Legislature(2003 - 2004)

05/02/2003 07:13 AM House W&M

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HJR 26-CONST. AM: PF APPROPS/INFLATION-PROOFING                                                                               
Number 3153                                                                                                                     
CO-CHAIR  WHITAKER announced  that  the final  order of  business                                                               
would be HOUSE  JOINT RESOLUTION NO. 26,  Proposing amendments to                                                               
the Constitution of the State  of Alaska relating to and limiting                                                               
appropriations from  and inflation-proofing the  Alaska permanent                                                               
fund by  establishing a percent  of market value  spending limit.                                                               
He  noted that  CS for  HJR  26, 23-LS1006\I,  Cook, 4/29/03,  is                                                               
before committee.                                                                                                               
The committee took an at-ease from 8:15 to 8:17 a.m.                                                                            
[Due to  technical difficulties the  log numbers from  this point                                                               
through  the  end  of  the minutes  are  ascending,  rather  than                                                               
Number 3151                                                                                                                     
CO-CHAIR HAWKER  moved Amendment 1 to  CS for HJR 26,  Version I,                                                               
which reads as follows:                                                                                                         
     On page 1, line 3                                                                                                          
     delete the word "ensure"                                                                                               
     insert the word "assure"                                                                                               
     On page 1, line 4                                                                                                          
     delete "is preserved"                                                                                                  
     insert "will be preserved over the long term"                                                                          
     On page 2, line 3                                                                                                          
     after the words "will be preserved"                                                                                        
     insert "over the long term"                                                                                            
CO-CHAIR WHITAKER objected for purposes of discussion.                                                                          
CO-CHAIR HAWKER said that there  have been lengthy discussions in                                                               
earlier meetings  on prefacing language.   He commented  that the                                                               
original version of the resolution  had predicate language and it                                                               
now has  a prefacing clause.   As a result of  those discussions,                                                               
this  amendment  was  drafted in  coordination  with  the  Alaska                                                               
Permanent  Fund   Board  and   Legislative  Legal   and  Research                                                               
Number 3319                                                                                                                     
CO-CHAIR  HAWKER  explained that  the  changes  from "ensure"  to                                                               
"assure"  revolve   around  a  legal  subtlety   that  is  better                                                               
explained  by  an  attorney.    He  told  the  members  that  the                                                               
amendment  restores   one  important  clause  in   the  prefacing                                                               
language clarifying that  this amendment is intended  to refer to                                                               
"over  time" as  over the  "long term".   He  explained that  the                                                               
words  "long term"  seemed to  be more  definitive language  than                                                               
"over time".  Co-Chair Hawker said  that the third change is just                                                               
additional  conforming   language  [on  the  same   issue].    He                                                               
recommended the committee  adopt this amendment since  it is most                                                               
closely akin to  that which was introduced by  the Permanent Fund                                                               
Corporation.    He  noted  that  HJR 26  will  go  to  the  House                                                               
Judiciary Standing  Committee where it may  be more appropriately                                                               
reviewed from a  legal prospective.  He commented  that the House                                                               
Special  Committee  on  Ways  and  Means  focus  is  a  bit  more                                                               
financial than judicial.  He  noted his confidence that the House                                                               
Judiciary  Standing Committee  will  give the  resolution a  more                                                               
appropriate hearing.  He summarized  his statement by saying that                                                               
he believes  the committee  is in agreement  as to  the financial                                                               
appropriateness,  correctness,  and  quality of  this  resolution                                                               
with the inclusion of Amendment [1].                                                                                            
Number 3507                                                                                                                     
REPRESENTATIVE  GRUENBERG   stated  that  he   strongly  supports                                                               
Amendment [1].                                                                                                                  
Number 3535                                                                                                                     
There being no objection, Amendment 1 was adopted.                                                                              
Number 3537                                                                                                                     
REPRESENTATIVE HEINZE moved  to report CSHJR 26,  as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal notes.                                                                                                      
REPRESENTATIVE KOHRING  objected.   He told  the members  that he                                                               
has concerns  about this legislation  and will be  voting against                                                               
it.   He said he can  see the writing on  the wall as far  as the                                                               
support for this  resolution and he said he  respects the members                                                               
of the committee.   He said that he also  respects the efforts to                                                               
address the fiscal  situation [of the state].   However, he views                                                               
this legislation as a creative way  for more money to be spent on                                                               
