[Senate Report 106-59]
[From the U.S. Government Publishing Office]
Calendar No. 129
106th Congress Report
SENATE
1st Session 106-59
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ARIZONA STATEHOOD AND ENABLING ACT AMENDMENTS OF 1999
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June2, 1999.--Ordered to be printed
Filed under authority of the order of the Senate of May 27, 1999
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Mr. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 415]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 415) to protect the permanent trust funds
of the State of Arizona from erosion due to inflation and
modify the basis on which distributions are made from those
funds, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
Purpose of the Measure
The purpose of S. 415 is to amend the Arizona Statehood and
Enabling Act to conform it to the constitutional changes
adopted by the Arizona voters in 1998 and to make changes
requested by the Governor of Arizona. The Statehood Act
required the State to establish a permanent fund into which the
proceeds from the sale of State trust lands and the land's
mineral and other natural products are to be placed. S. 415
requires the State of Arizona to invest the fund in stocks and
to reinvest the earnings to offset inflation in order to enable
the State to receive higher earnings on its investments. It
also allows the state to spend funds from the Miner's Hospital
Endowment Fund to benefit the Arizona Pioneers' Home, the only
facility in the State providing the type of care for which the
endowment fund was created.
Background and Need
This bill amends the Arizona Statehood and Enabling Act by
making two changes requested by the Governor and the State
Legislature. The Statehood and Enabling Act required the State
to establish a permanent fund into which the proceeds from the
sale of State trust lands and the land's mineral and other
natural products are to be placed. While the fund is not
expendable for any purpose, interest collected is required to
be used to support the financial needs of the beneficiaries. By
law, the principal of the fund must be invested in interest
bearing securities. This requirement prevents the State from
taking advantage of opportunities in the financial markets and
from reinvesting some of the earnings of the fund to offset
inflation, S. 415 directs the State of Arizona to invest the
fund in stocks and to reinvest the earnings to offset
inflation. A similar change to the New Mexico Statehood Act was
made in 1997.
The bill also allows the State to spend funds from the
Miners' Hospital Endowment Fund to benefit the Arizona
Pioneers' Home. Insufficient funds exist in the Miners'
Endowment Fund to build and operate a separate hospital for
disabled miners. Insufficient funding has resulted in disabled
miners receiving care at the Arizona Pioneers' Home since 1929.
Legislative History
S. 415 was introduced by Senators Kyl and McCain on
February 11, 1999. A hearing on S. 415 was held before the
Subcommittee on Forests and Public Land Management on April 28,
1999. At the business meeting on May 19, 1999, the Committee on
Energy and Natural Resources ordered S. 415 favorably reported.
Committee Recommendations and Tabulation of Votes
The Committee on Energy and Natural Resources, in open
business session on May 19, 1999, by a voice vote of a quorum
present, recommends that the Senate pass S. 415.
Section-by-Section Analysis
Section 1 provides the short title.
Section 2 amends sections 25, 27 and 28 of the Arizona
Statehood and Enabling Act to direct the State to invest the
sale of State trust lands fund in stocks and to reinvest part
of the earnings to offset inflation.
Section 3 subsection (a) amends section 28 of the Arizona
Statehood and Enabling Act to allow the State to use funds from
the Miners' Hospital Endowment Fund to benefit the Arizona
Pioneers' Home. Subsection (b) authorizes such use
retroactively to June 20, 1910.
Cost and Budgetary Considerations
The following estimate of the cost of this measure has been
provided by the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 20, 1999.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 415, the Arizona
Statehood and Enabling Act Amendments of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Marjorie A.
Miller (for the state and local impact) and Victoria Heid Hall
(for federal costs).
Sincerely,
Barry B. Anderson,
(For Dan L. Crippen, Director).
Enclosure.
Congressional Budget Office Cost Estimate
S. 415--Arizona Statehood and Enabling Act Amendments of 1999
S. 415 would amend the Arizona Statehood and Enabling Act
of 1910 and would consent to amendments to the constitution of
the state of Arizona approved by the voters on November 3,
1998. These amendments generally concern the administration of
the state's permanent trust funds. Congressional consent to the
amendments to the state's constitution is required before they
can be implemented by the state government.
