Legislature(2003 - 2004)

06/23/2004 10:48 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SENATE JOINT RESOLUTION NO. 103                                                                                            
     Proposing amendments to the Constitution of the State of                                                                   
     Alaska relating to an appropriation limit.                                                                                 
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated that  the  Senate  Rules Committee  at  the                                                            
request of Governor  Frank Murkowski sponsors this  legislation. The                                                            
bill   would   repeal   and   replace   the  State's   Constitution                                                             
appropriation  limit with  a spending  limit and  would establish  a                                                            
moving three-year  average as the  basis for the application  of the                                                            
limit. The legislation would terminate on July first, 2009.                                                                     
                                                                                                                                
Senator  Dyson asked  whether, upon  further review,  the Office  of                                                            
Management and  Budget had identified areas of the  bill, other than                                                            
those identified  and discussed during its first hearing  that would                                                            
require discussion.                                                                                                             
                                                                                                                                
CHERYL FRASCA, Director,  Office of Management and Budget, Office of                                                            
the Governor,  stated that the concerns raised in  the June 22, 2004                                                            
hearing  on the bill  have been  addressed.  No additional  drafting                                                            
errors were identified.                                                                                                         
                                                                                                                                
Senator  Dyson  reiterated  his concern  regarding  the calculation                                                             
formula in  Section 1, as  the language does  not appear to  support                                                            
the "no ratchet  down" provision that  had been specified  in SJR 3-                                                            
CONST AM:  APPROPRIATION/SPENDING  LIMIT. In  this regard,  he asked                                                            
whether  eliminating the  language  "or decrease"  in Section  1(a),                                                            
page one, line nine, would clarify this intent.                                                                                 
                                                                                                                                
Ms.  Frasca  responded  that  the "no  ratchet  down"  provision  is                                                            
addressed  by the fact that  were the formula,  which is based  upon                                                            
the  lesser  of  the population/inflation   factor  as  detailed  in                                                            
Section 1(a)(1)(A)  and (B) or the change in personal  income factor                                                            
as detailed in Section  1(a)(2), to determine a spending limit lower                                                            
"than  the spending  limit from  the prior  year,  then the  current                                                            
year's spending  limit" would  be implemented.  This would  continue                                                            
the "no ratchet down" intention  of SJR 3. The affect of eliminating                                                            
the words  "or  decrease," as  proposed  by Senator  Dyson, must  be                                                            
determined by the Department of Law.                                                                                            
                                                                                                                                
Senator Dyson  further questioned  whether the words "by  the lesser                                                            
of"  as specified  in  Section  1(a) on  page  nine, would  be  more                                                            
appropriately included in Section 1(a)(1)(A, line thirteen.                                                                     
                                                                                                                                
Co-Chair Green commented  that the word "or" as specified in Section                                                            
1(a)(1)(B),  line one,  page two,  might alleviate  Senator  Dyson's                                                            
concern  regarding  the  calculation  formula's  "no  ratchet  down"                                                            
provision, as  it would serve to identify whether  the formula would                                                            
be based on the  calculation of Section 1(a)(1) or  Section 1(a)(2).                                                            
                                                                                                                                
Senator  Dyson  continued   to  voice  concern  as  to  whether  the                                                            
language,  as  presented,  would  "preserve"  the  no  ratchet  down                                                            
intent.                                                                                                                         
                                                                                                                                
Ms. Frasca expressed that  language in SJR 3 might be being confused                                                            
with HJR 9 language.  She clarified that this bill  is modeled after                                                            
HJR 9-CONST AM:  APPROPRIATION LIMIT, as amended by  this Committee.                                                            
The Committee  could, if desired, amend this bill  in order to align                                                            
it with SJR 3.                                                                                                                  
                                                                                                                                
JIM BALDWIN, Senior  Assistant Attorney General, Opinions,  Appeals,                                                            
& Ethics Section,  Department of Law,  responded to Senator  Dyson's                                                            
question regarding  the elimination  of the words "or decreased"  in                                                            
Section 1(a), on line nine,  page one by stating that removal of the                                                            
words would not harm the "no ratchet down" intent of the bill.                                                                  
                                                                                                                                
