Legislature(1999 - 2000)
01/22/1999 09:02 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
January 22, 1999
9:02 AM
TAPES
SFC-99 # 5, Side A
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:02 AM
PRESENT
Senator Sean Parnell, Senator John Torgerson, Senator Randy
Phillips, Senator Dave Donley, Senator Gary Wilken, Senator
Lyda Green, Senator Al Adams and Senator Pete Kelly.
Also Attending: Representative Gail Phillips; Tam Cook,
Director, Legislative Legal and Research Services,
Legislative Affairs Agency; David Teal, Director, Division
of Legislative Finance; Dan Spencer, Chief Budget Analyst,
Office of Management and Budget; Jim Baldwin, Assistant
Attorney General, Governmental Affairs Section, Civil
Division, Department of Law.
SUMMARY INFORMATION
SENATE BILL NO. 28
"An Act relating to the increase of an appropriation
item based on additional federal or other program
receipts."
The bill was heard and held in committee.
REPRESENTATIVE GAIL PHILLIPS, Chair of the Legislative
Budget and Audit Committee, spoke to the bill. She said
this legislation was introduced at the request of the 20th
Legislature Legislative Budget and Audit Committee.
This bill would revise the procedure the governor must
follow when the Legislative Budget and Audit Committee does
not approve or does not take under consideration a revised
program request. Representative Phillips testified. She
stated that the need for revision to the "45-day rule"
stemmed from the recent actions by the Governor and the
committee's strong desire to protect the appropriation
power of the Legislature.
She explained that the proposed revisions to the 45-day
rule would not stop the Governor from ultimately proceeding
with expenditure that had been disapproved or not
considered by the committee. Instead, SB28 strengthened
the Legislature's appropriation power by delaying the
commencement of any expenditure until after the full
Legislature has been in regular session at least thirty
days.
She continued saying that the thirty day period was
designed to provide for additional discussion between the
Governor and the full Legislature and would allow the full
Legislature to consider any action deemed appropriate
concerning the Governor's determination to proceed with any
expenditure.
The Representative stressed that SB 28 did not create any
major obstacles for the Governor in terms of proceeding
with expenditure. The legislation merely allowed the full
Legislature to consider the issue and provide for addition
safeguards to the legislative appropriation power.
She urged the committee member to support the legislation.
Senator Sean Parnell noted similar legislation passed the
year before and vetoed by the Governor. He asked TAM COOK,
Director, Legal and Research Services, Legislative Affairs
Agency, to address those actions.
Ms. Cook said the prior bill (SB 347) was a simplified
version compared to this bill. It only delayed the
expenditure authority from the 45-days to "after the
Legislature had been in session for thirty days." She
stated that SB 28 was a bit more elaborate. She had
concerns with the timing of the notice requirement in SB
347.
Under the current 45-day rule, the Governor has to give
notice of an intention to expend, she explained. This
version, SB 28 ensured that the Legislative Budget and
Audit Committee received the notice before the thirty-day
period began. Her concern with SB 347 was the possibility
of the Legislative Budget and Audit Committee disapproving
an expenditure, the Governor took no action until the
Legislature was in session for 28 days and then the
Governor submitted notice. SB 28 built in a time period of
thirty days and ensured that the notice was received before
that period started running. It also addressed the question
of what would happen if Legislative Budget and Audit
Committee simply didn't act. It took the approach that if
Legislative Budget and Audit Committee didn't act within
ninety days the Governor could then give notice of intent
to expend, according to Ms. Cook. However, the delayed
expenditure would apply even in those situations.
Senator Al Adams wanted to know about the 45-day rule and
if that wasn't an agreement made between the Legislature
and the Executive Branch twenty years ago as a way to
settle a lawsuit.
Ms. Cook replied explaining this section (AK 37.07.080h)
did indeed have a history. It was originally enacted in
1977 and permitted appropriations on approval of both the
Governor and the Legislative Budget and Audit Committee.
Several different types of expenditures were allowed under
this provision; program receipts were just one. Shortly
after it was enacted there was a lawsuit filed titled Kelly
v Hammond? This lawsuit was filed by former legislator,
Ramona Kelly against then Governor, Jay Hammond. A
decision was never issued by was eventually was settled.
However, presiding Judge Stewart issued a number of
opinions one of which said that the Legislature could not
delegate the power of appropriation to one of its
committees and in the case of the power of the Governor, an
a violation of separation of powers. The Legislature took
the matter was to the voters in the form of a proposed
constitutional amendment in 1978. The voters rejected that
effort. The current 45-day rule was the Legislatures
response following the rejection of the proposed
constitutional amendment.
