Legislature(2017 - 2018)HOUSE FINANCE 519

02/23/2017 01:30 PM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

Audio Topic
01:33:31 PM Start
01:35:12 PM Presentation: Permanent Fund Forecasting Methodology, Variability and Volatility Discussion and Realized and Unrealized Earnings Presentation: Callan Associates, Inc.
02:35:36 PM HB57 || HB59
03:47:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Discussion: Permanent Fund Forecasting TELECONFERENCED
Methodology, Variability, & Volatility
+ Presentation: Realized & Unrealized Earnings TELECONFERENCED
By Callan Associates, Inc.
+= HB 57 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 59 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ Subcommittee Reports; Amendment Proposals as TELECONFERENCED
available:
- Office of the Governor
- Dept. of Military & Veterans' Affairs
- Dept. of Revenue
+ Bills Previously Heard/Scheduled 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. 59                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
2:35:36 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton noted that all  subcommittee actions were to                                                                    
Section 1, the  numbers section of the  budget. The reported                                                                    
subcommittee   recommended  budget   amounts  might   be  an                                                                    
incomplete picture  of the  department's budget.  He relayed                                                                    
that   after  the   committee  completed   the  subcommittee                                                                    
amendment process including the  language amendments that he                                                                    
would propose, a new committee  substitute work draft of the                                                                    
bill  along with  the reports  that would  include both  the                                                                    
numbers  and the  language appropriations  providing a  more                                                                    
complete  picture  of  each   agency's  budget  totals.  The                                                                    
subcommittee  reports   were  distributed  to   members  the                                                                    
previous  day and  were posted  on  the Legislative  Finance                                                                    
Division's website. Since he was  the subcommittee chair for                                                                    
the Office of the Governor  and the Department of Revenue he                                                                    
would begin with his reports.                                                                                                   
                                                                                                                                
Co-Chair Seaton  reported that the finance  subcommittee for                                                                    
the Office  of the Governor  had no amendments  to consider,                                                                    
nor  did   the  governor.  As  the   subcommittee  chair  he                                                                    
recommended no  changes to the  Office of the  Governor's FY                                                                    
18 budget. He read the budget totals by fund source:                                                                            
                                                                                                                                
     The budget totals:                                                                                                         
     Fund Source: (dollars are in thousands)                                                                                    
          Unrestricted General Funds (UGF) $23,135.8                                                                            
          Designated General Funds (DGF) -0-                                                                                    
          Other Funds 838.3                                                                                                     
          Federal Funds 205.0                                                                                                   
          Total $24,179.1                                                                                                       
                                                                                                                                
     The  Unrestricted  General  Fund difference  from  FY15                                                                    
     Management  Plan to  the FYI  18 Governor  budget is  a                                                                    
     reduction of $8.9 million, a  decrease of 27.7 percent.                                                                    
     From FY17  Management Plan, the FYI  18 Governor budget                                                                    
     reflects  an  unrestricted  general  fund  increase  of                                                                    
     $279.7, an increase of 1 .2 percent.                                                                                       
                                                                                                                                
2:38:06 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:38:26 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster  asked Co-Chair Seaton  to provide  his next                                                                    
subcommittee report.                                                                                                            
                                                                                                                                
Co-Chair  Seaton  recommended   two  budget  amendments  for                                                                    
consideration  by the  House Finance  Committee and  several                                                                    
recommendations to  various policy committees  for statutory                                                                    
changes. He read from the subcommittee report:                                                                                  
                                                                                                                                
    The budget if theses amendments are adopted totals:                                                                         
     Fund Source: (dollars are in thousands)                                                                                    
          Unrestricted General Funds (UGF)   $25,646.4                                                                          
          Designated General Funds (DGF)     $2,587.5                                                                           
          Other Funds    $269,013.3                                                                                             
          Federal Funds $78,665.5                                                                                               
          Total     $375,958.7                                                                                                  
                                                                                                                                
     Positions:                                                                                                                 
          Permanent Full-time 812                                                                                               
          Permanent Part-time 33                                                                                                
          Temporary 16                                                                                                          
          Total     861                                                                                                         
                                                                                                                                
     If  these  amendments  are  adopted,  the  Unrestricted                                                                    
     General Fund  difference from FY 15  Management Plan to                                                                    
     the FY  18 House  Subcommittee Recommended Budget  is a                                                                    
     reduction of                                                                                                               
     $8.185 million, a decrease of 24.2 percent.                                                                                
                                                                                                                                
     The  Unrestricted General  Fund difference  from FY  17                                                                    
     management   plan   to   FY   18   House   Subcommittee                                                                    
     Recommended Budget  is a reduction of  $455.2 thousand,                                                                    
     a decrease of 1.7%.                                                                                                        
                                                                                                                                
2:40:35 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:40:52 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Seaton read the recommendations for DOR:                                                                               
                                                                                                                                
     The  following   statutory  recommendations   are  also                                                                    
     submitted to the House Finance Committee                                                                                   
                                                                                                                                
