SJR 28-CONST AM: APPROPRIATION LIMIT SENATOR DONLEY stated that in article 9, section 16, of the constitution, an appropriation limit, that applies to the operation of government, has never worked because the initial dollar amount was high--$2.5 billion in 1981. The constitution also includes a provision for an escalator clause to raise the limit based on population and inflation. That calculation would equal a limit in excess of $6 billion today. There are several reasons for changing the existing appropriation limit. First, the lay person cannot understand the reading in the constitution. Second, it has never worked, and third, it would be a useful tool in reducing or restraining state spending. SJR 28 proposes to change and simplify the existing appropriation limit so it would be more effective and could be understood by the average person. CHAIRMAN TAYLOR expressed concern about what would be an appropriate number to allow for emergencies, expansions, the population base, etc. SENATOR TORGERSON acknowledged he would recommend a do pass, but the proposal must hold restraints on spending. Number 1080 SENATOR DONLEY stated there were hearings last summer in an attempt to establish a spreadsheet, so the problem could be better identified. One proposed change added a section that mandatorily brings the matter up for consideration in the year 2010. If the voters do not re-approve the resolution in 2010, the matter will go away. This would be an automatic "sunset" vote. SENATOR TORGERSON commented that "sunsets" are not put into the constitution, they are done through temporary law. SENATOR DONLEY agreed. Number 1315 SENATOR DONLEY stated if the legislature appropriated more money than was allowed or there was a miscalculation, clear guidelines are provided for the Governor to correct the problem. It would be the duty of the Governor to reduce expenditures of each state department, equally, to meet the limit. CHAIRMAN TAYLOR asked if there is a limit on the Governor's authority to spend. SENATOR TORGERSON said it sounds like SJR 28 changes authority from the legislative branch to the administrative branch. He questioned whether the Governor should call a special session for the legislature to handle the budget--the constitution does not give the Governor the right to manipulate the budget. CHAIRMAN TAYLOR commented that different governors have handled this situation differently and the issue should be clarified in the constitution. SENATOR DONLEY said the status of the Alaska railroad was also a concern. He asked whether the railroad is within or outside the appropriation limit. Committee members felt that language for the railroad and other trusts needed to be clarified. CHAIRMAN TAYLOR asked if the deletion of the trust language impacts fish and game and tobacco revenues. SENATOR DONLEY responded that legislative finance has done an analysis on which funds were affected and the total amounts. CHAIRMAN TAYLOR asked for the analysis. SENATOR DONLEY stated that the totals in the original bill are affected by the definition of general fund. With the language of the CS, the general fund expenditure for last year was a little over $2.9 billion. He suggested the following solutions: expand the dollar amount, change the year or limit the growth calculation. Number 1776 CHAIRMAN TAYLOR expressed concern that if a spending limitation was forced on state government, the only way to maintain that limitation would be to shift costs and services to communities that could afford them. If the spending limitation was too arbitrary, there would be no effect, or too much of an effect. SENATOR DONLEY asked for some guidance from the committee in crafting the committee substitute. One problem of using a new base number is that the public will perceive a dollar amount increase so updating the base year to 2001 may be preferable. CHAIRMAN TAYLOR stated he was not comfortable in giving a recommendation at this time, but the consensus was that a special session may be needed. The bill meets the judicial purview by adhering to legal requirements and Chairman Taylor would defer to the Finance Committee because the specific wording would depend on the numbers coming from that committee. SENATOR DONLEY moved SJR 28 from committee with individual recommendations. Without objection, the bill moved from committee.