Legislature(2005 - 2006)CAPITOL 120
04/25/2005 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HJR12 | |
| SB129 | |
| SB143 | |
| Violent Crimes Compensation Board | |
| Commission on Judicial Conduct | |
| Alaska Judicial Council | |
| HB266 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HJR 12 | TELECONFERENCED | |
| + | HB 266 | TELECONFERENCED | |
| + | HB 268 | TELECONFERENCED | |
| += | SB 36 | TELECONFERENCED | |
| += | SB 143 | TELECONFERENCED | |
| += | SB 129 | TELECONFERENCED | |
| + | TELECONFERENCED |
HJR 12 - CONST. AM: BUDGET RESERVE FUND REPEAL 1:14:05 PM CHAIR McGUIRE announced that the first order of business would be HOUSE JOINT RESOLUTION NO. 12, Proposing amendments to the Constitution of the State of Alaska relating to the repeal of the budget reserve fund. [Before the committee was CSHJR 12(W&M).] REPRESENTATIVE JOHN HARRIS, Alaska State Legislature, sponsor of HJR 12, offered that the resolution would provide "a way to deal with what we hope will be the beginnings of a fiscal plan for the state." The resolution would put before the voters the question of whether the Constitutional Budget Reserve Fund (CBRF) should be put into another "constitutional" fund that would allow earnings to be used for capital construction or capital maintenance. The resolution also provides that the earnings that will be allowed to be used would "be a stream determined by a percent-of-market-value approach," specifying 5 percent of the value of the fund every year; additionally, the fund would be inflation proofed. He predicted that the establishment of such a fund will be much less controversial than similar approaches. REPRESENTATIVE HARRIS mentioned that a companion bill is currently in the House Finance Committee and would take approximately $600 million from the CBRF and put it into a "statutory budget reserve" fund, and suggested that doing so would alleviate concerns regarding cash flow, concerns regarding whether the state would be able to meet its financial obligations in a timely manner. He explained that if HJR 12 passes, it will eliminate the three-quarter vote requirement, and predicted that this will in turn force the legislature to look at other sources of revenue to balance the budget without relying on what he characterized as "the crutch" of the CBRF. Voters could also then vote for candidates based upon what they claim they will do to balance to budget when and if they become elected officials. 1:18:22 PM CHAIR McGUIRE noted that HJR 12 is before the House Judiciary Standing Committee because it proposes a change to the Alaska State Constitution, and suggested that committee members allow the House Finance Committee to address the financial ramifications of the resolution. CHAIR McGUIRE, after ascertaining that no one else wished to testify, closed public testimony on HJR 12. 1:19:26 PM REPRESENTATIVE GARA asked whether HJR 12 would take all monies currently in the CBRF and put it in a capital construction permanent fund. REPRESENTATIVE HARRIS said it would with the exception of the aforementioned $600 million being addressed by legislation currently in the House Finance Committee. That $600 million, were both that bill and this resolution to pass - and the latter be approved by the voters - would be placed in the aforementioned "statutory budget reserve" fund; the remainder of monies currently in the CBRF would be transferred into the capital construction permanent fund. REPRESENTATIVE HARRIS, in response to a further question, clarified that were HJR 12 to pass, all references [in the Alaska State Constitution] to the CBRF would be eliminated; this would include references to "the sweep." The proposed new capital construction permanent fund would be constitutionally protected, and only the earnings - never the principal - could be spent. Again, the aforementioned $600 million would be available to address cash flow issues, would be available to borrow from and pay back, and would be subject to appropriation by the legislature. 1:21:31 PM REPRESENTATIVE GARA said his concerns are related to what he called "capital equity," in that historically, a disproportionate amount of money [for capital projects] tends to go to the districts of those members in the House Finance Committee with power, and offered that he has always thought that a solution would be to have "some sort of equity requirement." He asked Representative Harris to comment on this issue, and suggested that perhaps a provision could be added to the resolution such that it would allow for both fairness and statesmanship by saying that as part of "this" fund, no district could get more than 25 percent more than the average that all districts get unless authorized by a two-thirds vote in the House of Representatives. For example, if there were an emergency situation or a special project, then with a two-thirds vote, one district would be able to get a substantially larger amount of money than other districts; the legislature would have the flexibility to provide more funds to an area that needed it. 1:23:34 PM REPRESENTATIVE HARRIS said he doesn't have a problem with such a concept, but noted that almost all school maintenance projects are in rural Alaska and thus it seems that minority members are getting the bulk of capital funds. He said that he hopes to be able to work with Representative Croft in the House Finance Committee to address parity concerns. REPRESENTATIVE GARA suggested that perhaps the language could be structured such that "the average capital that goes to majority member districts, per district, should not be more than 25 percent more than the average that goes to minority member districts, absent a two-thirds vote." REPRESENTATIVE HARRIS posited that such would be good idea and that the concept has a lot of merit, but he doesn't yet know how it would be structured, what the language would look like. He suggested that perhaps the administration should be required to provide the legislature with a "maintenance list" - similar to the school construction list that it already provides - based on certain criteria, and that such a list might help to maintain some sense of order. 