Legislature(2001 - 2002)

04/29/2002 01:48 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SJR 38 - CONST AM: PRIORITY OF EXPENDITURES                                                                                   
[Contains mention of HB 349.]                                                                                                   
Number 0479                                                                                                                     
CHAIR ROKEBERG  announced that the  last order of  business would                                                               
be SENATE  JOINT RESOLUTION NO.  38, Proposing amendments  to the                                                               
Constitution  of  the State  of  Alaska  relating to  information                                                               
regarding proposed expenditures.                                                                                                
Number 0527                                                                                                                     
GWENDOLYN  HALL,  Staff  to  Senator  Pete  Kelly,  Alaska  State                                                               
Legislature, said on  behalf of Senator Kelly,  sponsor, that SJR
38  will  amend  the  Alaska State  Constitution  such  that  the                                                               
governor will be  required to submit a prioritized  budget to the                                                               
legislature.  She said of the sponsor that:                                                                                     
     He sees this as a  "communicative tool" between the ...                                                                    
     executive branch and the legislative  branch.  And in a                                                                    
     time  of  such fiscal  crises,  ...  we feel  that  the                                                                    
     administration would be the  best source of information                                                                    
     as to what  programs or services would be  best to cut,                                                                    
     since they  are the folks  that deal with  the services                                                                    
     and programs every day.                                                                                                    
REPRESENTATIVE  BERKOWITZ  asked:   "What  does  this look  like?                                                               
Practically speaking, what would it look like?"                                                                                 
MS. HALL, in response, said:                                                                                                    
     We actually  got this  idea from  the governor  when he                                                                    
     was  the   mayor  of  Anchorage.     Annalee  McConnell                                                                    
     submitted her  budget in a  prioritized fashion  to the                                                                    
     [Anchorage  Assembly], and  so I'm  sure we  could call                                                                    
     the governor's office ..., get  a copy of that, ... and                                                                    
     ... see what that would look like.                                                                                         
REPRESENTATIVE BERKOWITZ said:                                                                                                  
     I'm curious  to know  how we  would do  this.   I mean,                                                                    
     would  [he/she] prioritize  item  by  item through  the                                                                    
     budget?   Would  [he/she]  prioritize [one]  department                                                                    
     over other  departments?...  Would  [he/she] prioritize                                                                    
     constitutional over, say, moral?   I mean, I just don't                                                                    
     understand  how/what it  would  look like,  physically.                                                                    
     Would it become a bound piece  of paper?  Would it come                                                                    
     in the  form of a bill?   Would failure to  comply with                                                                    
     it be actionable?...  It's just very confusing.                                                                            
REPRESENTATIVE  JAMES  said:   "It's  all  statutory language  to                                                               
implement this constitutional amendment."                                                                                       
REPRESENTATIVE  MEYER  remarked   that  there  were  similarities                                                               
between SJR 38 and a  bill sponsored by Representative Fred Dyson                                                               
-  HB 349.    He then  spoke briefly  of  the Anchorage  Assembly                                                               
budget process.                                                                                                                 
MS. HALL pointed out that  SJR 38 differs from the aforementioned                                                               
bill  in that  it is  a constitutional  amendment, and,  as such,                                                               
will protect a prioritized  budget from constitutional challenges                                                               
based on separation of powers.                                                                                                  
Number 0795                                                                                                                     
REPRESENTATIVE  BERKOWITZ remarked  that SJR  38 appears  only to                                                               
focus on  the operating budget  but does not address  the capital                                                               
budget.  Why the distinction?                                                                                                   
REPRESENTATIVE  MEYER noted  that the  Anchorage Assembly  budget                                                               
process is similar in that  regard, mentioning that in Anchorage,                                                               
the capital budget is "bonded for."                                                                                             
REPRESENTATIVE BERKOWITZ pointed out,  however, that at the state                                                               
level, "we don't bond."  He  predicted that if the capital budget                                                               
is  not woven  into  "this constitutional  requirement, it  might                                                               
create some difficulties."                                                                                                      
CHAIR ROKEBERG  surmised that SJR  38 was introduced  in reaction                                                               
to   the  "administration's   failure  to   act  on   legislative                                                               
requests."  He  noted that the Department of  Education and Early                                                               
Development already prioritizes its capital expenditures.                                                                       
REPRESENTATIVE   BERKOWITZ   argued,    however,   that   "that's                                                               
prioritization  within  the  capital  [budget],  and  it  doesn't                                                               
integrate the  capital requests in with  the operating requests."                                                               
