Legislature(2017 - 2018)HOUSE FINANCE 519
05/02/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: the Economy and Fiscal Policy Overview: Alaska Children's Trust and Northern Economics | |
| Presentation: the Economy and Fiscal Policy Overview: the Foraker Group | |
| Presentation: the Economy and Fiscal Policy Overview: Tanana Chiefs Conference and Central Council Tlingit and Haida | |
| SB107 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 107 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 2, 2017
1:37 p.m.
1:37:52 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:37 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 Mark Neuman, Alternate
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
Representative Lance Pruitt
ALSO PRESENT
Jane Pierson, Staff, Representative Neal Foster; Laurie
Wolf, President and CEO, Foraker Group; Natasha Singh,
General Council Tanana Chiefs Conference; Grace Singh,
Central Council Tlingit and Haida; Senator Anna McKinnon,
Sponsor; Speaker Bryce Edgmon; Representative Justin
Parish; Representative Lora Reinbold.
PRESENT VIA TELECONFERENCE
Trevor Storrs, Executive Director, Alaska Children's Trust,
Anchorage; Jonathan King, Economist, Northern Economics;
SUMMARY
SB 107 ALASKA CAPITAL INCOME FUND
SB 107 was HEARD and HELD in committee for
further consideration.
PRESENTATION: THE ECONOMY AND FISCAL POLICY OVERVIEW:
ALASKA CHILDREN'S TRUST and NORTHERN ECONOMICS
PRESENTATION: THE ECONOMY AND FISCAL POLICY OVERVIEW: THE
FORAKER GROUP
PRESENTATION: THE ECONOMY AND FISCAL POLICY OVERVIEW:
TANANA CHIEFS CONFERENCE AND CENTRAL COUNCIL TLINGIT AND
HAIDA
Co-Chair Foster reviewed the agenda for the afternoon. He
noted Speaker Bryce Edgmon was in the audience.
1:39:48 PM
JANE PIERSON, STAFF, REPRESENTATIVE NEAL FOSTER, read a
prepared statement from Dianne Kaplan of the Rasmusen
Foundation:
Dear Chairman and House Finance Committee members,
For the record, my name is Diane Kaplan, President and
CEO of Rasmuson Foundation and longtime Alaskan, and
resident of Anchorage. I write today to offer my
sincere appreciation and support for the efforts of
this committee and to all members of the Alaska
Legislature on both sides of the aisle, and in both
bodies, as well as to the Governor, for the nearly
universal recognition that the State's fiscal
challenges must be addressed this session.
With our savings balance now below $5 billion, less
than two years' worth of deficits, we have to take
meaningful action. Alaskans are expecting a solution
that will take the uncertainty out of their future. A
comprehensive solution can happen this session and the
elements needed are all within your reach.
· A long-overdue restructure of the Permanent Fund
into a percent-of-market-value (POMV) model that
both preserves the dividend and uses earnings to
support the State's general fund; combined with,
· A new broad-based revenue source.
· Sensible budget reductions; and,
· A revision of the state's oil and gas production
tax credit system into one that encourages
investment and production while also taking into
account the necessity of long-term fiscal
sustainability.
Each and every one of these elements is realistic.
Alaskans know the schools their children attend, the
roads they drive and the airports they rely on do not
come free. It is time for all of us to participate in
making this state economically healthy and successful.
We are all in it together, the time is now to make
sure our children, and grandchildren have the same
opportunities we have all had in this great state. I
implore you to give Alaskans the budget solutions they
are counting on. The decisions will not be easy but
Alaskans support you and are relying on you to make
the right choices.
^PRESENTATION: THE ECONOMY AND FISCAL POLICY OVERVIEW:
ALASKA CHILDREN'S TRUST AND NORTHERN ECONOMICS
1:42:03 PM
TREVOR STORRS, EXECUTIVE DIRECTOR, ALASKA CHILDREN'S TRUST,
ANCHORAGE (via teleconference), would be the main speaker.
He thanked members for the opportunity to testify. He
discussed a PowerPoint presentation, "Alaska Children's
Trust" (copy on file).
Mr. Storrs started with slide 2. He stressed the importance
of investing in early childhood education.
Mr. Storrs continued to slide 3: "Social Determinants." He
explained that that the most effective way to prevent child
abuse and neglect was by addressing the social determinants
that fostered an environment that promoted trauma and did
not build the resilience necessary to manage it. One key
social determinants that influenced a family's ability to
ensure that a child grew up in a safe, stable, and
nurturing environment was economics. He stressed that
families who lived in poverty were at greater risk of
neglecting their children. He stressed, however, that
poverty was not a cause of abuse and neglect.
