Legislature(2017 - 2018)ADAMS ROOM 519

02/22/2018 01:30 PM FINANCE

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01:32:10 PM Start
01:34:12 PM Joint Presentation with the House Resources Committee
03:08:48 PM HB321
04:14:48 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Joint Presentation with House RES: TELECONFERENCED
China, LNG, & the AK Gas Pipeline
by Dr. Wenram Jiang, PhD
Scheduled but Not Heard
Subcommittee Reports & Amendments:
- Judiciary
<Above Item Removed from Agenda>
- Office of the Governor
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 321(FIN) Out of Committee
-- Public Testimony --
Scheduled but Not Heard
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."                                                                                                           
3:08:48 PM                                                                                                                    
Co-Chair  Seaton wanted  to start  with public  testimony on                                                                    
the supplemental bill.                                                                                                          
Co-Chair Seaton OPENED and CLOSED Public Testimony.                                                                             
3:09:59 PM                                                                                                                    
AT EASE                                                                                                                         
3:10:16 PM                                                                                                                    
Co-Chair  Seaton indicated  that  no one  had  signed up  to                                                                    
provide  testimony on  HB 321.  He asked  for comments  from                                                                    
committee members.                                                                                                              
Representative   Thompson  was   opposed   to  rushing   the                                                                    
supplemental bill out of committee.  He wanted a couple more                                                                    
days to properly  vet the bill. He thought  it was necessary                                                                    
to have further discussion about  certain items in the bill.                                                                    
Co-Chair  Seaton   asked  if  Representative   Thompson  had                                                                    
certain items  he wanted to  discuss. He conveyed  that only                                                                    
one  issue was  brought up.  He  explained that  any of  the                                                                    
items all 4 co-chairs could not  agree on as necessary to go                                                                    
in the  fast-track budget were  not included. The  amount of                                                                    
$170  million had  come down  to $49  million. He  suggested                                                                    
discussing  the item  Representative Wilson  had brought  up                                                                    
concerning  corrections.  Representative  Thompson  had  the                                                                    
same  question  as  Representative   Wilson.  He  asked  for                                                                    
clarification on the related item.                                                                                              
Co-Chair Seaton  recalled that  Representative Wilson  had a                                                                    
question that was addressed to  the department for feedback.                                                                    
The  department had  replied with  a  letter. Hopefully  the                                                                    
department  had  been  responsive. He  asked  Representative                                                                    
Wilson if she wanted to discuss the issue.                                                                                      
Representative  Wilson  met  with  DOC  and  understood  the                                                                    
portion regarding  population management. She wanted  to put                                                                    
on the record that the $10  million did not have anything to                                                                    
do with SB 91. However, it  had to do with the controversial                                                                    
fiscal note associated  with SB 91. She  clarified that when                                                                    
Palmer was closed,  there was not a  reduction in personnel.                                                                    
Rather,  personnel  were  placed  into  other  institutions.                                                                    
Historically,  halfway  house  money  had been  used  as  an                                                                    
offset,  although the  money was  reduced  by a  significant                                                                    
amount of $8  million. Currently there was  no extra cushion                                                                    
funds to rely  on. She did not understand  about the medical                                                                    
costs  associated  with  prisoners.  She  wanted  to  better                                                                    
understand  about the  growth in  the  number. She  reported                                                                    
there  had been  an increase  of $10  million in  healthcare                                                                    
costs. She  noted there  was a  supplemental request  of $10                                                                    
million in  the current legislation. There  was also another                                                                    
$10 million  request for  FY 19. She  was unsure  what drove                                                                    
the  increase. She  specifically  wanted to  know where  the                                                                    
growth  was derived.  She remarked  that $10  million was  a                                                                    
significant amount of  money. She was aware  that 2-3 people                                                                    
had been sent out of state  because of high medical costs. A                                                                    
few  more  prisoners might  be  sent  out-of-state. She  was                                                                    
looking for a breakdown of the population management.                                                                           
Co-Chair  Seaton  did  not  want to  get  confused,  as  the                                                                    
committee was  currently dealing  with the  supplemental for                                                                    
FY 18.  Representative Wilson wanted  to ensure that  it was                                                                    
not a one-time deal.  Co-Chair Seaton invited the Department                                                                    
of Corrections to respond.                                                                                                      
APRIL  WILKERSON,   DIRECTOR,  DIVISION   OF  ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT OF  CORRECTIONS, asked  Representative                                                                    
Wilson to repeat  her question. She noted  that Laura Brooks                                                                    
from  the  department was  also  available  to provide  more                                                                    