Senator Sean Parnell wanted to know if there was any
inappropriate delegation of power to the Legislative Budget
and Audit Committee under this bill?
Ms. Cook supposed there could be some question regarding
how long the Legislature could statutorily delay an
expenditure. She stated that was a fine point. However,
the 45-day delay had not been challenged. She surmised that
the court would probably find in the favor of it being a
reasonable delay. She used the argument that the court
would agree that the Legislature would want to have a
chance to be convened when the ultimate decision was made
regarding an expenditure.
She said there was an additional question on the current
practice of whether the Legislature could appropriate money
conditioned on Legislative Budget and Audit Committee
review. This system that had been utilized for years and
had not been challenged, she qualified.
Ms. Cook added that there was a case that had arisen from
different types of conditions that the Legislature imposed
on one of its budgets. The Governor made four vetoes on
conditional language with respect to different
appropriations. The question was on appeal before the
Supreme Court as to whether the legislature could impose a
condition on an appropriation at all and if so, what the
dimensions of that condition were. She said it was
possible that decision could have an implication for this
situation.
If the legislature has power to condition anything it
seemed to Ms. Cook that this type of condition ought to be
justified as reasonably related to an appropriation that
was so general in nature as the types of appropriations
seen of undesignated, unknown amounts of program receipts.
Assuming the Legislature survived the current litigation,
Ms. Cook felt the provisions listed in this bill would be
an acceptable legal condition.
Senator Sean Parnell clarified the bottom line was that Ms.
Cook thought the Legislature could survive a legal
challenge. Ms. Cook agreed and explained that, with
exception of the longer delay period, the challenge could
equally be made with respect to existing statutes. Right
now, the Legislature was passing appropriations conditioned
on Legislative Budget and Audit Committee review, she
stipulated.
Senator Al Adams asked what was the timeline for the
Supreme Court decision. Ms. Cook said first set of briefs
were due next week. There would then be an opportunity to
do reply briefs. She anticipated oral arguments would not
begin before the end of the session. She attributed past
court case delays to administrative changes in the Supreme
Court. She also suggested that either party could request
a delay, which would extend the process even further.
DAN SPENCER, Chief Budget Analyst, Office of Management and
Budget testified to the similar bill from the prior year
that was vetoed. In his veto message, Governor Knowles
made note that the bill could hinder prompt distribution of
funds to various programs.
Mr. Spencer said he planned to give a historical overview
of the Legislative Budget and Audit Committee process.
He read front section language saying, "Unanticipated
receipts from various sources that are received by programs
in the course of the fiscal year may be expended
conditioned upon review by the Legislative Budget and Audit
Committee." He gave an example of a program having
authority for $100,000 of federal funds in its budget. If
an unanticipated grant of $125,000 was received, the Office
of Management and Budget prepared a write-up for the
Legislative Budget and Audit Committee and work with the
committee chair to schedule a meeting. The Legislative
Budget and Audit Committee would review the write-up and
make a recommendation whether or not to proceed. If the
committee recommended not to proceed with the expenditure,
the Office of Management and Budget would resort to the
provisions allowing for the Governor to again review the
program and decide whether or not it was the best interest
of the State to allow the expenditure. At that point the
Governor would send a letter to the Legislative Budget and
Audit Committee chair saying the expenditure would
commence.
Mr. Spencer pointed out that eight or nine years ago the
whole process involved general fund program receipts and
several other receipts. For the last three or four years,
he said, program receipts had not been part of the front
language. Therefore that funding source had come off the
table and the front section contained only federal
receipts, corporate receipts and EVOS receipts.
He addressed the "45-day rule" expressing that the name was
a misnomer. Existing statute read 45 days would lapse if
the committee did not meet and make a recommendation. His
interpretation was that the Office of Management and Budget
could send the Legislative Budget and Audit Committee an
RPL and begin counting down 45days until the Governor could
proceed with the expenditure if the committee failed to
respond. Spoke further about 45-day rule.
The decision on whether to proceed with expenditure of
funds was not made lightly and was done only five or six
times since the agreement was reached in the 1970s,
according to Mr. Spencer. Each time the expenditure was
made it was because of a timing issue, he added. The cases
where the governor had evoked 45-rule had been made only
after talking with legislatures and having their support.
