03/25/2025 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB13 | |
| SB50 | |
| HB133 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 13 | TELECONFERENCED | |
| *+ | HB 133 | TELECONFERENCED | |
| + | SB 50 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 25, 2025
8:03 a.m.
MEMBERS PRESENT
Representative Rebecca Himschoot, Co-Chair
Representative Donna Mears, Co-Chair
Representative Carolyn Hall
Representative Ky Holland
Representative Mike Prax
Representative Justin Ruffridge
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13
"An Act relating to optional municipal property tax exemptions
for certain long-term rental units, certain mobile home parks,
real property rented to low-income families, real property owned
and occupied as a permanent place of abode, and real property
owned by first-time homebuyers."
- HEARD AND HELD
CS FOR SENATE BILL NO. 50(L&C)
"An Act relating to the comprehensive plans of first and second
class boroughs."
- HEARD AND HELD
HOUSE BILL NO. 133
"An Act establishing a 30-day deadline for the payment of
contracts under the State Procurement Code; establishing
deadlines for the payment of grants, contracts, and
reimbursement agreements to nonprofit organizations,
municipalities, and Alaska Native organizations; relating to
payment of grants to named recipients that are not
municipalities; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 13
SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTIONS
SPONSOR(s): REPRESENTATIVE(s) GRAY
01/22/25 (H) PREFILE RELEASED 1/10/25
01/22/25 (H) READ THE FIRST TIME - REFERRALS
01/22/25 (H) CRA, FIN
03/10/25 (H) SPONSOR SUBSTITUTE INTRODUCED
03/10/25 (H) READ THE FIRST TIME - REFERRALS
03/10/25 (H) CRA, FIN
03/25/25 (H) CRA AT 8:00 AM BARNES 124
BILL: SB 50
SHORT TITLE: MUNICIPAL COMPREHENSIVE PLANS: HOUSING
SPONSOR(s): SENATOR(s) DUNBAR
01/17/25 (S) PREFILE RELEASED 1/17/25
01/22/25 (S) READ THE FIRST TIME - REFERRALS
01/22/25 (S) CRA, L&C
02/04/25 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/04/25 (S) Heard & Held
02/04/25 (S) MINUTE(CRA)
02/11/25 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/11/25 (S) Moved CSSB 50(CRA) Out of Committee
02/11/25 (S) MINUTE(CRA)
02/12/25 (S) CRA RPT CS 2NR 2DP SAME TITLE
02/12/25 (S) NR: MERRICK, YUNDT
02/12/25 (S) DP: DUNBAR, GRAY-JACKSON
03/03/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/03/25 (S) Heard & Held
03/03/25 (S) MINUTE(L&C)
03/07/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/07/25 (S) Moved CSSB 50(L&C) Out of Committee
03/07/25 (S) MINUTE(L&C)
03/10/25 (S) L&C RPT CS 3DP SAME TITLE
03/10/25 (S) DP: BJORKMAN, DUNBAR, YUNDT
03/17/25 (S) TRANSMITTED TO (H)
03/17/25 (S) VERSION: CSSB 50(L&C)
03/21/25 (H) READ THE FIRST TIME - REFERRALS
03/21/25 (H) CRA, L&C
03/25/25 (H) CRA AT 8:00 AM BARNES 124
BILL: HB 133
SHORT TITLE: PAYMENT OF CONTRACTS
SPONSOR(s): REPRESENTATIVE(s) HIMSCHOOT
03/12/25 (H) READ THE FIRST TIME - REFERRALS
03/12/25 (H) CRA, STA
03/25/25 (H) CRA AT 8:00 AM BARNES 124
WITNESS REGISTER
REPRESENTATIVE ANDREW GRAY
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented SSHB 13.
SANDRA MOLLAR, Director
Division of Community & Regional Affairs
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on
SSHB 13.
KYLE JOHANSEN, Staff
Representative Andrew Gray
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on
SSHB 13 on behalf of Representative Gray, prime sponsor.
SENATOR FORREST DUNBAR
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented CSSB 50(L&C).
HAHLEN BEHNKEN, Staff
Senator Forrest Dunbar
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for CSSB
50(L&C), on behalf of Senator Dunbar, prime sponsor.
ANNA BRAWLEY, representing self
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on CSSB 50(L&C).
ELLA LUBIN, Staff
Representative Rebecca Himschoot
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for HB 133
on behalf of Representative Himschoot, prime sponsor.
LAURIE WOLF, President/Chief Executive Officer
Foraker Group
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 133.
STEPHANIE BERGLUND, Chief Executive Officer
Thread Alaska
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 133.
CAROLE TRIEM, Government Affairs Manager
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 133.
