Legislature(2023 - 2024)GRUENBERG 120

02/27/2023 01:30 PM House JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
Moved CSHJR 2(JUD) Out of Committee
Moved CSHB 38(JUD) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 HJR  2-CONST. AM: APPROP LIMIT                                                                             
1:32:11 PM                                                                                                                    
CHAIR VANCE announced  that the first order of  business would be                                                               
HOUSE  JOINT  RESOLUTION  NO. 2,  "Proposing  amendments  to  the                                                               
Constitution of the State of  Alaska relating to an appropriation                                                               
1:32:47 PM                                                                                                                    
BERNARD  AOTO, Staff,  Representative  Will  Stapp, Alaska  State                                                               
Legislature, responded to unanswered  questions from the previous                                                               
hearing  on  HJR 2,  on  behalf  of Representative  Stapp,  prime                                                               
sponsor.   In response to  a hypothetical scenario  involving the                                                               
federal  bureau  stopping  economic analysis  on  gross  domestic                                                               
product (GDP), he  indicated that the bill  sponsor would welcome                                                               
an amendment proposing  a different way to gather  GDP data other                                                               
than the  federal bureau, so  as not  to tie the  Constitution of                                                               
the  State of  Alaska  to a  specific entity.    He continued  by                                                               
correcting a misstatement, clarifying  that inflation was tied to                                                               
the  current proposal.   He  explained  that GDP  was a  holistic                                                               
calculation from  several economic drivers,  including inflation;                                                               
therefore,  adjustments  to  inflation  would  impact  GDP.    In                                                               
response   to  a   question  regarding   the   timeline  of   GDP                                                               
transmittal, he  relayed that the current  timeframe, as proposed                                                               
in HJR 2, would make it  difficult for the Office of the Governor                                                               
and the Legislative Finance  Division (LFD), [Legislative Affairs                                                               
Agency (LAA)],  to make the  appropriate calculations.   For that                                                               
reason, he  suggested changing the current  language from "fiscal                                                               
years" to "calendar  years," making it "the  five previous fiscal                                                               
years."   Responding  to a  question about  capital projects,  he                                                               
clarified that  capital spending was included  under the proposed                                                               
spending cap.  The only  exceptions on capital spending, he said,                                                               
was on  items with  a federal  match or  those paid  with general                                                               
obligation  (GO)  bonds.   In  response  to  questions  regarding                                                               
allowable spending via bonding, he  cited a court case referenced                                                               
in a document that had been distributed to committee members.                                                                   
CHAIR VANCE passed the gavel to Vice Chair Allard.                                                                              
1:36:54 PM                                                                                                                    
REPRESENTATIVE  VANCE  moved  to  adopt Amendment  1  to  HJR  2,                                                               
[labeled 33-LS0294\A.7, Marx, 2/25/23], which read:                                                                             
     Page 1, line 16, through page 2, line 1:                                                                                   
          Delete "federal bureau responsible for economic                                                                   
     analysis according to federal"                                                                                         
          Insert "state government as prescribed by"                                                                        
REPRESENTATIVE EASTMAN objected for the purpose of discussion.                                                                  
1:37:10 PM                                                                                                                    
REPRESENTATIVE  VANCE explained  that Amendment  1 would  provide                                                               
autonomy  to the  state  by removing  references  to the  federal                                                               
government  in   the  state  constitution.     Specifically,  the                                                               
proposed   amendment  would   remove  the   language  referencing                                                               
"federal bureau" on  page 1, line 16, through page  2, line 1, of                                                               
HJR 2, and replace it with "state government as prescribed by".                                                                 
VICE CHAIR ALLARD asked whether  the bill sponsor considered this                                                               
a friendly amendment.                                                                                                           
MR. AOTO answered yes.                                                                                                          
1:37:50 PM                                                                                                                    
REPRESENTATIVE  EASTMAN removed  his objection.   There  being no                                                               
further objection, Amendment 1 to HJR 2 was adopted.                                                                            
1:38:16 PM                                                                                                                    
The committee took a brief at-ease.                                                                                             
1:38:58 PM                                                                                                                    
REPRESENTATIVE  VANCE  moved  to  adopt Amendment  2  to  HJR  2,                                                               
[labeled 33-LS0294\A.8, Marx, 2/25/23], which read:                                                                             
     Page 2, line 2:                                                                                                            
          Delete the first occurrence of "fiscal"                                                                           
          Insert "calendar"                                                                                                 
REPRESENTATIVE EASTMAN objected for the purpose of discussion.                                                                  
1:39:05 PM                                                                                                                    
REPRESENTATIVE  VANCE  stated  that   Amendment  2  would  change                                                               
"fiscal" to  "calendar" on page 2,  line 2, of HJR  2 in response                                                               
to  the  concern  regarding  the   timeliness  of  the  GDP  data                                                               
transmittal  to  both  the  legislature   and  the  governor  for                                                               
consideration of the spending cap.   This change would make it so                                                               
the calculation  would be  available during  the crafting  of the                                                               
VICE CHAIR ALLARD asked whether  the bill sponsor considered this                                                               
a friendly amendment.                                                                                                           
