Legislature(1997 - 1998)
04/30/1998 08:05 AM House STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HJR 45 - BIENNIAL STATE BUDGET Number 0032 VICE CHAIRMAN IVAN announced the next order of business is HJR 45, Proposing amendments to the Constitution of the State of Alaska relating to a biennial state budget, to the appropriation limit, and to appropriations from the budget reserve fund, sponsored by Representative Phillips. VICE CHAIRMAN IVAN took an at-ease for approximately five minutes. Number 0035 REPRESENTATIVE GAIL PHILLIPS, Alaska State Legislature presented HJR 45 said she has a proposal for Alaska to start thinking about implementing a biennial budget system. Many other states in the nation do have biennial budgets, and this would have to be a constitutional amendment. She indicated she looks at it as a way not only for us to be able to save a lot of money in state government, because she would anticipate that in a two-year cycle, the second year when they're not doing the budget could be reduced to about half-time, to 60 days. Number 0040 REPRESENTATIVE PHILLIPS pointed out that, not only would it save a lot of money, but also it gives the agencies an opportunity to do long-range planning which they don't have the ability to do now - they spend so much time of every year of just doing budget work. She thinks it would be a major benefit to the agencies. She also thinks it's something the people of Alaska are ready to look at, to explore, to see if it would be beneficial. It works in other states and she thinks that we could make it work here. Number 0047 REPRESENTATIVE KIM ELTON said the only hesitation he has is, because so much of our budget is based on one source of revenue, and that source of revenue has been extremely volatile (going from $24 to $10 and back-and-forth) that he is concerned that the second year, or the nonbudget year, we'd be spending an awful lot of time making readjustments to the budget because of those fluctuations. REPRESENTATIVE PHILLIPS replied this legislation before you is just calling to put the question to the people, whether or not they want to pursue this. In your statutes, when you would adjust statutes to the biennial budget process then you could put in a formula there for adjusting to the differences in the price of oil. She believes that could be handled in the statutory process. Number 0058 KAREN COWART, General Manager, Alaska Support Industry Alliance, testified via teleconference in support of HJR 45. She said the Alaska Support Industry Alliance is a non-profit trade organization representing over 350 members engaged in business within the oil, gas, and mining industries. Collectively, their members employ 25,000 people. Their mission is to foster and promote the safe and environmentally sound development of Alaska's natural resources. MS. COWART stated they believe state government should do business like a business and investigate ways to do more with less, to be more efficient and more effective in planning and executing our state budget. Budget efficiencies would send a message to potential investors that we have a solid and sound fiscal plan and our "House is in order, a good place to do business." Number 0068 MS. COWART said the Alliance believes a two-year budget cycle could result in the following: An opportunity for agency planning. One that would be proactive spending habits instead of reactive spending dialog. We also believe we would have the opportunity to analyze state programs based on performance and results prior to budget appropriations. We believe there may be a potential for a shortened legislative session, thereby saving state dollars and resources. And finally, we believe that there would be a greater utilization of all 60 legislators and their expertise. Traditionally the Senate and House Finance Committees are made up of the senior members of both bodies. These members (indisc.) a majority of their time on budget matters during a legislative session and their wisdom and experience in a two- year process could be available for legislative work due to freed-up time. But supplemental requirements. We believe a biennial budget process would not preclude supplemental budget considerations due to circumstances of needs. These could be addressed on a case-by-case basis. Nevertheless, the process would free-up legislators to focus attention, one year on budget, one year on legislation. Twenty other states have already adopted a biennial budget process. That's a good indication that other states are thinking outside the "old box." We believe Alaska needs to develop a new way of thinking. We must look at new and innovative ways to conduct business and we encourage the dialogue on biennial budgeting to continue. Number 0086 CHERYL FRASCA, Consultant, Government Relations Issues, Alaska State Chamber, was next to testify in support of HJR 45 via teleconference. She said she works for the Alaska State Chamber in monitoring and reporting on Alaska budget issues. Based on 17 years of experience she has worked for the legislature as well as with Office of Management and Budget (OMB) as Director of the Budget Division for three years under the last administration. Based on this experience, she said she wants to lend support to the idea of going to a biennial budget. MS. FRASCA mentioned the sponsor's statement recognizes the legislature's time that it spends on budget issues. She reiterated she gained a real appreciation for the time that the executive branch spends in preparing a budget to meet your December submission date. In fact, just as the governor is signing into law one budget, the agencies are immediately clamoring for when is OMB going to issue the budget instructions so they can get going on preparing the documentation for the next year. If we change that, so that it only happens every other year, she believes that it would definitely free-up time for program managers and policy- makers in the executive branch to actually manage their programs. And for which, you then can hold them accountable for the results that they may lead to. Number 0099 MS. FRASCA stated, "And I think the biennial budget process would also blend in very well with the results-based government framework that the legislature has worked on this session. It would give them time to actually manage the results, as opposed to reacting to how much money they didn't get. And then, even more important, it would give you the legislature the opportunity to exercise your oversights - responsibilities by focusing on how well they are, the return on the investments that you've given them in terms of services that they're supposed to be providing." Number 0104 MS. FRASCA noted arguments in the past against going to a biennial budget has been the volatility of Alaska's revenues. That worked when we had lots of money and waiting for the April forecast was more of a matter of "how much money does the legislature get to spend." Now the issue is really more "how much money will be spent from the Constitutional Budget Reserve (CBR)." So she doesn't think that is as valid as it used to be as a reason not to go to a biennial budget. MS. FRASCA addressed the issue of supplementals, she said her observation is that, for the most part you can anticipate supplementals. It's just more a question of not knowing what the final dollar amount is going to be. So, it's not that there's unanticipated events for the most part, it's that no one wants to pony-up the full cost ahead of time without knowing what it's going to be. As Ms. Corwart pointed out, there is a trend with the 20 states, and even at the federal level, to going to a biennial budget. It's not suggested that the federal government, not that they're the model for budgeting, however, even Republicans and Democrats - the Clinton Administration have supported a biennial budget approach. She urged the committee's dialog on this issue. Number 0199 BRAD PIERCE, Senior Policy Analyst, Office of Management and Budget, Office of the Governor, was next to testify. He stated the governor is very interested in this and has been interested for a couple of years in going to biennial budgeting for all the reasons that have been stated. He indicated he would like to work with the sponsor of this to see if they can come up with a reasonable approach. He indicated the governor is generally supportive. Number 0128 REPRESENTATIVE HODGINS made a motion to move HJR 45, with individual recommendations and attached fiscal note. There being no objections, HJR 45 moved from the House State Affairs Standing Committee.
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