TOM MAYER, Chief Procurement Officer
Office of Procurement and Property Management
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
133.
ACTION NARRATIVE
8:03:33 AM
CHAIR REBECCA HIMSCHOOT called the House Community and Regional
Affairs Standing Committee meeting to order at 8:03 a.m.
Representatives Ruffridge, Hall, Holland, Himschoot, and Mears
were present at the call to order. Representative Prax arrived
as the meeting was in progress.
HB 13-MUNICIPAL PROPERTY TAX EXEMPTIONS
8:04:34 AM
CHAIR REBECCA HIMSCHOOT called the House Community and Regional
Affairs Standing Committee meeting to order at 8:03 a.m.
Representatives Ruffridge, Hall, Holland, Himschoot, and Mears
were present at the call to order. Representative Prax arrived
as the meeting was in progress.
HB 13-MUNICIPAL PROPERTY TAX EXEMPTIONS
8:04:34 AM
CO-CHAIR HIMSCHOOT announced that the first order of business
would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13, "An Act
relating to optional municipal property tax exemptions for
certain long-term rental units, certain mobile home parks, and
real property rented to low-income families."
8:04:59 AM
REPRESENTATIVE ANDREW GRAY, Alaska State Legislature, as prime
sponsor, presented SSHB 13. He read from the following prepared
remarks [original punctuation provided]:
Thank you Co-chairs Himschoot and Mears and all
members of the C&RA committee for hearing house bill
13 today. What this bill seeks to do is provide tools
to municipalities for tackling a crisis in our state
today that crisis is lack of housing that Alaskans
can afford.
Alaska has faced a sharp rise in home prices over the
past decade. In 2024 state economists reported that
our housing was the least affordable it had been in
two decades. In my home city of Anchorage, the average
price of a single-family home jumped to $524,000 this
fall, a 23% increase from just 4 years ago. Add to
this the increase in mortgage rates, monthly payments
for an average Alaska home have nearly doubled in the
past 4 years.
Statewide, the average price of a new home is
$423,000, which about 70% of Alaskans cannot afford.
The cost of a newly constructed home in Anchorage is
now $683,000, which 86% of Anchorage households cannot
afford.
Along with the sharp increase in home prices, Alaska
has seen a sharp increase in rents. This is due to
several factors. The first is that when homeownership
is not affordable, many renters who previously would
have exited the rental market with the purchase of a
home, are unable to purchase that home. So, they
remain in the rental market indefinitely. As a result,
fewer units are available for young Alaskans entering
the rental market for the first time. A 2024 AHFC
housing survey showed that rental vacancy rates across
the state remain historically low. As the pool of
rental properties shrink landlords face less
competition from other landlords while renters face
more competition from other renters. The free market
drives up rents due to increase in demand with a
decrease in supply. Finally, of course, inflation also
drives rents up. when landlord's operating costs rise,
they pass those costs onto their renters. I think we
can agree that we have experienced significant
inflation over the past few years.
I've identified the problem, House Bill 13 is part of
the solution. This bill incentivizes
more rental properties
of better quality
at lower cost.
It does so by offering OPTIONAL PROPERTY TAX
EXEMPTIONS to municipalities. Alaska municipalities
decide which if any of the following options are right
for them. And they have great discretion in crafting
the exemptions to meet their local needs. Here are the
possibilities:
1. An optional property tax exemption can be offered
to landlords who transition a short-term rental
property to a long-term rental property. This
incentivizes Alaskan properties being leased NOT
BY TOURISTS (as most short-term rentals are used
for) but by Alaskans.
2. An optional property tax exemption can be offered
to mobile home park owners who make major
infrastructure investment in their mobile home
parks. Alaska's mobile home parks are often the
most affordable housing option for our lower-
income families but we know that our mobile
home parks are absolutely not what they used to
be. This would allow municipalities to encourage
major repairs inside the park.
3. An optional property tax exemption can be offered
to landlords who rent to low-income families.
This is self-explanatory. We want landlords who
are willing to rent to low-income families
without overcharging them. HB 13 would allow
municipalities to reward landlords who are doing
the right thing. This particular section of the
bill is still having its language adjusted, and a
CS should be coming forward soon.
4. Finally, number 4, An optional property tax
exemption could be offered for first-time home
buyers as I said in my introduction homes are
very expensive, mortgages have doubled in recent
years, and if we want people to be able to buy
their first homes which I for one do -- we have
to figure out how to help them.
Those are the four different criteria that
municipalities could potentially offer property tax
exemptions for.
The bill does one additional thing and that is it
allows property tax exemptions to be offered for
owner-occupied residential properties only. This
aspect of the bill grew out of a recent proposal by
the Anchorage Economic Development Corporation which
had proposed an Anchorage sales tax that would be used
in part for property tax relief passing HB 13 would
allow that relief to go to residential homeowners
rather than to commercial property owners which was
not the intent of that proposal.