     1.   A  recommendation  to   the  House  State  Affairs                                                                    
     Committee:  Amend AS  43.23.008  to consider  repealing                                                                    
     allowable absences for the  Permanent Fund Dividend. In                                                                    
     2016,  26,524 dividends  were paid  to  people with  an                                                                    
     allowable  absence  from  the  state.  According  to  a                                                                    
     study, many  of those  who claim allowable  absences do                                                                    
     not  return  to the  state.  64%  of students  did  not                                                                    
     return,  and 81%  of  those  accompanying someone  else                                                                    
     with an allowable absence did  not return to the state.                                                                    
     17% of all appeals  through the Permanent Fund Division                                                                    
     relate directly to  allowable absence claims. Repealing                                                                    
     allowable  absences would  increase  the  value of  the                                                                    
     Permanent  Fund  Dividend   for  those  residents  that                                                                    
     remain in the state.                                                                                                       
     2.   A  recommendation  for  the  House  State  Affairs                                                                    
     Committee:  Consider  amending   AS  43.23  to  include                                                                    
     directives or incentives to  transition to a completely                                                                    
     paperless  environment  for   Permanent  Fund  Dividend                                                                    
     Applications.   Incentivizing  paperless   applications                                                                    
     would reduce the current printing  and postage costs of                                                                    
     $120,705.57.  It  would  also   reduce  the  number  of                                                                    
     seasonal   employees   necessary   to   process   paper                                                                    
     applications,   with   a  corresponding   decrease   in                                                                    
     $239,000 in seasonal personal costs.                                                                                       
     3.   A   recommendation   for   the   House   Fisheries                                                                    
     Committee:  Amend  AS 43.75  to  change  the amount  of                                                                    
     fisheries  taxes distributed  to local  communities and                                                                    
     direct  that  revenue  to  fund  direct  management  of                                                                    
     fisheries. Currently  50% of fisheries  taxes collected                                                                    
     by the state are distributed to municipalities.                                                                            
     4.   A   recommendation   for   the   House   Fisheries                                                                    
     Committee:  Reconsider   AS  43.75.015(b)-(d)   and  AS                                                                    
     43.77.010(1) to  determine if the reduced  tax rate for                                                                    
     small  fish processers  and the  reduced  tax rate  for                                                                    
     developing fisheries  are effective  or if  the reduced                                                                    
     rates  should be  repealed  or  more narrowly  defined.                                                                    
     These  three indirect  expenditures currently  cost the                                                                    
     state an estimated $525,852 in foregone revenue.                                                                           
     5.   A   recommendation   for   the   House   Education                                                                    
     Committee:  Amend   AS  43.20.014,  AS   43.55.019,  AS                                                                    
     43.56.018, and  AS 43.77.045 to  remove the  100% level                                                                    
     of  the  education  tax  credit.  Currently  the  first                                                                    
     $100,000 of an eligible  contribution receives a credit                                                                    
     of  50%, the  next $200,000  is credited  at 100%,  and                                                                    
     contributions above  $300,000 is credited at  50%. This                                                                    
     credit  can   be  taken  across  multiple   tax  types.                                                                    
     Reducing the 100% level of  the credit would reduce the                                                                    
     more than $7.4 million in foregone revenue.                                                                                
     6.   A  recommendation  for  the  House  State  Affairs                                                                    
     Committee: Amend  AS 43.52.255 to remove  the deduction                                                                    
     of  local  levies   against  the  Commercial  Passenger                                                                    
     Vessel  Tax. This  deduction  results  in an  estimated                                                                    
     $13,559,5558   ($13.56   million)  in   forgone   state                                                                    
     revenue.                                                                                                                   
     7.   A  recommendation  for  the  House  Transportation                                                                    
     Committee:  Amend AS  43.40.010(c) and  AS 43.98.025(d)                                                                    
     to repeal  or amend  the motor  fuel tax  timely filing                                                                    
     discount and  the tire fee timely  filing credit, which                                                                    
     result   in  forgone   revenue  of   approximately  $66                                                                    
     thousand  each.  Further,   reconsider  the  commercial                                                                    
     passenger vessel tax 72-hour  voyage exemption under AS                                                                    
     43.52.295(4),  which has  likely  modified cruise  ship                                                                    
     voyage plans in order to avoid the tax.                                                                                    
     8.   A recommendation for the  House Labor and Commerce                                                                    
     Committee:  Amend  or  repeal  AS  43.60.010(c),  which                                                                    
     reduces the  beer and malt  beverages tax from  $1.07 a                                                                    
     gallon to 35                                                                                                               
    beer sold in the state from a brewery who meets the                                                                         
     U.S.  definition  of  a  small  brewery.  35%  of  this                                                                    
     reduced rate is claimed by  out of state breweries. The                                                                    
     estimated forgone revenue is $2.6 million.                                                                                 
     9.   A   recommendation   for   the   House   Resources                                                                    
     Committee:   As  27.30.030,   AS   43.20.044,  and   AS                                                                    
     43.62.010, relating  to mining license  tax exemptions,                                                                    
     credits, and  deductions, should  be re-examined  by an                                                                    
     interim  taskforce.   Some  of  these   deductions  and                                                                    
     credits  were  established  pre-statehood  and  may  no                                                                    
     longer  meet intent.  Estimated known  foregone revenue                                                                    
     exceeds $6 million, with more  foregone revenue that is                                                                    
     not tracked.                                                                                                               
     10.  A   recommendation   for   the   House   Resources                                                                    
     Committee: Sunset AS 43.20.053,  the in- state refinery                                                                    
     tax credit,  on December  31, 2017. The  current sunset                                                                    
     date  is  December  31, 2019.  If  all  three  in-state                                                                    
     refineries were  to claim this  credit each year  it is                                                                    
     available,  changing  the  sunset by  two  years  could                                                                    
     result in  savings of $60 million.  However, because of                                                                    
     the number of tax payers  involved it is impossible for                                                                    
     Revenue to report how much  has been claimed under this                                                                    
     credit.                                                                                                                    
     11.  A recommendation for  the House Finance Committee:                                                                    
     Amend   or   repeal   various  corporate   income   tax                                                                    
     exemptions found  under AS 43.19 and  AS 43.20, several                                                                    
     of which were adopted to  conform with federal tax code                                                                    
     but are no  longer necessary or no  longer meet intent.                                                                    
     The  fiscal impact  of these  exemptions is  unknown at                                                                    
     this  time because  the potential  tax  revenue is  not                                                                    
     reported.                                                                                                                  
                                                                                                                                
     Other Information:                                                                                                         
                                                                                                                                
     The Subcommittee  discussed a variety of  issues during                                                                    
     the meetings.                                                                                                              
                                                                                                                                
     Several members expressed  interest in increasing state                                                                    
     investment  officers  or improving  investment  officer                                                                    
     recruitment   and   retention  tools.   More   in-house                                                                    
     investment  officers  could  result in  a  decrease  in                                                                    
     external  investment  management tools.  Ultimately  no                                                                    
     amendment   was   put  forward   during   subcommittee;                                                                    
     however,  this  remains  a point  of  interest  if  the                                                                    
     Department  can  demonstrate  a  plan  to  recruit  and                                                                    
     maintain these positions.                                                                                                  
                                                                                                                                
     The subcommittee also discussed  a requested remodel of                                                                    
     the Alaska Permanent  Fund Corporation office building,                                                                    
     which is also related  to investment officer retention.                                                                    
     This request  was not  offered as  an amendment,  as it                                                                    
     was more properly viewed as a capital request.                                                                             
                                                                                                                                
     Governor's Amendments:                                                                                                     
                                                                                                                                
     The  Governor did  not submit  any amendments  for this                                                                    
     agency.                                                                                                                    
                                                                                                                                
2:48:38 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment H DOR 1  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Taxation and Treasury                                                                                                      
     Tax Division                                                                                                               
     H DOR 1 - Add Corporate Income Tax Auditors                                                                                
                                                                                                                                
     Offered by Representative Seaton                                                                                           
     Increase  the corporate  income tax  auditing staff  to                                                                    
     capture additional  revenue that is  currently foregone                                                                    
     due  to  lack of  staff  resources.  Currently the  tax                                                                    
     system  is identifying  audit leads  that the  division                                                                    
     lacks   the  staff   time  to   investigate.  Estimated                                                                    
     additional revenue of $500,000 per auditor.                                                                                
     1004 Gen Fund (UGF) 246.0                                                                                                  
                                                                                                                                
