Legislature(2017 - 2018)HOUSE FINANCE 519
03/10/2017 08:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB57 || HB59 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 57 | TELECONFERENCED | |
| += | HB 59 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE BILL NO. 57
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; repealing appropriations; making
supplemental appropriations and reappropriations, and
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
HOUSE BILL NO. 57
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; repealing appropriations; making
supplemental appropriations and reappropriations, and
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
8:34:37 AM
Co-Chair Foster MOVED to ADOPT the proposed committee
substitute for HB 57 (FIN), Work Draft 30-GH1855\N
(Wallace, 3/9/17).
Representative Wilson OBJECTED.
Representative Wilson spoke to her objection. She had known
that all of the amendments she put forward would not be
adopted. She shared that she had offered a number of the
amendments because she believed the committee needed to
have some discussions. She elaborated that the committee
needed to discuss government's role and how much they
should be funding each area. She stated it was not merely
about the programs, but about how many things the state had
started paying for that had initially been paid for with
federal funds or because Alaska was a small state and had
not had some of the organizations able to meet some of the
needs. She underscored that it was no longer the situation.
She continued that the state had urban areas, great
nonprofits, and ways of raising funds that had not been
present in the past. She relayed that the current version
of the budget was larger than it had been a few days
earlier. She thought the state would never have a
sustainable budget with additional spending. She stated the
legislature was presently talking about an income tax,
motor fuel tax, and other to fill the budget gap. She
stressed that the Permanent Fund had been taken from
Alaskans the previous year and the current bill proposed
taking it again. She stated the bill would take $4 billion
from the Permanent Fund earnings reserve. She reasoned it
was not only about the $4 billion, but about the earnings
the fund would no longer receive because of taking more
than necessary from the reserve.
Representative Wilson believed the budget showed that the
legislature would prefer to drain the highest earning
savings account instead of using an account that earned
little to no interest. She surmised that at some point
there would only be one other way to get the money - from
the people - when savings could have been earning the money
instead. She would prefer to utilize the earnings off of
its savings versus taxing hardworking Alaskans. She
reasoned that Alaskans were contributing to nonprofits and
schools. She reiterated she had offered numerous amendments
because there was much discussion the committee needed to
have. She spoke about the new amendment process and noted
members had been told much of the discussion would occur in
the committee process instead of in subcommittees. She
emphasized that the discussion had not occurred. She
referenced a previous discussion about whether a forester
position in Haines was needed. She believed the real
question was what had happened to the timber receipts and
timber economy in Haines, Ketchikan, and other areas that
previously had sawmills. She spoke to economic development
in the timber, mining, oil, and other industries. She
stressed it was the way to fill the fiscal gap, not by
taxing or creating a larger deficit. She was not supportive
of the budget.
8:39:03 AM
Vice-Chair Gara thought the numbers were very difficult to
understand for people not sitting on the finance committee.
He believed one of the media outlets had been having
trouble with the issue. He clarified that the current bill
continued to cut the budget. He relayed that the budget was
down almost $3.5 billion since 2013. He compared the
current budget to the governor's vetoed budget from the
previous year (noting that the governor had vetoed a
significant amount) and relayed agency spending of general
funds was down by $61 million. He thought one of the media
reports had mistakenly reported it as an increase. He
reasoned that statewide spending could not really be
controlled in terms of retirement, and school bond debt was
down $81 million in general funds. He did not think the
legislature could play the game of comparing unrestricted
general funds (UGF) and designated general funds (DGF)
because the fund sources had been used interchangeably in
the past couple years. He continued that the preceding
year, to reduce the appearance of the use of general funds,
designated general funds from the Higher Education Fund
were used to fund the retirement debt. He reiterated that
overall state general funds were down $61 million in agency
spending and $81 million in statewide items.
Co-Chair Seaton corrected that the statewide total was down
$20 million. The total reduction between agency and
statewide operations was $81 million.
Vice-Chair Gara appreciated the correction as he had been
referencing the wrong line in his document. He reiterated
that the total general fund spending was down $81 million.
