HJR 19-CONST. AM: APPROPRIATIONS FROM CBR  8:45:00 AM CHAIR LYNN announced that the next order of business was HOUSE JOINT RESOLUTION NO. 19, Proposing an amendment to the Constitution of the State of Alaska relating to the constitutional budget reserve fund. 8:45:13 AM REPRESENTATIVE LAURA REINBOLD, Alaska State Legislature, as prime sponsor, presented HJR 19. She paraphrased the sponsor statement, which read as follows [original punctuation provided]: House Joint Resolution 19 proposes to place a constitutional amendment before the voters during the fall 2016 general election. This bill amends Article IX, sec. 17(b), of the Alaska Constitution and would place an annual spending cap of ten percent of the current balance in the fund on the constitutional budget reserve. Currently, the constitutional budget reserve may provide the amount necessary (when added to other appropriation funds) to provide for total appropriations equal to the amount of appropriations made in the previous fiscal year. The result is this fund being depended upon to backfill Alaska's large budget deficits. Our current fiscal situation has been masked by a false sense of security cushioned by our savings accounts. At the end of this fiscal year the statutory budget reserve will be diminished. We must remember that as our oil revenues diminish, it is the men and women of this great state who will bear the cost of big government. This legislation will allow Alaskans to determine if they wish to place a cap on the constitutional budget reserve in order to save for future generations. I appreciate your consideration and urge your support of HJR 19. 8:47:44 AM REPRESENTATIVE KELLER noted that the sponsor had talked about a cap on the constitutional budget reserve (CBR) and he asked her to confirm that would be a cap on spending. REPRESENTATIVE REINBOLD answered that is correct; HJR 19 proposed an annual spending cap of ten percent. 8:47:59 AM CHAIR LYNN asked how many dollars that would be. REPRESENTATIVE REINBOLD offered her understanding that currently there was $14 billion in the CBR; therefore, the cap would allow the state to spend $1.4 billion. 8:48:22 AM REPRESENTATIVE KELLER asked what would happen if there was a catastrophe that required more state spending. REPRESENTATIVE REINBOLD answered that there are provisions in the [Constitution of the State of Alaska] that would allow the governor of Alaska to declare a state of emergency. CHAIR LYNN asked if "this would be null and void" if there was a state or national emergency declared. REPRESENTATIVE REINBOLD replied, "Invasions and things like that; it's ... outlined very carefully." 8:49:02 AM REPRESENTATIVE KREISS-TOMKINS observed that for each year the 10 percent was taken out to spend by the state, each following year the 10 percent amount would be diminished, without actually disappearing completely, but to a point at which the amount would be inconsequential. He asked if the bill sponsor had thought through that scenario or if he might be misunderstanding the intent of the proposed legislation. REPRESENTATIVE REINBOLD indicated there were clearly outlined requirements to redeposit money to the CBR. He said the intent of HJR 19 was to give the people of Alaska the opportunity to vote on whether or not they want a 10 percent cap. 8:50:34 AM REPRESENTATIVE TALERICO said he thought he understood the logic that if there were smaller balances in the CBR each subsequent year, then the state's finances really would not be "going so well," and there would be a need for the increments to diminish "in order to expand that out." He said he thought replacement of the fund was a key issue. He said, "I'm assuming there's a natural inclination to cut back as much as possible." 8:51:32 AM REPRESENTATIVE REINBOLD relayed that the language relating to deposits being directed back into the CBR was found on page 72, Section 29, of "the overview of the governor's request." 8:52:00 AM REPRESENTATIVE KELLER asked if the proposed legislation would reduce the power and responsibility of the legislature, which currently makes the choice about how much money to pull from the CBR. He opined that HJR 19 would restrict that power. REPRESENTATIVE REINBOLD responded that "the whole purpose of the constitution" was that "the power does belong to the people." The proposed legislation would give the people the opportunity to decide whether they want to cap the spending at 10 percent, because what the legislature spends does effect the people of the state. She said it would take a three-quarters majority to pass a constitutional budget amendment. CHAIR LYNN asked, "Could this be done by public initiative?" REPRESENTATIVE REINBOLD offered her understanding that anything that would change the constitution must be initiated by the legislature. 8:53:30 AM REPRESENTATIVE KELLER said he would like the committee to move the bill out of committee to be discussed next by the House Judiciary Standing Committee and House Finance Committee. 8:53:57 AM REPRESENTATIVE VAZQUEZ said the state's current deficit was currently between $3.5 and $3.6 billion. She asked what the practical consequences would be of having "a provision like this applied to the legislature." REPRESENTATIVE REINBOLD said the proposed legislation was about the financial future of the state and whether the people want a 10 percent cap. REPRESENTATIVE VAZQUEZ asked for confirmation that if HJR 19 passed out of the legislature, then it would be placed on the ballot. REPRESENTATIVE REINBOLD answered that is correct: it would be on the ballot in 2016. 8:55:16 AM CHAIR LYNN, after ascertaining there was no one else who wished to testify, closed public testimony on HJR 19. 8:55:26 AM REPRESENTATIVE KELLER moved to report HJR 19 out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, HJR 19 was reported out of the House State Affairs Standing Committee.