Legislature(2021 - 2022)ADAMS 519
08/20/2021 01:00 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB3003 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB3003 | TELECONFERENCED | |
HOUSE BILL NO. 3003
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; making capital
appropriations and supplemental appropriations; and
providing for an effective date."
1:03:36 PM
Co-Chair Foster stated questions would be taken throughout
the presentation.
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided a PowerPoint presentation
titled "State of Alaska Office of Management and Budget:
House Finance Committee: Third Special Session Budget
Overview - HB 3003," dated August 20, 2021 (copy on file).
He stated the legislation was an appropriation bill to
accompany the other factors within an overall fiscal plan
being discussed during the current third special session.
Mr. Steininger began on slide 2 and addressed components of
the fiscal plan including constitutionally protecting the
Permanent Fund, Permanent Fund Dividend (PFD), and Power
Cost Equalization (PCE); establishing meaningful limits to
expenditure growth; and providing for a bridge to a
sustainable fiscal plan. He stated that some of the aspects
required appropriations in order to enact and implement the
concepts to arrive at a durable fiscal plan. The governor
had introduced the bill in order to address some of the
appropriation needs and to address another immediate impact
to individuals within the state.
Mr. Steininger stated that in addition to addressing the
fiscal plan, the bill provided some opportunities to
address things in the FY 22 budget. The PFD was the first
of the issues. He explained that the absence of an
appropriated PFD was resolved in HB 3003. Additionally,
there were impacts from the sweep [the sweep of various
state fund accounts to the Constitutional Budget Reserve
(CBR) at the end of each fiscal year]. He detailed that the
sweep would have impacted the PCE Fund, but it had been
resolved by the decision in the Alaska Federation of
Natives (AFN) case; therefore, the appropriations
associated with PCE had been released and carried out. The
higher education scholarship and grant programs were
impacted by the sweep, which was resolved by the
legislation. He added there were other ongoing operating
and capital budget shortfalls that were not directly
addressed by the bill. He planned to address the issue in
further detail later in the presentation.
1:06:20 PM
Mr. Steininger briefly summarized the sections in the bill.
The bill included the PFD payment of $2,350 per Alaskan at
a total of $1.53 billion. The payment was based on 50
percent of the percent of market value (POMV) draw [from
the Permanent Fund Earnings Reserve Account (ERA)]. The
bill also included three appropriations and associated fund
source changes in the budget. The bill swapped the fund
sources for the Alaska Performance Scholarship (APS)
awards, Alaska Education Grants, and the Washington,
Wyoming, Alaska, Montana, and Idaho (WWAMI) program. The
fund source was moved from the Higher Education Investment
Fund to unrestricted general funds (UGF) because the
balance of the former fund would be swept into the CBR.
Additionally, the bill included a $1.47 billion one-time
transfer from ERA to the CBR. He elaborated the number
reflected the balance of a $3 billion bridge fund that was
a key component of the overall fiscal plan for the state.
Mr. Steininger turned to slide 4 and discussed the budget
impacts of the CBR three-quarter vote failure for FY 22. He
stated that HB 3003 sought to resolve some immediate issues
involving scholarships and education grants that were
impacting individual Alaskans. The bill resolved the
problem with UGF backfill to directly support the program.
Mr. Steininger continued to address slide 4 and discussed
delayed issues that were not resolved in the bill but
required attention. The first were unfunded capital
projects that would be delayed while they were unfunded.
The second were partially funded operating items. The
operating items had access to current year revenues, which
allow operations until near the end of the fiscal year. He
stated that most of the challenges to operations would
manifest in the fourth quarter of the fiscal year, which
gave time to investigate the programs and determine the
best solution to each individual need. He elaborated that
the solutions required a robust discussion about the
programs' financial structures. He pointed out that
exclusion of the items from the bill should not be
interpreted as a lack of support for the programs. He
referenced a list [a separate handout titled "Budgetary
Issues Due to the CBR Vote Failure" dated 8/19/21 (copy on
file)] and explained the administration supported the
programs and had included the appropriations in its
December 15, 2020, budget or in subsequent amendments. The
list included governor priority items such as funding for
the Council on Domestic Violence and Sexual Assault
(CDVSA). He reiterated the governor's support for the items
and indicated a solution would require a robust discussion.
