with the citizens, and has stayed successfully for many years now. ... Obviously, I would prefer not to have artificial restraints of that manner. But the fact is, in a representational democracy, there's huge pressures for always more, more, more spending, and I do think this is a reasonable, fundamental first step. ... The difference between a tax cap and a spending cap is that we're starting with a bigger fiscal-gap situation right now.... I support doing as much as we can to clean up and make state government as efficient and fair in its spending as possible, before we do major new taxes. But at some point in time, we're probably going to have to do new revenues. And so I wouldn't really support doing a tax cap first; first I'd like to get control over the spending side of it, and do the best we can with what we have, and then look to revenues. Number 2215 REPRESENTATIVE MEYER indicated agreement. He posited that having a spending cap "forces you to prioritize"; it's important to prioritize in order to determine which services state government should be providing and which ones it shouldn't. He said he would be supporting SJR 23. REPRESENTATIVE OGAN noted that he has seen constitutional amendments result in unintended consequences. He asked Senator Donley whether he is aware of any unintended consequences that SJR 23 might engender in 20 years. He noted that if SJR 23 were to be adopted by both the legislature and the voters, it would be enshrined in the [Alaska State] Constitution. He asked: "Put on your 20/20 glasses - is this going to work then?" SENATOR DONLEY said: I've been trying to be real clear that I don't think that this is an excuse not to continue to work to do other things to solve the fiscal gap. ... I think this is a good, fundamental step. ... There's no question [that] the [Alaska State] Constitution, as it is now, just doesn't work - it doesn't make sense. So it should be addressed, but I wouldn't want this to be seen as the "catch all, be all," because I've never conveyed it to be that.... I just think it's one, good, fundamental building block towards developing a new long-range fiscal plan. So I wouldn't want ... - by passing it - [for] people to say, "Oh, well, now we've solved the problem," because we haven't. But we are creating a really solid foundation towards moving towards solving the problem ... so that's one thing that I wouldn't want see as an unintended consequence. Number 2296 As far as the actual functioning of it, I think it's pretty generous in its allowance for ... additional spending. From my point of view, it's probably more generous than I'd like to see. ... And I would hope that as it goes into effect, ... future legislatures see it as just what it is: it's [an] appropriation or a spending cap - and not a goal - each year. I would like to see it ... so it's not [viewed as], "Oh, well, this year we're going to spend that much." The debate should be, ... "What do we need to spend," and not just, "Oh, the cap's this, so we'll go to that." ... Obviously, that's not really going to be a downside because, as it is now, we have no cap at all. But I wouldn't like it to become the goal each year - spending that much - because I'd like to actually see us, as much as possible, improve the efficiency of government and hold down spending. SENATOR DONLEY continued: But the way it [is] here, Representative Ogan, I think it's going to facilitate that, because if you can hold the line in one year, ... it grows slowly.... You're going to slow down the growth of the cap, ... rather than it just automatically growing more and more each year. And I think that's the importance of tying the limit for one year to a close previous year, rather than [the] existing constitutional provision that ties it to a point in time all the way back to 1981. It just doesn't make sense. So that might be ... the thing that I would see the most. REPRESENTATIVE OGAN noted that there are provisions in the [Alaska State] Constitution now - spending provisions - that require certain percentages of the budget to be spent, for example, on the capital budget "and things like that." He also noted, "Of course, we don't do that, ... and I suppose if someone litigated, they'd probably win the case." "So that's not being enforced and that's constitutional law, so ... do you think this will be enforced?" he asked. Number 2395 SENATOR DONLEY said: We've had the advantage of having over a decade of experience with the existing appropriation limit. So we've learned a lot. ... We've had a lot of time to think about it and work on it and improve on it, ... so I think this is going to do a lot better than the existing one. You can understand it ...; it's got a definition of what's in and what's out that the financial people will be able to understand. Second, to go to the specifics of your question, the current "one-third to capital" provision - at least one-third of the budget's supposed to go to capital - there's [an] attorney general's opinion that says that only applies if you spent up to the full $6 billion that's allowed. [The Alaska State Constitution] doesn't say that, that's just an AG's opinion of what it says, but because of that opinion, the thing's been ignored. I don't think it's ever been followed. And [for] all practical purposes, if ... today we were forced to use one-third for capital, we would have a real problem. So I think it makes sense to get that out of the [Alaska State] Constitution. And this proposal does get it out of the constitution and allow [legislators], from legislature to legislature, to decide the appropriateness of what the level of the capital budget ought to be, rather than have some arbitrary one-third in the [Alaska State] Constitution. REPRESENTATIVE OGAN asked what would happen if Alaska gets the Arctic National Wildlife Refuge (ANWR) opened [to oil and gas exploration] and/or a gas pipeline [is built], and the state's population really grows: "Does this amendment restrict state spending to the point where we're not going to be able to meet the demands for those services?" And even if people are willing to step up to the plate and pay taxes, does this amendment deal with that, he also asked. SENATOR DONLEY said: I think it does. Remember the testimony we heard in October, that the numbers in here are pretty reasonable, [and] that they are comparable to the growth that we experienced under the five-year plan, where we were being very conservative - fiscally conservative - and actually reducing .... [Tape changed sides mid-sentence.] TAPE 02-10, SIDE B Number 2482 SENATOR DONLEY continued [mid-sentence]: ... mission as it appears here. And that the testimony we received in October was [that] this was a reasonable amount of growth compared to our past experience. So I think it does take care of that. And also, it's required that after only four years, this goes back before the voters. If the voters approved it in this general election, they would see it automatically again within four years. Now, I would suggest that [with] the gas line or even ANWR, there's no way