Legislature(2017 - 2018)ADAMS ROOM 519

03/07/2018 01:30 PM FINANCE

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Audio Topic
01:36:32 PM Start
01:37:17 PM HB285 || HB286
01:37:21 PM Amendments
03:24:55 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Note Time Change --
+= HB 286 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 285 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
Amendments
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 285                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
HOUSE BILL NO. 286                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;  making   supplemental  appropriations;                                                                    
     making  appropriations  under   art.  IX,  sec.  17(c),                                                                    
     Constitution  of   the  State   of  Alaska,   from  the                                                                    
     constitutional budget  reserve fund; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
1:37:17 PM                                                                                                                    
                                                                                                                                
^AMENDMENTS                                                                                                                   
                                                                                                                                
1:37:21 PM                                                                                                                    
                                                                                                                                
Representative Ortiz WITHDREW Amendment H HSS 22 (copy on                                                                       
file) [see discussion in minutes dated March 6, 2018].                                                                          
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Representative Ortiz MOVED to ADOPT Replacement Amendment H                                                                     
HSS 22 (copy on file):                                                                                                          
                                                                                                                                
     Health & Social Services                                                                                                   
     Appropriation: Senior and Disabilities Svcs                                                                                
     Allocation: Senior/Disabilities Svcs Admin                                                                                 
     Title: Companion Services                                                                                                  
     Wordage Type: Intent                                                                                                       
     Linkage: Appropriation - Senior and Disabilities Svcs                                                                      
     Offered by: Representative Ortiz                                                                                           
                                                                                                                                
     Wordage                                                                                                                    
     It is the  intent of the legislature that  the State of                                                                    
     Alaska  proceed  expeditiously to  establish  companion                                                                    
     services under  Section 1915(c) of the  Social Security                                                                    
     Act  to complement  and support  the services  provided                                                                    
     through  the  Medicare/Medicaid  waiver  programs.  The                                                                    
     Department of  Health and Social Services  shall submit                                                                    
     a  report to  co-chairs of  the Finance  Committees and                                                                    
     the Legislative  Finance Division on the  status of the                                                                    
     service no later than January 31, 2019.                                                                                    
                                                                                                                                
     Explanation                                                                                                                
     The Department indicates the  process of establishing a                                                                    
     "companion service"  category under Section  1915(c) is                                                                    
     lengthy and  can stretch  from one  to two  years. With                                                                    
     the reduction  in services  under the  Day Habilitation                                                                    
     program  it   is  vital  that  the   State  pursue  the                                                                    
     application   process    aggressively.   Families   and                                                                    
     communities have  been heavily impacted by  the 12 hour                                                                    
     per  week cap  on Day  Habilitation services  and until                                                                    
     companion  services  are  available to  complement  and                                                                    
     support  Day  Habilitation   services,  these  families                                                                    
     struggle  to   meet  the   needs  of   this  vulnerable                                                                    
     population.                                                                                                                
                                                                                                                                
There being NO OBJECTION, Replacement H HSS 22 was ADOPTED.                                                                     
                                                                                                                                
1:38:17 PM                                                                                                                    
                                                                                                                                
Representative Ortiz explained he had withdrawn the                                                                             
original Amendment H HSS 21 the previous day.                                                                                   
                                                                                                                                
Representative Ortiz MOVED to ADOPT Replacement Amendment H                                                                     
HSS 21 (copy on file):                                                                                                          
                                                                                                                                
     Health & Social Services                                                                                                   
     Appropriation: Senior and Disabilities Svcs                                                                                
     Allocation: Senior/Disabilities Svcs Admin                                                                                 
     Title: Service Delivery Models                                                                                             
     Wordage Type: Intent                                                                                                       
     Linkage: Appropriation - Senior and Disabilities Svcs                                                                      
     Offered by: Representative Ortiz                                                                                           
                                                                                                                                
     Wordage                                                                                                                    
     It  is   the  intent   of  the  legislature   that  the                                                                    
     Department  of  Health  &  Social  Services  re-examine                                                                    
     service delivery  models to ensure eligible  senior and                                                                    
     disabled   populations  receive   appropriate  services                                                                    
     irrespective  of   where  they  live  in   Alaska.  The                                                                    
     Department of  Health and Social Services  shall submit                                                                    
     a  report to  co-chairs of  the Finance  Committees and                                                                    
     the Legislative  Finance Division on the  status of the                                                                    
     service no later than February 15, 2019.                                                                                   
                                                                                                                                
     Explanation                                                                                                                
     Service   delivery   models   that   work   in   larger                                                                    
     communities  do   not  necessarily  work   in  Alaska's                                                                    
     smaller  communities.  It   is  important  to  reassess                                                                    
     service needs and delivery  models to serve individuals                                                                    
     wherever they live.                                                                                                        
                                                                                                                                
Representative Pruitt  OBJECTED for discussion.  He wondered                                                                    
if  the  Department of  Health  and  Social Services  (DHSS)                                                                    
anticipated   costs  associated   with  the   amendment.  He                                                                    
requested to hear from the department.                                                                                          
                                                                                                                                
Representative Wilson thought  Representative Ortiz may want                                                                    
to explain the replacement amendment first.                                                                                     
                                                                                                                                
Representative  Ortiz  explained the  replacement  amendment                                                                    
included some report back  language and eliminated reference                                                                    
to population  densities from any particular  community (the                                                                    
word  "community"  had  been removed).  The  amendment  also                                                                    
included a report date.                                                                                                         
                                                                                                                                
1:40:31 PM                                                                                                                    
                                                                                                                                
DUANE  MAYES, DIRECTOR,  SENIOR  AND DISABILITIES  SERVICES,                                                                    
DEPARTMENT   OF   HEALTH    AND   SOCIAL   SERVICES,   asked                                                                    
Representative Pruitt to repeat the question.                                                                                   
                                                                                                                                
Representative Pruitt complied. He  noted that the amendment                                                                    
only  included  intent language  and  wondered  if it  would                                                                    
result  in a  cost to  the department  or would  be absorbed                                                                    
within the department's normal scope of work.                                                                                   
                                                                                                                                
Mr.  Mayes  replied  he  believed   DHSS  could  absorb  any                                                                    
associated   costs.   He   reported   there   were   several                                                                    
initiatives currently  under way. He had  been presenting to                                                                    
other  [legislative] committees  on  some  authorities as  a                                                                    
part of SB  74 [Medicaid reform legislation  passed in 2016]                                                                    
- the department's  projection was to go live  in May, which                                                                    
would  decrease   some  of  the  work   the  department  was                                                                    
currently doing [as the deadline approached].                                                                                   
                                                                                                                                
Representative Pruitt WITHDREW his OBJECTION.                                                                                   
                                                                                                                                
Representative Guttenberg OBJECTED  for discussion. He asked                                                                    
if any part  of the study work would  be recoverable through                                                                    
Medicaid waivers.                                                                                                               
                                                                                                                                
Mr. Mayes  answered that  he believed  DHSS already  did the                                                                    
work  daily. He  elaborated  the department  worked to  find                                                                    
ways  to  better  serve  rural  communities  and  streamline                                                                    
processes. The  division had been flat-funded  for some time                                                                    
and had not brought  on additional positions; therefore, the                                                                    
division had to be smarter  about what it did. He reiterated                                                                    
his belief the department already  did the work specified in                                                                    
the amendment daily.                                                                                                            
                                                                                                                                
Representative Guttenberg WITHDREW his OBJECTION.                                                                               
                                                                                                                                
There being  NO further  OBJECTION, Replacement  Amendment H                                                                    
HSS 22 was ADOPTED.                                                                                                             
                                                                                                                                
1:43:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton MOVED  to ADOPT Amendment H HSS  23 (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Departmental Support Services                                                                                              
     Commissioner's Office                                                                                                      
     H HSS 23                                                                                                                   
     Amend Department Transfer  Language and Add Legislative                                                                    
     Intent Language in HB 286                                                                                                  
     Offered by Representative Seaton                                                                                           
                                                                                                                                
     Wordage:                                                                                                                   
     At   the  discretion   of  the   Commissioner  of   the                                                                    
     Department  of  Health  and   Social  Services,  up  to                                                                    
     $20,000,000    may   be    transferred   between    all                                                                    
     appropriations in  the Department of Health  and Social                                                                    
     Services, except  that no  transfer may  be made  to or                                                                    
     from the Medicaid Services appropriation.                                                                                  
                                                                                                                                
