HJR 38-US CONST AM: FEDERAL DEBT LIMIT  8:34:30 AM VICE CHAIR KELLER announced that the final order of business was HOUSE JOINT RESOLUTION NO. 38, Requesting the United States Congress to call a Constitutional Convention to propose an amendment to the Constitution of the United States requiring approval of a majority of state legislatures to increase the federal debt limit. VICE CHAIR KELLER said Article 5 of the U.S. Constitution states that the Constitution can be amended upon agreement of two- thirds of the states. He said HJR 38 is an attempt to get that agreement in terms of a debt limit increase. 8:35:33 AM REPRESENTATIVE SEATON asked if a constitutional convention would open up all parts of the U.S. Constitution for possible amendment. VICE CHAIR KELLER offered his understanding that it would be highly unlikely for that to happen, because the convention is called for by two-thirds of the states for a particular purpose, and the entire two-thirds would have to decide to change that purpose. He said he would gather the information that convinced him that there would be no run-away convention and share it with committee members. 8:38:03 AM VICE CHAIR KELLER, in response to Representative P. Wilson, offered his understanding that there has never been a Constitutional Convention called to amend the U.S. Constitution since its inception. He proffered that any signs of a movement by two-thirds of the states provide motivation for U.S. Congress. In response to a follow-up question, he said a similar resolution was proposed in 1982, but it was for a balanced budget, which he said is different from a debt limit. 8:40:41 AM REPRESENTATIVE PETERSEN talked about the debate in Washington, D.C., regarding whether to raise the debt limit, and he said one of the arguments in favor of it had to do with the country's credit rating. He said he agrees that "we" need to get debt under control, but does not know that the best way to do that is through an amendment to the U.S. Constitution, which could spin out of control. 8:43:01 AM VICE CHAIR KELLER challenged Representative Petersen to come up with a hypothetical situation that would lead to a runaway convention. He emphasized the indebtedness of the country and the importance of engaging the states in this discussion. 8:44:31 AM REPRESENTATIVE SEATON offered his understanding that if there was a constitutional convention, then there are two ways it could be addressed: a majority of the states or two-thirds of the states would have to ratify. VICE CHAIR KELLER indicated that that is not correct. He deferred to Jim Pound. 8:45:24 AM JIM POUND, Staff, Representative Wes Keller, Alaska State Legislature, on behalf of Representative Keller, sponsor, responded to Representative Seaton's comment. He offered his understanding that 38 states initially would have to pass this resolution or a resolution with similar language and submit it to U.S. Congress, who would then call a constitutional convention, which would be limited to the language in the resolution. REPRESENTATIVE SEATON asked whether the convention could consider the topic in general or would have to adhere to the specific language in the resolutions from the states. MR. POUND said the convention would be limited to the language submitted. 8:46:35 AM VICE CHAIR KELLER directed attention to language on page 3, line 3, which states that a federal debt limit increase "requires approval from a majority of the legislatures of the separate states". 8:46:54 AM REPRESENTATIVE P. WILSON asked for clarification as to the meaning of "three fourths of the several states" within a segment of Article 5 of the U.S. Constitution, which read as follows: shall call a convention for proposing amendments, which, in either case, shall be valid to all intents and purposes, as part of this Constitution, when ratified by the legislatures of three fourths of the several states REPRESENTATIVE P. WILSON asked if the number 37 equals three- fourths [of the states]. MR. POUND offered his understanding that it is 38. In response to follow-up questions, he said at least four state legislatures are working on similar resolutions, and a couple passed similar resolutions last year. 8:48:28 AM MR. POUND, in response to Representative Petersen, said the ultimate goal of HJR 38 is to ensure that U.S. Congress would have to get authority from the state legislatures to increase the debt ceiling. 8:49:52 AM REPRESENTATIVE PETERSEN pointed out that since not all state legislatures meet at the same time of year, it may be possible that some legislatures would have to be called back into session to vote on raising the debt limit. 