CSSB 56(STA): An Act relating to the budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska; and providing for an effective date. CSSB 56(FIN) work draft "A" was ADOPTED. Jerry Burnette, aide to Senator Phillips; James Baldwin, Assistant Attorney General, General Civil Section, Juneau, Department of Law; and Randy Welker, Legislative Auditor, Legislative Audit Division, spoke to SB 56. Discussion was had by Senators Rieger, Sharp, Co-chairs Frank and Pearce regarding a forth coming decision by the Supreme Court and its effect on SB 56. CSSB 56(FIN) was HELD in committee with SJR 52 in order that new language could be drafted for a Senate Finance Committee CS. CS FOR SENATE BILL NO. 56(STA): An Act relating to the budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska; and providing for an effective date. Co-chair Pearce announced that SB 56 was before the committee. She invited Jerry Burnette, aide to Senator Phillips, to join the members at the table. Co-chair Frank MOVED for adoption of CSSB 56(FIN) work draft "A". No objection being heard, it was ADOPTED. JERRY BURNETTE, aide to Senator Phillips, explained that this legislation said that the Constitution provided that when appropriations were made from the Constitutional Budget Reserve Fund, that the amount of money in the general fund available for appropriation at the end of each succeeding fiscal year be transferred to the Budget Reserve Fund, and that the legislature would implement this subsection by law. He went on to say that HB 58, which had already passed this legislature, contained a section implementing 17D. That provision provided that the undesignated, unreserved fund balance in the general fund be transferred to the Constitutional Budget Reserve Fund on December 16 of the preceding fiscal year. Mr. Burnette said that Judge Reese found HB 58 unconstitutional, giving the opinion that the limitation to the general fund unreserved, undesignated fund balance limited the scope of funds unconstitutionally. What SB 56 did was allow for the undesignated fund balance of the general fund and each of the separate accounts or sub-funds of the general fund to be transferred to the Constitutional Budget Reserve Fund. The Constitution provided the money in the general fund that was available for appropriation. He felt it was the best definition of money available for appropriation. He said that included a number of funds, including the Oil and Hazardous Substance Response Fund, and the Railbelt Intertie Reserve Fund. Co-chair Pearce invited Mr. Baldwin to join Jerry Burnette at the table. In answer to Senator Rieger regarding timing, Mr. Burnette said that December 16, 1995 would be the first time this transfer of funds would happen. Senator Rieger said that was the literal reading of the Constitution but may not have been the intent. In answer to Senator Sharp, Mr. Burnette said it referred to the Department of Administration because it kept the books for the state. Senator Sharp asked for a list of accounts and balances from the Department of Administration. Mr. Burnette referred that question to Randy Welker. In answer to Co-chair Frank, JAMES BALDWIN, Assistant Attorney General, General Civil Section, Juneau, Department of Law, said the funds had appropriated balances and were multi-year in nature. RANDY WELKER, Legislative Auditor, Legislative Audit Division, said the listing of funds basically was sub-funds to the general fund and varied in nature. He agreed with Mr. Baldwin in that the majority of those funds were established by appropriation, and labeled by the legislature for an intended future use. Some of them had regular activity while others were more dormant but had fund balances. Many were changing on a regular basis. Those with any significant balances were the Oil and Hazard Response Fund, Railbelt Energy Fund, the Intertie Reserve, the Storage Tank Assistance Fund, and the Marine Highways Fund, and may be subject to the payback provisions. Mr. Baldwin said that the equity remaining in the general fund group was close to $800M. Mr. Welker pointed out the various reservations and legal commitments on that money. "Unreserved and undesignated" would help define and determine the portion of those balances available. Discussion was had by Co-chair Frank, Senators Rieger, Sharp, and Mr. Welker regarding funds, the general fund, and their relationship. It was noted that the Science and Technology Fund had been designated as a legal endowment fund and would not be able to be swept. Mr. Baldwin said that the court seemed to realize how complicated it would be for the state if funds were swept. He said the decision had been moved on to the Supreme Court. In answer to Co-chair Frank, Mr. Baldwin said that it was his opinion that none of the general fund groups should be swept but that it should be only the year-end carry forward balance. In answer to Senator Rieger, Mr. Baldwin said there would be a repayment obligation for this year because an appropriation was made but there would be no sweep since there was no carry forward balance. Co-chair Pearce announced that SB 56 and SJR 52 be HELD in committee and a subcommittee would further study both bills. Senator Rieger said there was some philosophical difference between SB 56 and SJR 52 and he would like to see those differences resolved. Co-chair Pearce asked Mr. Baldwin to work with the committee in drafting new language.