He elaborated:                                                                                                                  
     For  example,  you  might say,  "I  would  rather  fund                                                                    
     [Alaska State] Troopers than build  the road here," but                                                                    
     if  you   segregate  the  two,   you  don't   have  the                                                                    
     opportunity  under  this  constitutional  amendment  to                                                                    
     make  that  decision,  because the  capital  budget  is                                                                    
     separate from the operating budget.                                                                                        
REPRESENTATIVE KOOKESH  returned to  the issue of  the Department                                                               
of Education  and Early Development's capital  budget priorities,                                                               
and recalled  that a few  years ago, he'd  stood up on  the House                                                               
floor and asked why the  legislature was jumping from number [32]                                                               
to number  59 in order  to fund carpets in  the Matanuska-Susitna                                                               
valley.  "The prioritization didn't  work there," he pointed out,                                                               
so "why should it work here."                                                                                                   
CHAIR ROKEBERG said he recalled that incident.                                                                                  
REPRESENTATIVE  BERKOWITZ   suggested,  "What   if  we   were  to                                                               
constitutionally   require   the   legislature  to   follow   the                                                               
'executively generated' lists?"                                                                                                 
CHAIR  ROKEBERG suggested  to  Representative  Berkowitz that  he                                                               
offer an amendment to that effect.                                                                                              
REPRESENTATIVE   JAMES,   on  Representative   Kookesh's   point,                                                               
surmised that sometimes items on  a priority list are passed over                                                               
because  they  are too  big,  and  by  passing such  items  over,                                                               
several smaller projects  can be funded instead.   Therefore, she                                                               
opined,  any  kind  of  prioritization is  never  going  to  work                                                               
perfectly and  will be  subjective, although  this does  not mean                                                               
that prioritization  shouldn't be done.   She indicated  that she                                                               
is in favor of SJR  38 because currently, the administration does                                                               
not   always  spend   funds  according   to  the   [legislature's                                                               
allocations].  She  posited that SJR 38 would  provide for better                                                               
communication between the administration and the legislature.                                                                   
Number 1214                                                                                                                     
JACK KREINHEDER,  Chief Analyst,  Office of the  Director, Office                                                               
of Management & Budget (OMB), Office of the Governor, said:                                                                     
     The administration's  main concern  with SJR 38  is not                                                                    
     with the priority budgeting issue  per se, but with the                                                                    
     fact  that   we  view  this  amendment   as  completely                                                                    
     unnecessary, and  do not see  any separation  of powers                                                                    
     issue here....   Our viewpoint is  that the legislature                                                                    
     does   have   complete    authority   to   direct   the                                                                    
     administration  to provide  or  request information  in                                                                    
     the  Executive  Budget  Act;  we've  had  an  Executive                                                                    
     Budget  Act on  the books  now  for, I'm  not sure  how                                                                    
     long, but  it goes  into some  detail, [and]  it's been                                                                    
     modified  in recent  years to  require the  performance                                                                    
     measures -  mission and measures  information -  that I                                                                    
     think we've  been working on fairly  cooperatively with                                                                    
     the legislature.                                                                                                           
     So the  legislature does have clear  legal authority to                                                                    
     say more than what the  constitution says, which is one                                                                    
     line  that the  governor shall  prepare a  budget every                                                                    
     year.     And  the  legislature's  done   that  in  the                                                                    
     Executive  Budget Act.   So,  HB 349  would modify  the                                                                    
     Executive  Budget Act,  as was  mentioned,  to do  just                                                                    
     what this requires,  and we would have  no intention of                                                                    
     challenging  that in  court, and  the  lawyers tell  me                                                                    
     that we  wouldn't have  any basis to.   So,  again, ...                                                                    
     our concern  with this resolution  is not so  much with                                                                    
     the  priority budgeting  per se,  it's  just that  it's                                                                    
     completely  unnecessary  [and]  would  clutter  up  the                                                                    
     [Alaska State] Constitution....                                                                                            
MR. KREINHEDER,  on the  issue of  the Anchorage  Assembly budget                                                               
process,  relayed  that  Ms.  Frasca,  "the  budget  director  of                                                               
Anchorage," has testified that attempting  to mirror Anchorage at                                                               
the state level  would be a major change and  be quite expensive.                                                               
Should  HB 349  pass,  he remarked,  although the  administration                                                               
would attempt to be responsive, there  will be limits to what can                                                               