Mr. Storrs continued to slide 4: "80 percent of Children in
OCS System Live in Poverty". He stated that most of the
children in the Office of Children's Services (OCS) would
be classified as living in poverty.
Mr. Storrs advanced to slide 5. He stated that when the
risk factors outweighed the protective factors, then child
abuse and neglect could occur. He stressed that a family's
level of fiscal stability played a major role.
Mr. Storrs continued to slide 6: "Reports":
1. Effect of AK Fiscal Options on
Children and Families
(ISER)
2. Analysis of State Fiscal Plans
(Northern Economics)
1:47:44 PM
Mr. Storrs detailed slide 7: "Effect of AK Fiscal Options
on Children and Families." He shared that there was a study
about how the different financial options would affect
families and children.
Mr. Storrs scrolled to slide 8: "How Much Might Different
Ways of Raising Revenues Cost Alaska Households per Person
Annually." He stated that a cut to the permanent fund
dividend (PFD) would have the greatest negative detriment
to families. He stated that households with children would
pay approximately 2.5 times more per person than those
without children for every $100 million of revenue. He
remarked that the next most costly to low income families
would be sales tax. He stated that all other measures,
except the graduated income tax, would cause households
with children more than those without children. He shared
that the report did not outline potential impacts of
further cuts.
Mr. Storrs discussed slide 9: "Analysis of State Fiscal
Plans: One Adult with Children." He relayed that the report
was not completed due to time constraints.
1:51:40 PM
Mr. Storrs transitioned to slide 10: "Adverse Childhood
Experiences Scored for Alaskan Adults and Their Five State
ACE Study Peers." He stated that a key component when
addressing the fiscal gap was demand for services. He felt
that further cuts or new revenue sources would not result
in change unless: 1. services were available to all
Alaskans regardless of their socioeconomic status; 2. there
was childhood investment; and 3. decreasing the level of
adverse childhood experiences (ACEs)in Alaska.
Mr. Storrs advanced to the pie charts on slide 11: "Alaskan
Adults and Their Income Status with Zero and Four Plus
ACEs." He noted that Alaskan adults with four plus ACEs
were twice as likely to make less than $20,000 per year
than their peers with zero ACEs. He stressed that the four
plus ACEs individuals utilized a much higher level of
services. The chart showed that those with high ACE scores
were the working poor. He stated that the estimated
lifetime cost per Alaskan victim of childhood neglect was
nearly $230,000.
1:54:42 PM
Mr. Storrs discussed slide 12: "Cost of Adverse Childhood
Experiences." He noted that 41 percent of Medicaid
enrollment in Alaska could be linked to ACEs with a cost of
approximately $360 million. He remarked that 32 percent of
Alaskan smokers likely smoked due to ACEs with a cost of
$190 million. He shared that 24 percent of non-gestational
diabetes were linked with ACEs with a cost of $110 million.
He stated that 14 percent of obesity cases in Alaska were
linked to ACEs with a cost of $31 million. He shared that
11 percent of binge drinking was linked to ACEs with a cost
of $70 million. He felt that the demand for services would
increase, and greatly impact the state budget.
Mr. Storrs stressed that the goal of the presentation was
to provide accurate data, and understand the effect of the
state's most vulnerable families.
Representative Wilson in looking at the income levels in
the different areas of the state. She wondered if there was
a way to compare the impacts of the different regions. She
mentioned North Pole versus Delta because of the local tax
structures being different.
1:57:05 PM
JONATHAN KING, ECONOMIST, NORTHERN ECONOMICS (via
teleconference), replied that the ISER report looked at the
effect of the state level taxes. He stated that the reduced
incomes from the plans would be same, regardless of region.
He understood that there were local taxes that may impact
the family's ability to adapt.
Representative Wilson commented the breaking point for the
families with local taxes would be greater than for those
without the local taxes.
Mr. King understood that logic.
Representative Wilson wondered whether the poverty level
would change after the taxes and PFD reduction.
Mr. Storrs responded that the poverty was defined in a
standard formula on the federal level, so there would be no
change in the poverty level.
Representative Wilson remarked that the tax expenses could
reduce the spendable income in a family.
Mr. Storrs responded in the affirmative.
Representative Grenn asked Mr. Storrs to comment on the
effects of the groups within Alaska Children's Trust (ACT)
Mr. Storrs replied that there had not been analysis within
the individual groups. He stated that the requests for
funding had increased. He remarked that without the
individual funding, the individuals were at risk of losing
services.
