Legislature(2017 - 2018)HOUSE FINANCE 519
03/07/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB57 || HB59 | |
| Amendments: Language | |
| Amenmdents: All Remaining Items | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 57 | TELECONFERENCED | |
| += | HB 59 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 7, 2017
1:38 p.m.
1:38:40 PM
CALL TO ORDER
Co-Chair Seaton called the House Finance Committee meeting
to order at 1:38 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Dan Saddler; Representative Lora Reinbold;
Representative Jennifer Johnston.
SUMMARY
HB 57 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 57 was HEARD and HELD in committee for further
consideration.
HB 59 APPROP: MENTAL HEALTH BUDGET
HB 59 was HEARD and HELD in committee for further
consideration.
Co-Chair Seaton addressed the agenda for the afternoon.
HOUSE BILL NO. 57
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; repealing appropriations; making
supplemental appropriations and reappropriations, and
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
HOUSE BILL NO. 57
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; repealing appropriations; making
supplemental appropriations and reappropriations, and
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
1:38:40 PM
^AMENDMENTS: LANGUAGE
1:39:28 PM
Co-Chair Seaton addressed the departments in the language
section. He reminded the committee that backup documents
from Legislative Legal Services were included in the
packet.
1:40:10 PM
AT EASE
1:41:16 PM
RECONVENED
Co-Chair Foster MOVED to ADOPT Amendment L H HSS 49 (copy
on file):
Juvenile Justice
Nome Youth Facility
L H HSS 49 - Contingency funding to keep the NYF open
unless DHSS determines that closing it reduces costs
Offered by Representative Foster
30-GF1855U.21 Wallace 3/6/17
Add contingency language appropriating $1,693.9 of UGF
to keep the Nome Youth Facility open unless DHSS
determines that the cost of closing the Nome Youth
Facility is equal to, or exceeds, the cost of keeping
it open.
Representative Wilson OBJECTED.
Co-Chair Foster read the amendment description [see above].
He elaborated that the prior year the funds had been
addressed in the committee process; funds had been removed
and added back into the budget. However, the governor had
not included funding in his proposed budget for the
upcoming year. The amendment added contingency language
specifying the legislature would continue to appropriate
needed funds unless the department found it was more cost-
effective to close the facility.
Representative Wilson was confused by the amendment. She
believed language amendments were typically aimed at
getting something done that did not have a dollar amount.
She surmised that if closing the facility would mean it
would cost more than $1.693 million and it would mean the
expense would be included elsewhere in the budget. She
asked about the plan for the youth if the Nome facility
closed. She asked if the funding would be sufficient to
shift back to the Nome youth facility to keep it open.
Co-Chair Foster answered that $2.6 million was currently
budgeted for the facility. The governor had left $1 million
in his proposed budget to transport youth back and forth
from Nome to another location such as Mclaughlin Youth
Center [in Anchorage], Bethel, or Fairbanks. The amendment
specified that if it looked like costs to the department
would exceed $1.6 million (for services such as
transportation and cultural programs), the Nome youth
facility would be allowed to remain open with those funds.
Representative Wilson understood that $1 million remained
in the budget for travel. She restated Co-Chair Foster's
statement that $2.6 million had been removed by the
governor. She asked if the language meant that $693,900
would have to come from other facilities in order to
complete the funding.
1:45:32 PM
Co-Chair Foster explained that $2.6 million was the total
budget; of that amount $1 million remained [in the current
budget], which meant there was a deficit of $1.6 million.
The department would need to prove that it could provide
the alternative for less than the $2.6 million. He reasoned
the Nome facility should be kept open if the cost exceeded
that amount. He believed other things had not been factored
in such as culturally relevant programs and work programs
offered in the Nome facility that were not offered in other
locations. He explained that the Nome facility should
remain open if it turned out it would cost more to
transport the youths. He added that in order to close the
facility the department would have to determine it would be
cheaper to close the facility.
Representative Wilson spoke to her understanding that the
current budget contained $1 million for the transportation
of youths from Nome to facilities in other locations and
back. She stated there was not currently $1.6 million
designated toward Nome. She surmised that because other
services would still be offered, potentially all of the
costs could be pooled together. She was trying to ensure
the amendment would not remove funding from another youth
facility. She wondered if the amendment had any "teeth"
requiring the department to find $1.6 million and keep the
facility open if it merely contained contingency language.
She remarked that closing the facility may "be more, but
it's actually in the other facilities that are open." She
was concerned about short-handing other facilities by
keeping the Nome facility open. She wanted to verify
"whether or not we're actually making them [DHSS] look for
it, or the budget stays the same, they can just reallocate
it over here if they want to, to keep it open."
1:48:39 PM
Co-Chair Foster answered that the amendment would not take
money from any other youth facilities such as Mclaughlin,
Mat-Su, Kenai, and Fairbanks. The amendment would be the
addition of a UGF increment. He detailed that the facility
should remain open if it turned out it would cost more than
$2.6 million to close the facility.
Vice-Chair Gara believed the amendment read incorrectly. He
believed the word "unless" on the second line should be
"if." He stated the goal was to keep the Nome Youth
Facility open if closing it would cost more.
Co-Chair Foster agreed.
Vice-Chair Gara considered offering an amendment to
Amendment H HSS 49.
1:50:18 PM
AT EASE
1:51:30 PM
RECONVENED
[Note: it was determined the amendment language was
correct; therefore, the conceptual amendment was not
offered.]
Representative Thompson commented that the youth from Nome
would be transferred to another youth facility in the
state. He asked if there were provisions in the Department
of Health and Social Services (DHSS) budget to cover the
cost of the additional kids who would be added to another
facility. He wanted to ensure they were not putting burden
on other facilities that did not have sufficient funding to
care for additional youths.
Co-Chair Foster answered that currently the Mclaughlin
Youth Center was at 102 percent capacity. The intent had
been to transfer kids from Nome to Mclaughlin. He reasoned
that there may be times where some openings were available,
but there may not be. He continued that if the youth were
only transferred to Mclaughlin, the center may have to open
up a wing that had previously been closed, which would
increase costs. He added that Mclaughlin also used Kenai
and Mat-Su as overflow.
Representative Thompson thought it meant there would be
increased costs elsewhere. He asked if the cost would be
part of the $1.6 million that would be a benchmark for
whether money was being saved or not.
Co-Chair Foster replied that thus far the costs included in
the governor's $1 million were travel, detention (for
instances when weather prevented travel), the trials in
Nome, and other. There were other costs that had not
initially been figured in for a whole list of programs
offered related to cultural identity (e.g. subsistence
related programs) that were not offered at a facility like
Mclaughlin. At present, a dollar amount had not been
determined on the items. The amendment would give the
department time to quantify the issues. He concluded that
if it turned out the Nome facility cost more to keep open,
the facility would be closed; however, if it was more
expensive to close the facility, it would remain open.
1:54:37 PM
Representative Thompson asked if there was a deadline on
when the department's study had to be complete. He asked if
the determination would be made by June 30 [2017].
Co-Chair Foster answered that he had asked the department
to review the issue, but a date had not been set. He
explained that the contingency specified that if DHSS could
not prove shutting down the facility would save the state
money by the time the budget was passed by the legislature
on April 17, the money would be appropriated.
Representative Wilson WITHDREW her OBJECTION. There being
NO further OBJECTION, Amendment H HSS 49 was ADOPTED.
1:55:53 PM
Vice-Chair Gara MOVED to ADOPT Amendment L H DBT 8 (copy on
file):
Debt Service
School Debt Reimbursement
L H DBT 8 - Restore School Debt
Reimbursement amount to FY18 Gov Requested amount
Offered by Representative Gara
Reference: 30-GH1855U.7.
This amendment restores School Debt Reimbursement to
the Governor's FY 18 level of $115,956.6. Please note
corresponding REAA amendment 30-GH1855U.8.
Representative Wilson OBJECTED.
Vice-Chair Gara reviewed his amendment that would restore
the statutory school debt reimbursement the state owed to
the full amount. He noted the statutes were always subject
to appropriation. He detailed that about one week earlier
the committee had considered the idea of saving funds by
reducing state money going to school debt reimbursement.
However, he believed the committee had heard clearly from
the public that the reduction would hit local communities
harder than he would like. He furthered that Anchorage and
Fairbanks had tax caps and if they had to absorb the costs,
they would have to find something else to cut in their
local budget such as police or other. He believed public
testimony had been convincing that the full amount should
be restored.
Representative Wilson testified in opposition to the
amendment. She stated that any time cuts were made it would
be hard. She believed that unfortunately the state could
not keep taking on the responsibility. She had told her
constituents that the 70/30 or 60/40 percent split on bonds
was not guaranteed. She advised constituents to be prepared
for 100 percent. She shared that Fairbanks had bonded at
100 percent since there had been a moratorium - the
community had decided it was important enough (even if it
had to foot the bill) to "be able to do this." She stated
that the Fairbanks North Star Borough did not have police.
She explained that the City of Fairbanks had police, but it
would not affect city police because it would be a borough
debt. She knew there had been questions about whether
people would prefer a cut to the school bond debt
reimbursement or to the Base Student Allocation (BSA). She
reasoned that at this point anything would take some
adjustments. She clarified that the reduction to the bond
reimbursement did not constitute a broken promise by the
legislature. She continued that the state had been lucky
enough to have enough revenue to keep the 70/30 or 60/40,
but she believed most municipalities knew that the funding
was by appropriation.
1:58:56 PM
Representative Pruitt spoke against the amendment. He was
challenged with voting on the current amendment prior to
voting on a BSA discussion. He thought there was an
understanding the committee had already indicated by voting
to include the reduction to the bond reimbursement that
something different would have to be done with education in
the current year. He stated he thought there was more to be
done beyond funding, but it would not happen through the
budget bill. He disagreed with specifically going after the
bond debt reimbursement - various communities had handled
the issue differently. He remarked that "this is kind of
focused in on specific communities just because they're the
ones that it deals with." He believed the legislature had
to do something and would have to reduce, but he believed
it was probably better to do it through the BSA mechanism
rather than the debt mechanism. However, because he had not
been able to vote on the BSA component as of yet, he would
vote against the current amendment. He did not want to
double up and remarked that based on the outcome of a vote
on the BSA, perhaps the bond reimbursement could be
reconsidered.
Representative Thompson echoed the sentiment of the
previous speaker. He did not want to see both items
prevail. He thought it may need to be addressed on the
House floor in order to ensure the right mix was
established. He disagreed with not funding the school bond
debt; however, he would vote against the amendment.
2:01:31 PM
Vice-Chair Gara appreciated the comments that individuals
were trying to save money. He referred to one comment that
if the legislature followed statutory formula and provided
the funding to schools for bond debt reimbursement that
classroom funding should be cut instead. He did not agree
with cutting school funding. He detailed that schools were
roughly $30 million behind where they had been two years
earlier. He believed that at some point it was necessary to
move the state forward and provide a state where people
wanted to raise their children. He believed the legislature
should pay the statutory formula - the state's payment of
$48 million to help towards school debt reimbursement.