He concluded that anyone who wanted to argue it was a
budget increase was not using the numbers. He believed the
important question was how the budget was impacting humans,
children, and seniors. He underscored that without a fiscal
plan, classroom funding would remain flat. He had heard a
comment that education funding had increased, but he
countered that the increase related to debt service, pupil
transportation, and retirement payments owed in the
Teachers' Retirement System (TRS). He emphasized that the
money going to classrooms was down over $20 million
compared to several years earlier. He continued that many
legislators would like to get to a point where school
funding would be aligned with actual costs in order to
avoid teacher layoffs. He hoped to get there by the
following year; however, a fiscal plan was needed. He noted
that Representative Wilson wanted a smaller budget and
furthered that even if the committee had adopted every one
of her proposed amendments, the state's savings were
disappearing. He believed the amendments merely rearranged
the budget components, but the attempt ultimately was
futile. He elaborated that within two years the state's
savings would be depleted.
Vice-Chair Gara expounded that without a fiscal plan the
budget would require the use of the earnings reserve, which
would mean at some point there was no money for a dividend.
He stressed that the proposed budget was part of a plan. He
supported finding rational cuts to the budget, which he
believed the current budget did. He addressed the
Department of Health and Social Services that was
responsible for caring for seniors, abused children,
disabled individuals, and other. He stressed that the
agency had been cut by $30 million. He stated that at some
point inflation would need to be recognized. He added that
it had been factored in the budget process up to a few
years back. He underscored that at some point it was
necessary to fund schools and the University. He remarked
that cuts to the University were hindering its ability to
bring in grant funding. He reasoned that it did not work to
provide inadequate education to a child in fourth grade,
while planning to get them the education they deserved
later on. He emphasized that it was not possible to fix
what had been lost in fourth grade. He spoke to attempts
made by others to cut pre-K. He stated the public had asked
the legislature to spend money on programs that worked, but
not on programs that did not work. He relayed that the
evidence was that pre-K worked. He stated that if a child
was lost by third grade, significant money would be spent
to get less achievement and success. He detailed that if a
child was caught up, they succeeded.
Vice-Chair Gara continued to discuss cuts that had been
proposed to things like suicide prevention, domestic
violence shelters, homeless shelters for youths, and food
banks. He stressed that at some point the cuts would rip
apart the fabric of society. He continued that the cuts
would rip apart the contract between the well off and those
who lived with difficulty. He stated that the proposed
budget kept the contract together even with budget cuts.
The proposed budget strategically made cuts and did not
merely cut for the sake of cutting. He believed cutting
domestic violence shelters and education qualified as cuts
for the sake of cutting. He stressed the legislature
represented the people - human beings who deserve the right
to opportunity and dignity. He specified that the budget
did what it could with the money available. He reasoned it
was also necessary to consider what the budget would do to
the economy. He stated that the Institute of Social and
Economic Research (ISER) had indicated that cutting another
$1 billion from the budget meant 15,000 public and private
sector jobs would be lost. He noted that 9,000 jobs had
already been lost in the past year. He believed the cuts
would extend the current recession for three to ten years.
He reiterated his concerns about cuts. He remarked that
parents would decide they did not want to raise their
children in schools with dramatically reduced budgets. He
believed the legislature needed to get serious about the
issue. He stated the arbitrary cuts that would harm people
had been debated by the committee for days. He added that
some of the proposed cuts in amendments had been cuts to
positions that had already been cut and would therefore be
a double cut, which had been communicated by the
Legislative Finance Division and agencies. He concluded
that the current budget was rational and minimized the
harm. He stated it was not the legislature's job to
maximize the harm.
Co-Chair Seaton reviewed the handouts in member packets
(copies on file). He advised members to notice that some
handouts pertained to UGF and others to GF-only. He
recognized Representative Louise Stutes in the audience.
8:51:17 AM
Representative Pruitt asked whether the committee was
speaking to the objection to the adoption of the CS or if
it was the final discussion.
Co-Chair Seaton answered it was the final discussion.
Representative Pruitt commented that it had been
fascinating "sitting over on this side of the budget
discussion this year." He acknowledged co-chairs for the
respectfulness they had shown during the budget
subcommittee process. Additionally he credited the
departments. He explained that in the majority of cases in
the current budget, the reductions had been brought forward
by the agencies as opposed to the legislature. He provided
the Department of Transportation and Public Facilities
(DOT) as an example and noted the legislature had actually
increased the DOT budget above the agency's request. He
wanted to make sure to give agencies the credit where
credit was due.