2:03:41 PM
Vice-Chair Gara thanked Mr. Storrs for the work he did for
children. He suggested that one of the proposals that was
before the legislature would include a $2.5 million cut to
children's services and the elimination of pre-K funding.
He queried comments on those issues.
Mr. Storrs reiterated that investing in children at an
early age would save taxpayers money in the long term. He
stressed that the best investment return was in prenatal
care. He stressed that the issue was not about increased
spending, but rather using the available funds in a wise
manner.
Mr. Storrs responded the goal was not to have children
removed from families but rather protected. The idea was
for children not to return to OCS.
2:07:25 PM
Vice-Chair Gara noted that there was an analysis about
budget cuts related to job losses. He referenced a proposal
that said that the legislature was looking for an
additional $750 million in cuts, and queried the effect of
public and private sector jobs.
Mr. King stated that he would be providing a presentation
regarding that question on Friday. He noted that there was
a model of an approximately $1 billion to the unrestricted
general fund (UGF), which would result in some additional
lost jobs of 44,000. He stated that a $750 million cut
could result in losing 20,000 to 30,000, with 5,000 to
7,000 being added to the status quo.
Vice-Chair Gara surmised that the total jobs were in both
the public and private sector.
Mr. King agreed, and stated that for every 10 public sector
jobs cut would lose 5 to 7 private sector jobs.
^PRESENTATION: THE ECONOMY AND FISCAL POLICY OVERVIEW: THE
FORAKER GROUP
2:10:22 PM
LAURIE WOLF, PRESIDENT AND CEO, FORAKER GROUP, introduced
herself and the PowerPoint Presentation, "The Nonprofit
Sector: Economic Impact in Alaska" (copy on file) She began
with slide 2: The Foraker Group":
Core Purpose: Strengthen nonprofits Core Values:
Strategic, Collaboration, Urban-Rural Native-
NonNative, Sustainability
4 lines of business to serve Alaska nonprofits and
tribes:
1. Educational Opportunities (online and in-
person)
2. Organizational Development (consulting,
facilitation)
3. Shared Services (back-room services) 4. State
Association (advocacy, research, statewide
initiatives)
Ms. Wolf advanced to slide 3, "Standing Beside Alaska
Nonprofits":
WE ARE PART OF EVERYDAY LIFE IN ALASKA
• We fill the gap between government services and
critical community needs
• We bring activities to Alaskans in ways that aren't
supported by commercial endeavors
• We are at the forefront of building communities,
creating change, and driving innovation.
• We focus on the greater good and have a significant
impact on the economy.
Ms. Wolf turned to slide 4: "4,800 501(c)(3) ORGANIZATIONS
REFLECT A VARIETY OF MISSIONS." She noted the different
organizations and the variety of missions within the
support of the Foraker Group.
2:15:07 PM
Ms. Wolf moved to slide 6: "ALASKA'S NONPROFIT ECONOMIC
IMPACT IS SIGNIFICANT":
$4.4 billion - direct expenditures by charitable
nonprofits
$2.1 billion - direct expenditures by other nonprofits
Total:
$6.5 billion - direct expenditures by all nonprofits
39,000 - total employees
Ms. Wolf scrolled to slide 7: "ALASKA NONPROFITS HAVE A
SIGNIFICANT ECONOMIC IMPACT." She noted that adding a
standard economic multiplier to the 39,000 jobs would
result in a larger impact of the nonprofit sector on the
state's economy. She remarked that 39,000 jobs could become
63,000 jobs in the state.
Ms. Wolf detailed slide 8: "Alaska Industry Comparisons":
• Oil
-110,000 jobs
-$6 Billion Wages
• Fishing
-78,000 jobs
-$1.6 Billion Wages
• Nonprofits
-63,000 jobs
-$2.5 Billion Wages
He pointed to the distribution on slide 9: "NONPROFITS
PROVIDE RURAL JOBS." She stressed that, in the country, the
nonprofit sector was 10.6 percent of workforce. She stated
that the nonprofit sector was approximately 12 percent. She
noted that the rural areas showed a greater impact of the
nonprofit workforce.
Ms. Wolf advanced to slide 10: "GOVERNMENT FUNDING
CONTINUES TO DECLINE -- A look at for 501(C)(3)." She noted
that mission related business income was increasing for the
nonprofits, and federal funding was decreasing. She
remarked that Alaskans typically "out gave" in households
across the state.