He added there were options to address the shortfalls that
may or may not be the same as the option used for the
scholarship and education grants.
1:10:08 PM
Mr. Steininger relayed there was additional information
available on the Office of Management and Budget (OMB)
website. He was happy to answer questions.
Representative Edgmon looked at slide 2 related to a
durable fiscal plan. He saw the language "constitutionally
protect," but he did not see anything about a vote of the
people. He presumed it was inferred when using the term
constitutionally protect. He remarked that the underpinning
of the governor's fiscal plan going forward was to have
major items including a spending cap, new revenues, and the
50/50 plan go before Alaskan voters before they could be
enacted.
Mr. Steininger agreed that the constitutional amendments
would have to go to voters for approval.
Representative Edgmon surmised that with the submittal of
the bill and the parsing out of two or three items outside
of the PFD was a policy call by the administration of what
was involved in the reverse sweep. He asked if there was a
plan for rest of the items that involved a reverse sweep
vote. He asked if items would just be dealt with later or
if there was a plan.
Mr. Steininger answered that the programs listed on the
handout required investigation on how to resolve the
issues. The administration had resolved the issue with the
higher education scholarship programs with a fund swap to
UGF; however, it was an inelegant tool for solving all of
the problems. He elaborated that the issues with some of
the appropriations were not necessarily things that needed
to be resolved just with a UGF fund swap. He detailed that
some of the operational realities were being revealed as
the sweep was implemented. He stated that many of the items
were programs that over the course of the past decade had
significantly more burden placed on designated revenues,
more so than revenue collected in a given year. The
solution to the problem may or may not be a backfill of
general funds. He elaborated that it may be looking at the
program structure and inherent cost. He stated that the
solution for each program would involve substantial work
with the departments. He relayed that the issues had always
existed but had not been highlighted until the sweep
started. He stated some of the programs were not as
sustainable as had been thought.
Mr. Steininger explained that as the administration went
through the process with the agencies to determine current
year revenue in each of the programs, individualized
solutions would begin to take shape. He furthered that some
of the solutions may be things that needed to be addressed
through the robust legislative subcommittee process. He
highlighted that the shortfall for some of the programs was
only 1 to 5 percent of their overall budget. He stated the
amount may be challenging for program managers; however, it
allowed time to go through the more robust process through
the legislative cycle with a supplemental bill in the next
session or possibly during the current session.
1:14:45 PM
Representative Edgmon looked at slide 3 related to the
elements of the bill. He remarked that the objective at the
top of the slide required the legislature to violate SB 26,
the structured draw from the ERA implemented in 2018. He
stated fair enough, there were individuals who would say
the legislature had been violating the Permanent Fund
Dividend statute as well. He stated that the two should go
hand in hand. He asked Mr. Steininger to speak to the
process involved with the comprehensive fiscal plan as
envisioned by the administration in regard to tying in the
overdraw of the ERA into the larger elements of the fiscal
plan in addition to new revenues, budget cuts, and other
provisions put forward by the administration and
[legislative] working group. He remarked that if the bill
was used to overdraw and was passed as requested by the
administration, the carrot would no longer exist in terms
of making tough decisions on revenues, budget cuts, and
other things that were needed in order to put a durable
long-term fiscal plan together. He asked about the
administration's thought process regarding the issue.
Mr. Steininger replied that it was a good discussion the
administration would like to have. He stated the purpose of
the bill was to act as a companion to the other
constitutional amendments [proposed by the governor]. He
elaborated that the bill was meant to support the wider
discussion around things like HJR 7, protecting the PFD,
PCE, and the Permanent Fund. He stated that the
aforementioned items were key issues for the state. He
added that HB 3003 was not the agenda in and of itself. He
did not view the bill as taking away the carrot. He
suggested the commissioner of the Department of Revenue
(DPR) could come before the committee to address any
questions.
1:18:06 PM
Representative Rasmussen appreciated that the
administration had included the Alaska student scholarship
and grants. She believed it was extremely unfair to all of
the students who had worked hard to earn the scholarships
by earning grades in the top 10 percent of their high
school. She remarked on the importance of the WWAMI program
to Alaska, especially in light of the current shortage of
healthcare workers. She asked whether the administration
had considered the oil tax credits the state was obligated
to pay at a statutory level. She believed that with a fund
source change, the credits may not have been paid. She
asked if the proposed one-time transfer considered the $4
billion transfer made after the budget process. She asked
what the ERA balance would be if the bill passed.
