HOUSE FINANCE COMMITTEE January 12, 1994 1:35 P.M. TAPE HFC 94 - 1, Side 1, #000 - end. TAPE HFC 94 - 1, Side 1, #000 - #589. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 1:35 P.M. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Foster ALSO PRESENT Representative Jerry Sanders; Representative Bettye Davis; Representative Pat Carney; Representative Brian Porter; Representative Cynthia Toohey; Representative Fran Ulmer; James L. Baldwin, Assistant Attorney General, Department of Law; John Bitney, Legislative Aid to Representative Larson; Joe Thomas, State Accountant, Division of Finance, Department of Administration. SUMMARY GENERAL DISCUSSION - STATE FINANCES HB 58 An Act relating to the budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska. HB 58 was placed into Subcommittee with Representative Hanley as Chair and with members Representative Brown and Representative Larson. GENERAL DISCUSSION Co-Chair Larson provided the Committee with an overview of procedures to be used for Committee meetings and for Subcommittee meetings. (Copy on file). Co-Chair Larson encouraged discussion regarding budget 1 subcommittee closeouts. He asked if they should be . presented before the full House Finance Committee or restricted to subcommittee hearings only. Following the discussion, it was agreed by members to invite individual department commissioners to provide the full House Finance Committee with a brief overview of the changes each department would be required to make to accommodate revenue reductions. HOUSE BILL 58 "An Act relating to the budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska." Co-Chair Larson referenced the two HB 58 work drafts included in Committee members packets provided by the House Judiciary Committee and the House Finance Committee. JAMES L. BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, referenced work draft #8-LS0188\K, CS HB 58 (FIN) commenting that the purpose of that draft would be to address issues needing clarification regarding the Budget Reserve Fund. The amendment establishing the fund explains the specific terms available while the work draft defines the source of money going into that fund. Mr. Baldwin pointed out, currently, there are disputes regarding the provisions and definitions of the appropriations. He suggested establishing a statute to define the terms of the legislation as a way to address the interpretive concerns. Co-Chair Larson MOVED to adopte work draft CS HB 58 (FIN), for purposes of discussion. She asked the differences between the proposed work draft and CS HB 58 (JUD). JOHN BITNEY, STAFF TO REPRESENTATIVE LARSON, explained that the work draft changes pertain only to Page 2, Lines 10-29, and deal with appropriation language. Representative Brown felt that CS HB 58 (JUD) language would address the intent of the Committee more precisely. JOE THOMAS, STATE ACCOUNTANT, DIVISION OF FINANCE, DEPARTMENT OF ADMINISTRATION, explained the classifications of the fixed tax accounts which are a standard body for accounting principles used in government. Representative Brown asked if federal funds would be excluded in the proposed language. Mr. Baldwin assured the Committee that the proposed language would not exclude federal funds. Representative Navarre stressed concern over possible 2 litigation and abuse with the current language. Mr. Baldwin reiterated that access to the funds would not be restricted. He felt the public had not been adequately advised of possible consequences resulting from the amendment. (Tape Change, HFC 94-1, Side 2). Committee members proceeded to discuss versions of spending limit language within the Budget Reserve. All House Finance Committee members agreed the language should be written more clearly, defining what is precisely available. Mr. Baldwin felt caution should be used in not making the language too specific as proposed in the House Judiciary Committee version. Representative Parnell recommended limiting the interpretive language to a specified time frame. Discussion followed regarding the gap between the terms for "administrative proceedings" and "amount available for appropriation". Mr. Baldwin explained that HB 58 provides evidence of the interpretive meaning of the Constitution and that it would carry weight in a court since it would provide direction by the Legislature. Co-Chair Larson placed HB 58 into a Subcommittee for further review with Representative Hanley as Chair and with members Representative Brown and Representative Larson. Co-Chair Larson MOVED TO WITHDRAW the MOTION that CS HB 58 (FIN) by the version before the Committee. There being NO OBJECTION, it was so ordered. Representative Brown asked if the Permanent Fund Earnings Reserve Account would be available for appropriation. Mr. Baldwin explained that the statute which establishes the Permanent Fund Earnings Reserve Account in the Permanent Fund is a "sinking fund" for the purpose of inflation proofing and paying the dividend. He emphasized that fund would not be available. Representative Martin added, that there currently is a legal opinion from Legal Services supporting the fact that the account is not a part of the General Fund. HB 58 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 2:55 P.M. 3 HOUSE FINANCE COMMITTEE January 12, 1994 1:35 P.M. TAPE HFC 94 - 1, Side 1, #000 - end. TAPE HFC 94 - 1, Side 1, #000 - #589. