05/11/2023 01:30 PM Senate FINANCE

CS FOR HOUSE BILL NO. 39(FIN) am(brf sup maj fld)(efd fld)                                                                    
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;   capitalizing   funds;   repealing                                                                    
     appropriations;    amending   appropriations;    making                                                                    
     reappropriations;      and     making      supplemental                                                                    
     appropriations."                                                                                                           
                                                                                                                                
4:16:57 PM                                                                                                                    
                                                                                                                                
Co-Chair   Hoffman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute for  CSHB 39(FIN), Work Draft  33-GH1347\O (Marx,                                                                    
5/11/23).                                                                                                                       
                                                                                                                                
Co-Chair Stedman OBJECTED for discussion.                                                                                       
                                                                                                                                
Co-Chair Stedman  relayed that staff would  walk through the                                                                    
proposed changes  in the bill,  after which  the Legislative                                                                    
Finance Division  (LFD) director  would give a  brief update                                                                    
on the states fiscal position.                                                                                                  
                                                                                                                                
4:17:35 PM                                                                                                                    
                                                                                                                                
PETE  ECKLUND, STAFF,  SENATOR  BERT  STEDMAN, relayed  that                                                                    
Version O  was an omnibus appropriation  bill which included                                                                    
operating, capital, supplemental, and  fiscal note items. He                                                                    
referenced Document A (copy on file):                                                                                           
                                                                                                                                
     The  version  in  front  of  you  (O),  has  operating,                                                                    
     capital, supplemental and fiscal note items.                                                                               
                                                                                                                                
     Version  O  is  a  combination   of  HB  39  version  P                                                                    
     (operating/supplemental),  adopted   by  the  committee                                                                    
     yesterday and SB 41 (capital  budget) version Y adopted                                                                    
     yesterday  with 4 changes:                                                                                                 
                                                                                                                                
     •  Added  a  $5 million  Statutory  Designated  Program                                                                    
     Receipt  (SDPR)   capital  amendment  request   by  the                                                                    
     Governor that came  to us yesterday for  review of rate                                                                    
     structures within the Medicaid program                                                                                     
     • Attached fiscal notes from legislation that either                                                                       
     has already or is possible to pass this session                                                                            
     • Added a $40 million appropriation to back-fill some                                                                      
     costs should a government shut-down occur                                                                                  
     • Changed the 'waterfall' of additional revenue above                                                                      
     the Spring Forecast of $73 per barrel of oil                                                                               
                                                                                                                                
4:19:30 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:19:47 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Mr. Ecklund  continued his remarks. He  explained that there                                                                    
were  fiscal  notes attached  to  the  bill and  noted  that                                                                    
additional  fiscal notes  for  passed  legislation could  be                                                                    
added  upon  further review.  He  continued  to address  the                                                                    
document. He addressed the third  bullet and discussed leave                                                                    
cash-out  and health  insurance usage  in previous  possible                                                                    
government  shut-down   periods.  He  addressed   the  final                                                                    
bullet.                                                                                                                         
                                                                                                                                
Mr.  Ecklund   summarized  that  between  the   capital  and                                                                    
operating budgets, the version  of the bill being considered                                                                    
was  within the  expected  revenue from  the spring  revenue                                                                    
forecast. He highlighted  line one on the  table on Document                                                                    
A,  which showed  that  the forecast  had  predicted an  oil                                                                    
price of $73/bbl,  or $6.2 billion in revenue.  In the event                                                                    
that  revenues were  above  $73/bbl,  an additional  $10/bbl                                                                    
would  send  $636  million   to  the  Constitutional  Budget                                                                    
Reserve (CBR). If revenues were  even higher with oil prices                                                                    
between $83/bbl  and $105/bbl, the  roughly $1.7  billion in                                                                    
additional  revenue would  be split  evenly between  the CBR                                                                    
and the dividend fund for an  FY 25 energy relief payment up                                                                    
to  $881.5  million  (roughly  the   same  amount  as  75/25                                                                    
dividend). He  noted that if  oil was higher  than $105/bbl,                                                                    
the excess would also go into the CBR.                                                                                          
                                                                                                                                
Senator Merrick  asked about uses of  revenue raised through                                                                    
other measures  being considered  by the legislature,  or if                                                                    
the provision was specifically tied to the price of oil.                                                                        
                                                                                                                                
Mr.  Ecklund relayed  that if  the legislature  passed other                                                                    
revenue measures,  the funds would  have an impact.  He drew                                                                    
attention  to  item  1  and noted  that  any  revenue  above                                                                    
$64,300,000 would go to the CBR.                                                                                                
                                                                                                                                
Co-Chair  Stedman explained  that  the bill  was written  in                                                                    
such a way after being  too difficult to write the provision                                                                    
based on an oil price trigger.                                                                                                  
                                                                                                                                
Mr. Ecklund  added that line  2, line 3,  and line 4  on the                                                                    
table on Document A showed estimates.                                                                                           
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  objection.  There being  NO                                                                    
OBJECTION, it  was so ordered.  The CS for CSHB  39(FIN) was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
4:24:03 PM                                                                                                                    
                                                                                                                                