2:02:35 PM
Representative Wilson MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Gara, Grenn, Guttenberg, Kawasaki, Foster,
Seaton
OPPOSED: Pruitt, Thompson, Tilton, Wilson
The MOTION PASSED (7/4). There being NO further OBJECTION,
Amendment L H DBT 8 was ADOPTED.
2:03:31 PM
Representative Ortiz WITHDREW Amendment L H DBT 9 (copy on
file).
2:03:50 PM
AT EASE
2:04:17 PM
RECONVENED
Co-Chair Seaton MOVED to ADOPT Amendment H SAP 18 (copy on
file):
Language Amendments
L H SAP 18 - Reinsurance program
Offered by Representative Seaton
See 30-GH1855U5, Wallace, 3-2-17
This amends sec. 10(g) and (h) in HB 57, version U.
The Department of Commerce, Community, and Economic
Development, Division of Insurance, has applied for a
federal waiver of Section 1332 of the Patient
Protection and Affordable Care Act. If this waiver is
approved, federal funding may become available in an
amount equal to the federal savings from lowered
insurance premium subsidies for eligible Alaskans.
Approval of the waiver is expected before June 30,
2017. Funding from the Alaska Comprehensive Health
Insurance fund would continue to be required to
reinsure Alaskans who were not eligible for federal
subsidies.
The change to subsections (g) and (h) extends the time
period of this Reinsurance Program appropriation from
the calendar year 2018 program to the calendar years
2018 through 2022 programs to match the term of the
waiver.
New subsection (i) adds expenditure authorization for
federal receipts that may become available in fiscal
year 2018 with the approved waiver for the calendar
year 2018 Reinsurance Program. The federal waiver will
be for a five-year period; however, future receipts
cannot be obligated in the state budget so additional
federal receipt authorization will be requested in
future years for the annual receipt collections.
New subsection 31(c) makes these appropriations
contingent upon federal approval of the Section 1332
waiver. This contingent language is required for
eligibility for the federal waiver because it makes
Alaska's program budget-neutral for the federal
government.
Representative Wilson OBJECTED.
Co-Chair Seaton reviewed his amendment related to health
insurance program. The amendment adjusted the appropriation
Sections 10(g) and (h) in HB 57, the name of the
reinsurance program to conform to legislative drafting
style, and Section 10(h) to match the timing of the
reinsurance program federal waiver. The amendment would add
federal receipt authority for funds from the waiver and
added a contingency section for the appropriations pending
approval of the waiver. The change would extend the current
calendar year 2018 appropriation made in Section 10(h) to
cover the term of the federal waiver through calendar year
2022 (FY 23). The amendment would also add federal receipt
authority for receipts collected in 2018 and allowed them
to be spent over the lifetime of the waiver. He continued
that since future receipts could not be obligated, the
department anticipated requesting federal authorization in
the state budget annually for the term of the waiver. The
amendment would also add contingency language for
appropriations pending federal approval of the waiver. The
federal government required the contingency so the waiver
would be neutral for its budget. Without the language
federal funds would not be available. Federal funds for the
calendar year 2018 program were estimated at $48 million.
The amendment would back up the reinsurance program - the
Alaska Comprehensive Health Insurance Association (ACHIA)
amount that had been passed to reduce the individual market
for the 7.5 percent increase instead of the 48 percent
increase in the health insurance program.
2:06:47 PM
Representative Wilson discussed that the legislature had
put $55 million into the program the previous year. She
asked if there was another appropriation in the current
year budget for the program. Alternatively, she asked if
the amendment pertained to utilizing the $55 million from
the previous year.
Co-Chair Seaton answered that it was the $55 million that
with federal waiver approval would be spread over five
years ($11 million per year) instead of the $55 million in
state funding that would be needed annually if the state
did not receive the federal waiver of $48 million.
Representative Wilson asked for verification that the
amendment would also allow federal funds to be accessible
without coming back to the legislature. She commented that
the state was basically taking on what the federal
government probably should have been doing through its
program. She added that the department would also have the
ability to utilize the funds without having to come back to
the legislature for approval.
Co-Chair Seaton agreed. He detailed there would be federal
receipt authority for $48 million matching with about $11
million in state funds to achieve the program reductions
with the intent of maintaining a health insurer within the
state.
Representative Wilson WITHDREW her OBJECTION.
There being NO further OBJECTION, Amendment L H SAP 18 was
ADOPTED.
2:09:08 PM
Co-Chair Seaton MOVED to ADOPT Amendment L H SAP 19 (copy
on file):
L H SAP 19 - Deposit the FY18 ASLC Dividend into the
General Fund
Offered by Representative Seaton
See 30-GH1855U.3, Wallace, 3-2-17.
This amendment deposits the Alaska Student Loan
Corporation FY18 dividend of $1.2 million into the
general fund and also deactivates the ASLC Dividend
fund code (1150, which is classified as UGF) so the
dividend is spent as UGF (code 1004). There is no
impact on UGF spending and no loss of information
caused by this amendment.
Representative Wilson OBJECTED.
Co-Chair Seaton explained the amendment that would move the
Alaska Student Loan Corporation (ASLC) dividend into the
General Fund.
Representative Pruitt asked about the policy shift. He
wondered why a separate fund had been created. He queried
what had been drawn from the fund in the past. He
understood there was no impact in undesignated general
funds (UGF). He wondered how the amendment shifted the
payment process and about the reasoning behind the proposal
to eliminate the fund code.
Co-Chair Seaton explained the fund code was obsolete and
not tracked. He detailed the fund code was merely
"something else sitting on the books" used to deposit the
money into; however, it was not used for anything else. The
dividend was spent as UGF. He detailed that the amendment
provided language to clean up fund codes for clarity and to
eliminate confusion about whether the funds were UGF or
DGF. He concluded it was better off in the UGF category,
which was all the amendment would accomplish.
Representative Wilson understood the amendment would
eliminate the [ASLC] fund; however, it had been her
understanding that the $1.2 million ASLC dividend was the
first dividend in a long time, if ever.
Co-Chair Seaton replied that he believed it was the first
[ASLC] dividend in "a while," but he believed there had
been dividends in the past.
Representative Wilson asked if the $1.2 million dividend
was derived from interest on higher education loans
Alaskans had taken out.
Co-Chair Seaton answered that the amount came from proceeds
from the ASLC, most of which was derived from interest on
the debt paid. He detailed that interest rates were
calculated at a period in time. The funds were collected
over time - sometimes the number was higher and other times
it was lower. He explained that when the state received
more money a dividend could be paid into the General Fund
to help offset the existing budget deficit.
Representative Wilson believed the money was coming from
Alaskans who had taken out a loan. She wondered if there
was a mechanism to lower the rates for student loans
instead of generating a dividend to the state. She wanted
to make sure the state was not charging more for student
loans than was necessary.
2:13:37 PM
Co-Chair Seaton did not know the exact statutory
construction, but normally people borrowed money and paid
an interest rate. He furthered that no matter what the
competitive interest rate was at the time, the borrower
paid the interest rate set at the time they borrowed the
money. He reasoned that the excess funds had been generated
and could help offset a portion of the budget deficit. He
did not know of any mechanism in place that would
automatically lower people's interest rates if current
interest rates were lower. He added it was generally an
application process if it existed.
Representative Wilson stated she would look into whether
there was a mechanism to adjust current student loans so
that the state was not making it harder for Alaskan
students to pay back their loans. She wondered how the
issue would be tracked in the future if the fund code was
removed.
Co-Chair Seaton answered that a dividend had to be accepted
by the legislature; it would come to the legislature
regardless of the removal of the fund code.
Representative Wilson WITHDREW her OBJECTION. There being
NO further OBJECTION, Amendment L HSAP 19 was ADOPTED.
2:15:52 PM
Representative Wilson MOVED to ADOPT Amendment L H SAP 20
(copy on file):
H SAP 20 - Eliminate ERA payouts in FY17 and FY18, and
fund K-12 with UGF at 95 percent of FY18 formula
amounts
Offered by Representative Wilson
30-GH1855U.16
See attached language from the Division of Legal and
Research Services. The intent of this amendment is to
ensure no funds are transferred from the Earnings
Reserve Account to either the General Fund or to the
Public Education fund and funds the Public Education
Fund at a reduced level (95 percent).
Co-Chair Seaton OBJECTED.
Representative Wilson explained the amendment would
eliminate the [Permanent Fund] earnings reserve account
(ERA) payment for FY 17 and FY 18. It would also fund K-12
with UGF at 95 percent of the FY 18 formula amounts. She
was concerned that taking a large amount from the ERA would
mean there may come a point where the Permanent Fund corpus
was also tapped, which she did not support. She believed
the issue should go to a vote of the people. She recalled
having the discussion with colleagues several years earlier
who also believed the issue should go to a vote. She
stressed the significance of the issue. She continued that
the state had been lucky to have the balance in the ERA,
but the budget would withdraw funds from the account for FY
17 and FY 18. She referred to late Governor Jay Hammond and
his 50/50 plan. She believed he had been cautious that
taking more than a yearly amount could have a negative
effect. She reiterated that the amendment would eliminate
the ERA payouts. She supported taking the issue to a vote
of the people. She spoke to the K-12 component of the
amendment. She remarked that the formula included
transportation funds because the service was a Base Student
Allocation (BSA) by default. She elaborated that the state
was giving transportation money to communities without any
type of bus service. She did not know if that had been the
reason for the transportation, but it was what it had
become. She concluded it was outside of the BSA, but was
utilized and funded in the same fashion.
Co-Chair Seaton spoke to his objection. He stated that a 5
percent budget cut was harder on most communities and on
all school districts. He elaborated that the elimination of
the fund draw for FY 17 and FY 18 would severely hamper the
passage of a budget.
2:20:05 PM
Vice-Chair Gara understood the point of the amendment was
to save money, but he opposed it. He explained that schools
had already been cut in the past several years. He did not
support an additional 5 percent cut to school funding. He
stated that he wanted to make sure people wanted to raise
their children in Alaska. He believed the amendment went in
the wrong direction. He continued that it was incumbent on
the legislature to come up with a fiscal plan to start
funding the needed services. He hoped a plan could be
agreed upon by the end of session.
Representative Pruitt spoke in support of the amendment. He
remarked there were several things going on with the
amendment that involved a substantial amount of money and
policy. He highlighted the moving of money into the Public
Education Fund as well as into the General Fund. There were
two components - one for FY 17 and one for FY 18. He
believed the committee would have a robust discussion about
whether or not to pay the current year's budget from the
ERA. He did not believe the funding should merely occur in
the budget process. He reasoned that the discussion should
occur around the many different proposed bills aimed at
dealing with the challenge of state revenues. He stated
"this doesn't create the stability that's needed." He
understood that a particular bill would be passed - at the
end the fiscal notes would move with the budget and could
be incorporated into the budget during closeout. He
disagreed with making the policy at present without the
bills. He also disagreed with taking money from FY 17,
which he understood the governor had also included in his
budget.
