Legislature(2021 - 2022)ADAMS 519
04/06/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB69 || HB71 | |
| Subcommittee Close-out Reports | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 69
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; 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. 71
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making
supplemental appropriations; and providing for an
effective date."
1:37:01 PM
^SUBCOMMITTEE CLOSE-OUT REPORTS
1:37:07 PM
Co-Chair Foster indicated the committee would begin with
the Department of Administration (DOA) subcommittee
close-out report.
ASHLEY CARRICK, STAFF, REPRESENTATIVE ADAM WOOL, read the
subcommittee close-out report for the Department of
Administration:
The House Finance Budget Subcommittee for the
Department of Administration submits the following
recommended operating budget for FY 22 to the House
Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $67,420.4
Designated General Funds (DGF) $27,091.6
Other Funds $188,991.3
Federal Funds $1,309.4
Total $284,812.7
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is an increment $1,200.0 of
Unrestricted General Funds, which is 1.8 percent above
the FY 22 Adjusted Base. The total budget difference
for the Department of Administration from FY 22
Adjusted Base to the House Subcommittee Budget
including Unrestricted General Funds, Designated
General Funds, Federal Funds, and Other Funds is a
reduction of $11,921.3, which is 4.0 percent below the
FY 22 Adjusted Base.
Positions:
Permanent Full-time 1,210
Permanent Part-time 17
Temporary 32
Total 1259
Budget Action:
The House Finance Budget Subcommittee for the
Department of Administration reviewed the FY 22 budget
request as well as one member-proposed amendment, and
recommends the following actions (dollars are in
thousands):
Accept the Office of the Governor's budget proposal,
with the following highlights and one additional
amendment:
? Accept the Governor's proposals impacting the new
Office of Procurement and Property Management. This
includes adding inter-agency receipt authority of
$5,977.0, as well as $200.0 in Surplus Federal
Property Revolving Fund.
? Accept the Governor's proposal to eliminate the
statewide single audit contract with the Division of
Legislative Audit totaling $450.0 in Unrestricted
General Funds.
? Accept the Governor's proposed one-time Unrestricted
General Fund increment of $1,650.0 to maintain the bi-
weekly payroll transition.
? Accept the Governor's proposed decrements to the
Information Services Fund totaling $15,198.7 due to
savings in the Office of Information Technology.
? Denied the Governor's proposed reduction in Risk
Management of $3,000.0 inter-agency receipt authority.
This decrement should be reflected in the House Bill
102 fiscal note. The Governor also proposed
conditional language that was accepted to allow
interagency receipts to carry forward into FY 22.
? Denied the Governor's proposed increment in the
Public Defender Agency for $86.0 of Mental Health
Trust Reserve funds on the grounds that the use of
these funds was not initially approved by the Mental
Health Trust Board of Trustees.
? Denied the Governor's proposed decrement in the
Alaska Public Offices Commission for $29.0
Unrestricted General Fund and the deletion of one Law
Office Assistant I.
? Denied the Governor's proposed reduction in the
Office of Public Advocacy for $854.4 in Unrestricted
General Fund. This proposal requires legislation for
statute change.
? Denied the Governor's proposed closure of six
Division of Motor Vehicles offices and six permanent
full-time customer service representative positions
totaling $582.5 in General Fund Program Receipt
authority. These offices are located in Eagle River,
Tok, Valdez, Homer, Haines, and Delta Junction.
? Accept a member amendment to decrement $264.2 in
inter-agency receipt authority to eliminate the Office
of Enterprise Analytics and the associated two
permanent full-time positions.
Ms. Carrick concluded her report and made herself available
for questions.
Co-Chair Foster spoke to undesignated general funds (UGF)
only. He commented that DOA was up by $1.2 million, but it
was not because of any subcommittee member amendments. It
was due to accepting some of the governor's increments and
decrements which had a net gain of $1.2 million. He asked
if he was correct. Ms. Carrick responded that he was
correct.
Representative Wool noted that the proposed one-time UGF
increment of $1.65 million for the bi-weekly payroll
transition was a large part of the increase Co-Chair Foster
mentioned. Co-Chair Foster appreciated the clarification.
1:42:30 PM
Ms. Carrick continued to the budget subcommittee report for
the Department of Labor and Workforce Development (DOL).
She read the report:
The House Finance Budget Subcommittee for Labor and
Workforce Development submits the following
recommended operating budget for FY 22 to the House
Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $17,725.3
Designated General Funds (DGF) $38,899.7
Other Funds $17,416.4
Federal Funds $77,480.8
Total $151,522.2
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is a decrement at $1,000.3 of
Unrestricted General Funds, which is 5.3 percent below
the FY 21 Adjusted Base. This UGF reduction is
accounted for via adoption of the following budget
items (dollars are in thousands):
Decrement in Commissioner's office to reduce
commodities expenditures and split funding for
Executive Secretary III (-57.2 UGF)
Decrement in Alaska Labor Relations Agency to reduce
travel, office space costs, and commodities and
expenditures due to administrative efficiencies (-60.4
UGF)
? Decrement in Management Services to reduce authority
no longer needed for Shared Services of Alaska
chargeback (-66.9 UGF)
? Decrement in Data Processing to reduce general fund
support for IT services due to business process
realignment (-29.6 UGF)
? Decrement in Labor Market Information to reduce
funding by renegotiating federally funded reimbursable
service agreements (-123.4 UGF)
? Decrement in Vocational Rehabilitation under the
Client Services allocation to decrease general fund
match to client services' basic support Federal grant
(-662.8 GF/Match).
Positions:
Permanent Full-time 661
Permanent Part-time 48
Temporary 26
Total 735
Budget Action:
The House Finance Budget Subcommittee for the
Legislature reviewed the FY 22 budget request,
including amendments, and recommends the following
actions (dollars are in thousands):
Accept the Office of the Governor's budget proposal,
with three amendments:
? Deny the decrement of 1 PCN and associated funding
(-115.5 UGF) for a Research Analyst III position in
the Labor Market Information allocation.
? Deny the decrement of 1 PCN and associated funding
(-66.8 UGF) for an Office Assistant II position in the
Wage and Hour Administration allocation.
? Deny the decrement of 1 PCN and associated funding
(-41.7 UGF) for an Administrative Assistant I position
in the Occupational Safety and Health allocation.
Ms. Carrick concluded her report and made herself available
for questions.
1:44:32 PM
Ms. Carrick moved to the University of Alaska (UA)
narrative report by the subcommittee. She read from the
report:
The House Finance Budget Subcommittee for the
University of Alaska submits the following recommended
operating budget for FY 22 to the House Finance
Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $272,733.5
Designated General Funds (DGF) $310,755.0
Other Funds $75,116.1
Federal Funds $137,830.5
Total $795,830.5
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is a decrement of $4,300.0 of
Unrestricted General Funds, which is 1.6 percent below
the FY 22 adjusted Base. The total budget difference
for the University of Alaska from FY 22 Adjusted Base
to the House Subcommittee Budget including
Unrestricted General Funds, Designated General Funds,
Federal Funds, and other funds is a reduction of
$36,345.0, which is 4.4 percent below the FY 22
Adjusted Base.
Positions:
Permanent Full-time 3,845
Permanent Part-time 186
Temporary 0
Total 4031
Budget Action:
The House Finance Budget Subcommittee for the
University reviewed the FY 22 budget request as well
as one member-proposed amendment, and recommends the
following actions (dollars are in thousands):
Accept the Office of the Governor's budget proposal,
with the following highlights and one additional
amendment:
? Accept the Governor's proposed $20,000.0 decrement
to the University of Alaska, representing the third
year of the decrements outlined in the compact
agreement made by the UA Board of Regents and the
Governor to take effect between FY 20-FY 22.
? Accept the Governor's proposed decrements in receipt
authority including $17,214.5 in authority to align
with anticipated revenue reductions in tuition and
fees for FY 22.
? Accept the Governor's proposed decrements in receipt
authority including $4,785.5 to transition the
University of Alaska Foundation to a non-profit.
Accept the Governor's proposed structure change to
consolidate all University allocations into a single
appropriation.
? Accept an amendment to add $15,700.0 to the
University of Alaska in Unrestricted General Fund. Due
to the COVID-19 pandemic, the University has a net
$15.7 million in lost revenue in FY 21. This amendment
restores funding losses that were sustained through
the uncertainties of the pandemic last year.
Ms. Carrick concluded her report and was open for
questions.
