Legislature(2019 - 2020)Anch LIO Lg Conf Rm
05/11/2020 01:00 PM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Cares Act Revised Programs - Legislative (rpls) | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
May 11, 2020
4:01 p.m.
MEMBERS PRESENT
Representative Chris Tuck, Chair
Representative Neal Foster (via teleconference)
Representative Andy Josephson
Representative Ivy Spohnholz
Representative Mark Neuman (via teleconference)
Representative Jennifer Johnston (alternate)
Senator Click Bishop, Vice Chair
Senator Bert Stedman (via teleconference)
Senator Natasha von Imhof
Senator Cathy Giessel
Senator Lyman Hoffman
Senator Bill Wielechowski (alternate, via teleconference)
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Matt Claman
Representative Bart LeBon (via teleconference)
Representative Sharon Jackson (via teleconference)
Representative Dan Ortiz (via teleconference)
Representative Kelly Merrick (via teleconference)
Representative Grier Hopkins (via teleconference)
Representative Mike Prax (via teleconference)
Representative Harriet Drummond (via teleconference)
Representative Andi Story (via teleconference)
Representative John Lincoln (via teleconference)
Representative Louise Stutes
Representative Geran Tarr
Senator Donald Olson
Senator Lora Reinbold
Senator Tom Begich
Senator Jesse Kiehl (via teleconference)
Senator Shelley Hughes
Senator Kawasaki (via teleconference)
Senator Gray-Jackson (via teleconference)
COMMITTEE CALENDAR
CARES ACT REVISED PROGRAMS - LEGISLATIVE (RPLs)
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
PAT PITNEY, Director
Legislative Finance Division
Alaska State Legislature
POSITION STATEMENT: Provided information and answered questions
regarding CARES Act RPLs.
BRIAN BUTCHER, Executive Director
Alaska Housing Finance Corporation (AHFC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding CARES Act
RPLs.
NEIL STEININGER, Director
Office of Management & Budget
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding CARES Act
RPLs.
ROB CARPENTER, Deputy Commissioner
Department of Transportation & Public Facilities
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding CARES Act
RPLs.
MEGAN WALLACE, Director
Legislative Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions related to CARES Act
RPLs.
JULIE ANDERSON, Commissioner
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding RPLs.
MICAELA FOWLER, Director
Administrative Services
Division of Community & Regional Affairs
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered a question during discussion of
RPLs.
DOUG VINCENT-LANG, Commissioner
Alaska Department of Fish & Game
Juneau, Alaska
POSITION STATEMENT: Answered questions during discussion of
CARES Act RPLs.
ACTION NARRATIVE
4:01:30 PM
CHAIR CHRIS TUCK called the Legislative Budget and Audit
Committee meeting to order at [4:01] p.m. Representatives
Josephson, Spohnholz, Johnston (alternate), and Tuck and
Senators von Imhof, Giessel, Hoffman, and Bishop were present at
the call to order. Representatives Neuman (via teleconference)
and Foster (via teleconference) and Senators Stedman (via
teleconference) and Wielechowski (alternate, via teleconference)
arrived as the meeting was in progress. Also present were
Representatives Claman, LeBon (via teleconference), Jackson (via
teleconference), Ortiz (via teleconference), Merrick (via
teleconference), Hopkins (via teleconference), Prax (via
teleconference), Drummond (via teleconference), Story (via
teleconference), Lincoln (via teleconference), Stutes, and Tarr
and Senators Olson, Reinbold, Begich, Kiehl (via teleconference)
Hughes (via teleconference), Kawasaki (via teleconference), and
Gray-Jackson (via teleconference).
^CARES ACT REVISED PROGRAMS - LEGISLATIVE (RPLs)
CARES ACT REVISED PROGRAMS - LEGISLATIVE (RPLs)
4:04:19 PM
CHAIR TUCK announced that the only order of business would be
the CARES Act Revised Programs - Legislative (RPLs).
CHAIR TUCK, in his opening remarks, stated that the purpose of
the meeting was to consider RPLs to help Alaskans alleviate some
of the effects of the COVID-19 crisis. He said that through
review of "the revised RPL request" from Governor Mike Dunleavy,
submitted Friday, 5/1/20, and through continued work on RPLs,
the Legislative Budget and Audit Committee has "several more
RPLs that are comfortably within the scope of the RPL process"
as outlined under AS 37.07.080(h). He advised that these RPLs
total more than $62 million and are directed at the Alaska
Housing Finance Corporation (AHFC) and various programs within
the Department of Transportation & Public Facilities (DOT&PF).
CHAIR TUCK informed the committee there are also 126 RPLs that
do not fall within the scope of the RPL process as outlined in
AS 37.07.080(h). These RPLs deal with direct aid to
communities, small business relief, and fisheries. Chair Tuck
imparted that the fisheries RPL was presented originally on
4/21/20. He said the committee received revisions related to
direct community assistance on 5/1/20, which included an
individual RPL for each community receiving direct assistance
based on economic impact metrics. He related that the committee
also received a revised and much more detailed RPL for small
business relief. He noted that these RPLs are included in the
committee packet.
CHAIR TUCK stated that the governor has proposed a series of
programs to utilize approximately $1.5 billion in CARES Act
federal funding to Alaska; thus far, $506 million has been
authorized, with $381 million received by the Department of
Health and Social Services (DHSS) and approximately $50 million
targeted to nonprofit organizations, as authorized by open-ended
receipt authority in the budget, and which requires no further
legislative authorization.
CHAIR TUCK stated that on 5/1/20, the Legislative Budget and
Audit Committee approved $125 million in RPLs for education,
public safety, transportation, and the university. He said the
committee would consider the remaining proposed RPLs, $52
million in two DOT&PF items focused on airport support and the
Whittier Tunnel. He indicated that $10 million of the $300
million in the business relief assistance had been "broken out
for homeless support through AHFC." He said that that now
leaves $958 million and three major items as the focus of
concern. He stated there are "four risks" related to some of
the RPLs, but he would like the committee to first focus on "the
easy ones."
4:07:46 PM
CHAIR TUCK said he thinks everyone can agree that Alaskans are
hurting, and the legislature needs to get relief out to them as
quickly as possible. He explained that with that in mind, his
intent was to entertain discussion on the RPLs, including the
legality of said RPLs and the risks of approving requests that
are outside the scope of the RPL process and create entirely new
programs without vetting by the full legislature. He stated,
"The last thing I want to see is this money tied up in lengthy
legal battles because of our actions here today; however, I do
recognize the urgency of distributing the funds and can only
hope that that does not happen."
CHAIR TUCK invited Pat Pitney to discuss the first batch of RPLs
on the agenda. He noted others available to speak: Sabrina
Javier, Alexei Painter, and Kelly Cunningham, with the Division
of Legislative Finance; Brian Butcher and Daniel Delfino, with
the Alaska Housing Finance Corporation (AHFC); Neil Steininger,
with the Office of Management and Budget; Dom Pannone, Rob
Carpenter, and John Finder, with the Department of
Transportation & Public Facilities (DOT&PF); Julie Anderson and
Micaela Fowler with the Department of Commerce, Community &
Economic Development (DCCED); Meg Wallace, with Legislative
Legal Services; and Alan Weitzner, with the Alaska Industrial
Development and Export Authority (AIDEA).
4:09:57 PM
SENATOR HOFFMAN said he understood the concern regarding the
legality of the last set of RPLs, and he asked whether it was
Chair Tuck's intention to have the committee vote on them.
CHAIR TUCK responded that the RPLs would be up for motion and,
depending on the feedback received from Legislative Legal
Services and other testifiers, he may rule them out of order.
He acknowledged there might be an appeal on that ruling.
4:11:16 PM
PAT PITNEY, Director, Legislative Finance Division, referred to
a memorandum ("memo") [included in the committee packet] that
she had written to the committee on 5/7/20, to five RPLs listed
in a table starting at the bottom of the first page through the
top of the second page. She explained that those were the five
RPLs she would address, one of which had several RPLs embedded
within it.
MS. PITNEY directed attention to RPL 04-2020-1059, Department of
Revenue (DOR), Alaska Housing Finance Corporation (AHFC)
Homeless Assistance Program. She stated that this RPL would
provide $10 million of the $1.25 billion Coronavirus Relief Fund
dollars available for "the priority needs of the state." She
said the $10 million would go to an existing program within
AHFC. She said, "AHFC has federal programs that do very
similar, if not the same exact program." She indicated there
are no issues with this particular RPL; it is appropriate for
the RPL use and would provide money for both homeless assistance
and homeless prevention.
4:13:35 PM
SENATOR HOFFMAN remarked that the homeless population is
vulnerable to COVID-19, and he asked whether these or other
funds would be used to test that population for the virus.
MS. PITNEY deferred to Neil Steininger and Brian Butcher but
offered her understanding that this RPL is for the prevention of
homelessness; it is "money to allow people to stay in the homes
they have."
4:14:44 PM
BRIAN BUTCHER, Executive Director, Alaska Housing Finance
Corporation (AHFC), confirmed Ms. Pitney's response by
indicating that the funds would be used primarily for the
prevention of homelessness. He reported that statistics show
that getting somebody out of homelessness and into a home is
approximately four times more expensive than preventing him/her
from becoming homeless in the first place. He offered his
understanding that funding for testing was "in the health care
piece of this."
4:15:27 PM
NEIL STEININGER, Director, Office of Management & Budget, Office
of the Governor, concurred with Mr. Butcher regarding there
being other funds within the Department of Health and Social
Services that would go toward "testing-related activities."
SENATOR HOFFMAN said he would like to hear back from the
department regarding "how that program is going to be identified
for the homeless." He said homeless people are at higher risk,
and he emphasized that preventing COVID-19 is "our number one
priority."
4:16:31 PM
CHAIR TUCK indicated the information before the committee shows
that "there is existing federal authority in this allocation's
use for similar purposes, such as rental assistance." He asked,
"Is there anything on mortgage relief, as well?"
MR. BUTCHER responded yes, AHFC was looking at this program for
both rental and mortgage relief, focusing on the need to prevent
homelessness.
4:16:56 PM
REPRESENTATIVE JOSEPHSON ask Ms. Pitney whether there was
anything in the CARES Act that would prohibit the legislature
from giving more than $10 million to help with rental and
mortgage relief should Mr. Butcher express the need for more
funds.
MS. PITNEY answered no; it just would require an appropriation.
REPRESENTATIVE JOSEPHSON asked Mr. Butcher whether he thinks it
would be wise of the legislature to appropriate greater than $10
million and whether he could spend it prudently.
MR. BUTCHER answered that AHFC feels comfortable with the
allocations made by Governor Dunleavy. He said the amount will
not be enough to cover every aspect of homelessness reduction,
but indicated that the amount has been based on "the amount of
time the economy takes to come back, what other stimulus
packages might come through the federal government, and a host
of other variables."
REPRESENTATIVE JOSEPHSON asked Ms. Pitney whether it would be a
fair statement to say that if the legislature accepts the $10
million but does not appropriate more, it effectively would be
waiving its right to do so with the $1.25 billion.