Amendment #3: This amendment  eliminates the words "or decreased" in                                                            
Section 1(a), line nine, on page one.                                                                                           
                                                                                                                                
Senator Dyson moved to adopt Amendment #3.                                                                                      
                                                                                                                                
Co-Chair Green objected for explanation.                                                                                        
                                                                                                                                
Senator Dyson  explained that removal of these words  would serve to                                                            
support  the intent  that the  Constitutional  spending limit  would                                                            
apply only  to the amount  that the State's  budget could  increase.                                                            
The Constitutional  spending limit  could not mandate a decrease  in                                                            
the budget. The  words proposed for deletion contradict  language in                                                            
Section 1(b) on page two, lines eight and nine.                                                                                 
                                                                                                                                
In  response  to  a  comment  from  Co-Chair  Green,  Senator  Dyson                                                            
explained  that rather  than clarifying  which  of the calculations                                                             
should  be used in  the formula,  as presented  in Section 1(a)  and                                                            
(b), the intent of this  amendment is to affirm that the end-product                                                            
of  all the  calculations  would  be  that  "it  would not  force  a                                                            
decrease below  the last year's appropriation level."  A forthcoming                                                            
amendment  would address  concerns regarding  the components  of the                                                            
calculation.                                                                                                                    
                                                                                                                                
Co-Chair Wilken expressed  that the conflict being addressed by this                                                            
amendment begins  with the words "if  the appropriation limit?."  on                                                            
line five,  page two in Section 1(b)  as it contradicts language  in                                                            
Section 1(a) on line five, page one.                                                                                            
                                                                                                                                
Co-Chair Green removed her objection.                                                                                           
                                                                                                                                
Senator Olson  asked for confirmation that the Administration  is in                                                            
agreement that  the intent of this  legislation is to not  allow the                                                            
budget to be reduced in the out years.                                                                                          
                                                                                                                                
Ms. Frasca  stated that the Administration  is willing to  support a                                                            
spending  limit  that  would  not  ratchet  down  the  budget  in  a                                                            
situation where the formula calculations might be negative.                                                                     
                                                                                                                                
There being no further objection, Amendment #3 was ADOPTED.                                                                     
                                                                                                                                
Senator  Dyson   asked  regarding   language  in  Section   1(a)(1),                                                            
beginning  on  line  ten, page  one  as  he understood  that  SJR  3                                                            
mandated that the formula  for determining a spending limit would be                                                            
based on the sum  of the Consumer Price Index (CPI).  The sum of the                                                            
CPI would be  limited to a growth  factor that would not  exceed the                                                            
income  of   the  State's   citizens.  He   asked  Ms.  Frasca   her                                                            
interpretation of that bill.                                                                                                    
                                                                                                                                
Ms. Frasca responded that  due to the fact that this legislation was                                                            
fashioned after  HJR 9 as amended  by the Senate Finance  Committee,                                                            
she had not  reviewed the provisions  of SJR 3. She reiterated  that                                                            
the Committee could amend SJR 103.                                                                                              
                                                                                                                                
Senator Dyson  stated that  the confusion  arises from the  language                                                            
that specifies that the  calculation would be based on the lesser of                                                            
CPI and population,  as specified  in Section 1(a)(1) or  the change                                                            
in  personal income  of  State  residents  as specified  in  Section                                                            
1(a)(2).                                                                                                                        
                                                                                                                                
Ms. Frasca clarified  that the language specifies  that the spending                                                            
limit calculation would  be based on the rate of change of inflation                                                            
plus  the  rate  of  change  in  population  times  .75  percent  as                                                            
specified  in Section 1(a)(1).  This sum would  then be compared  to                                                            
the  rate of  change  in personal  income  as specified  in  Section                                                            
1(a)(2). Whichever  is "the least of those two answers  would become                                                            
the adjustment factor for the limit."                                                                                           
                                                                                                                                
Senator  Dyson  stated  that  therein   lay  the  confusion,  as  he                                                            
understood that both HJR  9 and SJR 3 based their calculation on the                                                            
growth in  population and  the lesser  of the CPI  or the growth  in                                                            
Alaskans' income.                                                                                                               
                                                                                                                                
Co-Chair  Wilken  recalled   that  the Committee   had  removed  the                                                            
personal income component from those calculations.                                                                              
                                                                                                                                