Representative Pruitt spoke to his concerns about the
current budget. He discussed that there had been work done
by the agencies and the House Finance Committee. He added
that overall the committee had increased the governor's
proposed budget. He did not believe the current budget was
aligned with the public's desires. He pointed to the
decision to use a substantial portion of the Permanent Fund
earnings reserve account to fund the budget and set aside
for other things. He recalled knocking on doors in his
district and relayed there were people who would like to
see government cut to the exact amount of revenue coming in
and who did not support any use of the Permanent Fund.
However, there were numerous people who fell in the middle
- people who understood that the reserve account may need
to be accessed, but who were distrusting of the way money
was currently being spent on government. He believed that
with substantial revenue reductions, many individuals were
asking for something they could point to. He did not know
that a 1 percent reduction to agency operations was
significant enough. He recognized there was also a debt
service component as well.
Representative Pruitt continued that under fund
capitalization, the committee had reduced what it had to
pay on tax credits, which did not mean the tax credits were
not still owed. Additionally, it meant state could find
itself in a position where the companies were going to be
taken over by the people who invested money. He elaborated
that New York agencies could potentially own the companies
and substantial amounts of the state's debt. He noted he
had mentioned credit ratings and had been told that the
state was not going to borrow any money. He countered that
most of the time the state did not believe it was going to
borrow money, but then something came along like a large
gasline that the state did not have the credit for. He
believed the legislature needed to be cognizant of the
state's credit if the conversation was going to continue.
Representative Pruitt was very concerned that the
legislature was making policy in the budget by not having a
discussion and settlement on how to provide the sustainable
revenue approach. He continued that instead, the policy had
been inserted into the budget ad hoc. He believed the
strategy differed from the request of the business
community that was asking for a stable approach. He wanted
to settle the issue in a committee discussion and align the
budget in conference committee.
Representative Pruitt had been very surprised there was not
a single thing the Republican Minority could offer that the
House Majority could support. He stated the Majority had
proven to the public that the two sides did not get along.
He remarked that the Minority had been told no repeatedly
without conversation. He commended Representative Wilson
for doing the work that she did. He believed she had done
what she had been instructed to do - to look at surgical
cuts. He added that she had not offered amendments in
subcommittee because members had been told they were not
allowed to. He continued that members had been told the
only thing that would be discussed was programs, but no
programs had been cut during the subcommittee process, and
programs offered in the full committee had been turned
down. He stated they [the Minority] had offered surgical
cuts to the full finance committee and not a single one
could be entertained. He stressed that at some point in
time the House Majority would need the Minority because the
budget could not ultimately pass without their help. He
asked why none of the amendments had even been considered.
He remarked there had been $30 increments proposed that
would merely go back to 2016. He had wanted to have a
strategic conversation, but that had not occurred.
Representative Pruitt appreciated proving the public right
- that there was no bipartisanship in the legislature. He
noted he had voted in support of several Majority
amendments. He reiterated that there had been no
conversation or debate about the amendments proposed by the
Minority. He was frustrated and believed he was speaking
for numerous people in the public. He stated the public
wanted the legislature to cut the budget and to work
together. He agreed that the public did not want the budget
to harm people. He stressed that the public wanted the
legislature to accept the reality that the Alaska of
tomorrow would differ from the Alaska of the past. He
underscored that if the legislature could not adjust to
that reality it would saddle the next generation with a
debt it could not pay. He restated his objection to the
current version of the budget and noted that a conversation
had not occurred.
9:02:04 AM
Representative Guttenberg referred to the spreadsheets
provided to the committee (copy on file). He thanked the
previous chairs of the committee for their work and
remarked there had been significant budget reductions over
the past several years. He acknowledged Representative
Thompson as a former co-chair of the committee. He
discussed that he had been on both sides - in the Minority
and currently in the Majority - and the work was never
easy. He recognized that even when the state had money
there were aspects of the budget process that were
difficult. He reiterated that cuts to the budget over the
years had been significant. The current financial picture
was a result of how the economy had been structured over
the years. He reminded the committee that all of the
amendments over the years were not a snapshot in time, but
a result of something that had been put in place for a
reason - perhaps in times of financial surplus. He spoke to
the goal of increasing efficiencies and making
improvements. He underscored that the committee had done
significant work on the budget over the years. He recalled
working as a staffer in the building when oil prices had
been around $12 [per barrel] - the situation had not been
easy. He spoke to the importance of recognizing the
historic process that went back much farther than 2015. He
spoke to necessary considerations about what the state was
required to do, what it should be doing, and other.