Representative Pruitt addressed the 5 percent reduction to
the BSA. He explained that if Amendment L H SAP 20 passed
he would request that the committee reconsider the prior
amendment related to school bond debt reimbursement because
he did not want to double up. He believed the current
strategy needed to be handled differently. He remarked that
he continued to hear the legislature had cut education. He
acknowledged there had been a veto the previous year by the
governor. He continued that education funding had increased
continuously. He recalled that the previous year the
committee had heard a presentation showing that the
legislature had increased education higher than the rates
of inflation for the previous eight years. He continued
that the increase had been 30 percent, which was quite a
bit more than inflation. He stated that the legislature had
continued to show its commitment to education. He believed
that at present it was necessary to do things differently,
which meant that Anchorage and other areas would have to
participate in a different way. He postulated that if
anything had been classified in the "sacred cow" category,
which he believed the committee had done with a good
portion of the current budget, then they were never really
honestly going to tackle the budget. He understood there
were challenges to education; however, he did not see
significant policy consideration related to how education
was being delivered. He stressed that the legislature was
not having a conversation about how education was
delivered; therefore, unfortunately they faced scenarios
like the one facing the committee where "we almost take a
hatchet as opposed to really addressing the inherent
challenges with delivering education through Alaska." He
reiterated his support for the amendment. He requested that
the school bond debt reimbursement be reconsidered if the
amendment passed. He did not believe the two items should
be doubled up.
2:24:49 PM
Co-Chair Foster acknowledged Representatives Dan Saddler,
Lora Reinbold, and Jennifer Johnston in the audience.
Representative Wilson provided wrap up on the amendment.
She explained that one of the reasons she had offered the
amendment was because the budget would take more out of the
ERA than was necessary. She detailed that the proposed
budget would take the money from one savings to another
(i.e. from the ERA to the Public Education Fund) because
one account earned a substantial amount of money and the
other earned a minimal amount. She equated it to a person
getting ready to retire and putting all of their money into
a high earning stock portfolio, but choosing to cash out
the stocks and place the funds in a low earning savings
account that had ample money. She agreed that a plan was
needed, but she believed the state would lose hundreds of
millions of dollars by removing money out of the ERA early.
She elaborated that it would mean cashing out stocks that
had a potential of significant gain due to the current
market environment. She continued that to fulfill the
provision in the budget it would mean cashing in stocks
even though it may not be a decision the Alaska Permanent
Fund Corporation (APFC) would chose to make. She was
concerned about money the state would lose. She believed it
meant the state would have to "take those hundreds of
millions of dollars and go somewhere else and find it." She
stated it would then be necessary to look to state
residents to fill the gap, when it would have been possible
to fill the gap by the state's own investments making
money. She believed it made no sense.
Representative Wilson addressed the education component of
the amendment. She expressed her support for education. She
spoke to home schooling and costs. She shared that she had
home schooled her children and had received a fraction of
the money - the funds had come out of her own pocket. She
stated that the [low] costs home schooled children were
educated on was amazing. She stressed that the state payed
over $50,000 per student in some districts. She added "the
sad thing is, we're still at the bottom." She urged the use
of technology. She understood not all areas had broadband.
She emphasized that doing the same thing repeatedly with
education would cost more and it had not worked well. She
acknowledged that Alaska had great teachers, but she
pointed to the importance of allowing them to use
technology and options that were not as costly as some
current methods. She believed people would want to move
from the state if the legislature continued to take more
money out of their savings accounts. She stated that
utilizing savings did not constitute a plan, the only
change was the money would be taken from a different fund.
She stated it was the people's fund - she thought they
should vote. She believed using the ERA was a huge mistake
that would cost Alaskans.
Co-Chair Seaton MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Seaton,
Foster
The MOTION to adopt Amendment L H SAP 20 FAILED (4/7).
2:29:41 PM
AT EASE
2:35:24 PM
RECONVENED
Representative Wilson MOVED to ADOPT Amendment L HSAP 21
(copy on file):
L H SAP 21 - Supplemental payment of FY17 permanent
fund dividend
Offered by Representative Wilson
30GH1855U.12
See the attached language from the Division of Legal
and Research Services. The intent of this amendment is
to appropriate $663,350,000 from the earnings reserve
account to the dividend fund for the payment of
supplemental FY17 permanent fund dividends to eligible
individuals who received a permanent fund dividend in
October 2016.
Co-Chair Foster OBJECTED.
Representative Wilson read from the amendment description
[see above]. She corrected a typo in the description and
clarified the amount was $666,350,000 instead of
$663,350,000. The amendment would restore the governor's
veto from the previous year in order "to give the people
their money back."
Vice-Chair Gara remarked that there were different views
around the building about the size of the dividend. He
noted the House Minority leader had proposed a dividend of
$1,000 and the Senate had proposed $1,000 the previous
year. He stated it was a debate the legislature would
continue to have for the remainder of the current session.
Representative Pruitt did not support the amendment. He
pointed out that the current and next amendment were
similar, but they pertained to different years. The current
amendment would restore the governor's veto from the
previous year [FY 17]. He shared that the previous year
when the committee had voted on SB 128 [2016 legislation
pertaining to the Permanent Fund Dividend and earnings] he
had highlighted the "huge shift" that the public had not
really been aware of at the time. He added that the
governor had made a decision that the legislature had
chosen not to override. He spoke to several reasons he
believed the legislature should not merely restore the
governor's veto. First, the economic challenges residents
and the state had gone through the prior fall had already
passed. He did not mean to imply that the reduction did not
impact residents and the economy. However, he believed it
would create an "up and down scenario" if the amendment
passed. He reasoned that passage of the amendment would
give people hope there would be an additional $1,000 from
the prior year. He surmised it was highly likely the
governor may veto the amount again. He was concerned it
would create instability in the eye of the public. He
shared that people had emailed him the prior year saying
they understood that something would have to be done, but
requesting the legislature to hold off on the timing
because they had budgeted based on the amount. He opined
that instead of looking to the previous year, it was time
to move forward. He believed the previous amendment and the
next amendment that talked about how to fill the revenue
gap both included their own conversations, which
constituted the moving forward component. He concluded that
he would love to be able to give residents the money, but
in order to prudently manage the people's money in the
Permanent Fund and to ensure money was available in the
future, he believed it was appropriate to look forward and
not back.
Representative Tilton spoke in support of the amendment.
She agreed that the legislature had an obligation to help
people manage expectations. However, residents had expected
to receive the money the previous year, but it had been
vetoed by the governor. She stated that the veto had
resulted in more residents dipping below the poverty level
than before. She felt strongly that everything the
legislature did when it considered reducing the PFD
resulted in a changing of the economy.
Representative Wilson provided wrap up on the amendment.
She underscored that the money was sitting in the ERA and
more interest was being earned daily, but based on the
direction of the discussions most of the money would go to
government, not residents. She shared that she had spoken
with constituents and she believed the money belonged to
the people, which had been the agreement when the fund had
been formed. She detailed that once the fund had been
created the legislature had passed statute specifying that
some of the funds would be set aside for residents. She
noted that the other portion of the funds could be used for
government for essential services, but she thought a vote
of the people should occur. She stressed that the money did
not have to be earned by residents, it was given to each
resident. She furthered that residents did not own most of
the resources under their land, unlike in the movies where
someone found oil on their land and became rich off sales
(like in North Dakota and other locations). She stressed
that the resources belonged to the state in Alaska unless a
person had specific rights to the land, which was not
common. She continued that the Permanent Fund belonged to
the people. She believed the legislature should have
overridden the governor's veto the previous year. She
thought state residents should be part of the discussion if
the dividend amount changed. She believed government needed
to learn to handle its own funds before they "grab others."
She reiterated that the funds should have gone to
residents.
2:43:43 PM
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Tilton, Wilson
OPPOSED: Thompson, Gara, Grenn, Guttenberg, Kawasaki,
Ortiz, Pruitt, Foster, Seaton
The MOTION to adopt Amendment L HSAP 21 FAILED (2/9).
2:44:34 PM
Representative Wilson MOVED to ADOPT Amendment L HSAP 22
(copy on file):
L H SAP 22 - Fully fund FY18 permanent fund dividend
payment.
Offered by Representative Wilson
30GH1855U.11
See attached language from the Division of Legal and
Research Services. The intent of this amendment is to
fully fund the FY18 permanent fund dividend payment to
eligible recipients.
Co-Chair Foster OBJECTED for discussion.
Representative Wilson explained that the amendment would
restore full funding for the FY 18 Permanent Fund Dividend.
She detailed that no legislation had been passed to change
the amount. She stated the amount in the budget had been
chosen by someone else. She believed the full amount
belonged to residents. She added that the full funding
should be maintained until legislation made a change or a
vote occurred.
Representative Guttenberg spoke discussed that he had been
present when Permanent Fund votes had taken place. He
shared that he had spoken with various people around the
state and the Capitol Building who were older and wiser. He
elaborated that he had voted on the issues. He stated that
many people had reinterpreted their personal recollections.
He recalled that there had been a substantial amount of
money that needed to be put away - otherwise it would be
spent. He detailed that the initial discussion had not been
about a dividend program, that the money would belong to
the people, or about a sovereign relationship with the
money and land. He stated that those items were all modern
arguments. He did not dispute the validity of the
arguments, which he believed were valid for the people
holding the beliefs. He reiterated that when there had been
a vote to create a Permanent Fund that was protected
constitutionally, the arguments had not been relevant and
had not been part of the dialogue. He recalled that the
conversation had been limited to putting the money aside in
order to conserve it. He believed the objective had been
very successful.
Representative Pruitt spoke in support of the amendment. He
remarked that the amendment seemed similar to the prior
amendment, but it was different. He detailed there was
existing policy for the "going forward" piece in one of the
bills. He believed it needed to be established in one of
the bills instead of making the change within the budget.
He stated that the long-term policy would follow the bill
and be a part of the conference committee discussion. He
reiterated his belief that it should be done through
legislation (through the long-term establishment of the
stable revenue source the legislature was trying to
establish for the Permanent Fund and other) and not the
budget process.
2:48:39 PM
Representative Wilson provided wrap up on the amendment.
