Legislature(2017 - 2018)ADAMS ROOM 519
02/21/2018 01:30 PM FINANCE
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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.