Legislature(2017 - 2018)ADAMS ROOM 519

02/21/2018 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 96 TAXES;DEDUCTIONS;FEES;TAX STAMP DISCOUNT TELECONFERENCED
Heard & Held
-- Public Testimony --
+= SB 97 PENSION OBLIGATION BONDS TELECONFERENCED
<Bill Hearing Canceled>
+= HB 176 GROUND EMER. MEDICAL TRANSPORT PAYMENTS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 321 APPROP: SUPPLEMENTAL OP.; FUND; AMENDING TELECONFERENCED
Heard & Held
HOUSE BILL NO. 321                                                                                                            
                                                                                                                                
     "An  Act making  supplemental appropriations  and other                                                                    
     appropriations; making  an appropriation  to capitalize                                                                    
     a fund;  amending appropriations; and providing  for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:35:38 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster MOVED to ADOPT the proposed committee                                                                           
substitute    for   HB    321,   Work    Draft   30-GH2781\O                                                                    
(Wallace/Martin, 2/20/18).                                                                                                      
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
JOAN BROWN, STAFF, REPRESENTATIVE PAUL SEATON, explained                                                                        
the changes in the work draft. She read from a prepared                                                                         
statement:                                                                                                                      
                                                                                                                                
     The  Administration included  supplemental requests  in                                                                    
     the  operating and  capital  budget  bills released  on                                                                    
     December   15th.   The   Administration's   stand-alone                                                                    
     supplemental bill  was introduced as HB  321 on January                                                                    
     31st.  OMB described  the  December 15th  supplementals                                                                    
     when they  presented their  budget overview  on January                                                                    
     18th, the  supplemental bill  requests on  February 1st                                                                    
     and then went through  the supplemental amendments last                                                                    
     Friday, February 16th.                                                                                                     
                                                                                                                                
     The four finance co-chairs, with  the assistance of the                                                                    
     Legislative Finance  Division, have been  analyzing the                                                                    
     supplemental requests  with the goal of  having a "fast                                                                    
     track"  supplemental  bill.  It's  been  several  years                                                                    
     since a  separate supplemental  bill has  been adopted,                                                                    
     but  it used  to be  the norm.  There are  a couple  of                                                                    
     reasons why  earlier passage  of at  least some  of the                                                                    
     supplemental requests is a good idea:                                                                                      
                                                                                                                                
          1.   Agencies  that  are requesting  supplementals                                                                    
          know their  final current fiscal year  budget more                                                                    
          timely,  alleviating uncertainty  for the  program                                                                    
          managers  and  for  those that  benefit  from  the                                                                    
          programs.                                                                                                             
          2.   Shortening  the  list of  supplementals  that                                                                    
          get added to the capital  budget at the end of the                                                                    
          legislative session  (or special  session) reduces                                                                    
          the size of the  actual capital budget bill making                                                                    
          it easier  to track  the items  that should  be in                                                                    
          the  bill.   When many  items are  being added  or                                                                    
          deleted in  various bills and between  the bodies,                                                                    
          items can be  inadvertently dropped. That happened                                                                    
          last year.  Line 21 adds  a supplemental  that was                                                                    
          inadvertently dropped  last year. This  Fast Track                                                                    
          eliminates  9  pages  out of  the  capital  budget                                                                    
          bill.  This allows  Legal Services  to get  a bill                                                                    
          out more quickly.                                                                                                     
                                                                                                                                
     Requests  that didn't  make it  into  the "fast  track"                                                                    
     just  mean that  at least  one finance  co-chair had  a                                                                    
     concern  or question  that was  not answered  timely or                                                                    
     satisfactorily.   Any  remaining supplemental  requests                                                                    
     will be considered for inclusion  in the capital budget                                                                    
     bill.  Tomorrow the  other  finance  committee is  also                                                                    
     introducing an  identical version  of the  "Fast Track"                                                                    
     supplemental.                                                                                                              
                                                                                                                                
1:39:36 PM                                                                                                                    
                                                                                                                                
Ms. Brown continued to read from her prepared introductory                                                                      
remarks:                                                                                                                        
                                                                                                                                
