[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

                                _______
                                

                  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

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    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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