be done without additional funds.                                                                                               
Number 1409                                                                                                                     
MR.  KREINHEDER  offered  the  following as  an  example  of  the                                                               
administration's concern regarding a prioritized budget:                                                                        
     It's  kind  of  an   abstract  concept,  but  ...,  for                                                                    
     example,  is   it  more  important  for   Alaska  State                                                                    
     Troopers  to  investigate  homicides or  write  parking                                                                    
     tickets?   Well, that's  an easy one.   But  what about                                                                    
     the  Department  of Revenue?    How  would all  of  you                                                                    
     prioritize these  functions:  collecting oil  and other                                                                    
     taxes,   managing  the   state's  investments,   paying                                                                    
     permanent  fund   dividends,  or,   the  administrative                                                                    
     functions that  run the department?   Well, most people                                                                    
     probably  put  the   administrative  functions  at  the                                                                    
     bottom,  but  if  there's nobody  there  to  write  the                                                                    
     paychecks, then [who does] the  other work?  And in the                                                                    
     first three,  frankly, we'd have a  very difficult time                                                                    
     trying  to   rank  any  those  key   functions  of  the                                                                    
     department.   So, it just  comes down to  a philosophy,                                                                    
     and our  viewpoint is  that trying to  do this  sort of                                                                    
     priority budgeting  at the state level  is a simplistic                                                                    
     approach that  is better directed at  really looking at                                                                    
     specific functions, if that's  what we're talking about                                                                    
     eliminating or reducing.                                                                                                   
REPRESENTATIVE JAMES  noted that  in the private  sector, budgets                                                               
start  at zero  and all  expenditures  have to  be justified  and                                                               
reevaluated periodically,  because corporations  want to  be sure                                                               
that they are  "mean and lean" and not wasting  money on anything                                                               
that  would  reduce  their  profit  level.    Unfortunately,  she                                                               
remarked,  government  doesn't  have that  ability,  noting  that                                                               
usually a  review of the  budget is based  on what was  spent the                                                               
prior year.   She opined  that even if SJR  38 did result  in the                                                               
budget process  taking more time, it  would be good to  take that                                                               
time in  order to determine  specifically what would be  best for                                                               
each department.   She asked  Mr. Kreinheder which he  prefers, a                                                               
prioritized budget or a zero-based budget.                                                                                      
MR. KREINHEDER  surmised that  a zero-based  budget at  the state                                                               
level  would  be too  cumbersome  and  not  an efficient  use  of                                                               
resources,  as was  found  to be  the case  by  most states  that                                                               
attempted that type  of budget process.   Budgeting resources, he                                                               
opined, would  be better spent  "looking at  ... the guts  of the                                                               
programs"  to determine  which should  get more  money and  which                                                               
should get less.                                                                                                                
REPRESENTATIVE JAMES  acknowledged that government cannot  be run                                                               
like the private  sector because they have different  jobs to do.                                                               
She noted, however,  that government tends to grow  its budget by                                                               
spending all  its money so  that it can  ask for the  same amount                                                               
the following year.   She offered that SJR 38  will provide a way                                                               
in  which to  determine how  such practice  can be  restricted or                                                               
eliminated,  and surmised  that the  executive branch  is in  the                                                               
best position to make that determination.                                                                                       
Number 1674                                                                                                                     
MR.  KREINHEDER said  that he  understood Representative  James's                                                               
concern, noting  that even "a  flat budget" is a  difficult place                                                               
to start  from and  requires budget reductions  in some  areas in                                                               
order to  absorb increases  in fixed costs.   He  reiterated [the                                                               
OMB's] position  that instituting  a priority  budget is  not the                                                               
best approach  at the  state level,  noting Annalee  McConnell is                                                               
very  familiar  with   that  type  of  budgeting   process.    He                                                               
acknowledged that government growth is  one of the public's major                                                               
concerns,  but pointed  out that  growth in  the government  of a                                                               
growing state is  not necessarily a bad thing:   "you've got more                                                               
kids, you  need more  teachers; you've  got more  population, you                                                               
need more roads, you need more  Troopers, and so on, just to keep                                                               
the same  level of service."   He remarked that even  though some                                                               
are hoping to hold government spending  at the same level for the                                                               
next  20 years,  it is  going to  come down  to a  choice between                                                               