Ms. Wolf showed the statistics on slide 12: "Respondents:
Statewide, across subsectors, and primarily CEOs." She
stressed that it was unknown whether the nonprofits could
"make up for the losses in government funding at the same
rate that they are declining." He stated that organizations
were creatively partnering with government, businesses, and
other nonprofits.
Ms. Wolf moved to slide 13: "Nonprofit leaders are
generally pessimistic about the national landscape: Boards
are more pessimistic than CEOs." She remarked that there
were more board members than the CEOs, but they came from
every sector of the economy. She remarked that the
nonprofit CEOs were accustomed to "weathering storms" and
working in fairly difficult situations.
2:21:05 PM
Ms. Wolf scrolled to slide 14:" Nonprofit boards are more
anxious than CEO's about the state economy - overall worry
prevails."
Ms. Wolf continued to slide 15: "Alaska state fiscal gap is
effecting organizations primarily through funding and
uncertainty." She shared that most nonprofits stated that
the fiscal gap was affecting the overall mission, because
of funding.
Representative Grenn asked Ms. Wolf to clarify what funding
meant.
Ms. Wolf responded that the fiscal gap causing high
anxiety.
Ms. Wolf advanced to slide 16: "Nonprofits have less
unrestricted cash reserves readily available compared to
last year." She stated that the nonprofits were utilizing
savings to cover the cost of late government payments from
the year prior. She stated that nonprofits expected their
earned income to increase and the government funds to
decrease. She relayed that the philanthropy levels were
uncertain.
Representative Wilson queried the numbers of donations to
Pick Click Give.
Ms. Wolf did not have those numbers, but shared that the
numbers did not drop to the level of uncertainty.
Representative Wilson wondered whether there was a concern
about using the PFD to pay for an income tax.
Ms. Wolf replied that she did not know the answer.
Representative Wilson thought the information would be very
relevant to the discussion on the previous Friday.
2:25:47 PM
Vice-Chair Gara asked if there was a way to measure the
overall nonprofit funding. He wondered if the funding was
increasing or decreasing.
Ms. Wolf responded that both state and federal funding was
down. The Foraker Group would continue its efforts to
support nonprofits. However, philanthropy would not grow at
the same rate as in the past.
Vice-Chair Gara asked if lost jobs were reflected in the
contribution numbers.
Ms. Wolf thought it was too early to tell at present.
Representative Grenn wondered whether the Foraker tracked
corporate giving in the state.
Ms. Wolf responded that there was no single way to track
the data. The state had just begun at looking at the
information.
Representative Grenn noted that there had had mentioned
about some examples of collaboration.
Ms. Wolf agreed to provide that information.
2:31:30 PM
Representative Guttenberg wondered whether there was an
analysis of the stress of the staff in the nonprofits.
Ms. Wolf answered that Foraker had worked to create support
mechanisms for CEOs, development professionals, and direct
service providers.
Representative Neuman believed there were other ways to
approach work. He announced nonprofits believed the
cumbersome daily paperwork made up a large portion of their
operating expenditures. He asked if it was a big topic of
conversation amongst nonprofits. He wondered about tools to
reduce redundancy.
Ms. Wolf replied that she could not speak to the amount of
money. The group had encouraged the entities to work in
partnership. She recommended inviting the nonprofit leaders
to the table to get the answer. She stressed that if they
were not brought to the table a good answer would not be
obtained. Collaboration was desired; however, competition
was created. She spoke to making nonprofits compete for
funding and relayed that it was nonsensical. She strongly
encouraged legislators to invite the nonprofits to the
table.
Representative Neuman surmised that Ms. Wolf believed a
large expense for nonprofits related to red tape. He
queried the effect of regulation on the report.
Ms. Wolf did not have the data. She believed it was
necessary for legislators to decide the areas of
opportunities and to invite the nonprofits to the table.
Representative Neuman shared he had approached the governor
the previous year about the issue. He provided detail about
Administrative Order 266 - it had not gone far down the
line. He was frustrated about the process with nonprofits.
2:39:18 PM
Representative Guttenberg discussed that when nonprofits
went for grants there were caps on the amount that could be
used for administrative services. He reasoned that groups
would not pursue a grant if it did not make financial
sense.
Ms. Wolf replied by referring to the "overhead myth." The
group encouraged all funders to be realistic about what it
required to do their work.
Representative Grenn asked about administrative costs. He
shared a general scenario. He wondered if an organization's
costs were up to 70 percent.
Ms. Wolf answered it was too general of a scenario to reply
to.