we're going to experience a major economic boom within a four-year period. ... And that was the testimony in October also, that this is a reasonable period of time to have it subject to review again, because you'll be able to really have data [to] see how it's working. Obviously, we'll (indisc.) how to address the other issues on the fiscal gap before us, within that period of time, ... but yet ... there's nothing on the horizon that's going to show a giant potential boom within that four-year period. It may come soon after that; I hope it does, but it's doubtful it's going to happen in four years - ... that great a growth. And even if you did, ... in this committee substitute, have the ability to increase - double - what we have traditionally (indisc.) our experience over the last five or six years. So you've got some flexibility there. So I think it does handle it, and to ... make it even better, ... there's another automatic review every six years after that - after the first four years. So unlike the existing appropriation ... language in the [Alaska State] Constitution, the voters are going to be guaranteed to be able to see this again and say, "Yes" or "No," "We think it's working" or "We don't think it's working," and get rid of it if it isn't. Number 2421 REPRESENTATIVE COGHILL noted that one of the things that catches his eye is that "we're making exception to the appropriation for bond obligations." He asked whether this was going to put pressure on the [state] to increase its bond obligation beyond its ability to pay. SENATOR DONLEY said that that is a really important point that he probably should have raised. "That was one of the other relief valves that's contained in this amendment," he offered; since bonding money that's approved by the voters - general obligation (GO) bonds - is outside the limit, that's a way, "if you've really got a problem," to be able to free up some more funds. He opined that such a provision is appropriate because GO bonds, which haven't been utilized [by the state] in a long time, have to get a public, statewide vote of approval. He added that he thinks it's reasonable to allow going over the limit [as long as] the public votes on, and approves, what that extra money is being spent on. "So you've got a safety valve there; it's outside the limit. And so, clearly, ... there's not a problem paying for it, other than the normal problem of paying for these things, which is the fiscal gap," he said. CHAIR ROKEBERG posited that Representative Coghill's concerns revolve around the state's "debt credit worthiness," if the state went too far "that way." He added: I would just say that I think that the bond [covenant] of whatever existing inventory was out there, and/or the bond counsels and Wall Street, would dictate whether or not we were being overzealous in our borrowing, because we would find out in terms of our ratings and so forth. So that would be a damper; plus the legislature has to approve whatever's offered out to the citizens, unless it's a COP (Certificate Of Participation) or something like that. REPRESENTATIVE COGHILL said that he agrees with Chair Rokeberg, but noted that in Alaska, "we have a propensity to put pressure in one area and rupture ... another, so I just want to make sure that that is something we really watch." He mentioned the issue of reviewing a single constitutional provision when called upon for a "constitutional convention vote every ten years." He also made reference to when the provisions encompassed in SJR 23 go back out for public review. Number 2285 SENATOR DONLEY said: Representative Coghill's really accurate; this hasn't been done any time recently that I know of, but it has been done before in the history of the state. In fact, I think the original appropriation limit had [a] ten-year review provision and was actually subsequently approved by the voters; that's my memory from researching that. So it is very unusual, it has not been used much, but it isn't totally unheard of. CHAIR ROKEBERG noted that the voter's pamphlet for the 1982 general election stated that the appropriation limit of $2.5 billion proposed by Ballot Measure No. 4 would be reconsidered by the voters at the 1986 general election. He also noted that "in 1980 the GF portion of the budget was $4.1 billion, ... two years prior to the first spending initiative." REPRESENTATIVE COGHILL said that beyond bond voting, then, there is still the question of "having appropriations becoming the issue of a vote." He asked: Are we going to put tension on other areas of [the Alaska State] Constitution? In an attempt to clarify, he said, "Just on voting for appropriations, from the general public, has been something that has been discussed in this legislature, and I'm just wondering if this is going to bump into that discussion." SENATOR DONLEY said: "I don't think it should. I understand where you're going here, but because the GO debt is excluded from the limit, I don't think you're going to have a problem. ... And the amount that would be under the limit is the 'non GO debt' ... as defined in the language here." REPRESENTATIVE OGAN, after noting that the power of appropriation lies with the legislature, posited that perhaps Representative Coghill's concern centers around the question of whether [SJR 23] would result in delegating the legislature's authority to appropriate. SENATOR DONLEY acknowledged that it is certainly a limitation on legislative authority to appropriate, but it's one that already exists, in another form, in the [Alaska State] Constitution. Number 2127 CHAIR ROKEBERG noted that it has never come under "a court challenge because it was ill-founded to begin with." SENATOR DONLEY pointed out that [this limitation] is being proposed by the legislature, which is the branch of government that has the larger responsibility to deal with such issues. CHAIR ROKEBERG offered the analogy: "Tie my own hands - I can't trust myself." SENATOR DONLEY acknowledged that the press has written articles saying, "Oh, stop us before we spend again." He posited that Alaskan legislators, by and large, have been very responsible. He noted that in meeting with the "governor's budget people" just yesterday, they were making the case that "we've been more fiscally disciplined than any other state in the union over the past five, six, seven years"; the per capita spending has actually decreased tremendously from the levels of 1978 or 1979. And while that's true, he noted, "I think that the public needs reassurance that new revenue sources are simply not going to be used for new programs, and that new revenue sources are actually going to be ... used to solve the fiscal-gap problem." SENATOR DONLEY opined that SJR 23, for the first time, would give the public that assurance: within a reasonable parameter allowing for growth, major new tax provisions would actually go towards solving the problem and not towards more spending. He noted: That's one of my concerns with the governor's income tax, is if you just take his proposed income tax, which raises about $350 [million], and take