MS. PITNEY agreed that that would be a fair statement.
4:19:29 PM
REPRESENTATIVE SPOHNHOLZ asked Mr. Butcher how the amount of $10
million was chosen and how many Alaskans would be served with
that amount. She also asked him to define what the entire need
would look like and how much money that would require.
MR. BUTCHER answered that the $10 million was not derived
scientifically but as a result of discussions between the Office
of the Governor and AHFC. He said, "Certainly they had a policy
view ... beyond just the conversation we had on this." He said
he would have to get back to Representative Spohnholz regarding
the complete need. He talked about the fluctuation being
studied in April and early May regarding the ability of people
to pay rent and mortgage. He said AHFC is also working to
determine the amount of gap that would be needed. He said, "The
smaller the gap, the more people we could serve."
REPRESENTATIVE SPOHNHOLZ asked whether AHFC is getting
information solely regarding people being served by AHFC or
whether other entities are identifying folks who cannot pay rent
or mortgages.
MR. BUTCHER answered that currently in the Homeless Assistance
Program, AHFC works with 40 nonprofit service partners in 20
communities. He said, "We would look at working with our
nonprofit partners ... in a more expansive way that would cover
all of the state. We would certainly take a period of time to
get all the information out to mortgage holders and renters in
Alaska [and] make sure there was a sufficient period of time for
them to submit applications, and we would go from there."
4:21:46 PM
SENATOR VON IMHOF pointed out that currently several banks are
offering mortgage relief, including Wells Fargo; therefore, $10
million is not the only mortgage relief available. In response
to a request for clarification from Chair Tuck, she said each
bank is managing this on its own outside of the CARES Act
entirely.
4:23:14 PM
CHAIR TUCK, regarding the $1.25 billion in RPLs, said one area
missing is relief for individuals directly; however, he said he
is interested in the RPL currently being considered because it
gives household relief. He said he has seen a proposal to break
this up into two phases. He said if more CARES Act money comes
to Alaska, it would be nice to see $45 million for residential
and $20 million for businesses. He indicated this could help an
estimated 15,000 residences and 4,000 businesses statewide. The
second phase would "take half of that and do the same thing."
He said the proposal also includes residential rental and
mortgage relief up to two months or $3,000, and business rental
and mortgage relief up to two months or $5,000. He expressed
hope that there would be "more money down the road" to help
expand Mr. Butcher's vision.
4:25:02 PM
MS. PITNEY next addressed RPL 25-2020-8771, DOTPF, Statewide
Aviation and Rural Airport System CARES FAA Funding, at an
amount of $49 million. Referring to the committee packet
information with the heading, "Department of Transportation and
Public Facilities Highways, Aviation and Facilities and
Administration & Support Various Allocations," she said the RPL
would provide specific appropriation amounts by allocation, as
shown on a table lower on the page and onto the next page. The
table shows the breakdown for FY 20 for statewide aviation at $1
million; Central Region highway and aviation $3.8 [million]; and
specific amounts continued for Northern and Southern Region, and
so on. Then the balance of those appropriations are shown just
below that and on the next page for FY 21, including Northern
Region highway and aviation $16.3 million. Ms. Pitney specified
that this money was a separate appropriation within the federal
CARES Act specifically for airports; therefore, it comes with
federal restrictions for use within the rural airport system in
Alaska. She said different money is slated for the Fairbanks
International Airport, the Ted Stevens Anchorage International
Airport, and the Juneau International Airport. She continued:
And although there are two of these allocations where
there doesn't exist a federal appropriation to
increase, the money is restricted by the federal
government to these airports, and the appropriation
performs ... the same purpose as this money was
appropriated for. For those reasons we feel ... the
RPL process was an appropriate avenue. We have 237
rural airports that this money can provide additional
support to. ... Explicitly it can be used for
backfilling revenue to keep airports open, knowing
there has been a severe impact on air travel.
4:28:05 PM
REPRESENTATIVE NEUMAN asked Ms. Pitney how the appropriations
for the different regions were determined.
MS. PITNEY deferred the question to Mr. Steininger.
4:28:22 PM
MR. STEININGER deferred to Rob Carpenter of DOT&PF.
4:29:12 PM
ROB CARPENTER, Deputy Commissioner, Department of Transportation
& Public Facilities (DOT&PF), said the department first took the
entire amount of general funds that go to the rural airport
system, which is approximately $35 million, and subtracted that
amount and applied the remainder to the FY 20 budget; then $1
million was put in statewide aviation; the remainder was divided
among the three regions, based on their weighted allocation of
general funds going for rural airport maintenance operations.
He said the same "weightings" were applied for FY 21. In
response to a follow-up question from Representative Neuman, he
confirmed, "Yes, they're split based on ... the budget
weightings for each of those components."
REPRESENTATIVE NEUMAN said he wants to ensure that legislators
are not trying to get more for their areas and that the regional
formula is followed.
4:31:21 PM
REPRESENTATIVE JOSEPHSON asked Mr. Carpenter whether he would
describe these monies as intended to be directly COVID-19
responsive or to supplant dollars appropriated in March - either
as a supplemental or in the FY 21 budget.
MR. CARPENTER answered that Congressional intent was clear that
[RPL 25-2020-8771] funds were to mitigate the impacts of the
pandemic on the rural airport system. He said there was
subsequent guidance by the federal aviation administration (FAA)
that provided significant flexibility to use the funds for any
maintenance, operation, or capital cost of the airport system,
whether or not it was related to COVID-19. The restriction was
that the money has to be used for airport expenses, he added.
REPRESENTATIVE JOSEPHSON asked whether, because there does not
have to be "the same COVID connection" as with municipalities,
the legislature should anticipate the funds it has already
appropriated to lapse. In response to Mr. Carpenter, he
clarified that he is talking about general funds going to the
rural airport system.
MR. CARPENTER answered that the impact of the virus on rural
airports is "relatively insignificant." He said there are not
many terminals in rural airports that need to be made safer; the
revenue impact to those airports has been minimal. He said
DOT&PF is hoping to utilize this funding to replace the general
funds and then use the general funds elsewhere in the
department's budget. He stated that the intent is to do this as
minimally as possible and "carry as much of this forward into FY
21 as we can to get further legislative input on how this money
is used."
REPRESENTATIVE JOSEPHSON said he learned that neither the $290
million for small business nor the 45 percent for municipalities
is dictated by the CARES Act. The legislature could have said
it does not think $290 million was enough. In that context, he
queried whether the $49 million was dictated by the CARES Act or
was a number selected by the administration.
MR. CARPENTER replied that it was set forth under the CARES Act.
He added, "The administration had nothing to do with this
funding level."
4:35:19 PM
SENATOR BISHOP referred to [a subsequent RPL, labeled 25-2020-
8772] and noted that [the Measurement Standards & Commercial
Vehicle Compliance (MSCVC)] had waived annual permit fees. He
asked for confirmation that this was related to overweight
permit fees.
MR. CARPENTER confirmed that was the purpose. He said, "This
funding would cover the additional costs borne by the state as a
result of waiving those fees.
CHAIR TUCK asked whether waiving the fees also meant waiving the
fines.
MR. CARPENTER said he did not know, but could not imagine fines
would be waived; however, he said the idea was that a person
could "come in for an overweight permit fee and not be ... out
of compliance." He indicated that he would get back to Chair
Tuck regarding his question.
CHAIR TUCK surmised that if this has to do with someone applying
for an overweight permit, then if he/she were given the permit,
he/she would not have to pay the fee.
4:37:52 PM
CHAIR TUCK returned attention to the RPL ending 8871, regarding
airports. He said reporters had investigated why some airports
were getting more money than others that were of the same
capacity, and they found out that it had to do with a federal
formula influenced by those airports that "had more reserve
money."
4:38:25 PM
MS. PITNEY moved on to RPL 25-2020-8772, DOTPF, Measurements,
Standards, and Commercial Vehicle Compliance (MSCVC) 5001(d)
CARES Funding, at an amount of $1,350,000. She said this RPL
previously was lumped in with those that did not have the same
purpose; therefore, OMB and DOT&PF split it out as a single
purpose RPL. She stated that RPL 25-2020-8772 is similar to RPL
25-2020-8771 in that the MSCVC-compliant allocation does not
have federal appropriation, but the federal money is incoming.
She said, "That allows it to be applied for this specific
purpose." She concluded, "Because the allocation serves the
same purpose as this money provides for, we felt like the RPL
was ... an appropriate mechanism to use."
CHAIR TUCK ascertained that there were no questions related to
this RPL and asked Ms. Pitney to proceed with the next RPL.
4:40:15 PM
MS. PITNEY directed attention to RPL 25-2020-8776, DOTPF,
Whittier Access and Tunnel 5001(d) CARES Funding, at an amount
of $1,219,100. She explained this was a separate grant within
the CARES Act; therefore, it was not part of the $1.25 billion.
She said this was a lump sum, which OMB and DOT&PF split out to
provide specifically for an existing capitol project related to
the Whittier Access and Tunnel that has federal money for
operations and maintenance.
CHAIR TUCK ascertained that there were no questions related to
this RPL and requested Ms. Pitney proceed to the next RPL.
4:41:34 PM
MS. PITNEY brought attention to RPL 25-2020-8777, DOT&PF,
Northern Region Highways & Aviation 5001(d) CARES Funding, at an
amount of $465,000. This federal money is not part of the $1.25
billion but is a DOT&PF-specific grant to address the change in
schedule for the Dalton Highway road maintenance crews. She
explained that the change allowed the same people to work
together on their weeks-on schedules to mitigate the spread of
Covid-19. The hours and schedule change required more money,
she explained.
4:43:04 PM
CHAIR TUCK remarked that that was "the last of the easy RPLs."
He characterized [the RPLs offering rental and mortgage relief]
as "a mortgage holiday."
4:43:42 PM
REPRESENTATIVE JOSEPHSON said he thinks the amount of people
that can be given rental relief with "a mere $10 million" is
"pretty inadequate." He surmised that 10 times that amount
could be necessary. He said he thinks legislators would say the
concern they have heard most is that of landlords, and he said
rental relief would serve a dual purpose. He opined that more
needs to be done and one could argue that the state has the
resources to do it.
CHAIR TUCK remarked that a tough aspect of RPLs is that the
committee cannot amend them. He stated, "Fortunately, through
asking revisions, and hearing from the public a little bit
better, we're able to at least get this $10 million that we have
now out of [$290 million]."
4:45:02 PM
SENATOR STEDMAN moved that the Legislative Budget and Audit
Committee approve the following RPLs: RPL 04-2020-1059, DOR,
AHFC Homeless Assistance Program; RPL 25-2020-8771, DOT&PF,
Statewide Aviation and Rural Airport System CARES FAA Funding;
RPL 25-2020-8772, DOT&PF, MSCVC 5001(d) CARES Funding; RPL 25-
2020-8776, DOT&PF, Whittier Access and Tunnel 5001(d) CARES
Funding; and RPL 25-2020-8777, DOT&PF, Northern Region Highways
& Aviation 5001(d) CARES Funding. He issued the following
statement:
Passage of these RPLs while in session represents
action taken during an unprecedented public health
disaster and is allowable because the RPL increases
appropriations already made in operating budgets that
have already been passed by the full Legislature.