8:10:11 AM
CO-CHAIR HIMSCHOOT sought questions from committee members.
8:10:29 AM
CO-CHAIR MEARS shared through her experience in the Anchorage
Health Department, that she had observed code violations in the
water/sewer infrastructure in mobile home parks that were
expensive to fix. For that reason, mobile home parks struggle
to remain in compliance. She opined that making it affordable
to live in these mobile home communities by bringing them up to
code would be a great option.
REPRESENTATIVE RUFFRIDGE shared his understanding that
currently, changes to this municipal ordinance require approval
by voters in an election, whereas if the bill were to pass,
municipalities would be able to offer exemptions without voter
ratification.
8:12:48 AM
SANDRA MOLLAR, Director, Division of Community & Regional
Affairs (DCRA), Department of Commerce, Community & Economic
Development (DCCED), answered yes, the bill would allow
municipalities to create the exemption without the existing
process.
REPRESENTATIVE RUFFRIDGE asserted that boroughs would not be
granted the authority outlined in Section 1.
REPRESENTATIVE GRAY said he would want to amend the language to
include boroughs.
8:14:44 AM
REPRESENTATIVE RUFFRIDGE shared that the statutory definition of
"dwelling unit" is a place a person sleeps and in reference to
page 1, line 10, suggested that a person could take advantage of
this exemption by converting a one-bedroom short-term rental to
a long-term rental to get the entire house exempted.
REPRESENTATIVE GRAY said he would accept an amendment to the
bill to correct that language.
8:17:13 AM
REPRESENTATIVE HOLLAND asked why sub-subparagraph (ee) would not
require first-time home buyers to occupy the residence they are
purchasing.
REPRESENTATIVE GRAY said he would consider that as a possible
amendment to ensure that people are not buying their first home
and remaining renters; however, he said it is not a common issue
in his community.
REPRESENTATIVE HOLLAND maintained that he had seen renters buy
their first home as an investment property and rent it for cash
flow. He pointed out that the bill might reduce revenues from
property tax at a time when municipalities are struggling
financially. Additionally, if Anchorage were to grow its
economy, he asked how the bill would contribute to available
housing.
REPRESENTATIVE GRAY reiterated that no borough or municipality
would be required to implement these tax exemptions. He stated
that the bill was created at the request of municipalities
specifically the Municipality of Anchorage (MOA) - for the
purpose of incentivizing certain behavior. He spoke to
population decline and the drastic decrease in new construction.
He added that affordable homes are "derelict and falling apart"
and advocated for measures that incentivize the availability of
properties, property improvement, and the construction of new
homes.
8:23:28 AM
REPRESENTATIVE RUFFRIDGE pointed out that any reduction in
revenue would have to be offset by implementing another form of
tax or raising property taxes on eligible homeowners, which
would solve one small problem while creating others. He
expressed concern that the bill might have the opposite effect
of its intended outcome by incentivizing property investment and
short-term rentals. He also stated his concern that it would
circumvent voter oversight.
REPRESENTATIVE GRAY addressed local control and questioned
whether the state should be deciding how Anchorage makes and
spends its money. He reiterated that the Anchorage Assembly
passed a resolution in unanimous support of the bill.
REPRESENTATIVE RUFFRIDGE speculated that the Anchorage Assembly
is in support of the bill because it would give them unchecked
authority [to enact property tax exemptions] without the
approval of the electorate. He expressed concern that property
taxes would increase for individuals who may not qualify for
these exemptions, and that the assembly could do this without
voter approval.
8:28:51 AM
KYLE JOHANSEN, Staff, Representative Andrew Gray, Alaska State
Legislature, on behalf of Representative Gray, prime sponsor,
pointed out that there are 26 other instances in statute that
give municipalities the direct ability to enact the exemptions
beginning on page 1, line 7 of SSHB 13.
8:29:56 AM
CO-CHAIR MEARS opined that explicit language is better for
public process and clarity. She said one limitation on local
government is that the state must allow them to act. She said
the bill would add clarity and give permission for discrete
economic development tools.
REPRESENTATIVE GRAY pointed out that municipalities can already
enact these property tax exemptions in the interest of economic
development without voter approval; however, they cannot provide
blanket property tax relief while excluding commercial real
estate, which the bill would allow for.
8:32:12 AM
REPRESENTATIVE PRAX sought to confirm that there would still be
public hearings on the ordinance change proposed in the bill.
MR. JOHANSEN confirmed that it would go through the public
process.