running  the state  into  the ground  and  providing an  adequate                                                               
level of public service.                                                                                                        
REPRESENTATIVE JAMES opined  that there should be  a priority for                                                               
spending which includes growing the economy.                                                                                    
MR.  KREINHEDER,  in  response  to  questions,  agreed  that  the                                                               
administration's position is that SJR  38 will be redundant if HB
349 passes;  he remarked, however,  that he could not  comment on                                                               
whether the  governor intends  to veto  HB 349,  reiterating that                                                               
the administration would not challenge  HB 349 on a separation of                                                               
powers issue.   He  noted that  although the  administration does                                                               
not feel that mirroring Anchorage's  budget process is realistic,                                                               
it would make  a good faith effort  to comply.  He  said that the                                                               
current state budget process does  involve priorities, but not to                                                               
the point  of ranking, for  example, whether collecting  more oil                                                               
taxes is  more important than  managing the "billions  of dollars                                                               
we have in the bank."                                                                                                           
REPRESENTATIVE   BERKOWITZ   asked,   "What  happens   when   the                                                               
legislative   branch   doesn't   like  the   executive   branch's                                                               
REPRESENTATIVE MEYER replied, "Then we adjust it."                                                                              
REPRESENTATIVE  BERKOWITZ said,  "So, ...  what's different  than                                                               
what we do now?"                                                                                                                
REPRESENTATIVE MEYER  indicated that  at least  [the legislature]                                                               
would know what [the administration's]  priorities are before any                                                               
adjustments are made.                                                                                                           
REPRESENTATIVE  BERKOWITZ opined  that  the fact  that items  are                                                               
included  in  the  governor's  budget   should  indicate  to  the                                                               
legislature  that those  items  are  a priority.    "And when  we                                                               
modify  those budgetary  amounts or  delete them  entirely, we're                                                               
indicating legislative priority, aren't we?" he asked.                                                                          
Number 2013                                                                                                                     
CHAIR ROKEBERG closed public testimony on SJR 38.                                                                               
REPRESENTATIVE  MEYER said  he supports  SJR 38,  noting that  in                                                               
Anchorage,  the prioritized  budget process  forced communication                                                               
between the mayor and assembly.   He opined that a similar system                                                               
would do the same at the  state level between the legislature and                                                               
the administration.                                                                                                             
REPRESENTATIVE KOOKESH  referred to  subsection (b) in  Section 2                                                               
of SJR 38.  He said:                                                                                                            
     If   people  are   so  supportive   of  this   kind  of                                                                    
     documentation,    why   are    we   leaving    it   ...                                                                    
     [discretionary]?  On the end  of (b), [it says] "if the                                                                    
     legislature  requests  the  information  by  concurrent                                                                    
     resolution".   Is it  in case  somebody other  than the                                                                    
     party that's currently in there  gets elected?  I mean,                                                                    
     if you're going  to do this, then let's do  it.  Why do                                                                    
     you have the  "out" on there?  Why do  you have "if the                                                                    
     legislature  requests [the]  information"?   Why  don't                                                                    
     you  just say,  "the  governor shall  submit ...  under                                                                    
     this section", period?                                                                                                     
MS. HALL  said she has  not yet had a  chance to ask  the sponsor                                                               
why that language was included.                                                                                                 
CHAIR  ROKEBERG  said that  Representative  Kookesh  has a  valid                                                               
REPRESENTATIVE COGHILL  relayed that  in the House  State Affairs                                                               
Standing Committee, the  sponsor had indicated that  there may be                                                               
"some  executive  and  legislative  branches that  might  work  a                                                               
little  closer together,  and  there  might be  a  time when  the                                                               
legislature may  have to request it,  and this is a  tool to make                                                               
sure that the request is fulfilled."                                                                                            
REPRESENTATIVE  BERKOWITZ indicated  that the  inclusion of  such                                                               
language signals to him that,  clearly, this is a political bill,                                                               
because it cuts the minority out.                                                                                               
REPRESENTATIVE KOOKESH said that regardless  of which party is in                                                               
the  majority or  which  party the  governor  is from,  requiring                                                               
information  by concurrent  resolution "puts  politics into  it."                                                               
If  that  language  is  removed  and a  period  is  placed  after                                                               
"section"  on line  15, he  opined, then,  regardless of  who the                                                               
governor is, he/she will be required to submit a priority list.                                                                 