the accumulation of the possible increases in GF needed for his spending increases, you've only got a little over $30 million left to offset the deficit. That's not much progress for a big tax, where if you limit your spending - you don't increase spending - ... then the money from the tax revenue will actually reduce the fiscal gap. Number 2036 REPRESENTATIVE OGAN said, "just to clear up the record," Article IX, Section 13, says: "No money shall be withdrawn from the treasury except in accordance with appropriations made by law." He also noted that [Article IX] Section 6 says: "No tax shall be levied, or appropriation of the public money made, or public property transferred, not shall the public credit be used, except for a public purpose." He offered that according to his understanding of [SJR 23], since it doesn't make a withdrawal from the treasury, the legislature isn't delegating its power of appropriation; [SJR 23] just limits what the legislature can withdraw. CHAIR ROKEBERG asked what the distinction is between "what we consider GF now and the amount of $3.328 billion." He said that by a quick calculation, "the 4 percent's about $10 million - $10 million annual increase." MR. TEAL said: "About $65 million to $70 million." CHAIR ROKEBERG: "Is that based on a 2 percent or the 4 percent? How does that work? We're talking about a 4 percent but we're going back to the preceding year. So isn't the calculation based on 4 percent of the preceding fiscal year?" SENATOR DONLEY said: Two years earlier - not the exact preceding fiscal year, but from the fiscal year before the existing year. He added that the reason for that is that "we won't have the final numbers to base it on ... so it really works out to 2 percent a year." CHAIR ROKEBERG said: "So ... it's 4 percent, but ... by the math, though, it isn't necessarily; it depends on what you appropriated in a particular year." He noted that he is concerned about what happens if less than 2 percent is appropriated, on a cumulative basis. Chair Rokeberg asked Senator Donley whether his testimony is that "2 percent a year against that ... would be about $66 million. [Senator Donley indicated yes by nodding his head.] MR. TEAL made reference to the graph in members' packets. CHAIR ROKEBERG again asked for an explanation of the distinction between "what we define as general funds now, in the budget, and what is further included in this dollar amount." Number 1881 MR. TEAL said, "I wish I had a fiscal summary here, because - you've probable seen them - there are three columns: there are general funds, federal funds, and 'other.'" The simple answer to this, he said, is that it includes everything in the "general fund" column and everything in the "other" column, and then debt service is subtracted. However, it's a little more complicated than that, he acknowledged. CHAIR ROKEBERG said, "So we've got GF plus 'other,' less debt service." "What does happen if, in fact, we have an appropriation amount ... that is less than the budget limit; how do you calculate that, the way this is drafted, if there is less than a 2 percent increase the prior year?" he asked. SENATOR DONLEY, after acknowledging that they were making assumptions about the kind of spending pattern the legislature has in the future, said: Let's say that you'd had a steady spending pattern of spending up to the limit. ... And then you came to a year, which I think is the scenario you're asking about, where you spent less than the limit. Well, you would have a bump there; ... you wouldn't spend as much, but then the increase for the next year that was allowed would be based on the prior year. So it would be higher, right, it'd go up. But it's a cap; it's not a minimum, right, so you wouldn't have to spend up to that. It would allow you to spend more in that bump year, but since it's a cap, you don't have to. You could continue to spend steady, and that bump would correct itself in the next year because the increase would be based on the lower, previous years, then. ... You'd have a dip the next time. But remember, you've got three provisions in here ... to deal with it. Number one, by two-thirds vote, you could increase the amount that's available to spend. CHAIR ROKEBERG said, "I want to go the other way; I want to go down." SENATOR DONLEY: "Well, the more you held the line and decreased the spending, eventually, the more the budget cap would actually decrease." CHAIR ROKEBERG said, "For example, when we had the five-year plan we were actually reducing spending." SENATOR DONLEY noted: You would have to reduce spending as defined by this. ... We were always reducing the fiscal gap, and we were always reducing GF spending, right, but in some of those years, ... as defined this way, [spending] might have gone up. So as long you're reducing the spending, as defined, then your spending cap's going to reduce also. Number 1718 CHAIR ROKEBERG asked Mr. Teal whether this was correct, and whether, as Senator Donley described it, there were any problems with the way [SJR 23] was drafted. "Would you have any problems, as the person that would have to make the calculation, in doing this?" MR. TEAL said that there were always going to be problems because, five years from now, they're going to be [saying], "Find the loophole, find the loophole." "So I'm sure we'll be looking for loopholes," he added. But it's drafted, he opined, as tightly as it can be drafted now, and the key to the question of what happens if there is a sudden reduction is that it will affect "the thing," though he cautioned against making sudden moves like that because it will cause what Senator Donley called bouncing, in later years. But if there are two years in a row where the spending is reduced, then it won't bounce, he noted, the limit would simply be lowered a little bit and then would go along smoothly from that point on. CHAIR ROKEBERG added, "To say nothing of the impact on the economy." SENATOR DONLEY noted: We've discussed the possibility that if you wanted to be really tricky, and you kept down spending in one year but you wanted to maintain a steady flow, you could simply appropriate money and not spend it for that year. You could appropriate up to the cap and have a block of money and put it in an account and then not expend that money. ... And then it would lapse back into the general fund, but your line would continue up at a steady rate. So the legislature does have some fiscal tools [available]. SENATOR DONLEY added, "If you wanted to utilize your fiscal tools that are available to you to maintain a smooth, steady growth, that's one of the tools you could use." CHAIR ROKEBERG acknowledged: "Yes, you could, if you could get the votes." Number 1599 SENATOR DONLEY remarked that there is a lot of flexibility for making "this" workable. CHAIR ROKEBERG: "In both directions, I would hope." SENATOR DONLEY said yes. CHAIR ROKEBERG asked Senator Donley how he would respond to the charge that "this is too liberal a cap on the upside." SENATOR DONLEY noted that in his personal opinion, it is [too liberal], but pointed out that he