Co-Chair Foster clarified that the net reduction for UGF
was about $4.3 million. He asked about the compact
agreement. He wondered if the first year of the 3-year
compact was a reduction of $30 million, the second year was
a reduction of $20 million, and the third year was a
reduction of $20 million.
Representative Wool responded that the first 2 years of the
compact was a reduction of $25 million each and the last
year was a reduction of $20 million. The compact totaled
$70 million in reductions. The legislature added money back
resulting in a net reduction of $4.3 million.
1:48:44 PM
KEN ALPER, STAFF, REPRESENTATIVE ADAM WOOL, reviewed the
subcommittee report for the Department of Revenue (DOR):
The House Finance Budget Subcommittee for the
Department of Revenue submits the following
recommended operating budget for FY 22 to the House
Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $25,822.7
Designated General Funds (DGF) $3,781.5
Other Funds $259,707.5
Federal Funds $78,998.6
Total $368,310.3
The Unrestricted General Fund difference from the
FY 21 Adjusted Base to the House Subcommittee budget
recommendation is a decrease of $2,041.6 thousand, or
7.3 percent. The All-Funds difference from FY 21
Adjusted Base is a decrease of $5,888.5 thousand, or
1.6 percent.
Positions:
Permanent Full-time 818
Permanent Part-time 24
Temporary 17
Total 859
This represents a net decrease of two full time
positions, reflecting the deletion of three positions
and the addition of one new position.
Budget Action:
The House Finance Budget Subcommittee for the
Department of Revenue reviewed the FY 22 budget
request, including amendments proposed by committee
members. They recommend approval of the proposed
budget without amendment. However, committee
discussion raised several issues that they hope will
be addressed by the full Finance Committee and as the
budget bills continue to work through the legislative
process. These include:
The Tax Division made a compelling case that
additional auditor positions, particularly in the
Corporate Income Tax section, can bring in additional
revenue through increased audit assessments that
greatly exceeds the cost of the new positions. The two
new auditors added in FY 2018, which have to date cost
about $700,000, have produced about $12 million in
additional tax assessment. Because the subcommittee
did not want to add general funds to the budget, no
positions were added at the subcommittee level.
However, the finance committee should consider the
potential net fiscal benefit of adding one or more
auditors to the division.
? There was concern that the Permanent Fund
Corporation's incentive compensation program, at the
level funded, could potentially be inequitably
distributed if the higher-level investment officers
receive bonuses at the full allowable level. To
maximize the reach of the program, it may be
appropriate to limit the size of bonuses to a fixed
amount per individual.
Mr. Alper provided some extended narrative on the changes
to the budget. The highest-level point after 4 meetings of
the subcommittee was that no changes were made to the
governor's amended budget. The breakdown of the budget was
$25.8 million UGF, $3.8 million DGF, $259.7 million other
state funds, and $79 million federal funds for a total of
$368.3 million. He clarified that the other state funds
number was large and glaring. However, the items making up
the category were not unusual. The largest 2 items were the
fees from the Alaska Permanent Fund Corporation (APFC) to
pay for their own management of their funds and the
receipts of the Alaska Housing Finance Corporation (AHFC)
including rents that came in that they spent on their own
management.
Mr. Alper continued that the general fund number of
$25.8 million was about a $2 million cut from the previous
year. He detailed that of the cuts, only about one-quarter
of them were true reductions, and some were in reduced
positions. Some of the efficiency was from moving some of
their computer servers in the Child Support Division to the
Cloud. The other $1.5 million was a switch from
unrestricted general funds (UGF) to designated general
funds (DGF) where the Treasury Division was starting to
charge fees for the management of some of the funds they
controlled one-tenth of 1 percent or what bankers called
10 basis points for the Power Cost Equalization (PCE) Fund,
the Higher Education Fund, and the Public School Fund.
Mr. Alper continued that the total number of positions at
DOR was 859, a reduction of 2 from FY 21. It represented 3
cuts and one new position. Although no changes were made
from the previous year, there were 2 issues the committee
debated at length. The first was the issue of corporate
income tax auditors in the Tax Division. He thought the
committee might recall 2 new auditors were added to the
group in FY 18. Those auditors were on the payroll and had
cost the state a total aggregate over 3 years of about
$700,000. He had identified about $12 million worth of
additional audit revenue that the auditors had brought in.
Faced with those facts, the subcommittee contemplated
adding a couple of new auditors believing they would be of
a net fiscal impact to the state finding money that would
otherwise be left on the table.
Mr. Alper reported that the second issue had to do with a
new program of incentive bonuses that APFC was instituting
in the current year for their investment officers. The
program was approved in the prior year, although Governor
Dunleavy vetoed the addition in the budget. The increment
equaled $900,000. However, the corporation had an algorithm
and a formula. Ms. Rodell, the head of APFC, came to
Representative Wool's office and talked about the program.
He relayed that they clearly had a plan and a system that
the legislature should watch closely as it developed. He
was available for questions.
1:52:34 PM
Representative Josephson asked about the second bullet
regarding the incentive program. He wondered if the concern
had to do with lower-level investment officers not
receiving the full allowable level.
Mr. Alper responded that APFC's formula stated that the
senior officers could earn up to 50 percent of their base
salaries in incentives. Some of the junior officers could
potentially earn bonuses of up to 15 percent to 30 percent
of their base salaries depending on the investment
category. He suggested that adding up the salaries of
investment officers and their maximum allowable bonuses,
the bonuses would add up to about $2.7 million to
$2.8 million. Only $900,000 was requested for bonuses.
There was concern that the money could be monopolized by a
handful of senior executives leaving none for the remaining
investors. Ms. Rodell clarified that the formula would not
allow for such a circumstance. The bonus monies would get
spread around. Inherently, the bonuses were skewed to the
senior level investors. However, some portion of the bonus
monies would go to the lower salaried investors if they met
their investment targets.
Representative Wool added that the concern that came up in
committee had to do with the amount of investment bonuses
which was $2.7 million initially which changed to
$900 million. If a few people received bonuses between
$100,000 to $150,000 the $900 million would be used up.
However, Ms. Rodell reviewed the numbers with his office
from the previous year. In order for an investment officer
to receive a bonus certain benchmarks had to be reached.
There was nothing arbitrary or subjective about the plan.
Also, based on past performance, not everyone would receive
a bonus, as it depended on what fund they managed. Ms.
Rodell went through all of the numbers from the previous
several years and indicated, if everyone had the same
numbers, bonuses would not have reached the $900,000 mark.
There was no risk of bonuses only going to a small number
of employees. The structure was primarily set up as a
recruitment tool for hiring good investors. Many other
states and private institutions had bonus incentive
programs.
Representative LeBon had attempted to put the incentive
monies into the budget over the previous 2 budget cycles
when he chaired the subcommittee for DOR. The model he
suggested was based on private sector businesses. He noted
that banking career performance bonuses were very common.
They were paid out of profits and higher performance
achievements. They were not an expense of the bank at the
detriment of anyone else. It was earned by the performers
at a higher level of performance return on investment for
the bank and, in the current case, for the Alaska Permanent
Fund. Bonuses were very common for investors and
essentially self-funding. They were based on performance.
Representative Wool added that the bonuses were based on
5-year and yearly averages. The bonus percentage of an
individual's salary was predetermined based on their job
description. There were only 6 fund managers that were
eligible to receive the largest bonuses. Many of them had
significant tenure. He continued that because of the nature
of the market typically one category might be up while
another was down. Hence, it was unlikely the full amount of
$2.7 million in potential bonus payouts would be needed and
was the reason for the figure of $900,000.
1:57:47 PM
Co-Chair Foster had a question regarding the recommendation
of adding 1 or more tax auditors. Since FY 18 the total
cost for 2 additional auditors had been about $700,000. The
auditors had paid for themselves by finding additional tax
revenue. He thought updated information regarding the
average cost of an additional audit position would be
helpful in the deliberation process.
Mr. Alper responded that the entry level corporate income
tax auditor is a Range 18, Auditor 1. Sometimes a person
with additional experience would start as an Auditor 1 at a
Range 20. On average the positions would cost the state
about $120,000 per year, per employee. There were
amendments proposed and later withdrawn in the subcommittee
that would have funded 1 or 2 positions using the numbers
he provided from the personnel books.
Co-Chair Foster indicated the committee would move to the
subcommittee reports provided by Representative Edgmon.