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 1:35 P.M. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Foster ALSO PRESENT Representative Jerry Sanders; Representative Bettye Davis; Representative Pat Carney; Representative Brian Porter; Representative Cynthia Toohey; Representative Fran Ulmer; James L. Baldwin, Assistant Attorney General, Department of Law; John Bitney, Legislative Aid to Representative Larson; Joe Thomas, State Accountant, Division of Finance, Department of Administration. SUMMARY GENERAL DISCUSSION - STATE FINANCES HB 58 An Act relating to the budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska. HB 58 was placed into Subcommittee with Representative Hanley as Chair and with members Representative Brown and Representative Larson. GENERAL DISCUSSION Co-Chair Larson provided the Committee with an overview of procedures to be used for Committee meetings and for Subcommittee meetings. (Copy on file). 4 Co-Chair Larson encouraged discussion regarding budget subcommittee closeouts. He asked if they should be . presented before the full House Finance Committee or restricted to subcommittee hearings only. Following the discussion, it was agreed by members to invite individual department commissioners to provide the full House Finance Committee with a brief overview of the changes each department would be required to make to accommodate revenue reductions. HOUSE BILL 58 "An Act relating to the budget reserve fund established under art. IX, sec. 17, Constitution of the State of Alaska." Co-Chair Larson referenced the two HB 58 work drafts included in Committee members packets provided by the House Judiciary Committee and the House Finance Committee. JAMES L. BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, referenced work draft #8-LS0188\K, CS HB 58 (FIN) commenting that the purpose of that draft would be to address issues needing clarification regarding the Budget Reserve Fund. The amendment establishing the fund explains the specific terms available while the work draft defines the source of money going into that fund. Mr. Baldwin pointed out, currently, there are disputes regarding the provisions and definitions of the appropriations. He suggested establishing a statute to define the terms of the legislation as a way to address the interpretive concerns. Co-Chair Larson MOVED to adopte work draft CS HB 58 (FIN), for purposes of discussion. She asked the differences between the proposed work draft and CS HB 58 (JUD). JOHN BITNEY, STAFF TO REPRESENTATIVE LARSON, explained that the work draft changes pertain only to Page 2, Lines 10-29, and deal with appropriation language. Representative Brown felt that CS HB 58 (JUD) language would address the intent of the Committee more precisely. JOE THOMAS, STATE ACCOUNTANT, DIVISION OF FINANCE, DEPARTMENT OF ADMINISTRATION, explained the classifications of the fixed tax accounts which are a standard body for accounting principles used in government. Representative Brown asked if federal funds would be excluded in the proposed language. Mr. Baldwin assured the Committee that the proposed language would not exclude federal funds. 5 Representative Navarre stressed concern over possible litigation and abuse with the current language. Mr. Baldwin reiterated that access to the funds would not be restricted. He felt the public had not been adequately advised of possible consequences resulting from the amendment. (Tape Change, HFC 94-1, Side 2). Committee members proceeded to discuss versions of spending limit language within the Budget Reserve. All House Finance Committee members agreed the language should be written more clearly, defining what is precisely available. Mr. Baldwin felt caution should be used in not making the language too specific as proposed in the House Judiciary Committee version. Representative Parnell recommended limiting the interpretive language to a specified time frame. Discussion followed regarding the gap between the terms for "administrative proceedings" and "amount available for appropriation". Mr. Baldwin explained that HB 58 provides evidence of the interpretive meaning of the Constitution and that it would carry weight in a court since it would provide direction by the Legislature. Co-Chair Larson placed HB 58 into a Subcommittee for further review with Representative Hanley as Chair and with members Representative Brown and Representative Larson. Co-Chair Larson MOVED TO WITHDRAW the MOTION that CS HB 58 (FIN) by the version before the Committee. There being NO OBJECTION, it was so ordered. Representative Brown asked if the Permanent Fund Earnings Reserve Account would be available for appropriation. Mr. Baldwin explained that the statute which establishes the Permanent Fund Earnings Reserve Account in the Permanent Fund is a "sinking fund" for the purpose of inflation proofing and paying the dividend. He emphasized that fund would not be available. Representative Martin added, that there currently is a legal opinion from Legal Services supporting the fact that the account is not a part of the General Fund. HB 58 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 2:55 P.M. 6 7