This action does not represent an abrogation of the
Legislature's preeminent constitutional appropriation
authority.
There being no objection, it was so ordered.
4:47:14 PM
CHAIR TUCK announced that the committee would address the
remaining RPLs. He noted that the committee had been advised by
legal counsel that the remaining RPLs are outside of the RPL
scope, as outlined under AS 37.07.080(h). He said he would have
Ms. Pitney walk the committee through the RPLs, then allow
questions of Ms. Pitney, Neil Steininger, and other people
available online. He said that following that he would ask
Megan Wallace, Director, Legislative Legal Services to talk
about the legal risks should the committee take action today.
4:47:55 PM
MS. PITNEY began with RPL 08-2020-0250, State of Alaska COVID-19
Community Distribution, at an amount of $257,548,754.00. She
said this RPL was revised from the one originally submitted on
4/21/2020; the revision narrowed the amount from $562 million.
The distribution of the funding is using the community
assistance program (CAP) formula that has a $20 million base
amount, plus a population driven additional amount. She
specified that the RPL is using only the distribution formula
from the community assistance formula, not all the other
features of that program. Ms. Pitney stated that the structure
of the program is through the Division of Community and Regional
Affairs [within the Department of Commerce, Community & Economic
Development]. She explained that although the division
allocation has federal funding, it is for an entirely different
purpose than this funding is for; therefore, "it stretches the
limits of an RPL." She noted that a four-page spread sheet
included in the committee packet shows the amount of money. She
explained that the [$257,548,754.00] is listed in that first
column; the rest of the spreadsheet reflects an upcoming RPL.
4:50:49 PM
REPRESENTATIVE JOSEPHSON asked Ms. Pitney whether this
particular RPL was stretching or exceeding RPL authority.
MS. PITNEY answered that she would say, "We are outside the RPL
authority." She added, "The RPL authority envisions being able
to add to an existing program; this is ... creating a program."
4:51:31 PM
CHAIR TUCK asked how CAP works currently.
MS. PITNEY responded that CAP is set up as a separate fund. The
legislature regularly deposits money into the fund through fund
capitalization. One-third of the balance of the money at the
end of the fiscal year is distributed on the first day of the
following fiscal year. She continued that if the money followed
the provisions of the program, then it would need to be
deposited into the fund and then one-third would be distributed;
however, that would be inappropriate, because this is part of
the $1.25 billion CARES Act funding that needs to go toward
eligible expenditures. So, this is federal money going straight
to the communities based on the formula distribution.
4:53:41 PM
REPRESENTATIVE JOSEPHSON noted there had been a lot of testimony
on this issue. As an example, he recollected that the mayor of
Gustavus had testified that thus far Gustavus did not have any
expenses related to COVID-19, but he said the community may
still have a loss of revenue. He said the overall testimony was
that the guidance, of which he indicated there are two, were
read as being restrictive. He asked his question as follows:
If we appropriate these monies, and we set them aside
in a subaccount or however it's done at treasury, and
in fact in the end the accountants say we can only
spend $150 million of it, have we lost a chance to be
more surgical and say, "Oh, we could have dedicated
the other $107 million for COVID-related daycare
systems or domestic violence shelters or university
needs or rental relief"; have we taken that money and
locked it away? And I'm aware that it will be
distributed in quarterly sums. So, taking into
account that factor, do you have any thoughts about
that?
MS. PITNEY responded that the $257 [million] of the $568
[million] that's earmarked by the administration to go to the
communities is actually a singular distribution to each of the
communities as listed in the CAP distribution column. She said
unless a community voluntarily says it cannot spend the money
and gives it back "for the next best priority choice," the money
is "off the table once approved and cannot be redirected." In
response to a follow-up question from Representative Josephson,
she confirmed that she interprets the RPL and being a one-shot
deal. She indicated a willingness in having Representative
Josephson direct the question to Mr. Steininger.
4:57:10 PM
MR. STEININGER stated that communities have until the end of
December [2020] to incur the expenditure. When a community
relates that it may not have incurred expenditures related to
COVID-19 now, there is still uncertainty as to whether the
community will incur the expenditures by the end of December.
He indicated that this RPL is the first of the monies to go out
to communities; there are other monies that will go to
communities on a quarterly basis from other RPLs. He said those
monies would not go out to the communities unless they show that
they have actually spent down the initial money sent. He
indicated that toward the end of summer, once it is seen what is
left unspent, monies could be reallocated; however, he remarked
that he thinks that by the end of December, communities will
realize significant costs related to COVID-19 that need to be
covered.
REPRESENTATIVE JOSEPHSON said testimony heard at the 14 hearings
the legislature has held has already shown what the existing
need is; however, the monies "are going to be virtually
dedicated," so "while that happens, we can't redirect them." He
asked Mr. Steininger to confirm that is what he said.
MR. STEININGER confirmed that the communities need to know they
have access to the money in order to respond as they see fit "as
the situation continues to emerge through the end of the year."
4:59:25 PM
REPRESENTATIVE SPOHNHOLZ asked Ms. Pitney, "Have we ever
received federal funds for community assistance?"
MS. PITNEY answered no. She repeated that "this money is part
of the $1.25 billion." She said it is the administration's
choice to distribute this amount of funds to communities "using
this distribution methodology."
REPRESENTATIVE SPOHNHOLZ directed attention to a legal opinion
dated 5/5/20, from Megan Wallace, [included in the committee
packet], in which Ms. Wallace "described the legality of using
the RPL process for community assistance payments, given that
... community assistance hasn't received funds in the past and
that there isn't appropriations for community assistance, I
believe, in either 2020 or 2021." She said it seems like this
RPL might be out of order. She asked to hear from Ms. Wallace.
5:00:56 PM
MEGAN WALLACE, Director, Legislative Legal Services, Legislative
Affairs Agency, confirmed that she had penned a legal opinion on
5/5/20 to the Legislative Budget and Audit Committee, and she
did an analysis of the proposed community assistance RPL. As
Ms. Pitney had already noted, she said the issue she sees with
this RPL is that it seeks to increase the operating expenditures
for the Division of Community and Regional Affairs, and "that
appropriation that is being sought to increase does not serve
any community assistance function." She said these are funds
that are not being used to increase a community assistance
program; the proposal really is "to create a community
assistance program through use of the CARES Act funds that the
state receives." She continued:
Even though ... that allocation has federal funds, ...
the RPL process was not intended to be utilized to
create new programs or to create new appropriation to
increase or supplement existing appropriation, and
therefore it would be my opinion that if challenged,
this RPL poses a risk of being deemed an
unconstitutional delegation of the legislature's
appropriation power.
5:03:19 PM
REPRESENTATIVE JOHNSTON asked Mr. Steininger to confirm that the
federal guidance would direct 45-48 percent of the funds to
communities.
5:03:47 PM
MR. STEININGER responded that there is a "suggestion" that 45
percent should go to communities.
REPRESENTATIVE JOHNSTON remarked that the administration "is
trying to honor that guidance." She offered her understanding
that the communities receiving the funds must provide receipts
showing that they have followed the guidance of the U.S.
Department of Treasury and spent about 80 percent of the funds
before they get the next tranche.
MR. STEININGER confirmed that is correct.
REPRESENTATIVE JOHNSTON asked whether there would be anything to
prevent communities from spending the money received on the
other needs listed by Representative Josephson.
MR. STEININGER responded that there was nothing that would
prevent communities from allocating the funds to those needs,
"so long as they fit within the CARES Act guidelines."
REPRESENTATIVE JOHNSTON offered her understanding that the
Municipality of Anchorage and the House Finance Committee felt
that the legislative intent was broader than the current
criteria of the U.S. Department of Treasury, and she said there
seems to be interest in Congress to broaden the criteria to
replace revenue shortfalls in communities.
MR. STEININGER responded that while he does not want to
speculate as to what the federal government will do in the
future, he expressed hope that it would remove some of the
restrictions to make the money more impactful in communities.
5:06:02 PM
CHAIR TUCK asked for confirmation that the 45 percent was a cap
on what could be spent on any individual community. He said he
thinks the administration chose to use that as a guideline for
all the communities. For instance, in a small state with one
very large community, there was concern that all the money would
go to one community.
5:06:32 PM
MS. PITNEY, in response, offered her understanding that the 45
percent was determined based on the relative size across the
nation of local and state governments and on employment and
dollar value as presented in a congressional research report.
That was used to determine where there were those large
population cities and counties for the distribution. She said
it was merely a target and left to the discretion of the state
how much could go to the communities.
5:08:08 PM
SENATOR VON IMHOF said if Alaska had a city with a population of
500,000, this conversation would not be taking place; the money
would have gone straight to that major city. She said it is
because of Alaska's small populations that "the state gets all
the money." She stated that the intent of the federal
government is to get the money to communities as soon as
possible. She said there are 123 communities, and the
legislature does not know the needs of every one of them. She
said those communities would "apply for the second half and
provide a list of expenses." She echoed the comment of
Representative Johnston that states are looking for relief
beyond the scope of that stated by the U.S. Department of
Treasury. She said one cannot speculate on how that may change;
however, considering the amount of information being written on
the subject, it is possible that the second tranche may come
with a little more flexibility. There is no RPL process for
this new situation, she added. In response to Chair Tuck, she
confirmed she was talking about the second tranche of $311
million.
5:10:40 PM
SENATOR HOFFMAN, regarding the monies going directly to the
populations of more than 500,000 in other states, questioned
whether [Alaska] is being held at a different standard because
it does not meet a population threshold. He emphasized that the
smaller communities in the state need the relief as urgently, if
not more so. He said he represents over 100 communities. He
expressed concern that "we are sitting around twiddling our
thumbs, not taking the action necessary to dispense these funds
out to the people." He said initially the administration
presented this proposal for the money to be disbursed May 1, and
today is May 11. He said the people of Alaska need to be able
"to take the funds and do what they feel is necessary." He
added that the larger communities in the Lower 48 "have got
their money and they're spending it." He opined that that is an
injustice.
SENATOR HOFFMAN expressed an additional concern that if there is
a deadline of June 30, 2020, for spending the $365 million that
was available on May 1, then communities not able to spend the
money can blame the legislature. He asked Ms. Pitney whether
the first two appropriations of $257 million and $107 million,
totaling $365 million, must be spent by June 30.
5:14:07 PM
MS. PITNEY answered no, not by June 30. She said the rules on
the Coronavirus Relief Fund from the federal government is that
it has to be spent on costs incurred by the end of calendar year
2020. The first amount of $257 million is an FY 20
distribution, but it is an RPL applied to the DCCED budget. The
communities have use of the money until the end of December
2020, because of federal restrictions. She said the next amount
of money is $311 [million], the direct community cost payment,
and is split as RPLs for FY 20 and FY 21. She then said,
"Actually, ... the first distribution of the direct cost is a
2020 item, and then the next two are 2021 items."