8:50:33 AM MR. POUND indicated that the intent is that state legislatures would take care of the issue during their normal session times. VICE CHAIR KELLER said the purpose of the resolution is to make it more difficult for [U.S. Congress] to raise the national debt without representing the wishes of the people of the nation in that regard. He indicated that HJR 38 would put a process in place that is not as easy as the current one. 8:51:14 AM REPRESENTATIVE SEATON said he disagrees that the process to raise the national debt over the last year was an easy one. VICE CHAIR KELLER interjected that he meant easy by comparison. REPRESENTATIVE SEATON opined that the objective of HJR 38 is to say that [the Alaska State Legislature] does not trust those elected to Congress to be competent to "deal with the fiscal realities of the time." He said the debt limit has been raised two to three times in the last year, and he expressed concern that HJR 38 would put forward a situation requiring automatic default of the U.S. He stated that he does not see any contingency plan in the resolution to address an emergency situation. He said he agrees with the concept of constraining expenditures, but he indicated that there are also changes to the gross domestic product that effect revenues and, thus, the national debt. He expressed appreciation of the dialogue taking place, but said he foresees problems under HJR 38. Representative Seaton said he would like [the committee] to consider the cascading effect on Alaska and its bond rating if there was a default by the federal government "because we failed to increase the debt limit." He said he would like to hear feedback from the Permanent Fund Division and the Department of Revenue. 8:56:14 AM VICE CHAIR KELLER asked Representative Seaton if he was defining default as what would happen if the debt limit was not increased. REPRESENTATIVE SEATON said he believes the consequences of states saying no would probably be default, because "we wouldn't be paying on the bonds that we had issued." VICE CHAIR KELLER said he disagrees. He said he also disagrees with Representative Seaton's previous interpretation that HJR 38 implies that "we" have no trust in U.S. Congress. He stated that while HJR 38 is "built on what Congress has done or has failed to do" - the nation's debt is $16 trillion - its focus is an attempt to give representation to the people of America. 8:58:23 AM REPRESENTATIVE SEATON responded that the people directly elect their representation in Congress, so he would not want to say "we" are the only representatives of the federal budget. He continued as follows: I understand that we're not specifying Congress in here. Congress, of course, are ... the people we elect to go deal with that problem, and so, if we're needing to take that authority away from them, it seems to be the only logical conclusion that we don't think they're capable of making those considerations the way we want to make them. But I'd also like to say that ... as I see this, it would not be the people that are going to be making the decision, but it's the legislatures of the individual states. And so, it's the states that are being represented and not the people, because the direct lineup to the people is electing the Congress then to deal with that. 9:00:09 AM VICE CHAIR KELLER responded that that is his point exactly. He said HJR 38 would engage the power of the states in a decision that affects every citizen; it puts some weight on the sovereignty of states. 9:01:03 AM REPRESENTATIVE P. WILSON pointed out that [the language in the second "WHEREAS" clause, beginning on page 2, line 13] calls for a balanced budget. VICE CHAIR KELLER acknowledged that a mistake was made, and an amendment would be offered to delete that language from the joint resolution. 9:01:59 AM REPRESENTATIVE P. WILSON, regarding Vice Chair Keller's previous statement that a runaway constitutional convention is unlikely, offered her understanding that the very reason there has yet to be a constitutional convention is that many people are reluctant to risk the possibility of adversely affecting the best Constitution in the world. She offered an example of what she called "a feeding frenzy" of amendments made to oil and gas legislation once it reached the House floor in the Alaska State Legislature. 9:04:42 AM VICE CHAIR KELLER responded that he thinks Representative P. Wilson is envisioning that representatives from all the states would be together where they could change "this," but said he does not think that would be possible. He said, "If we pass this, and two-thirds of the states pass this, it's a very narrow channel that it goes down. And I just don't believe there's a scenario where it could be changed without convincing all two- thirds ..., and that would be a formidable task." 9:06:02 AM REPRESENTATIVE SEATON noted that a majority of the states have already passed equal rights amendments, and he said he thinks that issue could easily be put on the agenda if a constitutional convention was held. The states that had not already ratified an equal rights amendment would not be able to block the majority of the states that already have. VICE CHAIR KELLER said he will try to get a representative of the Goldwater Institute, an entity that has been working on this issue, to testify before the committee and talk about the consistency of wording. 