detail on the populations that the department was seeing.                                                                       
Co-Chair  Seaton mentioned  a  memo from  the Department  of                                                                    
Corrections   dated,   February    21,   2018   specifically                                                                    
addressing  the question.  It was  a three-page  response to                                                                    
the question.                                                                                                                   
Representative  Wilson asked  about the  actuals, and  about                                                                    
what the department anticipated spending.                                                                                       
Ms.  Wilkerson  replied  that  the   total  budget  for  the                                                                    
physical healthcare component  in FY 18 was  $30 million. In                                                                    
FY  17 the  department spent  just over  $43.5 million.  She                                                                    
noted that the  department received a supplemental  in FY 17                                                                    
and it  made up  an additional  $3 million  through existing                                                                    
authorization within the Health  and Rehabilitation RDU. She                                                                    
expected  a  shortfall  of  $11.7  million.  The  department                                                                    
anticipated   making   up   the   difference   between   the                                                                    
supplemental ask  of $10.3 million, the  difference of which                                                                    
would  be  made  up  within   the  existing  authority.  The                                                                    
shortfalls  were  currently  within personal  services,  the                                                                    
contractual  line, and  the commodity  line. The  department                                                                    
was asking  for the  same amount  to be added  to the  FY 17                                                                    
budget because  a shortfall  of a  minimum of  $10.3 million                                                                    
was expected.  She thought Laura  Brooks could speak  to the                                                                    
3:18:36 PM                                                                                                                    
LAURA  BROOKS,  DIVISION   OPERATIONS  MANAGER,  HEALTH  AND                                                                    
REHABILITATION  SERVICES,  DEPARTMENT  OF  CORRECTIONS  (via                                                                    
teleconference),  thought the  question  was  about why  the                                                                    
department's costs  had increased. She conveyed  that one of                                                                    
the  things that  had  greatly  influenced the  department's                                                                    
budget was the  treatment of Hepatitis C  in the facilities.                                                                    
For  the  first   time  there  was  a   cure.  However,  the                                                                    
medication was incredibly expensive.  She reported that when                                                                    
the department first started treating  inmates, the cost for                                                                    
a  12-week regimen  was about  $120,000. The  amount dropped                                                                    
down  to about  $74,000 in  the prior  year, and  it dropped                                                                    
again in the  current year to between $25,000  to $30,000. A                                                                    
person might think  that because the cost  of the medication                                                                    
had  dropped,  the  standard  of  care  would  broaden.  She                                                                    
explained that individuals were  treated based on the degree                                                                    
of illness  and on  the degree of  fibrosis versus  a 4-tier                                                                    
system. It  used to be  the department would treat  the most                                                                    
severe at  level 4. However,  the standard had  changed, and                                                                    
the department was  now treating levels 3  and 4. Therefore,                                                                    
while the cost  of the medication had  decreased, the number                                                                    
of patients  that were being  treated had increased.  In the                                                                    
current year,  the department was  expecting to  treat about                                                                    
20 patients  with the  medication at  an unbudgeted  cost of                                                                    
$540,000. In the following  year, the department anticipated                                                                    
that up  to 200 inmate  patients would be  treated, equating                                                                    
to an unbudgeted  cost of $5.4 million.  She reiterated that                                                                    
while the cost of medications  treating Hepatitis C had gone                                                                    
down, the need had risen.                                                                                                       
Ms.   Brooks  highlighted   that   the   overall  costs   of                                                                    
pharmaceuticals had risen dramatically.  Over the previous 5                                                                    
years  she  had seen  an  increase  in medication  costs  of                                                                    
almost  60  percent.  Although the  department  had  done  a                                                                    
tremendous  amount to  streamline and  reduce the  number of                                                                    
prescriptions written (about 12  percent), there was still a                                                                    
10 percent  increase in the overall  cost of pharmaceuticals                                                                    
impacting   the   department's  budget   substantially.   As                                                                    
Representative Wilson  indicated, the department  never knew                                                                    
who  would walk  through the  door. The  department had  had                                                                    
cancer patients  that had  run up costs  in the  hundreds of                                                                    
thousands of  dollars who were  pre-trial inmates  with very                                                                    
serious charges.  There was  no option to  send them  out of                                                                    
state,  to  send  them to  a  community  residential  center                                                                    
(CRC), or  to enroll them in  pretrial electronic monitoring                                                                    
(EM). The costs  had to be paid by  the department. Although                                                                    
