Legislature(1999 - 2000)

05/23/1999 11:15 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<AT THE CALL OF THE CHAIR>
* HB1001 ADVISORY VOTE LONG-TERM FINANCIAL PLAN
MOVED CSHB 1001(FIN) OUT OF COMMITTEE
txt
                                                                                                                                
                                                                                                                                
HOUSE FINANCE COMMITTEE                                                                                                         
SPECIAL SESSION                                                                                                                 
May 23, 1999                                                                                                                    
11:15 P.M.                                                                                                                      
                                                                                                                                
TAPE HFC SS 99 - 5, Side 1.                                                                                                     
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair Mulder  called the House Finance Committee meeting                                                                     
to order at 11:15 P.M.                                                                                                          
                                                                                                                                
PRESENT                                                                                                                         
                                                                                                                                
Co-Chair Mulder    Representative Foster                                                                                        
Co-Chair Therriault   Representative Grussendorf                                                                                
Representative Austerman  Representative Kohring                                                                                
Representative Bunde   Representative G. Davis                                                                                  
Representative J. Davies  Representative Williams                                                                               
                                                                                                                                
Representative Moses was not present for the meeting.                                                                           
                                                                                                                                
ALSO PRESENT                                                                                                                    
                                                                                                                                
Representative Jim Whitaker; Representative Andrew Halcro;                                                                      
Representative Ethan Berkowitz; Senator John Torgerson;                                                                         
Representative Sharon Cissna; Representative Bill Hudson.                                                                       
                                                                                                                                
SUMMARY                                                                                                                         
                                                                                                                                
HB 1001 An Act authorizing an advisory vote on a long-term                                                                      
financial plan for the state; and providing for an                                                                              
effective date.                                                                                                                 
                                                                                                                                
 CS HB 1001 (FIN) was reported out of Committee                                                                                 
with a "do pass" recommendation.                                                                                                
HOUSE BILL NO. 1001                                                                                                             
                                                                                                                                
An Act authorizing an advisory vote on a long-term                                                                              
financial plan for the state; and providing for an                                                                              
effective date.                                                                                                                 
                                                                                                                                
Co-Chair Mulder spoke to the changes made to the work draft                                                                     
currently before the members.  He advised that a change had                                                                     
been made to Page 3, Section 7, which would mandate that the                                                                    
permanent fund dividends issued in 2000 would be the same as                                                                    
those issued in 1999.                                                                                                           
                                                                                                                                
Representative Williams questioned the reason for that                                                                          
change.  Co-Chair Mulder explained that would allow the                                                                         
public to know the amount that their dividends would be for                                                                     
the next two years.  Representative Williams pointed out                                                                        
that the public would not know the dividend amount should                                                                       
the status quo calculation be in place.                                                                                         
                                                                                                                                
Representative Grussendorf explained by providing the public                                                                    
information regarding the amount, would increase their                                                                          
comfort enough to be able to focus on the plan and the                                                                          
State's financial problem.                                                                                                      
                                                                                                                                
Representative Grussendorf asked the time frame from which                                                                      
the 1999 dividend would be calculated.  Co-Chair Mulder                                                                         
replied it would be determined from a 5-year rolling average                                                                    
and based on the July 1st through June 30th fiscal year.                                                                        
                                                                                                                                
Co-Chair Mulder advised that Section 8 provided transitional                                                                    
language; Section 9 changes the sunset date and the                                                                             
repealing date.  He added that this legislation will require                                                                    
additional action by the Legislature for it to stay in                                                                          
place.  Representative J. Davies suggested that the                                                                             
legislation would provide security to the voters.                                                                               
                                                                                                                                
Representative Williams asked how distribution of a $1700                                                                       
dollar dividend would affect budget numbers calculated in                                                                       
plans previously discussed.  Co-Chair Mulder explained that                                                                     
level of dividend would create a "medium level" volatility.                                                                     
The plan works with all the same assumptions.                                                                                   
                                                                                                                                
Co-Chair Mulder pointed out that the current work draft                                                                         
contains no language regarding new revenues. The proposed                                                                       
plan is only a "model", which will serve the purpose of                                                                         
showing assumptions of how a plan could work.  Those                                                                            
assumptions would vary from legislature to legislature                                                                          
depending on new revenues and/or additional budget                                                                              
reductions.                                                                                                                     
                                                                                                                                
