Legislature(1999 - 2000)
02/05/1999 01:35 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 5, 1999
1:35 P.M.
TAPE HFC 99 - 16, Side 1.
TAPE HFC 99 - 16, Side 2.
TAPE HFC 99 - 17, Side 1.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:35 P.M.
PRESENT
Co-Chair Therriault Representative G. Davis
Co-Chair Mulder Representative Grussendorf
Vice-Chair Bunde Representative Kohring
Representative Austerman Representative Moses
Representative J. Davies
Representatives Foster and Williams were not present for the
meeting.
ALSO PRESENT
David Teal, Director, Division of Legislative Finance;
Ginger Blaisdell, Fiscal Analyst, Division of Legislative
Finance; Tom Maher, Legislative Aid, Representative Gail
Phillips; Representative Fred Dyson; Dan Spencer, Chief
Budget Analyst, Office of Management and Budget; Tamara
Cook, Director, Legislative Legal & Research Services.
SUMMARY
PRESENTATION: DAVID TEAL, DIRECTOR,
LEGISLATIVE FINANCE DIVISION
25 YEAR GENERAL FUND HISTORY
SB 28 An Act relating to the increase of an
appropriation item based on additional federal or
other program receipts.
CSSB 28(FIN) was reported out of Committee with a
"do pass" recommendation and with a zero fiscal
note by the Legislative Finance Division dated
1/26/99.
SENATE BILL NO. 28
"An Act relating to the increase of an appropriation
item based on additional federal or other program
receipts."
TOM MAHER, LEGISLATIVE AID, REPRESENTATIVE GAIL PHILLIPS,
explained that SB 28 would revise procedures that the
Governor must follow when the Legislative Budget and Audit
(LBA) Committee does not approve or does not take under
consideration a revised program request (RPL). The need for
revisions to what is commonly called the 45-day rule stems
from recent actions by the Governor and LBA's desire to
protect the appropriation power of the Legislature. Last
December, LBA directed Legislative Finance and Legal
Services to explore options to address these concerns. The
proposed legislation is a result of that effort.
Mr. Maher continued, the Legislature typically places front
section language in appropriation bills granting an open
appropriation to the Governor to proceed with the
expenditure of federal or other program receipts not
specifically appropriated by the Legislature. The Governor
is required to submit revised program requests to the LBA
Committee. If the request is approved, the Governor may
proceed immediately. If the request is disapproved, under
current law, the Governor must wait 45 days and then provide
a statement of reason to the Committee prior to the
commencement of any expenditure.
Mr. Maher pointed out that revisions to the 45-day rule set
forth in SB 28 do not stop the Governor from ultimately
proceeding with an expenditure that has been disapproved or
not considered by that Committee. Instead, SB 28
strengthens the Legislature's appropriation power by
delaying the commencement of any expenditure until after the
full Legislature has been in regular session for at least 30
days.
The 30 day period is designed to provide for additional
discussions between the Governor and the full legislative
body, allowing the full Legislature to consider any action
deemed appropriate regarding the Governor's determination to
proceed with any expenditure.
Mr. Maher concluded, SB 28 would not create any major
obstacles for the Governor in terms of proceeding with
expenditures. The legislation merely allows the full
Legislature to consider the issue and provide for additional
safeguards to the legislature's appropriation power.
Co-Chair Therriault explained how this legislation would be
accomplished. In the front section of the operating budget,
the Legislature's authority is extended to make
modifications to appropriations for underestimated and
unanticipated revenue receipts. That power is then extended
to the LBA Committee. The Governor files an RPL requesting
the additional authorization and then LBA takes the
appropriate action. As the statutes are currently written,
if the Committee fails to take it up or takes it up and
turns it down, the Governor can proceed with the expenditure
after the 45 days have passed. The question being, does the
Legislature wants to extend that authority and allow the
Governor to have that power or should that office wait until
the full Legislature meets in session to consider and
negotiate the concern.
Mr. Maher pointed out that the LBA Committee does have the
authority to rescind action taken if the RPL had previously
failed.
Representative Bunde pointed out that the Governor has taken
advantage of this authority over recent years.
Representative J. Davies disagreed with Representative Bunde
pointing out that during his tenure on LBA Committee, such
action was used sparingly and only in times of addressing a
serious issue. He requested documentation indicating that
there had been increased frequency to merit the policy
change. Mr. Maher noted that he could provide a document
received from Legislative Finance illuminating the concern.