Medicaid had been  a benefit to the  department covering the                                                                    
stays  of inmates  who  were hospitalized  for  24 hours  or                                                                    
more, the  largest increase was  the fee for  service costs.                                                                    
The  department was  spending about  $800,000  per month  on                                                                    
fees for  services to vendors  outside of the  facility. She                                                                    
cited examples such as going  to an orthopedic specialist, a                                                                    
day  surgery,  a  colonoscopy,  or an  eye  exam.  She  also                                                                    
thought  a change  in prison  population had  influenced the                                                                    
rise in healthcare  costs. Inmates were coming  to the state                                                                    
sicker, with untreated medical  conditions that were further                                                                    
complicated  by substance  abuse like  opiate abuse.  Opiate                                                                    
abuse  was  having a  noticeable  impact  on emergency  room                                                                    
visits. The department had over  840 visits costing anywhere                                                                    
from $700 to $5,000 per visit, sometimes more.                                                                                  
3:23:33 PM                                                                                                                    
Representative  Wilson asked  for  expenses  to-date in  the                                                                    
areas of personal services,  services, and commodities. They                                                                    
were  the  areas  in which  the  department  was  requesting                                                                    
increases. She  was looking  at page 3.  Ms. Brooks  did not                                                                    
have the  FY 18 year-to-date  figures on hand. She  had last                                                                    
year's numbers.                                                                                                                 
Representative Wilson was trying to  figure out how much the                                                                    
department had  already spent. Co-Chair Seaton  relayed that                                                                    
the supplemental  budget was projecting  through the  end of                                                                    
the year.  It did not  reflect the actuals  already incurred                                                                    
to-date. He  suggested having  someone from  the Legislative                                                                    
Finance Division  come to the  testifiers table.  He relayed                                                                    
that the committee was not working with FY 18 actuals.                                                                          
Representative Wilson suggested  that the department already                                                                    
knew its  numbers because it  had determined  a supplemental                                                                    
number  to   request.  The   department  already   knew  its                                                                    
population  management numbers.  She wanted  the information                                                                    
as  it pertained  to health  services. She  wondered if  the                                                                    
division had already overspent.                                                                                                 
3:26:28 PM                                                                                                                    
Ms. Wilkerson  reported that although  she did not  have the                                                                    
actual  breakout   of  numbers,   she  confirmed   that  the                                                                    
department had spent just over  $20 million of a $30 million                                                                    
budget. The  division did not have  negative appropriations.                                                                    
There  was a  difference between  the current  $11.7 million                                                                    
shortfall  and the  difference  in  the supplemental  having                                                                    
spent just  over $20  million of a  $30 million  budget. The                                                                    
department did  not have negative  appropriations presently.                                                                    
Of the  department's personal services,  it had  spent about                                                                    
$15 million. Under the contractual  line, the department had                                                                    
spent  just under  $10.7 million.  Under the  commodity line                                                                    
the  department was  just  under the  $2  million mark.  She                                                                    
could  provide the  actual  report. She  noted  that of  the                                                                    
department's  medical costs,  some of  its providers  were 6                                                                    
months  to 9  months out.  She  could not  confirm that  the                                                                    
expenditures  were  through  100  percent  of  the  billings                                                                    
received to-date.  They were  through the  invoices received                                                                    
within her  office. The department was  aware of anticipated                                                                    
items that made up the anticipated shortfall.                                                                                   
Representative Wilson  was just  trying to  understand where                                                                    
the money was going.                                                                                                            
Co-Chair Seaton added  that the supplemental was  to get the                                                                    
state  through the  end of  the year.  The figures  were not                                                                    
known.  He  commented  that  the  figures  were  projections                                                                    
except  for the  amounts already  expended. He  continued to                                                                    
remark about the varying numbers.                                                                                               
Representative  Pruitt  thought   the  supplemental  request                                                                    
spoke more  about the Department of  Corrections' management                                                                    
over  the  prior  year.  The department  had  asked  for  an                                                                    
additional  $10  million  for institutional  operations.  He                                                                    
pointed  to  the  department's  comments  about  the  budget                                                                    
reductions  being taken  in anticipation  of a  reduction of                                                                    