Mr. Steininger answered that the purpose of including the
scholarships and grants versus other unfunded operating
appropriations such as oil and gas tax credits, was due to
the very immediate impact on individual Alaskans. He stated
there was no ability to delay on the scholarships and
grants to find an alternative solution. He relayed that on
September 1, WWAMI students would receive full tuition
bills if the appropriation was not made. He remarked that
while the oil and gas tax credits impact Alaskan
businesses, there was bit more ability to delay while a
solution was determined. He believed the balance of the ERA
was approximately $20 billion on June 30. He detailed that
with the $4 billion transfer to the Permanent Fund corpus,
the $3 billion POMV draw, and the proposed $3 billion
bridge fund draw in HB 3003, the remaining balance would be
approximately $10 billion. He noted that the proposals for
consideration in the current special session would roll the
entirety of the ERA into the fund corpus and
constitutionally protect it to ensure the only amount
coming out was the sustainable 5 percent draw over time. He
expounded that the bridge fund and $3 billion draw in the
bill was to allow the state to work through the time period
as transitions were made in its fiscal structure.
Representative Rasmussen appreciated the urgency given to
the scholarship and higher education programs; however, it
was her understanding that many of the oil companies had
been holding off on final investment decisions on many
large projects. She highlighted the Pikka project as an
example, with a potential for 150,000 barrels per day. She
believed paying the amount was prudent, given companies
were making $1 billion-plus investment decisions in the
next couple of months.
Co-Chair Foster recognized Representatives Kevin McCabe,
Ken McCarty, Mike Cronk, Tom McKay, and Harriet Drummond in
the audience.
1:22:51 PM
Vice-Chair Ortiz referenced the proposed $1.47 billion one-
time transfer from the ERA to the CBR. He asked if the bill
indicated the governor no longer wanted to see a $3 billion
transfer to act as a bridge to a long-term fiscal plan.
Mr. Steininger clarified that the $3 billion transfer was
net of the PFD payment and the CBR deposit. He referenced
DOR modeling for FY 22 showed the SB 26 POMV draw splitting
between the PFD and government and the $3 billion transfer
coming out. He elaborated that because HB 69, the FY 22
appropriation bill already included the full POMV draw, HB
3003 showed the bridge fund split between the PFD and CBR
for technical and drafting reasons. He stated the net
effect was the same as the DOR presentations.
Vice-Chair Ortiz asked about the governor's intention for
the FY 22 PFD amount.
Mr. Steininger pointed to the top of slide 3 and detailed
that the calendar year 2021 (FY 22) PFD would be based on a
50 percent calculation of the POMV draw. He expounded that
the proposal aligned with the proposed constitutional
amendments currently before the legislature, rather than
the current statutory formula.
Vice-Chair Ortiz believed the [fiscal policy] working group
had recommended trying to accomplish a fiscal plan with one
bill or several bills simultaneously so that all of the
different parts were taken care of in one particular
effort. He asked if HB 3003 contributed to solving the
problem with one shot.
Mr. Steininger replied affirmatively. He explained that the
other items before the legislature under the current
special session to accomplish the entire fiscal plan. The
bill was a supporting appropriation bill to support the
constitutional amendments. He stated that the bill was not
meant to be taken on its own, it was a part of the overall
package. He remarked that it was not possible to write a
single that would implement all of the different policies;
therefore, separate bills were necessary to implement the
policies together during the current special session.
1:26:33 PM
Representative Wool shared concerns voiced by
Representative Edgmon regarding an overdraw of the 5
percent ERA draw under SB 26. He knew some individuals had
mentioned a potential willingness to consider the idea if a
formula change was implemented. He observed the
administration was not proposing a formula change, but an
amount based on a changed formula. He remarked that the
working group had come up with several suggestions. He
listed some of the concepts Mr. Steininger had mentioned
including a constitutional amendment for the 5 percent
[draw], a 50/50 PFD, some budget cuts, and some revenue. He
believed the working group wanted to implement solutions
simultaneously. He added that the items could not be
considered isolated in a vacuum. He asked why revenue was
not being presented for a durable fiscal plan. He stated
that the bridge was to a sustainable fiscal package;
however, even the working group had determined revenue
needed to be part of the package.