     It  is   the  intent   of  the  legislature   that  the                                                                    
     Department  of  Health  and Social  Services  submit  a                                                                    
     report   of  transfers   between  appropriations   that                                                                    
     occurred during  the fiscal year ending  June 30, 2019,                                                                    
     to the  Legislative Finance  Division by  September 30,                                                                    
     2019.  It is  the intent  of the  legislature that  the                                                                    
     operating budgets for the fiscal  years ending June 30,                                                                    
     2020, and  June 30,  2021, be  prepared to  reflect the                                                                    
     actual or anticipated  transfers between appropriations                                                                    
     for the fiscal year ending June 30, 2019.                                                                                  
                                                                                                                                
     Explanation:                                                                                                               
     30-GH2564O.8                                                                                                               
     This  amendment   revises  conditional   language  that                                                                    
     allows the Department of Health  and Social Services to                                                                    
     transfer   funding  across   appropriation  lines.   It                                                                    
     changes the amount from $25  million to $20 million and                                                                    
     excludes the  Medicaid Services appropriation  from the                                                                    
     transfer  authority. It  also  adds legislative  intent                                                                    
     for the department to submit  a report of the transfers                                                                    
     that  occur  during  FY19 to  the  Legislative  Finance                                                                    
     Division  by  September  30,   2019.  Lastly,  it  adds                                                                    
     legislative intent that the  operating budgets for FY20                                                                    
     and  FY21  reflect  the   FY19  actual  or  anticipated                                                                    
     transfers between appropriations for budget clarity.                                                                       
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair Seaton explained the amendment with a prepared                                                                         
statement:                                                                                                                      
                                                                                                                                
     This  amendment   revises  conditional   language  that                                                                    
     allows the Department of Health  and Social Services to                                                                    
     transfer   funding  across   appropriation  lines.   It                                                                    
     changes the amount from $25  million to $20 million and                                                                    
     it  excludes the  Medicaid Services  appropriation from                                                                    
     the  transfer  authority.   It  also  adds  legislative                                                                    
     intent for  the department  to submit  a report  of the                                                                    
     transfers   that  occurred   during   FY   19  to   the                                                                    
     Legislative  Finance Division  by  September 30,  2019.                                                                    
     Lastly, it  adds legislative intent that  the operating                                                                    
     budget for  FY 20 and  21 reflect  the FY 19  actual or                                                                    
     anticipated   transfers   between  appropriations   for                                                                    
     budget clarity.                                                                                                            
                                                                                                                                
1:44:29 PM                                                                                                                    
                                                                                                                                
Representative Tilton spoke in  opposition to the amendment.                                                                    
She explained that the intent  of the budget language, which                                                                    
had  been added  in the  past, had  been to  ensure Medicaid                                                                    
providers  were being  paid. She  elaborated that  there had                                                                    
been  a problem  with  the  Medicaid Management  Information                                                                    
System (MMIS) and  providers had not been  paid. The ability                                                                    
for    the   department    to   transfer    funding   across                                                                    
appropriations was meant to be  temporary. She remarked that                                                                    
the  amendment  would  exclude Medicaid  Services  from  the                                                                    
transfer authority.  She noted  the department  was required                                                                    
to report any  transfers to the legislature.  She asked DHSS                                                                    
if it  had used  the transfer authority  in the  last fiscal                                                                    
year. She requested detail.                                                                                                     
                                                                                                                                
SHAWNDA   O'BRIEN,  ASSISTANT   COMMISSIONER,  FINANCE   AND                                                                    
MANAGEMENT  SERVICES,   DEPARTMENT  OF  HEALTH   AND  SOCIAL                                                                    
SERVICES, asked for clarification on the fiscal year.                                                                           
                                                                                                                                
Representative Tilton asked for both FY 17 and FY 18.                                                                           
                                                                                                                                
Ms.  O'Brien answered  that the  transfer authority  had not                                                                    
been used in  the current fiscal year [FY  18]. She detailed                                                                    
the department  did not  typically see a  need in  the first                                                                    
six  months  of a  fiscal  year  (sometimes the  first  nine                                                                    
months). Typically, as DHSS made  projections and it saw how                                                                    
spending was taking place, it  evaluated whether there was a                                                                    
need to  move authority. She  elaborated that DHSS  only had                                                                    
authority to move general funds  in FY 17, which had limited                                                                    
the  department's ability  to  maximize  potential in  other                                                                    
areas  where it  may have  had excess  federal authority  or                                                                    
other  things   that  would  have  allowed   more  alignment                                                                    
internally.  In FY  17 the  department  had transferred  $15                                                                    
million  in  general  funds  to  cover  a  GF  shortfall  in                                                                    
Medicaid.                                                                                                                       
                                                                                                                                
1:47:50 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara  noted  there  were a  number  of  programs                                                                    
people automatically  qualified for  under state  or federal                                                                    
law including  public benefits, adult  temporary assistance,                                                                    
child care,  and other income-based services.  He elaborated                                                                    
that DHSS  tried to project  the number of people  who would                                                                    
qualify  for  the  benefits. He  remarked  that  people  may                                                                    
qualify for  one program  and not another.  He spoke  to the                                                                    
daily rate the department paid  to foster care providers. He                                                                    
asked if the areas he  mentioned were examples of places the                                                                    
department utilized the authority to transfer funds.                                                                            
                                                                                                                                
Ms.  O'Brien agreed  there were  some  situations that  were                                                                    
unforeseeable  due to  caseloads  or unknown  circumstances.                                                                    
The   department  had   been  monitoring   its  senior   and                                                                    
disabilities  general   relief  program   (assisted  living)                                                                    
because of some things going  on with the Alaska Psychiatric                                                                    
Institute (API) and the closure  of Beans Cafe in Anchorage.                                                                    
She  explained  it would  be  an  area  DHSS could  use  the                                                                    
transfer  authority   to  offset   what  may  have   been  a                                                                    
supplemental budget request.                                                                                                    
                                                                                                                                
Representative  Wilson asked  about the  highest amount  the                                                                    
department  had utilized  to  match funds  or  take care  of                                                                    
programs.                                                                                                                       
                                                                                                                                
Ms.  O'Brien answered  that FY  17  was the  first year  the                                                                    
department  had   used  the   General  Fund   (GF)  transfer                                                                    
authority since  she had been  in her current  position. The                                                                    
department was  monitoring a couple  of places in FY  18 and                                                                    
had not  made supplemental  requests because  it anticipated                                                                    
having  the   ability  to  address  the   needs  internally.                                                                    
Typically, the department budgeted  close to what it needed;                                                                    
in most years  prior to FY 15 DHSS  had sufficient authority                                                                    
to address  most of  the needs.  Reductions in  recent years                                                                    
made  it harder  to manage  within the  budget -  there were                                                                    
some  circumstances that  took place  that were  out of  the                                                                    
department's  control, which  DHSS  managed internally.  The                                                                    
department was still pretty good  at budgeting closely - the                                                                    
transfer  authority was  less than  1 percent  of its  total                                                                    
budget.                                                                                                                         
                                                                                                                                
Representative  Wilson remarked  that  the department  could                                                                    
not use the funds for  Medicaid. She wondered if the percent                                                                    
would change  significantly when considering the  portion of                                                                    
the budget  the authorization could  be used for.  She asked                                                                    
what the money had been used for in FY 17.                                                                                      
                                                                                                                                
1:51:22 PM                                                                                                                    
                                                                                                                                
Ms. O'Brien answered  that in FY 17 the funds  had been used                                                                    
to offset overspending in  Medicaid Services. The department                                                                    
had  not   transferred  the  authority  into   the  Medicaid                                                                    
Services component;  however, it had created  an interagency                                                                    
receipt  authority   to  offset  the  costs   using  another                                                                    
component where expenditures had taken place.                                                                                   
                                                                                                                                
Representative   Wilson    remarked   that    although   the                                                                    
legislature   had  excluded   Medicaid  from   the  transfer                                                                    
authorization, the department still had  a way to do it. She                                                                    
surmised the limiting language appeared to be irrelevant.                                                                       
                                                                                                                                
Ms. O'Brien answered  that in FY 17 DHSS had  found a way to                                                                    
leverage  the ability  to  reduce what  would  have been  an                                                                    
additional cost in the supplemental bill.                                                                                       
                                                                                                                                
Representative  Wilson  remarked  that  the  department  was                                                                    
still able to  use the transfer authority  for Medicaid even                                                                    
though the language specified it  could not be used for that                                                                    
purpose.  She did  not know  whether the  legislature had  a                                                                    
problem  with the  issue or  not -  whether the  $20 million                                                                    
went through the supplemental or  the transfer authority was                                                                    
a policy  call and  represented the same  pot of  money. She                                                                    
believed the  transfer authority had started  because of the                                                                    
Medicaid issue - when the  federal dollars would come in and                                                                    
the number of people who  would qualify was never known. She                                                                    
wondered why Medicaid could not use the money.                                                                                  
                                                                                                                                
