Legislature(2023 - 2024)ADAMS 519
04/27/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB26 | |
| SB87 | |
| SB25 | |
| HB125 | |
| HB178 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 26 | TELECONFERENCED | |
| += | HB 93 | TELECONFERENCED | |
| + | SB 87 | TELECONFERENCED | |
| + | HB 125 | TELECONFERENCED | |
| + | SB 25 | TELECONFERENCED | |
| *+ | HB 178 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 25
"An Act relating to inactive state accounts and funds;
relating to the curriculum improvement and best
practices fund; relating to the fuel emergency fund
and fuel emergency grants; relating to the special
Alaska Historical Commission receipts account;
relating to the rural electrification revolving loan
fund and loans from the fund; relating to the
Southeast energy fund and grants from the fund; and
relating to the Exxon Valdez oil spill unincorporated
rural community grant fund and grants from the fund."
2:01:35 PM
Co-Chair Foster noted that the next bill would be SB 25.
2:01:50 PM
AT-EASE
2:03:33 PM
RECONVENED
2:03:58 PM
SENATOR JAMES KAUFMAN, SPONSOR, introduced SB 25. The bill
had been nicknamed "silly funds" because the goal was to
eradicate funds that were meaningless. He read from the
sponsor statement (copy on file):
SB 25, in its current form, is intended to improve
performance by reducing administrative cost and
complexity associated with maintenance and tracking of
accounts that are no longer needed but are still open.
The state of Alaska at various times creates special
accounts to receive and hold money for certain
purposes, but over time some of those funds become
dormant and are no longer needed.
This can include filled funds that are not supporting
active programs, empty funds that are not supporting
active programs and funds held in trust.
Reducing the administrative burden of maintaining
unneeded funds is a prime example of the type of
incremental continuous improvement that is needed as
Alaska faces new fiscal challenges.
Senator Kaufman explained that his office reviewed existing
funds, determined which funds were no longer needed, and
created a mechanism to review funds every two years to
determine if there were any additional funds that could be
removed.
2:06:17 PM
MATTHEW HARVEY, STAFF, SENATOR JAMES KAUFMAN, read the
sectional analysis of SB 25 (copy on file):
Section 1:
Amends AS 24.20.020 to add a requirement for the
Legislative Finance Division to conduct a review of
inactive state accounts and funds at the beginning of
each new legislature and to submit an electronic
report including recommendations regarding which
inactive state accounts and funds should be repealed.
The report distribution list is included in this
section.
Section 2:
Adds a new subsection to AS 37.07.020 stating that the
governor may act upon the Legislative Finance Division
report in Section 1 of SB 25 by submitting legislation
in accordance with the report.
Section 3:
Repeals the statutory authority for the following
funds not supporting current or active programs.
• AS 14.07.182 Curriculum Improvement and Best
Practices Fund
• AS 26.23.400 Fuel Emergency Fund
• AS 41.35.380 Alaska Historical Commission Receipts
Account
• AS 42.45.020 Rural Electrification Revolving Loan
Fund
• AS 44.33.115 Exxon Valdez Oil Spill Unincorporated
Rural Community Grant Fund
Co-Chair Foster asked Senator Kaufman whether the Rural
Electrification Revolving Loan Fund (RERLF) related to
efforts to construct high powered electric lines in rural
areas of the state.
Senator Kaufman responded that the loan program was largely
supplanted by the Electrical Service Extension fund. Many
of the accounts had names that sounded compelling, but the
funds had been supplanted by other funds.
Representative Josephson noted that the Southeast Energy
Fund (SEF) was slated to be removed, but it was also listed
under repeals. He asked Mr. Harvey for clarity on the
situation.
Mr. Harvey responded that the Committee Substitute that was
passed by Senate Finance [CSSB(FIN)] removed the energy
fund and the inclusion of the fund on the list of repeals
seemed to be an error.
Representative Josephson noted that SEF still appeared to
be in the bill.
Mr. Harvey responded that AS 42.45.020 was in the bill.
Representative Josephson indicated that he had misread it.
2:10:20 PM
Co-Chair Edgmon asked Senator Kaufman if there would be any
implications relative to the Infrastructure Investment and
Jobs Act (IIJA) if SEF was removed. He was leery of
removing fund that were inactive that might have a future
purpose. He was in support of the bill.
Senator Kaufman responded that in the process of crafting
the bill, he found many funds that had reasons to exist. He
was not married to the idea of any specific fund being
deleted. The idea behind the bill was more focused on
implementing a clean-up mechanism that would require that
the funds be reviewed every two years. He would research
whether there would be any impact on IIJA and would follow
up with the committee with the information.
Co-Chair Foster requested that an entity such as the Alaska
Energy Authority (AEA) provide information to the committee
about the potential impact of the removal of the energy
fund.
Co-Chair Edgmon commented that it was easy to remove the
funds but difficult to reinstate the funds. He was
supportive of the bill but would like to be cautious about
the potential consequences.
Representative Hannan wondered if the any entities under
which a fund had been created had indicated that a fund was
not needed. She asked Mr. Harvey how much money was in the
funds and whether the money was supposed to be compiled for
ten years. She agreed that if there were funds that were
not being used that the funds should be removed, but she
wanted to ensure that entities that were responsible for a
fund agreed that it was no longer needed.
