Legislature(1993 - 1994)
04/11/1994 09:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 505
An Act making appropriations to and from the
constitutional budget reserve fund under art. IX, sec.
17(c), Constitution of the State of Alaska, for
operating and capital expenses of state government for
fiscal year 1994; and providing for an effective date.
Co-chair Pearce directed that CSHB 505 (Fin)(brf fld)(efd
fld) be brought before committee for presentation of an
overview by representatives of the administration. The Co-
chair referenced file materials consisting of transmittal
information from the Governor, the original House Bill, and
the version that ultimately passed the House. She
specifically noted House failure of both the budget reserve
fund and the effective date.
Senator Kerttula inquired concerning a legal analysis. Co-
chair Pearce said there is none. She explained that Judge
Reese provided a one-page decision with details to follow.
SHELBY STASTNY, Director, Office of Management and Budget,
came before committee. He advised of support for the
original bill as submitted by the Governor and lack of
support for the version passed by the House. The intention
of HB 505 was to lay out in the findings a history of
amounts flowing to the constitutional budget reserve fund
and thereafter placed in the general fund. The
administration believes that action taken by the attorney
general was appropriate. The administration subsequently
did as required and followed the attorney general's opinion
in placing moneys in the general fund. To cure problems
raised in litigation, the administration proposed
appropriation of $945 million from the general fund to the
constitutional budget reserve fund. Addition of interest
through the end of March brings the total to $978 million.
Once appropriated to and deposited in the constitutional
reserve, the funding would be immediately transferred back
to the general fund to meet ongoing expenditures. That
action would satisfy the court's direction.
The administration's proposal was that funding would be
transferred under Sec. 17(c) of the constitutional
amendment--the subsection that requires the three-quarters
vote.
Discussion followed between Co-chair Pearce and Mr. Stastny
concerning disputed amounts to accrue to the constitutional
budget reserve. Mr. Stastny advised of ongoing Dept. of
Revenue research over whether the amount in question was the
acknowledged $70 million or up to $200 million--the amount
collected on cases where an assessment was made but the case
was settled prior to informal conference.
Co-chair Frank referenced SB 331 (APPROP: BUDGET RESERVE
FUND TO GEN.FUND), the Senate version of the bill, and noted
that Sec. 4 appropriation of $416.6 million represents the
amount the legislature anticipated would be needed to
balance the current budget. Mr. Stastny concurred. He
added, however, that with the reduction in revenues from the
decline in oil prices, an additional $529 million will now
be required to fund the budget. Further, "another couple of
hundred million dollars" will be required "to be taken out
by a vote to fund capital and operating budgets." Co-chair
Frank voiced his understanding that Sec. 6 would appropriate
an unspecified amount to be determined at the end of the
fiscal year. Mr. Stastny concurred. The last estimate of
that amount is approximately $350 million. Co-chair Frank
noted that foregoing amounts total the $1.3 billion draw
from the constitutional reserve needed to bring the budget
"flush to the end of fiscal year 94." Mr. Stastny again
concurred.
Senator Kerttula asked if Judge Reese's decision would be
appealed. Mr. Stastny said that the administration intends
to await a detailed explanation of the ruling prior to
making a decision. He then voiced his personal opinion that
appeal would be pursued.
Senator Rieger inquired concerning the total of the
constitutional budget reserve fund once the proposed $945
million is appropriated back to the fund. Mr. Stastny
responded, "about $1.7 billion." The Senator then observed
that approximately $400 million would remain following
withdraws to satisfy FY 94 budget needs. Mr. Stastny
concurred.
In response to questions from Senator Kerttula, Mr. Stastny
said that while the administration may not agree with Judge
Reese's opinion that HB 58 is unconstitutional, the
administration believes that appropriations should be based
on a three-quarter vote to eliminate the question in the
future.
Co-chair Frank voiced his recollection that the
administration supported the House plan for funding of
education from the budget reserve. Mr. Stastny said that
the administration is supportive of any reasonable approach
that "gets the three-quarter vote."
Mr. Stastny next spoke to $150 to $200 million in funding
based on assumptions of transfers from AHFC ($180 million),
and a $60 million transfer from AIDEA resulting from AIDEA
purchase of assets owned by the Dept. of Commerce and
Economic Development. He further advised of an agreement by
the administration to a $50 million reduction in the
proposed budget. Calculation of all of the foregoing
results in a $130 or $140 million balance in the
constitutional budget reserve fund after funding of the FY
95 budget. The current spending plan indicates that if at
the end of FY 95 the state continues to spend, based on the
Governor's budget and the latest revenue projection, at the
end of FY 95 the constitutional budget reserve fund would
have a -$82 million balance, "assuming everything is funded
out of the constitutional budget reserve fund." The above
$50 million reduction, moneys transferred from AHFC ($180
million) and AIDEA ($60 million), and one half ($60 million)
of hoped for additional tax revenues provide a counter
balance.
Senator Kerttula inquired concerning support for additional
taxes. Mr. Stastny acknowledged that revenue raising
measures had not received a warm reception.
In response to a question from Senator Kelly, Mr. Stastny
said that the $50 million reduction would be unrestricted.
It could flow from both operating and capital funding.
Senator Kerttula asked if future settlements had been
factored into spending plans. Mr. Stastny responded that
while the administration is aware of them, they were not
factored into budget projections.
Co-chair Pearce called for additional questions. None were
forthcoming. She advised that CSHB 505 (Fin) (brf fld) (efd
fld) would be HELD in committee for further review.
RECESS - 9:40 A.M.
RECONVENE - 9:50 A.M.
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