the daily  prison population of  1257 starting on  July 1st.                                                                    
The daily  reduction was around  500 which reflected  a 757-                                                                    
person difference. He also  highlighted that the anticipated                                                                    
savings  would   not  be  attainable  until   the  projected                                                                    
reductions of  SB 91  could be  achieved. He  indicated that                                                                    
the  original number  was projected  by the  department with                                                                    
the understanding  that certain aspects  of SB 91  would not                                                                    
be  in  place.  However,  the  department  was  off  by  757                                                                    
individuals.   He  thought   the  discrepancy   brought  the                                                                    
management  of  DOC  into  question.  He  wondered  how  the                                                                    
legislature  could trust  the accuracy  of the  department's                                                                    
Ms.  Wilkerson understood  Representative Pruitt's  concern,                                                                    
as  the department  shared his  concerns. Within  the fiscal                                                                    
note, the department tried to  accurately represent that the                                                                    
funding reduction  was an  annual immediate  reduction while                                                                    
the projected population would be  achieved over a period of                                                                    
time. The  department knew it  was behind the curve.  At the                                                                    
bottom of the fiscal note,  the department identified that a                                                                    
supplemental  would  be needed  if  the  reductions did  not                                                                    
occur.  The department  did not  see the  immediate drop  in                                                                    
population as anticipated.                                                                                                      
3:31:46 PM                                                                                                                    
Representative   Pruitt  asked   why  the   initial  numbers                                                                    
provided  to  the  legislature  were  "best  case  scenario"                                                                    
numbers and  used to  plan the budget.  He thought  that the                                                                    
department's   fiscal  note   should  have   reflected  more                                                                    
realistic numbers. He  noted that the changes made  in SB 54                                                                    
[Legislation  passed in  2017 regarding  crimes, sentencing,                                                                    
and probation] did not go into  effect in time to change the                                                                    
department's  numbers.  The  numbers were  affected  by  not                                                                    
being  able  to  attain  something. He  suggested  that  the                                                                    
department should  have communicated that it  could not meet                                                                    
its goals.  Having the full  information would  have allowed                                                                    
the legislature to make a  better-informed decision on SB 91                                                                    
[An omnibus  crime bill passed  by the legislature  in 2016]                                                                    
and for budget planning purposes for the following year.                                                                        
Ms.  Wilkerson replied  that the  department  had been  very                                                                    
hopeful  about   achieving  its  intended   reductions.  Two                                                                    
factors  played a  role  in  the department's  circumstance.                                                                    
First,  the  inmate  population   had  not  reduced  as  the                                                                    
department  had anticipated  due  to  its difficulties  with                                                                    
community placements.  Second, there was a  reduction to the                                                                    
FY  18 budget  in the  amount  of $8.1  million of  existing                                                                    
authority  to  backfill  the  institutions.  The  additional                                                                    
reduction had  burdened the department  and left  it without                                                                    
sufficient operational funding.                                                                                                 
Representative Pruitt  mentioned hearing  about less  use of                                                                    
halfway houses and electronic Monitoring.  The state had not                                                                    
seen the  usage of halfway  houses in the capacity  that was                                                                    
expected   to  generate   savings.   He   asked  about   the                                                                    
commissioner's  and leadership's  policy  decisions and  why                                                                    
things  had  not  shifted. Ms.  Wilkerson  deferred  to  the                                                                    
commissioner of the department.                                                                                                 
Representative  Wilson  had additional  questions  regarding                                                                    
the bill. She referred to page  6, line 20 of the work draft                                                                    
which   mentioned  $322,000   for   paying  judgements   and                                                                    
settlements. She asked for more details.                                                                                        
3:35:53 PM                                                                                                                    
AT EASE                                                                                                                         
3:36:51 PM                                                                                                                    
Co-Chair Seaton relayed there was  only one case which was a                                                                    
Department of Environmental Conservation employment case.                                                                       
Representative  Wilson  pointed  to Section  7(b)  where  it                                                                    
talked  about fund  capitalization. Funds  in the  amount of                                                                    
$30 million  were being appropriated  from the ACHI  fund to                                                                    
the  Community Assistance  fund. She  thought that,  through                                                                    
legislation, the  community assistance  fund was  being paid                                                                    
