04/25/1994 09:10 AM Senate FIN

  CSSB 56(STA):  An  Act relating to  the budget  reserve fund                 
                 established   under   art.   IX,   sec.   17,                 
                 Constitution  of  the  State  of Alaska;  and                 
                 providing for an effective date.                              
                                                                               
                 CSSB  56(FIN)  work  draft  "A" was  ADOPTED.                 
                 Jerry  Burnette,  aide  to Senator  Phillips;                 
                 James  Baldwin,  Assistant  Attorney General,                 
                 General Civil Section, Juneau,  Department of                 
                 Law; and Randy  Welker, Legislative  Auditor,                 
                 Legislative Audit  Division, spoke to  SB 56.                 
                                                                               
                                                                               
                 Discussion was had by Senators Rieger, Sharp,                 
                 Co-chairs Frank and Pearce regarding a  forth                 
                 coming decision by the  Supreme Court and its                 
                 effect on SB  56.  CSSB  56(FIN) was HELD  in                 
                 committee  with  SJR  52 in  order  that  new                 
                 language  could  be   drafted  for  a  Senate                 
                 Finance Committee CS.                                         
                                                                               
  CS FOR SENATE BILL NO. 56(STA):                                              
                                                                               
       An Act relating to the  budget reserve fund established                 
       under art.  IX, sec. 17,  Constitution of the  State of                 
       Alaska; and providing for an effective date.                            
                                                                               
  Co-chair  Pearce  announced  that  SB   56  was  before  the                 
  committee.    She invited  Jerry  Burnette, aide  to Senator                 
  Phillips, to join the members at the table.                                  
                                                                               
  Co-chair Frank MOVED for adoption of CSSB 56(FIN) work draft                 
  "A".  No objection being heard, it was ADOPTED.                              
                                                                               
  JERRY  BURNETTE, aide  to  Senator Phillips,  explained that                 
  this legislation  said that  the Constitution  provided that                 
  when appropriations were made from the Constitutional Budget                 
  Reserve Fund, that the  amount of money in the  general fund                 
  available for appropriation  at the  end of each  succeeding                 
  fiscal  year be transferred to the  Budget Reserve Fund, and                 
  that the legislature would implement this subsection by law.                 
                                                                               
  He went on  to say that HB 58, which had already passed this                 
  legislature, contained  a section  implementing  17D.   That                 
  provision provided  that the  undesignated, unreserved  fund                 
  balance  in  the   general  fund   be  transferred  to   the                 
  Constitutional Budget  Reserve Fund  on December  16 of  the                 
  preceding fiscal year.                                                       
                                                                               
  Mr.   Burnette   said   that  Judge   Reese   found   HB  58                 
                                                                               
                                                                               
  unconstitutional, giving  the opinion that the limitation to                 
  the  general  fund  unreserved,  undesignated  fund  balance                 
  limited the scope of funds  unconstitutionally.  What SB  56                 
  did  was  allow for  the  undesignated fund  balance  of the                 
  general fund  and each of the separate accounts or sub-funds                 
  of the general fund to  be transferred to the Constitutional                 
  Budget Reserve Fund.  The Constitution provided the money in                 
  the  general fund that was available  for appropriation.  He                 
  felt it  was  the best  definition  of money  available  for                 
  appropriation.   He said  that included  a number of  funds,                 
  including the Oil and Hazardous Substance Response Fund, and                 
  the Railbelt Intertie Reserve Fund.                                          
                                                                               
  Co-chair Pearce invited  Mr. Baldwin to join  Jerry Burnette                 
  at the table.                                                                
                                                                               
  In answer to  Senator Rieger regarding timing,  Mr. Burnette                 
  said that December  16, 1995  would be the  first time  this                 
  transfer of funds  would happen.   Senator Rieger said  that                 
  was the literal reading of the Constitution but may not have                 
  been the intent.                                                             
                                                                               
  In answer to Senator Sharp, Mr. Burnette said it referred to                 
  the Department of  Administration because it kept  the books                 
  for the state.   Senator Sharp asked for  a list of accounts                 
  and balances  from the  Department of  Administration.   Mr.                 
  Burnette referred that question to Randy Welker.                             
                                                                               
  In  answer  to  Co-chair  Frank,  JAMES  BALDWIN,  Assistant                 
  Attorney General, General  Civil Section, Juneau, Department                 
  of Law, said  the funds had  appropriated balances and  were                 
  multi-year in nature.                                                        
                                                                               
  RANDY   WELKER,   Legislative  Auditor,   Legislative  Audit                 
  Division, said the listing of  funds basically was sub-funds                 
  to the general fund  and varied in  nature.  He agreed  with                 
  Mr.  Baldwin  in that  the  majority  of  those  funds  were                 
  established by appropriation, and labeled by the legislature                 
  for  an  intended future  use.    Some of  them  had regular                 
  activity  while  others  were  more  dormant  but  had  fund                 
  balances.  Many  were changing  on a regular  basis.   Those                 
  with  any  significant  balances  were  the Oil  and  Hazard                 
  Response Fund, Railbelt Energy  Fund, the Intertie  Reserve,                 
  the Storage Tank  Assistance Fund,  and the Marine  Highways                 
  Fund, and may be subject to the payback provisions.                          
                                                                               
  Mr. Baldwin  said that the  equity remaining in  the general                 
  fund group was close to  $800M.  Mr. Welker pointed  out the                 
  various reservations and  legal commitments  on that  money.                 
  "Unreserved  and   undesignated"  would   help  define   and                 
  determine the portion of those balances available.                           
                                                                               
  Discussion  was  had  by  Co-chair  Frank,  Senators Rieger,                 
  Sharp, and                                                                   
                                                                               
                                                                               
  Mr.  Welker  regarding funds,  the  general fund,  and their                 
  relationship.  It was noted  that the Science and Technology                 
  Fund had been designated as a legal endowment fund and would                 
  not be able  to be swept.   Mr. Baldwin said that  the court                 
  seemed to realize how complicated it  would be for the state                 
  if funds were swept.  He said the decision had been moved on                 
  to the Supreme Court.                                                        
                                                                               
  In answer to  Co-chair Frank, Mr.  Baldwin said that it  was                 
  his opinion that none  of the general fund groups  should be                 
  swept but that it should be  only the year-end carry forward                 
  balance.                                                                     
                                                                               
  In answer to Senator Rieger, Mr. Baldwin said there would be                 
  a   repayment  obligation   for   this   year   because   an                 
  appropriation was made  but there  would be  no sweep  since                 
  there was no carry forward balance.                                          
                                                                               
  Co-chair Pearce  announced that SB 56 and  SJR 52 be HELD in                 
  committee and a subcommittee would further study both bills.                 
  Senator Rieger said there was  some philosophical difference                 
  between SB 56  and SJR  52 and  he would like  to see  those                 
  differences resolved.  Co-chair Pearce  asked Mr. Baldwin to                 
  work with the committee in drafting new language.