Senator  Dyson  agreed,   but  clarified  that  the  Committee   had                                                            
incorporated  language specifying  that the CPI component  could not                                                            
exceed the growth in personal income.                                                                                           
                                                                                                                                
                                                                                                                                
SFC 04 1st SS #3, Side B 11:35 AM                                                                                               
                                                                                                                                
                                                                                                                                
Senator  Dyson  continued  that  this  provision   was  included  to                                                            
alleviate fears that otherwise  "a huge escalator" might result that                                                            
would undermine "that budget discipline."                                                                                       
                                                                                                                                
Co-Chair Wilken  asked, therefore,  whether the language  in SJR 103                                                            
mirrors that as adopted in SJR 3 by the Committee.                                                                              
                                                                                                                                
Ms. Frasca  "assumed"  that it  does not.  She reiterated  that  the                                                            
language presented  in SJR 103 is  mirrored after HJR 9,  as amended                                                            
by the  Senate  Finance Committee.  She  stated that  the  Committee                                                            
could alter the bill's language.                                                                                                
                                                                                                                                
Senator  Dyson  acknowledged.   He clarified   that  the  population                                                            
component  and the sum  of the lesser  of the  CPI or income  growth                                                            
were  the   key  elements   in  SJR  3.   He  asked  regarding   the                                                            
Administration's  decision  to mirror  the  components of  HJR 9  as                                                            
opposed to SJR 3.                                                                                                               
                                                                                                                                
Ms.  Frasca responded  that  an  extensive  review of  which  bill's                                                            
calculation  factors would  be the  best was not  conducted,  as the                                                            
Administration   determined  that,  since  both  HJR  9  and  SJR  3                                                            
contained the  same variables, either approach would  arrive "almost                                                            
to the  same place."  It used  the HJR  9 bill as  it had  processed                                                            
further than SJR 3. Therefore,  she stated that the weight placed on                                                            
one variable over  another would be the Committee's  preference. The                                                            
Administration would support either approach.                                                                                   
                                                                                                                                
Senator Dyson  voiced the desire that the legislation  would advance                                                            
from Committee after some forthcoming alternations.                                                                             
                                                                                                                                
Conceptual  Amendment  #4:  This  amendment   replaces  language  in                                                            
Section 1(a)(1)(A)  and (2) beginning  on line 11, page one  through                                                            
page  two,  line  four,  with  Section  1(a)(1)   and  (2)  language                                                            
beginning on  line eleven, page one  through Section 1(a)(2)  ending                                                            
on line  three, page two  of CS SJR 3(FIN).  This language  reads as                                                            
follows.                                                                                                                        
                                                                                                                                
             (1) the percentage rate of change in the Consumer                                                                  
     Price Index for all urban consumers for the Anchorage                                                                      
     metropolitan area compiled by a federal agency during the                                                                  
     two calendar years preceding the calendar year during which                                                                
      the immediately preceding fiscal year began, but not to                                                                   
     exceed the percentage change in personal income of State                                                                   
     residents during the two calendar years preceding the                                                                      
     calendar year during which the immediately preceding fiscal                                                                
     year begins; plus                                                                                                          
          (2) the percentage rate of change in the State                                                                        
      population during the two calendar years preceding the                                                                    
     calendar year during which the immediately preceding fiscal                                                                
     year began compiled by a State department.                                                                                 
                                                                                                                                
In addition, this amendment  inserts the words "per capita" into the                                                            
new language of Section  (a)(1) preceding the words "personal income                                                            
of State residents?".                                                                                                           
                                                                                                                                
Senator Dyson moved to adopt Conceptual Amendment #4.                                                                           
                                                                                                                                
AT EASE 11:40 AM / 11:47 AM                                                                                                     
                                                                                                                                
Senator Dyson stated that the inclusion of this language would                                                                  
clarify the intent of the Committee regarding the formula.                                                                      
                                                                                                                                
There being no objection, Amendment #4 was ADOPTED.                                                                             
                                                                                                                                
Amendment #1:  This amendment inserts a new paragraph  into the bill                                                            
in Section 1(c) on page three, line 21 as follows.                                                                              
                                                                                                                                
     (15) an appropriation for elementary or secondary public                                                                   
     school operations.                                                                                                         
                                                                                                                                