REPRESENTATIVE PRAX opined that if the public had wanted to
enact these exemptions, they would have voted for it. He shared
his belief that the bill would drive people out of Anchorage.
REPRESENTATIVE GRAY acknowledged Representative Prax's concern,
adding that the bill has been met with "joy" in other areas of
the state with high property tax burdens.
8:35:43 AM
REPRESENTATIVE RUFFRIDGE asked whether there would be a cap on
the exemptions in the bill.
REPRESENTATIVE GRAY said he supports local control so much so
that he would like municipalities and boroughs to set their own
criteria. He reiterated that these tax exemptions would not be
required.
REPRESENTATIVE RUFFRIDGE expressed concern that the bill would
grant authority to a small group of people and asked whether the
sponsor would be amenable to, instead of exempting by ordinance
in sub-subparagraph (aa), exempt by ordinance "adopted by voters
at an election." He maintained his concern that the bill would
set in motion an inequitable approach to government in addition
to taking away people's vote on the matter.
REPRESENTATIVE GRAY stated that Anchorage Assembly members are
elected by the citizens to make decisions in the best interest
of the public. He emphasized that his intention is to
incentivize the availability of higher quality rentals at a
lower cost, not to provide property tax relief.
8:45:03 AM
REPRESENTATIVE RUFFRIDGE asked how the bill would prevent rent
from increasing.
REPRESENTATIVE GRAY said he was still working on crafting the
right language for the low-income property tax exemption, which
would apply if the monthly rent charged to a low-income family
is not more than 30 percent of the median family income. For
properties that are on the verge of qualifying, he explained
that it would be in the landlord's best interest to drop rent by
$100 to qualify for the exemption, thereby putting downward
pressure on rent.
8:47:24 AM
CO-CHAIR HIMSCHOOT referred to sub-subparagraph (bb) and asked
what would qualify as a renovated mobile home park.
REPRESENTATIVE GRAY said the language is intentionally vague to
allow municipalities to define major infrastructure investment.
CO-CHAIR HIMSCHOOT expressed concern that a wealthy person could
buy a dilapidated mobile home park and replace it with a single-
family mansion. She said there needs to be solutions for
upgrading mobile home parks and making the owner's investment
more durable.
REPRESENTATIVE GRAY said the bill would not address that issue,
but it's something to be considered.
8:51:07 AM
REPRESENTATIVE HALL spoke to the differences in each community
with regard to the housing crisis and emphasized the importance
of offering numerous levers to address the home shortage.
According to a 2023 Agnew Beck Consulting study, she reported
that Alaska is in need of 27,500 new housing units over the next
10 years. She asked the bill sponsor to speak to the housing
shortage in Anchorage.
REPRESENTATIVE GRAY said it's a complicated issue because there
are different types of housing. In anchorage, the average
single-family home costs $524,000 and the average new build is
$683,000.
REPRESENTATIVE HALL shared her understanding that any additional
housing would be helpful due to the bottleneck in the market.
REPRESENTATIVE GRAY shared an anecdotal example of an apartment
building complex in his district and the price of recouping
building costs on new construction in Anchorage. He
acknowledged that landlords are in a difficult position as well.
8:56:54 AM
CO-CHAIR HIMSCHOOT announced that SSHB 13 was held over.
SB 50-MUNICIPAL COMPREHENSIVE PLANS: HOUSING
8:57:14 AM
CO-CHAIR HIMSCHOOT announced that the next order of business
would be CS FOR SENATE BILL NO. 50(L&C), "An Act relating to the
comprehensive plans of first and second class boroughs."
8:57:33 AM
SENATOR FORREST DUNBAR, Alaska State Legislature, as prime
sponsor, presented CSSB 50(L&C). He paraphrased the sponsor
statement [included in the committee packet], which read as
follows [original punctuation provided]:
Alaska is experiencing a housing crisis. The people of
our state have been stretched past their limits by
rapidly increasing costs and a scarcity of adequate
housing. Our population is stagnant and rapidly aging.
An exodus of working-age people has left the state
with chronic labor shortages. Housing is a crisis in
every Alaskan community, urban and rural, and every
community needs to be part of resolving it.
SB 50 adds a new section to the statutory description
of first- and second-class boroughs' comprehensive
plans, encouraging the inclusion of a housing
development plan. Title 29 already recognizes the
importance of community planning, with longstanding
requirements for cities and boroughs to adopt and
periodically update comprehensive plans. In the past,
housing has often been considered a general land use
issue, but the topic has reached a degree of urgency
that necessitates its own consideration. This
legislation will prompt boroughs to give specific
attention to the housing needs of their community,
critically examine their housing policies, and engage
the public via the comprehensive planning process.
