HOUSE FINANCE COMMITTEE JANUARY 28, 1995 12:05 P.M. TAPE HFC 95 - 11, Side 1, #000 - end. TAPE HFC 95 - 11, Side 2, #000 - #370. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 12:05 P.M. PRESENT Co-Chair Hanley Representative Kohring Co-Chair Foster Representative Martin Representative Mulder Representative Kelly Representative Brown Representative Parnell Representatives Grussendorf, Therriault and Navarre were not present for the work session. ALSO PRESENT Pat Pourchot, Legislative Director, Office of the Governor. SUMMARY WORK SESSION - HCR 1 HCR 1 Creating the Long Range Financial Planning Commission. CS HCR 1 (FIN) was HELD in Committee for further discussion. The legislation was placed into Subcommittee with Representative Parnell as Chair and with members Representatives Brown and Kohring. HOUSE CONCURRENT RESOLUTION 1 Creating the Long Range Financial Planning Commission. Co-Chair Hanley explained the concept of creating a special Long-Range Financial Planning Commission charged with proposing a plan to organize the state's finances. The concept was proposed during the last legislative session. He added, recognizing that State spending has consistently exceeded recurring revenue and that the State is faced with an unpredictable and declining revenue stream, several 1 thoughtful plans for dealing with the budget crisis were proposed to the last Legislature. Notable among these was the plan to change the process of managing the State's financial accounts. This plan was developed by Roger Cremo. The Cremo Plan was presented to the last legislature (HJR 48) and received extensive consideration by the House Judiciary Committee. Representative Brown pointed out that the legislation would provide a statewide opportunity to reach a consensus thus providing a workable plan. She recommended that the Commission review, debate and define options and at which time provide a preliminary report. She emphasized that a public process and effort should be used in collaberation with the Legislature to address the overall level of spending and reserves. Representative Brown recommended a structural change to Page 2, Section #3, delineating that as a separate section. She pointed out that a statutory change would be necessary to implement reductions. Co-Chair Hanley recommended the Committee work session begin by addressing the "WHEREAS" section of the legislation. Representative Parnell suggested a change to Page 1, Line 7, following "revenue", deleting "at" and adding the language "and reducing expenditures to". Co-Chair Hanley recommended a further change by deleting "at" and changing the language to "and expenditures at a". Committee members agreed with the recommended change. Representative Brown suggested adding a language change to Page 1, Line 8, following "uncertainty", adding "which is impeding economic growth". Following discussion among Committee members, Representative Brown recommended removing the language on Page 1, Line 8, "in order to remove doubt and uncertainty regarding expenditures; and". Representative Parnell discussed deleting all material following "WHEREAS", Page 1, Line 9 - 11, through "issues that"; thus beginning the sentence "the State system of budgeting and spending must be analyzed and reevaluated by the legislature; and". He felt that would provide a systemwide view as recommended by Roger Cremo. Committee members agreed with the proposed change. Representative Parnell suggested a change to Page 1, Line 14, following the language, "topics", deleting the word "and"; delete "on" and insert "and participate in drafting". Representative Brown recommended replacing the word "drafting" with "developing". Committee members agreed with 2 both changes. Representative Brown recommended a change to Page 1, Line 15, deleting the word "establish" and inserting "implement"; Line 16, deleting "organizes" and inserting "stabilizes". Representative Parnell recommended further moderation of "stabilize"; he proposed deleting all material on Line 16 following the word "plan;". Representative Brown requested inclusion to Page 1, Line 15, following "long-range", inserting "financial". Representative Brown recommended a change to Page 2, Line 2, deleting "goals" and adding the language, "mechanisms for implementing the plan". Representative Parnell suggested removing on Page 2, Line 2, "10-year" and then add to that language which explains the roll of the Commission and a definition of the length of the Commission's responsibilities. Co-Chair Hanley agreed that information should be contained in the "RESOLVED" information rather than in the "WHEREAS" section. PAT POURCHOT, LEGISLATIVE DIRECTOR, OFFICE OF THE GOVERNOR, agreed with comments made by the Committee members. He thought that specific actions to achieve goals should be the Commission's intent during the first three to five years. He noted that the first three to five years would be the most usable time frame to address the context of revenue expenditures and focus. Representative Parnell suggested a change to Page 2, Line 1, after the words "legislature" insert "and governor". Representative Brown advised deleting "10-year" and inserting "long range". Representative Brown provided new language to be inserted on Page 2, Line 1, deleting previous material on Page 2, Lines 1 - 3 and inserting, "BE IT RESOLVED that the Alaska State Legislature establishes the Long Range Financial Planning Commission in order to develop and recommend to the Governor and Legislature a long-range financial plan for the State that includes specific actions needed within the first three and five years to implement the plan;". Representative Kohring requested that a statement be included clarifying the need for stability by diversifying the economy. Co-Chair Hanley agreed that would be appropriate although should be contained in the "FURTHER RESOLVED" portion of the legislation. Representative Kohring offered to provide that language to the subcommittee. Representative Parnell provided the Committee with a handout 3 expanding the "FURTHER RESOLVED" portion of the legislation. [Attachment #1]. (Tape Change, HFC 95 - 11, Side 2). Co-Chair Hanley commented on the public make-up of the Commission. Representative Parnell acknowledged the issue in question is whether or not to have legislative and administrative members voting on the Commission as well as the public. He pointed out that the Commission needs support of the Legislative and Executive branch. He pointed out that in order to truly have a public commission, it would be necessary to exclude administrative members. Representative Parnell requested further discussion on the composition of the Commission. Discussion followed among Committee members regarding the size and political division among the public and non public participation of the Commission. Co-Chair Foster emphasized it would be important to choose the participants for the Commission geographically. Co-Chair Hanley agreed. Thoughts surfaced regarding the majority and minority party composition of the Commission. Co-Chair Hanley stated it would be more successful if the established goals were determined as part of an extensive debate. Mr. Pourchot applauded the concept of a non-voting test to achieve the balance of the Commission without providing a vote position. Co-Chair Hanley summarized the responsibilities of future discussion: 1. The make-up of the Commission. 2. Responsibilities of the Commission. 3. When the work of the Commission should be completed. He added, the goals and guidelines for the future movement of the plan should be a priority of the House Finance Committee. Members agreed on the need for a special session in order to finalize the resolves of the Commission. Co- Chair Hanley specified Subcommittee members consisting of Chair, Representative Parnell and members Representative Brown and Representative Kohring. CS HCR 1 (FIN) was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 1:05 P.M.