Legislature(2017 - 2018)BUTROVICH 205
02/15/2018 03:30 PM Senate STATE AFFAIRS
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SJR2 | |
| SCR5 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SJR 2 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SCR 5 | TELECONFERENCED | |
SJR 2-CONST AM: APPROPRIATION LIMIT
3:32:16 PM
CHAIR MEYER announced the consideration of SJR 2.
3:33:11 PM
CHRISTINE MARASIGAN, Staff, Alaska State Legislature, Juneau,
Alaska, summarized that Senate Joint Resolution 2 (SJR 2)
proposes amendments to the Alaska Constitution that would reset
a budget appropriation limit with certain exceptions. She noted
that the version of SJR 2 before the committee sets the
appropriation limit at $4.3 billion.
MS. MARASIGAN said that SJR 2 was introduced on January 27, 2017
and the Senate State Affairs Committee heard in 3 times. The
five main people who provided invited testimony included:
• Jeremy Price, State Director for Americans for Prosperity.
• Bob Williams, representative for State Budget Solutions.
• Penn Pfiffner, Chairman for the Taxpayer's Bill of Rights
(TABOR) Committee and former Colorado state representative.
• Barry Poulson, Emeritus Professor of Economics at the
University of Colorado.
• Matthew Mitchell, Senior Research Fellow at the Mercatus
Center at George Mason University.
She noted that public testimony was left open.
3:34:27 PM
She addressed what occurred in previous hearings on SJR 2 as
follows:
• February 14, 2017:
o 14-slide presentation by the sponsor that reviewed the
term "appropriation limit" as it is used in the
constitution, how many states have appropriation
limits, and background history on why the state needs
SJR 2.
o Presentation explained how SJR 2 would work, spending
exemptions, and how a built-in formula works.
o Document showed a side-by-side language comparison
from what is currently in the constitution and what is
in SJR 2, versions: N and M.
o Jeremy Price testified in support of SJR 2:
square4 Explained the need for limits to keep government
from growing excessively.
square4 Pointed out that the challenge was to keep
spending under control when times are good.
o Bob Williams testified in support of SJR 2:
square4 Served five terms in the Washington State
Legislature where he worked on tax and spending
limits.
o Matthew Mitchell, who studies state fiscal policies at
the Mercatus Center at George Mason University,
submitted a 77-page report for consideration in
support of SJR 2.
o Dave Harbor, author of Northern Gas Pipelines,
testified in support of SJR 2.
o National Federation of Independent Business Owners
submitted a letter of support for SJR 2.
3:36:59 PM
MS. MARASIGAN addressed the second hearing on SJR 2 as follows:
• March 2, 2017:
o Penn Pfiffner, Chairman for the Taxpayer's Bill of
Rights (TABOR) Committee testified in support of SJR
2:
square4 Explained the differences between TABOR that
passed in Colorado and SJR 2.
o Barry Poulson, Emeritus Professor of Economics at the
University of Colorado, testified in support of SJR 2.
She addressed the third hearing on SJR 2 as follows:
• March 30, 2017:
o SJR 2, version: M was moved by Senator Giessel.
o Five changes were presented in the committee
substitute for version: N.
o High-level-calculation worksheet presented which
showed how the base number for the appropriation limit
was calculated.
o Announced that a forth coming poll conducted by
Dittman Research, commissioned by the Alaska Chamber
of Commerce, would show wide-spread public support for
putting limits on spending by using a cap that works.
o Public testimony was left open.
SENATOR COGHILL asked her to clarify that SJR 2, version: N was
the old version and SJR 2, version: M was the proposed version.
MS. MARASIGAN answered yes.
CHAIR MEYER asked Ms. Marasigan to review the sponsor's
presentation of SJR 2 from February 14, 2017.
3:40:06 PM
MS. MARASIGAN explained that the presentation first went through
the following term definitions used in Article IX, Section 16 of
the Alaska Constitution:
• An annual cap on appropriations can be enacted
which grows yearly by the increase in population
and inflation and held binding by the
constitution.
• Some categories of appropriations are exempted.
• According to Alaska's Office of Management and
Budget (OMB), appropriation" is defined as:
statutory authorization to spend a specific
amount of money for a stated purpose.
Appropriations are often subdivided into
allocations in the appropriations bill. Funds may
not be spent without an appropriation made by
law.
She noted that the presentation showed how many state have
limits:
• Appropriation limits are part of a broader
category of Tax and Expenditure Limits (TELs).
• According to NCSL, as of 2010:
o 30 states operate under a tax or expenditure
limit:
square4 Spending limit: 23 states;
square4 Tax limits: 3 states;
square4 Both spending and tax limits: 4 states.
o Roughly half of these limits are
constitutional, the other half are
statutory.