SB 50 is a way to broaden Alaska's response to the
housing crisis. By prompting discussion, examination,
and strategizing at the local level some challenges
will be resolved without State intervention.
Simultaneously, communities will identify remaining
obstacles and local priorities, which will make any
subsequent State action more effective and efficient.
I urge your support for SB 50 so we can develop
locally driven initiatives to repair Alaska's housing
environment.
9:00:26 AM
HAHLEN BEHNKEN, Staff, Senator Forrest Dunbar, Alaska State
Legislature, on behalf of Senator Dunbar, prime sponsor,
presented the sectional analysis for CSSB 50(L&C) [included in
the committee packet], which read as follows [original
punctuation provided]:
Section 1: AS 29.40.030(a): Adds a new subsection 5 to
AS 29.40.030(a) stating that a housing development
plan will now be one of the components that may be
included in a comprehensive plan. Redesignates the
former subsection 5 as subsection 6.
9:01:00 AM
REPRESENTATIVE HOLLAND spoke to his experience creating the
Hillside district plan in Anchorage and the interplay between
comprehensive plans and district plans. He asked how the bill
would bring light to the importance of district and neighborhood
plans.
SENATOR DUNBAR clarified that the bill only applies to first-
and second-class boroughs, so it would not apply to Anchorage.
He said the bill is a relatively modest reform intended to
maximize local control while still encouraging new construction
and would not address conflicts between district and
comprehensive plans.
9:05:00 AM
ANNA BRAWLEY, representing self, stated her support for SB 50
because it would take action on community needs like housing and
engage with communities to create a clear vision and set clear
goals to achieve it. There is already a process in place for
this function, otherwise known as a comprehensive plan, which
she defined as a big picture, wide ranging plan that serves as a
20-year roadmap for communities. She pointed out that it's
sometimes hard to see how housing fits into these plans, as
housing intersects with many topics while being distinct and
different. Given the challenges Alaska faces, [housing]
deserves local attention and local solutions. She shared her
experience as a planning consultant and gave the example of the
City of Valdez's comprehensive plan update, which identified
housing as a top priority.
9:08:29 AM
CO-CHAIR HIMSCHOOT announced that CSSB 50(L&C) was held over.
HB 133-PAYMENT OF CONTRACTS
9:08:43 AM
CO-CHAIR HIMSCHOOT announced that the final order of business
would be HOUSE BILL NO. 133, "An Act establishing a 30-day
deadline for the payment of contracts under the State
Procurement Code; establishing deadlines for the payment of
grants, contracts, and reimbursement agreements to nonprofit
organizations, municipalities, and Alaska Native organizations;
relating to payment of grants to named recipients that are not
municipalities; and providing for an effective date."
9:08:56 AM
The committee took an at-ease from 9:08 a.m. to 9:10 a.m.
[Co-Chair Himschoot passed the gavel to Co-Chair Mears.]
9:10:26 AM
CO-CHAIR HIMSCHOOT, as prime sponsor, introduced HB 133. She
paraphrased the sponsor statement [included in the committee
packet], which read as follows [original punctuation provided]:
House Bill 133 seeks to ensure timely payment from the
State of Alaska to parties that provide essential
support under state agreements. The State relies on
nonprofits, municipalities, and tribal organizations
to deliver critical services to Alaskans. Delayed
payments create financial hardships, disrupt crucial
resources, and threaten the financial stability of
service providers statewide for years. HB 133 aims to
bring prompt payment for nonprofits, municipalities,
and tribal organizations that rely on state funding in
their grants, contracts, and reimbursements. This
measure ensures both state and federal pass-through
funds are disbursed promptly to these parties, which
benefits the Alaskans they serve.
Currently, there is no mechanism in place to ensure
prompt payment to nonprofits, municipalities, and
tribes. HB 133 would levy penalties and interest
against the state when payments are delayed. HB 133 is
modeled after AS 36.90.200, which requires the State
of Alaska to pay private-sector contractors performing
construction or public works activities in a timely
manner, including imposing penalties for non-
compliance and interest on late payments. This
reimburses the contractor for opportunity costs or
additional burdens experienced. HB 133 would bring
parity in the payment system to nonprofits,
municipalities, and tribes.
The lack of payment parity is a long-standing,
systemic issue. It affects entities across the state
for payments of all sizes, with delays between three
months to over a year. The impacts are wide-ranging.
For some organizations, delayed payments threaten the
continuity of programs and services, leaving
organizations to pause operations, tap into reserves,
pursue lines of credit, or reduce staff until payments
are received. Municipalities have reported that
delayed payments affect payroll, project funding,
insurance renewals, and critical infrastructure
investments. For tribes and nonprofits, the risk is
even greaterdelayed payments directly impact
vulnerable populations who rely on consistent, high-
quality care and support. The state's failure to pay
in a timely manner not only harms these organizations
but also increases long-term costs due to interest,
lost investment returns, and administrative
inefficiencies.