government    appropriations    from    the    permanent    fund.                                                               
Representative Kohring  said he is concerned  because he believes                                                               
the proposal before the legislature is  based on the value of the                                                               
fund, as  opposed to  the performance  of the fund.   He  said he                                                               
thinks it could  be a potential bonanza if the  value of the fund                                                               
were  to  go up  as  far  as what  could  be  made available  for                                                               
expenditures.   He said he does  not see a problem  that warrants                                                               
this  kind of  filter since  the legislature  has exercised  good                                                               
fiscal discipline with  years of effort in cutting  spending.  He                                                               
believes  the legislature  should go  a lot  further [in  cutting                                                               
spending]  particularly in  the areas  of making  government more                                                               
efficient  through mergers,  consolidations, and  other measures.                                                               
He also expressed  concern that these monies could  take away the                                                               
incentive  to  engage  in  serious  spending  reductions  in  the                                                               
future.   The  one  saving grace,  he commented,  is  that if  it                                                               
passes the  legislature it  will go before  the voters  and maybe                                                               
the voters  will see the  wisdom of turning  this [constitutional                                                               
amendment]  down.   Representative  Kohring stated  that he  will                                                               
campaign against the passage of this constitutional amendment.                                                                  
REPRESENTATIVE  KOHRING removed  his objection,  but restated  he                                                               
does not support the legislation.                                                                                               
Number 3745                                                                                                                     
REPRESENTATIVE HEINZE  stated for record  that she would  like to                                                               
clarify  the  main difference  between  this  resolution and  the                                                               
initiative, which was  defeated in 1999.  She  explained that she                                                               
sees this resolution  as a way to protect the  dividend, and that                                                               
is far from  [the purpose of the resolution] that  was before the                                                               
voters in 1999.                                                                                                                 
Number 3814                                                                                                                     
REPRESENTATIVE  GRUENBERG   stated  for   the  record   that  the                                                               
resolution that will  be passing out of the  committee deletes on                                                               
page 1, line 10,  the word "in".  He said that  he missed some of                                                               
the discussion on  the bill and asked for  clarification on this.                                                               
He also asked  for clarification on the language on  page 2, line                                                               
5, where it says  "the first five of", and asked  why is the last                                                               
year of  the preceding six  years being  eliminated.  Why  will a                                                               
five-year reference be used, instead  of a six-year average, once                                                               
Number 3923                                                                                                                     
BOB BARTHOLOMEW,  Chief Operating Officer, Alaska  Permanent Fund                                                               
Corporation,  explained that  the  line  to which  Representative                                                               
Gruenberg is  referring defines  which five-year-average  will be                                                               
used.  The objective of going  back and not using the most recent                                                               
fiscal year is to allow the  legislature and the governor to know                                                               
at  the  time  the  budget  is being  prepared  exactly  what  is                                                               
REPRESENTATIVE  GRUENBERG responded  that  answers his  question.                                                               
He stated he has no objection to moving the resolution.                                                                         
CO-CHAIR  WHITAKER objected  for the  purposes of  continuing the                                                               
discussion of the resolution.                                                                                                   
Number 4013                                                                                                                     
CO-CHAIR  HAWKER acknowledged  Representative Kohring's  personal                                                               
position against  the bill, his statesmanship,  and true courage.                                                               
He said  he appreciates  his willingness to  move a  bill forward                                                               
that  he does  not support,  knowing that  it will  ultimately be                                                               
placed before the  people of Alaska for a concurrence  vote.  Co-                                                               
Chair Hawker said that he hopes  all the members of the body will                                                               
take a lead  from Representative Kohring in  his demonstration of                                                               
true statesmanship in  this matter.  Co-Chair  Hawker removed his                                                               
Number 4103                                                                                                                     
REPRESENTATIVE WILSON  commented for  the record  that this  is a                                                               
step  to protect  the permanent  fund dividend  and will  help to                                                               
assure continuity and stability in  the dividend that will not be                                                               
there otherwise.                                                                                                                
REPRESENTATIVE HOLM pointed  out that percent of  market value is                                                               
not a very well understood term.   He said he believes it is very                                                               
important that  it is made  clear what it  does and does  not do,                                                               
and how volatile it is.                                                                                                         
With no  further objections, CSHJR  26, as amended,  was reported                                                               
out of the House Special Committee on Ways and Means.                                                                           

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