Vice-Chair Gara mentioned some of the proposals with cuts
to senior services, children's' services, and mental health
services. He shared that there was a belief that the
nonprofits would cover those costs. He wondered whether the
nonprofits had the ability to address those large budget
costs.
Ms. Wolf replied that the nonprofits did not have the money
to cover the cost.
Vice-Chair Gara asked if her response was a "no."
Ms. Wolf elaborated that the non-profits were doing much of
their work on behalf of the state. She did not believe that
philanthropy would make up the difference in the budget in
the state.
2:44:49 PM
Vice-Chair Gara stated that applying for grants was
difficult in all business sectors.
Ms. Wolf argued that government funds were much harder to
ask for and to manage than private philanthropy.
Vice-Chair Gara remarked that he would have a discussion
after the meeting.
Representative Neuman referred to slide 10, and queried the
dollar value of the 30 percent of the funding revenue for
nonprofits.
Ms. Wolf clarified that he was looking for numbers from
2013. She stated that the earned revenue was $1.74 billion;
government grants was $1.48 billion; and contributions was
$330 million.
Representative Neuman remarked that, even with 10 percent
efficiencies, there would be an addition $148 million for
nonprofits.
Co-Chair Foster encouraged Ms. Wolf to continue.
Ms. Wolf discussed slide 17: "The most significant public
policy issue that needs to be addressed for organizations
to succeed." She stressed that the highest concern for
nonprofits was the Alaska state budget.
Ms. Wolf concluded with slide 18: "Nonprofits want:
Economic durability, predictability, stability":
· Budget cuts undermines the ability to deliver services
and ends up costing the state more in the long run.
· The price of doing nothing is substantial
· We are asking for long-term plan so we can plan, not
just react.
Ms. Wolf urged members to come up with a long-term fiscal
plan. Since 2015, The Foraker Group was asking for a long-
term fiscal plan. In closing, The Foraker Group stood with
the State in partnership.
Co-Chair Foster recognized Representative Justin Parish in
the audience.
2:50:58 PM
Representative Guttenberg agreed with Ms. Wolf's comment
that state is in partnership with non-profits. He wondered
whether the state had a comprehensive plan about how it
delivered the grants and services.
Ms. Wolf replied in the negative, and believed that no
state had that program.
Representative Wilson wanted to make a distinction of cuts
versus the restructuring of programs. She wondered whether
the larger programs should be examined, such as Medicaid,
to examine cost savings measures.
Ms. Wolf thought the representative had a healthy line of
reasoning. She stated that there were current experts.
2:54:41 PM
Representative Wilson wanted to have those experts to
present to the committee.
Co-Chair Seaton stated that the costs in current bills
could not be included in the conversations.
Ms. Wolf responded that the method mergers were expenses -
any reorganization cost money. They needed a comprehensive
plan.
3:00:04 PM
Representative Wilson clarified that she was referring to
the government process, not the nonprofit programs.
^PRESENTATION: THE ECONOMY AND FISCAL POLICY OVERVIEW:
TANANA CHIEFS CONFERENCE and CENTRAL COUNCIL TLINGIT AND
HAIDA
3:00:41 PM
NATASHA SINGH, GENERAL COUNCIL TANANA CHIEFS CONFERENCE,
introduced herself.
GRACE SINGH, CENTRAL COUNCIL TLINGIT AND HAIDA, introduced
herself.
Ms. N. Singh read from a prepared statement:
Mr. Chairman, members of the House Finance Committee,
THANK YOU for the opportunity to testify today. For
the record, my name is Natasha Singh, General Counsel,
Tanana Chiefs Conference. I offer greetings from our
CEO and Chief, Victor Joseph, who regrets that he
cannot be here in person with us today.
And for the record, my name is Grace Singh, Government
Affairs Liaison, for Central Council of Tlingit and
Indian Tribes of Alaska. And I offer greetings from
our President, Richard Peterson. Both President
Peterson and Chief Joseph are attending the Governor's
Tribal Advisory Council, which was scheduled before
this generous invitation. And we might as well get the
first question out of the way. YES. We are sisters.
And, yes, she's the older sister.
3:06:17 PM
Ms. N. Singh continued to read from a prepared statement:
Today we would like to spend a few minutes describing
the origins of Native regional nonprofits, our role in
our communities, and the scope of the services we
provide. We will also spend a few minutes talking
about the numerous ways our organizations intersect
with the State of Alaska, particularly where we
provide contract services to Alaskans on behalf of the
State. And along the way I'm sure we're going to touch
on a couple observations about the Fiscal Year 2018
budget that is under discussion here in Juneau.