Senator Hoffman moved to adopt Amendment #1.                                                                                    
                                                                                                                                
Senator B. Stevens objected.                                                                                                    
                                                                                                                                
Senator Hoffman explained  that this "simple amendment" would remove                                                            
K-12 education expenditures from the spending limit provision.                                                                  
                                                                                                                                
[NOTE: Co-Chair Green assumed chair of the meeting.]                                                                            
                                                                                                                                
Co-Chair  Green stated that  the result of  this amendment  would be                                                            
that   education  spending   would   not  be   controlled  via   the                                                            
Constitutional spending limit, were one imposed.                                                                                
                                                                                                                                
Senator Hoffman  expressed that education  spending limits  would be                                                            
decided  by the Legislature.  The  Governor could  veto Legislative                                                             
decisions that were considered excessive in this regard.                                                                        
                                                                                                                                
Senator  B. Stevens disagreed  with Senator  Hoffman's comment  that                                                            
this is a simple amendment,  as, were it adopted, it would result in                                                            
the dollar  amounts specified  in Section 2(a)(1)  and (2)  on lines                                                            
one and two, page  four being re-calculated. Specifically,  it would                                                            
remove $800 million from  those numbers. Were education excluded, it                                                            
would serve to double the  maximum spending limit established by the                                                            
formula. "It is not a simple amendment."                                                                                        
                                                                                                                                
Senator  Bunde  commented   that  while  education  is  one  of  the                                                            
important services provided  by the State, it is not "the only one."                                                            
Because  it is the  largest annual  State expenditure,  it would  be                                                            
inappropriate to exclude  it from the spending limit. Doing so would                                                            
make the spending limit "meaningless".                                                                                          
                                                                                                                                
Senator Hoffman  stated, in response to Senator B.  Stevens concern,                                                            
that were the amendment  adopted, the numbers in Section 2(a)(1) and                                                            
(2) could  be addressed  with a  technical amendment.  He  disagreed                                                            
that the omission of education  from the spending limit would double                                                            
the amount.                                                                                                                     
                                                                                                                                
Co-Chair  Green asked  the  percentage of  General  Fund dollars  in                                                            
support of  education in  the FY 04 budget.  She understood  that it                                                            
amounted to between 45 and 50-percent of that budget.                                                                           
                                                                                                                                
Senator  Bunde   responded  that   education  spending  equated   to                                                            
approximately  $800  million  of  the State's  FY  04  $2.3  billion                                                            
budget.                                                                                                                         
                                                                                                                                
Co-Chair  Green understood,  therefore,  that this  amendment  would                                                            
exclude approximately  35-percent  of the State's expenditures  from                                                            
the provisions of the limit.  This would mean that the remaining 65-                                                            
percent would be responsible for controlling State spending.                                                                    
                                                                                                                                
Senator Hoffman stated  that consideration should be provided to how                                                            
the proposed spending  limit would have affected education  spending                                                            
this past year, especially  in consideration of the projected Public                                                            
Employees Retirement  System (PERS)  and Teachers Retirement  System                                                            
(TRS) obligations  which are  anticipated for  a minimum of  another                                                            
three or four  years. Therefore, this legislation  would establish a                                                            
spending  "knowing  full  well  that  ? we  have  increases  on  the                                                            
horizon," directly related to education.                                                                                        
                                                                                                                                
Senator Bunde  responded that the spending limit would  not prohibit                                                            
increasing the  education budget by $130 million.  What it would say                                                            
is that priorities  must be established, and, were  education deemed                                                            
a priority,  the money to support  its increased budget "would  have                                                            
to come  from another  area  of State  spending." "A  finite pot  of                                                            
money" would be available.                                                                                                      
                                                                                                                                
Senator  Olson declared  that while  funding for  the University  of                                                            
Alaska  system  is important,  K-12  education  should  be a  higher                                                            
priority  as it affects  more people  in the  State. Therefore  K-12                                                            
funding  "should  have  equal  positioning"  to  that  provided  the                                                            
University.                                                                                                                     
                                                                                                                                