SENATOR HOFFMAN clarified that he is in full support of getting
the funds to the people of Alaska as quickly as possible. He
said it does not make sense to distinguish one citizen over
another based on whether he/she lives in a community of greater
than or fewer than 500,000 people. He stated, "I am not going
to be one individual that's going to be hiding behind that
shield and not dispensing money to the people of Alaska."
5:16:40 PM
SENATOR GIESSEL remarked that when she read the federal guidance
that was published on May 4, she was impressed with the number
of affirmative answers regarding how money could be spent by the
communities. She mentioned impacts of the coronavirus, such as
hospitals that have not been able to allow elective surgeries
and dentists who have not been able to open their offices. She
said she thinks communities, no matter the size, will look at
the impacts of the coronavirus and recognize "the facility that
this money will give them." She expressed her high regard for
Ms. Wallace as the legislature's legal counsel and respect for
Ms. Wallace's concern about a possible lawsuit. Nevertheless,
she said she has to agree with Senator Hoffman that COVID-19 is
stretching the limits of the state and its communities, and
"this money does needs to be dissipated as soon as possible to
help mitigate some of that."
5:18:09 PM
SENATOR BISHOP said he would also like to "echo some of the
comments of the previous speakers." He related that an article
in The Daily News Miner of Fairbanks, Alaska, reports that
Alaska my lose hospitals to COVID-19 [through loss of revenue].
He described [the federal guidelines put out] on May 4 as
"refreshing," and he indicated that he hopes that the committee
will [approve the RPLS] so that the hospital in Fairbanks will
not need to lay off its staff.
SENATOR STEDMAN said the clock is ticking and Alaska is treated
differently because it is a smaller state. He said, "The
emergencies are today, and we need to deal with this. As far as
the legalities, we've been working through that issue for the
last three weeks, often daily." Senator Stedman recognized that
the times are unprecedented and [the committee] is "pushing the
bounds in some directions," but he said the full legislature has
the ability to go through a ratification process. He said while
there may be technical and bureaucratic reasons not to go
forward, an emergency is affecting citizens all across the state
and a response is needed as soon as possible. He expressed
support in the statements made by the last three members
regarding the need to take action.
5:21:08 PM
REPRESENTATIVE JOSEPHSON expressed support for Senator Hoffman's
concern for rural Alaska. He mentioned amendments he had
offered during the session to that end. He said he agrees that
"we must look out for our local communities."
5:21:40 PM
REPRESENTATIVE NEUMAN spoke about urgency and local control
being the best control. In terms of the legal opinion of Ms.
Wallace, he stated, "Everything that we're doing here is a legal
risk." The needs of each community differs, he emphasized, so
each community should decide how it best can use the funds. He
reiterated that there is a risk in what the Legislative Budget
and Audit Committee is doing, but emphasized that he would do
all he could to get the money to the communities.
5:23:59 PM
REPRESENTATIVE FOSTER expressed support for getting the money
out to communities as soon as possible. He said the public
won't understand the specific technical bureaucracies that are
delaying the disbursement of the money, yet will understand that
they exist and won't be happy about them. He expressed that not
approving the RPLs or going through the appropriation process
would result in the money getting to the people "much later."
He reiterated that he wants "to see the money get out sooner."
5:25:07 PM
CHAIR TUCK, in response to previous comments supporting the
immediate disbursement of funds to the people of Alaska, pointed
to a letter he had drafted to the governor regarding the RPLs.
He said he had shared the [draft] letter with members of the
committee, who requested he remove two of the paragraphs. Chair
Tuck opined that the paragraphs should have remained in the
letter, and he read them as follows:
The RPLs are currently being reviewed by the
Legislative Finance Division and Legislative Legal
division. Many of the items included in the RPL
packet are likely outside of the narrow confines of
what the Legislative Budget and Audit Committee is
able to legally consider under the RPL process and
require the full attention of the Alaska State
Legislature as the appropriating body of the State of
Alaska.
In addition: Although we are still awaiting official
guidance - expected on April twenty-eighth from the
feds - on how the state may use the CARES Act fund,
some of the items in the packet are contrary to early
guidance. It would be imprudent to distribute funds
outside of allowable usage and end up owing that money
back to the federal government, especially in the
uncertain fiscal times. It appears that those items
will be allowable under the second round of federal
stimulus money that is now being considered currently.
CHAIR TUCK posited that the reason for the current situation was
because he was talked into "playing nice" by taking out the two
paragraphs. He said, "If I had not taken those two paragraphs
out, I think we would have acted a lot sooner than we are right
now, the proper way, the right way." He said there is no reason
the legislature should not be "doing this the right way" while
in session. He said, "You don't do things thinking that you
won't get caught. In this case, we're trying to do something
hoping that somebody won't sue." He said there are only eight
days left in the legislature's regular session and "communities
are being impacted." He added, "They're going to be further
impacted in a much more negative way if there is a lawsuit." He
gave an example of the effects of current litigation regarding
"federal monies going through tribal councils." He noted that
in that lawsuit there was an injunction, and nobody is getting
money right now. He said he wants to avoid the position where
no one will get money for a while.
CHAIR TUCK asked Mr. Steininger what authority the governor has
"to be able to set up this new program." He offered his
understanding that the governor, in FY 20, "vetoed these funds
on three separate occasions - three appropriations bills," thus
"we have zero money going into it now" and "no federal money
going into it." He asked, "So, what would make this RPL process
eligible for the governor to be able to carry out this plan?"
5:28:28 PM
MR. STEININGER answered that the vetoes related to the Community
Assistance Program are unrelated to RPL 08-2020-0250. The RPL
provides federal authority to the Division of Community and
Regional Affairs, which engages in community support activities.
He said these are federal funds the state is allowed to grant
out to communities in Alaska. He added, "So, we have an
appropriation for the purpose of providing community support,
including financial support and grants to communities."
CHAIR TUCK offered his understanding that that is included in
statute pertaining to DCCED but does not mean "they can
incorporate entirely on their own." He asked whether that is
correct.
MR. STEININGER answered, "Those are the core services of the
Division of Community and Regional Affairs and their statutory
authority of the department to provide grants to communities
within Alaska."
5:29:57 PM
REPRESENTATIVE JOHNSTON, for clarification, asked whether DCCED
has the grant authority and, thus, the receipt authority from
the federal government. She asked whether the granting
authority is cited "for both these community distribution RPLs."
MR. STEININGER answered that the statute for DCCED allows the
department to provide grants, "including financial support
coming from the federal government to communities." He said the
core service of the Division of Community and Regional Affairs
includes financial assistance to administer grants and funding
distribution programs to communities.
5:30:58 PM
REPRESENTATIVE SPOHNHOLZ said she understands the stress that
communities are facing right now and the need to get funds
appropriated. She pointed out that this issue addresses
community assistance, and there are other RPLs that have not yet
been addressed regarding business assistance. She expressed
concern about protecting the state's economy, which she said has
been diversified over the last three decades. She said she has
heard that "a lot of that's going to be lost if we don't get the
funds out to communities really quickly." Notwithstanding that,
she expressed concern that "we are establishing a really
dangerous precedent by doing this today." She explained two
possible risks: being faced with a lawsuit and having to pay
back the federal government "or" setting a precedent of ceding
more authority to the executive branch of the State of Alaska.
She gave examples of times when the legislature has worked fast
on legislation and suggested that if the legislature had moved
that quickly when it received the first RPL, "we would be done
with this by now." She said there would be subsequent tranches
of funds from the federal government, questioned what would
prevent the governor from deciding to go with an RPL process
again, and questioned whether the legislature would be happy
with the outcome. She said at that point a precedent already
would have been set. She said the legislature has already faced
challenges in maintaining appropriating authority "because of
the high veto override threshold." She expressed disappointment
that the legislature did not move more quickly, because "we
could have, sort of, had our cake and eaten it, too," rather
than being in present circumstances.
5:33:41 PM
SENATOR STEDMAN responded, "We're not changing any ...
appropriation authority balance between us and the executive
branch at all. We've got language that we're reading into the
record. We're making it very clear that these are unprecedented
times dealing with a world-wide emergency." He stated that all
60 members of the legislature are guarded in terms legislative
authority. He concluded, "So, that argument doesn't hold much
water."
5:34:31 PM
SENATOR HOFFMAN noted that Senator Stedman had spoken with the
administration, and he alluded to a conversation with Senator
Stedman from which he gained the understanding that "the
administration agrees wholeheartedly that this is unprecedented
times and they don't view it as us usurping our authority to
appropriate." He sought confirmation from Senator Stedman.
SENATOR STEDMAN responded, "That is correct."
5:35:06 PM
CHAIR TUCK noted that the Mississippi State Legislature plans to
spend its [$1.25 billion] "with advice from the governor." He
remarked that the way he sees the RPL process going currently,
"we're going to let the governor spend it, with some limited
advice from the legislature." He stated, "So, I think there is
a shift in balance of powers that's happening in the State of
Alaska that should be maintained much the same as the State of
Mississippi." He made a comparison of government to industry,
stating that the executive director never goes outside of the
wishes of the board of directors, which has the final say as to
the wishes of the board. He said he would argue that there are
Senators and Representatives that "do not like the process that
we're going into, because they are not effectively representing
their districts." He said the committee does not have the power
to amend any of the RPLs and essentially is "rolling over" to
and "letting the executive branch appropriate." He called that
a dangerous precedent.
CHAIR TUCK related that when he was on a KSRN radio talk show
recently, "explaining what the proper [legislative] process is,"
a former speaker of the House called in and said, "Do not set
this precedent." Chair Tuck recognized a pandemic is talking
place but remarked that there had not been a new case in Juneau
since April 14. He said, "So, I don't see the panic." He noted
that grocery store clerks, hairdressers, and barbers are
working, and he opined that the legislature should also be
working. He said the issue could have been addressed early on.
5:38:10 PM
SENATOR GIESSEL emphasized that nothing the committee is doing
changes the appropriating authority of the legislature; the
legislature remains the appropriating body. She criticized
nonaction, worrying about whether the legislature gets "to eat
cake," and worrying about retaining power over the executive
branch when businesses and communities are "in desperate need of
financial assistance." She said the public knows that that
money has been delivered to the state treasury and that the
Legislative Budget and Audit Committee has the power to get that
money disbursed. She reemphasized that [the committee] is not
giving up any appropriation authority. She said the additional
RPLs before the committee should have been addressed last week,
and in those RPLs are revisions "offered by members of this
committee," and those revisions have improved the RPLs. She
offered her understanding that the communities are wondering
when action will take place.
5:39:45 PM
REPRESENTATIVE JOSEPHSON said the previous speaker made some
good points. In response to the idea that "someone is
dawdling," he stated:
Whether there was input or not to revisions to, for
example, the small business RPL, as proposed by the
administration: that arrived at around ten-thirty in
the morning, today, May eleventh.