with  Power  Cost  Equalization funds  based  on  a  formula                                                                    
contained in the bill. She  wondered why the state would use                                                                    
health money. She referenced a  previous occurrence in which                                                                    
$55 million  of the  funds were  used and  partially repaid.                                                                    
She thought it would be better  to leave the funds in place.                                                                    
She asked  if the  money would  be paid out  or left  in its                                                                    
current fund.                                                                                                                   
Co-Chair  Seaton explained  that $30  million was  deposited                                                                    
annually into the community assistance  program from the PCE                                                                    
fund, if available, to allow  for the same payout each year.                                                                    
The problem was due to a  gap year in which the governor put                                                                    
$30  million  from PCE  funds  into  the  FY 18  budget  but                                                                    
nothing  for the  FY  19 budget.  The  legislature would  be                                                                    
placed in the  same situation of not having  known funds for                                                                    
the following  year. Therefore, in the  proposed work draft,                                                                    
one-time  ACHIA   money  was  taken  and   placed  into  the                                                                    
supplemental for  FY 18. Intent  language was  included that                                                                    
specified that $30 million could  be taken from the PCE fund                                                                    
to  fund  FY 19.  The  bill  would fulfill  the  legislative                                                                    
intent  to have  $30 million  deposited into  the fund  each                                                                    
year  in   order  to  stabilize  the   Community  Assistance                                                                    
Program.  Rather than  trying  to cross  fiscal years,  they                                                                    
wanted to take  the FY 19 budget and utilize  the PCE excess                                                                    
earnings of  $30 million in  statute for the fiscal  year in                                                                    
which they  were preparing the  budget. They would  take the                                                                    
one-time money  from ACHIA and  put it into the  $30 million                                                                    
that  was not  appropriated  for  FY 18  in  the  form of  a                                                                    
supplemental    appropriation.   The    municipalities   and                                                                    
communities  would  know  the amount  of  money  they  would                                                                    
receive annually.                                                                                                               
Representative  Wilson asked  how  much money  the PCE  Fund                                                                    
made in the  current year. She also wondered  about how much                                                                    
was paid out of the PCE fund.                                                                                                   
3:40:09 PM                                                                                                                    
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
answered that  it was not the  current year, but it  was the                                                                    
previous  year.  In  FY  17 the  earnings  were  about  $112                                                                    
million  which  more than  paid  for  the  cost of  the  PCE                                                                    
program - roughly $35 million.  It left a substantial amount                                                                    
for community assistance  in the amount of  $30 million. The                                                                    
money was  intended to  be deposited  in FY  19 in  order to                                                                    
know at  the beginning  of the  fiscal year  that the  FY 19                                                                    
deposit  was  covered  by FY  17  earnings.  As  communities                                                                    
prepared  their  FY  20  budgets they  would  know  well  in                                                                    
advance that  the money  would be  there. He  explained that                                                                    
the other use of the PCE  earnings of $112 million after $30                                                                    
million was used for community  assistance $25 million could                                                                    
be used towards energy programs.  The governor had split the                                                                    
$25  million  between supplemental  in  FY  19 [and  another                                                                    
year]. The  Office of Management  and Budget  indicated that                                                                    
there would be a change making  the $25 million occur all in                                                                    
FY 19 just as all of the PCE  earnings from FY 17 went to fY                                                                    
19 community  assistance. It  was a  matter of  which fiscal                                                                    
year   the  money   was  assigned.   The  idea   behind  the                                                                    
legislation  was to  get  the  community assistance  program                                                                    
back on track using earnings  from the second prior year. In                                                                    
FY  19  the  deposit  would  be based  on  FY  17  earnings.                                                                    
Similarly, energy  program deposits made  in FY 19  would be                                                                    
based on FY 17 earnings. However,  it left a hole for FY 18,                                                                    
which needed to  be filled in the  supplemental process. The                                                                    
governor had proposed  using the PCE earnings in  FY 18. The                                                                    
Legislative Finance  Division thought  the proposal  did not                                                                    
follow  the intent  of  the  law passed  2  years prior.  He                                                                    
thought it was  a matter of timing and  finding fund sources                                                                    
to fill the shortage in Community Assistance funding.                                                                           
Representative  Wilson asked  for the  balance in  the ACHIA                                                                    
fund once the $30 million was removed.                                                                                          
3:43:33 PM                                                                                                                    