1:26:41 PM REPRESENTATIVE GRUENBERG surmised that HJR 12 is basically "changing what is now a [Constitutional Budget Reserve (CBR)] with a three-quarter vote into a permanent fund but allowing access of no more than 5 percent of the principal per year" for capital construction [and maintenance]. REPRESENTATIVE HARRIS concurred with that summation. REPRESENTATIVE GRUENBERG offered his understanding that originally the resolution was not limited to capital construction. REPRESENTATIVE HARRIS concurred. REPRESENTATIVE GRUENBERG suggested that perhaps the resolution oughtn't to be limited to just capital projects, but then noted that the fund would simply become a second permanent fund. REPRESENTATIVE HARRIS offered: The idea, of course, is that we have such a huge amount of deferred maintenance ... all over the state, and if we're ever going to get past this idea of the CBR being nothing more than a fund that we entice the minority - whoever they may be, republican or democrat - to dip into to balance our budget, and we're going to look forward enough to say we're going to use some other mechanism to balance our budget long-term, then we have to do this. Otherwise, this mechanism is here, it's easy - I mean relatively easy - to get at. And ... we've talked right now about [how] ... the republicans are in power so they just shut the democrats out. Well, the democrats will be in power sooner or later ..., and when they are you don't want to be shackled with that same issue either - you want to be able to control policy, as you should be able to. And I understand why the legislature did this years ago; ... the legislature was awash in money ... in those days, and ... the minority at that point in time ... had concerns about ... the money all being spent ..., so they ... wanted to put their own sideboards on it. ... I think those days are over with. ... We're not in those situations anymore. Yeah, we have $50-a-barrel oil ..., but we know that's not realistic to [expect that to] last forever. ... And with our budget continuing to increase, it won't be too many more years ... [before] we're at $3 billion general fund [GF] budget - it's going to take a lot of oil at very high prices to allow us to balance our budget under that scenario. And so I say we're going to need other revenue sources to balance our budget on a continuing ... [basis]. 1:30:21 PM REPRESENTATIVE GRUENBERG offered a hypothetical example involving repairs to a school in a Rural Education Attendance Area (REAA), and asked whether such a school would be considered a facility of the state or a subdivision of the state. REPRESENTATIVE HARRIS said yes. REPRESENTATIVE GRUENBERG asked whether the resolution would allow any public building in the state to receive monies from the fund created via the resolution. REPRESENTATIVE HARRIS said yes. REPRESENTATIVE GRUENBERG asked whether ferries would also be considered facilities of the state. REPRESENTATIVE HARRIS said yes. 1:31:26 PM REPRESENTATIVE GARA offered his understanding that the aforementioned school construction list that the administration provides the legislature is a "statutory" list. REPRESENTATIVE HARRIS concurred with Representative Gara's understanding. REPRESENTATIVE GARA offered his belief that the current three- quarter vote requirement of the CBR provides the minority with a voice regarding budget issues. REPRESENTATIVE HARRIS clarified, however, that such is not a guarantee, since with $50-a-barrel oil, for example, the legislature is able to balance the budget without tapping into the CBRF and thereby needing to make use of the three-quarter vote requirement. REPRESENTATIVE GARA offered his understanding that he and the sponsor agree with the concept that there should be some sort of equity regarding capital funds. He suggested that the resolution ought to include a provision which says that excluding the maintenance and construction school budget, which is defined by statute, for all other capital that's paid for by this fund, the average amount that goes, per district, to majority districts can be no more than 20 percent more than the average that goes to minority districts. If the House Judiciary Standing Committee were to amend HJR 12 to that effect, then if 20 percent doesn't seem to the House Finance Committee to be a fair number, he remarked, then that committee could try and come up with a better number. REPRESENTATIVE HARRIS remarked that such could be done either through an amendment or through intent language of some sort, adding that he doesn't have a problem with that concept as long as school maintenance issues or public facility maintenance issues are excluded - the first of which are already addressed by the aforementioned statutory list, and the second of which might also soon be addressed through a similar statutory list - since there may be more needs regarding those issues in certain districts. For example, the installation of detection systems in court buildings in urban areas. Such lists allow the legislature to funnel funds through to those specific areas/projects after the administration has had an opportunity to look at them in terms of which items should be a priority. In conclusion, he said he would prefer that the capital construction permanent fund not be used as a bonding mechanism; that rather it should be used strictly as a "cash" mechanism to pay for needed infrastructure repair. 