While Tanana Chiefs Conference was not officially
formed until 1962, the history of how our organization
came to be dates back just over 100 years. In 1915,
tribal Chiefs from throughout the region joined
together to protect Native land rights, an issue that
continues today.
Today, Tanana Chiefs Conference (TCC) is a consortium
of 42 interior Alaska communities, 37 of those are
tribes. We provide a variety of services from land
surveying to dental health, tribal court support to
prevention services and we provide these services in
an area of 235,000 square miles or about 37 percent of
the entire state. TCC serves more than 16,000 Alaska
Natives in interior Alaska and an additional 5,000
non-native residents.
TCC and other tribes and non-profits have the
authority under federal law to provide health,
behavioral, workforce development and tribal
government support through federal contracts and
grants. Also through specific statutes and agreements
with the State, TCC provides state services, which we
will highlight more in a few minutes.
3:10:29 PM
Ms. G. Singh continued to read from a prepared statement:
Mr. Chairman, again for the record, this is Grace
Singh speaking... Central Council Tlingit and Haida
Indian Tribes of Alaska was formed in 1935 to pursue a
land settlement on behalf of the Tlingit and Haida
people. The organization of Tlingit and Haida evolved
out of the desire to retain a traditional way of life,
through the efforts of the Alaska Native Brotherhood
and Sisterhood.
Tlingit and Haida is unique among the state's regional
nonprofits, as a federally recognized regional tribal
government serving more than 30,000 tribal citizens.
Several of our peer nonprofits across the state
represent tribal consortiums, the largest of which
being TCC with 37 federally recognized tribes.
These nonprofit organizations provide services to
rural Alaska on behalf of the State and Federal
governments. These compacted services significantly
saves the State and Federal agencies money, as tribal
governments have the networks and infrastructure in
rural Alaska required to administer these programs.
Contrary to popular belief, these nonprofit service
providers are not 100 percent funded by Federal and
State agencies. The programs are often significantly
underfunded, and to provide quality services and
employees, tribes like Tlingit and Haida compensate
more than a million dollars a year for these programs
that benefit Natives and Non-Natives in rural Alaska.
In addition to being a stand-alone organization,
Central Council contributes to a partnership of five
regional nonprofits, known as the Alaska Regional
Coalition. Together we five nonprofits, which
includes:
· Central Council here in Southeast
· TCC in the Interior,
· Maniilaq in Northwest
· Kawerak in the Bering Straits region,
· Chugachmiut in Prince William Sound region,
Our coalition brings approximately one quarter of a
billion dollars in federal money annually to the State
of Alaska.
And while we are not here today to speak for other
regional nonprofits outside of our coalition, we would
point out that, together, the state's Native
nonprofits, whether they be Tribal authorities,
housing authorities, or health, or justice
organizations, the overall economic impact of our
organizations runs into the multiple billions of new
money to the state annually.
3:11:40 PM
Ms. N. Singh continued to read from a prepared statement:
Mr. Chairman, again, for the record, this is Natasha
Singh speaking... Today's topic, "Alaska's Economy and
Fiscal Policy," is a welcome conversation because the
state's Native regional nonprofits, we have a
significant role in delivering essential services to
Alaska residents. And not just to tribal members. It
is important to note here, on the record, that we
provide services to EVERYBODY in our communities, not
solely Alaska Natives. It is a myth that our services
are limited to one Alaskan and not another.
And this is as good a time as any to address a
misconception about Alaska Natives wanting an income
tax because we wouldn't have to pay it. This is not
the case. Our regional corporations, our development
companies, and our regional nonprofits generate
billions of dollars of revenue in the state. Not to
mention the thousands upon thousands of Alaska Natives
who live and work in our state. Or the hundreds of
high-paying jobs these entities create for non-Natives
who enjoy the benefit of working for any of our
numerous enterprises. Our staff and headquarters are
often located in the state's major population centers,
and we generate robust revenue for municipalities and
the state through our economic activity. We often hear
that we want an income tax because we would not pay
it. That is simply not the case. We want an income tax
because it is best for Alaska. We are part of this
state, and we contribute far more to the economy than
we are credited for in discussions about fiscal
policy.
That said, Tanana Chiefs Conference therefore has
numerous critically important intersections with the
State budget, primarily with the State Department of
Health and Social Services but also with the
Department of Public Safety, where we provide public
safety services in remote rural Alaska, with the
Department of Law, where we partner with the State of
Alaska to deliver judicial services that keep people
accountable to their communities and to the State,
with the Department of Labor for voc-ed and job
training, and with the Department of Education and
Early Development where we provide Head Start programs
on behalf of the State and U.S. Dept. of Education.