Mr.  Teal thought  it was  important  to focus  on how  much                                                                    
excess was in the fund. He  detailed that the state had made                                                                    
3 deposits of  about $60 million each, one of  which was for                                                                    
FY 17. He  reported $55 million  flowing out in FY  17. Only                                                                    
$30  million was  needed and  $25 million  was refunded.  He                                                                    
continued  that  $60 million  was  deposited  in FY  18.  He                                                                    
reiterated that  there were 3  deposits; one for FY  16, one                                                                    
for  FY 17,  and one  for  FY 18  through FY  22. The  state                                                                    
obtained a waiver  from the federal government  for a 5-year                                                                    
program.  The  expectation  was for  the  state  to  receive                                                                    
federal  payments for  the reinsurance  plan. The  amount of                                                                    
$55 million for FY 18 - FY  22 took up $55 million leaving 3                                                                    
deposits to the fund and  only 2 withdraws. The total amount                                                                    
of  excess funding  was about  $93 million.  The Legislative                                                                    
Finance Division  recommended that  the state might  want to                                                                    
spend about $80 million rather  than the full amount because                                                                    
it was uncertain  how much the federal  government would pay                                                                    
from one  year to the  next. He  thought it would  be better                                                                    
for  there to  be more  money available  3-4 years  from now                                                                    
rather than finding out  additional deposits were necessary.                                                                    
The bottom line was that there  was about $93 million in the                                                                    
fund to  be used for one-time  expenditures. Co-Chair Seaton                                                                    
added a comment about one-time money.                                                                                           
3:46:10 PM                                                                                                                    
Representative    Neuman     understood    the    fast-track                                                                    
supplemental was being discussed relating  to line 34 on the                                                                    
spreadsheet. He had  a question beyond that.  He referred to                                                                    
page  13,  line   49  having  to  do   with  the  open-ended                                                                    
appropriation for statutory  designated program receipts for                                                                    
the  AKLNG  fund.  The Legislative  Finance  Division  notes                                                                    
stated that it was open-ended  language that would allow the                                                                    
investments  to  be deposited  into  the  AKLNG project  and                                                                    
spent without further appropriations.                                                                                           
Co-Chair    Seaton    interrupted   Representative    Neuman                                                                    
indicating that  the item  was not  presently on  the table.                                                                    
Representative Neuman  understood and had  clarified himself                                                                    
at the beginning of his  question. The way he understood the                                                                    
language, it  conveyed that  the administration  could enter                                                                    
into  an  agreement  with  Sinopec  or  China  Gas  and  the                                                                    
legislature  would not  have any  say in  how the  money was                                                                    
spent or appropriated. He asked if he was correct.                                                                              
Co-Chair Seaton did not want  to discuss the budget that was                                                                    
not  on  the table  currently.  The  only thing  before  the                                                                    
committee  was the  fast-track  supplemental. He  reiterated                                                                    
that  he  wanted  to  keep   the  focus  on  the  fast-track                                                                    
Representative  Wilson referred  to page  7, Section  9. She                                                                    
asked  why   the  word  "reduced"   was  being   changed  to                                                                    
Representative  Guttenberg  asked if  Representative  Wilson                                                                    
was   referring   to   the    bill   or   the   spreadsheet.                                                                    
Representative Wilson  responded that she was  talking about                                                                    
the bill. She reiterated her question.                                                                                          
3:49:12 PM                                                                                                                    
JOAN  BROWN, STAFF,  REPRESENTATIVE  PAUL SEATON,  responded                                                                    
that the change was due to  some of the monetary terms which                                                                    
currently  included furlough  days. In  other words,  it was                                                                    
not  just a  cash adjustment.  The number  of furlough  days                                                                    
could  be adjusted,  resulting  in the  number  going up  or                                                                    
Representative  Wilson  asked  about  the  ratifications  of                                                                    
certain  expenditures  on  page  9, Section  10.  Ms.  Brown                                                                    
responded  that generally  there were  ratifications in  the                                                                    
supplemental every  year. Usually  they were in  the capital                                                                    
budget  bill  at the  end  of  session. They  were  clean-up                                                                    
transactions  to  the  accounting   system.  The  funds  had                                                                    
already been  spent, and there  was no additional  cost. The                                                                    
ratifications did  not add to the  cost of the bill.  It was                                                                    
an accounting clean-up transaction.                                                                                             
Representative  Wilson   asked  why   2010  and   2011  were                                                                    