REPRESENTATIVE JOSEPHSON expressed concern that stating that the
legislature is not abdicating its appropriating authority does
not mean that "as a matter of legal fact it is not happening."
He said, "Because no one can cite to me any authority for the
administration unilaterally to say, 'We'll tell you what to do
relative to the appropriation power.'" He said just as
carpenters work with wood and cooks work with food, legislators
appropriate. He continued as follows:
We were exhausted on March 28, we were working beyond
an emergency, and people were concerned, and they
should have been. We wanted to see our loved ones.
All of that is fair. But we knew, 24 hours earlier,
that $1.25 billion was coming to us, and ... our
appropriation authority remained there. I just don't
have it in me, when I see a piece like Ms. Wallace's
of April 30 and May 5, to say, "To heck with it." I
don't have that capacity, especially when it's so
unequivocal."
5:41:49 PM
SENATOR HOFFMAN stated, "How Mississippi does business - that's
their business. We are Alaskans. We represent the people of
Alaska. We don't represent every other state in the Union.
They decide on their own what and how they want to do that
process." He continued:
These times are unprecedented, and we are in a
changing era of COVID. We will work with each other,
and we will come to the determination of what is best
for Alaska. But the people of Alaska are looking at
us, and we need to quit squabbling about what happened
in Mississippi and what happened yesterday and what
happened last week and what might happen tomorrow. We
need to say, "We are the decision-makers; let's make
some decisions today."
SENATOR HOFFMAN urged the committee to "get this thing done" for
the people of Alaska.
5:43:00 PM
CHAIR TUCK indicated he had mentioned Mississippi as an example,
not an arguing point. He opined, "We should err on the side of
the Constitution [of the State of Alaska] and use that as an
example." He emphasized that he would not "play stupid to get
along with people." He said, "I have an oath of obligation just
like everybody else has an oath of obligation, and I take that
seriously. You may not, and I'm not going to say that you do or
you don't."
SENATOR HOFFMAN said, "You do."
CHAIR TUCK emphasized that he currently had the floor to speak.
He added, "And I want to keep this very respectful."
SENATOR HOFFMAN remarked, "I hope you do, because your last
statements haven't been."
CHAIR TUCK indicated that the urgency that exists in the last
nine days of the session is because of the legislature, not the
Legislative Budget and Audit Committee. He said, "We've all
seen the same [legislative legal] opinions. We had a House
Judiciary [Standing] Committee meeting on it last Wednesday; it
was very clear." He said no one has been able to show him "how
this is legal" and everyone is saying, "Hey, ignore it." He
said his only point is that some of the members are having a
difficult time "ignoring it." He said he understands and
appreciates the urgency but wants to "make sure that we do it
right."
5:44:42 PM
The committee took an at-ease from 5:44 p.m. to 5:53 p.m.
5:53:37 PM
CHAIR TUCK clarified that the comment he had made before the at-
ease, regarding not playing stupid to get along, was in
reference to himself and not anyone else.
5:54:19 PM
SENATOR STEDMAN stated that similar things have been done in the
past to address emergencies, and the current situation could be
the biggest emergency. He pointed out that the co-chairs of
both the House and Senate Finance Committees were present, as
well as Senator Hoffman, who formerly chaired the Senate Finance
Committee. He emphasized the years of experience in the room.
Regarding concern about changing the balance of power with the
executive branch, he stated, "It's not going to happen."
5:55:25 PM
CHAIR TUCK remarked that the amount of money being considered
with the RPLs currently under consideration is $958 million, and
he said he does not know whether the legislature has ever "given
up that much power and that much money" through the Legislative
Budget and Audit Committee, especially with "no federal monies
into programs" and no programs established. He noted that in
the second round of guidelines from federal government were some
great ideas on [uses for the funds]. He said that the
governor's plan for community assistance and revenue sharing
"isn't so bad," but the question is, "Is that how much each
community needs versus how much we need to ... [put] directly
into small businesses?"
CHAIR TUCK ascertained that there were no further questions
regarding RPL 08-2020-0250.
5:57:11 PM
MS. PITNEY directed attention to RPL 08-2020-0251, State of
Alaska COVID-19 Small Business Relief, for an amount of $290
million. She said this is a revised RPL from a previous RPL
that established a loan program; it was submitted this morning
just after 10 a.m. She said it was revised based on input from
legislators and is now a grant program. The additional
information provides guidelines, boundaries, and definitions of
small businesses, as well as a list of eligible expenses. It
provides for a contractor to help in determining eligibility for
different businesses. She said the money is directed to the
Office of the Commissioner in the Department of Commerce,
Community & Economic Development, with the expectation that the
Alaska Industrial Development and Export Authority (AIDEA) will
be a partner or advisor in the program because of AIDEA's
existing relationship with small businesses. She said the $290
million comes out of the $1.25 billion.
6:00:08 PM
REPRESENTATIVE JOSEPHSON asked for a simple explanation from Ms.
Pitney as to the change in the RPL from a focus on loans to a
focus on grants.
MS. PITNEY answered that the original RPL requested funding for
loan programs through AIDEA, which developed a request for
proposal (RFP) and awarded it to a financial institution, which
established a loan program. The federal guidance on the use of
the CARES Act funds stipulated that loan programs would not be
an eligible expense. She offered her understanding that there
was additional input from those who said a loan would not help
[their businesses] but a grant would. Ms. Pitney noted that the
grant program does not supplant or overlap the Small Business
Administration's [Paycheck] Protection Program (PPP). The loans
are for those who did not qualify for the program or who did not
get funding because the funding ran out.
REPRESENTATIVE JOSEPHSON referred to the considerable discussion
about the delay in the release of the RPLs, and he remarked
again that he thinks they are not legal. Notwithstanding that,
he emphasized the marked difference between a loan and a grant
and said this may be the most important point he has heard
because the legislature had some involvement in the changes and
because they are materially different. He suggested that a
grant may "change the destiny of a small business." He remarked
that to the extent that the delay brought about that significant
change, it makes him "happy for the delay."
6:03:09 PM
REPRESENTATIVE SPOHNHOLZ said the House Labor and Commerce
Standing Committee had heard from small business owners about
the importance of receiving grants rather than loans. She said
this proposal will complement and not supplement the federal
programs, and a business would not be able to receive these
funds if it were benefiting from the federal PPP and economic
injury disaster loans (EIDL). She offered her understanding
that these grants available to small business owners are not
being made available to nonprofit organizations. She said there
are funds for nonprofits that are responding to the COVID-19
crisis with aid; however, there is a gap between those
nonprofits and others that are experiencing declines in earned
and charitable income. She said she would like to hear from the
commissioner of DCCED as to whether she is willing to consider
the addition of nonprofit organizations as recipients of this
RPL.
6:05:18 PM
SENATOR VON IMHOF listed those entities that are eligible for
the RPL and pointed out that the basic requirement is that the
entity must have a business license; therefore, "your nonprofit
will need to obtain a business license from the Alaska Division
of Corporations." She noted that nonprofits do have business
licenses, which is the basic prerequisite.
6:05:43 PM
JULIE ANDERSON, Commissioner, Department of Commerce, Community
& Economic Development, offered her understanding that as
Senator von Imhoff had indicated, any business license holder is
eligible. She said she would like to see the full focus of the
initial $150 million "be out towards small businesses throughout
Alaska that are so desperately in need of these funds." In
response to Representative Spohnholz' question, she stated,
"Yes, I am open to looking at that."
6:07:01 PM
REPRESENTATIVE SPOHNHOLZ said she thinks it is important to
acknowledge that nonprofit organizations are businesses that may
have to lay off employees as a result of a lack of earned and
charitable income. The issues are the same; the difference is
that a nonprofit does not have to generate a profit and
generally serves a charitable purpose. She said testimony has
been heard by the legislature from nonprofits that are
struggling financially and would like to be included in "any
programs that are designed to serve small businesses."
6:07:53 PM
SENATOR VON IMHOF said she thinks it would be in the best
interest of the state to include nonprofits. She asked
Commissioner Anderson whether she has any thoughts on sole
proprietorships.
COMMISSIONER ANDERSON replied that sole proprietorships are
eligible. She said 1 through 50 employees is the target of the
RPL program.
SENATOR VON IMHOF urged Commissioner Anderson to communicate
that clearly on the materials for application.
6:09:08 PM
SENATOR WIELECHOWSKI asked Commissioner Anderson to talk about
the criteria for a nonprofit or small business to get access to
the funds, including how the decision is made for the amount
given and how prioritization will work, assuming there will not
be enough funds for all the applicants desiring them.
COMMISSIONER ANDERSON said the businesses would have had to be
eligible, with 50 employees or fewer, when the health disaster
was declared on March 11, 2020. The applicant must have been
excluded or unable to qualify or otherwise unable to obtain
funds from other federal programs under the CARES Act. The
program will be first-come/first-served. She said DCCED will be
doing "a massive communication" once the RPL is approved; it is
already preparing information. The intent is to notify people
so they can be ready with the required documents before the
program goes live. She said the department has been assured
that the funding process will go smoothly for those who submit
complete applications. She said the funding amount ranges
$5,000 to a maximum of $100,000 per business. The department
will determine the amount of funds needed based on expenses
incurred from March 11 to date of application, as well as the
eight weeks following application. She indicated that money
would be spent by the applicants on working capital expenses.
In response to a follow-up questions from Senator Wielechowski,
she said the money would not cover compensation for loss of
business.
6:13:21 PM
REPRESENTATIVE SPOHNHOLZ asked for confirmation that those who
had been declined or not eligible to receive funds from the PPP
or the Economic Injury Disaster Loan (EIDL) would be eligible
for this RPL program.
COMMISSIONER ANDERSON answered that is correct.
6:14:20 PM
SENATOR BISHOP noted that the RPL said each applicant may make
only one application for funding, and he asked Commissioner
Anderson to look carefully at all the applications, because
there are many Mom and Pop businesses that do not have a legal
team to help them in the application process.
COMMISSIONER ANDERSON replied that she understands the concern.
She said the department would be providing grants to Alaska
Regional Development Organizations (ARDOR) to provide technical
assistance. The intent is to get the information and technical
assistance out to rural communities - to all areas of Alaska -
so people understand the process. She said the department has
set aside 20 percent of the initial funds for rural businesses
that may have communication problems, because the department
wants to ensure that everyone is treated fairly and equitably
irrespective of where he/she lives or his/her level of
sophistication.
6:16:27 PM
COMMISSIONER ANDERSON, in response to Chair Tuck, reviewed that
for the purpose of this RPL program, a small business is
considered to have 50 employees or less.
CHAIR TUCK asked about subsidiaries and whether total employees
would be counted or each individual subsidiary of entity.
COMMISSIONER ANDERSON answered that it would be based on
business licenses. A business may have a number of subsidiaries
under one business license. Under this RPL, each entity would
have to have a separate business license.
CHAIR TUCK said often several different names operate under one
license. He asked, "So, you're just going to take that one
license, is that right?"