Representative Wilson OBJECTED for discussion purposes.                                                                         
                                                                                                                                
Co-Chair Seaton read from a prepared statement (see above).                                                                     
                                                                                                                                
Representative  Wilson  asked why  the  money  would not  be                                                                    
program receipts.  She suggested  that the money  that could                                                                    
be found  could be used to  pay the amount. She  wondered if                                                                    
the state would be pursuing  people that owed more corporate                                                                    
tax than  what they  were paying now.  She wondered  how the                                                                    
state would be losing  approximately $1 million on corporate                                                                    
income tax. Co-Chair Seaton relayed  that the new accounting                                                                    
system identified  leads. There  were multiple leads  but no                                                                    
auditors  available to  work on  those  leads. The  revenues                                                                    
were  foregone which  the department  anticipated. He  noted                                                                    
that  two other  states  had hired  additional auditors  for                                                                    
corporate  income taxes.  Those states  recovered money  and                                                                    
encountered increased compliance  by corporations. The taxes                                                                    
came in as general funds  and were not program receipts. The                                                                    
funds came in as general taxes  from the auditing of the tax                                                                    
division. It was appropriate for  the monies that came in to                                                                    
the  unrestricted general  fund  to provide  the monies  for                                                                    
auditors. He had  no problem looking at it a  few years down                                                                    
the road  to see  about recovery  efforts. The  estimate was                                                                    
that  the auditors  would pay  for themselves  in the  first                                                                    
year and  bringing in $500,000 annually  per each additional                                                                    
auditor.                                                                                                                        
                                                                                                                                
Co-Chair Foster  let committee members  know Mr.  Spanos was                                                                    
available for questions.                                                                                                        
                                                                                                                                
Representative  Wilson indicated  that even  if the  program                                                                    
receipts were  not used currently  the legislature  would be                                                                    
adding  two additional  positions in  anticipation that  the                                                                    
state would receive more money.  She thought it was great if                                                                    
the state received  additional funds. She wanted  to be able                                                                    
to find out  whether the auditors were able to  bring in the                                                                    
anticipated  revenue after  the  first year.  She wanted  to                                                                    
follow the  money similar to the  Alaska Gasline Development                                                                    
Corporation  (AGDC). She  did not  have a  problem with  the                                                                    
amendment if  it was  successful in  bringing in  the money.                                                                    
She would  have a  problem if she  could not  follow whether                                                                    
the  state received  what  the state  thought  it would  She                                                                    
asked if the committee could make its program receipts.                                                                         
                                                                                                                                
Vice-Chair  Gara  relayed that  in  speaking  with DOR.  The                                                                    
department  was very  clear that  they did  not have  enough                                                                    
auditors.  They were  also  clear that  if  they had  enough                                                                    
auditors they  would be  able to raise  more money  than the                                                                    
auditors  would cost.  The  question  concerning whether  it                                                                    
would come  in in the  current year depended on  whether the                                                                    
state caught  someone who was  underpaid whether  they would                                                                    
take  it to  court  and whether  there  was litigation.  The                                                                    
state could not be guaranteed  that someone was not going to                                                                    
stall on  payments. He  thought it had  been clear  from the                                                                    
department that the state was  very short on auditors. If it                                                                    
had the auditors,  the state would make more  money than the                                                                    
cost of the auditors.                                                                                                           
                                                                                                                                
2:53:47 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster   also  informed   members  that   Mr.  Dan                                                                    
DeBartolo,  Director, Division  of Administrative  Services,                                                                    
Department  of Revenue,  was in  the audience  available for                                                                    
questions.                                                                                                                      
                                                                                                                                
Co-Chair Seaton  mentioned the ease  of requesting  a report                                                                    
on general  tax receipts recovered through  corporate income                                                                    
tax.  He thought  it would  be more  difficult to  set up  a                                                                    
different account  from UGF. He  suggested it would  be easy                                                                    
to find out whether the  auditors that were hired brought in                                                                    
the anticipated receipts.                                                                                                       
                                                                                                                                
DAN   DEBARTOLO,   DIRECTOR,  DIVISION   OF   ADMINISTRATIVE                                                                    
SERVICES, DEPARTMENT  OF REVENUE, spoke to  the question. He                                                                    
had discussed,  within the  department, the  issue following                                                                    
the subcommittee process.  It was agreed that  one thing the                                                                    
department should be  doing right away was to  create a more                                                                    
robust reporting mechanism  so that it could  report back in                                                                    
the following year during the  subcommittee process what the                                                                    
auditors   accomplished,  and   the   amount  collected   in                                                                    
corporate   income   taxes.   He  anticipated   having   the                                                                    
discussion  about the  effectiveness not  only in  the first                                                                    
year but in  years 2-5. To claim that  the mechanism worked,                                                                    
he suggested it might be  worthwhile to look beyond 5 years.                                                                    
He  would defer  further questions  on the  tax side  to Mr.                                                                    
Spanos on line.                                                                                                                 
                                                                                                                                
2:56:19 PM                                                                                                                    
                                                                                                                                
BRANDON   S.   SPANOS,   DEPUTY  DIRECTOR,   TAX   DIVISION,                                                                    
DEPARTMENT  OF REVENUE  (via teleconference),  clarified the                                                                    
question.                                                                                                                       
                                                                                                                                
Representative Wilson  wondered, if  the state were  to hire                                                                    
the auditors,  why they could  not be program  receipts. She                                                                    
understood that  it would  entail a code.  It would  make it                                                                    
easier to find out whether  the two additional hires brought                                                                    
in enough  to pay  for their  wages or  more. The  same idea                                                                    
could be applied in other  places as well. Mr. Spanos stated                                                                    
that it would  be very difficult to track  the payments from                                                                    
audits  of just  two auditors.  He suggested  it might  make                                                                    
more sense to put all  the corporate receipts into a special                                                                    
fund. It was  a policy call. It would be  difficult to track                                                                    
payment  receipts from  audits  done  by specific  auditors.                                                                    
While the department's system was  robust, it did not record                                                                    
payments  attached  to  audits   done  by  individuals.  The                                                                    
department  could do  it manually.  The department  would be                                                                    
tracking  the  new  auditors' revenues  manually  and  could                                                                    
report  that   information  back  to  the   legislature.  He                                                                    
provided the  caveat that the information  could be provided                                                                    
assuming it  was aggregated.  If one  auditor did  one audit                                                                    
and  a payment  came  in  for that  one  audit  it would  be                                                                    
questionable that the specific  number could be provided. He                                                                    
anticipated  within   one  year  several  audits   would  be                                                                    
completed. Assessments  could be provided in  a total dollar                                                                    
figure.  The  department  could also  provide  a  report  on                                                                    
payments, assuming they were paid.                                                                                              
                                                                                                                                