He gave a Sitka Airport project as an example.
Senator Randy Phillips asked for clarification. Mr. Spencer
responded that the Legislators consulted might not be
Legislative Budget and Audit Committee members but someone
else in the Legislature.
Mr. Spencer interpreted the current structure of the bill
as follows. If the Legislature was in the last thirty days
of a session or had just adjourned and the Legislative
Budget and Audit Committee held a meeting on an RPL brought
up for that particular fiscal year and if the LB&A
recommended not to proceed, RPL would be dead. The
committee would have effectively vetoed the appropriation
he assessed.
In many cases, waiting until thirty-days into the next
regular session, while not having the fiscal year expire,
came pretty close, in his opinion. If there was a timing
issue involved, it could effectively kill the RPL.
Mr. Spencer continued saying that the importance of this
varied because in the past there had been excess funds in
budget so the Office of Management and Budget did not have
to specify each individual receipt of federal funds that
was expected. This was no longer the case with the smaller
funding amounts.
He suggested that this legislation would place a bigger
burden for Legislative Budget and Audit Committee. He
referred to difficulties in scheduling a meeting were
adequate members could attend.
Senator Randy Phillips responded that the committee had
managed to meet and address Raps every time. Mr. Spencer
conceded but said that as unexpected timing issues came up
then the Legislative Budget and Audit Committee process
became more important. If there was a situation where the
committee made the decision not to proceed, and if the
Governor wanted to review that decision, under this bill
the Governor might not have an opportunity because of the
provision to wait until thirty days into the next regular
session.
Senator Lyda Green requested a list of all occasions where
the Governor went against the recommendation of the
Legislative Budget and Audit Committee.
Senator Randy Phillips responded that there were two
instances under Governor Hickel. Under this
Administration, there were between six and eight. Co-Chair
John Torgerson said details would be distributed to the
committee.
Senator Dave Donley asked Ms. Cook if it was her
understanding of the bill that if the Legislative Budget
and Audit Committee voted against authorizing a request
that the committee would be unable to revisit the issue
again if a new compelling argument was made in its favor.
Ms. Cook said she didn't see anything in the bill to
prevent Legislative Budget and Audit Committee from
revisiting an issue.
Mr. Spencer agreed with the idea of the committee
reconsidering its decision and he knew of several instances
where the committee did so. His point was that the
Governor might not have the ability to reconsider.
Further discussion ensued between Senator Dave Donley and
Mr. Spencer about the possibility for the Legislative
Budget and Audit Committee to revisit an issue if a
sufficient argument was made in favor.
Senator Randy Phillips asked if there were any RPLs or
potential RPLs that the Governor's office did not submit to
the Legislative Budget and Audit Committee. Mr. Spencer
said there were. Senator Randy Phillips offered that there
then were some RPLs that the Legislature might like to
consider, but was unable to because the Governor failed to
submit to the committee. Mr. Spencer could not think of a
case that a Legislator liked that the Office of Management
and Budget did not take forward. There was further
discussion on this particular topic.
Senator Al Adams had a question of procedure as proposed in
the bill. If the Legislative Budget and Audit Committee
twice rejected an RPL and the Governor submitted the same
RPL to the full Legislature for consideration and if the
Legislature took no action on the matter in the next thirty
days, did the Governor then have the authority to spend the
funds? He then wanted to know what formal action the
Legislation had to take to stop the expenditure. Would it
require a majority of both bodies? Mr. Spencer said that
he asked that question of the bill from the prior year.
Ms. Cook explained that the substance law would only delay
the time which expenditures could occur. It did nothing
more. It did not create in itself a remedy for the
Legislature. As to a particular RPL, she said it might
indeed be very difficult to prevent that expenditure on the
part of the Governor. Under to provisions of the bill, all
the Governor had to do was give notice that he intended to
make an expenditure despite it having been disapproved by
the Legislative Budget and Audit Committee
She continued her explanation. With respect to any
particular program receipt that has been disapproved, the
remedies available to the Legislature would depend on how
that appropriation was structured in the front section. If
the money was appropriated in very general terms as seen
now, then it might be difficult for the Legislature to peel
out a particular type of program receipt and to
disappropriate it. The only thing the Legislature could do
in that case would be to attempt to identify the program
receipts and to amend the prior year budget saying that
they were appropriating all but this program receipt. That
would require the enactment of legislation, which was
pretty difficult to do in thirty days with the possibility
of a veto of the Governor.