Prompt payment is a fundamental principle of fair
contracting. Ensuring prompt payments will strengthen
partnerships between the state and the organizations
that serve Alaskans. This legislation will increase
transparency, implement penalties for late payments,
and streamline reimbursement processes. House Bill 133
ensures that funds are distributed efficiently,
equitably, and on time, and upholds the state's
commitment to those who work tirelessly on behalf of
our communities.
9:14:48 AM
ELLA LUBIN, Staff, Representative Rebecca Himschoot, Alaska
State Legislature, on behalf of Representative Himschoot, prime
sponsor, presented the sectional analysis for HB 133 [ included
in the committee packet], which read as follows [original
punctuation provided]:
Section 1 amends AS 36.30 by adding a new section
requiring a state agency to promptly pay a contractor
for satisfactory service. Criteria are established for
acceptable delays in payment and the protocol related
to alerting a contractor to the reason for this delay.
This section provides several timelines for the
accruement of interest on late payments: a late
payment will begin to accrue interest on the thirty-
first calendar day after invoice, and a reasonably
delayed payment will begin to accrue interest on the
twenty-first calendar day after resolution on the
contract has been found.
Section 2 amends AS 36.30 article 4 by adding a new
section to include the prompt payment of grants and
reimbursements for nonprofit organizations,
municipalities, and Alaska Native organizations.
Timelines delineating the accruement of interest on
late payments for state funds and federal pass-through
funds are
established, as are acceptable delays in payment and
the protocol for noticing as such. An agency has
twenty one calendar days from invoice to pay without
interest penalty if using federal pass-through funds
and thirty calendar days from invoice to pay without
interest penalty for all other funds. This section
also defines the terms used throughout this bill.
Section 3 amends AS 37.05.316 by adding a new
subsection (d) which requires a state agency to pay at
least twenty percent of the grant amount within 10
days. This section also specifies how the rest of the
grant must be paid out to a named recipient.
Section 4 provides an immediate effective date for
this measure.
9:17:09 AM
CO-CHAIR MEARS opened invited testimony.
9:17:21 AM
LAURIE WOLF, President/Chief Executive Officer, Foraker Group,
gave invited testimony on HB 133. She said the state relies on
its partnership with the Foraker Group to deliver services
through grants, contracts, and reimbursements; however, the
partnership is broken when it comes to money. Because of the
current process, the Foraker Group is asked to report on money
that has not been received in order to stand in line for the
next payment that will also be delayed. Importantly, this money
has been approved by the legislature, she noted. She explained
that prompt payment must be followed when conducting
transactions with for-profit businesses, as directed by AS
36.90.200; unfortunately, this rule does not apply to
municipalities, nonprofits, and Tribal organizations. She said
the Foraker Group's goal is to ensure that the state is
efficient and that the work organizations provide to Alaskans is
predictable, stable, and available. After surveying Alaska
organizations to demonstrate the severity of the issue, top
impacts of delayed payments include cash flow issues,
operational delays, increased administrative burdens,
uncertainty and financial planning challenges, negative impacts
on staff, strained relationships, and impact on program
continuity. Delayed payments also directly impact economies
around the state because nonprofits cannot pay their bills to
other for-profit and nonprofit vendors. She clarified that the
purpose of HB 133 is to establish a foundation for moving
forward based on prompt payment parity, along with incentives
for timely payments just like the private sector. She
encouraged members to consider the bill favorably.
9:22:11 AM
REPRESENTATIVE RUFFRIDGE, referencing the Foraker Group's
written testimony [included in the committee packet], asked how
many dollars would fall into the category of "behind by thirty
days" in the nonprofits represented by the Foraker Group.
MS. WOLF explained that every department has its own system, so
it's difficult to account for all delayed payments. She added
that the Foraker Group has been asking for the total amount of
delayed payments for many years.
9:24:10 AM
STEPHANIE BERGLUND, CEO, Thread Alaska, gave invited testimony
paraphrased the following written remarks [included in the
committee packet]:
Thread is Alaska's statewide child care resource and
referral organization. We are a private 39-year-old
nonprofit serving families, early educators, early
childhood education programs, businesses and
communities across the state all to increase access
to affordable and high quality child care.
Thread is a grantee of the State, receiving most of
our organizational funding from the State Department
of Health and the State Department of Education and
Early Development. We are proud to be close partners
with the State's early childhood offices regularly
working to execute projects and grants that support
the child care sector, including the distribution of
millions in COVID-19 Relief funds. thread strongly
supports House Bill 133 and Senate Bill 129. As an
organization that relies on State funding to provide
services, pay parity is critical to ensure services
are delivered timely and with intent to meet the
required grant/contracted scopes of work. While we
have seen some important improvements at the
Department of Health, we continue to encounter
significant delays and uncertainty surrounding
payments and reimbursements from the State of Alaska.