Co-Chair   Green  expressed   that  comparing   K-12  education   to                                                            
University  funding and other  exempted components  of the  spending                                                            
limit is difficult  to do as the K-12  education component  does not                                                            
"generate money  that we would even  be allowed to exempt.  There is                                                            
nothing to waive."  Education is, in a fashion, receiving  a waiver,                                                            
as grants  that  might be  provided "directly  to  schools" are  not                                                            
included in the proposed  spending limit calculation. The University                                                            
raises  its  own money;  this  is  different  than  the 100-percent                                                             
funding provided to K-12 education.                                                                                             
                                                                                                                                
Senator Dyson  recalled that the graphs and models  relating to this                                                            
issue  that  were   presented  during  Committee  hearings   on  the                                                            
Constitutional  spending limits during the Twenty-Third  Legislative                                                            
Session, addressed  the Committee's concern regarding  whether there                                                            
sufficient  flexibility provided by  the spending limit proposal  to                                                            
meet projected  State  government  growth relating  to the  PERS/TRS                                                            
issue  as well  as the  Department  of  Health and  Social  Services                                                            
projected growth  of the State match  that would be required  in the                                                            
Medicaid  and Medicare  programs.  These obligations  would  present                                                            
challenges but would be doable.                                                                                                 
                                                                                                                                
Senator  Dyson  countered  that the  argument  that  K-12  education                                                            
should  be exempt  from  the spending  limit  due to  the number  of                                                            
people involved  could also be applied to ranking  investigating and                                                            
prohibiting crimes against  children as a number one priority as the                                                            
State leads  the nation in violations  against children.  Therefore,                                                            
what to exempt  due to the premise of this numbers'  argument, could                                                            
be a huge discussion.  He encouraged a no vote on  the amendment, as                                                            
the  fact  that  the  education  foundation   funding  formula,  the                                                            
Constitutional  mandate that education  be adequately provided  for,                                                            
and the "sympathy"  the Legislature has shown in this  regard should                                                            
sufficiently address the issue.                                                                                                 
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
                                                                                                                                
OPPOSED: Senator Dyson,  Senator B. Stevens, Senator Bunde, Co-Chair                                                            
Wilken and Co-Chair Green                                                                                                       
                                                                                                                                
The motion FAILED (2-5)                                                                                                         
                                                                                                                                
Amendment #1 FAILED to be adopted.                                                                                              
                                                                                                                                
{NOTE: Co-Chair Wilken assumed chair of the meeting.]                                                                           
                                                                                                                                
Amendment #2:  This amendment inserts a new subsection  into Section                                                            
2 of the bill, on page three, following line 26 as follows.                                                                     
                                                                                                                                
          (a)  The 2004 amendment relating to an appropriation limit                                                            
     (art. IX, sec. 16) takes effect only if the                                                                                
                (1) legislature  adopts  a resolution  proposing  an                                                            
     amendment  to Section 15 of Article IX to limit  appropriations                                                            
     from the Alaska permanent  fund based on an averaged percent of                                                            
     the  fund market value  and to permit  appropriations  from the                                                            
     fund  only for costs  of administering  the fund, a program  of                                                            
     dividend  payment  for residents  of the  State established  by                                                            
     law,  aid to public  education, and  aid to municipalities  and                                                            
     other communities; and                                                                                                     
                (2) proposed  amendment  described  in  (1) of  this                                                            
     subsection  is placed  before the  voters of  the state  at the                                                            
     2004 general election.                                                                                                     
                                                                                                                                
In addition,  the words "Contingent  Effect" would be inserted  into                                                            
Section 2 on page three, line 26, following "30".                                                                               
                                                                                                                                
Senator  Hoffman  moved  for  the  adoption  of,  and  objected  to,                                                            
Amendment #2.                                                                                                                   
                                                                                                                                
Senator Dyson  viewed the  amendment "as an  effort to come  to some                                                            
accommodation." He would  support the Amendment if the sponsor would                                                            
delete  language   that  would  serve   to  enshrine  some   of  the                                                            
distribution   of  the  earnings  of  the  Permanent   Fund  in  the                                                            
Constitution. This language  is located in the (a)(1) section of the                                                            
amendment; specifically  "and to permit appropriations from the fund                                                            
only for  costs of  administering  the fund, a  program of  dividend                                                            
payment  for residents  of  the State  established  by  law, aid  to                                                            
public education, and aid  to municipalities and other communities".                                                            
While he is sympathetic  to these programs, he does not support them                                                            
being enshrined in the Constitution.                                                                                            
                                                                                                                                