Representative Grussendorf referenced the sponsor statement
which indicates that "provisions of the 45 day rule set
forth in SB 28, do not stop the Governor from ultimately
proceeding with an expense which has been disapproved or not
considered by the Committee". He asked if that was correct.
He understood that the Governor could proceed with the
expenditure with or without legislative approval. Mr. Maher
agreed, noting that there could be other legislative action
within that negotiation.
Co-Chair Therriault reiterated his main concern is that the
full Legislature deal with each item as a new appropriation
or as an expansion to an existing appropriation.
Representative J. Davies suggested that it would be
appropriate to hear the historical perspective which lead to
the existing 45-day statute. He cautioned changing the
terms of that settlement. Co-Chair Therriault clarified
that the proposed legislation would only be an extension to
the delay period.
Representative J. Davies explained that the Administration
claims that for some funds, there should be no requirement
for legislative appropriation because they are federal pass-
through funds. The Administration argues that authority
does not have to be extended. The compromise was to have a
"notice" feature of the 45 days.
Co-Chair Mulder suggested that the concern is "the power of
appropriation". He commented that the Legislature does
appropriate "other funds". He believed that the Legislature
has the right and authority to make the appropriation.
Representative J. Davies agreed to that, however, asked if
the Legislature has the power to stop an appropriation made
by Congress.
Co-Chair Mulder noted his concern that with the current
system, the Legislature indirectly encourages the
Administration to not "lay all their cards on the table"
during the appropriation process.
Representative Austerman questioned why the 45 rule exists,
if the Legislature is the appropriating body. He asked when
the 45-day rule was implemented.
TAMARA COOK, DIRECTOR, LEGISLATIVE LEGAL & RESEARCH SERVICES
noted that the statute which has issue with the proposed
legislation, provides an entertaining history. It was
enacted in 1977, which provided for the Governor and the LBA
Committee to jointly approve expenditures of three different
categories of which one was program receipt. When the bill
was passed, it was immediately challenged in a class action
called Kelly vs. Hammond. The plaintiff was Ramona Kelly
and the case went before Judge Steward who ruled that all
three types of appropriations were invalid. With respect to
the program receipt portion, the Judge found an improper
delegation of the legislative power to appropriate to a
committee and he found a violation of the separation of
powers doctrine. Judge Steward also addressed the question
of federal program receipts. At the trial court level,
Judge Steward concluded that even federal program receipts
are subject to appropriation. As advised at that point, is
currently how Alaska operates.
Ms. Cook continued, the case was under appeal and both the
Legislature and the Executive Branch won some things and
lost some things. The appeal was dropped by agreement.
Instead, the Legislature submitted a proposed constitutional
amendment to the voters, which would put in place, what is
before the Committee in the proposed legislation as
Subsection H. The voters turned it down.
The following year in 1979, the Legislature amended
Subsection H so that it would apply only to program receipts
and in the form currently before the House Finance
Committee. In response to Judge Stewart, the Legislature
realized that it would have to come up with an
appropriation. The Legislature hit upon the mechanism of
appropriating in the front section of the budget an unknown
amount of additional program receipts, subject to
legislative audit. That was a physical appropriation in an
appropriation act of both federal and non-federal program
receipts. It is broad language which has never been
challenged.
Ms. Cook continued, the second part, dealing with the
Legislature not interfering with the Executive Branch's
power of expenditure created the 45-day rule. LBA does have
authority, but it does not have the power to keep that money
from being spent. That would be an improper delegation of
the Legislature's expenditure power to a Committee. It
would violate the Governor's power to spend in the face of a
legitimate appropriation. The 45-day rule allows LBA to
refuse and recommend but, ultimately, the Governor has the
power to spend.
Ms. Cook pointed out that the "statutory fix" coupled with
LBA's advisory review, creates a system which has never been
challenged. She added that it has worked for both the
Executive Branch and the Legislature, creating a system
which is flexible.
Co-Chair Therriault asked if it was correct to call the
referenced case a "settlement". Ms. Cook explained that the
case was dropped because the Governor and Legislature
decided to seek a political solution by proposing an
amendment to the Constitution. When that effort failed,
this statutory scheme was put in place.
