Legislature(1993 - 1994)

03/14/1994 03:36 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 SENATOR MILLER announced  SJR 38  (RESTRUCTURE PERMANENT FUND) to be     e    
 up for consideration.                                                         
                                                                               
 REPRESENTATAIVE JOHNNY ELLIS, sponsor, said if this passed it would           
 significantly change they way the state conducts its finances.  It            
 proposes that all the natural resource revenues of the state flow             
 into the Permanent Fund (PF) and that they adopt a system of                  
 gradually reigning in our expenditures and front loading the PF.              
                                                                               
 The advantages to this are many.  We could have a long range fiscal           
 plan for the state.  We would be able to capture windfalls for                
 future use and not have the boom and bust cycle in state spending.            
 We would be able to have a bigger PF and spend just earnings, not             
 the principle.                                                                
                                                                               
 Number 381                                                                    
                                                                               
 ROGER CREMO, author of the resolution, testified from Anchorage               
 that the resolution is self explanatory and he would answer their             
 questions.                                                                    
                                                                               
 SENATOR FRANK asked how the fluctuating value of the PF would be              
 reflected in the amount the legislature could appropriate?  MR.               
 CREMO said there is a provision for averaging the value of the                
 fund.  It is a 12 quarter average and is purposely done on a                  
 calendar basis so that the last of the 12 quarters is the one                 
 ending on December 31 just before the legislature convenes which              
 allows them to know to the penny how much money will be coming from           
 the fund.                                                                     
                                                                               
 SENATOR FRANK asked if they had considered writing the bill so that           
 people could see how it was changed rather than just repealing and            
 reenacting.  MR. CREMO explained that the drafting attorney, Tamara           
 Cook, suggested this way would be by far the clearest approach                
 since the change was so radical.                                              
                                                                               
 SENATOR LEMAN asked if he had given any more thought to the                   
 transition number.  MR. CREMO said it could easily be less than 20.           
 He used 20, because it seemed to produce numbers that at least                
 started with the level of spending that the legislature is                    
 currently using.  He said the lower the start of the percentage,              
 the better the system will perform.                                           
                                                                               
 SENATOR FRANK asked what opportunities there would be to take                 
 things off the budget.  MR. CREMO said there isn't much room for              
 the legislature as far as how much can come out of the fund.  The             
 percentage would be fixed in the constitution and the value of the            
 fund would be fixed by the market average.  There is no restriction           
 on what the legislature could raise with non-resource revenues.               
 There is no spending limit, nor does it tell the legislature what             
 to do - anywhere.  If the legislature would tax resources in the              
 future, that money would go into the PF rather than the general               
 fund.                                                                         
                                                                               
 SENATOR LEMAN moved to pass SJR 38 from Committee with individual             
 recommendations.  There were no objections and it was so ordered.             

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