"Proposing amendments to the Constitution of the State of Alaska relating to the repeal of the budget reserve fund. "

In 1990, the Constitutional Budget Reserve was established to provide cash to fund state government during times when low oil prices caused revenues to fall short of expenditures. It was funded by proceeds of settlements of tax and royalty disputes with the oil companies. Most of these large disputes have been settled and little additional dedicated revenue is expected anytime in the future.

Theoretically, the CBR should grow in size because the account is to be repaid when revenues exceed expenditures. To date, this has not occurred. The cumulative draw has been over $5 billion.

By repealing this amendment, there is no longer a need for a three-quarter vote whenever additional funds are needed to balance our budget. Also, elimination of this amendment will help facilitate the development of a fiscal plan that will allow the legislature to balance a budget on a year-to-year basis with known anticipated revenues.

As written within the resolution, funds from the CBR would be placed into a capital construction permanent fund. Appropriations from the fund are to be made on a percent of market value method with no more than five per cent of the average of the fiscal year end market values of the fund for the first five of the preceding six years.

The state needs a long-term fiscal plan and the first step should be the repeal of the constitutional budget reserve fund amendment.

CS HJR 12 (W&M)

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