Representative Guttenberg continued that some of the
discussion had been that it was very expensive to provide
things in rural Alaska and that people should move into the
urban areas. He reasoned someone in Seattle, Washington
could say the same thing about the expense of living
anywhere in Alaska. He detailed that at the end of the day
the state had vast resources, distances, and different
climates, which were all major considerations. He spoke to
the importance of remembering those things when going
through the budget process. He emphasized it was necessary
to use all of the tools available. He acknowledged that the
current budget was difficult and he did not believe anyone
was happy with all of its aspects, but the committee had
kept some control. He noted that merely keeping up with
inflation was about $250 million per year, which the budget
was far below. He thanked everyone for the historic work
done over time to get to the current point. He underscored
the importance of remembering how the state got to the
current point, why things had been done in the past, and
what had been the right thing to do. He wanted to pass
along the lessons of the past into the future.
9:06:41 AM
Representative Grenn thanked the individuals who had put
the bill together and all of the hands that contributed to
the process. He thanked the other committee members for
their work. He discussed learning about the budget process
and how contributions from members provided a more in depth
look at various items. He spoke about learning how
everything tied together, priorities, who the state took
care of and kept safe. He thought the current budget took
care of all Alaskans and slowly began to steer the state
towards a bright future. Additionally, he believed the
budget showed that the legislature could deal with crises
in a smart, caring, and hardworking way. He opined that
Alaskans would be thankful they would be taken care of and
would be part of something great for the state's future. He
believed he could go back to his community and say that the
legislature was working for the betterment of everyone in
the state. He reiterated his thanks to committee members
and shared that he was proud to vote in support of the
budget.
Co-Chair Seaton recognized Representative Gary Knopp in the
audience.
9:09:46 AM
Representative Tilton thanked some of the finance
subcommittee chairs for the way they had presented all of
the information. Although, she noted that members had been
told what they were not allowed to bring forward in
subcommittee, which was the reason the Minority had brought
amendments forward to the full committee. She added that
the reporting of the vote count had been accurate, which
she appreciated. She also thanked the agencies for their
work. She detailed that the agencies had tried to bring
their receipt authority closer to their actuals in order
for people to understand what was really happening when
looking at budget numbers. She also thanked the Legislative
Finance Division analysts for working long hours to answer
questions from the legislature as much as possible. She
understood there was a desire to minimize the reduction of
the state employee headcount, but she reasoned that for
many in the private sector, keeping their jobs was a new
bonus. She stated that individuals in the private sector
were happy to have a job. She relayed that a friend working
in the oil field and he had taken a 40 percent pay cut in
the past year. She underscored that he was happy to have a
job and was not asking for a merit increase.
Representative Tilton stated that her proposal to eliminate
the Serve Alaska program was not because she disliked
volunteerism. She mentioned her volunteer work in her
community as a mother. She believed that the private sector
and nonprofits could take care of the responsibility. She
stated the government was taking money away from the
entities. She believed that forgoing $1.9 million in
federal grant money was not compelling because the private
sector and nonprofits could get the money and she believed
they could probably do a better job distributing it. She
spoke to the importance of considering whether government
should be providing a service instead of asking how
government could provide the service better or more
efficiently. She discussed that at the start of the
amendment process the committee members had been informed
there was significant question about the validity of the FY
16 actual numbers. She and her colleagues had done
significant work looking back in the budget and had used
the FY 16 numbers. She asked who would have thought the
numbers were not the numbers. She stressed that the public
did not have access to analysts and departments to verify
whether the numbers were real. She questioned whether the
FY 15 actuals were real. She relayed that dozens of the
Minority amendments had been based on the concept.
Representative Tilton wondered why the numbers were
sacrosanct if they could not depend on the actuals. She
believed it may be necessary to look at how the legislature
did its budgeting. She continued that the amount of
spending reduced since FY 15 was not a particularly
compelling argument because there was still a $3 billion
fiscal gap. He constituents were looking at money being
taken from their pockets. She did not want to reduce "boots
on the ground" for seniors or individuals with
disabilities; however, she wanted core government services
to be run more efficiently. She reasoned that in her own
business she made reductions when she did not have the
money to spend. She had done more with less many times. She
added that she had lived through the 1980s and had done
more with less in her business. She stated that agency
operations had been reduced by $400 million since FY 13 or
$600 million in FY 15.