Number 2180                                                                                                                     
REPRESENTATIVE  COGHILL observed  that much  of the  constitution                                                               
has been drafted to "protect the  inclusion of the minority."  He                                                               
posited that  SJR 38 was crafted  with the idea that  there would                                                               
be tension between the two  branches of government, regardless of                                                               
REPRESENTATIVE KOOKESH reiterated  his point:  "If  we thought we                                                               
needed this,  then why are  we giving an out?   If we  think this                                                               
legislation  is so  important, why  are giving  an out  by saying                                                               
unless  a  concurrent  resolution   is  adopted  ...  there's  no                                                               
requirement here?"                                                                                                              
CHAIR ROKEBERG  said that although he  agrees with Representative                                                               
Kookesh's point,  almost everything they do  involves some degree                                                               
of politics.   He agreed that SJR 38, as  currently worded, would                                                               
more  often   come  into  play   in  a  "more  hostile   type  of                                                               
relationship" between the administration and the legislature.                                                                   
REPRESENTATIVE  COGHILL, referring  to the  concurrent resolution                                                               
requirement,  said  that  it  is important  to  ensure  that  the                                                               
minority has significant  input.  He recalled that  only a simple                                                               
majority  is  needed  to  pass  a  concurrent  resolution;  thus,                                                               
conceivably,    the   minority    would    not   be    completely                                                               
REPRESENTATIVE  JAMES   opined  that  SJR  38   would  simply  be                                                               
providing the legislature with a  way to require this information                                                               
should the  administration not come forward  with it voluntarily.                                                               
With a concurrent resolution requirement,  it would meant that at                                                               
least half of the legislature wants the information.                                                                            
REPRESENTATIVE COGHILL  noted that with the  language requiring a                                                               
concurrent   resolution,  there   would  at   least  be   further                                                               
discussion  during  the  legislative  process,  whereas  if  that                                                               
requirement was  removed, there would  be no discussion,  and the                                                               
administration   would  simply   be  required   to  provide   the                                                               
information  regardless  of  whether the  legislature  felt  they                                                               
needed it.                                                                                                                      
TAPE 02-57, SIDE B                                                                                                              
Number 2373                                                                                                                     
REPRESENTATIVE  BERKOWITZ pointed  out  that  since the  governor                                                               
doesn't  submit  the budget  until  around  December 15  and  the                                                               
legislature  doesn't  convene  until  approximately  mid-January,                                                               
even if a  concurrent resolution moves through the  process in an                                                               
expeditious  manner,  time  could  become an  issue  because  the                                                               
normal  effective date  of  a concurrent  resolution  is 90  days                                                               
after  adoption.     He  also  pointed  out   that  a  concurrent                                                               
resolution  with  an immediate  effective  date  requires a  two-                                                               
thirds vote,  which, conceivably,  could enable a  minority party                                                               
to block  the concurrent  resolution.   He acknowledged  that his                                                               
concerns  about  the  concurrent  resolution  requirement  differ                                                               
depending on which  parties might be in control  of the different                                                               
branches  of government.    He asked  why SJR  38  is even  being                                                               
considered, given that there are "these practical problems."                                                                    
REPRESENTATIVE  JAMES  said  that  she  would  like  to  see  the                                                               
administration prepare a priority list  to begin with, and opined                                                               
that SJR 38 would ensure that this happens.                                                                                     
REPRESENTATIVE BERKOWITZ pointed out,  however, that the language                                                               
in SJR 38  does not mandate that this information  be provided to                                                               
begin with, instead a concurrent resolution is required first.                                                                  
REPRESENTATIVE  KOOKESH  indicated  that  he  might  be  able  to                                                               
support SJR 38 if it would  ensure that once the governor puts an                                                               
item high up  on his/her priority list,  the legislature wouldn't                                                               
be able to strip those funds away.                                                                                              
REPRESENTATIVE BERKOWITZ mentioned that he  has not yet heard any                                                               
compelling  arguments that  would  justify  amending the  [Alaska                                                               
State] Constitution  as proposed  by SJR 38.   He  questioned how                                                               
those who  assert "defend, don't  amend" rhetoric with  regard to                                                               
subsistence can assert just the opposite with regard to SJR 38.                                                                 
CHAIR ROKEBERG announced that SJR 38  would be held over in order                                                               
to   allow   Ms.  Hall   an   opportunity   to  further   address                                                               
Representative Kookesh's concern regarding the concurrent                                                                       
resolution requirement.                                                                                                         

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