Representative Pruitt asked what  the state was looking for.                                                                    
He wondered  if the  state was looking  for people  that did                                                                    
not  pay their  taxes or  people  that had  errors in  their                                                                    
calculations.  Mr.  Spanos  responded the  tax  payers  were                                                                    
sophisticated  corporations that  were doing  their best  to                                                                    
pay  Alaska  as little  tax  as  possible. The  corporations                                                                    
studied Alaska's  statutes and interpret them  in their best                                                                    
interest.   Often   when   the  division   looked   at   the                                                                    
corporations it disagreed with the  stance they were taking.                                                                    
Many  of the  audits were  not what  would be  called "slam-                                                                    
dunk" audits. An audit was not  an open and shut case, but a                                                                    
resource intensive audit.  An auditor might have  to be sent                                                                    
to  a  company's  corporate  headquarters  to  review  large                                                                    
amounts of  paperwork or to communicate  frequently back and                                                                    
forth to  get the needed  level of substantiation to  make a                                                                    
determination. Some of the issues  involved a unitary filing                                                                    
for corporations.  For example, a company  doing business in                                                                    
Alaska might be a member  of a much larger corporation. They                                                                    
might claim that  they were not unitary with  their parent -                                                                    
the business  they do  in Alaska  should be  looked at  as a                                                                    
separate entity. It  was hardly ever the case  in the modern                                                                    
world.  Giant  corporations  controlled  their  subsidiaries                                                                    
and, generally,  the income from  the parent  company should                                                                    
be part of  the tax pie. Alaska should be  receiving a slice                                                                    
of the  pie. If the income  from the parent company  was not                                                                    
in  that pie,  the  pie  was much  smaller  as  well as  the                                                                    
revenue  Alaska  received.  There  were  several  other  tax                                                                    
issues that  the department would consider  assigning to the                                                                    
new auditors.                                                                                                                   
                                                                                                                                
Co-Chair Foster recognized Representative Lora Reinbold.                                                                        
                                                                                                                                
3:01:23 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt  thought  Mr. Spanos  was  indicating                                                                    
that  the entities  the state  was  pursuing were  typically                                                                    
multinational or  multistate entities rather than  the small                                                                    
business corporations  within the state. They  were entities                                                                    
that  created different  limited  liability corporations  to                                                                    
create  different tax  shields. He  asked if  his assessment                                                                    
was fair. Mr. Spanos agreed.                                                                                                    
                                                                                                                                
Representative Wilson MAINTAINED  her OBJECTION. She thought                                                                    
the information should be tracked.                                                                                              
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Grenn,   Guttenberg,   Kawasaki,  Ortiz,   Pruitt,                                                                    
Thompson, Seaton, Foster.                                                                                                       
OPPOSED: Tilton, Wilson.                                                                                                        
                                                                                                                                
Representative Gara was absent from the vote.                                                                                   
                                                                                                                                
The MOTION  PASSED (8/2). There being  NO further OBJECTION,                                                                    
Amendment H DOR 1 was ADOPTED.                                                                                                  
                                                                                                                                
3:03:54 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:04:36 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster repeated that Amendment  H DOR 1 passed on a                                                                    
vote of 8/2.                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  relayed  that  he was  in  charge  of  the                                                                    
language sections of the operating  budget bills. He had two                                                                    
other amendments to the Department  of Revenue's budget that                                                                    
were linked together.                                                                                                           
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment H DOR 2  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Child Support Services                                                                                                     
     Child Support Services Division                                                                                            
     H DOR 2 - Move Cost Recovery for Paternity Testing                                                                         
     from Language to Section 1 (Numbers)                                                                                       
                                                                                                                                
     Offered by Representative Seaton                                                                                           
     This  amendment  adds  the funding  from  the  language                                                                    
     section (formerly sec.  15 in HB 57, version  J) to the                                                                    
     numbers  section and  increases the  amount of  program                                                                    
     receipt  authority from  an estimated  $46.0 to  $50.0.                                                                    
     The language section is deleted in another amendment.                                                                      
                                                                                                                                
H DOR  2 and  H DOR  3 were  being offered  to clean  up and                                                                    
reduce the language sections of  the bill where possible and                                                                    
to put the information in the numbers section.                                                                                  
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton read from a  prepared statement (see above).                                                                    
He noted  that the  item was being  moved from  the language                                                                    
section  (subcommittees could  not  address or  act on  this                                                                    
section) of  the bill to  the numbers  section. Subcommittee                                                                    
members  would be  able  to address  and  amend the  numbers                                                                    
section once the information was moved over.                                                                                    
                                                                                                                                
Representative Wilson asked who  was paying for the program.                                                                    
Co-Chair  Seaton  responded  that  the money  was  from  the                                                                    
general  fund and  that currently  the numbers  were in  the                                                                    
language section.  Items in the  language section  could not                                                                    
be addressed or amended at  the subcommittee level. The idea                                                                    
was  to  take items  out  of  the language  sections,  where                                                                    
possible,  and place  them into  the numbers  section to  be                                                                    
available for subcommittee action in the future.                                                                                
                                                                                                                                
Representative Wilson understood  the change Co-Chair Seaton                                                                    
was suggesting. She  was unclear where the  full $50,000 was                                                                    
coming from. Co-Chair Seaton deferred to Mr. DeBartolo.                                                                         
                                                                                                                                
Mr. DeBartolo  did not have  the amendment in front  of him.                                                                    
Paternity testing  for Child Support  Services was  a budget                                                                    
item that was  added in every year and adjusted  back out at                                                                    
the end of  the year. The source of the  funds was a general                                                                    
fund match.  He apologized for not  having the documentation                                                                    
in front of him.                                                                                                                
                                                                                                                                
Representative Wilson referred  to page 1 of  the backup. It                                                                    
appeared there was  an increment of $50,000  and a decrement                                                                    
of $46,000 that  was not used, leaving a  balance of $4,000.                                                                    
She was trying  to determine if the  legislature was putting                                                                    
in  $50,000  from  program   receipts.  She  indicated  that                                                                    
typically when money came from  program receipts someone was                                                                    
paying for  it. She assumed,  because the test  was paternal                                                                    
in nature, it would be paid for  by a man. She was trying to                                                                    
understand who would  be paying for the  increase of $4,000.                                                                    
She requested an "at ease."                                                                                                     
                                                                                                                                