And, it should be noted, we provide these contract
services at a savings to the state.
Now we would like to provide specific examples of the
types of essential services that the state, through
Constitutional or statutory obligation, are provided
by TCC through contract.
I am very proud that our State through TCC is
committed to supporting our elders. The Senior
community based grants are specifically designed to
help elders maintain independence and remain in their
own homes and communities. We have an elder in
Nenana, Claude, who is able to live at home, which
save the state, but also is the place where he wants
to be. The community benefits from retaining the
elders' knowledge at home to teach the younger
generations.
In addition to elder services, the State, through TCC
provides a variety of programs for the disabled,
children with complex medical conditions, Alaskans
with traumatic brain injuries, or Alzheimer's disease
and related disorders. We provide programs and
services to improve the quality of life for people who
are impacted by mental disorders or illnesses. Really
the most vulnerable Alaskans.
3:12:55 PM
Ms. G. Singh continued to read from a prepared statement:
While most of TCC funding is through federal
contracts, interior Alaskan's rely heavily on State
funding for behavioral health and substance abuse
treatment. Unfortunately, as opioids and meth become
epidemic across our nation and state, more and more
Alaskan families are in need of these vital services
that either prevent abuse or treat abuse. The state
through TCC provides help to individuals at the onset
of a behavioral health crisis or psychiatric
emergency, recognizing - even at the earliest stages
of the intervention - that the goal is always to
maintain the individual in the least restrictive and
clinically appropriate ("closest to home") location.
We recently received a grant for the community of Tok,
predominately a non-Native community in which the
entire program was at maximum capacity before the
doors opened. TCC, on its own, is supplementing the
grant so we do not turn anyone away.
Alaska cannot afford to have less of these services
given the increased rates of drug use, we need more.
Given what Natasha said about the current epidemic of
drug use, it is more critical today to improve rural
public safety. Through contract with the Department of
Public Safety, we provide the Village Public Safety
Officer Program.
The VPSOs:
· Preserve public peace,
· protect life and property;
· and provide public safety
· for Alaska citizens both Native and Non-Native in
Rural communities.
The VPSO officers are first responders to violent and
emergency circumstances until the Alaska State
Troopers are able to travel to the villages.
This is an example of something that causes us some
concern. The Senate version of the operating budget
recommends a decrease of $200 thousand to fund Alaska
State Trooper positions.
While we support efforts to increase public safety
presence in Alaska, we do not want it done at the
expense of rural Alaska. In fact, the funds targeted
for reallocation are currently used to support the
VPSO program. These funds are primarily reserved for
VPSO positions, but when there are vacancies, those
funds can and are used to address recruitment and
retention efforts and unfunded mandates such as
holding cells and offices. We would hope the
Conference Committee supports the House version LINES
7 and 13 on the DPS "Motion Sheet."
However, if the Senate version is adopted, we would
ask that VPSO contractors be invited to participate in
preparation of the DPS report to the Senate about
efforts to improve recruitment and retention.
To be clear, Tlingit and Haida and the Alaska Regional
Coalition supports every effort to increase public
safety services throughout the State. And we encourage
the House and Senate to provide a complete fiscal
solution in order to provide these very necessary
services.
With the understanding of the extensive work provided
for the State by our regional nonprofits, I would ask
that you consider for a moment what is at stake if the
State:
· cuts funds to these programs,
· or selects a fiscal plan that relies on multiple
years of continued cuts
· without a complete plan in place to preserve
these essential services.
We recognize that the cuts identified by the legislature
and governor over the past three years were necessary to
address the changing fiscal landscape we face in Alaska
today. We also believe those cuts have gone far enough.
We believe that additional cuts jeopardize the
Constitutional and statutory obligations to provide
public safety and health and social services to all
Alaskans, regardless of their socioeconomic status or
where they reside.
Central Council Tlingit and Haida has contemplated that
question and this spring passed a resolution reaffirming
our support for a complete fiscal plan that includes a
progressive, broad-based revenue measure to balance the
regressivity of cuts to state spending and a cap on the
dividend. The Central Council resolution reads, in part:
"the Executive Council supports a multifaceted tax
structure that wholly addresses Alaska's fiscal
crisis; and opposes a tax structure that burdens
rural Alaska residents and communities."