MR. AOTO answered yes.                                                                                                          
1:40:21 PM                                                                                                                    
REPRESENTATIVE EASTMAN asked how  much time the legislature would                                                               
have  to craft  the budget  upon receiving  the GDP  data, should                                                               
Amendment 2 pass.                                                                                                               
1:41:20 PM                                                                                                                    
ROB CARPENTER,  Deputy Director, LFD,  LAA, considered the  FY 24                                                               
budget  as an  example.   He  explained that  should Amendment  2                                                               
pass, the  calendar year  before the prior  fiscal year  would be                                                               
2021, so  the relevant  data would  be from  years 2017  to 2021,                                                               
which  was  readily  available  to  both  the  governor  and  the                                                               
legislature through the entirety of session.                                                                                    
REPRESENTATIVE  GRAY asked  whether Amendment  2 addressed  LFD's                                                               
unanswered questions about the bill.                                                                                            
MR. CARPENTER confirmed  that it would clarify the  intent of the                                                               
bill and allow the division to make firm calculations.                                                                          
1:43:36 PM                                                                                                                    
REPRESENTATIVE  EASTMAN removed  his objection.   There  being no                                                               
further objection, Amendment 2 to HJR 2 was adopted.                                                                            
1:43:49 PM                                                                                                                    
The committee took a brief at-ease.                                                                                             
[Vice Chair Allard returned the gavel to Chair Vance.]                                                                          
1:44:20 PM                                                                                                                    
CHAIR VANCE invited final comments on HJR 2, as amended.                                                                        
1:45:05 PM                                                                                                                    
REPRESENTATIVE  GROH  applauded  the bill  sponsor's  desire  for                                                               
stability;   however,  he   pointed   out   that  reforming   the                                                               
constitutional  spending cap  would  require  amending the  state                                                               
constitution.   For  that  reason, he  urged  the legislature  to                                                               
exercise caution, as  the consequences of getting  it wrong could                                                               
be  disastrous.    He  shared  his  understanding  that  provided                                                               
testimony had indicated that HJR 2  was not the right reform.  He                                                               
recalled that the University of  Alaska Anchorage (UAA) professor                                                               
of economics, Kevin  Barry, had stated that  a GDP-based spending                                                               
cap would be an economic  trap during times of prolonged downturn                                                               
and prevent the  state from recovering.  Further,  he stated that                                                               
the  proposed  legislation did  not  adequately  address the  two                                                               
items that  history had shown  to increase the most  when revenue                                                               
spikes  occurred: capital  spending and  permanent fund  dividend                                                               
(PFD)  appropriations.    Additionally, he  opined  that  forging                                                               
ahead with  the spending  cap would  be counterproductive  to the                                                               
recommendations  from  the  Fiscal  Policy  Working  Group.    He                                                               
advised the committee  not to mistake his  comments as opposition                                                               
to   spending  cap   reform,  as   he  would   be  in   favor  of                                                               
constitutionalizing the  percent of  market value  (POMV) formula                                                               
or creating a revised formula  based on population and inflation.                                                               
For those reasons, he said  he would be offering a recommendation                                                               
of "do not pass" unless substantially amended on HJR 2.                                                                         
REPRESENTATIVE EASTMAN  suspected that  the proposed  formula may                                                               
not  account for  changes to  inflation that  could occur  during                                                               
"the   five   previous   calendar  years."      Nonetheless,   he                                                               
acknowledged that the existing  constitutional spending limit was                                                               
not  designed to  be functional.   He  argued that  the political                                                               
pressure to  spend what  was available  would always  be present,                                                               
adding that it  was appropriate to implement  checks and balances                                                               
against that pressure  to limit spending to  a reasonable amount.                                                               
He opined  that HJR  2 did not  adequately account  for inflation                                                               
and  cautioned against  making changes  to the  constitution that                                                               
may not work.                                                                                                                   
1:50:32 PM                                                                                                                    
REPRESENTATIVE  CARPENTER  pointed out  that  this  was only  the                                                               
first   step  in   the  committee   process   for  the   proposed                                                               
CHAIR VANCE added that she  had intentionally avoided considering                                                               
the  fiscal impacts  of HJR  2  in the  House Judiciary  Standing                                                               
Committee, as that was the  focus of other committees of referral                                                               
in   which  anticipated   further   dialogue   on  the   proposed                                                               
1:51:24 PM                                                                                                                    
REPRESENTATIVE ALLARD moved  to report HJR 2, as  amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.    There  being no  objection,  CSHJR  2(JUD)  was                                                               
reported out of the House Judiciary Standing Committee.                                                                         

Document Name Date/Time Subjects
HJR 2 - Amendment 1 (A.7).pdf HJUD 2/27/2023 1:30:00 PM
HJR 2 - Amendment 2 (A.8).pdf HJUD 2/27/2023 1:30:00 PM
HB 38 - Amendment 1 (A.6).pdf HJUD 2/27/2023 1:30:00 PM
HB 38
Weiss v. State 939 P.2d 380 (Alaska 1997).pdf HJUD 2/27/2023 1:30:00 PM
Forrer v. State 471 P.3d 569 (Alaska 2020).pdf HJUD 2/27/2023 1:30:00 PM
Response to Judiciary Committee.pdf HJUD 2/27/2023 1:30:00 PM
Alaska Dept. of Health Drug Facts (07-25-22).pdf HJUD 2/27/2023 1:30:00 PM
HB 66 - Transmittal Letter.pdf HJUD 2/27/2023 1:30:00 PM
HB 66
HB 66 - v.A.PDF HJUD 2/27/2023 1:30:00 PM
HB 66
HB 66 - Sectional Analysis.pdf HJUD 2/27/2023 1:30:00 PM
HB 66
HB 66 - Highlights Document.pdf HJUD 2/27/2023 1:30:00 PM
HB 66