Mr. Steininger replied that revenue was included in the
special session call, which provided the ability for
revenue measures to be introduced. He stated that [DOR]
Commissioner Mahoney would be glad to share some of the
analysis her team had done with the committee. He relayed
that he was present to discuss the appropriation bill.
Representative Wool referenced the retroactive to July 1
clause on page 5 of the bill. He asked if the concept was
acceptable to the administration.
Mr. Steininger answered assuming that a two-thirds vote for
the effective date clause in the bill was approved, the
appropriations could be enacted immediately upon being
signed.
1:29:45 PM
Representative Josephson referred to Mr. Steininger's
testimony regarding the balance of the ERA after the SB 26
draw and the proposed draw in HB 3003. He was concerned
that Mr. Steininger had not mentioned the unrealized
earnings. He stated his understanding that the ERA balance
would be closer to $9 billion after factoring in those
components. He asked for explanation.
Mr. Steininger answered he had been trying to do math in
his head and he apologized for any inaccuracy.
Representative Josephson asked for verification that the
$10 billion provided by Mr. Steininger had excluded a
reduction for unrealized earnings.
Mr. Steininger replied that he would have to make the
calculation on paper to ensure its accuracy. He had been
trying to provide a rough estimate for the committee.
Representative Josephson stated the other component was the
transfer of $4 billion to the corpus of the fund. He
highlighted that APFC was consistent and fairly adamant
about its desire for three times the draw remaining in the
ERA. He was uncertain the proposed legislation would have
that result. He looked at the handout and observed it
separated partially unfunded items from fully unfunded
items. He asked for verification it was due to a continuing
cycle of revenue and up to at least the fourth quarter they
were self-perpetuating/self-funded.
Mr. Steininger agreed. He elaborated that because revenue
was collected throughout the fiscal year, access to
expenditures on appropriations was allowed up to the amount
of projected revenue.
Representative Josephson thought there were scores of other
funds that were swept that were not included in the
handout.
Mr. Steininger replied that the sheet aimed to represent
only the places where the sweep impacted an existing
appropriation. He expounded that other funds that were
swept but had sufficient revenue in the fiscal year to meet
the whole appropriation were not included because there was
no operating issue associated with the sweep. Additionally,
funds that were swept that had no connection to budgetary
revenues of appropriations were not included because they
did not impact an operating appropriation. He explained
that the handout reflected items where the problems resided
when operating state government in a "post-sweep world."
1:33:23 PM
Representative Josephson returned to the context of
Representative Rasmussen's question about oil and gas tax
credits. He thought there was some merit to Representative
Rasmussen's remarks that paying the tax credits owed by the
state was felt imminently by the industry. He highlighted
that Mr. Steininger did not include school debt
reimbursement of $4.1 million or community assistance in
the unfunded category of the handout. He stated that if
because of the failure of the three-quarter reverse sweep,
the legislature and administration were appropriately
willing to spend over $20 million on students, he wondered
why the other aforementioned items should not be included.
Mr. Steininger replied because the community assistance
program had been funded from PCE, based on the AFN decision
the appropriation had been released by the administration.
He relayed that the deposit was being made into the
community assistance fund. He referenced school bond debt
reimbursement and the oil and gas tax credits and wanted to
ensure his comments on the immediacy and impact to
individual Alaskans should not be taken as a lack of
support or lack of sympathy for the impacts of the other
appropriations. The administration was looking at the fact
that on September 1, real people would feel an impact due
to the lack of the appropriation. The administration was
looking to resolve the specific issue. He agreed that the
other problems needed solving as well. The bill attempted
to address the most urgent issues to keep the focus on the
larger fiscal plan issues before the legislature in the
current special session.
1:35:35 PM
Representative Carpenter shared that he had been a member
of the Fiscal Policy Working Group. He corrected the record
that while the group agreed a singular comprehensive plan
needed to be considered, there had never been a discussion
that the action would take place in one vehicle (i.e., one
bill or one resolution). He elaborated that a comprehensive
plan would likely be a constitutional amendment, statute
changes in a bill, and appropriations to address items that
needed appropriation. He pointed out that all of the
unfunded programs reflected on the handout could be funded
with an amendment to the appropriations bill. He stated his
understanding that the legislature just had to decide where
the funds would come from. He asked for the accuracy of his
last statement.