3:10:01 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:11:31 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Mr.  DeBartolo addressed  Representative Wilson's  question.                                                                    
He  explained that  every year  the  Child Support  Services                                                                    
Division  had to  estimate what  would  be paid  for by  the                                                                    
custodial  fathers  for  paternity  testing.  Representative                                                                    
Wilson  was correct  that the  parent paid  for the  testing                                                                    
rather   than   the   state.    Last   year   the   division                                                                    
underestimated the  collection amount by about  $4,000 which                                                                    
was the reason for the change.                                                                                                  
                                                                                                                                
Representative Wilson understood  the language portion being                                                                    
moved. She wanted to clarify  that money was not being added                                                                    
to the budget. Rather, it  was money the state was recouping                                                                    
from users  of the  program. Mr. DeBartolo  responded, "That                                                                    
is correct."                                                                                                                    
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DOR 2  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment H DOR 3  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Child Support Services                                                                                                     
     Child Support Services Division                                                                                            
     H DOR 3 - Move Cost Recovery for Paternity Testing                                                                         
     from Language to Section 1 (Numbers)                                                                                       
                                                                                                                                
     Offered by Representative Seaton                                                                                           
     See 30-GH1855J.7, Wallace, 1/31/17                                                                                         
     This amendment deletes section 15 in HB 57, version J.                                                                     
     The funding is added to the numbers section and                                                                            
     increased to $50.0 in another amendment.                                                                                   
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton  explained that the amendment  reflected the                                                                    
other  half  of  the  change to  the  language  section.  It                                                                    
removed an  estimated amount  in the  language section  to a                                                                    
specific  dollar amount  receipt  authority  in the  numbers                                                                    
section.                                                                                                                        
                                                                                                                                
Representative Wilson  asked Co-Chair Seaton to  restate his                                                                    
position. Co-Chair Seaton repeated his explanation.                                                                             
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There being NO further OBJECTION, H DOR 3 was ADPOTED.                                                                          
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment H DOR 4  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Alaska Mental Health Trust Authority                                                                                       
     Mental Health Trust Operations                                                                                             
     H  DOR 4  - Restore  Funding Level  to Trust  Requested                                                                    
     Amount or FASD Campaign                                                                                                    
                                                                                                                                
     Offered by Representative Seaton                                                                                           
     This amendment  in the amount  of $150,000 is  to fully                                                                    
     fund  and maintain  the capacity  of the  Institute for                                                                    
     Circumpolar  Health  Studies  to continue  to  develop,                                                                    
     implement and evaluate  Fetal Alcohol Spectrum Disorder                                                                    
     (FASD) prevention  strategies and to continue  the FASD                                                                    
     media  campaign, which  has  been  instrumental in  the                                                                    
     dissemination of FASD  prevention messaging. Each child                                                                    
     diagnosed  with  FASD will  cost  the  State of  Alaska                                                                    
     $850,000 to $4.2 million from age 0-18.                                                                                    
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton read from a prepared statement (see above).                                                                     
                                                                                                                                
3:16:14 PM                                                                                                                    
                                                                                                                                
Representative Wilson assumed that  the state already funded                                                                    
the program in  the amount of $250,000.  The amendment would                                                                    
add $150,000  to program funding. Co-Chair  Seaton responded                                                                    
that the  current funding  level was  $500,000. There  was a                                                                    
decrement of  $150,000 in the governor's  budget relating to                                                                    
the media  campaign which disseminated  the message  that no                                                                    
amount  of alcohol  was  appropriate  during pregnancy.  The                                                                    
other portion of funding would  be applied to pregnancy test                                                                    
kits. He  reported 2000 responses  to surveys by  women. The                                                                    
funding would provide money  for survey follow-ups regarding                                                                    
those  women that  stopped drinking  upon finding  out about                                                                    
their pregnancies. The  purpose of the project  was to lower                                                                    
FASD in Alaska.                                                                                                                 
                                                                                                                                
Representative Wilson argued that  although the amount being                                                                    
requested  was  minimal,  she opposed  providing  additional                                                                    
funding.  She thought  the tests  were provided  at bars  to                                                                    
determine whether an individual  was pregnant or eligible to                                                                    
drink.  She was  unclear where  the survey  data would  come                                                                    
from. She  did not feel it  was the job of  state government                                                                    
to  provide   the  funding.  She   would  be   opposing  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Representative  Kawasaki agreed  with some  of the  comments                                                                    
made by Representative Wilson. He  reported that the program                                                                    
was being  funded for the  second year. Although  the survey                                                                    
provided some  results, it  was difficult  to tell  from the                                                                    
sample  whether   the  information  that  was   gleaned  was                                                                    
voluntary. He was  trying to understand the  efficacy of the                                                                    
specific program of putting pregnancy  tests in bars. If the                                                                    
program was  not working the  state should cease  paying for                                                                    
it. Conversely,  if the program  was working, he  thought it                                                                    
deserved  further  discussion.  If there  were  results,  he                                                                    
wanted to hear about them.  Co-Chair Seaton relayed that Mr.                                                                    
Jesse was available for questions.  He reminded members that                                                                    
the  amount  would  restore the  media  campaign  to  adults                                                                    
across the state.                                                                                                               
                                                                                                                                
3:19:41 PM                                                                                                                    
                                                                                                                                
JEFF JESSE, LEGISLATIVE LIAISON,  ALASKA MENTAL HEALTH TRUST                                                                    
AUTHORITY,    introduced    himself.   He    responded    to                                                                    
Representative Kawasaki that the  surveys were voluntary. He                                                                    
explained that  there was a  que code  on a poster  with the                                                                    
pregnancy  dispensers. He  believed there  was a  small gift                                                                    
certificate  that was  provided to  women who  completed the                                                                    
survey. It  was a  remarkable return of  the survey  for the                                                                    
type  of an  analysis.  He emphasized  that  the survey  was                                                                    
completely voluntary.                                                                                                           
                                                                                                                                
Representative   Wilson   noted   that  the   $150,000   was                                                                    
designated general  funds. She wondered if  the amount could                                                                    
be  utilized  in another  part  of  the budget  for  another                                                                    
program.  She asked  if she  was  accurate. Co-Chair  Seaton                                                                    
answered that the amount was  for alcohol and drug treatment                                                                    
prevention  funds, 20  percent of  which was  to go  towards                                                                    
alcohol  and prevention  programs.  He thought  FASD was  an                                                                    
appropriate target  for reducing  the effects of  alcohol on                                                                    
the Alaska  population. The state  had a high rate  of FASD.                                                                    
He  invited Mr.  Jesse  to talk  about  the distribution  of                                                                    
funds.                                                                                                                          
                                                                                                                                
Mr.  Jesse thought  Representative Wilson  was correct  that                                                                    
the state  did not  have dedicated funds.  The amount  was a                                                                    
designated fund which meant the  money could be used for any                                                                    
purpose.                                                                                                                        
                                                                                                                                