She recommended asking residents what they thought by
taking an advisory vote of the people. She supported asking
residents what they believed the fund should be and how
much the payoff should be. She stated "convince them that
essential government services have been whittled down to
where it needs to be to where they're willing to give more
than just the 50/50 that was brought up before." She
explained that allowing the people to vote would mean the
legislature would not have to "decide whether I have a
different opinion than someone else or someone else does
too." She continued that there were many bills in the
current process that addressed what the dividend payout
should be. She supported letting the bills go through the
process. She elaborated that if one of the bills passed and
it impacted the budget the change would be adjusted in the
fiscal notes associated with the bill. Alternatively, if
nothing passed related to the dividend for the current
year, the amount would not change. She believed that
putting the dividend payment in the budget would mean
determining the amount before letting the process run its
course. She stressed that the budgetary component was not a
policy call - the policy calls were associated with all of
the legislation that allowed Alaskans to be part of the
discussion. She underscored that the budget did not allow
Alaskans to be a part of the discussion. She supported
fully funding the dividend in the current year.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Tilton, Wilson, Pruitt
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz,
Thompson, Seaton, Foster
The MOTION to adopt Amendment L H SAP 22 FAILED (3/8).
2:51:05 PM
Representative Pruitt requested to hear Amendment L H SAP
23 (copy on file) at a later time. There being NO
OBJECTION, it was so ordered.
2:51:59 PM
Vice-Chair Gara MOVED to ADOPT Amendment L H FND 3 (copy on
file):
Fund Capitalization (no approps out)
Oil and Gas Tax Credit Fund
L H FND 3 - An additional reduction of $7 million in
oil tax payment, resulting in $30 million payment
Offered by Representative Gara
30GH1855U.22
The state has not fixed its current budget deficit any
more sustainably than it did last year, and last
year's appropriation was $30 million. It is intended
that when the state adopts a sustainable fiscal plan
and meets our constitutional obligation to get the
public maximum benefit from their oil resources, funds
will be available to pay these accrued credit
subsidies in greater amounts. In FY18 it is projected
that paid oil and gas production taxes will be less
than oil and gas credits generated by FY18 activity
under current law. This leaves the state with negative
production tax revenue for FY18.
Representative Wilson OBJECTED.
Vice-Chair Gara stated that currently there was a very
generous oil tax subsidy system and a very small oil tax
production system. He elaborated that currently oil fields
were either paying zero percent or 4 percent as a tax to
the state; however, there were more oil tax credits in the
current year than incoming production taxes. He stressed
the importance of fixing the system. He detailed it was a
debt the state would owe; therefore, reducing $7 million of
the payment would only increase the state's future
obligation. He WITHDREW the amendment.
Vice-Chair Gara MOVED to ADOPT Amendment L H FND 4 (copy on
file):
Regional Education Attendance Area School Fund 1222
L H FND 4 - Restore REAA deposit to FY18 Gov Request
amount
Offered by Representative Gara
Reference: 30-GH1855U.8.
This amendment restores REAA funding to the Governor's
FY18 amount of $40.64 million. Please note
corresponding amendment 30-GH1855U.7 for School Debt
Reimbursement.
Representative Wilson OBJECTED.
Vice-Chair Gara explained the amendment contained the
corresponding restoration of funding for school
construction and maintenance. He referred to an earlier
amendment that had restored funding for school debt
reimbursement. Amendment L H FND 4 would restore funding in
an equivalent percentage to Regional Educational Attendance
Area (REAA) school districts at the governor's proposed $17
million cost. He noted the funding matched the percentage
going to urban schools.
Representative Wilson MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Foster,
Seaton
OPPOSED: Wilson, Pruitt, Thompson, Tilton
The MOTION PASSED (7/4). There being NO further OBJECTION,
Amendment L H FND 4 was ADOPTED.
2:54:43 PM
Representative Ortiz WITHDREW Amendment L H FND 5 (copy on
file).
2:55:04 PM
AT EASE
2:55:47 PM
RECONVENED
Representative Tilton WITHDREW Amendments L XFR 3 and L XFR
4 because she had received inaccurate information from the
department.
2:56:44 PM
AT EASE
3:11:51 PM
RECONVENED
Representative Tilton made clarifying remarks regarding her
withdrawn fund transfer amendments. She had questioned the
balance and had received the information the current
morning related to fund balances with humble apologies from
the department about the previous incorrect information
provided. She underscored that legislators drafted
amendments based on information provided by the department.
She stressed the importance of the veracity of the
information legislators received. She emphasized that the
legislature was dealing with the people's money.
^AMENMDENTS: ALL REMAINING ITEMS
3:13:43 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 5
(copy on file):
Centralized Administrative Services
Office of Administrative Hearings
H DOA 5 - More closely align the FY 18 budget request
with the FY 17 Management Plan.
Offered by Representative Wilson
The FY 17 Management Plan has a budget of $137,000 in
the Services line and the FY 18 budget request is
$339,100 which is an increase of $202,100 over the FY
17 Management Plan. Therefore, a reduction of $85,400
in the Services line is made to this allocation to
more closely align the FY 18 budget request with FY 17
Management Plan and to delete all unrestricted general
funds (fund source 1004). This amendment is intended
to encourage the Department to manage its own budget
more prudently.
Co-Chair Foster OBJECTED.
Representative Wilson read from the amendment description
[see above].
Representative Grenn spoke against the amendment. He
pointed out that the services line from the FY 16 actuals
was $336,900, which was more in line with the FY 18 budget
request of $339,100. He detailed that the increase
reflected in the services line from the FY 17 management
plan due to the need to bring the Office of Administrative
Hearings receipts on budget, thus the increase in the
interagency receipt authority and not UGF. The current tax
at issue with some of the pending cases was over $100
million. He believed it would eliminate the department's
ability to pursue the cases if some of its personnel was
reduced.
Representative Wilson provided wrap up. She agreed that the
FY 16 budget was higher than FY 17. She surmised that FY 17
management did not think it needed as much money. The
amendment would decrease funds by $85,000 and would not
make any reductions to personal services. She clarified
that the office would continue to have the same number of
employees. She elaborated that the budget was still higher
by $202,100. She emphasized that the $85,000 reduction only
applied to the services line of the office's budget.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Grenn, Guttenberg, Ortiz, Gara, Seaton, Foster
Representative Kawasaki was absent from the vote.
The MOTION Amendment H DOA 5 FAILED (4/6).
3:17:57 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 6
(copy on file):
Office of the Commissioner
H DOA 6 - Delete one Special Assistant position and
associated costs.
Offered by Representative Wilson
This amendment deletes the Special Assistant to the
Commissioner from the FY 18 budget request. This
reduction will require the Commissioner's Office to
provide oversight and policy direction in a more
efficient manner with less high level management.
Co-Chair Foster OBJECTED.
Representative Wilson read from the amendment description
[see above]. She noted that the topic had been discussed by
the committee for numerous years. She appreciated the
special assistant, whose most basic job was to answer
questions from the legislature. In the past the committee
had been told that the time it would take to answer
legislators' questions would be increased if the position
was eliminated. She remarked that legislators may have to
do more of their own research. Given budget constraints,
she believed it may be prudent for legislators to do the
work themselves.
Representative Grenn was opposed to the amendment. The
Department of Administration commissioner's office had one
special assistant. The position was responsible for
tracking and responding to any legislation involving the
department. He contended that without the position the
department's ability to answer questions from the
legislature would be dramatically reduced. He referenced
Representative Tilton's earlier statements about the
importance of receiving timely and accurate information
from departments. He believed the only remaining general
funds for the Office of the Commissioner budget were
related to the fiscal note for SB 74 (Medicaid reform
legislation passed in 2016) and could not be deleted.
Representative Wilson stressed that the funding was not
General Fund match; it was $19,500 in general funds. She
explained that the $123,800 in interagency receipts meant
the department was responding to other agency requests (not
the legislature). She did not believe the information
Representative Tilton had received had come from the
special assistant. She agreed that legislators would have
to wait longer to receive answers from the department;
however, at some point the legislature had to consider
whether the information requests were mission critical. She
stated the amendment should not pertain to funding the
department already had because it was not matched. She
referred to the $123,800 in interagency receipts and
wondered what it was that other departments actually needed
fulfilled.
Co-Chair Foster MAINTAINED his OBJECTION
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Guttenberg, Ortiz, Gara, Grenn, Foster, Seaton
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H DOA 6 FAILED (4/6).
3:22:12 PM
Representative Wilson WITHDREW Amendment H DOA 7 (copy on
file).
3:22:30 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 8
(copy on file):
Finance
H DOA 8 - Delete funds for positions deleted by the
Department with no funding reduction.
Offered by Representative Wilson
The Department deleted 16 positions associated with
the statewide accounting system and the Integrated
Resource Information system as this project is now in
the stabilization phase. CIP receipts associated with
the positions were deleted, however the positions
deleted were partially funded with general funds which
were not deleted. This amendment deletes the general
funds associated with the positions that were not
deleted by the Department in the FY 18 budget request.
Co-Chair Foster OBJECTED.
Representative Wilson read the amendment description [see
above].
Representative Grenn spoke in opposition to the amendment.
He understood from his work with the department that the
funding for the positions had already been deleted. He
detailed that the department had hoped funding for the
positions could be found through DGF, but it had not been
realized. The department had removed the positions after
realizing funding was not available going forward. He
explained that eliminating the UGF funding would result in
cutting different operating positions currently filled and
providing support to the statewide administrative services.
Representative Wilson provided wrap up on the amendment.
She stressed the capital improvement project funding had
been removed, but the general funds had not. She inferred
that if the department was spending the funds on other
positions perhaps it was due to contractual agreements and
paying extra. She underscored that the funding in the
amendment had been designated for positions that had been
deleted. She continued the funds were in the budget and it
was clear where the CIP amounts had been taken out. She
emphasized that no general funds had been removed. She
surmised the department could be using the $398,000 for
something else; however, she believed the associated
funding with deleted positions needed to be deleted as
well.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Ortiz, Gara, Grenn, Guttenberg, Seaton, Foster
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H DOA 8 FAILED (4/6).
3:25:10 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 9
(copy on file):
H DOA 9 - Delete funds for positions deleted by the
Department with no funding reduction.
Offered by Representative Wilson
The Department deleted four vacant Business Analyst
positions and one part-time college intern associated
with the statewide accounting system and the
Integrated Resource Information system as this project
is now in the stabilization phase. This amendment
deletes the general funds associated with the
positions that were not deleted by the Department in
the FY 18 budget request.
Vice-Chair Gara OBJECTED.
Representative Wilson remarked that she would assume the
budget books received by the legislature were accurate. She
stated that she would not say the department was saying one
thing and the books said something different. She referred
to a conversation about FY 16 and stated "maybe the books
lie." She stressed that all the committee had to rely on
was the budget documents received. She read the amendment
description [see above]. She relayed that the amendment
would delete $36,100 in general funds.
Representative Grenn spoke against the amendment. He shared
his understanding after speaking to the department that the
positions had been deleted in the 2017 management plan. He
elucidated that the position funding had already been cut;
the actual PCNs [position control numbers] were deleted
after the department realized the funds were no longer
available. He suggested hearing from DOA on the issue.