Mr. Harvey responded that as a result of the sweep in prior
years, many of the funds with statutory authority now had
zero balances. The Fuel Emergency Fund had a balance of
about $22,000, but the Disaster Relief Fund was now being
used for the same intents and purposes for which the
emergency fund was initially created.
2:14:51 PM
Representative Galvin appreciated the intent of the bill.
She did some research on the bill and commented that there
was a section in AS 43.05.095 covering indirect expenditure
reports. It seemed as though the commissioner was required
to provide an annual report to the chair of the House
Finance Committee (HFC) detailing the expenditures. She
thought the process already seemed to be in place and she
was curious what would change with the bill.
Senator Kaufman replied that the bill would require the
Legislative Finance Division (LFD) to review the
expenditures and deliver the report. He argued that it
would expediate the process.
Representative Galvin relayed that she was not certain what
to do with the information. She wondered if the purpose of
the bill was to further emphasize the intent that was
already in statute but was not being followed.
Senator Kaufman responded that the bill might further
emphasize the intent in an indirect way.
Representative Coulombe thought there was concern around
deleting accounts. She stated her understanding that LFD
would review the accounts every two years and recommend
which ones should be deleted. Subsequently, the governor
would need to introduce legislation to have the accounts
deleted. She asked if her understanding was correct.
Senator Kaufman responded in the affirmative.
Representative Coulombe asked if funds would be allocated
to the unrestricted general fund (UGF) if accounts that
still contained funds were closed. She wondered who would
decide where the money would go.
Senator Kaufman replied that the funds would go to UGF.
Co-Chair Johnson referred to page 2, line 20 of the bill.
She commented that sometimes HFC did not have a chair or
had multiple chairs. She asked if there needed to be an
amendment in order to accommodate all possible scenarios.
Senator Kaufman responded that he would be amendable to the
introduction of an amendment.
Co-Chair Johnson replied that she had wondered about the
verbiage of "chair" as compared to "chairs."
Representative Stapp relayed that he was going to make the
same comment as Co-Chair Johnson. He appreciated the bill
and the efforts to clean up the processes to ensure that
unnecessary funds were deleted.
2:20:39 PM
Representative Hannan referred to AS 43.05.095 mentioned by
Representative Galvin, which directed the Department of
Revenue (DOR) to manage accounts. She understood that the
bill would request LFD to review the accounts and create a
report. She asked if DOR had not been completing the
statutory duties and whether LFD would be the best entity
to conduct the duties in the department's stead. She was
amenable to restructuring the process but it appeared that
the accounts were intended to be under the purview of DOR.
She wondered if substituting DOR for LFD would fix the
problem.
Senator Kaufman responded that the zero fiscal note stated
that LFD could easily absorb the duties into its current
workload and it would not be a financial burden.
Mr. Harvey responded that he did not have the definition of
indirect expenditures in front of him, but it was his
understanding that the accounts that were proposed to be
deleted were outside of the definition and it was not
statutorily required to have it included in the report. He
understood that it would be a slightly different report. He
would follow up with the committee with a more in depth
response in writing.
Co-Chair Foster asked Mr. Alexei Painter to comment.
2:23:22 PM
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
explained that LFD conducted one half of the indirect
expenditure report and DOR conducted the other half. The
report for which LFD was already responsible focused on
forgone revenue and not on funds. He relayed that there
would be two separate reports and it would be a new
statutory responsibility for LFD. He clarified that DOR
conducted its portion of the indirect expenditure report as
required by statute and LFD crafted a different portion of
the report.
Representative Galvin commented that she appreciated the
clarification. She wondered if the process would be similar
for both reports.
Mr. Painter responded in the affirmative. He explained that
DOR was responsible for a portion of the indirect
expenditure report on an annual basis and LFD was
responsible for another portion that ran on a six-year
cycle. The proposal would involve an additional publication
every two years on the funds. The division repeated some
information provided by DOR but also added information that
was not included in DOR's portion of the report.
Representative Galvin asked for clarification that LFD
collected the report by DOR and combined it with LFD's
report before presenting it to the committee.
Mr. Painter responded in the affirmative.
2:26:28 PM
Representative Coulombe asked Senator Kaufman if all
accounts would be reviewed or only the accounts under DOR.
Senator Kaufman deferred the question to Mr. Painter.
Mr. Painter responded that the bill did not say
specifically that it would only review funds under DOR and
there might be funds outside of the department that would
be required to be included in the report. He clarified that
the report would go beyond the funds administered by DOR.
Representative Coulombe asked if the permanent fund would
be reviewed.
Mr. Painter responded that the permanent fund would
certainly not be considered an inactive fund, but the fund
was within DOR.
Co-Chair Foster reminded the committee that the
presentation was intended to be an introduction to the
bill. He thought some of the nuances would be discussed in
subsequent hearings. He thanked the presenters.
Senator Kaufman relayed that he appreciated the committee's
time.
SB 25 was HEARD and HELD in committee for further
consideration.