Legislature(2021 - 2022)BUTROVICH 205
03/25/2021 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| SB102 | |
| SB2 | |
| SB28 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 102 | TELECONFERENCED | |
| *+ | SB 2 | TELECONFERENCED | |
| *+ | SB 3 | TELECONFERENCED | |
| *+ | SB 28 | TELECONFERENCED | |
SB 102-AMEND COMPACT FOR A BALANCED BUDGET
3:53:10 PM
CHAIR SHOWER announced the consideration of SENATE BILL NO. 102
"An Act relating to the Compact for a Balanced Budget."
He listed the individuals who would provide invited testimony.
3:54:07 PM
SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 102, said she was honored when former
lieutenant governor Meade Treadwell asked her to carry this
bill. Alaska joined the Compact for a Balanced Budget in 2014
and SB 102 reauthorizes that membership. She said the federal
debt is approaching $28 trillion and the compact is an effort to
keep from overburdening future generations. She explained that
the goal of the compact is to amend the US Constitution through
the Article V process. She deferred further introduction to
Buddy Whitt.
3:56:39 PM
BUDDY WHITT, Staff, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, advised that SB 102 extends
Alaska's membership in the Compact for America. He said the goal
of this compact is to pass a balanced budget amendment to the US
Constitution. Alaska entered the compact in 2014 after the
passage of HB 284 sponsored by former Representative Wes Keller.
At the time, the national debt was $17.3 trillion, but it had
not surpassed the nation's Gross Domestic Product (GDP). As of
March 2021, the national debt was $28 trillion, which exceeds
the GDP by $6.4 trillion. For perspective, the difference
between the national debt and the GDP is more than the GDP of
every nation on earth except for the US and China. He said this
is obviously unsustainable. He urged the committee to recognize
the need for a balanced budget amendment and to continue to work
towards that goal.
SENATOR HOLLAND expressed appreciation for the bill.
SENATOR COSTELLO stated that it is a good idea to shine light on
this situation.
4:01:16 PM
RILEY NYE, Intern, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, presented the following Sectional
analysis for SB 102:
Section 1 Article I Page 1, Line 3 through Page 2,
Line 3
Article I of the Compact is the Declaration of Policy,
Purpose, and Intent of the Compact for a Balanced
Budget Amendment. There are no changes to Article I of
the compact.
Article II, Sections 1 5 Page 2, lines 6 through
30
These sections of Article II of the compact contains
definitions for the commonly used terms; "Compact",
"Convention", "State", "Member State", and "Compact
Notice Recipients". There are no changes to these
definitions, so these sections to Article II are
unchanged.
Article II, Section 6 Page 2, Lines 31 through Page
3, Line 2
Article II, section 6 contains the notice requirement
stipulations for the compact to the member states.
There are no changes to this section of the compact.
Article II, Section 7 Page 3, line 3 through Page 4,
Line 23
Article II, Section 7 is the Balanced Budget Amendment
itself. The Balanced Budget Amend contains 7 sections
and outlines the details and the mechanics of the
amendment. This section in unchanged.
Article III, Page 4, line 24 through Page 6, line 6
Article III of the Compact detail's membership and
withdrawal criteria. Article III is unchanged.
Article V, Page 9, Lines 4 through 14
Article V of the compact contains the resolution
language to Congress for the application for an
Article V Convention for the ratification of the
Balanced Budget Amendment. Article V of the compact is
also unchanged from the current compact.
Article VI, Page 9, line 15 through Page 11, line 23
Article VI of the compact contains instruction on the
appointment of delegates, the limitations of delegate
powers and delegate instructions. There is a change in
Article VI of the compact in that the Governor,
Speaker of the House and President of the Senate or
their designee will be the delegate to the Article V
Convention. This section also stipulates that the vote
of the majority of the members of the three-member
delegation will be the vote of the member state.
Article VII, Page 11, line 24 through Page 14, line 1
Article VII of the compact details the rules of the
convention and there are no changes in this article to
the current compact.
Article VIII, Page 14, lines 2 through 19
Article VII of the compact specifies a prohibition on
Ultra Vires (or Outside the Powers) Convention.