Co-Chair Seaton noted the committee would not be hearing
from the department.
Representative Wilson emphasized that the budget books
showed the positions as deleted for four vacant business
analysts and one part-time college intern. She continued
that the books also showed the other funds as a negative
number and nothing had been listed under general funds. She
noted it was necessary to look at the details in the book
and at the prior year to determine the funding amount for
the positions to determine what they had been paid. She did
not want to accuse someone of being untruthful, but she
believed the books and the department could not both be
correct. She stressed that the FY 18 budget books did not
delete the $36,100.
Vice-Chair Gara MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Ortiz, Gara, Grenn, Guttenberg, Foster, Seaton
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H DOA 9 FAILED (4/6).
3:28:49 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 11
(copy on file):
Personnel
H DOA 11 - Funding reduction to eliminate increase in
Personal Services.
Offered by Representative Wilson
Four positions were deleted from this allocation,
however, the Personal Services line item increased by
$295,900 between the FY 17 Management Plan and the FY
18 budget request. This amendment eliminates the
increase in the Personal Services line item from the
FY 18 budget request.
Co-Chair Foster OBJECTED.
Representative Wilson read from the amendment description
[see above].
Representative Grenn spoke against the amendment. He
relayed that the Division of Personnel had cut three
positions, none of which were associated UGF. The fourth
position referenced in the amendment had been transferred
to the shared services organization within the department
for accounting services. He detailed that given the
positions did not have associated UGF, there had not been a
decrease in workload and eliminating the funds would result
in the elimination of other positions and a significant
reduction in service level.
Representative Pruitt did not understand what
Representative Grenn had said.
Representative Grenn explained that it was his
understanding that the Division of Personnel had cut three
positions, none of which had associated UGF. The fourth
position referenced by the amendment was a transfer to
shared services within the department for accounting
services. Given that the positions did not cut UGF and
there had not been a decrease in the workload of the
division, eliminating the funds would result in the
elimination of other positions.
3:31:52 PM
Representative Thompson stated it got confusing that the
subcommittees had not been able to address individual PCNs.
He believed there had been no way of having a pure question
and answer scenario with the departments or of obtaining
real figures to go off of. He thought the budget process
was flawed. He wanted to know whether three positions had
been eliminated. He wondered why there had been an increase
to the personnel services line of $295,000 from the
previous year. He thought the two things were incongruent.
Vice-Chair Gara asked whether the amendment sponsor had
spoken with the department to determine what the funds were
being used for and what would happen to the department if
the deletion occurred.
Representative Wilson answered that she had not spoken with
the department. She detailed that the department had cut
three positions. The fourth position had been cut and
transferred to another area. There were four fewer people
in the division, yet it had increased personnel services by
$295,900. She emphasized that the amendment did not cut any
positions. She did not believe she should have to talk to
the department. She stressed that the budget books should
show if positions were taken out of the budget. She
explained that FY 17 showed the positions; whether funding
had come from UGF, federal funds, or other; and how much
the positions made. She reasoned that whether or not the
positions had been paid with UGF funding, the amount was
increasing and the number of people was not. She believed
there should be an explanation for the increase (e.g.
contracts increased) and that the same increase should be
seen in all of the other allocations. She elaborated that
the growth had not been seen in personal services as shown
in the proposed budget. She noted that funding had been
cut, but the department had not cut the specific funds
targeted by the amendment. She was not claiming the
department was not using the funds for something else;
however, less people would mean lower payroll in most
businesses. There were fewer people in the division, yet
the state was paying more for the existing positions, which
did not make sense to her. She acknowledged there may be a
difference between looking at the book and talking to the
department; however, she believed the two conversations
should match up.
3:35:44 PM
AT EASE
3:39:50 PM
RECONVENED
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Gara, Grenn, Guttenberg, Ortiz, Seaton, Foster
Representative Kawasaki was absent from the vote.
The MOTION Amendment H DOA 11 FAILED (4/6).
3:40:39 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 12
(copy on file):
Labor Relations
H DOA 12 - Delete funding for position deleted by the
Department with no funding reduction.
Offered by Representative Wilson
The Department deleted a Labor Relations Analyst
position in the FY 18 budget request, however deleted
no funding associated with the position. This
amendment deletes the FY 2017 budgeted cost of the
position.
Vice-Chair Gara OBJECTED.
Representative Wilson read the amendment description [see
above]. She added that the budgeted cost of the position to
be deleted was $185,100.
Representative Grenn did not support the amendment. He
addressed his remarks to the current and other similar
previous amendments. The Department of Administration had
an unallocated reduction of $1.216 million in FY 17,
necessitating adjustments to the positions by the
department to manage the reduction. He explained that the
relations analyst position had been deleted in the FY 18
governor's budget request as the position was vacant due to
lack of funding (a result of previous cuts to the
division). Currently all positions within the Division of
Labor Relations were filled; eliminating the UGF would
result in cutting existing positions.
Vice-Chair Gara concurred with Representative Grenn. He
underscored that the past several amendments would be a
double cut to the department. He detailed that the funding
had already received an unallocated cut and positions had
been deleted. The amendments would cut the same amount of
funding a second time and would delete more money than the
positions cost.
Representative Wilson provided wrap up. She stated that the
details addressed unallocated costs and deleted positions
with associated funding. She continued that whatever the
reason the items had been defunded, the details were shown
in the budget. She elaborated on the budget details and
explained the books showed whether not a position went to
shared services or transferred a position from one
allocation to another. She noted that sometimes the budget
listed a position without the money. She underscored that
the book did not show the [labor analyst] position as not
being funded, which is where it should be. She looked very
closely to determine where the positions had been deleted.
She had observed that a portion of the money had been
deleted for other positions. She stressed that departments
were not being consistent, which was causing confusion. She
had found that money had been attached to the [analyst]
position for 2017; the position had been deleted for FY 18,
but the associated funding had not been deleted.
Vice-Chair Gara MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Tilton, Wilson, Pruitt
OPPOSED: Gara, Grenn, Guttenberg, Ortiz, Foster, Seaton
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H DOA 12 FAILED (4/6).
3:45:51 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 13
(copy on file):
H DOA 13 - Funding reduction of one PFT position and
related costs.
Offered by Representative Wilson
This amendment deletes a Labor Analyst position from
the FY 18 budget request. This will require the
Department to redistribute the work load to remaining
staff and to be more efficient in providing labor
relation services.
Co-Chair Foster OBJECTED.
Representative Wilson read from the amendment description
[see above].
Representative Grenn spoke in opposition to the amendment.
He detailed there were currently six labor relations
analysts on staff who processed grievances, interpreted
contracts covering the 15,000-plus state employees, and
negotiated collective bargaining agreements on the state's
behalf (6 out of 11 agreements were currently in progress).
He believed a reduction in staff would mean the state would
need to hire a contractor, which would be more expensive.
He concluded that eliminating the position would lead to
increased costs.
Representative Wilson opined that frequently contractors
were more efficient and cost-effective. She believed there
had not been any study conducted on the issue. She
requested to see the information if it was available. She
surmised that if everyone took a small amount it would mean
things could be streamlined versus taking large cuts out of
one department or another.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Tilton, Wilson, Pruitt, Thompson
OPPOSED: Gara, Grenn, Guttenberg, Ortiz, Seaton, Foster
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H DOA 13 FAILED (4/6).
3:48:28 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 18
(copy on file):
Office of Information Technology
State of Alaska Telecommunications System
H DOA 18 - Align FY18 personal services budget with
previous expenditures and delete all overtime pay.
Offered by Representative Wilson
FY 16 actual expenditures in the Personal Services
line item were $2,631,100. The FY 18 budget request is
$3,035,500 for this line item which results in an
increase of $404,400 over FY 16 actual expenditures.
This amendment reduces the FY 18 budget request for
the Personal Services line item by $404,400 in this
allocation to align the FY 18 budget request with FY
16 actual expenditures.
There is a small amount of premium pay, ranging from
$100 to $19,000, budgeted for nearly all positions in
this allocation. This amendment eliminates the total
amount of premium pay in the amount of $144,486
included in the FY 18 budget request. Declining
revenues dictate that overtime hours be reduced and
that state services be provided in a more efficient
and effective manner.
These reductions are intended to encourage the
Department to manage its own budget more prudently.
Co-Chair Foster OBJECTED.
Representative Wilson explained that the amendment would
take $548,900 from the General Fund. She read the amendment
description [see above].
Representative Grenn spoke against the amendment. He stated
that the amendment dealt with the telecommunications system
that provided 24/7 backup to the state's first responders,
which was a critical state service. He thought it was
probably not the best to look at year-to-year division due
to the wide fluctuations based on services, not on needs
from year-to-year. He did not believe any cuts could be
made to the service at the present time.
Vice-Chair Gara understood how hard it was to write an
amendment. He understood Representative Wilson worked hard.
However, in looking for efficiencies it was not possible to
just read a book and not speak to anyone. It would be more
compelling to him to learn she had spoken with the
department.
Representative Guttenberg agreed it was not easy to write
budget amendments, especially decrements. However, he
emphasized the importance of knowing the impact of the
amendment when making a reduction. He discussed that the
amendment pertained to first responders and
telecommunication systems. He questioned the impact of the
proposed cut.
Representative Pruitt mentioned Representative Grenn's
comment related to fluctuations [based on services]. He
asked whether another year would work if the current year
did not. He thought the amendment sponsor was making a
point that there were [budget] actuals compared to what had
been appropriated. He wondered if there was reason to
believe the $3 million was needed. He wondered if costs
were all below that number. He thought perhaps there was
another number to use besides the $548,900 (e.g. $300,000
or the average of a couple of numbers). He believed merely
writing off the idea because the numbers fluctuated did not
take into consideration the fact that the legislature was
funding something higher than a previous year. He
elaborated that the most recent year with actual numbers
available showed there had not necessarily been a need for
the entire appropriation. He reasoned that the committee
could have had the conversation earlier, but it had not
occurred.
3:55:49 PM
Representative Wilson provided wrap up on the amendment.
She stated that she found it interesting the legislature
was not supposed to look at the increment from year-to-
year. She countered that building a budget required looking
from year-to-year. She emphasized that the budget books had
been put out for a reason and included the departments'
mission, accomplishments, challenges, and components. She
remarked that she had tried asking questions on each
component back in December [2016] and was still waiting for
answers. She agreed that "in a real world" talking to the
department would not hurt. She stressed that she was not
going to look at budgets back to 2010. She asked what the
state had not been doing in FY 16 that was critical in FY
18 at a total increase of $548,900. She addressed
fluctuation and wondered what had made it grow by $500,000
in a year. She wondered what had changed that resulted in
such a substantial growth. She believed the increase should
mean something like a telecommunications tower had
collapsed or new people would need to be hired because a
new grant was received that required significant work. She
spoke about budgeting. She had not seen anything showing
the office had not been able to meet its mission. She
underscored that the biggest difference between FY 16 and
FY 18 was $548,900. She was not sure the department had
even addressed the increase. She had seen that the numbers
were inflated until the real numbers came in; it sometimes
made departments look like they were spending more money
than they really were. She reiterated the importance of the
budget books.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wilson, Pruitt, Thompson, Tilton
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Foster,
Seaton
The MOTION to adopt Amendment H DOA 18 FAILED (4/7).
