Legislature(1993 - 1994)
04/13/1994 08:45 AM Senate MIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 505 APPROP: BRF TO GEN.FUND; EDUCATION AID
Co-chair Pearce directed that CSHB 505 (Fin)(brf fld)(efd
fld) be brought on for discussion and noted that
appropriation from the constitutional budget reserve fund
for education failed as well as the effective date.
Legislation passed by the House thus contains only an
appropriation to the constitutional budget reserve. Co-
chair Pearce next directed attention to a draft SCS CSHB 505
(Fin) (8-GH2045\M, 4/13/94, Cook/Utermohle). She noted the
title change and advised that an accompanying title change
Resolution was prepared for introduction on the floor of the
Senate. Co-chairman Frank MOVED for adoption of the "M"
version work draft. No objection having been raised, SCS
CSHB 505 (Fin) was ADOPTED.
Co-chair Frank directed attention to the sectional analysis
prepared by Legal Services and explained that the Senate
Finance version of the bill:
Sec. 1 - Incorporates the Governor's findings and intent
language.
Sec. 2 - Includes a $932,762,996 appropriation from the
general fund to the constitutional budget reserve
fund per the judgment in Hickel v. Halford.
That total is reduced from $945 million.
Sec. 3 - Includes a $73,245,478 appropriation from the
general fund to the constitutional budget reserve
fund per the order in Cowper v. Hickel.
Sec. 4 - Appropriates from the general fund to the
constitutional budget reserve fund the interest
that would have been earned on totals set forth in
Secs. 2 and 3.
End: SFC-94, #60,Side 1
Begin: SFC-94, #60, Side 2
Sec. 5 - Appropriates $696,527,188 from the general fund for
full funding of education, all normal items of K-
12support including pupil transportation and
supplemental funding for single site schools.
Sec. 6 - Appropriates $103,345,264 from the general fund to
the Alaska debt retirement fund for full funding of
debt service.
Sec. 7 - Incorporates the original approach of the
Governor's bill which split the $945 million
appropriation. Sec. 7 splits the
$932 million appropriation into a
$416,600,000 appropriation from the
constitutional budget reserve fund
(the amount intended to be spent by
the legislature last session) and a
$516,162,996 appropriation from the
fund to cover a shortfall in the
general fund caused by the drop in
oil prices.
Sec. 8 - Appropriates from the constitutional budget
reserve fund
the interest appropriated in Sec. 4.
Sec. 9 - Makes a contingent appropriation from the budget
reserve
fund to the general fund, if necessary, to balance
the FY 94 budget and make it whole. That amount
is estimated at $323 million at the present time.
Sec. 10 - States that appropriations from the constitutional
budget
reserve are made under Sec. 17(c) of the
constitution and require a three-quarter vote.
Sec. 11 - Makes appropriations in Secs. 2 through 4
retroactive to
July 1, 1993, the beginning of the fiscal year.
Sec. 12 - Makes appropriations in Secs. 2 through 6
contingent upon
appropriations from the budget reserve fund (Secs.
7 through 9). That ensures that certain sections
cannot be dropped or vetoed out of the bill.
Sec. 13 - Contains an immediate effective date.
Senator Kerttula asked if the proposed bill would meet the
constitutional test. JIM BALDWIN, Assistant Attorney
General, Dept. of Law, said that the legislation follows the
approach suggested in the Governor's bill: that the
appropriations be made in accordance with a three-quarter
vote of both houses of the legislature. That avoids the
uncertainties of litigation. Mr. Baldwin stressed that his
comments do not indicate discontinuance of support for the
validity of HB 58 (ADMINISTRATION OF BUDGET RESERVE FUND)
which, if applied, would make a certain balance of the
budget reserve fund expendable without the necessity of a
three-quarters vote. If the legislature passes the proposed
bill on a three-quarters vote, the current basis for
challenge would be avoided.
Senator Kerttula asked if the bill is in good form and meets
concerns raised by the Office of the Attorney General and
others. Mr. Baldwin responded affirmatively, advising that
he reviewed the bill at the request of Senator Frank and
found it to be in correct technical form. It does not
present any new issues.
Senator Rieger referenced the revised, higher dollar amount
set forth in an April 13, 1994, memo and voiced his
understanding that transfer in and out of a greater amount
would not change the overall spending plan. Mr. Stastny
concurred.
Senator Rieger next raised questions resulting from language
relating to repayment of the constitutional budget reserve.
Mr. Stastny concurred that the additional $76 million
flowing from the general fund to the constitutional budget
reserve and back out would increase the amount that would
have to be repaid.
Senator Rieger next inquired concerning the detailed
judicial ruling, asking if it contained anything unexpected.
Mr. Baldwin responded affirmatively. He then explained that
while the issue of repayment was not argued before Judge
Reese, the court mentioned that provision of the bill. The
Dept. of Law felt it was noncontroversial in that it merely
restated constitutional provisions. Under those provisions
the surplus carried forward at the end of the fiscal year is
the source of money to be used for the repayment obligation.
The judge provided a more expansive interpretation by saying
that any surplus in the general fund would be the source for
repayment. Senator Rieger asked if the permanent fund
earnings reserve would be part of the surplus. Mr. Baldwin
said that the judge interprets the earnings reserve as being
on the front end--as being available in general--even though
it is not in the general fund. Mr. Baldwin further advised
that his reading of the ruling indicates that any separate
account or any separate funds established by law within the
general fund would have to be counted toward the surplus.
That differs from what the Dept. of Administration, division
of finance, shows as the surplus carryforward on the annual
report. In subsequent discussion, Mr. Baldwin said that the
judge did not specifically mention AHFC or AIDEA. Specific
reference is made to the railbelt intertie fund and the
earnings reserve account. General reference is then made to
other accounts that the legislature could expend upon a
majority vote "and the only impediment to the expenditure of
the funds being a lack of political will to do so."
Mr. Baldwin voiced his belief that in making his decision,
Judge Reese "moved towards are position--towards the HB 58
position." Plaintiffs argued that all funds accessible to
the legislature should be counted as available. That would
be very broad. The legislature appropriates from many
funding sources. The judge did not count revolving loan
funds, trust or custodial receipts, federal funds, and a
list of other funds proffered by the plaintiff. The dispute
has now narrowed to "some of the reserve funds that are
established by law and the earnings reserve account."
Senator Rieger voiced need to craft additional "pieces of
the package" to provide fiscal stability for the state.
Senator Kelly directed attention to Page 6, Sec. 6, and
noted the $103 million appropriation from the general fund
to the Alaska debt retirement fund. He then noted an
upcoming election in Anchorage and raised questions
concerning whether the foregoing appropriation would fund
the state obligation to municipalities for 70% school debt
reimbursement. Will all municipal debt incurred under the
new program would be funded? Co-chair Frank voiced his
understanding that it would. Mr. Stastny said that the bill
would provide full funding of "everything that we're
obligated to at this point."
Co-chair Frank MOVED for passage of SCS CSHB 505 (Fin) and
requested unanimous consent. No objection having been
raised, SCS CSHB 505 (Fin) was REPORTED OUT of committee.
All members signed the committee report with a "do pass"
recommendation with the exception of Senator Rieger who
signed "Do not pass except as part of a more comprehensive
package." Co-chair Pearce advised that the necessary
resolution relating to the title change would accompany the
bill.
ADJOURNMENT
The meeting was adjourned at approximately 11:25 a.m.
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