2:00:08 PM
Representative Edgmon began with the Department of
Commerce, Community and Economic Development (DCCED). He
gave his report:
The House Finance Budget Subcommittee for the
Department of Commerce, Community and Economic
Development submits the following recommended
operating budget for FY 22 to the House Finance
Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $8,032.0
Designated General Funds (DGF) $55,418.7
Other Funds $48,951.3
Federal Funds $22,181.2
Total $134,583.2
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is a decrease of $454.7 thousand of
Unrestricted General Funds, which is 5.4 percent below
the FY 22 Adjusted Base.
Positions:
Permanent Full-time 514
Permanent Part-time 0
Temporary 5
Total 519
Budget Action:
The House Finance Budget Subcommittee for the
Department of Commerce, Community and Economic
Development reviewed the FY 22 budget request and
recommends the following actions:
Accept the Office of the Governor's budget proposal,
with the following changes:
? Maintain UGF funding within the Community and
Regional Affairs allocation for the grant to the
Alaska Legal Services Corporation.
? Deny the Governor's proposal to utilize the Power
Cost Equalization Endowment Fund to supplant UGF
funding for the Alaska Energy Authority Rural Energy
Assistance allocation.
Representative Edgmon provided additional narrative to his
report. He conveyed that DCCED was a vast department that
had seen its UGF levels cut considerably, 83 percent, over
the previous 8 years. Of $134.5 million in funding for the
entire agency, a little over $8 million came from UGF for
unrestricted state spending. The department also did a
Yeomen's job in terms of work on the Coronavirus Aid,
Relief, and Economic Security (CARES) Act over the previous
calendar year distributing nearly $600 million to
municipalities as well as playing a large role in the small
business relief money.
Representative Edgmon reviewed the subcommittee
recommendations. The subcommittee approved the governor's
recommendations to increase interagency receipt authority
for the annual operations and maintenance costs for the
Prescription Drug Monitoring Program. It also approved the
governor's desire to transfer the Economic Development
Team, 2 staff members from DCCED, into the Governor's
Office.
Representative Edgmon reported that the subcommittee denied
the governor's request to remove $450,000 UGF from Alaska
Legal Services Corporation. The subcommittee heard from
agency staff that the request came from the Office of
Budget and Management (OMB). As he looked into the issue,
he was told that Alaska Legal Services did an incredible
amount of work for low-income people around the state
regarding civil cases. For every $100,000 of funding Alaska
Legal Services received, it was able to provide benefits to
182 people which, in turn, alleviated the impact on the
criminal justice system. He was happy to provide additional
detail to members who were interested. The subcommittee
also denied the governor's proposal to transfer $847,000
from the PCE Endowment, which was not statutorily allowed,
to use it for administrative services for the Alaska Energy
Authority (AEA).
Co-Chair Foster asked how many pages were in the
representative's report.
Representative Edgmon was not going off the subcommittee
report, he was looking at his prepared notes.
Co-Chair Foster asked Mr. Whitten if the report was 2
pages.
SETH WHITTEN, STAFF, REPRESENTATIVE BRYCE EDGMON, responded
in the affirmative.
Representative Edgmon continued that the subcommittee
approved the governor's request to increase federal receipt
authority for the Alaska Seafood Marketing Institute (ASMI)
and the Alaska Oil and Gas Commission to pursue federal
monies. The committee approved the governor's request to
add 2 utility master analyst positions to meet the
increased workload for the Regulatory Commission of Alaska.
He completed his report for DCCED.
Mr. Whitten relayed that the high points were noted in the
2-page narrative in front of members.
Co-Chair Foster asked Representative Edgmon what percentage
had been cut from the department in the prior 8 years.
Representative Edgmon reported that the agency had been
reduced by 83 percent over the past 8 years.
Vice-Chair Ortiz commented that while most agencies had
experienced significant reductions, he did not think any
had experienced a greater reduction than DCCED. He asked if
there was a sense from the administration whether the
agency was needed. He was perplexed with the level of cuts
to the department based on all of the good things it did.
He questioned whether it was worth keeping the department
with such a lack of investment.
Representative Edgmon agreed with Vice-Chair Ortiz's
comments. The department was vast and encompassed many
different areas. The department relied heavily on federal
dollars and revenues from fees.
2:06:27 PM
Representative LeBon pointed out that the department had
not taken a decrease in funding of 83 percent. Rather, the
sources of funding had shifted. It was his understanding
that the department had not been striped to the bone.
Representative Wool was the chair of the DCCED budget
subcommittee in the prior year. He recalled that the
Division of Economic Development seemed to be shrinking and
some of the positions were slated to move to the Governor's
Office. He suggested it was ironic. He wondered if that
change was still occurring.
Representative Edgmon indicated that the transfer of 2
positions related to economic development to the governor's
office left one staff in the Division of Economic
Development within the department. He suggested that most
of the economic development activity flowed through the
Alaska Industrial Development and Export Authority (AIDEA)
through loans and other services. The notion of having
staff to do other things related to economic development
had changed. The roll had changed based on staff levels.
Representative Josephson indicated that in FY 19 the
legislature resisted the movement of the economic
development team personnel to the Governor's Office. He
wondered about the legislature's hesitancy.
Representative Edgmon deferred to the previous subcommittee
chair, Representative Wool.
Representative Wool thought the subcommittee denied a
portion of the proposal. He would have to refer to his
previous notes. He recalled thinking the positions should
remain within the Division of Economic Development.
Vice-Chair Ortiz referred to Representative LeBon's
comments about the 83 percent reduction in funds and the
change in fund sources. He asked if anyone could speak to
the number of positions the department had 5 years prior.
Mr. Whitten reported that as of the FY 21 management plan,
there were 525 positions within the department. The
governor's budget showed a reduction of 6 positions.
2:10:42 PM
Representative Edgmon provided his subcommittee close-out
report for the Department of Fish and Game (DFG):
The House Finance Budget Subcommittee for the
Department of Fish and Game submits the following
recommended operating budget for FY 22 to the House
Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $50,159.9
Designated General Funds (DGF) $15,025.5
Other Funds $69,491.5
Federal Funds $87,483.2
Total $222,160.1
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is a decrease of $783.5 thousand of
Unrestricted General Funds, which is 1.5 percent below
the FY 22 Adjusted Base.
Positions:
Permanent Full-time 821
Permanent Part-time 601
Temporary 6
Total 1,428
Budget Action:
The House Finance Budget Subcommittee for the
Department of Fish and Game reviewed the FY 22 budget
request, including amendments, and recommends the
following actions:
Accept the Office of the Governor's budget proposal,
with the following changes:
? The Subcommittee addressed a projected shortfall in
funds appropriated from the Commercial Fisheries
Entries Commission by eliminating $716.5 in hollow
receipt authority and supplanting those funds with
General Fund Program Receipts generated by Commercial
Crew license fees. This is not a long-term fix and the
Subcommittee recommends that the full Finance
Committee consider how the legislature might begin to
better account for direct revenues generated by the
commercial fisheries industry through the creation of
a funding source that would enable better tracking and
help the division more directly fund their activities.
? The Subcommittee generated intent language to
require a report detailing the impacts of
consolidating allocations within the Commercial
Fisheries appropriation.
The Subcommittee shifted $66.2 UGF out of the
Wildlife Conservation allocation and into the
Commercial Fisheries allocation in order to reopen the
Wrangell office and fund one permanent full-time
position.
Representative Edgmon paraphrased his report. He relayed
that DFG was a department that had seen significant
reductions in UGF over the prior 10 years equating to a 52
percent reduction. The department was comprised of 25
percent UGF and 75 percent of other, federal, and DGF. The
subcommittee held 6 meetings and had a number of
recommendations which he would review.
Representative Edgmon reported that the major action taken
by the subcommittee was in the Division of Commercial
Fisheries, the part of the department that took the lion's
share of UGF. The committee approved the governor's request
to consolidate all the budget components into a single
appropriation line item instead of having appropriations to
all of the regional entities around the state. While the
regional allocations would be lumped into a single line
item (done for efficiency purposes), the regional
management structure would remain the same. The department
assured the finance subcommittee that the projects the
agency undertook would still be available to be tracked and
managed on a project level.
Representative Edgmon continued that the subcommittee also
addressed a projected shortfall in funds appropriated from
the Commercial Fisheries Entry Commission by eliminating
hollow receipt authority of $716,000 and replaced it with
funds from the general fund program receipts generated by
commercial crew fisheries license fees. The subcommittee
approved the governor's request to align budget authority
to reflect an expected increase in Pittman and Robertson
receipts which was largely tied to an uptick in the sale of
guns and ammunition. The subcommittee gave the department
more federal receipt authority to bring in more federal
dollars that would go towards the wildlife conservation
appropriation line item.