Co-Chair Seaton answered  that the goal was  to avoid giving                                                                    
DHSS the  impression the transfer authority  meant it should                                                                    
not budget tightly going forward.  The legislature wanted to                                                                    
know  the  department's  anticipated   costs  and  the  past                                                                    
history  of where  the costs  were. He  wanted to  receive a                                                                    
report  showing  where  the  transfers  had  been  made  and                                                                    
whether DHSS  anticipated it  would need  the money  for the                                                                    
same reason  the following year.  He elaborated that  if the                                                                    
funds  were  needed  the  following  year,  the  legislature                                                                    
wanted the  funding to be  moved to that specific  line item                                                                    
in the  budget. The  department should  have the  ability to                                                                    
use  the  authority  because the  preference  was  to  avoid                                                                    
supplementals.  Yet, the  authority should  not be  so loose                                                                    
that DHSS did not adjust its budget for anticipated needs.                                                                      
                                                                                                                                
1:54:15 PM                                                                                                                    
                                                                                                                                
Representative Wilson agreed it  was important to know where                                                                    
the money  was being  spent. She  had recently  learned that                                                                    
money got  spent in  places the  legislature was  unaware of                                                                    
until it  saw budget  actuals. She  observed that  the money                                                                    
had  been spent  for  Medicaid anyway  through a  roundabout                                                                    
method to  take care of clients  - she was not  faulting the                                                                    
department   because  it   was  trying   to  take   care  of                                                                    
individuals in need of care.  She reasoned that allowing the                                                                    
transfer  authority  for  Medicaid could  have  reduced  the                                                                    
supplemental and  may have meant  a fast  track supplemental                                                                    
would  not  have been  necessary  to  ensure providers  were                                                                    
paid.  She  thought the  language  was  not doing  what  was                                                                    
intended  if the  department was  finding a  way to  use the                                                                    
funds for Medicaid.                                                                                                             
                                                                                                                                
Co-Chair Seaton replied  that if the department  was able to                                                                    
move a small  amount of money among the line  items in order                                                                    
to  prevent a  supplemental budget  the following  year. The                                                                    
preference would  be to  know about the  cost ahead  of time                                                                    
and  ensure   the  department's  budget  got   adjusted  for                                                                    
anticipated need in the appropriate locations.                                                                                  
                                                                                                                                
1:56:12 PM                                                                                                                    
                                                                                                                                
Representative Wilson  thought she may  be misunderstanding.                                                                    
She surmised it sounded like  it was okay for the department                                                                    
to  use the  funds  for foster  care or  for  the Office  of                                                                    
Children's  Services,  but  not for  Medicaid.  However,  in                                                                    
reality, DHSS was using the  transfer authority for Medicaid                                                                    
via interagency  receipts. She clarified she  had no problem                                                                    
with the use  of the funds. She explained  she preferred the                                                                    
department to tell the legislature  the funds had been spent                                                                    
on Medicaid versus interagency receipts  because it was more                                                                    
transparent.   She  agreed   with  the   goal  of   avoiding                                                                    
supplemental budgets.  She did  not think  it made  sense to                                                                    
include  language  that  the authority  could  be  spent  on                                                                    
anything but Medicaid. She thought  it would be much clearer                                                                    
to  know the  department  had spent  the  money on  Medicaid                                                                    
versus  interagency receipts.  She thought  the language  in                                                                    
the amendment  was unnecessary. She believed  if the purpose                                                                    
was to exclude Medicaid the  language needed to be tightened                                                                    
to exclude  use interagency receipts for  Medicaid purposes.                                                                    
She understood  the department was  in a tight  spot because                                                                    
Medicaid was not  capped - if a person  qualified, the state                                                                    
was  responsible   for  paying   it  (whether   through  the                                                                    
operating budget or a supplemental).                                                                                            
                                                                                                                                
Co-Chair Seaton  noted there were people  who were concerned                                                                    
about  transfers   to  Medicaid.  He  was   amenable  to  an                                                                    
amendment that would remove the exclusion for Medicaid.                                                                         
                                                                                                                                
1:58:43 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:15:12 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative Wilson MOVED to  ADOPT conceptual Amendment 1                                                                    
to Amendment H  HSS 23 to delete language "to  or" from line                                                                    
4 [after the word "made" and  prior to the word "from"]. The                                                                    
amended amendment would read as follows:                                                                                        
                                                                                                                                
     ...the Department of Health and Social Services,                                                                           
     except that no transfer may be made from the Medicaid                                                                      
     Services appropriation.                                                                                                    
                                                                                                                                
Co-Chair Seaton pointed to the location in the amendment.                                                                       
                                                                                                                                
Representative Wilson  explained her discomfort  with giving                                                                    
any  department the  ability to  transfer  funding back  and                                                                    
forth.  She explained  that the  legislature  had asked  the                                                                    
department  for  a  report on  any  transfer  activity.  She                                                                    
detailed that no report had  been provided for FY 17 because                                                                    
no transfers had taken place.  She continued that there were                                                                    
issues  in  DHSS due  to  growth  in Medicaid  and  Medicaid                                                                    
expansion. She  referenced a $90 million  cost. She reasoned                                                                    
the issue was  not a department problem, it  was statute and                                                                    
federal regulations the legislature  had yet to address. The                                                                    
department  was  merely  doing   what  the  legislature  had                                                                    
mandated  -  if  a  person  was  eligible  for  Medicaid  or                                                                    
Medicaid expansion,  the department was required  to provide                                                                    
whatever  services it  had. She  had offered  the conceptual                                                                    
amendment because it was her  understanding DHSS was already                                                                    
[allowing   transfer  authorization   for  Medicaid]   in  a                                                                    
roundabout  way.  Additionally,  there  was  a  $90  million                                                                    
supplemental.                                                                                                                   
                                                                                                                                
Representative  Wilson believed  allowing the  department to                                                                    
transfer  funds to  Medicaid would  mean  a supplemental  or                                                                    
fast  track supplemental  may not  be necessary.  She stated                                                                    
the legislature would pay for  the services unless it wanted                                                                    
to tackle  Medicaid reform in  the last 40 days  of session.                                                                    
She believed  that would  not happen.  She wanted  to ensure                                                                    
the legislature  would look closely  at where the  money was                                                                    
spent. She hoped that what  the legislature appropriated was                                                                    
sufficient   (barring  something   unforeseeable)  and   the                                                                    
transfer authority would not be utilized.                                                                                       
                                                                                                                                
2:18:13 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  if  there  were any  other                                                                    
programs  that  were not  able  to  transfer money  out.  He                                                                    
wondered if there were any  other places where something was                                                                    
jeopardized if money was moved in or out.                                                                                       
                                                                                                                                
Ms.  O'Brien answered  that currently  the department  could                                                                    
transfer  funding  authority  across   any  of  its  funding                                                                    
sources. She  detailed if  DHSS had  a shortfall  in federal                                                                    
authority  and  needed  the  funds  someplace  else  in  the                                                                    
department, it could transfer the  authority and receive the                                                                    
funds. The amendment would not  restrict the department - it                                                                    
would  only  restrict  DHSS  from  moving  anything  out  of                                                                    
Medicaid Services.                                                                                                              
                                                                                                                                
There  being   NO  OBJECTION,  Conceptual  Amendment   1  to                                                                    
Amendment H HSS 23 was ADOPTED.                                                                                                 
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION                                                                                    
to Amendment  H HSS  23 as amended.  There being  NO further                                                                    
OBJECTION, Amendment H HSS 23 was ADOPTED as AMENDED.                                                                           
                                                                                                                                
2:20:09 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment L H SAP  23 (copy                                                                    
on file):                                                                                                                       
                                                                                                                                
     Language Amendments                                                                                                        
     L H SAP 23 - Amend section 27, the retroactivity                                                                           
     provision                                                                                                                  
     Offered by Representative Seaton                                                                                           
                                                                                                                                
     See 30-GH2564O.10                                                                                                          
                                                                                                                                
     This  amendment adds  a new  subsection (b)  to section                                                                    
     27,  Retroactivity,  for  the  FY18-FY19  appropriation                                                                    
     made in  sec. 19(l)  to the Alaska  Gasline Development                                                                    
     Corporation,  ensuring  that  the  appropriation  takes                                                                    
     effect in FY18.                                                                                                            
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Co-Chair  Seaton   read  the  amendment  (see   above).  The                                                                    
appropriation would take effect in  FY 18 in case the budget                                                                    
was  not signed  before July  1 [2018].  The subsection  was                                                                    
always included in appropriation  bills with provisions that                                                                    
took  place  in  the  current fiscal  year.  He  noted  that                                                                    
upcoming  Amendment  H  SAP  27  would  change  the  current                                                                    
Section 19(l), but even if  it was adopted the retroactivity                                                                    
provision would be technical.                                                                                                   
                                                                                                                                