Overall, there is inconsistency in how Departments
issue, approve, disperse and pay for
granted/contracted services. This includes
irregularity in following agreement timelines. The
lack of payment parity has been a growing issue and
has persisted across multiple administrations,
affecting organizations statewide including thread
clients.
Many of the child care programs we work with have also
experienced the negative impact of these
inconsistencies and delays. Child Care Assistance
Program payments are issued monthly, and when those
payments are delayed, it creates financial strain on
the small margins that many child care small
businesses operate on. The cost of leases, utilities,
and wages are fixed expenses, regardless of when
reimbursements are processed. Payment delays put the
sustainability of these programs at risk, compromising
the high-quality services they provide to families and
early educators across the state.
HB 133 and SB 129 address a long-standing inequity by
ensuring that nonprofits, municipalities, and tribal
organizations receive timely payments for essential
work. These bills would bring payments to nonprofit
partners in line with the existing statutory
protections for private contractors, ensuring that
critical funding is distributed as intended and
without unnecessary delays. Resolving this issue is
essential to Alaska's nonprofit sector and ensuring
that we continue to effectively serve our communities.
We strongly urge you to prioritize the passages of HB
133 and SB 129 to allow nonprofits like thread to
continue our vital work without the financial
instability caused by delayed payments. Thank you for
your leadership on this issue and your commitment to
supporting Alaska's families and communities.
9:28:21 AM
CAROLE TRIEM, Government Affairs Manager, Alaska Municipal
League (AML), gave invited testimony on HB 133. She explained
that all of AML's 165 members receive payments from the state
either through grants or pass through of federal funds. For
many members, Community Assistance is the most important of
those programs, which remits payments from the state to local
governments, and for several dozen communities, represents
between 40-90 percent of their annual budgets. In communities
without large tax bases, municipal resources are depleted or
stretched thin by the end of the year and local government
operations will sometimes shut down as they wait for new revenue
to come in, which makes prompt payments very important. Without
timely payments, cities face cash flow issues and problems
making payroll, and the delays may cause extra costs in
contracts and purchases. The city of Toksook Bay, for example,
reported that delays in Community Assistance payments resulted
in higher insurance costs due to interest penalties after missed
payment deadlines. She listed other programs through which
communities receive payments from the state.
9:31:47 AM
REPRESENTATIVE RUFFRIDGE highlighted the Department of
Administration's (DOA) zero fiscal note and sought to verify
that the department could implement this bill at zero cost. In
addition, he asked how the interest would be paid and whether
the bill would require that interest be paid.
CO-CHAIR HIMSCHOOT said if the state makes prompt payment there
would be no added expense. She said the desire is for the state
to get out and stay out of arrears with nonprofits, Tribes, and
municipalities. She offered to follow up on the query about
interest payments.
REPRESENTATIVE RUFFRIDGE referred to AS 45.45.010, which
according to the court, does not actually prescribe interest on
anything despite seemingly intending to do so. He asked whether
each department would need to submit a fiscal note to explain
how this goal would be accomplished.
CO-CHAIR HIMSCHOOT pointed out that if all departments were to
provide timely payments, the fiscal note would be zero. With
regard to interest, she said the bill would not change state
requirements when partnering and providing funds to another
private or nonprofit entity.
9:36:56 AM
REPRESENTATIVE RUFFRIDGE asked whether interest had been paid on
late payments for other contractual arrangements and if so,
whether it was 10.5 percent.
CO-CHAIR HIMSCHOOT said she did not know the answer and had been
trying to find that information. She contemplated where the
funding for the extra payment would come from and offered to
follow up with the requested information if there are concrete
examples of late payments.
9:38:08 AM
REPRESENTATIVE HOLLAND expressed appreciation for the bill and
highlighted the importance of Section 3. He recommended
clarifying that payments are not automatic and that civic
organizations must be compliant within the payment system and
submit proper documentation.
CO-CHAIR HIMSCHOOT sought to confirm that Representative Holland
was suggesting that Section 3 should further clarify that
certain benchmarks must be met.
REPRESENTATIVE HOLLAND said he was looking for clarification
that checks would not be automatically sent without the
recipient setting themselves up for payment.
CO-CHAIR HIMSCHOOT shared her understanding that those steps are
inferred but could be made explicit.
9:43:00 AM
REPRESENTATIVE PRAX suggested that the administration should
speak to why they cannot do this without direction from statute
and asked whether the committee would be hearing from
departments.