Meaning, that any action outside the scope, purpose,
and rules of the compact and the convention are out of
order and invalid. Article VII is unchanged from the
current compact.
Article IX, Page 14, lines 20 through 28
Article IX contains resolution language for each state
to use in ratifying the Balanced Budget Amendment.
This article is unchanged from the current compact.
Article X, Page 29, line 29 through 30
Article X contains the Construction, Enforcement,
Venue, and Severability Clause for the compact. The
only change to this Article is in the termination date
of the compact, which occurs either upon ratification
of the Balanced Budget Amendment or on April 12, 2031,
whichever occurs first.
4:04:30 PM
CHAIR SHOWER asked Mr. Whitt to set the record straight
regarding Articles IV and Article VII.
MR. WHITT advised that Article IV outlines the powers and
responsibilities of the compact commission and stipulates that
each commission member has one vote. This article provides the
mechanism for getting the commission together and to the final
goal of ratification of the constitutional amendment.
MR. WHITT said Article VII lays out the details of the rules of
the convention. He noted that there are no changes from the
current compact.
CHAIR SHOWER asked Mr. Whitt to introduce the invited
testifiers.
MR. WHITT said former Lieutenant Governor Meade Treadwell will
give opening comments and introduce the panel.
4:06:54 PM
MEADE TREADWELL, Chair, Balanced Budget Compact, Anchorage,
Alaska, stated that this is a very narrowly focused compact that
is intended to force a national conversation on the debt to try
to avoid a US default. The compact commission has economic
experts that are looking at the national default issue and who
owns US Treasuries. As to why Alaska should renew its
membership, he said the compact is working to force a
conversation on spending and debt. Mississippi, North Dakota,
North Carolina, and Arizona, either renewed their compacts or
renewal is pending. He said there is no perfect compact because
the federal government needs the means to spend in the event of
a true emergency, but the spending sideboards Congress has put
on itself have not been successful. It is important to have this
conversation because Alaska would feel the effects very quickly
if the federal government were to default. He said the state
owns a lot of Treasury bonds and it depends on federal spending.
MR. TREADWELL introduced Chip DeMoss to explain how the compact
works.
CHAIR SHOWER said he agrees with the concept.
4:12:50 PM
CHIP DEMOSS, CEO, Compact for America Educational Foundation
(AEF), Houston, Texas, advised that AEF is the designated
administrator for the Compact for a Balanced Budget. He related
that he is a CPA and has been involved in all aspects of
corporate finance for 30 years.
He explained that the written testimony he provided addresses
the technical aspects of the compact document and the balanced
budget amendment it contains. He thanked the State of Alaska for
taking a leading role in moving the compact forward, starting in
2014. Alaska was the second member state to express its desire
to exercise the power of the state legislature to propose and
ratify amendments to the US Constitution without going through
Congress. He also thanked Mr. Treadwell for working on behalf of
the foundation and for his leadership role as chair of the
compact commission.
4:14:33 PM
MR. DEMOSS provided an update. In 2017 when Arizona joined the
compact, the deadline for joining was extended to 2031 to give
other states time to join. The North Dakota legislature recently
sent the extension bill to the governor for a signature. Georgia
has indicated it wants to renew participation next session and
bills will be introduced in the North Carolina legislature next
week to join the compact. He said AEF believes more states will
join the compact very soon because Congress is unable to address
the out-of-control spending and federal debt. He highlighted
that the national debt grew to over $28 trillion last month. Now
that the stimulus bill was signed into law, the federal debt is
expected to exceed $30 trillion by the end of 2021. He noted
that he attached a graph to his written testimony that shows the
dramatic increases in the annual deficits over the last 10
years. He offered his belief that Congress never intends to pay
back what it has borrowed or to cut spending. He predicted
ballooning deficits and hyperinflation, which will destroy
American wealth nationwide.
MR. DEMOSS said economic experts are forecasting double-digit
inflation before the end of 2021. Instilling fiscal constraints
on Congress has to come from state legislatures. He said Alaska
has indicated it is willing to do so and the America Educational
Foundation is working to bring other states on board.
CHAIR SHOWER commented that this is not a partisan issue it is
an American issue.