Representative Pruitt wanted to  ensure they understood what                                                                    
the  amendment  did. He  believed  that  if the  legislature                                                                    
could not  complete a  budget before  July 1,  the amendment                                                                    
meant  the  Alaska  Gasline Development  Corporation  (AGDC)                                                                    
would not be prevented from signing an agreement in June.                                                                       
                                                                                                                                
Co-Chair Seaton agreed.                                                                                                         
                                                                                                                                
Representative  Pruitt  did not  see  it  as a  concern.  He                                                                    
reasoned the amendment was precautionary  in case "things go                                                                    
sideways" [with the budget].                                                                                                    
                                                                                                                                
Co-Chair  Seaton  agreed  and explained  the  amendment  was                                                                    
technical  to go  with any  supplemental budget;  therefore,                                                                    
the  supplemental would  be signed  by the  governor in  the                                                                    
year the  legislature intended the appropriation  to be used                                                                    
for.                                                                                                                            
                                                                                                                                
Representative  Pruitt  surmised  the  language  was  needed                                                                    
because they  were addressing the overall  operating budget,                                                                    
not a fast  track supplemental. He elaborated  that the item                                                                    
addressed by  the amendment was  unique -  most supplemental                                                                    
items had  been pulled out already;  therefore, the language                                                                    
for the specific item needed to remain.                                                                                         
                                                                                                                                
Co-Chair Seaton replied in the affirmative.                                                                                     
                                                                                                                                
2:25:35 PM                                                                                                                    
                                                                                                                                
Representative Wilson  pointed to page 67,  Section 19(l) of                                                                    
the bill. She read from the language in the bill:                                                                               
                                                                                                                                
     The  amount of  statutory  designated program  receipts                                                                    
     received by the  Alaska Gasline Development Corporation                                                                    
     during the fiscal  years ending June 30,  2018 and June                                                                    
     30,  2019,  is  appropriated to  the  Alaska  Liquefied                                                                    
     Natural Gas Project Fund.                                                                                                  
                                                                                                                                
Representative  Wilson  did  not  know  what  the  statutory                                                                    
designated program  receipts were  and where  they currently                                                                    
resided. She reasoned the funds did  not appear to be in the                                                                    
Alaska Liquefied Natural Gas Project Fund.                                                                                      
                                                                                                                                
Co-Chair Seaton explained that it  was the only supplemental                                                                    
item remaining  in the  operating budget.  The same  kind of                                                                    
language   was  used   for  the   supplemental  budget.   He                                                                    
elaborated  that anything  supplemental needed  to apply  to                                                                    
the current fiscal  year. He noted that if a  budget was not                                                                    
signed  until  after July  1,  the  appropriation would  not                                                                    
apply  to FY  18. The  language made  sure the  supplemental                                                                    
items the  legislature approved would  be applied to  FY 18,                                                                    
not FY 19.                                                                                                                      
                                                                                                                                
Representative Wilson asked for  the amount of the statutory                                                                    
designated program receipts. She  wondered if the amount was                                                                    
open-ended.  She  questioned  whether  the  amount  included                                                                    
funds AGDC  may receive from China  or other. Alternatively,                                                                    
she  wondered if  it only  pertained  to the  amount in  the                                                                    
supplemental.                                                                                                                   
                                                                                                                                
Co-Chair Seaton answered that an  amendment (Amendment H SAP                                                                    
27) by Representative Pruitt  also involved the supplemental                                                                    
budget.                                                                                                                         
                                                                                                                                
JOAN  BROWN,  STAFF,  REPRESENTATIVE PAUL  SEATON,  answered                                                                    
that  Representative  Wilson's understanding  was  accurate.                                                                    
The amendment was a technical,  legal provision the co-chair                                                                    
wanted  included  in  all  budget bills  with  any  type  of                                                                    
supplemental appropriation. She believed  they would take up                                                                    
Amendment  H   SAP  27  next,   which  included  an   FY  18                                                                    
appropriation.                                                                                                                  
                                                                                                                                
2:29:09 PM                                                                                                                    
                                                                                                                                
Representative   Wilson   remarked    that   the   amendment                                                                    
potentially  applied to  two  amounts -  the  amount in  the                                                                    
supplemental and  any statutory designated  program receipts                                                                    
AGDC may find.                                                                                                                  
                                                                                                                                
Ms.  Brown  corrected that  the  amendment  only applied  to                                                                    
Section  19(l).  She  explained  that  because  the  section                                                                    
applied  to  the  fiscal  year ending  June  30,  2018,  the                                                                    
provision  was a  supplemental provision.  The amounts  were                                                                    
split in the next amendment  (Amendment H SAP 27) between FY                                                                    
18 and FY 19.                                                                                                                   
                                                                                                                                
Representative  Wilson WITHDREW  her OBJECTION.  There being                                                                    
NO further OBJECTION, Amendment H SAP 23 was ADOPTED.                                                                           
                                                                                                                                
2:30:06 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  MOVED to ADOPT  Amendment L H SAP  24 (copy                                                                    
on file):                                                                                                                       
                                                                                                                                
     Language Amendments                                                                                                        
     L H SAP 24 - Restore FY19 inflation-proofing of the                                                                        
     Alaska permanent fund                                                                                                      
     Offered by Representative Seaton                                                                                           
                                                                                                                                
     See 30-GH2564O25                                                                                                           
                                                                                                                                
     This  adds  a  new   section  8(e),  the  updated  FY19                                                                    
     inflation  proofing appropriation,  which transfers  an                                                                    
     estimated  $942  million   from  the  earnings  reserve                                                                    
     account to  the principal of the  Alaska permanent fund                                                                    
     to offset the effects of inflation.                                                                                        
                                                                                                                                
Representative   Pruitt   OBJECTED    for   discussion.   He                                                                    
appreciated  the   amendment.  He  explained  that   he  and                                                                    
Representative Thompson had been  vocal about the importance                                                                    
of inflation proofing  the corpus of the  Permanent Fund. He                                                                    
noted  the  amendment  would  move  $942  million  from  the                                                                    
earnings reserve account  (ERA) to the corpus  to ensure the                                                                    
value  of  the  fund  would  continue  to  grow  for  future                                                                    
generations.                                                                                                                    
                                                                                                                                
2:31:18 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:31:46 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Gara  supported the amendment. He  hoped everyone                                                                    
would  agree  to  inflation proof  the  Permanent  Fund.  He                                                                    
stated that the number was higher  than it had been in other                                                                    
years, but  the fund  had not  been inflation  proofed since                                                                    
2016.                                                                                                                           
                                                                                                                                
Representative Wilson stated that it  was only for one year,                                                                    
but  there  was  nothing  preventing  the  legislature  from                                                                    
providing additional funding to  cover the lack of inflation                                                                    
proofing  in recent  years (once  oil prices  and production                                                                    
increased). It  was her intent to  get the fund back  to the                                                                    
proper level. She  remarked that everyone wanted  to see the                                                                    
fund grow and prosper.                                                                                                          
                                                                                                                                
Co-Chair  Seaton noted  that  the value  of  the corpus  had                                                                    
changed, and they wanted to  make sure the right amount went                                                                    
into the  fund - the number  had changed by $1  million. The                                                                    
amount in  the amendment  had been  changed to  $942 million                                                                    
instead of the original estimate of $943 million.                                                                               
                                                                                                                                
Representative  Pruitt  thanked  Representative  Wilson  and                                                                    
Representative  Tilton for  their support.  He believed  the                                                                    
amendment was important. He WITHDREW his OBJECTION.                                                                             
                                                                                                                                
There being NO  further OBJECTION, Amendment L H  SAP 24 was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
2:34:10 PM                                                                                                                    
                                                                                                                                
Representative Pruitt  MOVED to ADOPT  Amendment L H  SAP 27                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Language Amendments                                                                                                        
     L H SAP 27 - Deletes unlimited SDPR authority for                                                                          
     AGDC. Offered by Representative Pruitt                                                                                     
                                                                                                                                
     Limits SDPR authority for AGDC to $500,000.0 for FY18,                                                                     
     and $500,000.0 for FY19. Removes AGDC SDPR authority                                                                       
     from the LB&A RPL process.                                                                                                 
                                                                                                                                