Representative J. Davies remarked that the "settlement" had
been an agreement made out of court between the Legislature
and the Administrative Branch to resolve a long-standing
disagreement. Ms. Cook agreed that it had been mutually
beneficial to both the parties.
Representative Grussendorf believed that the Exxon Valdez
Oil Settlement (EVOS) money was the issue which created
tension. That money had to be spent in certain designated
areas. He suggested that this was a different category
than program receipts. Ms. Cook agreed that the Exxon
Valdez money was unusual. In the case of that settlement,
it went before the Court in a formal sense. At one point,
the Administration assumed the position that expenditure of
those funds, which were "weird" in that they were co-mingled
with the federal government, could have been received as
damages. The State damages were placed into a single fund
with trustees representing both the federal government and
State government in charge, which created a curious dynamic
to address those co-mingled funds. Ms. Cook recalled that
the federal government indicated that none of the money in
that fund would be subject to appropriation. They
emphasized that it was not part of the Alaska State Treasury
and was not subject to appropriation. One of the
difficulties of not appropriating that money was that it
would be going to State entities. If the money was not
subject to appropriation, there was a question as to how the
departments would accept it and delegate it with absence of
that appropriation.
The Legislature responded by passing a statute, which
applied, to Exxon Valdez money. The statute was specific to
that money indicating that there were two ways in which the
expenditures could be made:
? The Legislature could appropriate money for a
particular project that is submitted and then fund
it; or
? Through program receipt expenditure authority
which provides oversight for the LBA Committee.
Ms. Cook reiterated that this is how the State has gotten to
the present point with the EVOS money treated like program
receipts.
Representative Bunde asked if it was only federal program
receipts which LBA had perview over. Ms. Cook responded
that the definition of program receipts was broad and
included a few different income streams of which federal
program receipts are one.
Representative J. Davies pointed out that the legislation
before the Committee resulted from seven cases in which
three were related to EVOS circumstances. That leaves only
four program receipt issues of concern, two of which
occurred during the Administration of Governor Hickel and
two during that of Governor Knowles. He suggested that
there is no evidence of acceleration. Co-Chair Therriault
responded that all have occurred since 1990, from a
statutory scheme put in place in 1979.
Co-Chair Mulder asked the value to the Legislature of having
the 45-day rule. Ms. Cook replied that value would be the
same that the 45-rule has for the Governor. It sets up a
system of appropriating an unanticipated amount of revenue.
It is beneficial to the Legislature in that it gets the
Legislature out from under constitutional objection that a
Committee is participating in an expenditure decision in an
unconstitutional manner. It helps the Governor, because
without that, LBA Audit review, the Legislature would be
disinclined to appropriate that amount of money.
Co-Chair Mulder believed that the old system does encourage
providing excess authority in anticipation of funding. Ms.
Cook replied that the 45-day rule allows the Office of the
Governor to make the expenditure more quickly. Co-Chair
Therriault stated that it provides the ability to deal with
unforeseen circumstances during interim. He agreed that the
current mechanism has provided some sort of flexibility.
Representative G. Davis suggested that the 45-day rule
basically provides notice. Co-Chair Therriault agreed,
although asked if it was correct that when a legislator
makes a vote on the front section of an appropriation, would
notice be good enough or would you expect more control.
Representative G. Davis asked what is an "emergency" and
could that differ between the Governor and the LBA
Committee.
DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF THE GOVERNOR,
OFFICE OF MANAGEMENT AND BUDGET, offered to provide
Committee members an overview. He noted that the front
section appropriations reference those not specific to
statute. Three years ago, those appropriations were more
broadly worded with EVOS, program receipts, test fishery
receipts and statutory designated program receipts. Years
prior to that, it also included general fund program
receipts. Of the seven RPL's proposed as problems, three of
these were general fund program receipts at the time they
were used.
Mr. Spencer explained what has occurred is that a
subcommittee faced with a cap might take program receipts
out of the budget and then offers intent language to LBA in
order to receive those program receipts. He explained the
way the process currently works is that the Legislature
passes a budget plan based on what is known at that time.
As unexpected federal grants are made available, it is then
determined if they would fit into an existing budget. If
not, it is then submitted as a RPL to the LBA Committee.
Mr. Spencer acknowledged that the existing 45-day rule
provides any Administration plenty of opportunity for
mischief although, emphasized that no governor has chosen to
do that but instead has worked closely with the LBA
Committee.