Representative Tilton referred to discussion about the
realities of inflation. She had added a percentage for
inflation in her proposed reductions. The committee had
also heard that $61 million in agency spending and $20
million in statewide spending had been reduced. She
stressed that the committee had not had the discussion
about the change of UGF, DGF, or the motor fuel tax. She
thanked members who supported her intent language
amendments that had passed. She believed the intent
language she had offered was a "no-brainer." She detailed
that people had been killed on the streets in Mat-Su due to
a paused project. She did not think there should be any
arguments over rectifying the situation. She emphasized
that the policy related to the earnings reserve that had
been put in the budget should have been discussed. She
stressed it was a bigger discussion. She opposed the
budget.
Co-Chair Seaton wanted to make sure that everyone
understood that he had requested the multi-year agency
summaries in order for people to sort out the idea of UGF
and DGF as if they were not all money. It was possible to
look at the all general funds and know it included the
money the state had and all of the money the state spent
instead of having some of it hidden away as DGF. He was
pleased that the spreadsheets were available. He explained
that the totals would show a restoration of $6.5 million in
pupil transportation funds for the Department of Education
and Early Development and $1.2 million for pre-K
representing the philosophies and priorities of the [House]
Majority. He pointed out that funds for wage freezes had
been backed out (because the bill had not passed).
Additionally, DGF from fuel had been removed, which had
been put in the Department of Public Safety and had been
moved to the Department of Transportation and Public
Facilities budget. He detailed that the goal was to ensure
DGF money was appropriated from the right place to the
right place. The use of DGF from the Higher Education Fund
had also been taken out and moved to UGF. He elaborated
that the change made the budget look higher, but it was
not; it was the same amount of money, but coming from the
appropriate location. He hoped that as the process moved
forward legislators would look at the budgets and all of
the funds to see how they were well managed and well
designated usage. He informed members that the Legislative
Finance Division was preparing several other reports that
would be posted online after the current meeting. He
extended thanks to the division for all of its assistance
and advice on crafting the budget. He thanked Legislative
Legal Services and his staff for their hard work.
Representative Foster MOVED to report CSHB 57(FIN) out of
Committee with individual recommendations [Note: it was
subsequently clarified that the following roll call
pertained to the adoption of the CS and not moving the bill
from committee].
Representative Wilson OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Grenn, Guttenberg, Kawasaki, Ortiz, Gara, Seaton,
Foster
OPPOSED: Pruitt, Thompson, Tilton, Wilson
The MOTION PASSED (7/4).
Representative Pruitt noted that the roll call had
pertained to the adoption of the CS.
Representative Foster MOVED to report CSHB 57(FIN) out of
Committee with individual recommendations.
Representative Wilson OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Guttenberg, Kawasaki, Ortiz, Gara, Grenn, Foster,
Seaton
OPPOSED: Pruitt, Thompson, Tilton, Wilson
The MOTION PASSED (7/4). There being NO further OBJECTION,
CSHB 57(FIN) was REPORTED out of committee with a "do pass"
recommendation.
9:24:55 AM
Co-Chair Foster MOVED to ADOPT proposed committee
substitute for HB 59, Work Draft 30-GH1856\O (Wallace,
3/8/17). There being NO OBJECTION, it was so ordered.
Representative Foster MOVED to report CSHB 59(FIN) out of
Committee with individual recommendations.
Representative Wilson OBJECTED. She clarified for the
record that CSHB 59(FIN) was the mental health budget. She
WITHDREW her OBJECTION.
There being NO further OBJECTION, CSHB 59(FIN) was REPORTED
out of committee with a "do pass" recommendation.
9:25:54 AM
Co-Chair Seaton spoke to the schedule for the following
week.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 57 LFD Report HCS3 UGF Only.pdf |
HFIN 3/10/2017 8:30:00 AM |
HB 57 |
| HB 57 LFD Report HCS3 Total Funds.pdf |
HFIN 3/10/2017 8:30:00 AM |
HB 57 |
| HB 57 LFD Report HCS3 Gen Funds.pdf |
HFIN 3/10/2017 8:30:00 AM |
HB 57 |
| HB 57 CS WORKDRAFT v.N 3.9.17.pdf |
HFIN 3/10/2017 8:30:00 AM |
HB 57 |
| HB 59 WORKDRAFT v.O 3.9.17.pdf |
HFIN 3/10/2017 8:30:00 AM |
HB 59 |