She disclosed how the presentation explained the state's history
in establishing an appropriation limit as follows:
• The Trans-Alaska Pipeline System (TAPS)
completed, first oil flowed June 20, 1976.
• Alaska's Permanent Fund established by voters
November 2, 1976.
• FY1979 to FY1982, Alaska's total budget tripled
from $1.1 billion to $3.2 billion, excluding fund
transfers.
o For reference, the FY2006 budget was $3.3
billion.
• July 15, 1981: Alaska Legislature passed Governor
Hammond's SJR 4 in a special session.
• November 2, 1982: Alaska voters enshrined the
amendment limiting appropriation increases in the
Alaska Constitution, passing Ballot Measure 4
with a 61 percent to 39 percent tally.
• November 4, 1986: Alaska voters reaffirmed the
amendment in a planned revisit of the limit, the
vote was 71 percent to 29 percent in favor.
• 1986: Statutory Appropriation Limit.
• 1991: Statutory Budget Reserve Fund.
• 1991: Constitutional Budget Reserve Fund.
MS. MARASIGAN addressed the presentation as to why SJR 2 was
brought forward as follows:
• The appropriation limit in Article IX, Section 16 needs
repair, it has soared out of reach and failed to impact any
spending since its enactment:
o FY2017 budget was $5.2 billion, while the limit
was $10.0 billion.
• The limit may never come into play again unless it is
"reset."
• The intent of the voters should be respected and there
should be a meaningful appropriation limit.
• During the 2016 interim, Senator Dunleavy asked Legislative
Finance Division (LFD) to review the existing Statutory and
Constitutional Appropriation Limits.
• LFD responded with analysis and provided a look at problems
associated with the state's spending limits, loopholes in
the limits, and recommendations for ways to assist in
developing a workable loophole-proof (as much as possible)
spending limit that would:
1. Suppress the growth of government during revenue
surpluses,
2. Address rapid burning of reserves during revenue
shortfalls.
• Staff worked with LFD, Legal Services Division, and
individuals involved in the creation of the existing
appropriation limit to craft a revised appropriation limit
for Alaska.
3:45:11 PM
MS. MARASIGAN referenced the explanation of the key elements to
revise the constitutional appropriation limit as follows:
• Simplicity in presentation:
o Voters must be able to clearly understand the
limit and must not be so complex that it cannot
be easily explained.
o SJR 2 was designed to simplify the existing
limit.
• Sophisticated in function:
o Borrows from lessons learned following
implementation of the 1982 limit.
o Office of Management and Budget's Division of
Strategic Planning wrote a paper in 1986 which
characterized the 1982 limit as complex with a
design to strike a balance between accomplishing
something in a particular way while
simultaneously preserving the flexibility to
respond to unforeseen events and changing
circumstances.
She detailed that basics of SJR 2 as follows:
• Would need to pass during the 30th Legislature, prior
to the November 2018 General Election:
o Constitutional Amendments and Conventions, AS
15.50.030, placing proposition on ballot:
square4 The lieutenant governor shall direct the
director to place the ballot title and
proposition on the ballot for the next
statewide general election held after the
amendment proposed by the legislature or
held 120 days after the amendment proposed
by a constitutional convention. If there is
insufficient time to permit the proposition
to be placed on the regular ballot by the
director, the lieutenant governor shall
direct the director to prepare a separate
ballot for the proposition.
• Effective Date: Under AS 15.50.060, would become
effective 30 days after certification.
o SJR 2 would be effective for the FY2020 budget,
contemplated in early 2019.
• Spending exempt ("outside") the limit for
appropriations made to:
1. The Alaska Permanent Fund.
2. Payment of PFDs.
3. Meet a state of disaster declared by the
governor as prescribed by law, AS 26.23.020.
4. State general obligation or revenue bond
proceeds.
5. Pay obligations under state general
obligation bonds and revenue bonds.
6. Money received from the federal government.
7. Re-appropriation of a previous unobligated
appropriation.
8. Money for expenditure by a state agency to
provide internal services, or to provide
services to another agency, and another state
agency has also received an appropriation of
the same money.
9. Money held in trust by the state for a
particular purpose.
10. Money received by the state from a source
other than the state or federal government
that is restricted to a specific use by the
terms of a gift, grant, bequest, or contract.
11. Revenue of a public enterprise or public
corporation that issues revenue bonds.
12. Money deposited into the CBR, back to the
funds and accounts from which the money came
(reverse sweep).
13. State savings account or fund as prescribed
by law.
