Sponsor Statement for HB 435

An Act Relating to the Consumer Price Index

By Representative Norman Rokeberg

House Bill 435, An Act relating to the consumer price index, adopts one specific version of the consumer price index for use in the Alaska Statutes. That index is the U. S. City Average, All Urban Consumers, All Items Indexes, Consumer Price Indexes, as published monthly by the Bureau of Labor Statistics, United States Department of Labor. This is the most commonly used CPI in the United States; e.g., it is used to calculate inflation proofing of the Permanent Fund.

Currently, the most often referenced CPI in the Alaska Statutes is for the Anchorage area. The Bureau of Labor Statistics on a semi-annual basis accomplishes this publication with information for the January CPI and July CPI. This makes it difficult to use, e.g. when calculating any adjustment the State of Alaska cannot use the currently monthly "baseline value", it must use the January or July Anchorage figure. This can yield a fundamentally flawed number. Additionally, the Anchorage index has not kept pace with the national index. The Anchorage index is more volatile and may not reflect true cost increases relative to the national consumer prices.

Sections 4, 11, 14, 19 and 20 of the bill contain qualifying language. The change proposed by this bill would not impact certain programs as these programs are based on a date certain (i.e., TRS and PERS benefit for employees who first became members of the system before the effective date of this Act would remain under the CPI for urban wage earners and clerical workers for Anchorage, Alaska, during the previous calendar year; planned communities created before the effective date of the bill would continue to use the CPI for urban wage earners and clerical workers, U. S. City Average, all items 1967 equal 100; mining claims, leasehold locations, and mining leases first acquired from the state before the effective date of this Act would remain under the CPI for all urban consumer, Anchorage Metropolitan Area (Semi-annual average); etc.

The purpose of this legislation is to set a single CPI for all statutory and regulatory activities which more accurately reflects the cost of living dynamics for Alaska’s governmental activities.

ED 1:3/23/98