Co-Chair Seaton OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Pruitt  explained the amendment  pertained to                                                                    
AGDC. The current budget language  allowed for an open-ended                                                                    
amount to be accepted by AGDC  for a natural gas project. He                                                                    
elaborated that statutory  designated program receipts would                                                                    
go  into  the  Alaska  Liquid   Natural  Gas  Fund.  He  was                                                                    
concerned about ensuring the  legislature had an opportunity                                                                    
to consider  whether it was  comfortable going  forward with                                                                    
the project.  He found  the open-ended  language concerning.                                                                    
The  amendment  included  language   that  allowed  for  two                                                                    
separate   amounts  in   two  years.   The  first   was  the                                                                    
supplemental  (he  referenced   the  earlier  discussion  on                                                                    
Amendment L  H SAP 23) that  allowed for $500 million  to be                                                                    
accepted  in FY  18.  The second  portion  allowed for  $500                                                                    
million to be  accepted in FY 19. He  acknowledged the large                                                                    
size  of  the amounts  and  explained  the increments  would                                                                    
allow the project to move  to the next stage. He underscored                                                                    
the goal  was not  to stop  the project.  The amount  in the                                                                    
amendment was sufficient for AGDC  to take the next step. He                                                                    
noted  the  phase was  typically  referred  to as  the  FEED                                                                    
[front  end  engineering  and design]  stage.  However,  the                                                                    
process moving forward had been  changed and the stage gates                                                                    
were not  the same as  in the  past. He reiterated  that the                                                                    
amendment would  allow for  more than  enough money  to move                                                                    
forward.                                                                                                                        
                                                                                                                                
Representative  Pruitt  explained  the  amendment  specified                                                                    
that   any  additional   funding   would   go  through   the                                                                    
legislative appropriation process within  the next year. The                                                                    
amendment would  ensure the legislature  would still  have a                                                                    
part in the conversation going forward.                                                                                         
                                                                                                                                
2:37:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton spoke to the  issue AGDC's ability to accept                                                                    
more  without legislative  approval. He  asked to  hear from                                                                    
the corporation.                                                                                                                
                                                                                                                                
GENE   THERRIAULT,   GOVERNMENT  LIAISON,   ALASKA   GASLINE                                                                    
DEVELOPMENT  CORPORATION,  stated  that  as  discussed,  the                                                                    
amendment   dealt  with   two   components.  One   component                                                                    
authorized a specific amount of  money in the current fiscal                                                                    
year  and the  next  fiscal year,  which  differed from  the                                                                    
governor's open-ended  budget that would allow  the funds to                                                                    
come in over a two-year period.                                                                                                 
                                                                                                                                
Mr.  Therriault explained  that  the  governor's budget  had                                                                    
come  out in  December when  there had  been half  of FY  18                                                                    
remaining -  as time  had gone by  the window  for potential                                                                    
money  to  come   in  [during  FY  18]   had  narrowed.  The                                                                    
corporation  appreciated the  healthy  sum  included in  the                                                                    
amendment. He remarked on the  large size of the project and                                                                    
the  large sum  needed  for its  advancement. He  elaborated                                                                    
that AGDC hoped there was  an opportunity to attract outside                                                                    
funding  sources  to  help  with   the  current  process  in                                                                    
anticipation of  the bigger deal coming  together. He stated                                                                    
that with the  end of FY 18 approaching,  breaking the funds                                                                    
into two $500  million pots [between FY 18 and  FY 19] would                                                                    
only leave  $500 million in  FY 19. The  corporation thought                                                                    
the  current process  could cost  between  $700 million  and                                                                    
$800   million.  The   governor's   language  had   provided                                                                    
flexibility over  a two-year period, whereas  there was some                                                                    
concern the amendment  meant they may bump into  the cap. He                                                                    
stated  it  would   be  helpful  if  there   could  be  some                                                                    
consideration of  raising the  amount in  both years  or the                                                                    
second year  when it  was more likely  the money  would come                                                                    
in.                                                                                                                             
                                                                                                                                
Mr.  Therriault addressed  that the  amendment would  remove                                                                    
the Legislative Budget and  Audit Committee's (LB&A) ability                                                                    
to   consider  a   statutory   designated  program   receipt                                                                    
increment exceeding  the allowable amount. He  was concerned                                                                    
about the  message it  sent to a  potential partner  who may                                                                    
come  in  with a  dollar  amount  outside of  the  specified                                                                    
appropriation  limit.  He  furthered  that  the  legislature                                                                    
would have  to convene in  special session during  the first                                                                    
half of  FY 19 in order  to receive the funds.  He mentioned                                                                    
many  legislators would  be busy  with campaigns  during the                                                                    
fall. Alternatively, if the LB&A  language was left in, AGDC                                                                    
could  take the  dollar amount  exceeding the  appropriation                                                                    
limit to LB&A to address the issue.                                                                                             
                                                                                                                                
2:41:16 PM                                                                                                                    
                                                                                                                                
Vice-Chair Gara stated  that his only concern  was about the                                                                    
project moving  forward without legislative  approval. Under                                                                    
statute passed by the  legislature, legislative approval was                                                                    
required for  any obligations of the  state; therefore, AGDC                                                                    
would not  have the  ability to obligate  the state  with or                                                                    
without the amendment. He considered  a funding increment of                                                                    
$1 billion and reasoned that  no one could build the gasline                                                                    
for $1  billion. Even if  the amendment cap was  $1 billion,                                                                    
he did  not see  a gasline happening,  he imagined  it would                                                                    
allow  AGDC   to  bring  in  investment   dollars  for  very                                                                    
preliminary parts  of a gasline  planning process.  He asked                                                                    
if his assumption was accurate.                                                                                                 
                                                                                                                                
Mr.  Therriault answered  in the  affirmative. He  discussed                                                                    
that when AGDC  had been created the  legislature had passed                                                                    
AS 31.25.240  specifying the corporation could  not obligate                                                                    
the  state. If  and  when  a project  went  forward, as  the                                                                    
corporation  partnered with  others or  statutory designated                                                                    
program  receipt funds  came in,  the corporation  could not                                                                    
deploy funds  in a  way that created  an obligation  for the                                                                    
state. If the corporation were  to issue bonds and a capital                                                                    
reserve fund  was created it  would require AGDC  to receive                                                                    
authorization from  the legislature. There were  a number of                                                                    
statutory   points  where   AGDC  had   to  come   back  for                                                                    
authorization  from the  legislature.  In the  corporation's                                                                    
last semi-monthly report distributed  to the legislature, it                                                                    
had  answered  questions  from  Senator  Cathy  Giessel  and                                                                    
Senator  Anna MacKinnon.  He specified  that question  6 had                                                                    
asked AGDC  to go through  a list of  anticipated agreements                                                                    
and to  highlight which still required  legislative approval                                                                    
under  the   new  possible  structure.   A  couple   of  the                                                                    
agreements would require  legislative approval. He addressed                                                                    
a concern  that an  open-ended statutory  designated program                                                                    
receipt  scenario meant  someone could  write a  $40 billion                                                                    
check  and  the project  turned  into  a runaway  train.  He                                                                    
explained that was  not what AGDC intended and  it would not                                                                    
be allowed.                                                                                                                     
                                                                                                                                
2:44:10 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  spoke to  the concern  about the  amount of                                                                    
money and  whether $500 million  bumped against the  cap. He                                                                    
detailed that he and Representative  Pruitt had talked about                                                                    
the  issue. He  MOVED  to ADOPT  conceptual  Amendment 1  to                                                                    
Amendment L H SAP 27 to  increase the $500 million cap in FY                                                                    
18 to $1  billion and from $500 million to  $1 billion in FY                                                                    
19.                                                                                                                             
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative  Pruitt recognized  AGDC's concern  about the                                                                    
ability  to get  the money  prior to  the end  of FY  18. He                                                                    
asked  Mr.  Therriault  if   he  anticipated  any  statutory                                                                    
designated program  receipt money coming in  that AGDC would                                                                    
need to accept by June 30.                                                                                                      
                                                                                                                                
Mr. Therriault  answered that  the chance  was low,  but not                                                                    
outside  the   realm  of   possibility.  He   reported  that                                                                    
discussions were  fluid. The corporation  would not  want to                                                                    
be precluded if the chance arose.                                                                                               
                                                                                                                                
Representative Pruitt  believed the intent was  to allow the                                                                    
$1 billion to  be fluid over the FY 18  and FY 19 timeframe.                                                                    
He was amenable to allowing  AGDC the opportunity to receive                                                                    
up to $1 billion in FY 19.                                                                                                      
                                                                                                                                
Co-Chair Seaton  clarified that the amendment  allowed an FY                                                                    
18 appropriation of  receipt authority up to  $1 billion. If                                                                    
the  $1 billion  was  not  completed in  FY  18,  the FY  19                                                                    
authority  was  up to  $1  billion.  He explained  that  the                                                                    
amount  was not  transferrable  from  FY 18  to  FY 19.  For                                                                    
example, [if  no money was used  in FY 18] $2  billion could                                                                    
not be spent in  FY 19. The intent was to  enable AGDC to go                                                                    
into negotiations  without being limited to  an amount below                                                                    
a potential commitment.                                                                                                         
                                                                                                                                