Representative  Wilson suggested  that  the  money could  be                                                                    
used  for more  services in  behavioral health  to get  more                                                                    
services to  people with drinking problems.  She pointed out                                                                    
that the money  could be spent towards  more services rather                                                                    
than a campaign. She thought  the gift cards given to survey                                                                    
participants  were likely  another  cost to  the state.  She                                                                    
thought  the  money  should be  utilized  for  a  behavioral                                                                    
service having  to do  with alcohol  or drug  addiction. She                                                                    
wanted the committee  members to understand that  it was not                                                                    
money the state would be giving  up, it was money that could                                                                    
go directly towards  services. She did not  need a response.                                                                    
She knew her statement to be true.                                                                                              
                                                                                                                                
Representative Wilson MAINTAINED her OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Guttenberg, Ortiz, Gara, Grenn, Foster, Seaton.                                                                       
OPPOSED: Kawasaki, Pruitt, Thompson, Tilton, Wilson.                                                                            
                                                                                                                                
The MOTION  PASSED (6/5). There being  NO further OBJECTION,                                                                    
Amendment H DOR 4 was ADOPTED.                                                                                                  
                                                                                                                                
3:23:28 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:24:14 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Seaton asked  Representative  Kawasaki to  present                                                                    
the subcommittee report for DMVA.                                                                                               
                                                                                                                                
Representative Kawasaki read from his report:                                                                                   
                                                                                                                                
     The Chair of the  House Finance Budget Subcommittee for                                                                    
     the  Department  of   Military  and  Veterans'  Affairs                                                                    
     recommends that the House  Finance Committee accept the                                                                    
     Governor's   FY18    Amended   Budget    with   further                                                                    
     amendments:                                                                                                                
                                                                                                                                
     The   FY18   budget   with   recommended   subcommittee                                                                    
     amendment totals:                                                                                                          
                                                                                                                                
     Fund Source: (dollars are in thousands)                                                                                    
     Unrestricted General Funds (UGF) $16,349.4                                                                                 
     Designated General Funds (DGF) 28.4                                                                                        
     Other Funds 10,180.6                                                                                                       
     Federal Funds 30,995.1                                                                                                     
     Total $57,553.5                                                                                                            
                                                                                                                                
Representative   Kawasaki  indicated   that  there   was  an                                                                    
increase of roughly $100,700 from  the FY 17 Management Plan                                                                    
with  an  unrestricted  general   fund  (UGF)  of  $16,248.7                                                                    
representing a  .6 percent increase.  He continued  that the                                                                    
subcommittee  met  several  times  over the  month  and  was                                                                    
forwarding  two budget  amendments which  he would  speak to                                                                    
shortly.                                                                                                                        
                                                                                                                                
Representative Kawasaki  read the  statutory recommendations                                                                    
by the finance subcommittee:                                                                                                    
                                                                                                                                
     The following  statutory recommendations  are submitted                                                                    
     to the House Finance Committee:                                                                                            
                                                                                                                                
     1.  Amend AS  26.27 to  provide statutory  authority to                                                                    
     the Alaska Aerospace Corporation  to issue dividends to                                                                    
     the State  of Alaska. This change  is necessary because                                                                    
     the corporation stated  intentions to provide dividends                                                                    
     to  the State  in the  future, but  does not  currently                                                                    
     have the statutory authority to do so.                                                                                     
                                                                                                                                
     2.  Move Alaska  Aerospace Corporation  from Title  26,                                                                    
     the Department  of Military  and Veterans'  Affairs, to                                                                    
     Title  14, the  Department of  Commerce, Community  and                                                                    
     Economic Development. This  change is important because                                                                    
     several  public  corporations   are  housed  in  DCCED,                                                                    
     including  Alaska  Energy Authority,  Alaska  Railroad.                                                                    
     Alaska Gasline  Development Corporation and  the Alaska                                                                    
     Industrial Development  & Export Authority,  several of                                                                    
     which  have  bonding  authority, issue  dividends,  can                                                                    
     purchase  land  and  have   tangible  assets.  AAC  was                                                                    
     originally  housed in  DCCED until  2011 when  moved by                                                                    
     Executive Order 115.                                                                                                       
                                                                                                                                
Representative Kawasaki reviewed  other information from his                                                                    
report:                                                                                                                         
                                                                                                                                
Other Information:                                                                                                              
                                                                                                                                
     1. An  amendment proposal was  offered that  would have                                                                    
     reduced  $388.0  UGF  from  personal  services  in  the                                                                    
     Office of  the Commissioner, an approximate  20 percent                                                                    
     reduction   from  post-vacancy   amount.  The   sponsor                                                                    
     offered  the  proposal  as flexibility  to  reduce  UGF                                                                    
     spending in the Office of the Commissioner.                                                                                
                                                                                                                                
     Subcommittee Discussion:                                                                                                   
     The Department  said the  $388.0 deletion  would impact                                                                    
     46 PCNs that specialize in human                                                                                           
     resources,  budget submissions,  equipment procurement,                                                                    
     internet technology and others that                                                                                        
     support  270  personnel  across  the  state,  including                                                                    
     those who oversee the development and                                                                                      
     submission  of  its   operating,  capital  and  federal                                                                    
     budget requests.                                                                                                           
                                                                                                                                
     2. An  amendment proposal was  offered that  would have                                                                    
     reduced $273.0 UGF  from services in the  Office of the                                                                    
     Commissioner, a  15 percent reduction of  services from                                                                    
     the  Governor's   FY18  Amended  Budget.   The  sponsor                                                                    
     offered  the amendment  to scale  back on  recent years                                                                    
     increases.                                                                                                                 
                                                                                                                                
3:27:38 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki MOVED  to ADOPT  Amendment H  MVA 1                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Military and Veterans' Affairs                                                                                             
     Office of the Commissioner                                                                                                 
     H MVA 1  - Eliminate Expansion of  Alaska State Defense                                                                    
     Force for Rural Engagement                                                                                                 
                                                                                                                                
     Offered by Representative Kawasaki                                                                                         
     Due to  current budget  deficit, the  subcommittee does                                                                    
     not  wish to  expand  or create  new  programs at  this                                                                    
     time.                                                                                                                      
     1004 Gen Fund (UGF) -210.9                                                                                                 
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Kawasaki  read the amendment (see  above). He                                                                    
noted  that  while  the  committee  agreed  that  the  rural                                                                    
engagement  component and  the  Alaska  State Defense  Force                                                                    
were very important, due to  budget restraints the committee                                                                    
denied the increment. He furthered  that the department came                                                                    
to the legislature  in FY 17 for a $1.3  million UGF request                                                                    
and a  $1 million capital  request which were denied  at the                                                                    
time for similar reasons.                                                                                                       
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There  being NO  further OBJECTION,  Amendment H  DMV 1  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Representative  Kawasaki MOVED  to ADOPT  Amendment H  MVA 2                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Alaska Military Youth Academy                                                                                              
     H MVA 2  - Report on Alaska Military  Youth Academy UGF                                                                    
     Structure                                                                                                                  
                                                                                                                                