was trying to reach a compromise for a supermajority: something that's reasonable but which would be a "quantum-leap improvement" over what currently exists in the [Alaska State] Constitution. He opined that [SJR 23] is a major improvement over what currently exists. In response to the question of whether [SJR 23] was perfect, he acknowledged that he did not think "we're going to get perfect when it comes to something like this." CHAIR ROKEBERG asked whether $66 million a year is too much. SENATOR DONLEY noted that his first choice would be to have a flat requirement for the next couple of years with some growth after that, because, right now, the price of oil is depressed, so there is an immediate problem. But [SJR 23] is not crafted for this moment in time, he remarked; it's crafted to last a longer period of time, and it is not known whether the price of oil will go up dramatically in the next year. "It's happened to us here in the past," he said, so the current fiscal gap could disappear, just like it did two fiscal years ago when "we had a surplus," not because production was higher or that less was spent - although a lot less was spent, he added - but because the world price of oil was higher, which could happen again. SENATOR DONLEY noted that some of the criticism heard at a prior hearing regarding [a different bill, SJR 24] is that [the constitutional budget reserve fund] is projected to go away in two years, and his rejoinder to that criticism is that it was projected to go away almost ten years ago but that did not prove to be true. He added that he hopes that "it" is still around ten years from now, and if "we're" fortunate and the price of oil bumps up a bit, "it" could stick around. And if that's the case, he pointed out, then "we ought to make sure that it's running and functioning as appropriately and smoothly as possible, and [is] consistent with what the voters wanted it to do in the first place." Number 1501 REPRESENTATIVE COGHILL said he was still concerned a little bit about the debt. He indicated that he was trying to foresee "how much debt obligation do we have to get to before we've obligated that percentage that's going to bump us against the top." There will be a lot of pressure at [that] point, he noted, to sell a particular issue every year and eat up that limit via [debt] obligation. He also noted that with regard to federal money that's taken in, almost all of it requires a match, so "we could get ourselves obligated again, as we do now, with 'federal match money issues' that would eat up that limit." SENATOR DONLEY replied that the first scenario isn't a problem, because the additional debt service that would go into the operating budget for those bonds would be outside the limit. So although he understands the concern - that by issuing the bonds, the legislature would use up its flexibility to increase the operating budget - that's not going to happen because it's outside the cap. With regard to the second scenario, he acknowledged that if there were a billion dollars in federal funds available and the state needed "a hundred million" to match it, that could be a problem. The legislature would have to make a choice; it would have to prioritize, just as with the capital budget, where the legislature does its best not to turn down any federal funds that are available. But in the past some funds have been turned down just because the matching funds weren't available and those projects weren't as high a priority as something else, he said. There will always be that unknown potential out there, and that may eat into the increase, but it's simply going to be a process of prioritizing where the money will do the most good for the people. Number 1403 REPRESENTATIVE COGHILL said that he agrees but noted that "we have this insatiable appetite and ... this would bring that pressure to bear as well, ... because [we] would have to prioritize between taking federal money and/or using our own resource money." REPRESENTATIVE MEYER said: First of all, I think, [with regard to the issue of] the federal money, we've been pretty blessed with that over the years, and ... maybe it will increase, but time will tell on that one. But I do agree with the Senator - if that's the case, we'll just have to prioritize whether we want to do the federal matching or not. [Regarding] the bonding [issue], which was a concern of Representative Coghill's, again, we have this in Anchorage where we have a spending cap or a tax cap, whatever you want to call it, and then the voters will approve whether or not they want to taxed above ... this tax cap. And then if they want to, then they go ahead and vote for the school or the park or the new fire engine, whatever the case may be. And ... I share the chairman's concerns about if the amount goes up so much every year, are we going to feel obligated to go ahead and spend that whole amount; [by] then, hopefully, we'll have a good, fiscal-conservative group of legislators here, and we'll say, "No, we don't need to spend that $66 million, and we don't have to." ... I've looked at this and I've thought about this [for] quite a while, and I do think this is a good first step in tackling our fiscal gap.... Number 1301 BRAD PIERCE, Senior Economist, Office of the Director, Office of Management & Budget (OMB), Office of the Governor, said that the administration opposes SJR 23 because it's unnecessary and it ties the hands of future legislatures [in] dealing with circumstances the way they feel is most appropriate. He elaborated: One of the most important powers of the legislature is that of appropriation, and it shouldn't be given up lightly. We think this resolution has a superficial appeal by imposing constraints on future state spending that aren't effective under the existing limit. It's being presented as a necessary precursor to addressing the revenue side of our fiscal gap. However, this disregards the budget cutting that's taken place over the past several years and implies that we're still some time away from being ready to address the revenue side of the fiscal gap. The fact that the current constitutional limit has never been reached indicates that a constitutional limit is not needed to control spending growth. Since 1982, when the current limit went into place, state spending has been controlled by a combination of limited available revenues and public opinion, and we don't think that's going to change. Other states with spending limits have had surplus revenues from income, sales, [and] corporate tax receipts that increased with their economic growth. [The] situation [in] Alaska is entirely different; we're looking at the decline of our resource-extraction revenue and ... no income or sales taxes that grow with the population and the economy. The logic in this legislation doesn't make sense in terms of what categories are included under the limit. You remember the Gramm-Rudman-Hollings Act that controlled federal spending back in the '80s; well one of the chief provisions of that Act was [that for] any new program, you had to find a new revenue