Senator Kiehl asked  Mr. Ecklund to discuss  the $40 million                                                                    
backfill funding for a potential government shutdown.                                                                           
                                                                                                                                
Mr.  Ecklund explained  that the  Office  of Management  and                                                                    
Budget (OMB)  would be more  equipped to respond  to Senator                                                                    
Kiehl's question, but  he understood that past  threats of a                                                                    
government shutdown  resulted in  greater insurance  use and                                                                    
leave cash-outs  by state  employees. He  noted that  he had                                                                    
checked in  with the  OMB director  before the  meeting, who                                                                    
indicated that  there was  over $212  million in  leave that                                                                    
was possible  to be cashed out  in the case of  a government                                                                    
shutdown. He  furthered that even if  the legislature passed                                                                    
an appropriation  bill and the  effective dates  failed, the                                                                    
governor  could interpret  the failure  to signify  the bill                                                                    
would not  take effect for  90 days, which could  go further                                                                    
than July 1.                                                                                                                    
                                                                                                                                
Co-Chair Stedman thought that  the eventuality could incur a                                                                    
bunch of costs.                                                                                                                 
                                                                                                                                
Co-Chair Stedman relayed that  the LFD director would update                                                                    
the  fiscal picture.  He noted  that  the numbers  presented                                                                    
would be slightly different to  those presented the previous                                                                    
day, and changes would be highlighted.                                                                                          
                                                                                                                                
4:25:54 PM                                                                                                                    
                                                                                                                                
ALEXEI  PAINTER,  DIRECTOR,  LEGISLATIVE  FINANCE  DIVISION,                                                                    
addressed Document  C (copy  on file),  which was  an update                                                                    
from  a document  from the  committee  hearing the  previous                                                                    
day. He noted  that Document B (copy on  file) showed detail                                                                    
of  the fiscal  notes that  were  included in  the bill.  He                                                                    
noted that  the revenue numbers  through line 4  on Document                                                                    
C, including  $6.2643 billion in available  revenue, had not                                                                    
changed from what he presented  the previous day. The agency                                                                    
operations  not  including  the  $40  million  appropriation                                                                    
referenced by  Mr. Ecklund were  on line 5 and  included the                                                                    
$174.9  million  for K-12  education  that  was outside  the                                                                    
funding formula. He noted that  the fiscal note for the bill                                                                    
(SB 52)  was also  included in the  fiscal note  packet, and                                                                    
the  amount would  be different  based on  whether the  bill                                                                    
passed or not.                                                                                                                  
                                                                                                                                
Mr.  Painter continued  that Line  6 showed  statewide items                                                                    
and had not  changed. He highlighted that Line  7 showed the                                                                    
capital budget  and mental health capital  budget, which was                                                                    
still   $356.9  million.   The   one   amendment  that   was                                                                    
incorporated  into the  capital budget  was non-Unrestricted                                                                    
General Funds (UGF)  so it did not factor  in. The Permanent                                                                    
Fund  Dividend (PFD)  had not  changed, which  left Line  10                                                                    
with a  surplus of  $132 million without  considering fiscal                                                                    
notes  and  other  items.  Line  11  showed  the  total  for                                                                    
included fiscal  notes at $19.5  million, not  including the                                                                    
Base Student  Allocation (BSA) increase  counted on  line 5.                                                                    
The amount was narrowed down from the previous number.                                                                          
                                                                                                                                
Mr.   Painter  informed   that   the  potential   Conference                                                                    
Committee  additions  had  been reduced  to  $14.6  million.                                                                    
There were two  additions in the bill that were  also in the                                                                    
House bill  - $5 million for  Head Start and $3  million for                                                                    
AGDC. Removing  the two items from  the potential Conference                                                                    
Committee  additions reduced  the potential  for the  higher                                                                    
items taken for both budgets.                                                                                                   
                                                                                                                                
Mr. Painter  relayed that the  addition of fiscal  notes was                                                                    
$34.1 million, leaving a potential  surplus of $97.9 million                                                                    
at the $73/bbl oil price  level. He highlighted that the $40                                                                    
million mentioned by Mr. Ecklund  would only go out if there                                                                    
was  a  government shutdown,  which  would  reduce the  97.9                                                                    
million to  57.9 million if  the appropriation was  used. If                                                                    
not,  there  would  be nearly  $100  million  available  for                                                                    
capital  budget  increases,  future  supplemental  items  or                                                                    
lower oil prices.                                                                                                               
                                                                                                                                
Co-Chair  Stedman relayed  that the  committee would  take a                                                                    
half  hour break  before  returning for  a  brief period  to                                                                    
consider adopting a CS for SB 48.                                                                                               
                                                                                                                                
4:29:33 PM                                                                                                                    
RECESSED                                                                                                                        
                                                                                                                                
5:12:03 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Stedman handed the gavel to Co-Chair Olson.