04/26/1994 09:10 AM Senate FIN

                                                                               
  SENATE BILL NO. 56                                                           
                                                                               
       An Act relating to the  budget reserve fund established                 
       under  art. IX, sec.  17, Constitution of  the State of                 
       Alaska.                                                                 
                                                                               
  Co-chair  Pearce  directed that  SB  56  be brought  on  for                 
  discussion, referenced a draft CSSB 56  (Fin) (work draft 8-                 
  LS0453\U, Cook, 4/25/94),  advised that  the draft had  been                 
  approved by  Senator Phillips,  and noted  that Jim  Baldwin                 
  worked with  Legislative Legal Services  to develop language                 
  that reflects the  state's position.   Co-chair Frank  MOVED                 
  for  adoption of CSSB  56 (Fin), "U"  version, and requested                 
  unanimous consent.  No objection having been raised, CSSB 56                 
  (Fin) was ADOPTED.                                                           
                                                                               
  JIM BALDWIN, Assistant  Attorney General, Dept. of  Law, and                 
  JERRY BURNETT, aide  to Senator Randy Phillips,  came before                 
  committee.  Mr. Burnett  explained  that  the Finance  draft                 
                                                                               
                                                                               
  repeals "the section  from HB  58 and reenacts  it with  new                 
  numbers."  Mr. Baldwin said that the bill was constructed to                 
  protect  against  the  fact  that  a  court   may  find  the                 
  interpretation in HB 58  to be valid but not  severable from                 
  other provisions.   If passed,  CSSB 56 (Fin)  would clearly                 
  state the legislature's intent that it be separately enacted                 
  from HB 58 provisions found to be unconstitutional.                          
                                                                               
  In response to  a question from Co-chair Frank,  Mr. Baldwin                 
  said  that  language  within the  Finance  draft  is "fairly                 
  equivalent" to that  within Amendment No. 1 for SJR  52.  He                 
  acknowledged that  language within  CSSB 56  (Fin) does  not                 
  answer  "the  succeeding fiscal  year  question."   The bill                 
  merely defines the source of funding  but does not solve the                 
  timing  issue.   Under  art.  IX,  sec. 17(d)  of  the state                 
  Constitution, repayment to the constitutional budget reserve                 
  fund is to be made from the balance of the succeeding fiscal                 
  year.    Under  a literal  interpretation,  that  means that                 
  repayment  of  1994  withdrawals  would  be  made  from  the                 
  remaining balance at the end of 1995. Mr. Baldwin noted that                 
  need to withdraw moneys from  the budget reserve fund  would                 
  indicate there would be no balance at the end of that fiscal                 
  year.   Language thus  speaks to  the  succeeding year  when                 
  there possibly could  be a  balance.  The  state has  argued                 
  that Judge Reese should be reversed on that point.                           
                                                                               
  Directing attention to  language within  CSSB 56 (Fin),  Mr.                 
  Baldwin noted  the definition  of "unreserved,  undesignated                 
  general fund balance"  and the fact  that transfer is to  be                 
  made on or before December 16  of the following fiscal year.                 
  The bill requires that once the  state has determined it has                 
  a  surplus,  payment be  made  by  December 16  of  the year                 
  following the year in which the surplus was determined.  Co-                 
  chair Frank  presented a  scenario  whereby the  legislature                 
  withdrew moneys  from the  reserve to  balance FY  94.   The                 
  price  of oil subsequently increased, and there is a balance                 
  of  unrestricted revenues  at the  end of  FY  94.   He then                 
  voiced  his  understanding  that bill  language  would  "not                 
  necessarily sweep it in until FY 95 was finished, and we saw                 
  whether or not  we had  a balance  after FY 95."   Both  Mr.                 
  Burnett  and  Mr.  Baldwin acknowledged  that  that  was the                 
  intent.    Mr.  Baldwin voiced  his  understanding  that the                 
  amendment contemplates waiting "for  another fiscal year  to                 
  see if there was going to be a surplus."  The amendment thus                 
  means  that "If there  is any outstanding  obligation to the                 
  budget reserve  fund,  you're  going to  have  to  use  that                 
  surplus to repay it."   Both Co-chair Frank and Mr.  Baldwin                 
  acknowledged that while  the amendment  might mean as  above                 
  stated, that is not necessarily what it says.  The amendment                 
  simply says, "When  you have a  surplus, you compute it  and                 
  pay it by  a certain date."   Co-chair Frank asked if  it is                 
  within legislative  power to  implement language  to resolve                 
  the question.  Mr. Baldwin responded affirmatively.  The Co-                 
  chair  than suggested  that the  issue  be resolved  at this                 
                                                                               
                                                                               
  time.                                                                        
                                                                               
  End,   SFC-94, #72, Side 1                                                   
  Begin, SFC-94, #72, Side 2                                                   
                                                                               
  Mr.  Baldwin  advised  that  he  would develop  language  to                 
  accomplish that end.  Co-chair Frank asked that the language                 
  cover situations where  there are remaining balances  in the                 
  fiscal year during  which a  withdrawal is made  as well  as                 
  succeeding fiscal years.   He suggested  that it would  most                 
  likely "take years and years to  pay back the budget reserve                 
  fund."  Mr. Baldwin concurred.                                               
                                                                               
  Co-chair  Frank  directed  that CSSB  56  (Fin)  be  HELD in                 
  committee pending development of the new language.