Mr. Steininger agreed.
Vice-Chair Ortiz asked Representative Carpenter for
verification that the working group had agreed that a
solution would be done at one time.
Representative Carpenter confirmed there had been agreement
on the need for a comprehensive package with multiple
components to be agreed upon and acted on at one time.
1:37:43 PM
Representative LeBon observed that the need for a large
draw from the ERA was a requirement in HB 3003. He
estimated it was about a 10 percent draw against the POMV
formula. He highlighted that the SB 26 formula called for a
5 percent draw. He asked for verification that drawing
another $3 billion [as proposed in the bill] would mean a
[total] draw of approximately 10 percent.
Mr. Steininger agreed; however, he noted that the $3
billion bridge fund was a one-time draw that was part of a
structural reform. He explained it was not an unsustainable
continued draw from the ERA. He elaborated that it was a
one-time draw in order to implement the constitutional
change protecting the ERA. He detailed that when the ERA
was moved into the corpus of the Permanent Fund, a bridge
was needed to get to a point of reaching a sustainable
fiscal picture as changes were implemented such as spending
reductions or new revenues.
Representative LeBon addressed sustainability of a model.
He asked if the administration considered a stair step
model to soften the draw rate to help sustain the Permanent
Fund for years to come. He highlighted that a public
purpose endowment required managing with fiscal discipline.
He detailed that fiscal discipline meant setting and
holding to a draw rate. He asked about the compelling
argument to deviate from the set rate. He suggested that it
was very rare to deviate from set fiscal discipline draw
rate for most public endowments.
Mr. Steininger replied that the committee was asking good
questions that he believed would be ideal for a more robust
discussion with Commissioner Mahoney. He stated the
administration's proposal protected the Permanent Fund in
perpetuity by bringing the ERA into the corpus and not
leaving the ERA available for simple appropriation. He
stated the action would protect the Permanent Fund over
time.
1:41:33 PM
Representative LeBon stated he was not trying to debate on
the philosophy of an endowment. He suggested that the fund
would be impaired over the long-term at some level. He
stated that it was possible to argue when looking at the
next two years that the impact would be in the distant
future. He pointed out that if the fund's future growth
capability was impaired, generationally there would be a
day when the question would need to be answered. He
remarked that for the immediate gratification and reward
for overdrawing the ERA, individuals would argue it was the
right time while there was money in the fund to do so. He
emphasized that public purpose endowments rarely took that
action and tried to avoid it for long-term generational
reasons.
Representative Carpenter asked what percentage the proposed
bridge fund draw equated to in relation to the overall
value of the ERA.
Mr. Steininger responded that the proposed $3 billion
bridge draw from the June 30 ERA balance of $20 billion was
15 percent.
Representative Carpenter asked if the legislature had the
authority to deviate from statutory appropriation language.
Mr. Steininger replied that the legislature had
appropriation authority and could appropriate from the ERA.
Representative Carpenter clarified his question. He asked
if the legislature had the authority to deviate from
appropriation related statutory language.
Mr. Steininger replied in the affirmative. He relayed that
any amount could be appropriated from the ERA. He stated
that the legislature had the authority to appropriate more
than the 5 percent POMV draw.
Representative Carpenter asked what gave the legislature
the authority.
Mr. Steininger replied that he did not want to go out of
his depth into a legal analysis.
Co-Chair Foster recognized Representative David Nelson in
the audience.
1:44:43 PM
Representative Josephson supported the administration's
proposal to fund the Alaska student scholarships and grants
[listed on slide 3 of the presentation]. He assumed the
administration remained concerned about the sweep. He was
reminded that the Higher Education Investment Fund had a
balance of $344 million one year back and had a current
balance of $420 million because it was managed wisely. He
asked for verification that the 20 percent growth
[experienced in the Higher Education Investment Fund in the
past year] would be reduced to 2 percent in the CBR. He
recognized that the 20 percent growth was not sustainable.
Mr. Steininger agreed that 2 percent was the long-term
outlook for current CBR investment.