SENATOR COSTELLO asked if issues other than the balanced budget
could be brought forward at the convention.
MR. DEMOSS said no, only the balanced budget amendment may be
considered at the convention. The compact limits the convention
to 24 hours and the balanced budget amendment must be ratified
by 38 states.
MR. TREADWELL added that Article V has never been used to amend
the US Constitution and the compact was carefully crafted to
prevent a runaway convention.
SENATOR HOLLAND asked how many states have joined and if there
was a projection for getting 38 states to join.
4:20:17 PM
MR. TREADWELL mentioned states moving in the direction of
joining and suggested the committee members should work through
interstate legislative groups to encourage other states to join.
SENATOR HOLLAND said this is a noble effort that could snowball
once it picks up momentum.
4:22:48 PM
SVEN LARSON, Economist and Advisor, Balanced Budget Compact,
Wyoming, stated that he participated in the initial drafting of
the Balanced Budget Amendment. He highlighted that the budget
deficit today is 15 percent of GDP and in 2020 the federal
government borrowed the equivalent of 15 percent of GDP.
MR. LARSON said both Alaska and Wyoming have structured their
state and local governments on the premise that minerals will
continue to produce revenue. That is no longer the case so both
states have to realign to a new revenue stream. In this
circumstance, it is easy to become more dependent on federal
money, he said, particularly for Medicaid. Should the federal
government default or even see the potential for that, it will
quickly cut expenditures and Medicaid money for states will be
at the top of the list. He asked members to imagine what the
Alaska government would do if it were to lose even 10 percent of
its Medicaid funding.
MR. LARSON said the benefit of the Balanced Budget Compact is
that it gives states a seat at the table, so the federal
government never reaches the point of drastic cuts in aid to
states. That is probably the most important component of the
Balanced Budget Compact for state legislatures to consider. He
said a final point about that is that the federal money to
states cannot be used as a quid pro quo to allow Congress to
increase its debt limit.
MR. LARSON concluded that as an economist he cannot emphasize
strongly enough how important the Balanced Budget Amendment is
for states.
SENATOR HOLLAND said he appreciates the enthusiasm.
CHAIR SHOWER expressed hope that the state continues to work on
this.
4:28:04 PM
WES KELLER, representing self, Wasilla, Alaska, said he
appreciates the opportunity to testify in support of SB 102. He
thanked the sponsor and Mr. Treadwell for their work on the bill
and pointed out that the Compact for American will cost the
state nothing. He said he was honored to carry the bill in 2014
and he believes there is more reason to be enthused today. He
explained that the compact provides for the use of Article V to
amend the US Constitution to require a balanced budget. Alaska
was the second state to join the commission. He drew an analogy
between having a compact on the books and having a high-quality
damper control on a raging wood-fired stove. He said the compact
enables three-fourths of the sovereign states to slow federal
spending, which he believes is long overdue. He said a point
that has not been made is that the compact can provide the
catalysis that Congress needs to regulate itself. He asked the
committee to support this very well vetted bill. SB 102 gives
states the opportunity to cooperate and compel Congress to limit
spending.
SENATOR HOLLAND thanked him for the enthusiasm.
CHAIR SHOWER said he believes the committee understands the
importance of the bill and the danger of an unsustainable
national debt.
MR. TREADWELL thanked the committee and Alaska for the support
it has given to this compact.
MR. WHITT thanked the committee for hearing the bill.
4:35:00 PM
CHAIR SHOWER opened public testimony on SB 102.
4:35:19 PM
MIKE COONS, representing self, Palmer, Alaska, reported that
according to the Balanced Budget Taskforce website, 6 more
states or 34 states in total need to join the compact to
authorize holding a convention and 38 states are needed to
ratify the amendment. He said he has been advocating for a
balanced budget amendment to the US Constitution for years. He
stated support for SB 102 and states taking back their
government through Article V of the US Constitution.
4:37:03 PM
CHAIR SHOWER closed public testimony on SB 102. He advised that
written testimony could be sent to ssta@akleg.gov and it would
be added to the record.
4:37:29 PM
CHAIR SHOWER held SB 102 in committee for further consideration.