9:07:48 AM MR. POUND directed attention to language on page 3, [lines 4-7], which read as follows: FURTHER RESOLVED that the amendments convention requested by this resolution be limited to the subject matter of proposing for ratification an amendment to the Constitution of the United States providing that an increase in the federal debt requires approval from a majority of the legislatures of the separate states; and be it MR. POUND said, "This is a single-subject constitutional convention." 9:08:36 AM MR. POUND, in response to Representative P. Wilson, said this resolution has come from the Goldwater Institute, and it will be discussed by other legislatures. He said, "What we approve here has to be approved in 37 other states with the exact same language." VICE CHAIR KELLER, in response to Representative P. Wilson, offered an explanation as to why the aforementioned mistake was in the joint resolution. He emphasized that the most important part of the joint resolution contains the "BE IT RESOLVED" language.  MR. POUND added to the explanation. REPRESENTATIVE P. WILSON asked if each state would craft its own "WHEREAS" clauses, but the language following "BE IT RESOLVED" would be the same. VICE CHAIR KELLER stated his preference is to have "the expert" answer that question at the next hearing. 9:11:29 AM REPRESENTATIVE P. WILSON directed attention to language on page 3, lines 12-13, which read as follows: FURTHER RESOLVED that the Alaska State Legislature urges the legislatures of the other 49 states to make the same application. REPRESENTATIVE P. WILSON ventured the language should be changed to accurately reflect that some states have already adopted similar resolutions. MR. POUND characterized the number as a moving target. 9:12:26 AM REPRESENTATIVE PETERSEN ventured that if U.S. Congress was backed into a corner, it might have to raise taxes extremely high in order to avoid going over the debt limit, which would throw the country into further recession. 9:13:29 AM MR. POUND suggested that the other option is that [U.S. Congress] might cut the budget spending. VICE CHAIR KELLER said he cannot imagine "raising taxes to make us prosperous." REPRESENTATIVE PETERSEN said he offered that example to show that unintended consequences could happen. 9:14:05 AM SHEILA FINKENBINDER, Juneau, Alaska, testifying on behalf of herself, said she agrees with the premise of the proposed joint resolution that the federal government should be asked to deal with the budget; however, she said she disagrees with calling for a constitutional convention. She quoted a representative of the National Conference of State Legislatures as having said, "The U.S. Constitution does not - and Congress has not - established a process by which a constitutional convention [is called] upon 'the application of the legislatures of two-thirds of the federal states'." Ms. Finkenbinder said that as a result, a number of legal issues arise, which center around these points: The identicalness of the petitions; the scope and limitations of a constitutional convention ...; the validity of any recisions of petitions by state legislatures ...; the contemporaneousness of the petitions ...; and the proper enactment and submission of the petitions by state legislature. MS. FINKENBINDER said that in her research, she found just as many studies showing the risk in calling for a constitutional convention as those supporting doing so. She directed attention to language of the first "FURTHER RESOLVED", beginning on page 2, line 30, through page 3, line 3, and asked the committee to consider changing the language to urge Congress "to create an amendment to the constitution of the United States that provides that an increase in the federal debt limit require approval from a majority of the legislatures of the separate states". She said that would still allow the states to have input and gives the message to Congress to recognize that Alaska is asking it to deal with the federal budget. 9:17:46 AM VICE CHAIR KELLER asked Ms. Finkenbinder to keep an open mind as she sees new information. He explained, "I started where you are, but I have become convinced." 9:18:38 AM REPRESENTATIVE SEATON offered an analogy wherein municipalities of the state would pass a resolution allowing the legislators of the state to take money out of the Capital Budget Reserve (CBR) to fund the state's budget. 9:20:25 AM VICE CHAIR KELLER said that is a good analogy, but municipalities don't have constitutions and don't claim to be sovereign. REPRESENTATIVE SEATON admitted that it was not a perfect analogy, but said it illustrates having someone not involved with the budget make decisions regarding it. [HJR 38 was held over.]