Representative Edgmon continued that along with the
subcommittee consolidating all of the regional allocations
into a single appropriation line item, it also added
separate intent language requiring the department to
produce a report updating the legislature on the impact of
the consolidation within the commercial fisheries
appropriation. Lastly, the subcommittee approved shifting
$62,200 from the wildlife conservation appropriation to the
commercial fisheries appropriation to reopen the Wrangell
Fish and Game Office at the behest of Representative Ortiz.
He concluded his subcommittee report for DFG.
2:14:06 PM
Representative Edgmon continued to the Department of
Corrections (DOC) subcommittee close-out report:
The House Finance Budget Subcommittee for the
Department of Corrections submits the following
recommended operating budget for FY 22 to the House
Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $341,515.0
Designated General Funds (DGF) $16,327.4
Other Funds $21,942.5
Federal Funds $14,370.6
Total $394,155.5
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is an increase of $1,735.7 thousand of
Unrestricted General Funds, which is .3 percent above
the FY 22 Adjusted Base.
Positions:
Permanent Full-time 2,055
Permanent Part-time 0
Temporary 0
Total 2,055
Budget Action:
The House Finance Budget Subcommittee for the
Department of Corrections reviewed the FY 22 budget
request, including amendments, and recommends the
following actions:
Accept the Office of the Governor's budget proposal,
with the following changes:
? Denied the structure change moving the Electronic
Monitoring and Community Residential Center
appropriations into the Population Management
appropriation.
? Denied the Governor's request to replace $4,344.9 of
unavailable Restorative Justice Funds with an equal
amount of general funds in the Physical Health Care
allocation. This decrement is not intended to curtail
physical healthcare services for inmates, but to true
up budgetary needs for the agency.
? Inserted intent language directing the Department to
renegotiate contracts with Community Residential
Centers to flat rate contracts with the intention of
achieving the most cost-effective usage of CRCs.
Representative Edgmon provided a narrative to his report.
The Department of Corrections had the fifth largest
departmental budget in the amount of $394 million. the
undesignated general fund portion was $350 million. The
department relied mostly on state funding to be
operational. The subcommittee recommendations included
approving the governor's request to back out $60 million
which, in the previous year, was used for capital
expenditures related to the opening of the Palmer
Correctional Center. The amount was backed out of the
budget because it was not necessary.
Representative Edgmon continued that the subcommittee
approved the governor's request to transfer $14.8 million
from the Institutional Director's Office to fund FY 22
operational activities for the Palmer Correctional Center.
For the second year the amount was tied to HB 49
[Legislation passed in 2019 regarding crimes, sentencing,
drugs, theft, and reporting]. The Palmer Correctional
Facility was intended to open later in the current year.
However, the project had involved significant funding and a
multi-phased process.
Representative Edgmon reported that the subcommittee also
approved the governor's request to add funding for crisis
recovery centers (CRC), otherwise referred to as halfway
houses, and for electronic monitoring. The subcommittee
added funding of $3.9 million UGF for 112 new beds at
Parkview CRC in Anchorage. The subcommittee also added
$461,000 for GPS tracking for individuals involved in
halfway houses or CRCs. It was viewed as a cost-savings
mechanism because people on electronic monitoring had the
ability to get healthcare benefits outside of DOC. The
tracking would save money in the long run and allow for
better monitoring for people with ankle bracelets.
Representative Edgmon continued that the subcommittee
approved a fund source change anticipating an increase in
fund available through municipal and federal mandate
billing. The subcommittee approved the governor's request
to fund 6 healthcare providers who would be utilized at the
Palmer Correctional Center. The subcommittee denied the
governor's proposed structured change to move the
electronic monitoring and CRCs' appropriations back into
the population management appropriation allowing for better
tracking of the funds being expended for the assigned
purposes.
Representative Edgmon indicated that the subcommittee also
denied the governor's request to replace $4.3 million of
unavailable restorative justice funds with an equal amount
of UGF in the physical health care allocations. He noted
that the restorative justice funds were funded by money
coming from Permanent Fund Dividends from inmates. The
money, in turn, was used to fund the physical health care
allocation portion of the department. He explained that
because the number of inmates was down in the department
there was less PFD monies coming in and truing things up.
Representative Edgmon relayed that lastly the subcommittee
inserted intent language directing the department to
renegotiate contracts with CRCs from a tiered rate
structure to a flat rate contract with the intention of
receiving the most cost-effective use of the CRCs
encouraging the department to employ a billing rate more
commensurate to costs involved with inmates released to
CRCs. He concluded his report.
2:19:37 PM
Co-Chair Foster asked about the recruitment and retention
of correctional officers. He wondered if the correctional
officers had reached out to the committee to restore the
funding. Mr. Whitten responded in the affirmative. The
correctional officers of the facilities requested a
structural change unrelated to recruitment and retention.
Co-Chair Foster clarified that the correctional officers
did not have a request for funding for recruitment and
retention, but they reached out about other issues. Mr.
Whitten replied that the correctional officers were
concerned with getting correction officers in the
recruitment unit. There had been discussions with the
department about how to make it happen. They requested a
structural change to move PFDs to the population management
appropriation enabling correction officers to work in the
recruitment unit. However, the structural change was not in
the purview of the subcommittee.
Co-Chair Foster relayed that the money was appropriated,
but the department ended up using the money for other
purposes. Mr. Whitten reported that the department was slow
in deploying the recruitment unit. His understanding from
documents provided to the subcommittee was that they were
moving ahead. He had a report that compared 12/30/2019 to
12/31/2020 showing recruitment results. In 2019 there were
1728 correctional officers and at the end of 2020 there
were 1888 correctional officers. There were also increases
in adult probation officers, medical mental health
professionals, and critical support positions.
2:22:23 PM
Representative Wool commented that in the prior year the
department had asked about setting up a recruitment unit
because of the low number of correctional officers, and a
significant amount of money was being spent on overtime.
The subcommittee appropriated about $400,000 for positions
and for marketing. Once the unit was established, the union
for correction officers approached him wanting all
corrections officers in the unit. The department indicated
that 3 positions would be hired: a manager, an
administrative person, and one corrections officer on a
temporary basis from 6 months to a year. Different
correctional officers would rotate in the position. He
wondered if the problem with staffing was really being
solved. The unit needed to hire people quickly. He thought
the unit was set up at a two-thirds level. He was curious
if the recruitment levels and hiring numbers were
increasing to ensure proper staffing.
Co-Chair Foster wanted to ensure that the department's
needs were being addressed. Mr. Whitten commented that the
appropriation in the previous year and the same
appropriation in the current year for the recruitment and
retention unit was $738,600.
2:25:10 PM
Representative Rasmussen commented that the subcommittee
had learned that a fee could be charged to the CRC
residents where the state had a cap with inmates in the
general population. It was her intent to work with the
department in finding a way to move forward and find some
receipt authority for people who were living in the CRCs.
She found it alarming that DOC's budget was larger than the
University's budget and other important departments. She
hoped the legislature could find ways to utilize other
funds sources and to eliminate some of the general fund
spend. She would like to see the issue discussed in the
full House Finance Committee.
Representative Johnson referenced intent language directing
the department to renegotiate contracts with the CRCs. She
asked if Mr. Whitten had a projection report. She had some
information that showed renegotiating the contract would
not be a cost savings. She would appreciate any information
or projections he had. Mr. Whitten responded that the
administrative costs for the CRCs were front loaded.
Therefore, if the CRCs were full, the state would pay a
cheaper price per individual. However, because the CRCs
were not filled, the state paid more for CRCs than the
state would under a flat rate contract. He would be happy
to get some information to the committee.
2:27:41 PM
Representative LeBon commented about how the lines had
crossed with the University of Alaska's budget versus the
budget for DOC. He was aware the University did its best to
collect revenue from students through tuition. The
legislature needed to figure out a way to charge prisoners
tuition to be in the prison system. He asked about DFG's
position in Wrangell. He wondered if the department had a
position on the action which would shift money from the
wildlife conservation portion of the budget to support the
Wrangell position. He asked for any incite on the issue.