Mr. Spencer continued, if an RPL is turned down during the
LBA Committee, the Governor's choice is to resubmit, ask the
LBA Committee to reconsider its action, not undertake it, or
continue and authorize the expenditure. He assured
Committee members that in the decision involving the seven
issues of concern, none of them were arrived at from a
"cavalier attitude". He emphasized that nothing is taken
lightly about this rule.
(Tape Change HFC 99 - 16, Side 2).
Mr. Spencer advised that a timing issue had been involved in
each of the seven decisions and that the Governor did
consult with the members of the LBA Committee.
Mr. Spencer addressed his concerns with the legislation in
regards to giving the LBA Committee veto power. The law as
currently written has been rarely invoked. Had it not been
for EVOS, there have been few times it has occurred. When
it has occurred and when there is a timing constraint, this
legislation could give the Committee veto authority, and
that would not be in the best interest of the State.
Presently, the Governor must provide LBA a written report
explaining why the expenditure was essential; that action
has always occurred. Under the proposed statutory change,
the Governor would not be able to make that decision.
Mr. Spencer summed up the position of the Governor's Office,
pointing out that the Legislature and that Office have a
workable agreement and a process with a built-in reasonable
time delay before the Governor can invoke the ability to
spend unappropriated money. No Administration has acted
unreasonably. He concluded that the current process works.
Representative Bunde mentioned his concern that there are
projects which can not maintain the scrutiny of the full
body so consequently decide to wait to introduce their
proposition so that it would come before the LBA Committee.
Mr. Spencer acknowledged that the concerns are a double-
edged sword and that motives do vary.
Co-Chair Mulder asked about the Department of Community and
Regional Affairs (DCRA) payment in lieu of taxes. Mr.
Spencer noted that federal money had been available for the
communities and he recalled that in prior years, it was off
budget. The question was never if the communities would
receive the funding, but rather would they receive it in a
timely fashion. Mr. Maher addressing that concern,
referenced an e-mail from Fred Fisher, Legislative Analyst,
pointing out that the issue got to LBA because it was
difficult to find the original appropriation. Mr. Spencer
agreed that there has been debate regarding the underline
appropriation of that RPL.
Representative Grussendorf advised that the situation was
more complicated with that Payment In Lieu of Taxes (PILT)
which has always passed directly through to the communities.
LBA was trying to direct communities how they were to spend
that money. The communities did not appreciate that
attitude especially in Southeast Alaska.
Representative Austerman noted that he was not convinced
that the proposed legislation would be the correct way to
address the problem.
Co-Chair Therriault replied that the legislation would grant
the flexibility on many different possible fronts. Within
30-days when the Legislature was back in session, action
could then be decided upon by the full legislative body.
Representative J. Davies countered that if the Legislature
were to not place it in the front section, then communities
might go directly to the federal government to get the money
appropriated. He suggested that the Legislature would then
have less foresight and control then now. Additionally,
every issue before the LBA Committee has had a timing
concern for funding. He reiterated, the current settlement
is the best compromise and has worked over the years.
Representative Grussendorf suggested that the legislation
was submitted because some people disagreed with the land
purchases. He pointed out that each issue had been quite
time sensitive.
Representative J. Davies agreed with Co-Chair Therriault
that members on the LBA Committee should not take their
votes lightly. He suggested that the recommendations made
by Co-Chair Therriault could actually "shut-off" an
appropriation to veto funding made either by the Legislature
or by Congress. Representative J. Davies emphasized that
both those actions would be unconstitutional.
Representative G. Davis thought that the legislation could
initiate additional costs. He believed that if a situation
were a true emergency, it would need to be quickly addressed
and with the proposed legislation, the Governor would have
to call a Special Session to handle it. He recommended that
the current system stay in place.
Representative Bunde commented that the decision regarding
the legislation was a "judgement call". He added that some
departments circumvent legislative action by coming to LBA
with their requests rather than to the full Legislature. He
noted that he supported the legislation with the hope that
negotiations could be made to eliminate the need for it.
Co-Chair Mulder MOVED to report CSSB 28(FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative J. Davies
OBJECTED.
Representative J. Davies explained that that issues have not
been resolved and there have been serious concerns raised in
discussion. He requested an opportunity to better
understand the cases which stimulated the proposed
legislation. Additionally, he recommended separating the
EVOS circumstances from the rest of the proposal. The EVOS
process was added as an appendix to the current process.
