HCR 1 - LONG RANGE FINANCIAL PLANNING COMMISSION Discussion was had with Senator Pearce, Representative Phillips, Pat Pourchot, and Pam Neal. An amendment suggested by the administration was moved by Senator Donley but failed on a vote of 5 to 2. SCS CSHCR 1 (STA) was REPORTED OUT of committee with a $51.3 fiscal note from the Legislative Affairs Agency. CS FOR HOUSE CONCURRENT RESOLUTION NO. 1(FIN) Creating the Long Range Financial Planning Commission. SENATE PRESIDENT DRUE PEARCE came before committee and directed attention to SCS CSHCR 1 (STA). She referenced a recommendation from Commonwealth North for a statewide effort involving Alaskan citizens in long-range financial planning. She further stressed need for a "soft landing" as Prudhoe Bay revenues fall and the state faces "huge budget deficits over the next ten years." The resolution would create a balanced, statewide commission. Pages 2 (lines 25-29) and 3 (through line 24) present specific areas of commission review. The Senate State Affairs' version calls for nine public members: 1. Three chosen by the Speaker of the House 2. Three chosen by the Senate President 3. Three chosen by the Governor The House-passed version required unanimous consent by the Governor, Speaker, and Senate President for all nine members. Concern arose that that type of consensus would involve a difficult and lengthy selection process and not provide the needed wide range of diversification. Senate State Affairs added a provision requiring that legislative appointments by both the House and Senate consist of one member of the majority and one member of the minority. Senator Pearce acknowledged that work to be undertaken by the commission should be done by the legislature. She then added that a long-range plan could probably not be developed without participation by the public. The resolution would allow the legislature to work with the public on development of new ideas for future budgeting. Senator Pearce spoke to constituent concern that the state does not presently have a budgetary plan. She referenced the Cremo Plan and the "safe landing plan" proposed by ISER. There has been no opportunity for review and discussion of these plans by the public. The resolution passed the House on a vote of 37 to 1. Senator Pearce noted support by the Alaska Municipal League, Alaska State Chamber of Commerce, Common Sense for Alaska, the National Federation of Independent Businesses, Resource Development Council, etc. Senator Zharoff referenced fiscal note information indicating that public members would be selected from Fairbanks, Anchorage, and Southeast. Senator Pearce explained that since there is no way to anticipate where public members might come from, a regional diversity was simply set forth by Legislative Affairs. She said she expected rural members would participate and advised that the fiscal note could be revised to show membership from the four judicial districts, if that would provide a greater level of comfort. Senator Zharoff stressed need for participation by people from rural Alaska. Discussion followed regarding identification of anticipated fiscal gaps and recurring revenue and expenditures. Senator Pearce spoke to projections by the administration, Legislative Finance Division, the Oil and Gas Division with the Dept. of Revenue, etc. REPRESENTATIVE GAIL PHILLIPS, sponsor, came before committee. In response to a question from Senator Zharoff, she spoke to need for involvement of more public than legislative members. A total of nine was selected to "keep the committee from getting too big." Senator Zharoff asked how the public members would be selected. Representative Phillips referenced lists of people who have been involved in state financial planning for some time as well as experts and volunteers. Senator Halford expressed his hope that membership would not be weighted toward direct or significant indirect beneficiaries of state spending. More general beneficiaries should be well represented. Senator Rieger voiced support for the resolution, saying that it would create a mechanism for protecting state reserves such as the earnings of the permanent fund, AHFC, AIDEA, etc. PAT POURCHOT, Legislative Director, Office of the Governor, next came before committee. He voiced support for the idea of a long-range fiscal planning commission, but noted disagreement regarding composition of the members. All members must have equal involvement in the process to ensure both the function and credibility of the commission. The Governor's position is that commission members should work toward consensus and avoid vote count situations. The proposed fifteen-member commission could lead to an eight to seven configuration. Mr. Pourchot proposed that the commission consist of a structure that does not include the typical tie-breaking vote. He noted that when the vote is eight to seven, the credibility of commission work is greatly weakened. He pointed to an even number of members on the PERS and TRS investment board and even representation of management and employee interests. In that situation, members are forced to work together to reach consensus. Mr. Pourchot suggested addition of another public member, appointed by the Governor, for a sixteen-member commission, including ten public members: four appointed by the Governor, three by the Senate, and three by the House. He cautioned that lessening the Governor's role in selection of commission members might force him into a "less proactive role in the ultimate recommendations of the commission." PAM NEAL, Alaska State Chamber of Commerce, next came before committee. She told the committee that the chamber represents approximately 700 businesses, employing 80,000 people. She voiced support for the resolution and said that reduction in state spending and long-range financial planning are the first priorities on the chamber's legislative agenda. The chamber is less concerned by composition of the commission than the requirement that it include: 1. Statewide representation. 2. Representatives of beneficiaries of state spending. 3. Representatives of providers of state revenue (the business community). Speaking to questions regarding need for the commission, Ms. Neal stressed that it would "help get this process rolling . . . get something on the table that everybody can look at." Referencing commission costs, Ms. Neal noted that planning is a necessary and beneficial process in the business community. It thus justifies the expense. The $51.3 fiscal note is a small price to pay for a solution to state deficits. Co-chairman Halford called for additional testimony on the resolution. None was forthcoming. Senator Donley MOVED for adoption of the amendment suggested by the administration: Page 2, Line 6: Change "nine members of the public" to "ten members of the public" Page 2, Line 8: Change "three" to "four" appointed by the Governor. Page 2, Lines 7 and 8: Include language specifying appointment of three public members, each, by both the Senate and House. End: SFC-95, #3, Side 1 Begin: SFC-95, #3, Side 2 Senator Rieger voiced support for the resolution without the proposed amendment. Senator Zharoff spoke in support of the change, stressing need for the sixteen-member commission to reach consensus. Co-chairman Halford called for a show of hands on the motion. The motion FAILED on a vote of 2 to 5. Senator Rieger MOVED that SCS CSHCR 1 (STA) pass from committee with individual recommendations. No objection having been raised, SCS CSHCR 1 (STA) was REPORTED OUT of committee with a $51.3 fiscal note from the Legislative Affairs Agency. Co-chairman Frank and Senators Rieger and Sharp signed the committee report with a "do pass" recommendation. Co-chairman Halford and Senators Donley and Zharoff signed "no recommendation." Senator Phillips signed "do not pass."