included. She asked if something  had been missed. Ms. Brown                                                                    
could  not  say definitively  why  there  were so  many  old                                                                    
transactions. If  revenue was expected  to be  received that                                                                    
would  have cleaned  things up,  the adjustments  could drag                                                                    
Representative  Wilson   suggested  it  could   possibly  be                                                                    
federal funds  that were expected.  In other  words, general                                                                    
fund money was spent in the  hope of another type of funding                                                                    
being received but had not  been obtained to-date. Ms. Brown                                                                    
Representative Pruitt  wanted to  return to the  fund source                                                                    
change regarding  community revenue sharing. He  referred to                                                                    
page 6, line 13 of the  bill and page 19 of the spreadsheet.                                                                    
He thought  money that was  earned in  FY 17 was  applied to                                                                    
FY 19. He  asked about the  earnings in  FY 16 and  how they                                                                    
could  have been  applied in  the current  year [FY  18]. He                                                                    
wondered why a draw from the PCE fund was necessary.                                                                            
Mr.  Teal responded  that the  earnings were  only about  $8                                                                    
million or  $9 million. The  amount was insufficient  to pay                                                                    
for  the   PCE  program.  There  were   no  excess  earnings                                                                    
available  to   make  the  FY   18  deposit   for  community                                                                    
assistance.  He continued  to explain  that  with no  excess                                                                    
money, the governor  did not ask for a deposit  from PCE. He                                                                    
also did  not make a  general fund deposit to  the community                                                                    
assistance  fund. The  legislature  did not  make a  deposit                                                                    
either.  If  a deposit  was  not  made  before June  of  the                                                                    
current year the distribution to  communities in FY 19 would                                                                    
be $20 million rather than $30 million.                                                                                         
3:53:59 PM                                                                                                                    
Representative Pruitt remarked that  there was a policy call                                                                    
made by  not funding  community assistance. He  wondered why                                                                    
the governor did  not introduce it [an  amendment]. He asked                                                                    
about the initial thought process.                                                                                              
Mr.  Teal  could  not  comment  on  the  governor's  thought                                                                    
process or policy  decision. He could only  confirm that the                                                                    
appropriation was  not included  in the  budget. It  was the                                                                    
basis for discussions between the  chairman's office and the                                                                    
governor's office.  The governor  indicated his  support for                                                                    
the   community   assistance   program  and   wanted   money                                                                    
deposited. However,  he did not  submit an  amendment making                                                                    
the  deposit.  If  the  legislature   decided  to  make  the                                                                    
deposit,  it  would  show  an   additional  $30  million  of                                                                    
spending. He was not sure  the legislature was willing to do                                                                    
that in the prior year,  which resulted in the appropriation                                                                    
being placed in the supplemental bill.                                                                                          
Co-Chair Seaton  added that there had  been an appropriation                                                                    
to  spend some  money. He  explained that  $30 million  went                                                                    
into the fund and came out  as an amount calculated based on                                                                    
how much  money was in  the fund.  In the prior  year, there                                                                    
was  an  appropriation  offered   to  add  an  appropriation                                                                    
amount, rather  than adding  to the  fund, which  would have                                                                    
brought the  amount back  up to  the level  it had  been the                                                                    
previous year.                                                                                                                  
Representative Pruitt  asked if  the amount was  smaller. He                                                                    
thought the  amount was $8 million.  Co-Chair Seaton replied                                                                    
that it was  about $8.3 million. He added that  if the money                                                                    
had been in  the fund, only about one-third  would have been                                                                    
spent because  it was the  third distribution. It  was added                                                                    
to the  amount appropriated  with a third  taken out  of the                                                                    
fund and $8  million added. The legislature did  not have to                                                                    
find $30 million  to place in the fund and  then remove one-                                                                    
third of  it. The legislature  only took what was  needed to                                                                    
make the past payment.                                                                                                          
Representative  Pruitt  did  not  like  appropriating  funds                                                                    
through   the   supplemental    because   he   thought   the                                                                    
supplemental  process   was  typically  overlooked   by  the                                                                    
public. Co-Chair  Seaton commented  that he had  brought the                                                                    
matter  up so  that  the public  could  understand that  the                                                                    
legislature had  not capitalized  the fund with  $30 million                                                                    