Representative J. Davies asked to separate the issues, place
the bill in subcommittee, and leave in-place the statutory
laws made over twenty years ago. He requested members to
reconsider their consideration their position on the
legislation.
Representative Grussendorf noted the historical efficiency
of the LBA Committee given the tremendous amount of funds
they are responsible for. The current system has worked
efficiently. He requested that Committee members not use
the proposed legislation as an item for a power struggle
between the Legislature and the Office of the Governor.
A roll call vote was taken on the motion.
IN FAVOR: Austerman, Bunde, G. Davis, Kohring, Mulder,
Therriault
OPPOSED: J. Davies, Grussendorf, Moses
Representatives Foster and Williams were not present for the
vote.
The MOTION PASSED (6-3).
CSSB 28 (FIN) was reported out of Committee with a "do pass"
recommendation by the Legislative Finance Committee dated
1/26/99.
PRESENTATION BY DAVID TEAL - 25 YEAR GENERAL FUND HISTORY
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION, spoke to
how oil revenue affects the overall revenue for the State.
He emphasized that oil revenue is not stable and that there
is a downward trend in oil revenue. Currently, there is a
$1.1 billion dollar fiscal gap or 50% of the budget. Mr.
Teal commented that concern with stability is no surprise.
The General Obligation (GO) debt was structured so as to
assume continued production and selling power of the oil.
The present situation creates a much larger than anticipated
fiscal gap. Mr. Teal stressed that the gap can not be
reasonably addressed with budget cuts alone. He noted that
the focus of the Senate Finance Committee meeting earlier in
the day had been on generating revenue rather than the
downsizing expenditures.
Mr. Teal commented that following the request to address
State expenditures, the Legislative Finance Division
prepared Attachment #1, "The 25 Year General Fund History".
[Copy on file]. He noted that Ginger Blaisdell coordinated
that effort for the Division.
GINGER BLAISDELL, FISCAL ANALYST, DIVISION OF LEGISLATIVE
FINANCE, spoke to Attachment #1. She stated that Page 2 of
the graph indicates the volatility of oil and gas property
taxes, severance tax, corporate income tax and rents and
royalties on Alaska's total revenue.
She pointed out that the small spikes in the "other
revenues" line are attributed to:
? 1980 Investment earnings
? 1983 Investment earnings
? 1986 Settlement payments
Ms. Blaisdell continued, the greatest peak in 1981-1982 was
due to extraordinary high world oil prices that occurred at
the same time Alaska's production came onto the market.
Alaska was producing 2 million barrels per day at that time.
Alaska's production level is currently about half, and the
price per barrel is less than half of the 1982 level.
In general, Alaska's oil forecasts have been close to actual
earnings over the past 15 years. Overall, the Department of
Revenue has under-projected oil revenues by $.82/bbl.
Representative J. Davies asked if "other revenue" included
Permanent Fund revenues. Ms. Blaisdell replied that
category was only general fund revenue and would not include
the Permanent Fund. Representative J. Davies questioned if
the tax settlement had been considered revenue. Ms.
Blaisdell stated that would not show as general fund revenue
nor would the Capital Budget Reserve (CBR) interest.
Ms. Blaisdell spoke to Page #3, which illustrates projected
general fund revenues at various oil prices, indicating the
impact on the general fund as the oil price fluctuates
between $10/bbl and $20/bbl. The narrowing distance between
lines shows that with lower production, the price per barrel
has a lesser effect on oil revenues.
Other oil revenues, such as corporate income tax, property
tax and severance taxes provide additional "oil-related"
revenues to Alaska. She noted that the oil projections are
based on a sensitivity model provided by the Department of
Revenue and are based on the current oil fields life and
production expectancy.
Ms. Blaisdell pointed out that to make $1.257 billion
dollars in year 2020, oil prices would have to be $91/bbl as
adjusted for 3% inflation. ($45/bbl in today's dollars).
Representative Grussendorf asked about the oil companies
production reaction at this time. Ms. Blaisdell stated that
she understood that ARCO was looking at future development.
Page #4 of the handout illustrates general fund revenues
versus the expenditures. In general, Alaska's spending has
followed the pattern of its revenue. As revenue increases,
so does spending. As revenue decreases, so does spending,
but at a slightly lower rate.
She pointed out that general fund program receipts are
counted as general fund expenditures but are not included in
the State's revenue total.
