Legislature(1993 - 1994)

04/13/1994 08:45 AM MIN

Audio Topic
* first hearing in first committee of referral
+ 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                 
  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                 
            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                 
            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                 
  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                 
  The meeting was adjourned at approximately 11:25 a.m.                        

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