source for [it]. Well, this just stands that on its head ... by putting a limit on spending for programs, even if they're self-funding; we don't think that's appropriate. Number 1174 MR. PIERCE continued: The proposed limit would have no relation to the fiscal gap, which is a difference between general fund revenues and spending. Other funds included in the limit have no effect on the fiscal gap whatsoever. Under the provisions of this resolution, any time the legislature knowingly passed a budget that exceeded the appropriation limit, the governor would be required to impose across-the-board cuts on executive- branch operations to reduce spending to the level of the cap. It doesn't make sense to write a provision into the [Alaska State] Constitution that says if the legislature exceeds its own limit that the governor has to go back in and fix it. Arbitrary across-the- board cuts are an abrogation [of the] legislature's responsibilities for setting appropriations levels. And interestingly enough, this provision of this constitutional limit, where the governor would have to go back [and] make across-the-board cuts, doesn't apply to the ... legislature's own budget. The limit set in this resolution for 2004, in the new CS version, is probably about $100 million too low, just using the internal logic of 4 percent over the two years' preceding budget. And that's because it would round down the 2002 budget, subject to the limit, and has no provision for supplementals in it. Supplementals would be a big problem under this cap. And there's some other technical issues here that .... CHAIR ROKEBERG asked: Why would they be? Wouldn't they be part of the fiscal year appropriation? MR. PIERCE said that they would be, but then "you'd have to leave some room for supplementals; you never quite know what they're going to be." CHAIR ROKEBERG noted, however, that "you have two years; the supplemental's already been appropriated by the time you're getting around to going back...." Number 1099 MR. PIERCE said, "No, we're talking about 2004, where it's set in the bill." Continuing on, he said: But the main policy objection here is that it sets an arbitrary spending limit without regard to cost increases experienced by individual programs. Like just the change in the rules for Medicaid that we're facing in the '03 budget here, if this limit were in effect, we'd be over the limit just because of our change in a Medicaid match. It also doesn't take into account university receipts [or] increases in other fund sources such as [the] mental health trust, public school trust income, or court-mandated expenditures. The arbitrary percentage increase in the limit has no relation to real-world drivers of public-service costs such as population or inflation; it's just 4 percent. We know for certain that the faster-than-average growth of expensive [aspects] ... like school-age children or the elderly, or medical costs/inflation, ... rises much faster than the overall CPI (Consumer Price Index), and it'll have dramatic impacts on our future budgets. During the past five years, the legislature and the governor worked closely together to allow self-funding programs - that have no effect on the fiscal gap - to grow as needed to meet the demand for services as long as fees that support those services increased along with them. And this effort benefited oil and gas producers, emerging fisheries, other Alaska industries, pioneer home residents, university and AVTEC [Alaska Vocational Technical Center] students, and many others. This amendment would throw out all that effort by subjecting fee-supported services to the same arbitrary limit. Why should self-funded programs like [the Division of Occupational Licensing ("Occupational Licensing")] or AHFC [Alaska Housing Finance Corporation] corporate receipts ... be subject to this kind of a limit? If the university brought in ... more revenue and tuition receipts, [then] expenditure of that revenue, if we're at the limit, would count against the cap, and reductions would have to be made elsewhere to accommodate [it]. There are numerous other examples throughout the budget where this thing would have similar perverse consequences. Number 0900 MR. PIERCE also said: I think natural resource developers should be particularly concerned about something like this. One of the major issues that emerged during the legislature's five-year budget-cutting exercise was a frustration by oil and mining and timber companies trying to get their permits processed in a timely fashion. Even though they were willing to pay for expedited permit processing and the fiscal gap wouldn't widen because of the receipts they were bringing in, because they were self-supporting, the legislature balked at spending this money because it counted against the fiscal gap. So we moved those self-funding programs from the general fund to fee- supported services; other funds; and statutory, designated program receipts. So these fees would be back in the same old loop here, and these fees would be subject to the same arbitrary limit that they were under the five-year budget-cutting program. Another major issue has already been referred to here, and that's that spending for debt service is outside the limit. This is a powerful incentive for debt financing. Debt financing has the advantage of paying for something over the lifetime of the facility, but whenever we've had cash, we've been able to fund our capital projects by cash [and] we've saved a lot of money. It cost about one-and-a-half times as much - to build something - to pay for it through debt as it does to pay for something with cash, and you say, "Well, we aren't going to be able to pay [cash for things] in the future." But if we get big lease payments for ANWR development or something like that, it's possible that we could be in a position to pay for capital projects with cash, and this limit would not allow that. Number 0743 MR. PIERCE said: I think that [Mr.] Teal referred to the kind of subterfuges and so forth that this thing would engender. ... That's the first thing, probably, the next finance chair would ask him to do, is, "How do I get around this"; I know it's something that the next governor [would] likely ask us to do, is, "How do we get around this limit." It sets up a false hurdle that really doesn't need to be there. One final thing, and I wanted to stay to the bill here, but if this limit were in effect, if this passed and the rest of the Senate's fiscal plan passed and we had this pro rata reduction bill combined with this limit, and the governor was forced to make across-the-board cuts, it would trickle down to everybody. It would [affect] K- 12 education payments, seniors/disabled [payments], longevity bonus payments; everybody would share in those across-the-board cuts, and we just don't agree with that vision of governing. So we don't think the legislature needs to be saved from itself here. There's plenty of historical precedence where the legislature didn't spend every dime that it had available, including about $7 billion deposited into the corpus of