Legislature(2023 - 2024)DAVIS 106
02/08/2024 12:15 PM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Updated Fiscal Plan Working Group Model | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
February 8, 2024
12:00 p.m.
MEMBERS PRESENT
Representative Ben Carpenter, Chair
Representative Jamie Allard
Representative Tom McKay
Representative Kevin McCabe
Representative Cathy Tilton
Representative Andrew Gray
Representative Cliff Groh
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Robert Meyers
COMMITTEE CALENDAR
PRESENTATION(S): UPDATED FISCAL PLAN WORKING GROUP MODEL
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXI PAINTER, Director
Division of Legislative Finance
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Gave the Updated Fiscal Plan Working Group
Model presentation.
ACTION NARRATIVE
12:16:57 PM
CHAIR BEN CARPENTER called the House Special Committee on Ways
and Means meeting to order at 12:00 p.m. Representatives McKay,
McCabe, Groh, Gray, and Carpenter were present at the call to
order. Representatives Allard arrived as the meeting was in
progress.
^PRESENTATION(S): UPDATED FISCAL PLAN WORKING GROUP MODEL
PRESENTATION(S): UPDATED FISCAL PLAN WORKING GROUP MODEL
12:17:36 PM
CHAIR CARPENTER announced that the only order of business would
be the Updated Fiscal Plan Working Group Model presentation.
12:18:34 PM
ALEXI PAINTER, Director, Legislative Finance Division (LFD),
Legislative Agencies and Offices, began a PowerPoint
presentation [hard copy included in the committee packet]. He
touched upon the first page of a handout preceding the
spreadsheets, which read as follows [original punctuation
provided, with a bracketed date correction]:
Data Sources
The revenue figures are from the Department of
Revenue's Fall 2023 Revenue Sources Book. For
simplicity, this model assumes that the 5% Percent of
Market Value (POMV) draw from the Permanent Fund is
followed. LFD's full fiscal model can generate
scenarios with alternative Permanent Fund draw
structures. This model also uses DOR's 2023 Fall
Revenue Forecast and does not allow varied oil prices
or production. LFD's full fiscal model does allow for
variations on these items.
Most revenue estimates in this sheet were provided by
the Department of Revenue in [2023] to the House Ways
and Means Committee.
Budget data is from the Legislative Finance Division's
fiscal summaries of the Governor's budget.
MR. PAINTER noted that the percent of market value (POMV)
numbers and statutory dividend numbers in his model differ
slightly from what shows in the Revenue Sources Book in the
governor's budget. He turned to the first spreadsheet and
talked about the revenue tab and budget baseline growing with
inflation of 2.5 percent. He showed how to make changes to the
figures on the spreadsheet. He pointed to the permanent fund
dividend (PFD) appropriation and mentioned that the per person
number for fiscal year 2025 (FY 25) includes an estimate of the
energy relief payment funded in 2024. He talked about fund
transfers and the deficit coming out of savings balances.
MR. PAINTER noted a difference from last year's model, in that a
gap had been left after the constitutional budget reserve (CBR)
and statutory budget reserve (SBR) while this year the division
added the option to fill the deficit from the earnings reserve
account (ERA), which has the effect of reducing future POMV
draws. Another new feature is a graph of the realized ERA
balance, which includes the following year's POMV draw and
everything remaining. He noted that in the basic fall forecast
there are no overdraws; the ERA draws down by FY 33 to "just the
amount for the next year's POMV draw." He noted a feature that
would show numbers with no inflation-proofing.
12:24:49 PM
MR. PAINTER moved on to revenue budget appropriation tabs and
noted that the spreadsheet allows the user to change the oil
price assumption from the $76 fall forecast and dropping to
follow the futures market, but he noted there has been little
change in oil prices since the fall forecast. He indicated the
user of the spreadsheet could choose anywhere from $20 to $150
per barrel. He explained the "flat" numbers are because of
carry-forward numbers and making sure the numbers are accurate
in the particular scenario. He pointed to numbers related to a
sensitivity analysis from the Department of Revenue (DOR). He
showed an option for new revenue. He said for income tax there
is a percentage for federal tax liability, a flat tax on
adjusted gross income or progressive tax, as well as a tax on
high earners proposed under HB 156. He indicated that the
numbers are from DOR's model of last year and LFD has not seen
updated numbers, but he further indicated there have not been
massive changes since then. The sales tax model is also the
same as last year, and he mentioned "a Wyoming-style" moderate
base, a narrower base tax, and the broadest base tax proposed
under HB 142. He said the user of the spreadsheet could plug in
any tax rate to see the results. There are other tax options;
many of the numbers are from legislation session of 2023. He
highlighted updates to motor fuel tax and property tax.
