69–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 106–140

ARIZONA STATEHOOD AND ENABLING ACT

AMENDMENTS OF 1999

MAY 13, 1999.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. YOUNG of Alaska, from the Committee on Resources,

submitted the following

REPORT

[To accompany H.R. 747]

[Including cost estimate of the Congressional Budget Office]

The Committee on Resources, to whom was referred the bill

(H.R. 747) 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, report favorably thereon without amendment and recommend that the bill do pass.

PURPOSE OF THE BILL

The purpose of H.R. 747 is 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.

BACKGROUND AND NEED FOR LEGISLATION

Under the Enabling Act of 1910, the State of Arizona receives

revenues generated from lands that were granted to the State upon

admission to the Union. After deposit in several existing trust

Funds, these revenues contribute funding for public schools, state

colleges and universities, and other public institutions.

As currently provided for in the original Enabling Act, the Funds

must pay out all of their income, with ‘‘income’’ interpreted as all

interest and dividends received. This creates a problem because it

does not account for and adjust to rates of inflation. Inflation has

averaged approximately 4.5% over the past 50 years and the income generated from the Funds has grown at less than the rate of
2

inflation. To account for inflation, a portion of the interest should

be retained and reinvested to fuel future income growth.

Further, the current Enabling Act has a number of stringent investment restrictions. While these restrictions may have been appropriate at one time, they are outdated and are no longer advisable. The restrictions have severely limited the potential of the

Funds to earn high returns and have also limited their ability to

reduce risk through investment diversification.

To make the necessary changes to allow the State trust Funds

to be managed differently, it is necessary for Congress to approve

of the changes as well as amend the Arizona Enabling Act.

COMMITTEE ACTION

H.R. 747 was introduced on February 11, 1999, by Congressman

Bob Stump (R–AZ). The bill was referred to the Committee on Resources, and within the Committee to the Subcommittee on National Parks and Public Lands. On April 29, 1999, the Subcommittee met to mark up the bill. No amendments were offered. The bill

was then ordered favorably reported to the Full Committee by voice

vote. On May 5, 1999, the Full Resources Committee met to consider the bill. No amendments were offered and the bill was then

ordered favorably reported to the House of Representatives by voice

vote.

COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of rule XIII

of the Rules of the House of Representatives, the Committee on Resources’ oversight findings and recommendations are reflected in

the body of this report.

CONSTITUTIONAL AUTHORITY STATEMENT

Article I, section 8 and Article IV, section 3 of the Constitution

of the United States grant Congress the authority to enact this bill.

COMPLIANCE WITH HOUSE RULE XIII

1. Cost of Legislation.—Clause 3(d)(2) of rule XIII of the Rules of

the House of Representatives requires an estimate and a comparison by the Committee of the costs which would be incurred in carrying out this bill. However, clause 3(d)(3)(B) of that rule provides

that this requirement does not apply when the Committee has included in its report a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974.

2. Congressional Budget Act.—As required by clause 3(c)(2) of

rule XIII of the Rules of the House of Representatives and section

308(a) of the Congressional Budget Act of 1974, this bill does not

contain any new budget authority, spending authority, credit authority, or an increase or decrease in revenues or tax expenditures.

3. Government Reform Oversight Findings.—Under clause 3(c)(4)

of rule XIII of the Rules of the House of Representatives, the Committee has received no report of oversight findings and rec-
3

ommendations from the Committee on Government Reform on this

bill.

4. Congressional Budget Office Cost Estimate.—Under clause

3(c)(3) of rule XIII of the Rules of the House of Representatives and

section 403 of the Congressional Budget Act of 1974, the Committee has received the following cost estimate for this bill from the

Director of the Congressional Budget Office:

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, May 11, 1999.

Hon. DON YOUNG,

Chairman, Committee on Resources,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 747, 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

H.R. 747—Arizona Statehood and Enabling Act Amendments of

1999

H.R. 747 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 constitution of the state of Arizona is required before

they can be implemented by the state government.

CBO estimates that enacting H.R. 747 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. H.R. 747

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.

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 Paul N. Van de Water, Assistant Director

for Budget Analysis.

COMPLIANCE WITH PUBLIC LAW 104–4

This bill contains no unfunded mandates.
4

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as 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):

ACT OF JUNE 20, 1910

CHAP. 310.—An Act To enable the people of New Mexico to form a constitution and

state government and be admitted into the Union on an equal footing with the

original States; and to enable the people of Arizona to form a constitution and

state government and be admitted into the Union on an equal footing with the

original States.

* * * * * * *

SEC. 25. That in lieu of the grant of land for purposes of internal

improvements made to new States by the eighth section of the Act

of September fourth, eighteen hundred and forty-one, and in lieu

of the swamp-land grant made by the Act of September twentyeighth, eighteen hundred and fifty, and section twenty-four hundred and seventy-nine of the Revised Statutes, and in lieu of the

grant of thirty thousand acres for each Senator and Representative

in Congress, made by the Act of July second, eighteen hundred and

three, which grants are hereby declared not to extend to the said

State, the following grants are hereby made, to wit:

For university purposes, two hundred thousand acres; for legislative, executive, and judicial public buildings heretofore erected in

said Territory or to be hereafter erected in the proposed State, and

for the payment of the bonds heretofore or hereafter issued therefor, one hundred thousand acres; for penitentiaries, one hundred

thousand acres; for insane asylums, one hundred thousand acres;

for school and asylums for the deaf, dumb, and the blind, one hundred thousand acres; for miners’ hospitals for disabled miners, fifty

thousand acres; for normal schools, two hundred thousand acres;

for state charitable, penal, and reformatory institutions, one hundred thousand acres; for agricultural and mechanical colleges, one

hundred and fifty thousand acres; and the national appropriation

heretofore annually paid for the agricultural and mechanical college to said Territory shall, until further order of Congress, continue to be paid to said State for the use of said institution; for

school of mines, one hundred and fifty thousand acres; for military

institutes, one hundred thousand acres; and for the payment of the

bonds and accrued interest thereon issued by Maricopia, Pima,

Yavapai, and Coconino counties, Arizona, which said bonds were

validated, approved, and confirmed by the Act of Congress of June

sixth, eighteen hundred and ninety-six (Twenty-ninth Statutes,

page two hundred and sixty-two), one million acres: Provided, That

if there shall remain any of the one million acres of land so granted, or of the proceeds of the sale or lease thereof, or rents, issues,

or other profits therefrom, after the payment of said debts, 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,

øthe income therefrom only to be used¿ distributions from which

shall be made in accordance with the first paragraph of section 28
5

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,

øthe 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 the 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 or indirectly derived therefrom, for any object other

than for which 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.

* * * * * * *

Æ