Representative Josephson asked if the administration agreed
the CBR sweep was untenable as a long-term method. He
believed there had to be reform of the 1990 amendment or a
reverse sweep.
Mr. Steininger replied with an emphatic yes. He stated that
one of the administration's constitutional amendments dealt
with the structure of the CBR and the repayment provision.
He agreed that a reduced investment earning was an issue.
He pointed out that the administration had proposed in its
December budget to reverse the sweep; however, it had not
been enacted. Therefore, the administration was looking for
other solutions to the discreet problems such as the
scholarships and grants. The administration recognized that
looking at the structure of the CBR was a key part of the
overall fiscal plan for Alaska. He relayed it was part of a
proposed constitutional amendment that also addressed
looking at how the state could increase spending over time
and ensuring there was a meaningful constitutional spending
limit.
Representative Wool stated that the PFD amount in the bill
was based on a calculation of 50 percent of the POMV draw,
which would necessitate an overdraw of the 5 percent. He
asked if the administration had calculated what the maximum
PFD amount would be without an overdraw of the ERA. He
remarked that many people were opposed to violating SB 26,
certainly in the absence of a comprehensive fiscal package.
Mr. Steininger answered that the administration had
proposed a statutory dividend or the dividend in the bill
that matched the administration's proposed fiscal plan. He
stated that a surplus dividend was not a policy perspective
supported by the administration.
1:48:28 PM
Representative Edgmon asked if the ERA draw in the next
fiscal year was $3.2 billion.
Mr. Steininger believed it sounded about right.
Representative Edgmon believed it was in the range he had
previously stated. He reasoned if there was a $3 billion
draw for a bridge fund, it was possible there would be a
PFD that was lower than $2,350 the following year because
of revenue sideboards in place. He remarked the one unknown
was oil revenue because even though prices were up,
production and prices varied. He elaborated that based on
what he was hearing and seeing [in the presentation], the
next year's dividend would also be $2,350; however, the
reality was, the amount depended on expenditures. He
highlighted there was a large chunk of money the state
hoped would come via the federal infrastructure legislation
that should take shape prior to the end of the year. He
noted the federal funding could require a match. He stated
the match had been 10 percent for every 100 percent in
Department of Transportation and Public Facilities
projects. He believed there could be a smaller PFD the next
year because the expenditure side could be a much different
number than was currently known.
Mr. Steininger answered that the bill was a companion to
other changes, including the proposal to change the PFD
program to be 50 percent of the POMV draw.
Representative Edgmon emphasized that the proposed change
would have to go to a vote of the people, which would not
go into effect until FY 24.
Mr. Steininger responded that the administration's
intention was to adhere to the proposed suite of
constitutional amendments and the appropriations bill upon
passage, prior to approval from voters. He agreed that it
would take time for voters to vote the items into the
constitution, but the administration would still prepare a
budget and treat state finances as if the items were in
place because the bills were the plan put forward by the
administration. He stated that putting a plan in place and
immediately not following it would undermine the purpose of
the plan. He reiterated that the appropriation bill was
associated with the other components and if the change to
the dividend, HJR 7, was voted on and passed by the
legislature, the administration would seek to follow it
even though it would not be constitutional law in the
coming year.
1:52:02 PM
Representative Edgmon thought that would be rising above
the legislature's ability to appropriate. He pointed out
the agreement would not be official and would be more
informal until approved by the people. He characterized it
as an unofficial compact between the legislature and the
administration. He cited the Wielechowski case, which
specified the legislature clearly has the ability to
appropriate. He stated the ability rose above any statutory
obligations and any other compacts (i.e., the compact with
the university). He stressed that the change would not be
the law of the land until it was voted on by the people. He
underscored that if the proposal passed [the legislature]
it was not written in stone that the PFD would be $2,350 in
the next year because it was not possible to know what the
legislature would do next session or what oil prices,
production, and the markets would do. He pointed out that
in the force majeure events of the world, there could be
one-time occurrences on the expenditure side that could not
be anticipated at present. He wanted to be clear to his
constituents about the reality of the situation.
