Legislature(1995 - 1996)
01/22/1996 01:30 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE JUDICIARY COMMITTEE
January 22, 1996
1:30 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Lyda Green, Vice-Chairman
Senator Al Adams
Senator Johnny Ellis
MEMBERS ABSENT
Senator Mike Miller
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 30
Proposing amendments to the Constitution of the State of Alaska
relating to the budget reserve fund.
PREVIOUS SENATE COMMITTEE ACTION
SJR 30 - No previous Senate action.
WITNESS REGISTER
Senator Steve Rieger
Alaska State Capitol
Juneau, Alaska 99811
POSITION STATEMENT: Sponsor of SJR 30
Brad Pierce
Office of Management and Budget
P.O. Box 110020
Juneau, AK 99811-0020
POSITION STATEMENT: Supports SJR 30
Neil Slotnick
Assistant Attorney General
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Answered questions on SJR 30
ACTION NARRATIVE
TAPE 96-2, SIDE A
Number 001
SJR 30 USE OF BUDGET RESERVE FUND
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:30 p.m. Senators Taylor, Green, Adams, and Ellis were
present. The first order of business was SJR 30.
SENATOR RIEGER, prime sponsor of SJR 30, gave the following
overview of the measure. The purpose of the constitutional
amendment which created the budget reserve fund was to help
stabilize state revenue and was passed at a time when the
Legislature was anticipating major legal settlements, commonly
referred to as potential windfalls. The fund was created in
response to concern that if all of the money was available at once
for spending, the temptation and pressure for expending it would be
irresistible. The budget reserve fund was designed to hold all of
the one-time settlements and to be used when there were shortfalls,
in order to stabilize state spending. It was not designed as a
spending limit, but was crafted so that the money would be
initially separated from the general fund but could be spent with
a simple majority vote as long as it did not serve to increase
spending over prior years. To use that money, in any form, as part
of a plan which increased spending over the prior years, would take
an extraordinary majority, or 3/4, vote. The amendment was
misdrafted in that excessive attention was concentrated on
reference to funds available for appropriation as the standard by
which to meet one or more tests, rather than the use of a standard
testing the actual level of spending. The references to "funds
available for appropriation" were eventually litigated with the
outcome being that no spending plan can be passed by a simple
majority, if there are any funds available from previous years.
Those funds are placed on the table first and used in that year's
calculations of spending, and are subject to the "sweep."
SENATOR RIEGER explained the "sweep" process. Once draws have been
made from the constitutional budget reserve, at the end of the
year, either funds must be made available for an appropriation to
repay the budget reserve fund, or a 3/4 vote to avoid doing so must
occur. The litigation centered around which funds were available
for appropriation. The general fund was available for
appropriation, but funds such as the Alaska Marine Highway Fund, in
which the money is collected in one year but is not spent until the
following year for operations, were in question. Other funds with
similar structures are the Alaska Debt Retirement Fund, the Four
Dam Pool Transfer Fund, some of the Mental Health Trust monies, the
Railbelt Energy Fund, and others. The Divisions of Legislative
Finance and Legislative Audit have compiled a list of such funds,
which essentially must be depleted unless the 3/4 vote occurs to
prevent them from being depleted.
Number 089
SENATOR TAYLOR asked if the Science and Technology Foundation is on
the list. SENATOR RIEGER replied the Science and Technology
Endowment Fund was determined to be in question by legislative
auditors. Because its determination was in question, it was not
used to determine the calculations of what was swept and then
unswept. The Power Cost Equalization Fund was treated in the same
way. He added in practice it has made no difference, since there
has always been a 3/4 vote and it has never been tested.
Number 100
SENATOR RIEGER explained the purpose of SJR 30 is to refocus the
wording of the amendment on spending from year to year, rather than
on funds available from year to year. Second, SJR 30 removes the
sweep provision. When it was created, there was no practical way
of foreseeing that there would ever be a way to avoid the need for
a 3/4 vote to prevent a sweep from fiscal year 1996 forward,
because there have already been several hundred million dollars
drawn from the budget reserve fund that have not been repaid.
Number 127
SENATOR ADAMS asked if, with passage of SJR 30, one had an equal
amount of unrestricted general funds and the constitutional budget
reserve funds, an equal amount on an annual basis, then a simple
majority vote would be required, rather than the 3/4 vote. SENATOR
RIEGER believed Senator Adams' interpretation to be correct.
