04/29/1996 09:25 AM House STA

 CSSCR 23(STA) am - LONG RANGE FINANCIAL PLANNING                            
                                                                               
 Number 195                                                                    
                                                                               
 CHAIR JAMES announced the next item on the agenda was CSSCR 23(STA)           
 amended, which related to long range financial planning and she had           
 a committee substitute, Version K, dated 4/29/96.  She noted the              
 Senate Rules Committee sponsored this legislation at the request of           
 the Long Range Financial Planning Commission.  Chair James said she           
 would explain the committee substitute which she had drafted.  She            
 said the changes from the original bill were made in the Senate               
 State Affairs Committee and passed through the Senate some time               
 ago.  The proposed committee substitute changed the language on               
 page 1, line 9, from a $433 million estimated budget gap in FY 96             
 to an anticipated $313 million.  She continued, "The other                    
 statements that the fiscal gap is projected to grow steadily;                 
 changes in projected revenue and expenditures could use up the                
 constitutional budget reserve by the year 2000 if we don't do                 
 something about it; and the conclusion is that there is no single             
 fiscal tool sufficient to address the fiscal gap and that we have             
 to do several different things; the members of the Long Range                 
 Financial Planning Commission were charged with developing a 3-, 5-           
 and 10-year plan; the permanent fund is a cornerstone of the                  
 state's economic future, as well as it should continue to grow to             
 provide reliable dividends to the general public; that a financial            
 plan adopted by the legislature should contain a combination of               
 spending reductions and new revenue resulting from an expanded                
 economy that will close the gap by fiscal year 2001; whereas the              
 combination of the fiscal policies adopted by the legislature                 
 should put the state on firm fiscal ground and strike a balance               
 between current needs and protection of the permanent fund for                
 future generations; and the Nineteenth State Legislature has                  
 prepared a fiscal plan to close the fiscal gap which incorporates             
 the following:  1) as part of the plan to ensure maximum earnings             
 from the permanent fund, the legislature has deposited $1.1 billion           
 to the fund's principal; 2) significant spending reductions through           
 reasonable and responsible budget cuts; 3) tax levels that are less           
 than those proposed in other plans; and 4) protection for the                 
 permanent fund and constitutional budget reserve fund.  Therefore,            
 be it resolved that we will first reduce the size and scope of                
 state government to decrease the gap between recurring revenue and            
 recurring expenditures; and that in closing the fiscal gap and                
 developing a long range plan the legislature will prioritize                  
 expenses by taking into account our constitutional responsibilities           
 and the needs of our children, the elderly, and our needy citizens;           
 and that further, we will make significant spending reductions                
 through means such as welfare reform, entitlement reform,                     
 privatization of state services, and the institution of procedural            
 changes to state employees' pension, wage, and benefit package; and           
 be it further resolved that the legislature pledges to work with              
 all parties to implement this long range financial plan and meet              
 the needs and desires of the Alaskan people; and be it further                
 resolved that the Nineteenth legislature urges all Alaskans to                
 learn about Alaska's fiscal situation and support actions necessary           
 to close the fiscal gap; and that the legislature thanks all                  
 members of the Long Range Financial Planning Commission for their             
 hard work and efforts to address the state's fiscal future and                
 assist the legislature in addressing the economic challenges we               
 face as a state.  Copies of this resolution shall be sent to the              
 Honorable Tony Knowles, Governor of Alaska and to the members of              
 the Long Range Financial Planning Commission."                                
                                                                               
 CHAIR JAMES noted that no one had signed up to testify.  She asked            
 if there were comments or questions from committee members.                   
                                                                               
 Number 357                                                                    
                                                                               
 REPRESENTATIVE OGAN expressed support for the Resolution but                  
 proposed an amendment on page 2, line 9, to insert "from resource             
 development" after the word "economy".  He said there are some                
 plans that would propose to expand the economy by using the                   
 permanent fund to fund government at current levels or actually               
 expand the current levels of government.  He didn't think the                 
 economy should be expanded by the size of government. Realistically           
 at this time, revenues result from resource development and he                
 thought that should be the priority.                                          
                                                                               
 Number 408                                                                    
                                                                               
 REPRESENTATIVE PORTER offered a friendly amendment to the amendment           
 to insert "from an expanded private sector economy."                          
                                                                               
 Number 420                                                                    
                                                                               
 REPRESENTATIVE OGAN agreed.                                                   
                                                                               
 CHAIR JAMES restated the amendment on page 2, line 9, would insert            
 "private sector" following "expanded".  Hearing no objection,                 
 Amendment 1 was adopted.  She asked if there was further                      
 discussion.                                                                   
                                                                               
 Number 439                                                                    
                                                                               
 REPRESENTATIVE PORTER remarked this was the joint philosophy of the           
 joint caucuses which had been discussed for some time, so it                  
 shouldn't strike anyone as a surprise.  He moved to adopt and pass            
 HCS CSSCR 23, Version K, with individual recommendations out of               
 committee.  Hearing no objection, HCS CSSCR 23(STA) moved from the            
 House State Affairs Committee.                                                
                                                                               
 CHAIR JAMES called an at-ease.