JUD - 3/28/94 SENATOR TAYLOR brought SJR 8 (CAPITAL PROJECTS/EXPENDITURE LIMIT) before the committee as the next order of business. SENATOR RANDY PHILLIPS explained the legislation is basically a spending limit plan. It sets the limit at $2.3 billion from FY 95 through the year 2000. The only exceptions to the spending limit would be the appropriations to the permanent fund, permanent fund dividends, budget reserves, revenues from taxes approved by voters, bond proceeds, principal and interest on bonds issued by the state, money received in trust for a specific purpose, endowment earnings, and reserves from public corporations. The limit cannot be exceeded unless there is two-thirds affirmative vote of both the House and the Senate. If inflation exceeds 6 percent, the Legislature may appropriate an amount to offset the effect of inflation that exceeds 6 percent. Any revenues in excess of the expenditure limit will be deposited in the constitutional budget reserve account. It also requires that at least 10 percent of all money appropriated for each fiscal year be appropriated for capital projects and loans. Number 360 SENATOR TAYLOR asked if this would have an effect on the last three years' budget cycles. SENATOR PHILLIPS answered it would have an effect on both last year and this year. SENATOR TAYLOR asked if it was realistic to try to obtain a spending limitation at this level. SENATOR PHILLIPS acknowledged it was, because in the future, the state will be at that point whether this is in place or not. SENATOR TAYLOR responded that wasn't necessarily true, because the Legislature could start spending money out of different accounts that are still readily available for appropriation. Number 390 SENATOR LITTLE, referring to the inflation factor, asked if this legislation takes into account that fact that everything will cost more. SENATOR PHILLIPS answered that right now inflation is about at 3 percent and this allows for an upper cap of 6 percent. If it goes over that, the Legislature may appropriate an amount to offset the effect of inflation that exceeds 6 percent. SENATOR TAYLOR pointed out that if the inflation rate were at 5 percent, his formula would not allow for any adjustment to take that 5 percent into consideration. SENATOR LITTLE said she had some real concerns with school districts and everybody else in the state having to eat the cost of inflation without severely damaging programs. SENATOR PHILLIPS stated he would not have a problem with amending that language. Number 420 SENATOR DONLEY made a motion that on page 1, line 7, to change the money appropriated for capital projects and loans from 10 percent to 5 percent. SENATOR JACKO objected, stating that capital projects are more important in some parts of the state than others, and making it less is not reflective of that. The roll was taken with the following result: Senator Donley voted "Yea" and Senators Taylor, Halford, Jacko and Little voted "Nay." The Chairman stated the motion failed. Number 480 After further discussion on the inflation factor, SENATOR TAYLOR moved that page 2, lines 14 and 15, replace "6" with "3." Hearing no objection, the amendment was adopted. SENATOR DONLEY asked where the state's share of local school construction projects fits in. SENATOR PHILLIPS answered that it isn't in here, it is part of the operating budget, and he wouldn't be opposed to adding that to the 10 percent capital projects budget. Number 520 SENATOR JACKO asked what percentage was appropriated last year for capital projects. SENATOR PHILLIPS estimated it was close to 25 percent. SENATOR JACKO moved that on page 1, line 7, change "10 percent" to "25 percent." SENATOR LITTLE objected. The roll was taken with the following result: Senator Jacko voted "Yea" and Senators Taylor, Halford, Donley and Little voted "Nay." The amendment failed. Number 545 SENATOR TAYLOR moved that on page 1, line 12, and on page 2, line 9, change "1995" to "1996" and change "2000" to "2001" and on page 2, line 25, change "2000" to "2001." Hearing no objection, the amendment was adopted. SENATOR DONLEY asked what the interplay was between this amendment and the existing Article IX, Section 16, and why not just eliminate it. SENATOR PHILLIPS suggested a repealer could be put in saying that if this is approved that section could be repealed. SENATOR DONLEY commented he thought it is more preferable to put this on the books and just get rid of Section 16, which is the old spending limitation. TAPE 94-26, SIDE B Number 015 SENATOR DONLEY moved a conceptual amendment that the resolution would repeal Article IX, Section 16 of the Constitution of the State of Alaska. SENATOR HALFORD amended the conceptual amendment that the resolution should be redrafted so that it becomes a replacement for the existing Article 18, Section 16. Hearing no objection, the conceptual amendment was adopted. Number 040 SENATOR TAYLOR stated that after a committee substitute incorporating the amendments was drafted, SJR 8 would be back before the committee for final action.