Representative Edgmon referenced Representative Carpenter's
comments as a member of the working group on the holistic
nature of all of the pieces going together. He believed it
indicated there were other bills to follow because on the
revenue side it was a big component of the whole
comprehensive package needed in order to get to the bridge
funding period two years down the road where additional
bridge funding or overdrawing the ERA was not needed. He
looked forward to seeing some of that, perhaps as time
permitted from the committee as well. He stressed it was a
much bigger picture envisioned by the administration than
HB 3003 itself. He highlighted that promising a $2,350 PFD
also implied certain things had to happen the next year to
get to that number. From his perspective, there were many
variables that were currently out of their control.
1:54:34 PM
Representative Carpenter understood the skepticism by
Representative Edgmon. He relayed there had been plenty of
skepticism about comprehensive plans during the working
group discussion. He thought it would be helpful for the
committee to see the models that the Legislative Finance
Division had shared with the working group. He believed the
information could potentially answer some of the questions
that had been raised during the meeting.
Vice-Chair Ortiz referred to the proposed $1.47 billion
transfer [to the CBR] shown on slide 3. He stated he did
not understand why there was not another $1.53 billion
overdraw transfer to reach the proposed $3 billion bridge.
Mr. Steininger clarified that the $3 billion draw from the
ERA (in HB 3003) was split into two pieces. He explained
that $1.53 billion would pay the PFD and the other portion
would be deposited into the CBR. Prior models presented to
the working group showed the proposal as a $3 billion
transfer to the CBR, including a $1.53 billion payment of
the PFD from the normal POMV and the remaining deficit paid
from the CBR to the operating budget. He explained that the
drafting mechanics appeared slightly differently in the
current presentation because the operating and capital
budgets had been appropriated before the dividend was
appropriated. The current presentation showed the bridge
fund going to the PFD and the CBR. He explained that it was
still the same $3 billion bridge fund, but the presentation
showed the remainder of the bridge fund necessary for
deposit into the CBR as $1.47 billion and the first portion
of the bridge fund would pay the FY 22 PFD.
1:57:53 PM
Vice-Chair Ortiz asked for verification that the 5 percent
draw under SB 26 would generate about $3 billion in the
current year.
Mr. Steininger agreed.
Vice-Chair Ortiz stated that a portion of the draw would go
to the PFD and a portion would go to the operating budget.
He asked for verification those funds were spoken for.
Mr. Steininger answered that was the way DOR had modeled
it. He explained that the appropriation in HB 69 used the
entire $3 billion POMV to pay for the state operating
budget.
Vice-Chair Ortiz asked if the funding was not going into
the CBR.
Mr. Steininger replied that the SB 26 POMV draw was not
going into the CBR.
Vice-Chair Ortiz surmised it meant drawing [an additional]
$3 billion from the ERA to put into the CBR. He remarked
the draw was above the standard 5 percent draw.
Mr. Steininger agreed.
Vice-Chair Ortiz asked for verification it was a $3 billion
transfer.
Mr. Steininger agreed.
HB 3003 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster set an amendment deadline of 9:00 a.m. on
Sunday. The next meeting would be on Sunday at 11:00 a.m.
2:00:41 PM
Representative Josephson asked Co-Chair Foster to revisit
the rules pertaining to votes. He asked for verification on
his understanding of the voting rules.
Co-Chair Foster confirmed the rules.
Representative Rasmussen asked if the committee would hear
public testimony on Sunday.
Co-Chair Foster replied that public testimony was not
planned. He relayed that the bill primarily focused on the
PFD and there had been significant public testimony on the
topic in the past.
Representative Rasmussen requested to hear public testimony
on the bill.
Representative Josephson suggested that if the chair
decided to hear public testimony, it could happen the
following day.
Co-Chair Foster agreed it was a possible option.
2:03:04 PM
AT EASE
2:04:01 PM
RECONVENED
Co-Chair Foster shared that the fiscal working group had
extensive public testimony on the 50/50 plan. He explained
the reason for moving quickly on the bill. He relayed the
House and Senate would start losing members later in the
coming week.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFIN HB3003 TSS Budget Bill OMB Presentation 8.20.21.pdf |
HFIN 8/20/2021 1:00:00 PM |
HB3003 |
| HB 3003 HFIN Budget Impact of CBR Vote Failure OMB Handout 8.20.21.pdf |
HFIN 8/20/2021 1:00:00 PM |
HB3003 |