Representative Williams emphasized that it would be "risky"                                                                     
for the welfare of the State's budget to guarantee a $1700                                                                      
dollar dividend for the next two years.  Co-Chair Mulder                                                                        
agreed that the $1000 dollar dividend would be the more                                                                         
responsible way for the State to proceed, however, he                                                                           
believed that the $1700 approach would be less risky than                                                                       
the status quo.  He acknowledged that the intent was to                                                                         
appease voters enough to hopefully vote "yes" on the issue.                                                                     
                                                                                                                                
Representative Williams asked if the proposed plan would                                                                        
need "adjusting" in the next few years.  Co-Chair Mulder                                                                        
reiterated that the proposed legislation could work.                                                                            
                                                                                                                                
Representative Williams acknowledged that he was "bothered"                                                                     
by this proposal and reminded members that when various                                                                         
plans were being considered, the $1700 dollar dividend plan                                                                     
was known to be "very" risky.   He believed that the                                                                            
Legislature would have to come back into session to "fix"                                                                       
this plan. Representative Williams pointed out that this is                                                                     
the first time that the Legislature has come before the                                                                         
people to request usage of the Permanent Fund.  He                                                                              
emphasized that he would like to see it done correctly the                                                                      
first time.                                                                                                                     
                                                                                                                                
Representative Grussendorf spoke to the "risk" of presenting                                                                    
any plan to the public.  He stressed that the Legislature                                                                       
can not afford to "fail".  The public must be educated,                                                                         
however, he acknowledged that what is on their minds is only                                                                    
the amount of the dividend check.  The $1700 dollar dividend                                                                    
will provide the voting public a little "comfort" and                                                                           
hopefully, the proposed plan should provide a better                                                                            
political and economic environment to sell the plan.                                                                            
                                                                                                                                
Representative G. Davis agreed that the $1000 dividend would                                                                    
provide complete safety from an economic standpoint, the                                                                        
$1500 dividend would provide a degree of comfort, and that                                                                      
the $1700 dividend does guarantee more risk.  However, he                                                                       
acknowledged that the need for a plan is so important, it is                                                                    
essential to convince the public while at the same time,                                                                        
they don't sacrifice too deeply.                                                                                                
                                                                                                                                
Co-Chair Therriault MOVED to RESCIND action taken on                                                                            
adopting the previous CS HB 1001 (FIN) from Committee.                                                                          
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Co-Chair Therriault MOVED to adopt work draft #1-LS1022\I,                                                                      
Cook, 5/23/99, as the legislation before the Committee.                                                                         
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Representative Austerman asked clarification on how the                                                                         
legislation would work.  Co-Chair Mulder explained that this                                                                    
year, the dividend would be calculated in the traditional                                                                       
manner; next year, the dividend would be the same amount as                                                                     
in 1999.  He continued, the following year, the dividend                                                                        
would be calculated at 50% of the 5.88 payout.                                                                                  
Representative Austerman pointed out that by putting off the                                                                    
endowment for two years, could jeopardize the intended                                                                          
concept.                                                                                                                        
                                                                                                                                
Representative Foster referenced Page 5, Lines 7 and 10.  He                                                                    
questioned if that language should be included.  He posed a                                                                     
hypothetical situation in which, if the plan does not                                                                           
generate enough funds, then the State would need to find                                                                        
future revenue sources.  He believed that the language could                                                                    
"tie the hands" of future legislatures when trying to create                                                                    
revenue sources.                                                                                                                
                                                                                                                                
Co-Chair Mulder agreed, however, noted the intent was to                                                                        
convey to the public, that there is confusion related to the                                                                    
approach as provided by the Governor.  This language is                                                                         
"not" the Governor's approach.  He noted that it would not                                                                      
preclude other new revenues or a statewide tax from being                                                                       
discussed as possible options in the future.                                                                                    
                                                                                                                                
Representative J. Davies agreed that the language referenced                                                                    
by Representative Foster would not preclude an income tax in                                                                    
the future.                                                                                                                     
                                                                                                                                
Co-Chair Therriault MOVED to report CS HB 1001 (FIN) out of                                                                     
Committee with individual recommendations,  There being NO                                                                      
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CS HB 1001 (FIN) was reported out of Committee with a "do                                                                       
pass" recommendation.                                                                                                           
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 11:40 P.M.                                                                                             
                                                                                                                                
H.F.C. Special Session 4 5/23/99 p.n.                                                                                           

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