Vice-Chair Ortiz responded that it was not the addition of
a position. It was the reversal of closing the Wrangell
office. In the previous budget cycle, as chair of the
subcommittee, he attempted to restore the office. The
governor vetoed it anyway. It represented an action opposed
by his constituents in Wrangell. One of the main activities
was hunting for moose on the Stikine River. Presently, with
the closure of the Wrangell office, they had to go to
Petersburg for moose tags. He further explained that
Petersburg was not accessible by road. The issue had been
very problematic due to the loss of ferry service and the
closure of the Wrangell office. Although he suspected the
game division was supportive of the change, his
constituents were supportive and had noticed a significant
problem.
Representative Wool had a question about visitation with
inmates. He wondered if families would be able to visit the
incarcerated soon since vaccinations had increased. He
returned to the point that DOC's budget had surpassed the
University's budget. He returned to his question about
visitation and vaccinations. Mr. Whitten was aware that the
department had experienced significant challenges with a
number of issues surrounding Covid-19 including visitation,
isolation, and quarantine. The discussion was not around
policy.
Representative Josephson received a phone call on the prior
day about officers reporting that the funds the legislature
appropriated needed to be in the population management
appropriation. The funds could not be properly spent where
they were currently housed. He was also informed the
department wanted language that would staff the recruitment
office with actual corrections officers rather than
Department of Safety (DPS) personnel. It was essential in
knowing what the work entailed.
Co-Chair Foster indicated the committee would be hearing
the subcommittee report for the Department of Education and
Early Development.
2:34:44 PM
CAROLINE HAMP, STAFF, REPRESENTATIVE DAN ORTIZ, read the
subcommittee close-out report for the Department of
Education and Early Development (DEED):
The House Finance Budget Subcommittee for the
Department of Education and Early Development submits
the following operating budget for FY 22 to the House
Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $58,950.2
Designated General Funds (DGF) $24,285.8
Other Funds $33,234.5
Federal Funds $247,182.5
Total $363,663.3
The total fund difference from FY 22 Adjusted Base to
the House Subcommittee budget is -$1,417.0, or a
decrease of 0.4 percent. The Unrestricted General Fund
difference from FY 22 Adjusted Base to the House
Subcommittee budget is -$11.2, or a decrease of 0.02
percent.
Positions:
Permanent Full-Time 251
Permanent Part-Time 12
Temporary 3
Total 266
Budget Action:
The House Finance Budget Subcommittee for the
Department of Education and Early Development reviewed
the FY 22 budget requests from the Governor and member
amendments, and submits the following actions for
consideration:
Governor's Budget Action Items - The subcommittee
adopted 32 of the 33 budget action items proposed by
the Governor. Rejections and changes are below:
1) The subcommittee adopted the Governor's proposal to
use the Mental Health Trust Reserve to fund the Alaska
Autism Resource Center. However, there was discussion
regarding the funding source, which resulted in an
affirmative vote for a recommendation to the House
Finance Committee and is expanded under
"Recommendations" No.3 below.
2) The subcommittee rejected the Governor's proposal
to delete an Education Associate II position (05-
1809). The subcommittee recommends that the Department
uses those funds of $109.2 to address the State Board
goal to "support all students to read at grade level
by the end of third grade" (Education Challenge). More
detail is provided under "Wordage Intent" No.2 and
"Recommendations" No.4 below:
Wordage Intent:
The subcommittee adopted two member amendments
regarding intent language:
1) It is the intent of the legislature that federal
funds be used to create statewide standards for
instruction in social and emotional learning.
2) It is the intent of the legislature that a baseline
assessment of current practice in Alaska's 53 School
Districts, including but not limited to adopted K-3
reading curriculum and assessment tools; Dyslexia
screening tools; intervention strategies and timeline;
frequency of parent teacher conferences for those
students experiencing reading deficits; teacher and
staff training offered to support K-3 reading
instruction; and number of certified K-3 teachers with
reading endorsement. The Department is to provide
report of findings to the Finance co-chairs and the
Legislative Finance Division on or before December 1,
2021 and notify the Legislature that the report is
available.
Recommendations:
The subcommittee adopted four member recommendations:
1) The Department of Education and Early Development
House Finance Subcommittee recommends that the House
Finance Committee consider a $5,000.0 UGF increment to
the Pre-K Grants allocation. The increment provides
two-year grant awards to school districts to support
statewide Pre-K programs. It is a multi-year
appropriation with a lapse date of June 30, 2023 and
is a continuation of the Pre-K grant program already
housed in the department. It is recommended that it is
funded from the FY 21 lapsed funds in the Residential
Schools Program allocation due to COVID-19.
2) The Department of Education and Early Development
House Finance Subcommittee recommends that the House
Finance Committee consider a $635.9 DGF increment to
the Library Operations allocation. The increment
allows the continuation of Alaska's statewide online
library system, including Statewide Library Electronic
Doorway (SLED) and the Alaska Library Catalog (ALC).
It is recommended that it is funded from the Higher
Education Investment Fund (1226).
3) The Department of Education and Early Development
House Finance Subcommittee recommends that the House
Finance Committee work with the Alaska Mental Health
Trust to determine an appropriate funding source for
the Alaska Autism Resource Center allocation.
4) The Department of Education and Early Development
House Finance Subcommittee recommends that staff and
funding be retained, instead of reducing the budget by
$109.2 and 1 PFT, in the State System of Support
allocation (budget item No.13) and redirected to the
State Board's goal of all students reading at grade
level by the end of third grade.
Ms. Hamp concluded the subcommittee close-out report.
Representative Ortiz was available to answer any questions.
Representative LeBon asked about an Education Associate II
position that was deleted in the budget. Vice-Chair Ortiz
clarified that the subcommittee did not accept the
governor' recommendation to delete the position.
Representative LeBon asked if the position was filled at
the time or vacant. Representative Ortiz recalled that the
position was vacant.
Representative Josephson was curious about the funding for
the Online with Libraries (OWL) program. Ms. Hamp reported
that the program was funded in the amount of $472,400.
Representative Josephson asked about Pre-K funding. Ms.
Hamp relayed that there were additional grants to Pre-K for
FY 19 and FY 20. There was an additional Pre-K grant that
the legislature tried to extend into FY 21. That additional
grant was vetoed. Base funding was still available for Pre-
K, but was much less than the previous 2 years.
2:40:26 PM
LIZ HARPOLD, STAFF, REPRESENTATIVE DAN ORTIZ, reviewed the
subcommittee report for the Department of Environmental
Conservation (DEC):
The House Finance Budget Subcommittee for the
Department of
Environmental Conservation submits the following
recommended operating budget for FY 22 to the House
Finance Committee:
Fund Source: (in thousands of dollars)
Unrestricted General Funds (UGF) $15,374.6
Designated General Funds (DGF) $24,627.9
Other Funds $15,662.1
Federal Funds $24,499.9
Total $80,164.5
There is a small decrease in Unrestricted General Fund
use from FY 22 Adjusted Base to the FY 22 House
Subcommittee budget of $140.0 which equals a reduction
of 0.9 percent.
Positions:
Permanent Full-time 472
Permanent Part-time 0
Temporary 1
Total 473
Budget Action:
The House Finance Budget Subcommittee for the
Department of Environmental Conservation reviewed the
FY 22 budget request, including amendments, and took
the following actions:
The Governor submitted 9 budget action items. The
House Finance Subcommittee accepted 4 of these items.
The House Finance Subcommittee rejected 5 of these
items. The items the House Finance Subcommittee
accepted are:
? To realign usage of State Revolving Loan Fund Admin
fees.
? Replace State Revolving Loan Fund administrative
fees with Federal receipts.
? Delete three vacant accounting positions and
associated funding. The items the House Finance
Subcommittee rejected are:
? Two technical adjustments related to drafting
errors.
? Substituting UGF for CPVEC funds in the division of
Environmental Health.
? Reduce authority, along with 5 PCNs, in the Spill
Prevention and Response appropriation.
Subcommittee Amendments:
The House Finance Subcommittee adopted the following
budget amendment:
? Intent language: It is the intent of the Legislature
that the Department of Environmental Conservation
submit to the legislature an execution plan detailing
how they will pursue remediation of known sites and
prevention of new spills. The report should be
submitted to the Co-Chairs of Finance and the
Legislative Finance Division by December 1st, 2021.
Ms. Harpold concluded the DEC overview.
Representative Rasmussen reported that in a legal memo the
Department of Law noted the use of CPVEC funds for
shellfish testing was not legal. She thought she heard
Senator Begich testify in subcommittee that he had a legal
opinion from Legislative Legal Services confirming that it
was not a legal use of funds. She asked Ms. Harpold to
provide an explanation. Ms. Harpold deferred to Vice-Chair
Ortiz.