     In  addition to  the  O  version of  HB  321, you  have                                                                    
     before you:                                                                                                                
                                                                                                                                
          1.   The  legal-sized   spreadsheet  of   all  the                                                                    
          supplemental requests.                                                                                                
          a.   The lines that are  shaded green in the first                                                                    
          column means those items are  included in the Fast                                                                    
          Track supplemental.  So all  of the items on pages                                                                    
          1  through 7  ?  are included.    You'll find  the                                                                    
          Supplemental  Bill   total  on   page  6   of  the                                                                    
          spreadsheet:   $49.5   million   of   Unrestricted                                                                    
          General Fund,  $5.1 million of  Designated General                                                                    
          Funds,  and $13.1  million of  Other  Funds for  a                                                                    
          total of $67.7 million.                                                                                               
          b.   The  remaining  page  and   a  half  are  the                                                                    
          accounting system  ratifications for  prior years,                                                                    
          which don't add to  the bill total. (Ratifications                                                                    
          are  entries  adding  authorization  to  zero  out                                                                    
          accounting system errors.   The funds were already                                                                    
          spent in the prior years.)                                                                                            
          c.   The second  "Bill" column indicates  in which                                                                    
          bill the supplemental was requested.                                                                                  
          d.   The  middle   columns  of   the  spreadsheet:                                                                    
          Department through Fund  Source are unchanged from                                                                    
          the OMB version of the spreadsheet.                                                                                   
          e.   On  the right  side of  the spreadsheet,  the                                                                    
          yellow   highlighted  Modification   column  notes                                                                    
          what,  if  any,   changes  the  Finance  Committee                                                                    
        chairs have made to the original requests.                                                                              
          i.   For example,  on lines  2-4, these  items are                                                                    
          now in the numbers section instead of language.                                                                       
          ii.  On line 8 there's  a new supplemental request                                                                    
          from   the   legislature    for   $121.3   General                                                                    
          Fund/Program Receipts related  to the extension of                                                                    
          the  Anchorage Wells  Fargo  lease  in the  Benson                                                                    
          Blvd.                                                                                                                 
          iii. There are  a variety  of other  changes noted                                                                    
          in this column as well.                                                                                               
          f.   On  the far  right side  of the  spreadsheet,                                                                    
          the   yellow   highlighted   Legislative   Finance                                                                    
          Division or LFD  Notes column includes explanatory                                                                    
          notes.                                                                                                                
                                                                                                                                
     2.   You  also   have  a  3-page   Legislative  Finance                                                                    
     operating  supplemental report  with red  boxes on  it.                                                                    
     The  numbers  in  the  boxes  correspond  to  the  line                                                                    
     numbers on the legal-sized spreadsheet.                                                                                    
     3.   A Multi-year Agency Summary report that shows the                                                                     
     Fast Track supplementals by agency and whether they                                                                        
     are operating or capital.                                                                                                  
                                                                                                                                
          a.   There's only  one capital item  included: the                                                                    
          $8,125.0  Statutory  Designated  Program  Receipts                                                                    
          Volkswagen settlement.  It is described on line                                                                       
          14 of the legal-sized spreadsheet.                                                                                    
          b.   You may notice that  the total on this report                                                                    
          is less  than the $67.7 million  I just mentioned.                                                                    
          That's because  on the Agency Summary  Report, the                                                                    
          Fund Transfers  are not included in  the Statewide                                                                    
          Total.   However, the Fund Transfers  are shown on                                                                    
          the report  and if one  does the math,  the totals                                                                    
          do match.                                                                                                             
                                                                                                                                
     [Secretary Note: All the documents Ms. Brown referred                                                                      
     to are on file.]                                                                                                           
                                                                                                                                
1:42:44 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton recognized  that Representative Kawasaki and                                                                    
Representative Guttenberg had joined the meeting.                                                                               
                                                                                                                                
Representative  Pruitt asked  if the  $30 million  increment                                                                    
was  switching   the  fund  source   from  the   Power  Cost                                                                    
Equalization   (PCE)   Endowment    Fund   to   the   Alaska                                                                    
Comprehensive Health Insurance Fund (ACHI).                                                                                     
                                                                                                                                