COMMISSIONER ANDERSON answered, "That's my understanding as we
develop this program."
6:18:22 PM
SENATOR VON IMHOF offered that a further scrutiny or eligibility
consideration could be one federal taxpayer identification
number (TIN) and one social security number (SSN) per
proprietor.
6:18:46 PM
CHAIR TUCK suggested taking applications from small businesses
that may have received some PPP funds but did not sustain the
same funding they would have if they had 500 employees, for
example. He asked Commission Anderson, "Would you be willing to
take applications for them, as well, in case more money comes
into the state to be able to help them out?" He suggested that
a business could end up being penalized by having applied for
other funding first, not knowing that this RPL program would be
available subsequently that would have provided the business
more benefit.
COMMISSIONER ANDERSON said she has thought about that. She
noted that there are still quite a few small businesses that
have not had access to any funds. She proposed waiting to see
what the demand is. She said the process allows more
flexibility; the department is not dedicating the entire amount
to one entity all at once. She said the department is still
tracking the Small Business Administration (SBA) programs; close
to 10,000 small businesses in Alaska have received funding
through EIDL or PPP. She said she would like the ability "to
adjust as we move forward."
CHAIR TUCK noted that "the fourth or fifth paragraph" states
that as of FY 17, the State of Alaska does not provide funding
to ARDOR. He read, "This RPL will provide a grant to ARDOR for
a temporary increase in activities in direct response to
coronavirus public health pandemic." He asked how ARDOR is
currently funded.
COMMISSIONER ANDERSON offered her understanding that ARDOR
received a grant from the Denali Commission this past fiscal
year and funneled the grant through the [Division] of Community
& Regional Affairs. She explained that that happened before her
time as commissioner. She deferred to Micaela Flower.
6:22:29 PM
MICAELA FOWLER, Director, Administrative Services, Division of
Community & Regional Affairs, Department of Commerce, Community
& Economic Development, stated that up until FY 16, ARDOR
received grant funds from the state that were a portion of its
funding. She said ARDOR can apply for federal grants. It also
receives funding through its membership; for instance, the
Southeast Conference in Juneau is able to charge fees for events
and other things. She said ARDOR is not receiving state funding
at this time.
6:23:20 PM
REPRESENTATIVE SPOHNHOLZ related that SBA had reported several
weeks ago, regarding paycheck protection loans, that 4,800
Alaska businesses had loans averaging $190,000; therefore, the
businesses eligible for the PPP would do much better under that
program than they would under this RPL program. She said this
program makes more sense for the smaller businesses. To
Commissioner Anderson, she stated that many of those who applied
for EIDL but did not receive them got an advance, and those
1,500 advances averaged about $4,600, and she asked whether [the
receipt of those advances] would make people ineligible for the
RPL program being discussed.
COMMISSIONER ANDERSON answered that she had not heard that
statistic but is willing to consider it. She said the intent of
this RPL program is to help as many small businesses as
possible, while having enough guidelines to avoid any ambiguity
regarding eligibility.
REPRESENTATIVE SPOHNHOLZ opined that it is important not to
penalize businesses that received a small sum from EIDL. She
recommended keeping the process simple while still doing due
diligence, in order to show kindness to the small business
owners across the state who are having to adapt in many ways.
6:26:13 PM
SENATOR VON IMHOF asked Commissioner Anderson to put the EIDL
concept "in a box" when considering eligibility, because she
said although it has been a good program, it has been
inconsistent, unreliable, and sometimes with "no rhyme or
reason." For example, she said folks have applied, never heard
back, and then received $4,000 in their account. She requested
that Commissioner Anderson "use that as a consideration" but not
to "penalize a business if they have received even some
funding." She added, "Representative Spohnholz is right; it's
about between three and five."
COMMISSIONER ANDERSON expressed appreciation for the advice and
said the department would consider that.
6:27:31 PM
SENATOR WIELECHOWSKI asked whether a small business that could
not pay its rent could apply for a grant.
COMMISSIONER ANDERSON responded yes, absolutely. She said that
is the intent of the grant program. She explained that the
program would look at expenses incurred and whether those
expenses had been paid or not. She said the department
recognizes that businesses have had to close because of COVID-19
and have lost the revenue to pay incurred expenses, as a result.
The grants could keep those businesses alive and moving forward
in the following weeks; the money could cover mortgage payments,
rent, utilities, payroll, and other typical operating expenses.
She said the grant program is not intended to provide a payoff
for previously existing expenditures or loan amounts, but rather
all costs incurred between March 11 and December [31, 2020]. In
response to a follow-up question, she said the money in this
grant is not for individuals who may need help paying their
rents; she suggested perhaps AHFC may have such a program or
perhaps DHSS.
6:29:51 PM
MR. STEININGER stated there is the AHFC Homelessness Prevention
Program RPL for $10 million, discussed previously, "to cover
costs like that."
SENATOR WIELECHOWSKI asked Mr. Steininger whether he thinks
giving $10 million to "several hundred thousand Alaskans who
might not be able to pay their rent" and $290 million to small
businesses is fair.
MR. STEININGER responded, "That's the allocation that we've
made." To a repeated question as to the issue of fairness, he
said, "It's difficult to determine the overall need of every
aspect as we allocate the money. ... All areas of the Alaska
economy are in need, and all of these needs are very
sympathetic. And so, I don't think this is a question of fair
but a question of where we're seeing impact."
6:31:20 PM
SENATOR VON IMHOF pointed out that the intent behind giving
money to small businesses to cover payroll is so employees can
pay their mortgages, rents, car payments, et cetera. This would
affect up to 50 employees per business, she added.
SENATOR WIELECHOWSKI said he thinks it is good to provide
assistance to small businesses but does not think the amounts
are in a proportion that helps individuals.
6:32:52 PM
REPRESENTATIVE JOSEPHSON asked whether marijuana businesses are
eligible for these grants.
COMMISSIONER ANDERSON answered that in addition to the limits
previously stated, the following are not eligible for this
particular grant: marijuana businesses, secondary income
sources, state businesses, and businesses that have filed for
bankruptcy.
6:34:19 PM
CHAIR TUCK commented that a lot of businesses are hurting, and
he wished there were more money to give. He remarked that money
going out in the form of permanent fund dividends and small
business relief will "go fast." He said the hope is to sustain
businesses through [the pandemic], but consideration will have
to be given to opening up the economy more each day as safely as
possible.
6:35:08 PM
MS. PITNEY moved on to a group of 123 RPLs, beginning with RPL
08-2020-0260, titled "COVID-19 Community Direct Costs for Adak,"
for an amount of $684,000. She said RPL 08-2020-0260 partially
applies to FY 20 and partially applies to FY 21. She continued
as follows:
So, this is the framework for the $311 million of
direct-cost grants to communities. So, there was the
$257 million distribution based on a community
assistance program; this is an additional $311 million
based on a different formula, and the formula is more
... community tax-based.
MS. PITNEY directed attention to a spreadsheet previously shown
in relation to RPL 0250. She pointed out that on the
spreadsheet, the first column shows community assistance-based
payment. She referred to the next three columns on the
spreadsheet as direct-cost distribution one, direct-cost
distribution two, and direct-cost distribution three. She said
the framework for RPL 0260 and the 122 other RPLS is the same;
"the amount of money is associated with direct-cost distribution
one, two, and three" for each community on the spreadsheet. She
continued as follows:
This was revised from the program that was submitted
originally on April 21 to put an expectation that the
communities would apply for this funding and certify
that they would use it for eligible expenses and be
responsible for the return of any funds not spent on
eligible expenses. The other revision was that ...
after the first distribution, future distributions
would be pending demonstration of 80 percent of prior
funding utilized. Between the community assistance
distribution and this direct-cost distribution, the
total is $568 million to communities.
6:39:31 PM
REPRESENTATIVE JOSEPHSON remarked that he had never seen a
complete explanation from OMB as to how [these 123 RPLs] were
derived, and he asked Ms. Pitney if she had.
MS. PITNEY answered, "Only through backing into it."
6:40:26 PM
MS. WALLACE, in response to Chair Tuck, stated that the analysis
she had done relating to the $257 million RPL for the community
assistance payment is substantially similar to this series of
RPLs addressing the remaining $311 million. She said the RPLs
were amended on May 1 to make minor technical changes. She
continued:
One example, in terms of the statutory authority that
is cited for the expenditure authority: the RPLs now
identify AS 44.33.020(a)(20), which is the statutory
provision providing for the powers and duties of the
department, which includes administering community
assistance, including federal programs for revenue
sharing and community assistance.
And so, there's been some ... positive updates in
terms of identifying the authority to administer these
programs, but the underlying issues that I spoke about
earlier - they still cite the same appropriating
authority, which is the operating expenditures of the
Division of Community & Regional Affairs, which, as I
mentioned before, do not currently serve community
assistance function.
And so, I do have some concerns that, if challenged,
these individual RPLs suffer kind of the same
deficiencies as ... the first community assistance
RPL. But ... the legal issues, again, ... are similar
to what I previously advised, and I did not
differentiate between the first RPL and ... this
batch.
6:43:23 PM
REPRESENTATIVE JOSEPHSON asked Ms. Wallace whether her concerns
about the second batch of RPLs were greater because they were
not grounded in the statutory formula.
MS. WALLACE responded that she had not before considered the
question. She said it is difficult to say what weight the court
would give. Ultimately the executive branch wielded great
discretion in terms of identifying the formula for the second
batch and determining the amount to attribute to the first
batch. She said she thinks both batches of RPLs suffer from
similar legal problems. She opined that if one batch failed
constitutional muster, then they both would, under similar
reasoning.
6:45:14 PM
SENATOR STEDMAN said the challenges that may be faced are
unknown, but the legislature can utilize ratification "to
nullify a lot of this stuff." He added, "... We also have the
ability to counter or clean up any issues as we go forward."
6:46:23 PM
MS. WALLACE, at the request of Chair Tuck, addressed the
previous RPL regarding the release of funds to help small
businesses. She said she had had a chance to look at the
updated RPL made available earlier the same day. She said the
conclusion she had provided in her memorandum would not change
in response to the revised version of the RPL, since most of the
technical substance remains the same. She explained she was
referring to the appropriation authority, which is an investment
appropriation and allocation in the department, which currently
does not contain any federal receipt authority. She said she
thinks this RPL feels like a new program and appropriation
versus an increase of an existing program or appropriation
accounted for by the legislature.
6:48:36 PM
SENATOR BISHOP, referring to Ms. Wallace's memorandum
recommending that the legislature ratify the RPLs if they are
approved, asked her to specify what she meant by "a later date."
MS. WALLACE responded that she had written about the potential
of the legislature to ratify the RPLs subsequent to them being
approved by the Legislative Budget and Audit Committee. She
pointed to an example in the memorandum of when something
similar had been done during the administration of former
Governor Bill Sheffield, when the governor had impounded
municipal funds under a statutory provision and was successfully
challenged by municipalities. When that happened, the
legislature subsequently ratified the impoundment, and the
Alaska Supreme Court held that that ratification served to cure
any constitutional defect with the impoundment. Ms. Wallace
emphasized that the sooner the legislature ratifies the RPL
expenditure, the less risk there will be of any challenge.