2:47:30 PM                                                                                                                    
                                                                                                                                
Representative  Wilson   provided  a  scenario   where  AGDC                                                                    
brought  in   $700  million   in  FY   18.  She   asked  for                                                                    
verification that the remaining  $300 million would not roll                                                                    
over  into FY  19.  She surmised  the  corporation would  be                                                                    
limited to $1 billion in FY 19.                                                                                                 
                                                                                                                                
Co-Chair Seaton agreed.                                                                                                         
                                                                                                                                
Representative Wilson  asked who  would give $1  billion for                                                                    
the project  that would  not have  the result  of obligating                                                                    
the state.                                                                                                                      
                                                                                                                                
Mr. Therriault answered  that the funds could  come from one                                                                    
of the  potential overseas partners/buyers discussed  in the                                                                    
media.  Funds  could also  come  from  an EPC  [engineering,                                                                    
procurement, and  construction] contractor.  The corporation                                                                    
was  speaking with  EPC contractors,  potential buyers,  and                                                                    
potential  financiers.  Individuals traveling  overseas  had                                                                    
reported   significant  excitement   and  interest   in  the                                                                    
project. The  funds could come  from any one of  those types                                                                    
of investors.                                                                                                                   
                                                                                                                                
Representative Wilson surmised that  no one would give funds                                                                    
without  an expectation  of receiving  something in  return.                                                                    
She wondered if  AGDC would be obligated and  not the state.                                                                    
She reasoned if someone gave money  there would have to be a                                                                    
contract somewhere. She wondered  if the contracts were only                                                                    
with AGDC or other.                                                                                                             
                                                                                                                                
2:49:04 PM                                                                                                                    
                                                                                                                                
Mr. Therriault answered  it would be a  contract between the                                                                    
entity bringing  in the  money and  ADGC. He  furthered that                                                                    
AGDC's  liability as  a corporate  entity in  the state  was                                                                    
limited to the corporate entity.                                                                                                
                                                                                                                                
Representative  Grenn spoke  in  support  of the  conceptual                                                                    
amendment  and  the  amendment.  He  believed  the  work  by                                                                    
Representative Pruitt  and Co-Chair Seaton  in collaboration                                                                    
with Mr.  Therriault showed the  importance and  momentum of                                                                    
the issue. He believed the limit was responsible.                                                                               
                                                                                                                                
Representative  Wilson WITDREW  her OBJECTION  to conceptual                                                                    
Amendment 1.  There being  NO further  OBJECTION, conceptual                                                                    
Amendment 1 to Amendment L H SAP 27 was ADOPTED.                                                                                
                                                                                                                                
2:50:12 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  Mr.  Therriault to  review                                                                    
LB&A authority and what it meant  to remove it [as under the                                                                    
proposed amendment].                                                                                                            
                                                                                                                                
Mr.  Therriault  referred  to  standard  budgetary  language                                                                    
allowing LB&A to consider program  receipt dollars in excess                                                                    
of the budgeted amount. Funds  were allowed to come in under                                                                    
AS 37.07.080(h),  the process where  an entity went  to LB&A                                                                    
for approval of  extra funds. The committee  could choose to                                                                    
convene and approve the request.  The administration had the                                                                    
authority to  receive the money  if LB&A chose not  to meet;                                                                    
however, if  LB&A met  and turned  the request  down, anyone                                                                    
bringing  funds  to  the project  would  think  twice  about                                                                    
following through  if they did  not see  legislative support                                                                    
for a proposal.                                                                                                                 
                                                                                                                                
Representative  Wilson clarified  that she  could not  speak                                                                    
for other  legislators, but her  campaign had nothing  to do                                                                    
with her  job as a  legislator. She believed  her colleagues                                                                    
would be  present if  there was need  to convene  to discuss                                                                    
the project  [during a special  session]. She  was concerned                                                                    
about  transparency   to  the   public.  She   stressed  the                                                                    
amendment would allow AGDC to  take in $2 billion, which was                                                                    
a  substantial  amount of  money.  She  elaborated that  the                                                                    
state would not be obligated, but  AGDC would be and the gas                                                                    
would  belong to  every Alaskan.  She  understood there  had                                                                    
been  concerns   about  how  the  gas   would  be  utilized,                                                                    
including substantial concerns from  Fairbanks that it would                                                                    
be bypassed,  and gas  would be  sent overseas  instead. She                                                                    
understood  that  $2  billion  was not  enough  to  build  a                                                                    
gasline, but it  was a large amount. She wanted  to know how                                                                    
far along  "could we possibly  get" in terms  of obligation.                                                                    
She  asked what  would happen  if Fairbanks  and North  Pole                                                                    
were  bypassed. She  wanted to  ensure  Alaskans were  taken                                                                    
care of first.                                                                                                                  
                                                                                                                                
Mr.  Therriault answered  that the  funds would  be used  to                                                                    
cover engineering  work, contractual structuring of  a deal,                                                                    
leading up to (but not  beyond) a final investment decision.                                                                    
He elaborated  that any  obligation of  the state  and other                                                                    
items  specified   in  statute  would   require  legislative                                                                    
approval. He  noted that fewer agreements  than the previous                                                                    
project  structure would  require  legislative approval.  He                                                                    
believed that  if there was  a fear about the  whole project                                                                    
going forward,  $2 billion  was not enough  money to  get to                                                                    
that  stage.  The allocation  would  be  enough to  continue                                                                    
through the  regulatory process and  structuring contractual                                                                    
agreements, up to the point  where AGDC would be prepared to                                                                    
consider  a  final  investment decision,  but  not  actually                                                                    
pulling the construction trigger.                                                                                               
                                                                                                                                
2:55:13 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  stated  that   since  AGDC  was  not                                                                    
considered a state  entity, she asked if there  would be any                                                                    
reporting  to the  legislature on  where any  incoming money                                                                    
had come  from and where  it would be  spent. Alternatively,                                                                    
she wondered if the information would be private.                                                                               
                                                                                                                                
Mr.  Therriault  replied  that   he  believed  it  would  be                                                                    
information AGDC was excited to  share; it would be included                                                                    
in   the   corporation's    semi-monthly   report   to   the                                                                    
legislature.                                                                                                                    
                                                                                                                                
2:55:50 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:58:17 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Seaton pointed  to  a  Legislative Legal  Services                                                                    
opinion dated  March 6,  2018 in  members' packets  (copy on                                                                    
file).  He and  Representative Pruitt  had wanted  to ensure                                                                    
the  amendment  did  not  conflict  with  any  statute.  The                                                                    
memorandum confirmed  the legality of placing  limitation on                                                                    
further  investment. He  believed increasing  the cap  to $1                                                                    
billion  removed the  likelihood of  a problem.  He recalled                                                                    
that  when   AGDC  and  the   governor's  office   had  been                                                                    
negotiating  on  Memorandums  of  Understanding  people  had                                                                    
asked where  the money  was. He  remembered that  people had                                                                    
stated the negotiations lacked meaning  because there was no                                                                    
money.  He noted  that  it had  come to  a  point where  the                                                                    
legislature wanted to  restrict the ability to  take money -                                                                    
he believed the  level should be high  enough to communicate                                                                    
the  legislature's  support  for  the project  and  that  it                                                                    
wanted  to  see  skin  in  the game  from  people  AGDC  was                                                                    
negotiating with.                                                                                                               
                                                                                                                                
Co-Chair Seaton believed the  amendment provided the ability                                                                    
to move forward  in FY 18 and FY 19.  He provided a scenario                                                                    
where a  deal costing $20  billion arose and  expressed that                                                                    
the  legislature  would  quickly call  itself  into  special                                                                    
session  to approve  the  appropriation.  The endeavor  with                                                                    
AGDC had been  done in a way to insulate  the process of the                                                                    
corporation  from   political  whims.  He   appreciated  the                                                                    
amendment  and believed  it satisfied  ensuring the  project                                                                    
could  move  forward,  while maintaining  the  legislature's                                                                    
ability to review the deal.                                                                                                     
                                                                                                                                