1:34:55 PM REPRESENTATIVE COGHILL said he would object to putting an allocation provision in the resolution. Rather, if they are going to add language to the [Alaska State] Constitution regarding another constitutional fund, they should just define how that fund is to be managed and how it is to be accessed, and all other issues related to that fund should be left up to the legislature to deal with. He cautioned against putting equity allocations in the [Alaska State] Constitution, since, he opined, allocations should instead be debated as a legislative policy issue, particularly given the historical fluctuations in pipeline revenues. He asked the sponsor to comment regarding what he anticipates the actual ballot language would be. REPRESENTATIVE HARRIS noted that the language on the ballot could be worded a number of different ways, and expressed a preference that it be as clear as possible so that the voters understand what they are voting on and understand what the term, "percent of market value," means with regard to both inflation proofing and "the stream of revenue coming off." REPRESENTATIVE COGHILL asked the sponsor whether he is wedded to the concept of "percent of market value," or whether he would be amenable to having an open fund and allowing the legislature to "dip into" it as well. REPRESENTATIVE HARRIS reiterated that the principal of the proposed fund would be constitutionally protected so as to prevent "dipping into" it. Additionally, as currently written, there is no vote mechanism allowing access to the principal. REPRESENTATIVE COGHILL surmised, then, that only 5 percent of the market value of that fund would be used and no three-quarter vote would be needed. 1:38:51 PM REPRESENTATIVE HARRIS concurred. In response to a question, said he is not completely devoted to the "5 percent of market value" concept, but he thinks that it is a good mechanism that allows two things to happen, one of which being to inflation proof the fund. He pointed out, too, that the legislature would not be required to use those funds; instead, if that money were not needed, it could simply revert back into principal. REPRESENTATIVE COGHILL, surmised that the current constitutional requirement of paying back the CBRF would no longer exist with the adoption and voter approval of the proposed constitutional change. REPRESENTATIVE HARRIS concurred. 1:40:24 PM REPRESENTATIVE GARA said another of his concerns centers around the possibility that if the cushion now offered by the CBRF is wiped out, it will hasten the day that an income tax or a sales tax or a permanent fund dividend (PFD) cut will have to be imposed. REPRESENTATIVE HARRIS noted that debates on that issue took place when oil was at $8 per barrel, and remarked that that question is one that will have to be faced at some point, particularly given that the budget has continued to increase because costs have continued to increase. He added: It's bringing it to a head, to say we have to ask the people of the state of Alaska how they want to truly fund the growth of this government, period. And this puts the question before them - they don't have to vote for [it], the people, but it puts the question in front of them - "Do you want to do something different with the CBR?" ... And that certainly will be part of the debate if it gets out there in the public, to say, "Well, this is ... enhancing the fact you're probably going to have use of the earnings of the permanent fund or income tax or sales tax just to balance the budget in the future." But I think the people need to have that question in front of them. 1:43:26 PM REPRESENTATIVE GARA [made a motion to adopt Conceptual Amendment 1], to say that outside of school and public facilities construction and maintenance projects, the expenditures from this fund should not provide, on average, any more than a maximum of 20 percent more per district in majority members' districts than minority members' districts, to guarantee that the minority doesn't get shut out of the process for power reasons, and would say that in order for that [stipulation] to be waived, there would have to be a two-thirds vote to justify the projects that would otherwise disrupt that balance. REPRESENTATIVE ANDERSON objected. 1:45:03 PM REPRESENTATIVE ANDERSON opined that Conceptual Amendment 1 would tie the legislature's hands and underestimates the fact that districts are connected. REPRESENTATIVE COGHILL said he objects to Conceptual Amendment 1 because of the possibility that it could create allocation problems, and opined that when proposals are offered that would change the Alaska State Constitution, they should be accompanied with a description of the basic underlying principal. If allocations are to be based on certain, set percentages, for example, then the legislature should be free to allocate within those percentages. REPRESENTATIVE GARA, with regard to Conceptual Amendment 1, said: Certainly ..., under this proposal, ... one ... republican district could get all the money and the other one would get none, but that would be okay as long as on average, all of the ... money that went to the majority wasn't on average, per district, 20 percent [more] than all of the money that went to the minority. And if we can't agree to something like that or some other language that would preserve fairness to people who are not the majority ... party, I really greatly worry that we're going to have a provision where things like what happened in the past, where you get this special allocation for majority member districts that doesn't get accorded to the minority party, will happen more often. And if we're going to get rid of the two-thirds vote requirement, which is really one of the few things that gives the minority a voice in this legislature, ... then I think you have to replace it with something that guarantees some fairness. And ... if people want to work on better language, and people want to get this bill out today, that's why I would like to have something on the record today and let them fiddle with it in [the House Finance Committee]. But [I've] got to say, I'm not going to be thrilled with a provision that doesn't have a protection like that. 1:48:31 PM A roll call vote was taken. Representatives Gruenberg and Gara voted in favor of Conceptual Amendment 1. Representatives McGuire, Anderson, Coghill, Kott, and Dahlstrom voted against it. Therefore, Conceptual Amendment 1 failed by a vote of 2-5. 1:48:53 PM REPRESENTATIVE DAHLSTROM moved to report CSHJR 12(W&M) out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHJR 12(W&M) was reported from the House Judiciary Standing Committee.
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