Legislature(2003 - 2004)
03/19/2003 01:32 PM Senate JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SJR 3-CONST AM: APPROPRIATION/SPENDING LIMIT SENATOR DYSON, sponsor of SJR 3, told members that former Senator Donley proposed a constitutional spending limit last year when the Legislature was discussing the state's fiscal difficulties. It passed the Senate but not the House. As he read through Senator Donley's committee discussions and notes he found that in 1981 a previous constitutional amendment established a spending limit with an escalator clause that would have set last year's general fund spending limit at over $6 billion. It also contained a provision that if court interpreted that the spending limit was reached, one-third must be spent on capital projects. The upshot is that constitutional spending limits never worked. SENATOR DYSON explained that Senator Donley's proposal said any spending increase would be limited to 4 percent of the amount spent two years earlier. To spend another 2 percent, a two- thirds vote was required and to spend 2 percent beyond that, a three-quarter vote was required. SJR 3 is virtually the same resolution that passed the Senate last year. It excludes payments to the railroad, the permanent fund, money traded between state agencies, dividends and pass through money from the federal government. It will require a supermajority vote to increase the budget more than 4 percent every two years. 2:49 p.m. SENATOR THERRIAULT asked if SJR 3 is a reintroduction of Senator Donley's resolution. SENATOR DYSON said it is. SENATOR ELLIS noted that Governor Murkowski has said he does not support a constitutional spending limit because he plans to exercise fiscal discipline. He asked Senator Dyson if he changed the Governor's mind. SENATOR DYSON said he has not. He has had significant discussions with Ms. Frasca of the Office of Management and Budget (OMB) and he hopes someone from the Administration will be present today to suggest improvements. SENATOR THERRIAULT said the constitution expressly gives the Legislature the power, without interaction with the Governor, so it is not necessary to change his mind. SENATOR ELLIS said although it is not required, it is advisable. SENATOR FRENCH referred to a statement made earlier by Senator Dyson about how governments have a hard time breaking the habit of spending other's money and remarked that Alaska is a perfect example of the fallacy of that position because the Legislature has cut spending over the last decade. SENATOR DYSON said it is quite surprising to see that the Legislature is spending less now per capita than it was pre- Prudhoe Bay. However, he does not believe the general population believes that legislators are trustworthy without the Legislature voluntarily putting significant restrictions upon itself. He said he hopes the Legislature acts responsibly and doesn't need to impose the limit. However, Senator Donley found that for the spending limit to come into play, the Legislature would have to spend more money than what is allowed, someone would have to file suit, and the court would have to rule that the Legislature acted unconstitutionally. SENATOR ELLIS asked Senator Dyson if he said this resolution is largely a public relations exercise to build trust. SENATOR DYSON said he believes, and it was Senator Donley's position, that this must be done to build the public's confidence that the Legislature is operating within boundaries that are not easily mutable. He said he suspects everyone agrees something needs to be done to bring in more revenue, but Senator Donley believes the public will not support any new revenue sources unless they trust the Legislature with their money. He said this would help. His last point was that someone must take court action to impose the limit and he suspects that action will seldom be invoked, but it's a good exercise in discipline. SENATOR FRENCH asked Senator Dyson for a copy of the background materials he referenced. SENATOR THERRIAULT said that Senator Donley was concerned that the public was convinced that the Legislature had been prudent and would continue to be prudent. He asked if the existing spending limit set $2.5 billion as the base and ratcheted it up every year. SENATOR DYSON said that is correct; the escalator clause provides for inflation and population increases. SENATOR THERRIAULT said that points out why statutory programs should never automatically be inflation proofed - spending would shoot through the roof. There being no further questions or testimony, Chair Seekins told members he would bring this legislation before the committee at a later time. He then announced the committee would take up SB 45.
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