14. Dedicated funds.
MS. MARASIGAN addressed an appropriation item comparison between
the existing limit and the new limit from SJR 2.
She said the last part of SJR 2 addresses the resolution's
built-in-growth formula as follows:
• The mechanism which adjusts the appropriation cap
annually is a critically important element.
• The existing limit's formula adjusts the spending cap
by 100 percent of the cumulative change in population
and inflation.
o This led to a trajectory for the limit which
quickly became unattainable.
• If the formula in 1982 had been set at 50 percent of
the cumulative change in population and inflation, the
limit would have performed as indicated on the graph
shown on slide 12.
MS. MARASIGAN addressed further policy considerations for SJR 2
as follows:
• Flagged spending items for further examination:
o Revenue Bond Debt Service:
square4 Specifically, whether this exemption should be
limited to bonds that generate sufficient revenue
(or anticipated reductions) to cover debt
service.
o Unrestricted Federal Funds (approximately $7.4 million
in FY2018).
o Re-appropriations (and scope changes).
o University receipts (Designated General Funds (DGF) or
other).
o Appropriations to a state savings account, as
designated by law:
square4 Statutory clarification needed for Constitutional
Budget Reserve Fund (CBR), Statutory Budget
Reserve Fund (SBR), etc.
o Dedicated Funds:
square4 Example: Fish and Game Fund currently inside the
limit, the introduced bill would place all
dedicated funds outside the limit. Note:
"Dedicated Funds" are not the same as "Designated
Funds."
o Capital Budget:
square4 An obvious loophole if placed outside the limit.
• Pressure-Relief Valve:
o A method to exceed the appropriation limit, whether it
be through referral to voters, legislative super-
majority, or otherwise.
3:48:45 PM
CHAIR MEYER referenced "further policy considerations" in slide
13 and opined that the discussion is probably more appropriate
for the Senate Finance Committee.
CHAIR MEYER asked Ms. Marasigan to confirm that the last public
vote on an appropriation limit occurred on November 4, 1986 and
resulted in 71 percent voting in favor of the amendment.
MS. MARASIGAN answered correct. She said the previous chair of
the Senate State Affairs Committee referenced a poll by Dittman
Research that reported that 53 percent of Alaskans supported a
spending cap in 2015 and 66 percent in 2017.
3:51:24 PM
CHAIR MEYER concurred with Ms. Marasigan that the current
appropriation limit needs to be modified because the current
limit does not work.
SENATOR GIESSEL recalled that the result of a recent Senate
majority poll was that over 70 percent were in favor of a
spending cap. She conceded that the poll was unscientific
whereas the Dittman Research poll was scientifically conducted.
CHAIR MEYER said he has seen various polls on a government
spending cap and remarked that results have shown that the
public is overwhelmingly supportive.
SENATOR GIESSEL recalled that the committee had seen three
versions of SJR 2 with spending caps that varied from $4.2
billion to $4.3 billion. She asked if the committee adopted
version: M, a version with a $4.3 billion spending cap.
3:53:50 PM
At ease.
3:54:31 PM
CHAIR MEYER called the committee back to order. He confirmed
that version M is before the committee as the working document.
3:55:55 PM
CHAIR MEYER closed public testimony.
SENATOR COGHILL stated that SJR 2 should move forward because
Alaskans have been waiting for the legislation. He opined that
getting movement on an appropriation limit will increase
Alaskans' interest level.
CHAIR MEYER remarked that Alaskans want a spending cap. He
believed that SJR 2 is the right thing to do from a statewide
policy standpoint. He said the next committees of assignment,
Senate Judiciary and Senate Finance, can workout the matters
pertaining to a constitutional amendment and the spending-cap
numbers.
3:57:41 PM
SENATOR GIESSEL moved to report SJR 2, [CSSJR 2(STA)], version
30-LS0123\M, from committee with individual recommendations and
attached zero fiscal note.
3:57:56 PM
CHAIR MEYER said there being no objection, the motion carried.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 2, Version M.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| SJR 2 - Summary of Changes (Version N to M) 3.29.2017.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| SJR 2 Calculation - How to Reach the Limit (version M) - 3-29-2017.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| Alaska Public Opinion Survey March 2017 Spending Cap page 19.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| SJR 2 Support Testimony Mitchell.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| SJR 2 Sponsor Presentation 2.14.2017.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| Fiscal Note SJR2-LEG-LEG-02-15-18.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| SJR 2 - Testimony Dave Harbour.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |
| SJR 2 Backup Document - LFD Calculation of SJR2(M) Applied to Operating & Capital Spending FY16-FY18.pdf.pdf |
SSTA 2/15/2018 3:30:00 PM |
SJR 2 |