the permanent fund. And we think the current committee substitute here for SJR 23 [Version R] is not much of an improvement on a fatally flawed concept. REPRESENTATIVE OGAN noted that he differed in his opinion regarding what effects [SJR 23] would have, because he hopes that a spending limit would cause the legislature to really focus on what the state's priorities are. He mentioned that perhaps the legislature would then look at "the 500 programs" created since the influx of oil money, in order to reprioritize and thereby avoid the situation of having to make arbitrary cuts to every department. "I went through five years of that and I was never real comfortable with that process," he said, because it is difficult to know where to cut troopers or where to cut education, for example. He offered the analogy of "money to government is like blood to cancer: the more blood you give a cancer, the more it grows." He asked Mr. Pierce, "Don't you think that there's other ways to accommodate the problems that this would create, rather than how you characterize it?" There's more than one way that the legislature could make this policy call, he opined, other than how Mr. Pierce characterized it. He asked Mr. Pierce whether he agrees or disagrees with that statement. MR. PIERCE replied: "I don't know if I understand the question." Number 0521 REPRESENTATIVE MEYER opined that "obviously the governor ... feels the need to have new taxes." He said that it would be "a real hard sell" for him to go back to his constituents and say, "We need more taxes because we want to keep spending like we always have," when in his constituents' opinion, "we've ... given them good reason to be suspicious of how we've spent money in the past." He opined that [SJR 23] at least limits the amount that the legislature has to spend, which, he surmised, would help him when he has to go back to his constituents and advocate for taxes or [permanent fund] use. He suggested that [SJR 23] would help both the governor and the legislature. He asked Mr. Pierce to comment. MR. PIERCE said: "I'm just here to deliver the message." REPRESENTATIVE JAMES complimented him on his delivery of that message. She noted, however, that at issue is the public's distrust of both the legislature and the administration. This, coupled with the knowledge that soon the money will run out, makes it appropriate to give the public a choice regarding requiring the legislature to limit its spending. She said that what she hears from the public indicates a belief that once "we start charging them, there is no end [to it]." She asked Mr. Pierce whether he understands that concept. MR. PIERCE said: Sure, but ... this is sort of a negative approach to that. We come in here as people of good will trying to do the best job that we can to govern, and so I guess we turn it around and look at in a positive aspect. You come down here, you're charged with appropriating money, you're charged with developing the budget, that's what people elected you to do, you [don't] need to be saved from yourself. Number 0288 REPRESENTATIVE JAMES said: Certainly, I don't feel like I need to be saved from myself; I'm sure everyone feels the same way. But collectively, we need to be saved from each other, I think, because, having been down here for ten years now, it's not as easy as you think to look people in the eye when they're on their knees begging for funds, and say, "Sorry, we don't have any." And then when we get home, the people are really distressed with us on that issue. And ... there is the other concept: let's have a constitutional amendment that limits how much we can tax. ... I think Representative Croft has such a constitutional amendment - limit 5 percent of income taxes and 5 percent of sales tax. I can tell you that people in my district don't want to pay either one. They wouldn't support a 5 percent limit; that's a lot of money. ... So I don't know that we can get to the tax limit in a constitutional amendment, but I think we can get to a spending limit [via] a constitutional amendment, and it seems to me that this is rational. I agree with you - and I'll have you comment in a minute - ... that there might need to be a calculation on population and cost of living if we don't want to squeeze ourselves into a little hole. But one of the things that we have to assume that this is going to do is get more economy outside of the government area, and not so much counting on the government area to provide everything for everybody. Would you think that's a good assessment of where we really intend to go? MR. PIERCE said: "I don't quite know what to say; I really don't know what you're asking." CHAIR ROKEBERG noted that Mr. Pierce raised some interesting questions relating to "the cap X and also the other expenditures." He remarked that it took him seven years to get [Occupational Licensing] "out of the GF," and that he was not real happy to be trying to "put it back in here." He said that according to his reading of the legislation, the "cash cap X expenditures would be included in the caps." He asked Senator Donley whether he has considered making that another exclusion, or whether he would be willing to accept an amendment to that effect. SENATOR DONLEY, after mentioning that he'd taken some notes on some of the points raised, remarked that one point addressed related to the governor being charged with reducing the budget to conform with the constitution should the legislature "overappropriate", and yet such a conforming step would not apply to the legislature's budget, only to the executive branch's budget. He said that his response to that point is that it is because the vast majority of the budget relates to the executive branch; the legislative branch involves less than 1 percent and the court system involves only another 3-4 percent of the total budget. TAPE 02-11, SIDE A Number 0001 SENATOR DONLEY, turning to Chair Rokeberg's questions, said that one of the problems with excluding program receipts is that the legislature can define and redefine what program receipts are, and use that manipulation to just continue to spend more and more by simply redefining. "When we made the 2 percent growth assumption," he added, "we have been actively shifting things to program receipts, over the past five, six, seven ... years, but still the total growth, as defined by the constitutional amendment, has been less than that 2 percent." So even as that activity occurred, and as program receipts increased and more services were being provided, he noted, "we were still living within that 2 percent growth." CHAIR ROKEBERG asked about tuition at the University of Alaska and [receipts from Occupational Licensing]. He opined that those are areas that will experience growth and do not affect any "general appropriation money." SENATOR DONLEY acknowledged that that is true. He noted, however, that while they are included in the definition, the definition incorporates an allowance for an increase. He also pointed out that "it's been more than the traditional increase that's occurred over the past