Ms. Blaisdell noted that the revenue peaks and valleys shown
on Figure #4 are attributed to oil fluctuation.
? 1979-1982 Oil production increased from the
previous years and the extremely high prices.
? 1986 Oil prices "crashed" from a projected
$24.64/bbl to $22.03/bbl. With high production,
the slight price drop caused a significant drop in
Alaska's revenues.
? 1991 The Gulf War brought projected oil prices
from $19.15/bbl to $21.57/bbl.
? 1992 Tax settlement payments from oil producers
increased revenues.
? 1994 Oil prices "crashed" from a projected
$18.25/bbl to $14.05/bbl.
? 1997 Unexpected high oil prices from projected
$16.72/bbl to $20.90/bbl.
? 1998 Iraq exports are allowed that drive prices
down from projected $18.44/bbl to $16.03/bbl.
? 1999 Price "crash" brings oil to a new low average
of $11.58/bbl.
Ms. Blaisdell spoke to the expenditure peaks and valleys on
Page #4.
? 1980 Alaska's first $1 billion dollars operating
budget plus $100 million dollars supplemental.
Capital budget increased from $23 million dollars
to $86 million dollars in 1980.
? 1981 Alaska's operating budget increased to $1.5
billion dollars, capital expenditures jump from
$86 million dollars to $900 million dollars in
general fund spending.
? 1982 Alaska's operating budget grows by another
$400 million and the capital budget declines
slightly. Special appropriations are
approximately $3 billion dollars.
? 1983 & 1984 Drop significantly due to decline in
special appropriations spending, however, the
operating and capital budgets stay at around $1.9
billion dollars and $400 million dollars
respectively.
? 1985 Operating budget increased to $2.3 billion
dollars and capital jumps to $1.8 billion dollars.
? 1986 Oil revenues drop due to a price crash.
Overall spending stays relatively stable but drops
in FY88 and rebounds in FY89. During this time,
1,300 positions were eliminated from the state
work force. By 1991, state positions were back to
the "pre-layoff" level and stabilized with minimal
growth.
? 1987 The operating budget stayed relatively the
same, the capital budget increased $200 million
dollars and special appropriations increased $150
million dollars from 1986.
? 1988 to 1994 Expenditure peaks and valleys have
leveled off.
? 1990 Constitutional Budget Reserve created.
? 1994 Alaska draws from the Constitutional Budget
Reserve to offset the decline in revenues.
? 1997 An unexpected increase in revenues created a
$70 million dollar general fund surplus.
? 1998-2000 The Constitutional Budget Reserve is
depended upon to "balance" the State's
expenditures with it declining revenue source.
Representative J. Davies responded to comments made by
Representative Kohring and pointed out that the graphs do
not indicate federal funds. If the total expenditures per
capita were plotted and adjusted to real dollars, it would
indicate that the State spends less per capita now than it
did in the 1970's.
Ms. Blaisdell provided those figures:
1973 Population was 336 thousand residents.
1998 Population was 621 thousand residents.
1973 $3.7 million dollars per person was spent.
1998 $3.7 million dollars per person was spent.
Mr. Teal pointed out that in 1973, there were only two
funds, general fund and federal funds. Over the years, the
"other" funds have grown substantially.
Co-Chair Therriault commented that when the State started
offering a dividend, the State started attracting a populace
that required much more service from government.
Representative Bunde asked if the expenditures indicated
money paid out for the Permanent Fund Dividend (PFD). Ms.
Blaisdell stated it did not. PFD checks are paid out of the
Permanent Fund corporate receipts and are not included in
the general fund category.
Co-Chair Mulder acknowledged that oil revenue is not stable
and asked how to reduce that uncertainty. Mr. Teal advised
that "uncertainty" could not be reduced, because oil is a
commodity and commodities fluctuate. He emphasized that oil
prices can not be controlled. Everyone understands that the
oil bonanza is over. He cautioned that it is important to
remember to spend less than every dime that is available.
Representative J. Davies suggested that earnings from the
PFD could be a source of major income. Mr. Teal
acknowledged that the Legislature has been responsible but
that there is competition for that money. The Permanent Fund
Dividend takes away the earning flow from the general fund.
Thus concluded the presentation on the general fund history.
ADJOURNMENT
The meeting adjourned at 3:45 P.M.
H.F.C. 10 2/05/99
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