4:00:04 PM
Representative Tilton MOVED to ADOPT Amendment H DOA 19
(copy on file):
Public Communications Services
Public Broadcasting - T.V.
H DOA 19 - Decrease to TV public broadcasting
Offered by Representative Tilton
10 percent reduction
(Page 4, line 12 - 30-GH1855A)
Representative Ortiz and Co-Chair Foster OBJECTED.
Representative Tilton explained the amendment. She believed
that public communications services (radio and television)
were always in legislators' sights when it came to the
budget. She reasoned that it was not because legislators
did not support the programming. She posed the question as
to whether public broadcasting television constituted a
constitutionally mandated core service and whether it
should be paid for by the state. She referred to
substantial public testimony from across the state, some of
which was in favor of the services. However, she believed
there had not been testimony about what portion of the
stations' budget was funded by the state compared to
private donation. She concluded it was difficult to make
budget decisions without having the information. The
amendment would not completely eliminate funding for public
broadcasting in order to give the stations time to adjust
to the reduction.
Representative Grenn spoke in opposition to the amendment.
He indicated that since FY 15 public broadcasting
television had undergone a 23.3 percent cut in general
funds. He detailed the budget subcommittee had heard from
several stations across the state, all of which were
opposed to further cuts. The stations had provided
information about their state funds during public testimony
that ranged from 10 to 20 percent. He believed committee
members had been impressed by the low number. He also
thought public broadcasting had done a great job rallying
private support to make up for cuts to state funding that
had occurred in the past several years. He detailed that
public broadcasting provided vital information to the
entire state - it was the only source of service in many
areas. He believed eliminating such a strong vehicle for
communication was not a prudent course of action.
Representative Tilton questioned what the state was
supposed to provide as a government. She spoke to the
state's deficit and the need to fill public safety
necessities, troopers, education, and other services. She
expounded that the amendment would give public broadcasting
time to increase private funding and find other ways to
support the services.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Foster,
Seaton
The MOTION to adopt Amendment H DOA 19 FAILED (4/7).
4:04:47 PM
Representative Wilson MOVED to ADOPT Amendment H DOA 20
(copy on file):
Satellite Infrastructure
H DOA 20 - Grants Reduction
Offered by Representative Wilson
This amendment makes a reduction of $100,000 from the
FY 18 budget request in the Grants line. FY 17
Authorized was $92.2 and by reducing FY 18 grants it
more closely aligns with FY 17 Authorized and leaving
$60.0 in this allocation.
Co-Chair Foster OBJECTED.
Representative Wilson read the amendment description [see
above].
Representative Grenn spoke against the amendment. He
indicated that the amendment tied to the previous
amendment. He discussed that the department had been
working hard to bring the cost down for satellite
infrastructure. He detailed that the infrastructure was
critical to the delivery of audio and video news, public
affairs, legislative and state government content
education, community emergency alert services, and rural
Alaskan communities. The historic funding for satellite
infrastructure had been around $160,000 including the FY 16
actuals - it was also the proposed amount in the FY 18
budget.
Representative Guttenberg highlighted that critical
emergency management needs went over various satellite
systems. He spoke of the critical emergency management
needs using various satellite systems. He referred to
numerous telecommunications issues, the increased use of
satellite and broadband, and other. He wondered what the
$100,000 reduction represented in a policy call aside from
a budget reduction. He questioned how much time the
reduction would mean the satellites would be down and what
would be put at risk. He did not support making cuts
without understanding the impact. He stressed that the
state relied on the infrastructure. He was concerned about
trying to make a value judgement without understanding the
impacts a reduction would have.
Representative Wilson thought the value judgment should be
about whether the state should be providing the services.
She suggested there may be other entities that could
partner to provide the service. She stated the most
successful programs involved private/public partnerships;
however, she stressed those partnerships would not be
encouraged if the state continued to fund everything at 100
percent. She stressed that the discussion was about budget.
She questioned whether other funding options had been
explored and why government had taken the service over in
the first place. She reasoned that it was sometimes
difficult to make the distinction between budget and
policy, which frequently intertwined. She suggested
spreading out the pain in small amounts throughout the
budget in order to avoid devastating impacts on various
entities.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Grenn, Guttenberg, Ortiz, Gara, Seaton, Foster
Representative Kawasaki was absent from the vote.
The MOTION to adopt Amendment H DOA 20 FAILED (4/6).
Representative Wilson WITHDREW Amendments H DOA 22 and H
DOA 23 (copy on file).
Representative Wilson MOVED to ADOPT Amendment H DOA 24
(copy on file):
Alaska Public Offices Commission
H DOA 24 - Delete funding for positions deleted by the
Department with no funding reduction.
Offered by Representative Wilson
The Department deleted two positions in the FY 18
budget request without taking funding reductions in
the Personal Services line item for the positions
deleted. The FY 2017 budgeted cost for these two
positions was $128,700. This amendment deletes the
funding that was budgeted for these positions.
Co-Chair Foster OBJECTED for discussion.
Representative Wilson read the amendment description [see
above].
Representative Grenn spoke in opposition to the amendment.
He explained that the Alaska Public Offices Commission
(APOC) had left the positions vacant in an attempt to find
other funding sources. Since 2015 APOC had seen a 42
percent reduction in its budget and had deleted six vacant
positions, making it more difficult for the agency to
fulfill its mission. The agency's mission was to encourage
the public's confidence in its elected and appointed
officials. He believed deleting an additional $128,000 in
UGF from personal services would mean the elimination of
another position. He underscored the critical service APOC
provided as the public's watchdog.
Representative Thompson stated that the amendment went
"back to the process, and we're in the process at the
present time." He noted some positions had been deleted,
which he was glad to see. He continued that over the past
several years the subcommittees had looked at PCNs, which
had not been allowed during the process in the current
year. He elaborated that in the past the Department of
Transportation and Public Facilities subcommittee had
looked back five years to identify five or six positions
that had not been filled in five years. He detailed the
agency had been using the money allocated to the positions
wherever it wanted (e.g. for overtime pay and other). He
furthered that subcommittees had not been allowed to
question the department or go after those type of things.
He felt like the [subcommittee] system was flawed and that
the committee had not done its job.
4:13:00 PM
Co-Chair Seaton reminded members that departments were
required to maintain a certain vacancy factor; therefore if
UGF was cut, it meant a cut would occur to a filled
position. He noted the vacancy factors varied between
departments - the vacancies were needed to enable
departments to hire people when they got the funding. The
vacancy factors were critical to the way funding worked for
personal line items.
Representative Thompson stated that positions that were
intentionally left empty for three to five years would not
be filled, but the state had been funding them. He did not
disagree with the remarks made by Co-Chair Seaton in
relation to positions that had not been funded the
preceding year, but should be filled. He continued that
amendments did not propose to eliminate positions that had
been vacant for only one year. He concluded that their
amendments only proposed to eliminate vacant positions that
were being taken advantage of by departments.
Vice-Chair Gara emphasized that it had taken several
minutes of speaking to the department to receive the needed
information about the specific positions. The funding for
the positions had been deleted in FY 17 with an unallocated
cut. He emphasized that the amendment would result in a
double cut to the department (like four other previously
proposed amendments). He stressed it was necessary to speak
to the department versus merely reading the budget book. He
stressed that the cut would delete additional positions.
4:14:58 PM
Representative Wilson remarked that the ability to have the
discussions in subcommittee would also be helpful. She
agreed that some of the positions had been deleted because
departments had to fulfill a vacancy factor - the
information was included in the budget books. She believed
a person should be able to look at the budget books to get
all of the information. She acknowledged that if she had
only looked at the basic numbers without drilling down into
the detail it would be her fault; however, she had reviewed
the details. She furthered that the details addressed
whether positions had been transferred and whether the
money had been transferred with them. She added that
sometimes positions were transferred without the money. The
details also showed whether positions were funded with
interagency receipts. She explained the details in the
books should specify whether cuts had been unallocated in
2017.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Guttenberg, Kawasaki, Ortiz, Gara, Grenn, Foster,
Seaton
The MOTION to adopt Amendment H DOA 24 FAILED (4/7).
4:18:27 PM
Representative Tilton MOVED to ADOPT Amendment H DOA 26
(copy on file):
Motor Vehicles
H DOA 26 - Outsource of services through business
partners
Offered by Representatives: Tilton, Wilson
It is the intent of the legislature that the Division
of Motor Vehicles outsource administrative and
licensing services to private sector business partners
to the extent practicable. The Division has reported
that during FY16 and FY17 private sector business
partners have processed 15 percent of the total
transactions and collected 17 percent of the revenue
for the division. As a result DMV is looking at
expanding both the number of business partners
throughout the state and the number of services those
business partners can provide.
Vice-Chair Gara OBJECTED for discussion.
Representative Tilton explained the amendment that included
intent language. She had heard from the department that it
was looking at moving services out to its business
partners, which she wanted to ensure the department would
continue to pursue. She read from the amendment description
[see above]. She believed it was a good return on
investment.
Representative Grenn applauded the intent of the amendment;
however, he was uncertain of its necessity and would not
support it. He detailed that since July 2016 the Division
of Motor Vehicles (DMV) had entered into six contracts
consisting of four private businesses and two financial
institutions. Additionally in the coming month the division
would be conducting a pilot program with one of its current
private business partners that would enable DMV to process
and issue driver's licenses and state identification cards.
Once the 90-day pilot period was over the division would
verify its processes were running smoothly. The intent was
to open the opportunity to all businesses currently
performing DMV services.
Representative Thompson supported the amendment. He noted
that the amendment did not require the division to do
anything and did not specify that a certain amount of money
would be saved. He furthered that it merely encouraged DMV
to continue to outsource services [to private sector
business partners]. He explained that customers paid for
the additional $10 fee on top of the license plate fee. He
opined that the outsourcing was a good thing. The amendment
merely encouraged the department to keep up the work.
Representative Pruitt spoke in favor of the amendment. He
stated that just because DMV was outsourcing services
currently did not mean it would not decide to stop in the
future. He believed it was good for the legislature to
encourage DMV to continue the practice. He told of a recent
experience he had at DMV where he had waited over two
hours. He detailed that the employee who had helped him had
discussed challenges and had specified that no one listened
to the employees. He believed it represented the difference
between working in the confines of a bureaucratic system.