     Offered by Representative Kawasaki                                                                                         
     It  is   the  intent   of  the  Legislature   that  the                                                                    
     Department  of Military  and  Veteran's Affairs  (DMVA)                                                                    
     develops  a  report to  the  Co-Chairs  of the  Finance                                                                    
     committees   and   Legislative  Finance   Division   by                                                                    
     December 1, 2017, identifying funding                                                                                      
     options available to the  Alaska Military Youth Academy                                                                    
     to   generate  revenue.   The   report  shall   include                                                                    
     recommendations  and limitations  for  tuition and  fee                                                                    
     structures  based  on   income  levels  of  applicants'                                                                    
     households,    and    how    to    incorporate    those                                                                    
     recommendations into  Fiscal Year  2019 budget  for the                                                                    
     Department. The  report shall  also include  the impact                                                                    
     of  those recommendations  on federal  matching dollars                                                                    
     and the UGF budget.                                                                                                        
                                                                                                                                
Co-Chair Foster OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Kawasaki  read the amendment (see  above). He                                                                    
indicated  that, according  to  the  department, any  dollar                                                                    
recuperated  from tuition  or voluntary  contributions might                                                                    
reduce  the  federal pay-in  to  a  ratio  of 75  cents  per                                                                    
dollar.                                                                                                                         
                                                                                                                                
3:30:08 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  commented  that the  Military  Youth                                                                    
Academy  had   taken  less  money  for   BSA  [Base  Student                                                                    
Allocation]  than  any  academy.   The  academy  set  a  fee                                                                    
structure  a few  years prior.  She was  concerned with  the                                                                    
intent  language  and  whether   it  would  apply  to  Mount                                                                    
Edgecombe or  other public schools. She  thought the academy                                                                    
had made  great efforts. She  noted the entity  had accepted                                                                    
Alaska dropouts  and helped them  get back into  school. She                                                                    
did  not believe  there would  be  very few  parents of  the                                                                    
academy  that would  be able  to provide  funding for  their                                                                    
children.  She suggested  the intent  language be  adjusted.                                                                    
She also suggested some of  the schools giving up their BSA.                                                                    
She wanted additional information  prior to including intent                                                                    
language that could  result in the loss  of federal funding.                                                                    
She was concerned with entities being treated equitably.                                                                        
                                                                                                                                
Co-Chair Seaton clarified that the  DMVA budget was the only                                                                    
one  before  the committee  presently.  He  also noted  that                                                                    
during  round  two  of   the  amendment  process  individual                                                                    
finance  members   could  offer  further  intent   or  other                                                                    
amendments.                                                                                                                     
                                                                                                                                
Representative   Pruitt  mentioned   the  75/25   ratio.  He                                                                    
suggested that the  state received $25 for  every dollar the                                                                    
state  brought in.  He wondered  if it  would make  sense to                                                                    
seek  the funds  from a  few available  people. His  friends                                                                    
that attended  the academy would  not have had the  means to                                                                    
pay for  it on their own.  He noted that in  the narrative a                                                                    
non-profit  was  mentioned.  He wondered  if  there  was  an                                                                    
opportunity  to utilize  monies  from  non-profits or  money                                                                    
from  outside state  government  to cover  the  25 cents  to                                                                    
avoid losing federal funding.                                                                                                   
                                                                                                                                
Representative  Thompson was  concerned with  the amendment.                                                                    
He reported that  over the last 3 years  the legislature had                                                                    
reduced the Youth  Academy funding. The entity  had laid off                                                                    
several people and was operating  on a shoestring budget. He                                                                    
thought demanding  an additional  report that  would require                                                                    
research  was  unreasonable  because  of  the  reduction  in                                                                    
personnel.  He thought  the committee  would  be asking  the                                                                    
academy  to  do  more  with  less  people.  He  opposed  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Representative Kawasaki believed at  the time the department                                                                    
had  no objection  to  the  amendment. Subcommittee  members                                                                    
also had  no objection. The  committee did not want  to deny                                                                    
someone  the  ability to  attend  or  to create  a  chilling                                                                    
effect with a tuition. There  were cases in which there were                                                                    
kids whose families could pay  that had no avenue to capture                                                                    
the funds.  He relayed that  there was a  501(c)3 non-profit                                                                    
that was being  lined up, but the paperwork  was in process.                                                                    
The recommendation,  if passed by the  committee, would come                                                                    
before the  body again in  the following year at  which time                                                                    
options would  be presented. He  reiterated that  there were                                                                    
no  objections   in  the   subcommittee  to   the  amendment                                                                    
proposal.                                                                                                                       
                                                                                                                                
3:35:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton asked  if it meant the 501(c)3  being set up                                                                    
to  receive  funds was  providing  a  mechanism for  receipt                                                                    
authority. He wondered if the  state of Alaska would be able                                                                    
to accept  donations from the  501(c)3 for  augmentations to                                                                    
the program.  Representative Kawasaki responded that  it was                                                                    
envisioned  that  the  501(c)3  would  allow  offsetting  of                                                                    
general  funds.  Research  was  still  needed  to  determine                                                                    
whether the offsetting  of funds would cause  a problem with                                                                    
federal receipts - the reason  the intent language was being                                                                    
offered.                                                                                                                        
                                                                                                                                
Co-Chair  Seaton clarified  that it  was intent  language to                                                                    
allow   it.  However,   nothing  had   been  done   to-date.                                                                    
Representative Kawasaki responded affirmatively.                                                                                
                                                                                                                                
Co-Chair Foster WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
Representative  Wilson  OBJECTED.  She  commented  that  the                                                                    
military academy had  done what she wished  all schools did.                                                                    
They dwindled their  budget and only charged  the state what                                                                    
it needed. She  wished all the districts would  do the same.                                                                    
The  academy  had a  very  successful  program and  attained                                                                    
federal dollars.  She thought  it was  terrible to  tell the                                                                    
academy it  needed to find  additional funds  somewhere else                                                                    
when  they  had been  a  model.  She  believed it  would  be                                                                    
sending  the  wrong message  to  a  successful program.  She                                                                    
invited members to imagine what  would happen if the academy                                                                    
got  caught up,  causing anguish  and  a lack  of desire  to                                                                    
participate.  The  academy  accepted  mostly  dropouts.  She                                                                    
concluded  that instead  of rewarding  the  academy for  its                                                                    
performance,  the  amendment  sent the  wrong  message.  She                                                                    
could not support it.                                                                                                           
                                                                                                                                