year, including those funds increasing program receipts." CHAIR ROKEBERG said, "I got a problem with this because the program receipts are stand-alone programs." He surmised that Senator Donley apparently believed that "they could be manipulated by the legislature to allow for additional expenditure even though there was no income coming in from them." Number 0175 SENATOR DONLEY pointed out that they "have been moving more and more things to that" [via] the definition, and that it is very problematic because the definition can be changed. CHAIR ROKEBERG recounted that prior legislation of his "had three items from the House side, [but] when it ended up in the Senate side, it had about 65 [items]." He mentioned that each one of those programs had a source of funds, and they weren't a "GF source of funds"; they were funds that were generated by the particular program. He asked Senator Donley to explain to him how that [type of example] would be manipulated "in that category to raise spending." SENATOR DONLEY replied: "Well, it's just that there's room for -- if there was a way we could lock down the definition of program receipts, I am certainly willing to look at it, because I understand the point." MR. TEAL noted that the point has been raised before, and it's a good one: "Why would you want to do that." He remarked that all he could say to that point is that that's the way the limit was conceived. He offered that the legislature could probably come up with another [item] to add to the list of exceptions - number 11 - which would allow programs that are fully funded by program receipts, statutorily, to be excluded. SENATOR DONLEY added that if members had a suggestion regarding specific language, he recognizes that that is a legitimate public policy decision. CHAIR ROKEBERG posited that if there were significant growth and the University of Alaska actually raised its tuition to help fund some of the "general tanks up there," the university should not be dissuaded from doing so. SENATOR DONLEY pointed out that it would have to be a pretty massive increase "in fees and revenue from fees" to really create a problem. CHAIR ROKEBERG said that the trouble is that even if "they had [$5 million or $6 million] here, and a $30 million Medicaid problem, all of a sudden you're whacked up against the $66- million cap pretty quickly." Number 0366 REPRESENTATIVE JAMES said that she was totally opposed to "making designated program receipts" because the [Alaska State] Constitution does not allow dedicated funds, and "that is an end run around dedicated funds." Some of the program receipts being discussed aren't really program receipts, she opined, - they are user fees. She added that as far as she is concerned, user fees are a specific tax on a specific group of people doing a certain thing, noting that she is not very supportive of user fees in general. And although she acknowledges that use of the university and use of [Occupational Licensing] are two very valid examples, referring to program receipts or self-funded programs is still problematic for her because she is not sure that even that "would pass muster," since [SJR 23] would involve making a constitutional amendment to a constitution that says dedicated funds are not allowed. She said, "They sound dedicated to me; I don't think I'd want to put it in there." SENATOR DONLEY offered that they wouldn't really be dedicated because they would still be subject to appropriation each year. So they wouldn't run up against the "non dedication of funds" clause, but there is certainly a public policy decision to be made, he noted. He said that he would be willing to accept an amendment adding program receipts to the list of exceptions, and surmised that Mr. Teal's suggestion would be the best way to do it. "You don't want to add programs that are only partially program receipts, because then what happens is you would raise the fees to offset GF and get around the spending [limit] that way," he added. CHAIR ROKEBERG said that despite some members' concerns regarding dedicated funds and the constitutionality of licensing fees, he is in favor of exempting program receipts. He remarked that that there are some "quasi-judicial boards," which are required by the legislature to be fully funded, that may want to grow, but can't do so even for their own benefit. "This is the same old fiscal-gap problem, because they'd butt up against the ceiling again," he added. SENATOR DONLEY said that if the committee wanted to give him some guidance via a conceptual amendment, he would not have a problem with that. Number 0545 CHAIR ROKEBERG asked: What about the "cap X on cash?" SENATOR DONLEY said, "Sure." He noted that the next point he wanted to discuss pertained to the argument that somehow, if Medicare went up, all of a sudden the state would be out of money. That argument assumes that the program isn't going to be modified or adjusted to stay within the state's means, he pointed out, so there are other options rather than just running out of money. He added that there would also be the "supermajority safety valve," should the legislature decide to continue to pay more. With regard to the cash-use issue, he said that should the state get a huge cash payment, which he deemed unlikely and certainly more than four years away, the CBR should be repaid first and then built back up so that the state has money available to act as a fiscal shock absorber. He also noted that that money could be put into an account so that the income from that money could be used to pay for the debt service that the voters would approve through GO bonds. SENATOR DONLEY said that the aforementioned option would be a viable use of any big cash payment, and the voters would still have the final say over what that money was being used for, but there would be a fund source to pay for it. He said that he hopes that the state, once again, has to worry about what to do with giant cash payments. Senator Donley then spoke to another issue raised earlier: The idea of across-the-board cuts - the segue that got off into the idea of proration - [I'll] just respond to that briefly. Only if the budget was structured in a certain way would the across-the-board cuts have the kinds of scary impacts that the witness testified to. Obviously, past administrations have actually sought proration authority, ... because they were being fiscally responsible; they wanted to reduce expenditures. Unfortunately, our current governor now has broken the billion-dollar mark, during his eight years in office, for spending increases over that time. And it's obvious that he is not the kind of guy that wants to reduce spending - it's not [on] his agenda. But governors who have wanted to exercise fiscal discipline and reduce spending have wanted proration authority to solve that, and clearly it could be structured in such a way [so that] those kinds of unwanted problems don't occur. Number 0729 REPRESENTATIVE JAMES relayed her belief that in the event that the spending limit needs to be exceeded, the concerns regarding program receipts would be