HJR 18 - DEDICATED FUNDS: RATE MAY BE CHANGED Number 0980 CHAIRMAN BUNDE introduced the next item on the agenda, HJR 18, Proposing an amendment to the Constitution of the State of Alaska relating to changing the rate of a tax or license that supports a dedication of its proceeds. He indicated that CSHJR 18(STA) was before the committee. Number 0990 REPRESENTATIVE IVAN IVAN deferred any questions to Mr. Wright. Number 0992 TOM WRIGHT, Legislative Assistant to Representative Ivan, said he received information from Brad Pierce, Office of Management and Budget, which outlined seven different dedicated funds that are in existence right now. He referred to a memo outlining those funds, the fiscal year balance and the funding source. In response to Representative Porter's question, he had a discussion with Jim Baldwin and looked back at the record in the House State Affairs Committee. He said Mr. Baldwin stated that the attorney general's office is still using the 1959 opinion as a basis. However, in the House State Affairs Committee, Mr. Chenoweth did say, a good faith legal argument could be made, that raising the rate for a specific tax or proceed does not constitute a violation of the dedicated fund. He said, upon further discussion with Mr.Chenoweth, this statement was reiterated. Number 1059 CHAIRMAN BUNDE said there is not a current attorney general's opinion on this matter. He noted that the next committee of referral is the House Judiciary Standing Committee and indicated that this question could be addressed there and in fact encouraged it to be addressed there. Number 1086 REPRESENTATIVE J. ALLEN KEMPLEN said he was curious that there is no limit on the amount of money that could be placed in a dedicated fund. He understood that the intent of the drafters of the Alaska State Constitution was that they wanted to retain maximum flexibility to the people and their representatives for the dispersement of public monies and were hesitant about seeing a lot of money earmarked for special accounts. This bill seems to allow for any amount of money to be placed into these dedicated funds and appears to run counter to the intent of the people who set up the Alaska State Constitution. Number 1156 MR. WRIGHT said the attorney general in 1959 had this reasoning as the basis of his opinion, that the tax or proceeds could not be raised, they had to stay the same. He said, the Chenoweth opinion dated April 26, 1996 as well as some of the discussion that took place during the constitutional convention part of the record, it seemed to be a point that they didn't want to bind future legislatures to keeping the same rate in effect, that there might be some changes in the future. He said CSHJR 18(STA) does not address the maximum amount portion. Number 1204 CHAIRMAN BUNDE clarified that CSHJR 18(STA) talks about changing the rate and asked if, in regards to the existing funds, there was no prohibition as far as a maximum amount was concerned, if there was just a rate at which money could accrue in these funds. Number 1217 MR. WRIGHT said he couldn't clearly answer those questions. He could look back at some of the conversations as well as the effort to raise the rate on the highway fund. He said it was decided that they couldn't raise the rate based on this 1959 opinion. By not funding that particular dedicated fund, it nullified the fund. Number 1250 CHAIRMAN BUNDE clarified that the fish and game fund is one of the dedicated funds and it doesn't top out somewhere. He thought the question was if there was a maximum amount that can be put into a dedicated fund. He asked if the question regarded the rate and not the total fund. REPRESENTATIVE KEMPLEN said he was interested in the maximum amount and asked if there was a maximum limit. Number 1275 CHAIRMAN BUNDE said there is not a maximum limit that exists constitutionally. Number 1283 REPRESENTATIVE PORTER said, regarding the constitution prohibiting dedicated funds, the drafters of the constitution recognized this fund as an exception to the general rule about dedication to funds. He said Mr. Chenoweth's opinion cited conversations during the construction of the constitution and added that it is amazing that some attorney general in past years didn't think the rate could be increased. His understanding, of attorney general's opinions, is that without subsequent statutory clarification they are the law until a statute or a revision of the constitution addresses the same issue and contradicts it. Number 1331 REPRESENTATIVE AL VEZEY said an attorney general's opinion falls under the category of case law and the longer case law stands, without being overturned, the more precedent setting it becomes. To overturn the 1959 opinion, at this time, would be equivalent to the Supreme Court overturning a previous Supreme Court ruling. It can be done, but it shows disrespect for precedence. Number 1359 CHAIRMAN BUNDE said CSHJR 18(STA) does not impinge on an attorney general's opinion being overturned or not, this bill would allow changes to the rate that money is put into a dedicated fund. Number 1395 REPRESENTATIVE JOE GREEN said he is co-sponsor of CSHJR 18(STA). CHAIRMAN BUNDE noted it for the record. Number 1409 REPRESENTATIVE GREEN made a motion to move CSHJR 18(STA) out of committee with individual recommendations and the attached fiscal note of $3,000 in the out year. Number 1423 REPRESENTATIVE VEZEY objected to the motion. Number 1440 A roll call vote was taken on CSHJR 18(STA). Representatives Porter, Dyson, Green and Bunde voted yea. Representatives Vezey and Kemplen voted nay. Representative Brice was absent for the vote. CHAIRMAN BUNDE said that CSHJR 18(STA) was moved from the House Health, Education and Social Services Committee.