He supported individuals driving the market and the success
of the particular organizations. He believed a shift would
occur where more people were heading in that direction. He
noted that if the shift successfully occurred it meant the
number of state employees and facilities would need to be
reduced. He believed there should be other providers in the
private sector. He added that the market would drive the
success of the private sector business partners - people
would not patron the businesses if the service was not
superior to service provided by DMV. He believed people
currently wanted an option that exceeded their experience
at DMV. He appreciated the department was working on the
issue, but he wanted it to continue.
4:23:36 PM
Representative Wilson supported the amendment. She wanted
to make sure the department was not merely looking at
cities that currently had the service. She wanted to ensure
outlying areas such as Delta, Bethel, Nenana, or Nome had
the service as well. She shared that she had also spent a
significant amount of time in line at DMV. She remarked
that people were willing to pay extra to avoid waiting in
DMV lines. She stated that the service could be outsourced
for less money. She believed the department had done a good
job working on the issue, but she wanted to ensure it
expanded to communities beyond the road system. She
remarked on the DMV business hours that did not expand
beyond the standard workweek. She wanted to encourage the
private sector to provide availability during off work
hours.
Representative Guttenberg stated that every dealership
could sell tags. He noted there were quite a few places in
Fairbanks that operated as a business - it was not cheaper,
just very convenient. He continued that it was possible to
get online to see how crowded DMV was at any given time. He
remarked that DMV was a money maker for the state, with low
cost. He would not oppose the amendment, but he would like
to see a report or concept of the discussion about "what
they're doing, where they've been, how successful they
are." He added that a person could purchase a hunting
license at numerous places. He reasoned that DMV had been
working to outsource services and he believed it would be
beneficial to have the division provide the legislature
with a status report. He was interested to learn why some
businesses could not or would not provide the service. He
reiterated that there were numerous places providing the
service, which was not cheaper (there was a surcharge), but
was more convenient.
4:27:00 PM
Representative Tilton provided wrap up. She expressed high
hopes to find some common ground on something during the
current meeting. She highlighted that the division had
already started outsourcing services. She wanted to
continue to encourage a public/private sector relationship
where everyone was working together to help combat the
current deficit. The practice allowed DMV to "look and work
on the things that they have to" and allowed another option
for the public. She communicated that the private business
partnerships collected 17 percent of the revenue for DMV,
which was a good return.
Vice-Chair Gara stated that he would probably support the
amendment if it was written differently. He thought the
directive to outsource should be softer. He MAINTAINED his
OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Pruitt, Thompson, Tilton, Wilson, Grenn,
Guttenberg, Seaton, Foster
OPPOSED: Kawasaki, Gara
The MOTION PASSED (9/2). There being NO further OBJECTION,
H DOA 26 was ADOPTED.
4:29:54 PM
Representative Wilson MOVED to ADOPT Amendment H CED 7:
Executive Administration
Commissioner's Office
H CED 7 - Delete Special Assistant
Offered by Representative Wilson
This amendment makes a reduction of $150,000 from the
Personal Services line of the FY 18 budget request and
deletes one of two Special Assistant to the
Commissioner positions and the associated personal
service. Any duties performed by this position that
must be continued can be redistributed to remaining
staff in the Commissioner's office or in the Division
of Administrative Services.
Co-Chair Foster and Vice-Chair Gara OBJECTED.
Representative Wilson read the amendment description [see
above]. She relayed that the $35,300 came from general
funds and $114,700 from interagency receipts.
Representative Guttenberg was opposed to the amendment. He
stated the commissioner's office had already been reduced
by eight positions since 2015 including a deputy
commissioner and three staff. Additionally, the reductions
had cut all of the administrative support in the Anchorage
office and removed a communications position. He
communicated that the commissioner sat on 30 boards and
commissions including the department's 6 core and 6
corporate agencies. He elaborated that administrative
services had been designated as backup, but it did not have
the capacity to perform in that role due to cuts of 26
percent since 2015. He detailed that the division had lost
13 positions - more than half of administrative services
positions were information technology staff who create and
maintain computer programs for the department to function.
The division managed the department including finances,
procurement, human resources, and other functions. He
continued that the cut would fall on a department and
commissioner that was already overburdened and would
negatively impact the basic core function of the
department.
Representative Pruitt supported the amendment. He stated
that "part of the reasons why we argue that we can't cut is
part of the reason why I don't think the department should
exist." He believed that at present there was no need for a
separate department. He continued they could come up with a
reason to keep the positions because there was too much to
do at the department. He expounded that due to the
substantial number of boards and commissions the
commissioner sat on, it was necessary to delegate
responsibility out to other people. He opined that there
were too many boards and commissions, too much government,
and too much busy work. He believed the amendment took an
appropriate look and was part of a larger discussion about
whether or not it was necessary to reanalyze what
government looked like. He thought there should be an
analysis done to determine whether all of the existing
boards and commissions were needed. He suggested
considering whether some of the boards and commissions
could be combined to increase effectiveness and efficiency.
He spoke to the argument that the positions were needed
because the workload was too significant for a reduced
number of people; however, he did not believe it was the
way to increase the effectiveness and efficiency of
government. He appreciated the amendment. He shared that he
had defended the position the previous year when he had
chaired the Department of Commerce, Community and Economic
Development budget subcommittee. However, he chided the
department for failing to work to become more efficient in
that area over the past year.
4:35:41 PM
Representative Wilson provided wrap up. She stated "shame
on us if we're making somebody go to 30 boards and
commission meetings." She believed the bigger question was
about the $114,700 in interagency receipts that was not
being used by the commissioner. She detailed that someone
else was using the position and the department was funding
it with other sources besides the commissioner's office.
She reasoned if the funding had been used to offset the 30
boards and commissions, it would have appeared as general
funds or other funds, but not interagency receipts. She
concluded that the specific special assistant was not
spending time on boards and commissions. She believed the
position was doing work that should be done by other
departments. She continued that interagency receipts were
the most difficult funding source to follow (with the
exception of those used by the Department of Transportation
and Public Facilities for facilities). The amendment did
not address the responsibility of the commissioner to be on
30 boards and commissions, but she hoped the legislature
felt there were better uses of the commissioner's time. She
explained that the majority of the funding addressed by the
amendment was primarily interagency receipts, which she
believed meant the position was doing something another
department could do.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Ortiz, Gara, Grenn, Guttenberg, Kawasaki, Foster,
Seaton
The MOTION to adopt Amendment H CED 7 FAILED (4/7).
4:38:11 PM
Representative Wilson MOVED to ADOPT Amendment H CED 9
(copy on file):
Community and Regional Affairs
H CED 9 - Streamlining
Regional Affairs with reduction in personnel and other
line items
Offered by Representative Wilson
This amendment deletes 22 positions and makes a
reduction of $2,400,000 from the Personal Service line
of the FY 18 budget request for the following items:
Anchorage- deletes 2 of 3 Grants Administrators, 10 of
14 Local Government Specialists, and 1 of 3 Research
Analysts
Fairbanks-deletes 2 of 4 Grants Administrators and 2
of 4 Local Government Specialists
Juneau-deletes 2 of 3 Local Government Specialists, 2
of 3 Grant Administrators and 1 of 2 Research Analysts
A reduction of $100,000 is made to the Travel line
item to the In-State Employee Travel category. A
reduction of $130,000 is made to the Services line
item for Education Services and reduction of $200,000
is made to Grants line.
Co-Chair Foster OBJECTED for discussion.
Representative Wilson explained the amendment. She
discussed that the department did a multitude of things,
many of which had been started when the state had been
flush with money and had been able to provide more and more
assistance to communities that were understaffed. She noted
that other communities had to fulfill those same
obligations on their own. The amendment was an attempt to
begin streamlining the Division of Community and Regional
Affairs. She read from the amendment description [see
above]. She believed it was necessary for the state to get
smarter with its existing resources. She believed the
funding was going to communities that may have alternative
private funding sources. She underscored that providing the
funds was not constitutionally mandated.
Representative Guttenberg read briefly from Article 10,
Section 14 of the Alaska Constitution:
An agency shall be established by law in the executive
branch of the state government to advise and assist
local governments. It shall review their activities,
collect and publish local government information, and
perform other duties prescribed by law.
Representative Guttenberg spoke in opposition to the
amendment. He explained that the next section of the
constitution related to the Boundary Commission, which was
also under the Division of Community and Regional Affairs.
He stressed that assisting local governments was mandated
in the state constitution. He continued that many of the
staff (i.e. local grant administrators, government
specialists, and research analysts) helped communities to
make decisions and assisted them with technical things that
rural Alaska did not have the capacity to do. The grants
administrators assisted with local Boundary Commission
issues, "which we all both love and hate at the same time."
He referred the amendment's proposed $2.8 million cut and
remarked that many of the positions traveled to rural
Alaska and slept on gymnasium floors and provided necessary
services that saved the state a significant amount of
money. He noted that the amendment did not contain
information showing what services would be reduced and did
not address any constitutional requirements the state had.
He referred to the travel cost and reasoned that the
state's geographical makeup made it necessary for employees
to travel to rural areas.
4:42:42 PM
Representative Wilson countered that the state was and
would continue to assist communities. She explained that
the question was what level the state could afford to
assist and at what point should communities be required to
maintain the service on their own. She continued that many
small communities did not require the assistance. She
addressed the numerous grant personnel due to a plethora of
capital grants. She elaborated that when the state had been
flush with money it had given a large amount to communities
and positions had been needed to follow the grant funds.
She explained that the grant funding had been reduced
annually. She believed it was unnecessary to maintain the
same number of grant administrator positions when the
number of grants had been diminished. She continued that it
was not possible to travel as much when funding had been
reduced. She reasoned it was necessary to use other methods
of communication such as Skype and cell phones. She
acknowledged that the total travel cost could not be
eliminated - there were existing issues with broadband
capability. She was not proposing eliminating all
assistance, but she did not believe it was possible to
continue providing services at the same level. She added
that a policy call to consider was whether to discontinue
certain state services once a community reached a
particular size.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Wilson
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Seaton,
Foster
The MOTION to adopt Amendment H CED 9 FAILED (4/7).
4:45:22 PM
Representative Tilton MOVED to ADOPT Amendment H CED 10
(copy on file):
Serve Alaska
H CED 10 - Eliminate Serve Alaska
Offered by Representatives: Tilton, Wilson
There are two personnel at a cost of $244,162 to
administer a $1.9 million federal grant.
This amendment zeros all spending from all fund
sources and functionally eliminates the entire
program.
(Page 5, line 16 - 30-GH1855A)
Co-Chair Foster OBJECTED for discussion.