Vice-Chair Ortiz responded that the use of CPVEC funds for
shellfish testing had occurred for the previous 9 years
with the logic being that the funds came directly from
cruise ship passengers who were large consumers of
shellfish on the vessels. The cruise ship industry had not
been opposed to the use of the funds for the particular
purpose. The subcommittee chose to reject the proposal to
change it to UGF due to the fact that UGF was in short
supply. The legal opinion was discussed in subcommittee but
had never been challenged in court. It would be up to the
full committee to change the funding to UGF.
2:46:02 PM
Representative Rasmussen wondered how long the legislature
intended to pay the testing fee for the related business.
She could not think of many industries that were 100
percent subsidized by the state with fees directly related
to their business. She understood that initially funding
the testing fees was about supporting the start-up of a new
business. She wanted to better understand the situation.
Vice-Chair Ortiz commented that testing for paralytic
poisoning was a protection of the general public.
Representative LeBon asked about the reduction of 5
positions within the Spill Prevention and Response (SPAR)
Program. He wondered if the positions were filled or
vacant.
Vice-Chair Ortiz thought the positions had been vacant. He
asked his staff to comment. He indicated there had been
significant discussion about whether the subcommittee
should accept the reduction in positions. There had been
the elimination of about 12 positions a year previously.
The public had expressed concerns about the SPAR Program
continuing to operate. There had been testimony indicating
there was a significant number of sites that had not
received attention from the SPAR team. The subcommittee
thought further reductions to the program would not be the
right direction for the department.
Representative LeBon did not know the details of the SPAR
staff or the vacancies. He was concerned with whether
current employees would be affected.
2:49:59 PM
Representative Josephson commented that because of a
reduction in thru-put the contribution to the SPAR coffer
was reduced. He was concerned because the department shared
tables showing that SPAR funding would drop to zero in the
middle of the current decade. He did not think the
department had much of a concern about the reduction. The
administration believed the resolution to funding SPAR was
additional production. He offered that the number of
contaminated sites was 2400. He asked Representative Ortiz
the status of the monies that had traditionally been used
for the Ocean Ranger Program. It was his understanding the
department no longer wanted the program. It wanted shore-
based regulation taking into account that the state did not
have cruise ships presently. He asked Representative Ortiz
his understanding of the program.
Representative Ortiz replied that the source of the funding
came from cruise ship passenger resources. The general
description from the department was that they have a
replacement for the Ocean Ranger Program, but he had not
heard any further detail. The funds continued to pile up
although there would not be an abundance of cruise ships
expected in the current year.
Ms. Harpold pointed out that in FY 21 $2 million of the
Ocean Ranger fees were used for ambient water quality
testing. They took advantage of not having ships around
Southeast Alaska in the previous summer to get some
baseline readings of water quality. The remainder of the
money sitting in the account had not been appropriated.
Representative LeBon noted Representative Josephson had
mentioned the number 2400 in reference to contaminated
sites. He asked if any of the sites were related to the oil
industry. Representative Josephson was not certain.
Representative Wool wondered about the sites. It was his
understanding that the sites did not represent large
spills. Vice-Chair Ortiz reported that he had received a
report from the EPA regarding how well DEC did in trying to
protect state waters and keeping the oceans clean. While
the report was not based on the performance of the current
administration, the general report was the state was not
doing a good job. There was the potential for the federal
government to step in if it was not happy with the job
being done by the state. The Department of Environmental
Conservation performed duties in lieu of the EPA. However,
the EPA could step in.
2:56:20 PM
Ms. Harpold continued to the subcommittee report for the
Department of Transportation and Public Facilities (DOT).
She read from the report:
The House Finance Budget Subcommittee for the
Department of Transportation and Public Facilities
submits the following recommended operating budget for
FY 22 to the House Finance Committee:
Fund Source: (in thousands of dollars)
Unrestricted General Funds (UGF) $152,552.4
Designated General Funds (DGF) $47,230.2
Other Funds $417,615.0
Federal Funds $58,795.6
Total $676,193.2
There is a small increase in Unrestricted General Fund
use from FY 22 Adjusted Base to the FY 22 House
Subcommittee budget of $1,193.8 which equals 0.8
percent.
Positions:
Permanent Full-time 2929
Permanent Part-time 281
Temporary 145
Total 3355
Budget Action:
The House Finance Budget Subcommittee for the
Department of
Transportation and Public Facilities reviewed the FY
22 budget request, including amendments, and took the
following actions:
The Governor submitted 45 budget action items. The
House Finance Subcommittee accepted 36 of these items.
The House Finance Subcommittee rejected 9 of these
items. The items the House Finance Subcommittee
accepted are:
? Four items related to reducing receipt authority in
Administration and Support.
? Multiple items related to Facilities consolidation
and structure change.
? Increasing UCR receipt authority in Administration
and Support.
? Adding UGF for collective bargaining agreements.
? Three items that replace aviation fuel tax receipts
with CARES Act Funds due to a project aviation fuel
tax revenue shortfall.
Three items that replace motor fuel tax receipts
with CARES Act Funds due to a projected motor fuel tax
revenue shortfall.
? Three items reducing aviation and motor fuel tax
receipt authority in Highways and Aviation.
? Reopening of the Silvertip, Chitina and Birch Lake
maintenance stations and increasing funding for Dalton
District shift change.
? Using Federal funds for paint striping at rural
airports.
? A cost-of-living salary adjustment in International
Airports.
? Reducing maintenance on non-DOT maintained roads.
The items the House Finance Subcommittee rejected are:
? Three items related to a reduction in funding for
AMHS Marine Vessel Operations as well as related
transfer of AMHS receipt authority from one AMHS
allocation to another.
? Six related to replacing UGF with FAA CARES Act
funds for rural airport operations.
Subcommittee Amendments:
The House Finance Subcommittee adopted the following
budget amendments:
? Use $49,940.0 Federal Receipts (1265) to replace
AMHS Fund (1076) within the Alaska Marine Highway
appropriation. Additionally, $1,945.1 of UGF (1004)
was moved from Marine Vessel Operations to various
non-AMHS DOT appropriations to replace AMHS Fund in
those appropriations and that UGF amount was replaced
with $1,945.1 in Federal Receipts (1265). This brought
the full amount of AMHS Fund (1076) replacement with
Federal Receipts in the Department to $51,885.1.
? Intent language: It is the intent of the Legislature
that the Department of Transportation and Public
Facilities increase consultation and collaboration
with local municipalities, including by establishing
Regional Transportation Planning Organizations, to
advance the identification and planning for locally
driven projects where there is both interest and
capacity. The Department should outline in the State's
agreements with the Federal Highway Administration
criteria for determining local municipal capacity, and
the process for local administration of federally
funded transportation projects.
Additional Non-Operating Budget Recommendations:
The House Finance Subcommittee Chair puts forward
these additional recommendations that are not part of
the Operating Budget and are in regard to future
appropriations the legislature may make.
1. Use $30M CRRSAA FHWA funds to build crew quarters
on the Tazlina and Hubbard. Put out to bid as soon as
money is appropriated.
2. Put a significant amount of CRRSAA or ARPA funds
toward the Tustumena replacement vessel and make it
SOLAS compatible.
3. Allocate remaining CRRSAA FTA money toward rural
transit grantee recipients.
4. Provide AMHS service to Wrangell any time service
is scheduled for Petersburg. 5. Use Federal funds to
get Certificate of Inspection completed for Hubbard.
6. Find money for annual maintenance of the Kuskokwim
Ice Road.
7. Use FAA CARES for deferred maintenance and capital
projects at rural airports.
8. Maximize flexibility for use of federal
transportation dollars received by state and
appropriated to local governments, including - where
possible - allowing municipalities to allocate funds
for operating or capital expenditures to the maximum
extent.
Ms. Harpold concluded the DOT narrative.
Representative LeBon referred to the first page of the
summary under designated general funds of $47.2 million. He
wondered if the figure represented gas tax receipts or
something else. He wondered the source of the UGF funds.
Vice-Chair Ortiz was aware that a portion was from the fuel
tax funds.
Representative LeBon clarified that Representative Ortiz
was talking about the fuel tax. He reported that the
legislature was not able to dedicate funds to specific
agencies. In the case of fuel tax, he wondered whether the
legislature could designate the funds. He asked whether the
state would be able to see an increase in the line item in
a future budget cycle if the legislature were to pass the
proposed additional $.08 per gallon fuel tax. Vice-Chair
Ortiz responded affirmatively.