CO-CHAIR HIMSCHOOT said the problem is widespread and
longstanding and has spanned multiple administrations. She
offered to reach out to department leadership for further
insight.
9:46:01 AM
REPRESENTATIVE RUFFRIDGE referenced the pie chart on a handout
from the Foraker Group [included in the committee packet] and
questioned why the percentages total 128 percent, not 100
percent. He said it can't be assumed that payments would be
made on time and expressed his hope that further conversations
with departments, particularly the Department of Education and
Early Development (DEED) and the Department of Health (DOH),
would be had.
CO-CHAIR HIMSCHOOT deferred to Ms. Wolf.
9:49:54 AM
MS. WOLF said the data is a point in time survey from summer
2024, and not meant to be a representative sample of all 5,600
nonprofits within the state. Similarly, the pie chart
represents organizations' responses and is not meant to add up
to 100 percent. She said she hoped the takeaway is that the
problem is systemic and therefore, a systemic solution is
needed.
9:51:59 AM
TOM MAYER, Chief Procurement Officer, Office of Procurement and
Property Management, Department of Administration (DOA),
confirmed that the dollar impact would be minimal because only a
few forms would need to be modified. He said the Office of
Procurement and Property Management does not process or pay
bills, and that invoices are generally approved by project
managers.
9:52:53 AM
REPRESENTATIVE RUFFRIDGE asked how many grant payments to
nonprofits the Office of Procurement and Property Management is
responsible for.
MR. MAYER said his office establishes multi-agency contracts for
things like office supplies that all agencies use. He explained
that the procurement office does not track payments to allow for
a separation of powers that avoids the responsibility of both
procuring something and approving the payment for that thing.
REPRESENTATIVE RUFFRIDGE asked why then, DOA wrote a fiscal note
for the bill.
MR. MAYER answered, "We were required to write a fiscal note,
and in our case, for my particular section, there was no dollar
cost to it. All we can do is modify forms."
9:54:40 AM
REPRESENTATIVE PRAX asked who is responsible for making and
tracking the payments.
MR. MAYER suggested the accounting team for each department.
9:55:50 AM
REPRESENTATIVE HOLLAND commented that he's stunned that the
procurement process is not tracking payments to contractors.
REPRESENTATIVE PRAX commented that in addition to nonprofits,
employees are not getting paid. He stressed the need to speak
with each department face to face to resolve the issue.
9:57:39 AM
CO-CHAIR HIMSCHOOT reiterated that her intention with HB 133 is
to solve a problem and set a performance standard that is on par
with private contractors.
CO-CHAIR MEARS announced that HB 133 was held over.
9:58:37 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:58 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 13 Sponsor Statement version N.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 version I (CS SS HB 13 (CRA)).pdf |
HCRA 3/25/2025 8:00:00 AM |
HB 13 |
| HB 13 version N (SS HB 13).pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 version A.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Summary of Changes (version A to N to I).pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Sectional Analysis version N.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Fiscal Note - DCCED-DCRA 3.21.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Anchorage Assembly Feb 2025 Resolution of Support.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Dwelling Unit Definition.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Federal low-income family definition and Link.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |
| HB 133 Sponsor Statement - Version G.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 - Version G 3.8.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 Sectional Analysis - Version G.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 Fiscal Note - DOA-OPPM 3.21.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM |
HB 133 |
| HB 133 Testimony - Received by 3.24.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM |
HB 133 |
| SB 50 Sponsor Statement version I.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 Version I 3.10.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 version N SCRA CS.pdf |
HCRA 3/25/2025 8:00:00 AM |
SB 50 |
| SB 50 version A.pdf |
HCRA 3/25/2025 8:00:00 AM |
SB 50 |
| SB 50 Explanation of Changes version A to version I.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 Sectional Analysis version I.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| SB 50 Testimony - Received as of 3.24.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/1/2025 8:00:00 AM |
SB 50 |
| HB 133 Research - Impact of Delayed Payment.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 3/27/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM HCRA 4/8/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM |
HB 133 |
| HB 133 Testimony - Prompt Payment Resolution -FINAL 3.25.25.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/3/2025 8:00:00 AM |
HB 133 |
| HB 13 Additional Documents-Girdwood Valley Service Area Board of Supervisors Letter of Support.pdf |
HCRA 3/25/2025 8:00:00 AM |
HB 13 |
| HB 13 Additional Documents-Anchorage Bill of Rights.pdf |
HCRA 3/25/2025 8:00:00 AM HCRA 4/10/2025 8:00:00 AM HCRA 4/22/2025 8:00:00 AM HCRA 4/24/2025 8:00:00 AM |
HB 13 |