SENATOR ADAMS commented that the minority would then not play a
part in the priorities needed in the state. He added if SJR 30
were enacted, the 12 Republicans could focus on their priorities,
while the 8 Democrats would have no say. SENATOR RIEGER replied
that prior to the passage of the constitutional budget reserve, it
was always technically possible for any majority to pass a budget
with no consideration given to the concerns of the minority, but in
practice it is more complex than that. SENATOR ADAMS disagreed and
expressed concern that SJR 30 would eliminate minority party
participation in budget priorities in both houses.
Number 152
SENATOR ADAMS noted Section 2 repeals the payback provision. He
asked how much money is owed to the constitutional budget reserve
at present. SENATOR RIEGER did not have the dollar amount
available. He explained that the section being repealed requires
that if appropriations are made from the budget reserve fund, the
amount available for appropriation shall be deposited in the budget
reserve fund until it is repaid in its entirety. This requires the
"sweep" every June 30, which effects the general fund and other
funds not originally determined to be in the general fund.
Number 179
BRAD PIERCE, senior policy analyst with the Office of Management
and Budget, stated the Administration generally supports SJR 30.
Regardless of the short term political considerations, it follows
the intent of the original constitutional amendment. The
Administration also supports repeal of the "sweep" provision.
SENATOR ADAMS asked Mr. Pierce what the amount of money borrowed
from the constitutional budget reserve is. MR. PIERCE offered to
provide that information at a later time.
Number 200
NEIL SLOTNICK, assistant attorney general, offered to answer
questions, as he participated in much of the litigation involving
the constitutional budget reserve, and in the attempts of the
Legislature to enact definitions implementing the original
amendment. He pointed out that SJR 30 deletes the term "in the
previous calendar year" which would effectively allow the
Legislature to change the amount in the calculus by passing
supplemental appropriations. This language was originally included
to prevent the Legislature from manipulating the previous year's
budget by raising that amount with supplementals. Additionally, he
explained that by focusing on unrestricted revenue, and defining
unrestricted revenue to mean all monies received by the state
during a fiscal year, any possible general fund carry forward is
ignored in the calculus as to whether a 3/4 vote would be
necessary.
Number 231
SENATOR TAYLOR asked for further explanation of whether those funds
would still be unrestricted merely because the year had passed. He
noted frequently revenue is not even calculated within the year in
which it was due. That calculation often runs 3 to 4 months into
the next fiscal year before the amount of the carry forward, as of
July 1, is known. MR. SLOTNICK replied that he was focussing on
unrestricted revenue, meaning all money received by the state
during a fiscal year. SENATOR TAYLOR stated it was received during
the year even though the amount was undetermined. MR. SLOTNICK
responded if it was a budget surplus left over from the previous
year, it would not be considered received during that year.
Number 250
MR. SLOTNICK commented the Department of Law would appreciate a
thorough legislative history of this issue since there was not a
great deal of legislative history available when this issue was
litigated.
SENATOR ADAMS asked if Mr. Slotnick was saying that from the total
of the unrestricted general fund and the constitutional budget
reserve, the carry forward money would be subtracted. MR. SLOTNICK
stated the carry forward might not be unrestricted. He clarified
his interpretation of the language in SJR 30 to mean that the
unrestricted carry forward would not be subtracted. That money
would not be part of the calculus. One would be comparing what was
available unrestricted revenue in one year against what was
appropriated out of unrestricted revenue and the constitutional
budget reserve for the previous year. If there was a decrease in
revenue, you could then appropriate out of the constitutional
budget reserve by a simple majority without looking at any surplus
that might have carried forward from the previous year.
Number 264
SENATOR RIEGER stated that Mr. Slotnick's testimony describes the
original cause of the problem. Mr. Slotnick is speaking about an
undesignated carry forward sitting in the general fund. In trying
to access those funds, the Legislature inadvertently caught carry
forwards which were designated, but in a literal reading, were not
designated enough to make them unavailable, such as the Marine
Highway Fund. To categorize each fund would be too complex.
Number 279
SENATOR TAYLOR discussed the need to review SJR 30 further and
announced the measure will be scheduled again next week. There
being no further business before the committee, the meeting was
adjourned at 1:50 p.m.
| Document Name | Date/Time | Subjects |
|---|