CBO estimates that enacting S. 415 would have no effect on
the federal budget. Because the bill would not affect direct
spending or receipts, pay-as-you-go procedures would not apply.
S. 415 contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act and would impose
no costs on state, local, or tribal governments. Enactment of
this bill would give Arizona state officials greater
flexibility in investing and distributing the assets of the
state's permanent funds.
On May 11, 1999, CBO prepared a cost estimate for H.R. 747,
the Arizona Statehood and Enabling Act Amendments of 1999, as
ordered reported by the House Committee on Resources on May 5,
1999. The two bills are virtually identical, and the cost
estimates are the same.
The estimate was prepared by Marjorie A. Miller (for the
state and local impact) and Victoria Heid Hall (for federal
costs). This estimate was approved by Robert A. Sunshine,
Deputy Assistant Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 415.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 415, as ordered reported.
Executive Communications
On, April 16, 1999, the Committee on Energy and Natural
Resources requested legislative reports from the Department of
the Interior and the Office of Management and Budget setting
forth Executive agency recommendations on S. 415. The Committee
received a letter from the Department of the Interior dated
April 16, 1999, and is printed as follows:
Department of the Interior,
Office of the Secretary,
Washington, DC, April 16, 1999.
Hon. Larry E. Craig,
Chairman, Subcommittee on Forests and Public Land Management, Committee
on Energy and Natural Resources, U.S. Senate, Washington, DC.
Dear Mr. Chairman: As requested, we have reviewed S. 415, a
bill to amend the Arizona Statehood and Enabling Act in order
to protect the permanent trust funds of the State of Arizona
from erosion due to inflation and modify the basis on which
distributions are made from the funds.
S. 415 relates entirely to Arizona's use of its funds. We
have no involvement in that process and, therefore, have no
comment on the bill.
The Office of Management and Budget has advised that there
is no objection to the submission of this letter from the
standpoint of the Administration's program.
Sincerely,
Richard T. Cardinale
(For Jane M. Lyder, Legislative Counsel).
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 415, as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
Arizona Statehood and Enabling Act Amendments of 1999
* * * * * * *
Sec. 25 * * *
* * * * * * *
Provided, that if there shall remain any of the one million
acres of land so granted, or of the proceeds of the sale of
lease thereof, or rents, issues, or other profits therefrom,
after the payment of said debt, such remainder of lands and the
proceeds of sales thereof shall be added to and become a part
of the permanent school fund of said State, [the income
therefrom only to be used] distributions from which shall be
made in accordance with the first paragraph of section 28 and
shall be used for the maintenance of the common schools of said
State:
* * * * * * *
Sec. 27 That five per centum of the proceeds of sales of
public lands lying within said State which shall be sold by the
United States subsequent to the admission of said State into
the Union, after deducting all the expenses incident to such
sales, shall be paid to the said State to be used as a
permanent inviolable fund, [the interest of which only shall be
expended] distributions from which shall be made in accordance
with the first paragraph of section 28 and shall be expended
for the support of the common schools within said State.
Sec. 28 That it is hereby declared that all lands hereby
granted, including those which, having been heretofore granted
to said Territory, are hereby expressly transferred and
confirmed to the said State, shall be by the said State held in
trust, to be disposed of in whole or in part only in manner as
herein provided and for the several objects specified in the
respective granting and confirmatory provisions, and that the
natural products and money proceeds of any of said lands shall
be subject to the same trusts as the lands producing the same.
The trust funds (including all interest, dividends, other
income, and appreciation in the market value of assets of the
funds) shall be prudently invested on a total rate of return
basis. Distributions from the trust funds shall be made as
provided in Article 10, Section 7 of the Constitution of the
State of Arizona.
Disposition of any of said lands, or of any money or thing
of value directly of indirectly derived therefrom, for any
object other than for such particular lands, or the lands from
which such money or thing of value shall have been derived,
were granted or confirmed, or in any manner contrary to the
provisions of this Act, shall be deemed a breach of trust,
except that amounts in the Miners' Hospital Endowment Fund may
be used for the benefit of the Arizona Pioneers' Home.
* * * * * * *
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