DAVID TEAL, DIRECTOR,  LEGISLATIVE FINANCE DIVISION, replied                                                                    
in  the   affirmative.  He  detailed  that   the  governor's                                                                    
original budget  funded the  Community Assistance  Fund (CA)                                                                    
from  PCE in  FY  2018, which  informed  communities of  the                                                                    
amount of  their FY 2019  distribution but left the  FY 2020                                                                    
amounts  unknown. The  supplemental CS  proposed to  use the                                                                    
reinsurance refund  from Premera to  ACHI on line 13  of the                                                                    
spreadsheet ["FY2018  Supplemental Bill"] (copy on  file) in                                                                    
the amount of $25 million. The  balance of the ACHI fund was                                                                    
somewhere between  $80 million and $90  million. The purpose                                                                    
was  to allow  the PCE  earnings to  be used  in FY  19; the                                                                    
transaction   occurred   in   the  operating   budget.   The                                                                    
transaction  put   the  PCE  earnings  used   for  community                                                                    
assistance  back  on  the  original  track  the  legislature                                                                    
intended; prefunding  CA rather than using  the supplemental                                                                    
process.  The  governor's   budget  disregarded  one  year's                                                                    
deposit  therefore, in  order to  save the  $30 million  PCE                                                                    
withdraw for FY  19, the ACHI fund source was  chosen for FY                                                                    
18.  One-time  funding  was chosen  for  the  one-time  fund                                                                    
source,   which   was   a  reimbursement   for   reinsurance                                                                    
overpayment.                                                                                                                    
                                                                                                                                
1:46:35 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt recalled  that  the  PCE fund  earned                                                                    
$112  million the  past year  and a  formula determined  the                                                                    
amount available  to spin  off for  PCE. Legislation  in the                                                                    
prior  year  allowed  an  amount of  money  above  what  was                                                                    
necessary to  fund PCE to be  used for CA. He  asked how the                                                                    
change impacted  the overall value  of the fund and  the two                                                                    
distribution  calculations.   Mr.  Teal  replied   that  the                                                                    
purpose  of funding  from the  ACHI  fund was  to leave  the                                                                    
value of  the PCE  fund unaffected. Funding  both the  FY 18                                                                    
and FY 19 CA expenditures  from the PCE was possible because                                                                    
the PCE earnings  were so high. However,  the option reduced                                                                    
the value  of the fund  and jeopardized future  earnings and                                                                    
was not favored by the co-chairs.                                                                                               
                                                                                                                                
Representative Wilson  pointed to  lines 3 and  4 of  the FY                                                                    
2018  Supplemental   Bill  spreadsheet  pertaining   to  the                                                                    
Department  of  Corrections  (DOC).  She  offered  that  the                                                                    
offender  population trend  was  leveling. She  asked for  a                                                                    
breakdown  of  SB  91  -   Omnibus  Crim  Law  &  Procedure;                                                                    
Corrections  [ CHAPTER  1 SLA  17  -03/21/2017] funding  for                                                                    
population  management  based  on how  the  legislature  was                                                                    
going   to   "re-disperse   moneys   into   those   specific                                                                    
institutions." Ms. Brown did not  have the breakdown on hand                                                                    
but would  follow up. Representative Wilson  pointed to line                                                                    
4 of the spreadsheet  [inmate healthcare]. She reported that                                                                    
she had  been unable  to determine  in subcommittee  how the                                                                    
health  needs  were  being  met.  The  department  had  sent                                                                    
several  inmates out  of state  because healthcare  was more                                                                    
affordable. She  had received information  from DOC  but the                                                                    
breakdown of  the $10  million supplemental  expenditure was                                                                    
incomplete. She noted an additional  $10 million increase in                                                                    
the FY  19 budget. She requested  more information regarding                                                                    
the increases in inmate health care.                                                                                            
                                                                                                                                
1:50:00 PM                                                                                                                    
                                                                                                                                
Representative   Wilson  WITHDREW   her  OBJECTION   to  the                                                                    
adoption of the work draft.                                                                                                     
                                                                                                                                
