Legislature(1995 - 1996)

01/26/1995 09:07 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     HOUSE FINANCE COMMITTEE                                   
                        January 26, 1995                                       
                            9:00 A.M.                                          
  TAPE HFC 95-7, Side 1, #000 - 531.                                           
  CALL TO ORDER                                                                
  Co-Chair  Mark Hanley  called  the House  Finance  Committee                 
  meeting to order at 9:07 a.m.                                                
  Co-Chair Hanley               Representative Kohring                         
  Co-Chair Foster               Representative Martin                          
  Representative Brown          Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representatives Mulder, Navarre  and Grussendorf were absent                 
  from the meeting.                                                            
  ALSO PRESENT                                                                 
  Speaker  Gail Phillips;  Representative  John Davies;  Kevin                 
  Richie, Executive Director, Alaska Municipal League; Annalee                 
  McConnell, Director, Office of Management and Budget, Office                 
  of the  Governor; Chris  Christensen, Staff Counsel,  Alaska                 
  Court System;                                                                
  HCR 1     Creating   the   Long  Range   Financial  Planning                 
            HCR  1   was   HELD  in   Committee  for   further                 
  HOUSE CONCURRENT RESOLUTION NO. 1                                            
       Creating the Long Range Financial Planning Commission.                  
  SPEAKER GAIL PHILLIPS spoke in support  of HCR 1.  She noted                 
  that the concept of creating  a special Long-Range Financial                 
  Planning  Commission  charged with  a  plan to  organize the                 
  state's  finances   was  first  proposed  during   the  last                 
  legislative session.  She observed  that the State is  faced                 
  with an unpredictable and declining revenue stream.                          
  Speaker Phillips referred  to the Cremo plan.   She observed                 
  that the Cremo plan received  extensive consideration by the                 
  House Judiciary Committee  during the  previous session.   A                 
  House Judiciary  Subcommittee recommended that  a Long-Range                 
  Financial  Planning Commission  be  convened  to review  and                 
  identify anticipated state  expenditures, recurring  revenue                 
  and  potential revenue  sources, existing  reserves, and  to                 
  investigate implementing forward funding of the budget.                      
  Speaker  Phillips  emphasized  that  long  range   financial                 
  planning  is  essential  to  attain  stability  of  Alaska's                 
  financial future.                                                            
  Speaker  Phillips outlined  changes recommended  by Governor                 
  Knowles in which she is in agreement:                                        
       *    Change page 3, line 9  (9) from "February 15, 1996                 
            to October 1, 1995;                                                
       *    Increase public representation; and                                
       *    use in-house staff to reduce fiscal cost.                          
  Speaker Phillips explained that the  early report date would                 
  allow the Governor's  office to use the  Commission's report                 
  to develop the FY 97 budget.   She observed that the current                 
  version  stressed representation by  financial experts.  She                 
  agreed  that  it would  be better  for  the majority  of the                 
  Commission's members to be from the  public.  She noted that                 
  in-house  financial   experts  can  assist   the  Commission                 
  members.   She  recommended that  a  contractor be  hired to                 
  coordinate the Commission  and the  work of the  Commission.                 
  She added that the Commission can be housed in the Anchorage                 
  Co-Chair Foster  clarified that  members can  come from  all                 
  parts of the State.  Speaker  Phillips noted that the fiscal                 
  note accompanying  the Senate  companion bill  is higher  to                 
  accommodate travel for public members from across the state.                 
  She expressed support for the increased travel allocation.                   
  Representative Martin  noted that prior  administrations and                 
  legislatures have  reviewed the issues  and compiled reports                 
  regarding  the  State's  long  range   fiscal  status.    He                 
  emphasized  that  no  action  has  been  taken  by  previous                 
  legislatures.  He urged that action be taken.                                
  Representative Brown echoed remarks by Representative Martin                 
  in regards to the  need for action.  She emphasized  the use                 
  of studies  previously compiled  to educate  the public  and                 
  legislators.  She  stressed the need to  bring together what                 
  is  known  and  produce  a  consensus  or  package  solution                 
  options.   She suggested  that  the work  of the  Commission                 
  focus on  finding conclusions  or possible  solutions.   She                 
  recommended that a special session meet  in the Fall of 1995                 
  to  allow  action to  take  place.   She  stressed  that the                 
  legislature and  executive branch must be actively involved.                 
  She asserted that it is time for action.                                     
  Speaker   Phillips   agreed   that  Representative   Brown's                 
  suggestion for a special session has merit.                                  
  Co-Chair  Foster  spoke  in support  of  HCR  1.   He  noted                 
  concerns among constituents in his district.                                 
  Representative   Therriault   suggested  that   cutting  and                 
  consolidating programs  be  prioritized  over    instituting                 
  taxes.   Speaker Phillips  noted that the  resolves were not                 
  prioritized.    She indicated  that  item (8)  would  be her                 
  number one priority.                                                         
  Representative Therriault suggested that the   Department of                 
  Revenue's mid case forecast be used as base information.  He                 
  added  that  the  Department  of  Education's  growth charts                 
  should also be used.                                                         
  that   the   legislative   and    executive   branches   are                 
  participating in the planning process.  He stressed that the                 
  judicial branch will be  part of the equation in  any effort                 
  to rationalize state spending and downsize state government.                 
  He   requested  that  one  seat  be   made  available  to  a                 
  representative from the judicial branch.                                     
  Representative Martin noted that  each Governor as  directed                 
  by executive order submits a long range plan for the State's                 
  well being.   He observed that  the judicial branch has  not                 
  been  previously  involved in  this  process.   He expressed                 
  concern that                                                                 
  the judiciary branch  remain neutral in order  to adjudicate                 
  disputes regarding any plan.                                                 
  Mr.  Christensen stressed that  the judicial appointee would                 
  probably  be  a  financial expert  from  the  administrative                 
  office.  He stressed that judges can "wear two hats;" to put                 
  administrative interest aside and look at legal issues.                      
  Representative   Parnell   echoed   Representative  Martin's                 
  concern that there  is an inherent  conflict of interest  in                 
  having a judicial representative on the Commission.                          
  stated that  the Alaska  Municipal League  strongly supports                 
  the  long-range  fiscal  planning process.    He  noted that                 
  stabilization  of  municipalities   and  long-range   fiscal                 
  planning  are  the  Alaska Municipal  League's  two platform                 
  issues.   He offered  the use  of Alaska  Municipal League's                 
  resources for use by the Commission.                                         
  In  response  to  a question  by  Representative  Martin, Mr                 
  Richie asserted  that the  Alaska Municipal  League supports                 
  public involvement.                                                          
  Co-Chair Hanley  reiterated that  the ground  work has  been                 
  laid.  He emphasized  that the problem has  been identified.                 
  There is  a gap  between recurring  revenue and  anticipated                 
  spending  at current levels.   He acknowledged  that the two                 
  ways to close the gap are to cut spending or raise revenues.                 
  He noted that there are many options within these tools.  He                 
  urged  that the next  step be  taken beyond  identifying the                 
  Representative Kohring  accentuated that establishment  of a                 
  long-range plan is  a needed  major step  forward that  will                 
  help  the  legislature  to  resolve  the fiscal  crisis  and                 
  implement  stability.    He felt  that  emphasize  should be                 
  placed on reducing the budget through spending cuts.                         
  Co-Chair  Hanley  noted  that Annalee  McConnell,  Director,                 
  Office of Management and Budget, Office of the Governor  was                 
  present at the  meeting.  He  emphasized that the Office  of                 
  Management  and  Budget   is  willing   to  work  with   the                 
  The meeting adjourned at 9:37 a.m.                                           

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