6:51:42 PM
SENATOR WIELECHOWSKI asked whether the state would have to repay
the federal government or whether the communities and small
businesses would have to repay the state should the legislature
not ratify the expenditure.
MS. WALLACE, in terms of the $1.25 billion in federal funds
received by the states, said the CARES Act specifically provides
some oversight function within the U.S. Treasury. She stated
that while the focus of the U.S. Treasury guidelines to date has
been on acceptable uses, there is little information pertaining
to payback procedures. She said at this point she thinks it
would be safe to assume that it would be the state that would be
required to pay back the funds it receives from the federal
government if the funds are improperly expended.
6:53:32 PM
REPRESENTATIVE JOSEPHSON emphasized his support of local
governments and stated that his concern for the previous RPL for
community assistance is the same as for this one. He explained
that having heard testimony that "there was strong evidence that
... [communities] couldn't possibly use it all," his concern was
that "we're sort of encumbering" [the funds] when, for example,
they could be used for rental relief, small business loans,
COVID-19-related daycare assistance, homeless shelters, and to
address the increased needs related to domestic violence.
6:54:42 PM
CHAIR TUCK remarked that the committee could not broaden the
scope [of RPLs] but said it could "close that scope a little
bit" to ensure communities spend the funds in such a way that
does not put the state at risk of having to pay the funds back
to the federal government. He indicated that "the second round
of guidelines" opens up possibilities for other things that can
be done, and he said Representative Josephson mentioned a few of
those. He said he would like more to go toward small
businesses. He expressed hope that communities would be able to
help their local businesses. He said he thinks childcare is in
need of assistance. He suggested that emergency rental and
mortgage relief could probably use more money through AHFC to
help out families and employees that are not getting
unemployment insurance at the level needed but are not able to
go back to work. He said it would be nice to do other creative
things with the money, but he also understands the need to get
the money distributed as quickly as possible. Chair Tuck said
the RPL package for community assistance and revenue sharing is
not a bad one overall; the question is how it should be
administered and whether the amounts are fair.
6:57:22 PM
SENATOR WIELECHOWSKI agreed that the need is urgent but argued
that when the finance director, the department, and the attorney
from Legislative Legal Services say this is unconstitutional and
does not fit within the RPL process over which the Legislative
Budget and Audit Committee has jurisdiction, it is
unconstitutional "to have this money go out like this." He
marveled that there has been no opportunity for public testimony
and there has been no legislative oversight regarding
distribution of $1.25 billion. He speculated there may have
been private conversations in the Office of the Governor. He
said the Constitution of the State of Alaska states that the
legislature is the appropriating body, and that cannot be
overridden by a committee vote or a legislative agreement. He
opined that the simple solution would be for all legislators to
fly to Juneau to vote on the issue.
6:59:07 PM
REPRESENTATIVE NEUMAN said he had asked Ms. Wallace about the
authority that the Legislative Budget and Audit Committee has in
its ability to accept the federal funds. Considering that the
legislature already passed its FY 20 supplemental budget and the
FY 21 operating budget, he said he finds it unlikely that a
court would invalidate action taken by the Legislative Budget
and Audit Committee during a recess as he indicated is outlined
under AS 08.08. He said the governor submits the RPLs, and the
committee has 45 days to approve them, which would speed them
up, or tell the governor what it likes or does not like. The
governor can still take the federal money no matter what the
Legislative Budget and Audit Committee says, because it is an
advisory committee. He said, "It comes down to whether we want
to accept these federal funds or not." He offered his
understanding that the governor has worked with the
administration, the committee, and others "to try and comply and
make this work." He added, "But I don't think anybody knows
what the rules are yet." He said he thinks it is a risk worth
taking, and he indicated that delaying the decision does not
help communities.
CHAIR TUCK said there may be some gray areas on some of the
RPLs. He allowed that the committee may meet during a recess
but "to take up additional monies going into programs already
determined by the legislature." He said he thinks "that the way
this is being applied falls outside of the RPL process." He
mentioned the lack of underlying federal program receipts as
being an issue. He stated that the prohibition on using funds
for revenue replacement is also a concern. He continued:
The formula underlying the $311 million could put the
funds at risk. We were able to reverse engineer it
and see that, yeah, a lot of it's done to lost
revenue, not including property taxes, but all the
other taxes: sales taxes, bed taxes, cruise ship
taxes - you name it. And so, this might push this
liability onto individual communities in case they
misuse the funds, but ultimately, I think ... the
State of Alaska's going to be responsible for it.
There's also the equity issue of the formula itself,
which I don't have a problem with, but some community
may have a problem with, so, we have to be careful
with that.
And then the oversight issue regarding the small
business assistance program - we're not sure how it's
... going to be used or how it's not going to be
abused. And I'm glad that we changed it from a loan
to a grant program .... I know that it was
recommended by the Alaska Support Industry Alliance
that we flip this over to grants, but if we had made
this decision a week ago, I think we would have been
making a bad decision, because, again, we can't amend
RPLs; all we can do is accept them as they are. And I
want to thank Representative Josephson for pointing
that out.
... We've got to make sure that these programs are
utilized the most efficient way possible; that it's
going to what we intend it to go to and it has the
effects that we intend on having .... And there's
just ... very little checks and balances on this at
this time right now.
The official last day of session is May 20; that's
just nine days from today. We haven't had a COVID
crisis ... since April 14 in Juneau. ... We haven't
had any legal support, as pointed out by Senator
Wielechowski. I know that ... [the] House Judiciary
[Standing] Committee did try to invite [the]
Department of Law and they refused to appear and state
their case of why these ... are legal, so you really
only are hearing it from one side, and that's from our
counsel. ... I just have a little bit of a problem of
not ... following the advice of our legal counsel or
heeding ... the warnings. So, notwithstanding the
emergency, I think that it is a little bit dangerous
of walking down this RPL process and setting a
precedence.
7:06:26 PM
REPRESENTATIVE NEUMAN acknowledged the work that Chair Tuck has
done on the issue. He remarked that everyone has his/her
opinion and individual vote. He offered a reminder that he had
spent time chairing the House Finance Committee in the past and
sought expert advice because he is not an expert. He expressed
confidence that those handling the money would find the right
way to get that money to the people. He said, "I feel that we
are standing in the way of that happening."
CHAIR TUCK said there have been times when he has been
disappointed but other times when he has been impressed at what
has been accomplished. He offered an example in the past when
the legislature worked together. He talked about bridge-
building and partnerships amongst all branches and parties in
government. He then stated, "I do believe that ... we could
have come together on something very solid on this stuff."
REPRESENTATIVE NEUMAN shared with the committee that at 3 p.m.
that afternoon, he had received word that his uncle had died as
a result of COVID-19 and that his cousin is infected.
CHAIR TUCK expressed his condolences.
7:09:43 PM
MS. PITNEY, at the direction of Chair Tuck, began her
explanation of the final item for consideration, RPL 08-2020-
0054, a request for an appropriation in the Office of the
Commissioner, in the Department of Commerce, Community and
Economic Development. She said the source of the funding is
part of the CARES Act that was directed to National Oceanic and
Atmospheric Administration (NOAA). There is an earmark of funds
of $50 million for Alaska to provide relief to fisheries
participants, which includes fishermen, charter boat companies,
and subsistence participants. It covers incurred losses
resulting directly or indirectly from COVID-19. She said the
participant definition is "fairly narrow" and prescribed by
federal law.
MS. PITNEY said the funding is intended to go to the interstate
fisheries commissions - Alaska's being the Pacific States Marine
Fisheries Commission (PSMFC) - and it will be released when
there is an approved plan by NOAA. She said it is unclear
whether the funding is coming through the state. Also unclear
is the exact spending plan for that money. She said the other
issues is that the money is coming to the DCCED Office of the
Commissioner, which does not have "a like appropriation." Ms.
Pitney said there are a lot of unknowns at this time and
suggested that once a plan is in place, this might be something
that the Legislative Budget and Audit Committee may want to
consider. She stated that other than this not meeting the
boundaries of the RPL process, the risk would be an additional
$100 million of federal appropriation in the DCCED Office of the
Commissioner.
7:13:19 PM
CHAIR TUCK asked Ms. Pitney to confirm that currently "we don't
have the money for the $50 million in the fisheries" and "we
don't have a program set up for it right now."
MS. PITNEY answered that that is her understanding. She added
that the good news is that out of the $300 million the CARES Act
provided for fisheries, $50 [million] is earmarked for Alaska.
7:13:53 PM
SENATOR GIESSEL observed that the release from NOAA, dated May
7, 2020, clarifies that after the money is released, NOAA will
use the allocations to "our partners," which she pointed out is
PSMFC. She said the commission "actually does this all the
time." She gave as example fisheries disasters. She said she
is confused because "we don't have the money yet" and "it's
going to the commission to be distributed"; therefore, she
asked, "How does the state have any hands on this money at all?"
MS. PITNEY deferred to Mr. Steininger.
7:15:42 PM
MR. STEININGER deferred to the commissioner of the Alaska
Department of Fish & Game.
7:16:00 PM
DOUG VINCENT-LANG, Commissioner, Alaska Department of Fish &
Game, confirmed that NOAA has administered the money so that it
goes to PSFMC and the state is in the position to develop "the
spend plan." He said the department learned that it would have
to develop the eligible pools of people that could apply for
this money, including any coastal fishery impacted by COVID-19.
He explained that once the spend plan was put together, he did
not want to have to wait for Pacific states to distribute money
to other groups of candidates across the West Coast; therefore,
the best approach would be to apply for a block grant once the
spend plan was in place and get the money into DCCED's hands,
then use DCCED's granting authority to get the money quickly
into the hands of Alaskans. In response to Senator Giessel, he
confirmed that ADF&G would be developing the spending plan, even
if the block grant were not received.
SENATOR GIESSEL remarked that that information gave her "a level
of confidence."
7:18:13 PM
CHAIR TUCK asked whether a bill would be necessary in order for
the department to develop the plan.
COMMISSIONER VINCENT-LANG answered that the department has
developed plans for various disaster relief and does not need a
bill in order to figure out this plan. He reiterated his
support for the idea of a block grant to the state that could be
distributed more quickly.
CHAIR TUCK surmised there may be some legal issues to address
regarding this RPL.
7:19:20 PM
SENATOR GIESSEL related that she serves on the Pacific States
Fisheries Commission and imparted that it sometimes takes two to
three years for the money to pass through the commission. She
expressed appreciation for Commissioner Vincent-Lang's plan for
getting the money to Alaskans more expediently.
7:19:50 PM
REPRESENTATIVE NEUMAN said in prior years it was not uncommon to
request state authority for spending funds in order to shorten
the process. He added, "Doing this seems very similar to that."