3:01:48 PM                                                                                                                    
                                                                                                                                
Representative Wilson  did not believe there  was anyone who                                                                    
did not  appreciate the  project, but  she wanted  to ensure                                                                    
Alaskans  came first.  She  stated that  some  may think  $1                                                                    
billion did not sound like  a substantial amount, but it did                                                                    
to her.  She did  not want Alaskans  to be  forgotten during                                                                    
the course  of the project.  She stressed the issue  was not                                                                    
about how  much the  state could  sell its  gas for,  but to                                                                    
ensure  areas  that  had  been   hurting  for  a  long  time                                                                    
economically because  of energy  costs, were  not forgotten.                                                                    
She  stated   that  when   people  invested   they  expected                                                                    
something in  return. She  reasoned no  one would  give AGDC                                                                    
$500 million  to $1 billion  without a  contract designating                                                                    
they were  to recoup the  money. She was  uncomfortable with                                                                    
the amount,  but she understood  the project was  not small.                                                                    
She wanted Alaskans  to know the documents  would be public,                                                                    
so  they  could see  who  was  investing and  to  understand                                                                    
Alaskans came first.                                                                                                            
                                                                                                                                
Co-Chair Seaton WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
There being  NO further  OBJECTION, Amendment  H SAP  27 was                                                                    
ADOPTED as AMENDED.                                                                                                             
                                                                                                                                
Representative  Ortiz   MOVED  to  RESCIND  action   on  the                                                                    
adoption of Amendment H GOV  2 [the amendment was adopted in                                                                    
the previous  committee meeting, see minutes  dated March 6,                                                                    
2018 for detail] (copy on file):                                                                                                
                                                                                                                                
     H GOV 2                                                                                                                    
     Offered by Representative Wilson                                                                                           
     FY17 Actuals were  $0 and the FY  19 Governor's request                                                                    
     is $550.0.  A decrement $100.0  will result in a  FY 19                                                                    
     budget  request  of $400.0  for  what  is described  as                                                                    
     "agency support  as needed to meet  high priority needs                                                                    
     in the contingency fund".                                                                                                  
                                                                                                                                
Co-Chair Seaton pointed  to the amendment on page  25 of the                                                                    
Legislative  Finance Division  operating budget  transaction                                                                    
detail [amendment packet] (copy on file).                                                                                       
                                                                                                                                
There being NO OBJECTION, the  adoption of Amendment H GOV 2                                                                    
was RESCINDED.                                                                                                                  
                                                                                                                                
3:03:39 PM                                                                                                                    
                                                                                                                                
Representative Ortiz MOVED to ADOPT  Amendment H GOV 2 (copy                                                                    
on file):                                                                                                                       
                                                                                                                                
     H GOV 2                                                                                                                    
     Offered by Representative Wilson                                                                                           
     FY17 Actuals were  $0 and the FY  19 Governor's request                                                                    
     is $550.0.  A decrement $100.0  will result in a  FY 19                                                                    
     budget  request  of $400.0  for  what  is described  as                                                                    
     "agency support  as needed to meet  high priority needs                                                                    
     in the contingency fund".                                                                                                  
                                                                                                                                
Representative Kawasaki and Vice-Chair Gara OBJECTED.                                                                           
                                                                                                                                
3:04:45 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:05:20 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative   Wilson   reported   that   she   had   more                                                                    
information to  share regarding Amendment  H GOV 2.  She had                                                                    
researched  back to  2010 to  determine what  had been  used                                                                    
from the  account. She  detailed in  2010 $294,300  had been                                                                    
withdrawn for personal services  of $172,600 and services of                                                                    
$121,700,  which   she  did   not  believe   constituted  an                                                                    
emergency. In 2011, the balance had been $800,000.                                                                              
                                                                                                                                
Representative  Ortiz asked  how much  had been  budgeted in                                                                    
that particular year.                                                                                                           
                                                                                                                                
Representative  Wilson replied  that in  FY 10  $800,000 had                                                                    
been in the budget and  $294,300 had been expended (personal                                                                    
services of  $172,600 and  services of  $121,700). In  FY 11                                                                    
the amount  had been $800,000  and $5,700 had been  spent in                                                                    
services. In  FY 12 and  FY 13  the amount was  $800,000 and                                                                    
nothing  had been  spent.  In  FY 14,  the  amount had  been                                                                    
$800,000 and  $49,600 had  been spent  (the details  on what                                                                    
the funds had  been used for were not available).  In FY 15,                                                                    
the amount had  been $650,000 - at the  time former Governor                                                                    
Sean Parnell had  reduced his own budget by  $150,000 in the                                                                    
contingency line.  She elaborated  that a total  of $194,700                                                                    
had been spent in FY  15, including $67,300 on state travel,                                                                    
$127,300 on  services, and  $200 on  commodities. In  FY 16,                                                                    
Governor  Bill Walker  had reduced  the contingency  line by                                                                    
$50,000,  for a  total contingency  budget of  $600,000. She                                                                    
detailed that $89,100  had been spent in FY  16 on financial                                                                    
services  agency support  as needed  to  meet high  priority                                                                    
needs. She  did not  know what the  high priority  needs had                                                                    
been  for  $89,100.  In  FY  17 there  had  been  a  $50,000                                                                    
unallocated reduction, which she  believed had come from the                                                                    
Senate. The contingency  budget was down to  $550,000 and no                                                                    
expenditures had been made in FY 17 or FY 18.                                                                                   
                                                                                                                                
Representative Wilson  noted the  committee had  heard about                                                                    
three expenditures the previous  day related to transitional                                                                    
costs,  redistricting,  or the  gasline,  but  she had  been                                                                    
unable to  find any information  about the items.  Her staff                                                                    
had  spoken with  David Teal  [director  of the  Legislative                                                                    
Finance Division]  to ensure her numbers  were accurate. She                                                                    
had yet  to find any  case from FY  10 to present  where the                                                                    
fund  had been  used for  emergency purposes.  Her amendment                                                                    
would  decrease  the fund  by  $100,000,  which would  leave                                                                    
$400,000  available.   She  stressed  the   remaining  funds                                                                    
exceeded expenditures in any year  since FY 10. She believed                                                                    
the pertinent  question was whether  members wanted  a slush                                                                    
fund or not.                                                                                                                    
                                                                                                                                
3:08:36 PM                                                                                                                    
                                                                                                                                
Representative  Ortiz  asked  if  there had  ever  been  any                                                                    
specific  action  taken by  the  legislature  to reduce  the                                                                    
governor's budget.                                                                                                              
                                                                                                                                
Representative  Wilson  believed   the  $50,000  unallocated                                                                    
reduction in  2017 had  come from  the Senate.  She detailed                                                                    
the  information she  found specified  that former  Governor                                                                    
Parnell  had made  a reduction  in FY  15 and  that Governor                                                                    
Walker had  made a  reduction in FY  16. She  disagreed with                                                                    
any claim that the governor  did not touch the legislature's                                                                    
budget  and   vice  versa.  She   had  no  problem   with  a                                                                    
contingency fund  for emergencies, but  since FY 10  none of                                                                    
the  funds had  been used  for emergencies.  She appreciated                                                                    
the  committee's  budget  process  in  the  past  two  years                                                                    
because of its transparency and  the ability for everyone to                                                                    
participate. She  stressed the fund  was supposed to  be for                                                                    
emergencies, but she had been  unable to locate any instance                                                                    
since FY 10 where the funds  had been used for that purpose.                                                                    
She a rejection of  the amendment indicated that legislators                                                                    
did  not want  to touch  the  governor's budget  so that  he                                                                    
would not touch the legislature's budget.                                                                                       
                                                                                                                                
Representative Wilson  thought funds should be  removed from                                                                    
the  budget when  they  were  not spent  the  way they  were                                                                    
intended.  She  did not  believe  the  contingency fund  was                                                                    
being used for  emergencies. She detailed that in  FY 15 the                                                                    
fund  had been  used for  the following  items: $36,600  for                                                                    
legal     and     judiciary     services,     $5,300     for                                                                    
telecommunications,  $21,400  for  advertising  and  promos,                                                                    
$3,300 for  equipment and machinery, $1,700  for information                                                                    
technology  telecommunications,  and $400  on  communication                                                                    
sales interagency  services. She  reiterated that  the money                                                                    
was  not being  utilized  as intended.  The amendment  would                                                                    
leave  the  majority of  the  funds  intact  in case  of  an                                                                    
emergency.                                                                                                                      
                                                                                                                                