12:28:28 PM
MR. PAINTER, at the request of Chair Carpenter, walked the
committee through the use of the "custom" tax category which
allows the user to enter their own figures. He gave options for
drop downs, including the governor's budget and an adjusted
base, which he reviewed is a clean starting point before getting
to the policy initiatives in the governor's budget. He pointed
to a K-12 change and versions under SB 140 from the House Rules
Standing Committee, SB 52, a bill passed by the Senate Education
Standing Committee, or a custom number. He explained there are
two ways to change the agency operations, either by changing the
number or by changing the growth percentage, and he offered
examples. He noted how much difference rates of inflation can
make by FY 33; the model is sensitive when looking at the
compounding effect of the rate over time. Mr. Painter discussed
statewide items including school debt reimbursement. He noted
the current program has an expiration date of 2025. He said the
division is assuming there will be new debt issued by districts,
and that assumptions are based on the historical average of the
10 years before the moratorium, but with the new, lower
reimbursement percentages. He explained the default option is
to prorate the debt, but other options exist, such as extending
the moratorium or changing the reimbursement rates, among
others.
MR. PAINTER talked about another big variable related to
retirement and mentioned SB 88. He noted the fiscal note is
based on the Senate Finance Committee's actuary and "only goes
out to roughly 30" thus cannot be used in this model. He
explained the use of the item for which the division has a
current analysis and reiterated the ability to enter additional
options. Regarding community assistance, he noted the statutory
payment is the default; however, he noted another amount could
be entered from what is in the governor's plan. He pointed to a
number for the disaster relief fund and said the governor "has
$5 million," which he called an arbitrary number used as "a
placeholder."
12:34:26 PM
MR. PAINTER moved on to the capital budget and said the
spreadsheet user can change that to match last year's
spreadsheet by changing the dollar amount, also by changing the
growth rate. He said it would compound based on that rate. He
talked about the PFD and said the default is the statutory
calculation and noted the number is different from what is in
the governor's budget because it is based on a different
projection. He showed how to change the numbers and results.
He stated that there is no option to change fund transfers;
however, "if people have particular savings or other goals, we
can build in options."
MR. PAINTER moved next to the appropriations limit chart and
explained the bars and lines. He noted there currently is a
statutory limit but it is not modeled in the chart because,
without assigning a high growth rate, this is not impacted. The
default here is the current constitutional limit. He said there
is another way to calculate the constitutional limit similar to
how the City of Anchorage figures its tax cap. He noted other
options: HJR 2 and HB 38, and a House Special Committee on Ways
and Means amended version of "that same proposal." He stated
his willingness to model other proposals.
12:38:17 PM
MR. PAINTER, in response to Representative Groh, confirmed that
when entering in the assumptions in the 10-year plan, with the
1.5 percent growth not from the community assistance, with
general funds and no supplementals, it would equal the
cumulative gap produced by the Legislative Finance Division of
approximately $1 billion higher than that of the governor. In
response to a follow-up question as to whether the cumulative
gap gets larger over time, he confirmed that is accurate "under
our default assumptions."
12:39:52 PM
CHAIR CARPENTER anticipated that as policy discussions happen
within the legislature during session, it may be necessary to
"model out the long-term impact to our budget." He said this
tool provided by Mr. Painter helps members see the implications
of the policy choices before them. He thanked Mr. Painter for
his presentation.
12:41:22 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
12:41 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HW&M Worksheet Copy - Updated 2.06.2024.pdf |
HW&M 2/8/2024 12:15:00 PM |