Co-Chair Seaton OBJECTED for further discussion.                                                                                
                                                                                                                                
Representative Ortiz  pointed to page  5, line 20  and asked                                                                    
why the  transaction was necessary.  He was in favor  of the                                                                    
appropriation. Mr.  Teal asked for confirmation  that he was                                                                    
referencing the  $23.9 million appropriation for  the Alaska                                                                    
Marine Highway  System (AMHS). Representative  Ortiz replied                                                                    
in the  affirmative. Mr.  Teal responded  that in  the prior                                                                    
session general  fund (GF) money  was reduced and  offset by                                                                    
additional spending  from the AMHS fund  that was authorized                                                                    
due to  a supplemental deposit  from a prior  year. However,                                                                    
the   deposit  occurred   at  a   much  lower   amount  than                                                                    
anticipated.  The AMHS  fund ended  up short  by almost  $24                                                                    
million. The system could not  schedule without the funding.                                                                    
The appropriation  was a primary  reason for the  fast track                                                                    
supplemental; to  ensure the AMHS could  maintain operations                                                                    
and schedules.                                                                                                                  
                                                                                                                                
1:52:02 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg pointed to page  5, line 22 of the                                                                    
spreadsheet   [University   of    Alaska   Bargaining   Unit                                                                    
Agreements].  He  asked  if the  legislature  still  had  to                                                                    
ratify  the  contract  even  though  the  contracts  had  no                                                                    
monetary  terms  requiring supplemental  appropriation.  Ms.                                                                    
Brown replied in  the affirmative. Representative Guttenberg                                                                    
pointed  to line  37,  page  8 item  for  the Department  of                                                                    
Commerce,   Community  and   Economic  Development   (DCCED)                                                                    
[Financial   Examiner   I/II   for  Alaska   Native   Claims                                                                    
Settlement Act Filings  and Support]. He asked  if there was                                                                    
a reason why  the second position had not been  added to the                                                                    
original  budget. Ms.  Brown could  not recall  the original                                                                    
issue.  Representative Guttenberg  pointed  to  page 13  and                                                                    
spoke  about changing  the  appropriation  and transfers  of                                                                    
funding between  the Alaska Gasline  Development Corporation                                                                    
(AGDC) and  Alaska LNG  Project Fund.  He asked  whether the                                                                    
transaction was  the authorization. Ms. Brown  answered that                                                                    
if the  item was not shaded  green in column one  it was not                                                                    
in  the supplemental  CS. The  supplemental  items he  noted                                                                    
were presented for a decision in the future.                                                                                    
                                                                                                                                
Co-Chair  Seaton  WITHDREW  his OBJECTION.  There  being  NO                                                                    
further OBJECTION, Work Draft 30-GH2781\O was ADOPTED.                                                                          
                                                                                                                                
HB  321  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Seaton handed the gavel to Co-Chair Foster'                                                                            
                                                                                                                                
Co-Chair Foster  indicated that HB 176  was previously heard                                                                    
in committee on February 16, 2018.                                                                                              
                                                                                                                                

Document Name Date/Time Subjects
HB096 Supporting Documents Statutes Repealed by HB 96 2.20.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB096 Sponsor Statement ver A 2.12.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB096 Supporting Documents - Indirect Expenditure Report 2.22.17.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB096 Supporting Documents IE HFIN DOR Subcommitee Report 2.12.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 96
HB 321 2 19 18 FY18 Supplemental Summary and Detail with LFD Notes.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 CS Workdraft O version 2-20-18.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 Fast Track Agency Summary-Op & Cap.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 Fast Track Supp TransDetail.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 321 Fast Track StatewideTotals-Op & Cap.pdf HFIN 2/21/2018 1:30:00 PM
HB 321
HB 176 - Amendments 1 & 2.pdf HFIN 2/21/2018 1:30:00 PM
HB 176
HB 176 - Supporting Documents - IGT Flow Chart - 2.20.18 FINAL.pdf HFIN 2/21/2018 1:30:00 PM
HB 176
HB 176 aml comment hb 176 2.20.18.pdf HFIN 2/21/2018 1:30:00 PM
HB 176