Senator Hoffman thought  that this language was included in SJR 102,                                                            
and in that  regard, he thought that  the amendment would  serve "to                                                            
keep  the language  in  compliance with"  that  resolution.  Perhaps                                                            
further  discussion   on  SJR102-CONST.  AM:  PERM  FUND   P.O.M.V.;                                                            
DIVIDENDS should occur before this amendment is considered.                                                                     
                                                                                                                                
Amendment-to-Amendment  #2:  The amendment  to the amendment  amends                                                            
language in (a)(1) of the  amendment so that the language would read                                                            
as follows.                                                                                                                     
                                                                                                                                
          (a)  The 2004 amendment relating to an appropriation limit                                                            
     (art. IX, sec. 16) takes effect only if the                                                                                
                (1) legislature  adopts  a resolution  proposing  an                                                            
     amendment  to Section 15 of Article IX to limit  appropriations                                                            
     from the Alaska permanent  fund based on an averaged percent of                                                            
     the fund market value; and                                                                                                 
                (2) proposed  amendment  described  in  (1) of  this                                                            
     subsection  is placed  before the  voters of  the state  at the                                                            
     2004 general election.                                                                                                     
                                                                                                                                
Senator  Bunde moved  to Amend  Amendment  #2. He  stated that  this                                                            
would  reflect  one  of  the  resolutions  being  presented  to  the                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator  Hoffman  stated  that while  he  would  not object  to  the                                                            
amendment  to  the  amendment,  he  might  consider  including  this                                                            
language in SJR 102.                                                                                                            
                                                                                                                                
Senator Dyson  observed that many  Legislators have stated  that any                                                            
discussion  of new revenues  to the State  government should  have a                                                            
Constitutional  spending limit as their "cornerstone."  He commended                                                            
Senator  Hoffman's  efforts  in support  of  adopting  a POMV  plan.                                                            
Therefore,  he understood  that Senator  Hoffman's  amendment  is an                                                            
effort  to  establish  agreement  in  order  to  make  that  happen.                                                            
Acceptance of  Senator Hoffman's amendment by "those  of us who want                                                            
a spending" limit  would indicate a reciprocal willingness  that "we                                                            
would  work  with  you  to get  the  POMV  before  the  people."  He                                                            
applauded the "spirit of that."                                                                                                 
                                                                                                                                
Senator Bunde  noted that  Senator Dyson has  stated that there  are                                                            
those who would not "go  anywhere without a complete plan." However,                                                            
the situation  has become  one in which supporters  of the  POMV and                                                            
supporters  of a spending  limit are waiting  for the other  to take                                                            
the first step. This might  "indeed be an opportunity for us to step                                                            
together."  He also accepted that  there are those who argue  that a                                                            
spending limit  would not be considered  without addressing  how the                                                            
State would  acquire new  revenue. That is  as valid an argument  as                                                            
that  a spending  limit would  not be  accepted  without a  spending                                                            
plan. Approval of the amendment  to the amendment might provide hope                                                            
of moving forward.                                                                                                              
                                                                                                                                
Senator Hoffman reiterated  that his support of the amendment to the                                                            
amendment and  his support of the establishment of  a spending limit                                                            
would be contingent on what occurs with SJR 102.                                                                                
                                                                                                                                
Senator Dyson  understood Senator Hoffman's remarks  to be that were                                                            
an acceptable  version of  SJR 102 not to  advance, Senator  Hoffman                                                            
would not  support this  legislation, "even  as amended." Were  that                                                            
the case,  Senator Dyson  would offer a motion  on the Senate  floor                                                            
"to delete the amendment  that we just made." However, he hoped that                                                            
some common  ground would  be acquired that  would march both  sides                                                            
"forward together."                                                                                                             
                                                                                                                                
Senator  Olson  commended  Senator  Dyson  on  his  perception  that                                                            
working  together might  advance a  plan. He voiced  support  of the                                                            
Governor's  proposal as outlined  in SJR 102.  He reminded  that the                                                            
final decision would be with the voters.                                                                                        
                                                                                                                                