Ms. Harpold pointed out that the Alaska Marine Highway
System Fund was considered a designated general fund and
previously made up the bulk of the fund source. Co-Chair
Foster asked how much was in the AMHS Fund. Vice-Chair
Ortiz thought the balance was near zero.
Co-Chair Foster indicated Representative Josephson's
committees would be reported next.
3:03:04 PM
CATHERINE REARDON, STAFF, REPRESENTATIVE ANDY JOSEPHSON,
would provide an abbreviated narrative for the Department
of Health and Social Services (DHSS):
The House Finance Budget Subcommittee for the
Department of Health and Social Services submits the
following recommended operating budget for FY 22 to
the House Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $1,115,599.7
Designated General Funds (DGF) $ 96,307.9
Other Funds $ 179,389.8
Federal Funds $2,070,415.1
Total $3,461,712.5
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is a decrease of $1,391.1 thousand of
Unrestricted General Funds, which is .1 percent.
Positions:
Permanent Full-time 3,340
Permanent Part-time 18
Temporary 94
Total 3,452
Budget Action:
The House Finance Budget Subcommittee for the
Department of Health and Social Services reviewed the
Governor's FY 22 budget request including Governor's
amendments. As is reflected in the reports attached to
this document, the Subcommittee accepted some of the
Governor's requests for amendments to the FY 22
Adjusted Base, denied other Governor requests, and
made eleven of its own amendments. Highlights of
Subcommittee action include:
? Restored full funding of Medicaid Services to the FY
22 budget by denying the Governor's $35 million
decrement. FY 21 carryforward language should be
reviewed by the Finance Committee in light of the
Subcommittee action to fully fund Medicaid in the FY
22 operating budget.
Approved all increments supported by the Mental
Health Trust. In addition to use of MHTAAR funding,
which was endorsed by the Subcommittee, the Governor's
budget request included use of Mental Health Trust
Reserve (MHTReserve) which the Subcommittee opposed as
a fund source. The Subcommittee approved items funded
by MHTReserve with the expectation that the Finance
Committee will replace MHTReserve with an alternative
fund source as detailed in the recommendation section
below.
? Denied Governor's amendments to Adjusted Base that
reduced the presence of Children's Services and
Juvenile Justice Staff in rural communities. The
Subcommittee took the position that delivery of those
services electronically or through workers based in
urban Alaska will be detrimental to the department
mission.
? Addressed critical and longstanding problems with
recruitment and retention of caseworkers in the Office
of Children's Services by adding targeted funding for
retention bonuses, behavioral health support, and
tuition reimbursement for caseworkers.
? Funded Implementation of the Alaska Tribal Child
Welfare Compact to improve services and outcomes for
families in rural Alaska.
? Provided for safety of state employees by denying
proposed decrements reducing security guard coverage
at OCS offices, and through intent language regarding
safety of employees at the Alaska Psychiatric
Institute.
? Safeguarded public health by partially restoring
cuts made in recent years to Public Health Nursing.
? Gradually reduced the number and funding of Public
Assistance staff who process applications for Alaskans
in need, to ensure the department has adequate
resources if implementation of planned technological
improvements does not proceed as quickly or smoothly
as intended.
Increased availability of Behavioral Health grants
and Individual Developmental Disability waiver
services.
Recommendations:
The Subcommittee makes the following recommendations
to the House Finance Committee:
? Replace Mental Health Trust Reserve Funds with
Alternative Funding Source. The Subcommittee strongly
opposes use of Mental Health Trust Reserve
(MHTReserve) in the department budget and recommends
change to another fund source.
? Review Medicaid FY 21 carryforward language in light
of Subcommittee action to fully fund Medicaid in the
FY 22 operating budget.
Ms. Reardon reported that the House subcommittee accepted
some of the governor's requests for amendments to the FY 22
adjusted base, denied others, and created a number of its
own amendments. Highlights of the actions included the
restoration of full funding of Medicaid services to the
FY 22 budget by denying the governor's $35 million
decrement. In the subcommittee's opinion the carry forward
language in the budget should be reviewed in light of the
subcommittee action.
Ms. Reardon continued that another significant action taken
by the subcommittee was the denial of the governor's
amendments that reduced the presence of the Office of
Children's Services (OCS) and Juvenile Justice staff in
rural communities. The subcommittee took the position that
delivery of those services electronically or through
workers based in urban Alaska would be detrimental to the
department mission. Some of the items of concern were cuts
to positions in Juvenal Justice in Fairbanks, Valdez, Nome,
and Dillingham and office closure reductions in Valdez,
King Salmon, and McGrath. The Wrangell Mayor's letter
expressing distress about the impact of not having an OCS
worker located in the community was influential.
Ms. Reardon reported that the committee addressed another
topic of concern which was the critical and longstanding
problem of recruitment and retention of case workers in
OCS. The department spoke to the subcommittee about
turnover which exceeded 50 percent and the impact on
families and children. She also noted the inefficiencies
that came with high turnover and cases moving through the
hands of a series of case workers.
Mr. Reardon continued that the subcommittee decided to make
a start at addressing the recruitment and retention problem
by targeting funding for retention bonuses when case
workers reached their twenty-fourth month of service. The
subcommittee also inserted funding for behavioral health
support for OCS workers to help in dealing with the
stresses that accompanied their jobs. Tuition reimbursement
for professional education for case workers was also a tool
the subcommittee provided to address recruitment and
retention. The trio of retention efforts was aimed at
reducing the cost and inefficiency of the high turnover
rate.
Ms. Reardon offered that another significant decision by
the subcommittee was to gradually decrease the number in
funding of Public Assistance staff who processed
applications for Alaskans in need for various Public
Assistance programs. The subcommittee decided to reduce the
workers and associated supplies and postage funding more
gradually than the governor proposed. The governor proposed
cutting 101 positions, whereas, the subcommittee chose to
make only a third of the reductions in FY 22. The
subcommittee would revisit the issue in the following year
after observing technology rollouts. The subcommittee
approved a cut of $1.132 million UGF for Public Assistance
staff who processed applications with the belief that they
needed to make sure the division had adequate resources if
the implementation of planned technologies did not proceed
as quickly or as smoothly as intended. She provided an
example of what could go wrong noting the delay in senior
benefits. There was also the anticipation of a much-needed
purge to the Medicaid rolls when the federal government
stopped prohibiting the removal of Medicaid recipients, a
process slated to occur the following December at the end
of the Covid relief plan. The subcommittee wanted to ensure
that there were enough positions and funding to staff for
the anticipated purge.
Ms. Reardon continued to an action recommended by the
subcommittee to increase availability of behavioral health
grants and to increase the number pulled off the 80-person
waitlist of Alaskans eligible for intellectual and
disability waivers. It was something the Key Campaign
addressed with legislators. The subcommittee increased the
number of individuals that could be pulled off the waitlist
in the coming year from 50 to 70. The subcommittee also
adopted a variety of intent language to reflect their views
on several budget issues.
Ms. Reardon continued that the subcommittee strongly
opposed the use of Alaska Mental Trust Health Authority
reserve funds in the department budget and recommended a
fund source change. The subcommittee supported the
activities, just not the funding mechanism. She reiterated
that the subcommittee action to restore the $35 million in
Medicaid meant that the subcommittee was suggesting that
the full finance committee review the carry forward
language that achieved the same dollar amount. She
concluded her report.
3:11:51 PM
Representative Wool referred to the incentive program that
focused on the retention of case workers. He understood the
incentive to keep case workers in place for a minimum of 24
months. He asked if a bonus program was practiced in
another portion of state government.
Ms. Reardon indicated that currently there was an incentive
bonus of $1000 for case workers. The subcommittee was
recommending the amount be increased to $3000. The current
incentive was part of a union agreement. The idea behind
the incentive was that for the first year a case worker was
in training mode and was assigned a reduced caseload. After
a case worker reached a year in their position, they would
be assigned a full caseload. It was in the second year that
the division typically lost case workers to stress and the
turnover of other co-workers. The thought was that if a
case worker could make it to 24 months on the job, they
might stay. She reported that $1000 was not enough of an
incentive for people to stay the duration. Hopefully, $3000
would be a more persuasive figure.