allayed by the [three-fourths-vote] provision. CHAIR ROKEBERG: "You're going to get a [three-fourths] vote to raise the real estate license fee?" REPRESENTATIVE JAMES suggested that perhaps a two-thirds vote would be sufficient. CHAIR ROKEBERG said that if the committee is willing, he would offer a conceptual amendment to exclude those fully funded, self-supporting programs, then all that would have to be done is "lower the base from that amount." MR. TEAL, to respond to Representative James, said that "you couldn't get there with the two-thirds vote; you've got roughly $50 million [of] statutory, designated program receipts and another $50 million worth of receipt-supported services that are out there now." So it's unlikely that "those" could be addressed with the [three-fourths] vote either, he noted. On the issue of a conceptual amendment, he said that it would depend on how it's stated; if the language refers to "fully funded", then Occupational Licensing, the Oil and Gas [Conservation] Commission, and the [Regulatory Commission of Alaska (RCA)] are clearly fully funded by fees or receipts, and would be excluded. He remarked that the university, however, still gets close to $200 million of general funds, so it would be difficult to claim that it is fully funded. CHAIR ROKEBERG said that he would stick with "fully funded" to avoid the argument about whether "they're in or out." SENATOR DONLEY pointed out that it's very unlikely that in any particular year, the program receipts or other sources of revenue would double; that would be a tremendous amount of additional revenue. So as long as it wasn't doubling, he added, there would be an opportunity to deal with it "within the 2 or the 3 percent increase." CHAIR ROKEBERG remarked that what he is saying is that $66 million may not go very far in a particular year. SENATOR DONLEY said that "if that passes, we can make it work." Number 0990 CHAIR ROKEBERG closed the public hearing on SJR 23. He made a motion to adopt Conceptual Amendment 1, on page 2, line 10: "A new [paragraph] (10), and move [current paragraph] (10) to (11), that fully funded program receipts be excluded from the calculation." SENATOR DONLEY noted that other portions of [SJR 23] might have to be adjusted slightly. CHAIR ROKEBERG added that concept to his motion regarding Conceptual Amendment 1. REPRESENTATIVE OGAN asked whether adoption of Conceptual Amendment 1 would allow the legislature to shift program receipts around "to get them off budget," so that the budget could be increased through the back door. CHAIR ROKEBERG posited that the answer is no because they're not off budget now, they're just in the "other" category, but they are still available for appropriation. It just excludes them from the ceiling here, he added, it allows them to go up because they are self-funded. REPRESENTATIVE OGAN acknowledged that point but indicated that he still has concerns. SENATOR DONLEY recalled that Mr. Teal had mentioned that it would be similar to the Gramm-Rudman-Hollings Act in that "if you can find your own source of funding, you can spend more money." So if the fees go up, he added, that money can be spent on more services. CHAIR ROKEBERG concurred; if "BP" wanted to spend a million dollars on a permit, then it could do so without affecting the cap. REPRESENTATIVE OGAN said that what he is concerned about is the unintended consequences of creating a motivation for different agencies to charge program receipts. Both government and budgets would continue to grow if the legislature gave agencies carte blanche with program receipts, he opined. Number 1100 REPRESENTATIVE JAMES indicated that this is also a concern of hers. There is a plethora of user fees out there, she opined, for example, permits for sewers. She also indicated her impression that the attitude appears to be, "If you need more money, just raise the users' fees," which she considers to be a form of taxation for a selective few. "I don't want to open the door for that," she stated. SENATOR DONLEY said: What about this as a compromise ...: What if the user-fee exception was limited to statutorily set user fees so that the agencies wouldn't have the authority to raise them just to create more bureaucracy, ... that they'd only count the ones that we set by statute. So then you'd have the safeguard of the legislature being involved. CHAIR ROKEBERG opined that that wouldn't work because [user fees] are set by regulation. MR. TEAL observed that it is by statute that Occupational Licensing is supposed to set its fees; so while the fees are set by regulation, it is the statute that directs that activity. He noted that there are some Department of Environmental Conservation (DEC) programs that are set up in a similar fashion. "If you change it to programs which the legislature's directed, [it] will be cost [recovery]," he added. CHAIR ROKEBERG mentioned that it is just [Occupational Licensing] "permitting" that he is concerned about at this juncture. MR. TEAL noted that permits are also "cost recovery." CHAIR ROKEBERG indicated a willingness to amend Conceptual Amendment 1 as Senator Donley suggested regarding a compromise. REPRESENTATIVE JAMES said that although she is sympathetic to this issue, she does not want to be trapped into building a bigger government and causing some people to have to pay for something they can't avoid. She said that she doesn't have a problem with paying for the cost of doing business. That's not the issue, she noted, it's just that it appears to her that the more regulations and rules there are, the more it will cost - the higher the user fees will become. She remarked that she has "been here ten years and I've seen it happen, day after day after day." REPRESENTATIVE MEYER asked: "Isn't the safeguard in place with the suggestion that the Senator had about having the increases come before the legislature again?" CHAIR ROKEBERG indicated that he thinks it is. REPRESENTATIVE JAMES argued that "all the ones we've done came before the legislature." CHAIR ROKEBERG countered that not all of "them" have statutory requirements to set the fees, which is what the amended version of Conceptual Amendment 1 entails. Number 1285 CHAIR ROKEBERG made a motion to adopt Conceptual Amendment 1, as amended. MR. TEAL indicated that the suggested language for Conceptual Amendment 1, as amended, would involve: "Receipts which the legislature has directed will be cost recovery, so that like [Occupational Licensing] and others where, by statute, the legislature says, 'Fees will be set to recover costs.'" Number 1363 A roll call vote was taken. Representatives Meyer and Rokeberg voted for Conceptual Amendment 1, as amended. Representatives James, Ogan, and Coghill voted against it. Therefore, Conceptual Amendment 1, as amended, failed by a vote of 2-3. Number 1372 REPRESENTATIVE OGAN moved to report HCS SJR 23, version 22- LS0734\R, Cook, 2/4/02, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HCS CSSJR 23(JUD) was reported from the House Judiciary Standing Committee.
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