Ms. Cook explained suggestions of David Teal, Director of
Division of Legislative Finance. He had suggested that if
there were particular types of appropriations in the budget
process that concerned the Legislature, that at least it
should create the opportunity by creating a statutory delay
in expenditure so that in the appropriation process, the
Legislature could identify certain types of extra program
receipts and provide a lapse date. Rather than the
Legislature affirmatively having to change an appropriation
act and have to pass a bill, particularly sensitive
appropriations would lapse if the Legislature didn't act to
amend that bill to prevent the lapse, she continued. She
concluded her argument saying that there might be a number
of techniques that might be used and that might be helpful
as to some particular types of expenditures of program
receipts. At the very least, the Legislature would have
the full Legislature would have a thirty-day period to seek
to influence the Governor politically.
Mr. Spencer concluded saying that Office of Management and
Budget didn't think the current process was broken and
therefore didn't need to be fixed.
JIM BALDWIN Asst. Attorney General, testified to the bill.
He said the Department of Law position was similar to its
stand on last year's bill. He didn't disagree with the
Legislative legal council advice. However he expressed some
differences. He felt it was important to keep in mind what
brought about the existing law, which was a compromise
between the Governor and the Legislature to resolve a
dispute. He detailed that dispute.
The Governor's position was that certain trust and
custodial receipts which could only be spent on items or
objects of expenditure, which were specified by others
outside of state government did not need to be
appropriated. The Legislature did not agree with that and
felt a delegation of authority needed to be made to the
Legislative Budget and Audit Committee.
Mr. Baldwin stated that because there had been no
litigation over the present system somehow validated it
under the law was false reasoning. Just because the
Administration had not challenged the 45-day rule did not
mean the Legislature could extend it.
He spoke of the meaning of compromise.
He defined the delegation issue saying that the
constitution said that the Legislature was made up of two
houses and when significant powers were given to a
legislative committee, the committee was invested with the
powers of the full Legislature. In this instance where the
Legislative Budget and Audit Committee had the power to
veto an expenditure that had been authorized to a certain
extent by the full Legislature then as an institution it
had many dangers. He asked the committee to consider this
argument that the committee was given full power not just
oversight powers.
He also pointed out that it had been described to the
Senate Finance Committee that the Department of Law was
litigating with the Legislature to the extent that they
wanted to say that the Legislature could not impose a
condition at all on an appropriation. He countered that
that information was not exactly correct. His
interpretation of the litigation was to say that the
Legislature could not impose conditions that violated the
confinement requirement in the constitution.
Co-Chair John Torgerson asked if the expedition of the 45-
rule didn't do just that. Mr. Baldwin replied that it set
out a way of action.
Co-Chair John Torgerson argued that this bill just extended
45-day rule and said he didn't follow the argument.
Mr. Baldwin suggested that it might end the
Administration's ability to spend the money.
Co-Chair John Torgerson suggested that the real fix was to
eliminate the appropriation of federal funds in the front
language and instead grant the authority to the Legislative
Budget and Audit Committee.
Mr. Baldwin felt the existing compromise was a good
budgetary tool and that appropriation of federal funds was
a good thing. However, if the funds were not appropriated
at all then there would be extreme pressure for the
Governor to take action and spend those funds.
Co-Chair John Torgerson suggested it was time for another
compromise because this committee's interest plus that of
the Legislature with the passage of SB 327 was that they
wanted a fix to what they perceived as a major problem.
Senator Dave Donley wanted to know if the Department of Law
had an opinion of the constitutional validly of the other
end of compromise that the Governor could expend funds
without constitutional budget authorization from the
Legislature. Mr. Baldwin said there were old opinions on
the books that said exactly that. Senator Dave Donley
wanted to know if those were Attorney General opinions.
Mr. Baldwin affirmed. Senator Dave Donley wanted to know if
there were court decisions. Mr. Baldwin replied that there
were from other states but none for this state.
Senator Dave Donley continued asking questions on this
topic and summarized that this was another argument in
favor of having and elected Attorney General. He stressed
that the Attorney General serves at the pleasure of the
Governor and therefore was going to make arguments to
support the Governor's positions.
Co-Chair John Torgerson ordered bill held in committee for
further considerations.
He made announcements regarding future meeting schedules.
ADJOURNED
Senator Torgerson adjourned the meeting at 9:50 AM.
SFC-99 (11) 1/22/99
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