3:13:52 PM
Co-Chair Foster referred to the carry forward language. He
was looking at the pros and cons of the language. He asked
if the subcommittee had recommended that the $35 million
for Medicaid would be funded with UGF. Ms. Reardon
responded affirmatively.
Co-Chair Foster explained the governor had wanted to carry
forward excess Medicaid funds from FY 21 to FY 22 in the
amount of $35 million. At the same time, he also
recommended cutting the budget by $35 million to offset the
cost. There would be no real cut to DHSS. Ultimately by
doing what the governor suggested the carry forward did not
count as an addition to the FY 22 budget. However, the
reduction counted as a cut to the budget. The other problem
in doing what the governor suggested was that in FY 23, if
the funding were to continue, it would have to be added
back into the budget and would appear as an increase. It
would create a cliff situation.
Ms. Reardon responded that it was the subcommittee's
understanding that because the $35 million would not be in
the FY 22 appropriation, it would not go into the adjusted
base for FY 23. In order to maintain the same level of
spending in FY 23, an increment of $35 million would have
to be added to the budget. She reported that while the
subcommittee was interested in finding ways to spend less
on Medicaid while providing adequate services, a decrease
of $35 million was not achievable for FY 23. An increment
would be necessary.
Co-Chair Foster wanted people to understand the
ramifications of whatever action the committee decided to
take.
Representative Josephson wanted to make a couple of
comments on the OCS items. He noted that the subcommittee
heard 3 or 4 slides of a PowerPoint, and several top
officials from the department were on record. The director
of the division described in some detail what was happening
within her division. She described a 51 percent turnover,
personnel who were essentially damaged by their
experiences. In other words, case workers were so
traumatized that they were not the same people leaving as
when they arrived. The subcommittee found the resources for
a bonus of $3000 without increasing the UGF budget. Since
there were over 200 case workers in the division, the
subcommittee wanted to see them have access to a therapist
to process their experiences. Finally, there was a modest
tuition reimbursement. The department had directed the
division to be fully candid as to what was really going on,
and the finance subcommittee responded.
3:19:08 PM
Ms. Reardon moved to the Judiciary (JUD) budget:
The House Finance Budget Subcommittee for the
Judiciary submits the following recommended operating
budget for FY 22 to the House Finance Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $112,548.1
Designated General Funds (DGF) $ 518.0
Other Funds $ 2,246.1
Federal Funds $ 975.6
Total $116,287.8
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is an increase of $480.4 thousand of
Unrestricted General Funds, which is .4 percent above
the FY 22 Adjusted Base budget. There is also $40.0
increase in interagency receipts (Other State Funds),
for a total increase of $520.4 above the FY 22
Adjusted Base budget.
Positions:
Permanent Full-time 737
Permanent Part-time 37
Temporary 5
Total 779
Budget Action:
The House Finance Budget Subcommittee for the
Judiciary reviewed the FY 22 budget request submitted
by the Governor on behalf of the Alaska Court System
and recommends that the FY 22AdjustedBase+ budget be
approved with three amendments:
? Add 40.0 (I/A Receipts) to allow the Court System to
process marriage licenses for the Department of Health
and Social Services in Fairbanks. The DHSS Division of
Health Analytics and Vital Records does not have an
office in Fairbanks and has requested that the
Fairbanks court perform duties associated with
applying for a marriage license and has agreed to pay
the cost for court clerks to perform these duties.
? Add 480.4 (UGF) for implementation of the
recommendations of the Alaska State Legislature Task
Force on Therapeutic Courts. The task force report
recommended additional personnel to increase the
effectiveness and efficiency of the Therapeutic Court
system: one new prosecutor, one new public defender,
and one person to oversee and coordinate peer support
groups for Therapeutic Court participants and
graduates. Although those positions will be housed in
departments, funding is included in the Judiciary's
Therapeutic Court Allocation.
? Add Intent Language expressing the legislature's
intent that the Judiciary speedily resume calendaring
jury trials. The Court System did not object to that
language and is currently moving forward to resume
trials. The Subcommittee did not accept two items in
the FY 22 GovAM BA because those amendments to the
Adjusted Base budget were found to require legislation
to implement. The Subcommittee did not oppose the
concept of the state and its Judiciary reducing
insurance costs by self-insuring for property loss or
the concept of moving the Office of Public Advocacy
from the Department of Administration to the
Judiciary. However, since legislation is required to
make those programmatic changes, the Subcommittee
decided that fiscal notes accompanying the necessary
legislation would be the appropriate method of making
associated funding changes.
Ms. Reardon concluded her presentation on Judiciary's
budget.
3:22:25 PM
Ms. Reardon continued to the subcommittee close-out report
for the Department of Law:
The House Finance Budget Subcommittee for the
Department of Law submits the following recommended
operating budget for FY 22 to the House Finance
Committee:
Fund Source: (dollars are in thousands)
Unrestricted General Funds (UGF) $54,704.4
Designated General Funds (DGF) $ 2,697.8
Other Funds $32,546.2
Federal Funds $ 2,032.5
Total $91,980.9
The Unrestricted General Fund difference from FY 22
Adjusted Base to the House Subcommittee budget
recommendation is an increase of $2,633.5 thousand of
Unrestricted General Funds, which is 5.1 percent above
the FY 22 Adjusted Base budget.
Positions:
Permanent Full-time 550
Permanent Part-time 0
Temporary 0
Total 550
Budget Action:
The House Finance Budget Subcommittee for the
Department of Law reviewed the Governor's FY 22 budget
request including Governor's amendments. The
Subcommittee recommends that the Governor's FY 22
operating budget request be approved with the
following changes:
1. The Subcommittee denied the Governor's $1,290.1
thousand fund source change from UGF to SDPR for
prosecution of misdemeanors in home rule
municipalities. The Governor proposed to bill home
rule municipalities for the level of misdemeanor
prosecution they currently receive from the state.
2. The Subcommittee rejected the renaming of the
appropriation that provides for civil legal work.
3. The Subcommittee reduced by $200.0 thousand UGF
funding for the contractual services line in the Labor
and State Affairs Allocation to eliminate funding not
required to maintain the department's core operations.
4. The Subcommittee eliminated the vacant Deputy
Attorney General position in the Office of the
Attorney General and an equivalent amount of UGF
funding. This position was created by the department
through its management plan and filled in 2019. The
position is now vacant, and the Subcommittee voted to
return to the previous management structure of two
deputy attorneys general.
RECOMMENDATIONS:
The Subcommittee makes the following recommendations
to the House Finance Committee:
? Budget Structure: Reinstate the FY 21 appropriation
"Legal Contracts Relating to Interpretation of Janus v
AFSCME Decision" and include $20.0 thousand UGF
funding.
? Supplemental Item for Prosecutor Recruitment and
Housing: Change the fund source for this $4 million
FY 21 supplemental item requested by the Governor. The
Subcommittee supports funding the requested activities
but finds the Higher Education Fund source
inappropriate to the purpose. The Subcommittee
encourages the department to coordinate its rural
housing project with the Alaska Housing Finance
Corporation and other departments with similar needs.
? Supplemental Item for Outside Counsel to Support
Statehood Defense: Deny this $4 million FY 21
supplemental item and consider the Governor's request
on the merits as a possible amendment to the FY 22
operating budget. The Subcommittee position is that
the request is not necessary to address urgent FY 21
supplemental needs and is more properly considered a
multi-year operating budget increment. The
Subcommittee recommends that the Finance Committee
determines whether FY 22 funding for Statehood Defense
should be approved in the requested amount or a lower
amount or denied.
Ms. Reardon concluded the subcommittee report for the
Department of Law.
Co-Chair Foster asked about the budget structure on page 2
of the report regarding the Janus v AFSCME. He wondered if
it was in the budget in the prior year, was vetoed, and was
being reinstated. He asked if he was correct. Ms. Readon
replied, "That is correct, Mr. Chair."
Representative Josephson explained that there were two
structures created and made law by the legislature in the
prior spring. One of them was in the subcommittee budget,
but the subcommittee did not have the authority to restore
the other item. Under one reading of the 2001 Supreme Court
decision, the governor was not allowed to draw through the
structure. He had heard there was a counter argument. The
governor was allowed to veto an item, which was money and a
purpose, but not through the structure itself.
Co-Chair Foster reviewed the agenda for the following day.
HB 69 was HEARD and HELD in committee for further
consideration.
HB 71 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Finance Subcommittee Closeout Reports Link.pdf |
HFIN 4/6/2021 1:30:00 PM |
HB 69 HB 71 |