Senator  Dyson encouraged  the Committee to  recognize that  methods                                                            
could  be   considered  that  would   allow  the  proposals   to  be                                                            
implemented  via statutory rather  than Constitutional measures.  He                                                            
urged that compromising efforts be exerted.                                                                                     
                                                                                                                                
Co-Chair Green objected to the Amendment-to-Amendment #2.                                                                       
                                                                                                                                
Co-Chair Green  removed her objection to the Amendment-to-Amendment                                                             
#2.                                                                                                                             
                                                                                                                                
There being no further  objection, the Amendment to Amendment #2 was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Amendment #2, as Amended, was before the Committee.                                                                             
                                                                                                                                
A roll  call  was taken  on the  motion to  adopt  Amendment #2,  as                                                            
amended.                                                                                                                        
                                                                                                                                
IN FAVOR: Senator  Olson, Senator Bunde, Senator Dyson,  and Senator                                                            
Hoffman                                                                                                                         
                                                                                                                                
OPPOSED: Senator  B. Stevens, Co-Chair  Green, and Co-Chair  Wilken                                                             
                                                                                                                                
The motion PASSED (4-3)                                                                                                         
                                                                                                                                
Amendment #2, as Amended was ADOPTED.                                                                                           
                                                                                                                                
Amendment #5:  This amendment inserts  a new paragraph into  Section                                                            
1, subsection (d) on page three, following line 21 as follows.                                                                  
                                                                                                                                
     (15) an appropriation to fund State employee retirement                                                                    
     benefits.                                                                                                                  
                                                                                                                                
Senator  Hoffman  moved  to  adopt Amendment  #5  and  objected  for                                                            
discussion.  He stated that in consideration  of the concern  raised                                                            
in  opposition  to Amendment  #1  that  eliminating  K-12  education                                                            
funding  from the spending  limit  would be too  large a  component,                                                            
this amendment  would remove  a smaller component  of K-12  funding;                                                            
specifically   that   funding   specific   to  the   K-12   PERS/TRS                                                            
obligations.                                                                                                                    
                                                                                                                                
Senator Hoffman removed his objection.                                                                                          
                                                                                                                                
Co-Chair Wilken objected for further discussion.                                                                                
                                                                                                                                
Co-Chair  Green  remarked  that  the  State  would  experience  some                                                            
unanticipated  expense  every  year.  While  PERS/TRS  expenses  are                                                            
currently an issue,  in a few years it would be something  else. For                                                            
that reason, the inclusion  of "hot button issues of the time" would                                                            
not be a wise move.                                                                                                             
                                                                                                                                
Co-Chair  Wilken  recalled   that  a forecast   was  developed  that                                                            
reflected  the PERS/TRS  expenses  for  FY 06  and FY  07. He  asked                                                            
Senator Dyson to speak to that point.                                                                                           
                                                                                                                                
Senator  Dyson  stated  that the  projection  models  depicted  that                                                            
forward  education expenses  could be absorbed  within the  spending                                                            
limit, as proposed. This surprised many.                                                                                        
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
                                                                                                                                
OPPOSED: Senator Bunde,  Senator B. Stevens, Senator Dyson, Co-Chair                                                            
Green, and Co-Chair Wilken                                                                                                      
                                                                                                                                
The motion FAILED (2-5)                                                                                                         
                                                                                                                                
Amendment #5 FAILED to be adopted.                                                                                              
                                                                                                                                
Co-Chair Wilken asked for  confirmation that the exemptions provided                                                            
to the  University of  Alaska in SJR  3 and HJR  9 remain intact  in                                                            
this legislation.                                                                                                               
                                                                                                                                
Ms. Frasca assured  Co-Chair Wilken that the exemptions  provided to                                                            
the University are contained in the bill.                                                                                       
                                                                                                                                
Senator Dyson moved to  report the bill, as amended, from Committee,                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There  being  no  objection,  CS  SJR  103(FIN)  was  REPORTED  from                                                            
Committee  with the  Division of  Elections $1,500  fiscal note  #1,                                                            
dated June 18, 2004.                                                                                                            
                                                                                                                                
RECESS 12:26 PM / 2:10 PM                                                                                                       
                                                                                                                                

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