Representative Kawasaki  addressed one of the  concerns that                                                                    
was mentioned. He thought the  Alaska Military Youth Academy                                                                    
had  done a  great job.  However, the  academy was  capacity                                                                    
driven  and was  up such  that  they needed  to match  every                                                                    
federal  dollar   available.  If  the  state   was  able  to                                                                    
contribute more  into the GF function,  it could potentially                                                                    
expand and grow  with another unit. He pointed  out that the                                                                    
problem  was that  the  state was  looking  for nickels  and                                                                    
dollars  everywhere.  If  the   state  wanted  a  successful                                                                    
program  within   the  Alaska  Military  Youth   Academy  to                                                                    
increase,  utilizing  a  501(c)3  or some  sort  of  tuition                                                                    
system provided an avenue to do so.                                                                                             
                                                                                                                                
Representative Wilson MAINTAINED her OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Guttenberg, Kawasaki, Ortiz, Seaton, Foster                                                                           
OPPOSED: Pruitt, Thompson, Wilson, Grenn                                                                                        
                                                                                                                                
Vice-Chair Gara  and Representative Tilton were  absent from                                                                    
the vote.                                                                                                                       
                                                                                                                                
The MOTION  PASSED (5/4). There being  NO further OBJECTION,                                                                    
Amendment H MDV 2 was ADOPTED.                                                                                                  
                                                                                                                                
Co-Chair Seaton asked Representative  Kawasaki if there were                                                                    
any  other  amendments  for  DMVA.  Representative  Kawasaki                                                                    
responded in the negative.                                                                                                      
                                                                                                                                
Representative    Pruitt    asked     if    the    statutory                                                                    
recommendations would  be discussed further. He  asked if it                                                                    
was currently  the time to discuss  the recommendations. Co-                                                                    
Chair  Seaton  relayed  that the  statutory  recommendations                                                                    
were  developed by  the subcommittees  and forwarded  to the                                                                    
policy  committee by  the subcommittees.  House finance  was                                                                    
not  taking any  action.  Every member  had  the ability  to                                                                    
forward   statutory    amendments   on   their    own.   The                                                                    
recommendations were for the  policy committees to consider.                                                                    
The   legislature   was   not  voting   on   the   statutory                                                                    
recommendations developed by the policy committee.                                                                              
                                                                                                                                
Representative  Pruitt wondered  if  it  was an  appropriate                                                                    
time to  discuss the  subcommittee recommendations  prior to                                                                    
the  bill moving  out  of the  House  Finance Committee.  He                                                                    
restated his  question about discussing  the items  prior to                                                                    
them  moving out  of  committee.  Co-Chair Seaton  explained                                                                    
that one of the ideas  of having the policy committees serve                                                                    
as the  budget subcommittees was for  the recommendations to                                                                    
be discussed  within the subcommittee except  for those from                                                                    
the  Department  of  Revenue.  He  explained  that  DOR  was                                                                    
considering  tax items.  In  most  cases, the  subcommittees                                                                    
were policy  committees reviewing  proposed actions.  It was                                                                    
not the  finance committee telling the  policy committee but                                                                    
rather   the  policy   committee's  functioning   as  budget                                                                    
subcommittees.  The  budget subcommittees  were  responsible                                                                    
for  identifying statutory  actions  for consideration.  The                                                                    
recommendations  would   come  through  the   House  Finance                                                                    
Committee  in the  form of  a piece  of legislation  because                                                                    
they   would  most   likely  be   related  to   finance.  He                                                                    
anticipated  that  the  statutory recommendations  based  on                                                                    
change  in  the  budget  would come  to  the  committee.  If                                                                    
recommendations  did not  evolve  into bills  they could  be                                                                    
offered  by any  individual  member of  the subcommittee  or                                                                    
anyone  in the  House. The  committee would  not get  into a                                                                    
discussion  about  the  subcommittee  recommendations.  They                                                                    
were subcommittee recommendations to the policy committees.                                                                     
                                                                                                                                
3:44:14 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt express  confusion  about the  policy                                                                    
committee  versus the  subcommittee. He  indicated that  the                                                                    
subcommittees  were chaired  by  House  Finance members.  He                                                                    
thought there  would be some statutory  recommendations that                                                                    
would come from the finance  subcommittee that he might have                                                                    
concerns  with.  He  felt  there  was  confusion  about  why                                                                    
statutory recommendations would be  generated from a finance                                                                    
subcommittee.  He thought  they should  have been  left with                                                                    
the policy  committee and left  out of the  finance reports.                                                                    
Co-Chair Seaton added  that he wanted the  full committee to                                                                    
have   the   information   about   the   findings   of   the                                                                    
subcommittees.  However, changes  could not  be accomplished                                                                    
through the  finance committee. They had  to be accomplished                                                                    
through statutory change.                                                                                                       
                                                                                                                                
Representative   Wilson   noted   the  Alaska   Aero   Space                                                                    
Corporation and wondered  if it would take  a statute change                                                                    
to move the division into  commerce rather than to change it                                                                    
in  the  budget.  Co-Chair Seaton  responded  affirmatively.                                                                    
Representative Wilson wanted  clarification. She thanked Co-                                                                    
Chair Seaton.                                                                                                                   
                                                                                                                                
HB  57  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  59  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Seaton reviewed the agenda for the following day.                                                                      
                                                                                                                                

Document Name Date/Time Subjects
Callan - APFC -H. Finance Committee Presentation.pdf HFIN 2/23/2017 1:30:00 PM
Callan Presentation HFIN
Return Projection Methodology APFC HFIN 01.17.17.pdf HFIN 2/23/2017 1:30:00 PM
Callan Presentation HFIN
DMVA-Subcommittee Packet HFIN.pdf HFIN 2/23/2017 1:30:00 PM
HB 57
GOV-Subcommittee PKT Packet HFIN.pdf HFIN 2/23/2017 1:30:00 PM
HB 57
DCCED-Subcommittee Packet HFIN.pdf HFIN 2/23/2017 1:30:00 PM
HB 57
DPS-Subcommittee Packet HFIN.pdf HFIN 2/23/2017 1:30:00 PM
HB 57
DEC-Subcommittee Packet HFIN.pdf HFIN 2/23/2017 1:30:00 PM
HB 57
DOR-Subcommittee Packet HFIN.pdf HFIN 2/23/2017 1:30:00 PM
HB 57
Operating Budget emails 1- 2.17.17.PDF HFIN 2/23/2017 1:30:00 PM
HB 57