7:20:26 PM
SENATOR BISHOP observed that the plan would include many aspects
of fisheries, including subsistence, guided fisheries, and
commercial. He said it is unknown what people will be able to
do in the future, what fishing they will have access to, and
people will need fish stocked in their freezers; therefore, he
asked Commissioner Vincent-Lang to pay close attention to
subsistence users in the fisheries.
COMMISSIONER VINCENT-LANG responded that Senator Bishop is
correct that there is a smaller pot of money dedicated to
subsistence relief that's "maybe going" to the Pacific States
Fisheries Management Commission. He stated that it is his
intent not to forget about that user group. Further, he stated
his intent is to manage the fisheries in a way that will provide
subsistence harvest opportunities so that people can fill their
freezers throughout Alaska this summer.
7:22:18 PM
CHAIR TUCK, after ascertaining there were no further comments
pertaining to RPL 08-2020-0054, made some wrap-up comments. He
remarked that the [RPL] process was being used in an
unprecedented manner. He stated that it is typical for the
chair of the Legislative Budget and Audit Committee to bring
forward only those RPLs that are lawful or made so through
interaction with the Office of the Governor. He indicated that
four of the RPLs would not typically be brought before the
committee, but he did so with the understanding of the urgency
of getting assistance to communities. He said the committee can
let the governor know that it does not want to approve the RPLs
either because "it's something we don't want to see happen" or
because "they're illegal," and the governor can withdraw the
RPLs or "enact around the Legislative Budget and Audit
Committee." He reiterated that there is no way for the
committee to amend the RPLs; it must accept them or not - as is.
7:23:55 PM
REPRESENTATIVE JOSEPHSON emphasized that beyond the attorney
finding these RPLs as being "outside the law," she had said that
"if we didn't act," then the governor's receipt of the funds
would also be outside the law. He said he wrestled hard with
this [issue]. He said it was impressive that the legislature
passed a budget in 68 days, working beyond the emergency
declaration. He reiterated that saying the legislature is not
abdicating its authority does not make it so. He expressed
concerns that with these RPLs, the committee is making the
governor an appropriator, as well. He related that [the House]
learned a lot of things through recent committee hearings that
the administrative branch did not know, including that there are
more targeted ways to reach a bigger audience in this crisis.
He mentioned the methods adopted by the government of the State
of Mississippi.
REPRESENTATIVE JOSEPHSON expressed concern that too much will be
given to local governments that they cannot legally use.
Referring to the disparate amounts designated for small
businesses versus rent relief, he said he thinks it is not fair,
but that that does not mean he does not think the $290 million
should not go to small businesses. He also expressed concern
that "this process is going to grow the power of" the
Legislative Budget and Audit Committee by saying to the rest of
the legislators that if there is no appropriation, the committee
can just determine what the desires of the legislature are. He
said this process is not following the protocol of the committee
approving RPLs for monies already appropriated by the full
legislature.
REPRESENTATIVE JOSEPHSON expressed concern that allowing this
precedent now will, in the future, give free reign for the
governor to come up with RPLs for unrestricted federal monies.
He said if the legislature were to fly back to Juneau and
appropriate the money for these RPLs, then that would be lawful,
but "we are not even doing that." He said in a country where
Alaska already has the model for the strongest governor, he is
concerned that "we've made the governor stronger yet." He
concluded, "I remain profoundly concerned about these RPLs."
7:30:02 PM
REPRESENTATIVE SPOHNHOLZ stated that she would not "stand in the
way of this ... happening" but expressed concerns about a flawed
process. She said the RPL process does not include public
testimony and the vetting process of legislative committees and
both bodies, which she opined always makes a bill better. She
said she was glad that the funds were changed from loans to
grants but said there is "some of this" that doesn't "meet the
mark that's been established." She said there is not enough
money in housing assistance. She mentioned previous remarks by
Senator Wielechowski and a letter to the governor signed by 22
legislators recommending increased funding for housing
assistance. She referred to the previous remark made by Mr.
Butcher that significantly more than $10 billion would be needed
in order to significantly respond to the need and that it costs
four times more to get a homeless person back into housing than
it costs to keep them in housing in the first place. She stated
there is legal jeopardy in the approach being taken by the
committee, which risks the ability to get the funds distributed
properly. She opined that the legislature should ratify right
away to prevent greater consequences for Alaskans counting on
the funds and to ensure the full legislature gives its seal of
approval to ensure both the letter and spirit of the law are
being met.
7:33:02 PM
SENATOR STEDMAN indicated his full support of approving the RPLs
during the current meeting to aid Alaska's citizens. He said
there probably will be other assistance from Washington, D.C.,
and perhaps further refinements coming up, that the committee
would need to address. He added, "But right now, we need to
move the process along."
7:33:50 PM
SENATOR HOFFMAN stated that beyond COVID-19 itself, people are
hurting in other ways; they are not able to pay rent, buy food,
or pay medical bills, and communities are not able to raise
needed revenue. He opined, "The sooner we get these dollars out
on the streets, the better off Alaskans are going to be."
7:34:44 PM
SENATOR WIELECHOWSKI set up a hypothetical situation in which
session was still in progress, the budget was not yet passed,
and the governor decided the people of Alaska could not wait and
began to appropriate funds. He said although the people of
Alaska may cheer that, it would be a clear violation of the
Constitution of the State of Alaska, because the legislature has
the power of appropriation. He asked, "How would that be any
different than what's happening here?" He offered some more
examples where the governor appropriates funds wherever he/she
wishes, including to select communities. He said, "Under this
theory that he can do that, this committee really can't stop
him; he just has to wait 45 days and there goes half a billion
dollars to Wasilla." Senator Wielechowski said that is clearly
unconstitutional and he does not want "to give that sort of
power to one individual in this state," because that is not what
the state's founders "envisioned setting up the appropriation
process." He said he agrees that the people of Alaska are
hurting and need help, and that is why he thinks "we should be
voting on this as an entire legislature in Juneau."
7:36:52 PM
REPRESENTATIVE NEUMAN opined, "The best thing we can do is get
some more cash - this money - into our economies." He said
before the COVID-19 crisis, Alaska was already in a deep
recession, with people leaving the state. He said the federal
government has given $1.25 billion to the State of Alaska, and
the committee is "sitting here fighting about how we can spend
it or if we can accept it." He said he does not think anyone in
the legislature would say that "the appropriations that we have
seen today are not good." He compared this to the budget, which
he indicated no one likes in its entirety but is a compilation
of everyone's opinion. He said while there are guidelines for
the expenditure of the funds, "we are on new ground." He said
he thinks getting the cash into the economy is the best thing to
do. He added, "I know there is a risk in that, there is a risk
in everything that we do. It's why we probably have immunity -
for making the choices that we do - from court." He says he
sees what is going on for businesses, and he doesn't know "the
answer for all their stories" other than to distribute the
money. He concluded, "Local control is the best control."
7:39:46 PM
SENATOR GIESSEL offered her understanding that the people of
Alaska are not only hurting but are also frustrated, because
this is federal money allocated to the State of Alaska "for the
specific purpose of assisting the recovery from this virus, to
sustain communities, small businesses, and our people." She
emphasized that the work of legislators is not a career but is
public service, and she opined that this is an opportunity to
employ that public service by getting these federal funds to
communities. She urged committee members "to set aside our
guard of who gets what credit for appropriating this" and "get
the money to the people of Alaska."
7:41:02 PM
REPRESENTATIVE TUCK stated that he, just as much as anyone in
the room, wants to get the money to the people of Alaska as
expediently as possible. He expressed hope that the RPLs can be
compliant so that there would be no chance for legal challenges,
"especially on the basis of powers." He said he worked hard "to
show people a way that we can go down to Juneau" to address the
federal funds and to ensure that the legislature exercises its
full authority for appropriating the money. He said this did
not happen and the committee is left with no choice but to
address the RPLs.
CHAIR TUCK, before entertaining a motion, told the committee
that - based on the consistent advice from legal counsel - he
would be ruling the motion out of order. He said he would not
do so lightly. He acknowledged that based on the comments
heard, the committee would be approving the RPLs.
7:42:28 PM
SENATOR BISHOP moved that the Legislative Budget and Audit
Committee approve the following RPLs: RPL 08-2020-0250,
Department of Commerce, Community & Economic Development, Direct
Municipal Relief; RPL 08-2020-0251, Department of Commerce,
Community & Economic Development, Small Business Relief; RPL 08-
2020-0260 through 08-2020-0382, Department of Commerce,
Community & Economic Development, Direct Municipal Relief by
Community; and RPL 08-2020-0054, Department of Commerce,
Community & Economic Development, COVID-19 Economic Stimulus for
Alaska Fisheries. He issued the following statement:
Passage of these RPLs represents action taken during
an unprecedented public health disaster. This action
does not represent an abrogation of the Legislature's
preeminent constitutional appropriation [authority].
7:44:00 PM
CHAIR TUCK ruled the motion out of order, based on the advice
from legal counsel that the aforementioned RPLs fall outside of
the scope of the process, as laid out in AS 37.07.080(h).
SENATOR GIESSEL objected.
CHAIR TUCK clarified that a yea vote would uphold the ruling of
the chair, while a nay vote would override the ruling of the
chair and proceed with the motion.
7:45:35 PM
CHAIR TUCK called for a roll call vote, suggested an at-ease,
which was never taken, then voided the roll call vote in order
to offer further clarification. In response to Representative
Neuman, he specified that the vote about to be taken would not
be to approve the RPLs but to uphold or override the ruling of
the chair.
7:46:06 PM
A roll call vote was taken. Representatives Tuck, Josephson,
and Spohnholz voted in favor of the ruling of the chair.
Representatives Foster and Neuman and Senators Bishop, von
Imhof, Giessel, Hoffman, and Stedman voted against it.
Therefore, the ruling of the chair was overridden by a vote of
3-7.
7:47:29 PM
CHAIR TUCK returned to the motion made previously by Senator
Bishop. He summarized that those RPLs addressed Direct
Community Assistance, Small Business Relief, and Fisheries. He
asked whether there was any further discussion. He remarked
that there would be more money coming into the State of Alaska,
and he indicated a desire to see the full body addressing the
appropriation of federal funding, because he thinks "we're in
danger of compounding the problem."
7:48:18 PM
SENATOR BISHOP expressed thanks to all the committee members.
He acknowledged, "It's not easy for anybody, but we're not in
easy times." He spoke of keeping ears and eyes wide open.
7:48:48 PM
CHAIR TUCK brought attention back to the pending motion. He
asked whether there was any objection to the motion. There
being none, he announced that the committee had approved the
RPLs.
CHAIR TUCK expressed his thanks to the committee.
7:49:26 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
[7:49] p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 20-05-11 RPL Packet.pdf |
JBUD 5/11/2020 1:00:00 PM |
|
| 20-05-11 Additional RPLs Packet.pdf |
JBUD 5/11/2020 1:00:00 PM |
|
| 20-05-05 Legal Memo.pdf |
JBUD 5/11/2020 1:00:00 PM |
|
| 20-05-11 Agenda 4pm AMENDED.pdf |
JBUD 5/11/2020 1:00:00 PM |