in   the   prior   year.  Instead,   the   legislature   had                                                                    
supplemented  the payment.  Currently,  the legislature  was                                                                    
doing the capitalization.                                                                                                       
3:58:45 PM                                                                                                                    
AT EASE                                                                                                                         
4:00:37 PM                                                                                                                    
Co-Chair Seaton  announced that it  was Mr.  Teal's birthday                                                                    
and presented him with a present.                                                                                               
4:02:37 PM                                                                                                                    
AT EASE                                                                                                                         
4:04:22 PM                                                                                                                    
Vice-Chair  Gara  MOVED  to  report  CSHB  321(FIN)  out  of                                                                    
Committee with individual recommendations.                                                                                      
Representative Wilson OBJECTED.                                                                                                 
Representative Kawasaki  indicated that it had  been a while                                                                    
since he  had seen a fast-track  supplemental and understood                                                                    
the  discomfort of  some members  to  pass such  legislation                                                                    
prior to  discussing the budget.  Historically, it  had been                                                                    
how  things  were  done  for  several  years.  He  expressed                                                                    
appreciation for the work that  had been done by both bodies                                                                    
in finding  the agreement points  on the items in  the bill.                                                                    
He understood there  would be a bolder  discussion about the                                                                    
supplementals in  general. He  noted that  the FY  19 budget                                                                    
discussions were  ongoing. He would support  moving the bill                                                                    
from committee.                                                                                                                 
Representative   Pruitt  understood   wanting  to   pass  an                                                                    
appropriation  bill on  things that  the legislature  agreed                                                                    
on.  However, he  was concerned  with  the use  of the  term                                                                    
"Fast-track"  as it  implied  that there  would  not be  the                                                                    
opportunity  to properly  vet it  and offer  amendments. The                                                                    
movement of the bill at such  a quick pace did not allow for                                                                    
the public  to properly weigh  in on the policy  calls being                                                                    
made.  He did  not understand  why more  time was  not being                                                                    
provided. The  appropriation was sizable at  $65 million. It                                                                    
appeared the request was less  because of the money received                                                                    
from the  Alaska Comprehensive Health  Insurance Association                                                                    
(ACHIA) program. He reiterated  his hesitancy to support the                                                                    
bill  because  of the  process.  He  would be  opposing  the                                                                    
Representative Wilson  was concerned  with the  quickness of                                                                    
the  process.  One  of  her  concerns had  to  do  with  the                                                                    
Department  of Corrections  portion.  She  had received  the                                                                    
numbers regarding  population management. She was  aware the                                                                    
department  had  a  payroll  date  to  meet  and  would  not                                                                    
otherwise   meet  it.   She   mentioned   the  $10   million                                                                    
supplemental  request  from  the   prior  year  and  another                                                                    
anticipated. She thought it equated  to a significant amount                                                                    
of money going out without  a discussion about what could be                                                                    
done  to  save  money.   She  was  fine  with  fast-tracking                                                                    
anything  as long  as she  could  explain the  legislature's                                                                    
actions to her constituents.  She would be objecting because                                                                    
she did not agree with some  of the items and because of the                                                                    
advanced pace of the bill.                                                                                                      
Representative Wilson MAINTAINED her OBJECTION.                                                                                 
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Gara, Grenn, Guttenberg,  Kawasaki, Ortiz, Foster,                                                                    
OPPOSED: Wilson, Pruitt, Thompson, Neuman                                                                                       
The MOTION PASSED (7/4).                                                                                                        
CSHB 321(FIN)  was REPORTED out  of committee with  four "do                                                                    
pass"    recommendations,    three    "no    recommendation"                                                                    
recommendations, and four "amend" recommendations.                                                                              
4:12:45 PM                                                                                                                    
AT EASE                                                                                                                         
4:14:05 PM                                                                                                                    
Co-Chair Seaton  indicated that the subcommittee  report and                                                                    
amendments  for   the  Office  of  the   Governor  would  be                                                                    
addressed on the following day's agenda.                                                                                        

Document Name Date/Time Subjects
Dr.Wenran Jiang information.pdf HFIN 2/22/2018 1:30:00 PM
HFIN Presentation
Wenran Jiang Alaska PPT Feb 22 2018.pdf HFIN 2/22/2018 1:30:00 PM
HB 321 DOC Supplemental Response.pdf HFIN 2/22/2018 1:30:00 PM
HB 321