3:11:37 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg spoke  against the  amendment. He                                                                    
explained  the amendment  would  not prevent  the fund  from                                                                    
being  used as  it  had  been in  the  examples provided  by                                                                    
Representative Wilson. He stressed  the amounts had all been                                                                    
under $400,000. He pointed out  there had been an earthquake                                                                    
in   early  January   that  could   have  been   potentially                                                                    
devastating.  He  reasoned  that  $500,000  would  disappear                                                                    
immediately if needed  for a similar event.  He stressed the                                                                    
importance of  giving the  state the  ability to  respond to                                                                    
emergencies.  He   questioned  how  the   legislature  would                                                                    
convene  to address  an emergency  if the  Anchorage airport                                                                    
was  destroyed.  He believed  the  amount  in the  fund  was                                                                    
reasonable.   He  stressed   the  importance   of  emergency                                                                    
management and the  ability to act immediately  in the event                                                                    
of a  natural disaster. He  continued that the  money rolled                                                                    
over year to year. He did not  want there to be any delay in                                                                    
deploying the funds  in the event of an  emergency. He noted                                                                    
that Fairbanks  had experienced disasters. He  thought about                                                                    
Southeast, Southcentral,  the recent  earthquake, volcanoes,                                                                    
the 1989  Exxon Valdez  oil spill,  and more.  He reiterated                                                                    
the importance of a contingency fund.                                                                                           
                                                                                                                                
3:13:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  clarified that the  fund was  a contingency                                                                    
fund, not only  an emergency fund. The fund  could be tapped                                                                    
for many different purposes by  the state's chief executive.                                                                    
He underscored that  the contingency fund was  meant for the                                                                    
unexpected.                                                                                                                     
                                                                                                                                
Representative Thompson  spoke in support of  the amendment.                                                                    
He  did  not  believe  an  additional  $150,000  would  mean                                                                    
anything  in  the  face  of  a  devastating  earthquake.  He                                                                    
underscored that the state had  emergency response funds and                                                                    
the  National  Guard.  He reasoned  the  federal  government                                                                    
would  respond  immediately  in   the  event  of  a  natural                                                                    
disaster in  Alaska. He  did not believe  the amount  in the                                                                    
fund would even  touch responding to a  natural disaster. He                                                                    
stressed that the remaining  $400,000 exceeded spending from                                                                    
the fund in  the past eight years. He did  not think it made                                                                    
sense to  argue about the  amount. He thought  the reduction                                                                    
was responsible.  He wondered why  the committee  would want                                                                    
to add more money to the budget when it was not necessary.                                                                      
                                                                                                                                
Vice-Chair  Gara  did not  like  the  message the  amendment                                                                    
sent.  He  stated  that  the fund  had  contained  at  least                                                                    
$600,000  when former  Governor Parnell  had been  in office                                                                    
and no  one had tried  to cut  the funds or  speculated that                                                                    
the governor  had abused  the money.  When factoring  in the                                                                    
amendment  reduction the  fund balance  would be  50 percent                                                                    
less than it had been  during the Parnell Administration. He                                                                    
discussed the  fund was intended  for high  priority issues.                                                                    
He remarked that  the Office of Management  and Budget (OMB)                                                                    
was   supposed  to   be  doing   work  on   healthcare  cost                                                                    
containment in  2017 but had  gotten wrapped up in  a number                                                                    
of other  things. He stated that  if OMB decided to  do work                                                                    
on healthcare cost containment  and consultants were needed,                                                                    
he was amenable to using the  funds for that purpose. He did                                                                    
not like  the message  the amendment sent  and did  not want                                                                    
the   current  governor   treated   differently  than   past                                                                    
governors. He stated  that as a Democrat he  had never tried                                                                    
to "do that" to Republican  governors and the Republican led                                                                    
legislature at  the time  had not tried  to reduce  funds to                                                                    
the governor.                                                                                                                   
                                                                                                                                
Co-Chair Seaton  asked members  to stick  to the  budget and                                                                    
its implications and not what others' intent may be.                                                                            
                                                                                                                                
3:17:34 PM                                                                                                                    
                                                                                                                                
Representative   Pruitt   testified   in  support   of   the                                                                    
amendment. He  referenced the amendment  sponsor's testimony                                                                    
that the  fund had not  really been used  [historically]. He                                                                    
wanted  to  hear  from  the   administration  if  there  was                                                                    
something  important  it wanted  to  use  the funds  on.  He                                                                    
recalled   testimony   from   the  previous   day   by   the                                                                    
administration and  noted they  had not specified  there was                                                                    
anything  important [on  the horizon].  He had  not heard  a                                                                    
strong enough argument about why  the cut should not be made                                                                    
to  a fund  that  had  not been  used.  He  did not  support                                                                    
appropriating money  without knowing  what it could  be used                                                                    
for. He thought members should  support the amendment or the                                                                    
committee  should hear  from  the  administration about  why                                                                    
they needed the money and what  it expected to use the funds                                                                    
for.                                                                                                                            
                                                                                                                                
Co-Chair Seaton underscored that  the point of a contingency                                                                    
fund  was for  purposes that  were unknown.  He stressed  if                                                                    
there  were  known  items  needing  funding  they  would  be                                                                    
budgeted instead of being funded with contingency funds.                                                                        
                                                                                                                                
Representative Wilson clarified she  was not arguing against                                                                    
Governor Walker -  the issue was not about  who the governor                                                                    
was.  She emphasized  the amendment  was about  the numbers.                                                                    
She  stated that  the  money  was not  being  spent and  the                                                                    
governor's office did not know  what the money had been used                                                                    
for. She had asked the  administration the previous day what                                                                    
the  funds had  been used  for. She  stated three  items had                                                                    
been identified, none  of which had been in  the budget. She                                                                    
had  tried  to  determine  where money  had  come  from  for                                                                    
transition,  redistricting, and  the  gasline. She  stressed                                                                    
that  it  had  not  come  from  the  contingency  fund.  She                                                                    
believed the contingency fund  was an "emergency-type" fund.                                                                    
She continued that fund did  not necessarily need to be used                                                                    
for  that  purpose,  but  it   had  been  allocated  to  the                                                                    
governor's  office  with  no  restrictions.  She  could  not                                                                    
believe  the   fund  had  been  used   for  advertising  and                                                                    
promotions in the past.                                                                                                         
                                                                                                                                
Representative  Wilson continued  that  she appreciated  the                                                                    
need for funds  in the event of an  emergency. She explained                                                                    
it was the purpose of  a separate amendment [Amendment H SAP                                                                    
25]  that  would  allocate  over  $6  million  to  emergency                                                                    
response. She could not find  any other comparable fund with                                                                    
no  parameters. She  stated that  earlier the  committee had                                                                    
argued over  $20 million  that required  the submittal  of a                                                                    
spending report  to the legislature;  most of the  money was                                                                    
to avoid a  supplemental. She stressed that no  one had come                                                                    
to  her office  to explain  why  the money  was needed.  She                                                                    
hoped that  an explanation had  been given to  the co-chair.                                                                    
She underscored that  the funds did not return to  the GF if                                                                    
they  were unexpended  -  the funds  went  into the  capital                                                                    
fund. She did not know why.                                                                                                     
                                                                                                                                
Representative Wilson explained there would  be a gap in the                                                                    
budget  and the  public would  be charged  for the  $150,000                                                                    
because it would  be in the budget. The  legislature did not                                                                    
know  whether  the funds  would  be  spent. She  would  have                                                                    
preferred to eliminate the fund  balance, but she understood                                                                    
that some  of the funds had  been utilized in the  past. The                                                                    
amendment  would  not  cut  into   anything  that  had  been                                                                    
utilized. She  would have  offered a cut  to the  fund under                                                                    
previous administrations  if she had  found it. She  was not                                                                    
willing  to  tell  her   constituents  the  legislature  was                                                                    
considering taxes  when there was  money in the  budget that                                                                    
may or may not be used for an unknown purpose.                                                                                  
                                                                                                                                
3:22:43 PM                                                                                                                    
                                                                                                                                
The OBJECTION was MAINTAINED.                                                                                                   
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Pruitt, Thompson, Tilton, Wilson, Grenn                                                                               
OPPOSED: Gara, Guttenberg, Ortiz, Seaton, Foster                                                                                
                                                                                                                                
Representative Kawasaki was absent from the vote.                                                                               
                                                                                                                                
The MOTION to adopt Amendment H GOV 2 FAILED (5/5).                                                                             
                                                                                                                                
3:23:46 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:24:34 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HB  285  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  286  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Seaton reviewed  the  schedule  for the  following                                                                    
day.                                                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
HB 286 H HSS 22 Replacement.pdf HFIN 3/7/2018 1:30:00 PM
HB 286
HB 286 Pruitt - H SAP 27 Legal Opinion.pdf HFIN 3/7/2018 1:30:00 PM
HB 286
HB 286 H HSS 21 Replacement.pdf HFIN 3/7/2018 1:30:00 PM
HB 286
HB 286 H SAP 27 Amendment Suporting Documents.pdf HFIN 3/7/2018 1:30:00 PM
HB 286
HB 286 HB 285 Amendments with Actions as of 3-7-18.pdf HFIN 3/7/2018 1:30:00 PM
HB 285
HB 286