Legislature(2001 - 2002)
05/07/2002 08:08 AM House STA
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* first hearing in first committee of referral
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SJR 43 - MORATORIUM ON MAINTENANCE OF EFFORT Number 2380 VICE CHAIR FATE announced that the final order of business would be CS FOR SENATE JOINT RESOLUTION NO. 43(STA)(title am), Requesting the United States Congress to grant a two-year moratorium on state maintenance of effort requirements for federally funded programs. [There was a motion to adopt CSSJR 43(STA)(title am), version 22-LS1632\J.A, but it was already before the committee.] Number 2430 MARILYN WILSON, Staff to Senator Dave Donley, Alaska State Legislature, presented SJR 43 on behalf of the Senate Finance Committee. She told the committee that SJR 43 requests that the United States Congress grant a two-year moratorium on state maintenance of effort requirements to states receiving federal funds. A maintenance of effort requirement is a condition that comes with federally funded programs, and sometimes these requirements are very complicated and complex and inhibit the states' ability to reduce or reallocate expenditures. Alaska and many other states are facing a serious fiscal gap. This resolution is being asked for to allow states to adjust their budgets. If this resolution were granted, it would give states more flexibility to adjust their budgets to the appropriate levels without losing federal funding. Number 2488 REPRESENTATIVE HAYES asked if contact had been made with U.S. Senator Stevens, U.S. Senator Murkowski, or U.S. Representative Young to ask what they thought of this resolution. MS. WILSON answered that copies will be sent to those offices, but contact had not been made beforehand. Number 2527 REPRESENTATIVE CRAWFORD asked for some examples of what efforts there might be flexibility on. MS. WILSON replied that the maintenance of effort requirements are spread throughout and they vary. She told the committee that she had asked the Division of Legislative Finance for a list. Number 2617 REPRESENTATIVE JAMES noted that almost all the federal funding in the state's budget has to be matched in some way. The federal funds do drive the general fund spending. She said she is willing to support this resolution, but she commented that she is embarrassed in many ways to ask the federal government for this reduction in maintenance of effort because Alaska has the money and could handle it. She explained that the problem is that the Medicaid and social services budgets are growing, and over time Alaska won't be able to handle it unless there are other kinds of income into the state. She indicated that that is not going to happen over night. Number 2650 REPRESENTATIVE JAMES pointed out that there has been a drought for at least nine years in the application of private industry for various reasons. Part of that has been the federal rules and regulations that have come down on timber and other things. She said there is some federal reason why the state is in this problem, besides September 11. REPRESENTATIVE JAMES told the committee that the state is in serious trouble. The demographics are severe; there are more non-productive people than productive people living in the state. The 18- to 44-year olds have been leaving the state in droves because there are no opportunities for them here. Things will have to turn around a lot before there is a vibrant economy in Alaska. She said if the state didn't get the federal funds, it would be noticed. Number 2725 REPRESENTATIVE JAMES agreed that she is willing to ask for a little bit of relief on the maintenance of effort just because "we're doing what we're doing, doesn't mean next year is going to better. In fact, I think it's going to be worse." The people who have the needs do need to be served. That can't be avoided, she said. Number 2747 REPRESENTATIVE HAYES asked Ms. Wilson for the maintenance of effort list so he could see what would be affected. The committee took an at-ease from 8:51 a.m. to 8:52 a.m. Number 2781 REPRESENTATIVE WILSON said that she was embarrassed by this resolution. First of all, Alaska is in a fiscal crisis. Times are bad and unless this legislature does something about it before the session ends and has some kind of a plan so this state can start getting back on its feet, "How dare us ask the federal government to do anything if we don't do something? If we do end up passing a fiscal plan so that we have decided as a state that we are going to try to do something about the problem, how dare we send something to the feds to ask them to do something," she asked. She commented that she doesn't have a problem if a fiscal plan is passed. Number 2832 REPRESENTATIVE CRAWFORD agreed with Representative Wilson. He said he thought the state gets back $6 in federal dollars for every tax dollar Alaska sends. The federal government is doing far more than its share. Alaska gets more federal dollars per capita than any other state in the Union. He said he believes the state is not broke, and it needs to do its part. He noted that he is not in favor of this resolution. REPRESENTATIVE JAMES agreed with Representative Crawford about the amount of federal dollars the state gets, but she told him that the problem is that there isn't the income in the state to pay a sufficient amount of federal tax. If Alaska paid more federal tax, it won't get any more federal money. The bottom line is, "They are doing it because we are not earning our way. That's the issue. If we were to have a vibrant economy, we would be putting more money into the federal government and maybe getting our own money back." Number 2905 REPRESENTATIVE JAMES noted that the tax money comes from people working and having paychecks. She commented that she is not willing to tax people now when there are so few of them working who get a good-sized paycheck. More paychecks need [be in the economy] before people are asked to pay. VICE CHAIR FATE asked how Senator Donley perceives the line in the sponsor statement that says, "This resolution, if granted, would give states more flexibility to adjust their budgets to appropriate levels without losing federal funding." Number 2937 MS. WILSON answered that it's not asking to do away with the maintenance of effort, just to give a moratorium for the state to look at its budget and come back with a new level of funding. TAPE 02-53, SIDE B Number 2953 REPRESENTATIVE JAMES explained that there was an opportunity a few years ago to get a bigger share of Medicaid and a lesser amount of general funds. One of the things that boosted up Medicaid this year was because it went back to the other level. She said she thinks that is one of the methods that could be given to the state to have a 9 or 10 percent match as an example. She commented, "It's not that we're not going to put something in but just give us an opportunity, and probably not in every area, but in the areas where it's most important to give a little better. It's saying a couple of years of opportunity to have a smaller match and still meet the requirements of the federal funding." VICE CHAIR FATE asked if there was a 10 percent match and the state was only able to do 8 percent, would the state have to come up with the other 2 percent the next year. He wondered how that would work. REPRESENTATIVE JAMES said the state is not making that decision. The state is asking the federal government to consider something like this, and probably whatever it tells us is what would have to be done. The state may or may not want to accept it but is asking the federal government to take a look at this. Alaska is not the only one; other states are having a severe problem with this. "We're not expecting special consideration; we're just in there with everyone else." Number 2822 The committee took an at-ease from 8:59 a.m. to 9:00 a.m. [Vice Chair Fate turned the gavel back to Chair Coghill.] REPRESENTATIVE JAMES moved to report CSSJR 43(STA)(title am) out of committee with individual recommendations and the accompanying zero fiscal notes. There being no objection, CSSJR 43(STA)(title am) was reported out of the House State Affairs Standing Committee.
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