Representative Tilton explained that the amendment would
eliminate the Serve Alaska program and associated federal
funding. She referenced the program's mission to foster
support and promote the ethics of service and volunteerism
by inviting all Alaskans to contribute their time. She
believed it was something Alaskans already did without a
program. She detailed that the program had $237,700 in
personnel costs to the state (excluding any retirement and
benefit costs). She elaborated that the federal government
was also in a deficit position in providing $1.9 million to
help generate volunteerism. She believed the people of
Alaska already had volunteerism in their hearts. She did
not believe a program requiring state funds was necessary.
She reasoned there were other places and programs that
administered similar things including disaster services,
economic opportunities, economic and educational
opportunities. She believed there were several existing
programs that could absorb the services.
Representative Guttenberg spoke against the amendment. He
referred to the sponsor's statement about other places to
receive the services. He countered that to a large extent,
the Serve Alaska program was it. He continued that in many
ways instead of having employees administer the service,
volunteer programs had been created and efforts had been
made to train youth to do good things for society. He
discussed the proposal to cut $1.8 million after $195,000
in general funds. The state was in a partnership with the
Corporation for National Community Service. He continued
that the state was serving Alaska with RuralCap, which
administered resilient youth programs; it was also working
with Alaska Native youth programs to prevent substance
abuse and suicide. Additionally, the program worked with
AmeriCorps to create a youth taskforce working to engage
kids in high schools and peer-to-peer outreach. He also
listed the Sitka AmeriCorps program, Anchorage Parks
Foundation, and the Salvation Army.
Representative Guttenberg stated that over the years the
legislature had asked people to do more with less and
eventually more with nothing. He stressed that all the
state had to do was create an infrastructure, ask them to
bring in volunteers, and train kids with work ethic. He
underscored it was the lowest level of volunteerism to get
people to actually make a difference in their community and
to encourage young people to start off in a career of
understanding volunteerism. He hoped it would mean youth
would continue to volunteer in places like the Salvation
Army, church, community, and other for the rest of their
lives. It was not possible to merely tell a person to go
volunteer. The program accomplished a significant amount
with low dollars. He believed an infrastructure for
volunteerism was needed. He explained that even kids
cleaning up garbage in the spring had a supervisor
volunteer. He emphasized that the program accomplished a
significant amount at a very low cost.
4:50:21 PM
Vice-Chair Gara was opposed to the amendment. He addressed
comments made during the amendment discussion pertaining to
the Department of Commerce, Community and Economic
Development. He referred to an earlier statement that it
was necessary to start cutting the department's agencies.
He stressed the agency had been cut 65 percent in the past
several years. The department was supposed to make rural
communities more vibrant, help with the economy, and help
reduce the cost of energy across the state. He emphasized
that the proposed amendment would end AmeriCorps, which was
a bipartisan nationwide program. He did not understand why
someone would want to cut $200,000 and eliminate $2 million
in federal matching funds. He believed in AmeriCorps, which
he referred to as an urban Peace Corps. He opined that
eliminating the program in Alaska would be a grave mistake.
Representative Wilson believed AmeriCorps was already in
Fairbanks and went through the borough. She thought
nonprofits could pick it up and apply for the federal
funds, which she believed some were already doing. She
wondered why the state had provided funding for the
program. She questioned whether Anchorage or another
nonprofit had been asked to organize the program. She
underscored that the state was not responsible for always
providing funding. She believed at a certain point the
program no longer needed assistance from the state. She
supported AmeriCorps volunteers, but did not believe the
state should pay for it. She hoped the subcommittee chair
would look into whether the federal funding could be used
by a non-governmental entity.
4:53:36 PM
Representative Tilton provided wrap up. She had no problem
with AmeriCorps or any other volunteer program and
encouraged the programs. She shared that she had belonged
to the Lion's Club and had worked with young teens picking
up trash - she did not think it was necessary to go to an
organized program to learn how to volunteer. She stated
there were numerous opportunities in schools, churches, and
local Lions and Elks clubs. She stressed that the amendment
was not directed at any particular program. She did not
believe it was the state's responsibility to fund the
program. She reasoned it was necessary to consider whether
a program was a core service or constitutionally mandated
or whether it was merely a nice service.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Tilton, Wilson, Grenn, Pruitt
OPPOSED: Gara, Guttenberg, Kawasaki, Ortiz, Foster, Seaton
Representative Thompson was absent from the vote.
The MOTION to adopt Amendment H CED 10 FAILED (4/6).
4:55:42 PM
AT EASE
5:00:20 PM
RECONVENED
Representative Wilson MOVED to ADOPT Amendment H CED 13
(copy on file):
Economic Development
H CED 13 - Delete the allocation and all funding as it
does not contribute to the mission of the Department
Offered by Representative Wilson
This amendment deletes all positions and funding for
this allocation from the FY 18 budget request. The
mission of the Department is to promote economic
development opportunities, however, this allocation
does not contribute to the Department's mission.
Instead, the division focuses on research and
technical assistance that are not critical to the
life, health or safety of Alaskans.
Co-Chair Foster OBJECTED.
Representative Wilson read from the amendment description
[see above]. She elaborated that the amendment would remove
$769,400 from personal services, $91,200 from travel,
$720,100 from services, $20,300 from commodities, and
$2,900 from capital outlay. The amendment would remove five
permanent full-time positions for a total of $1,603,900
($173,300 in federal receipts, $783,500 in general funds,
$72,600 in interagency receipts, $109,600 in capital
improvement program receipts, $128,400 in statutory
designation, and $336,500 for vehicle rental tax (general
funds)).
5:02:39 PM
Representative Guttenberg addressed the amendment, which
pertained to the economic development mission of the
Department of Commerce, Community and Economic Development.
He read from a portion of the amendment description: "the
division focuses on research and technical assistance that
are not critical to the life, health or safety of
Alaskans." He stressed that the department focused on
economic development. He cited examples including Made in
Alaska, Alaska Products Preference, Minerals Commission,
tourism oversight for the state, visitor research, the
Alaska Regional Development Organizations designations, and
the Comprehensive Economic Development Strategy. He
referenced the fiscal deficit facing the state and reasoned
that economic development would be instrumental in
addressing the problem. He countered complaints about staff
doing research. He stressed that opportunities had to be
identified to capitalize on Alaska's resources. He reasoned
that without research it would not be possible to determine
correct decisions. Additionally, the decision making
process was expensive. He referred to the numerous funding
sources included in the amendment. He opposed the
amendment.
Representative Pruitt remarked that the subject was a tough
one. He detailed that everyone wanted to see economic
development; however, it was necessary to consider a
department or division's success in putting forward that
mission. He discussed that when the Department of Energy
had been formed the goal had been to move away from
utilization of oil from outside of domestic sources. He
expounded that at the time 70 percent of the country's oil
came from domestic sources, whereas at present it was 30
percent. Yet the state continued to spend a large amount of
money on the department. He did not know whether the
department's efforts had been successful - he believed it
was necessary to determine whether success in bringing
about economic diversification had occurred. He remarked
that the state continued to fund the department, but the
mission as it had been established "has not been there." He
was not trying to claim that no good work had been done by
the department. However, he believed the department was
"stuck in the same ways."
Representative Pruitt recalled a conversation several years
back with a former House Finance Committee member. He
shared that the conversation had been about a small company
with several employees. He elaborated that the state had
spent $100,000 trying to help the small company operate its
business. He remembered asking why. He stated that
unfortunately that type of situation occurred in the
Division of Economic Development. He continued that
sometimes it became less about how to create a larger
diversification versus work to help on a smaller scale. He
believed the legislature should potentially look at
eliminating the division's funding. He spoke to challenges
the state had created throughout various levels of
government. He relayed that the vehicle rental tax had
originally been intended to go towards marketing for
tourism; however, $336,000 was budgeted to go towards
economic development. He remarked that sometimes larger
cuts to the budget needed to be made because it was not
possible to cut small increments in the budget due to the
complexity of the bureaucratic system. He supported the
amendment.
Representative Tilton added that she wanted to encourage
economic development, but she believed one of the best ways
to foster economic development was to streamline permitting
and regulations, which she did not believe the department
did.
5:09:36 PM
Co-Chair Seaton opposed the amendment. He was surprised
that his colleagues would say that the legislature did not
need to worry about economic development. He detailed that
the division housed the ARDORs program [Alaska Regional
Development Organizations], which focused on many different
sections of the state. He continued that without the ARDORs
program there would not be regional economic development.
The division also included the Minerals Commission, which
was working on promoting different mineral locations across
Alaska. He pointed to the successful Made in Alaska program
that had diversified local economies and had enabled them
to produce for an Alaska product preference program. He
remarked that they could develop everything out of state
and could abandon looking for different opportunities, but
he did not believe it was something that should be done. He
continued that economic development was one of the things
the state had always tried to focus on because it did not
happen if directed efforts were not made by the state. He
believed the state needed to help where possible. He
concluded it was not possible to throw a substantial amount
of money into things, but the amount provided to the
division was not large.
Representative Wilson provided wrap up. She disagreed with
the comment that if the state did not do something,
economic development did not happen. She believed the
Minerals Commission, the ARDORs program, and research were
all positive; however, she questioned why the things needed
to be government services. She stressed there was a
research institution that the legislature heard about from
the University of Alaska. She asked what research the
department was doing that could not be done by the research
institution. She believed the Made in Alaska program could
be combined with tourism. She was uncertain why the vehicle
rental tax was being utilized by the division. She
emphasized it was not about whether the program was good or
bad, but about whether government needed to fund the
services. She believed many people from the private sector
would disagree with the statement that if government did
not provide the work it would not get done. She opined that
when government took on the work it was because the private
sector knew something would be expensive and would
ultimately not work.
Representative Wilson discussed that municipalities across
the state had their own economic development staff. She
continued that putting services in silos ended up costing
more money and did not result in increased success. She
thought the Minerals Commission could be housed under the
Department of Natural Resources. She believed
nongovernmental organizations could be eligible for federal
grants if the state chose not to utilize them. She opined
that more could be done at the local level with increased
participation. She emphasized that she did not believe the
people providing the services were bad in any way - the
larger question was whether the state should be doing the
work in the first place. She stressed that when the state
had been small it had been necessary for government to take
on the work because there had not been any real structure.
She underscored that times had changed and the state was
growing. She concluded the state should be able to stand on
its own two feet. She was in favor of seeing which programs
would be supported by Alaskans and communities. She
believed positive services offered by the state would be
picked up by the private sector or the University. She
underscored it was not necessary to have a department
focusing on the services.
Co-Chair Foster MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Tilton, Wilson, Pruitt, Thompson
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Seaton,
Foster
The MOTION to adopt Amendment H CED 13 FAILED (4/7).
HB 57 was HEARD and HELD in committee for further
consideration.
HB 59 was HEARD and HELD in committee for further
consideration.
Co-Chair Seaton announced the schedule for the following
morning.
ADJOURNMENT
5:16:04 PM
The meeting was adjourned at 5:15 p.m.
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