3:16:41 PM
Ms. N. Singh continued to read from a prepared statement:
And the Tanana Chiefs Conference, also rightly
concerned about the State's ability to provide
essential services over time, TCC passed a resolution
in 2015 and this spring that echoes TH' resolution,
but also comes out explicitly in favor of a specific
type of revenue:
"Tanana Chiefs Conference supports the most
vulnerable including children, the elderly,
single parents, and low-income Alaskans and
opposes any State of Alaska deficit solution that
would disproportionally impact these vulnerable
groups; and … that Tanana Chiefs Conference
supports legislation that introduces an income
tax."
The members of The Alaska Regional Coalition of Native
regional nonprofits are at various stages of explicit
support for an income tax. TCC, Kawerak and AFN all
full support an income tax- but what we all have in
common is that we believe a complete plan is necessary
and that a progressive element is necessary to balance
the regressive elements of a cut and cap plan.
3:18:07 PM
Ms. G. Singh continued to read from a prepared statement:
It may come as no surprise to you that we support a
progressive revenue element to balance to regressive
nature of budget cuts and a dividend cap, that we
support a long-term solution over ones that leave it
to chance whether the State can balance its budget,
and that whatever plan the Legislature agrees to is
equitable across urban and rural Alaska.
3:18:53 PM
Ms. N. Singh continued to read from a prepared statement:
We hope that we have dispelled some myths today about
the contributions that our beneficiaries make in terms
of paying our share of the cost of providing state
services. We are willing to accept that a Permanent
Fund restructure and a dividend cap are reasonable
steps that this state must take, but we urge you to
consider the ethical and moral obligation we all have
to one another to balance those elements with a
progressive revenue measure to avoid
disproportionately impacting one Alaskan over another.
We are all in this together and we are proud to do our
part to stabilize the state economy and support a
complete fiscal plan.
With that, Mr. Chairman, we are available for
questions. And, again, thank you for the opportunity
to come speak with you today.
3:19:57 PM
Vice-Chair Gara apologized for the idea that a region of
the state may benefit another region more than another. He
appreciated the perspective of the senior community, and
various people who did not have a voice in the legislature.
Representative Neuman was confused. He asked about comments
made as to tax measures that would disproportionately
affect certain people. He wondered how TCC was in favor of
using the PFD.
Ms. N. Singh replied that a reduction of the PFD would
disproportionately negatively affect her beneficiaries. She
stated, however, that she would not support a Permanent
Fund restructuring, if that was the only option available.
Representative Neuman queried the ability to adjust to
regulations. He wondered how much extra paperwork and money
spent could be required to have adequate accountability for
the funds.
Ms. N. Singh replied that a large percentage of contracts
were federal contracts in the Self-Determined Education
Assistance Act. The federal regulations allowed for
compacts to piece together programs and the reporting was
done under one umbrella. She stated that there was already
an efficient system, which she felt that the state should
also adopt.
Representative Neuman continued to speak to the issue of
regulations.
3:26:24 PM
Representative Wilson mentioned that the oil tax reform was
a part of the solution. She asked about hearing concerns of
a change in tax regime.
Ms. N. Singh noted that both entities had not taken a
position on oil tax reform.
Representative Wilson stressed that oil tax reform was part
of the issue.
Ms. G. Singh commented on Representative Neuman question
about the capping of the PFD. She stated that restructuring
was part of the plan, because the income tax should not go
back as credit to the oil companies.
Ms. N. Singh stressed that there was a concern about job
loss in all sectors.
Representative Wilson asked about people's positions about
the overall impact of spendable cash. She asked if any
stress could be tolerated.
Ms. N. Singh responded that she believed that all of the
issues had been before the council.
3:31:15 PM
Representative Wilson asked about any other concerns that
were discussed. She asked Ms. N. Singh to share with the
committee.
Co-Chair Seaton thanked the presenters and acknowledged the
services provided by the organizations. He was appreciative
of other para-educators throughout the state. He referred
to an Institute of Social and Economic Research (ISER)
study related to children and families - the study broke
out the information. The idea that rural Alaska was poor
and did not have people who would pay income tax was
dispelled in the report. He reiterated his thanks.
Representative Neuman had heard the goal stated of treating
all Alaskans fairly. He spoke to reducing the Permanent
Fund Dividend.
Ms. N. Singh was going off the premise that Alaskan's were
different. The dollar means something different to
different groups of people.
3:36:19 PM
Representative Neuman commented that most Alaskans would be
able to absorb the costs. He asked if she recognized the
fact that people in the state had differences
Ms. N. Singh was not familiar with the specific bill
measures Representative Neuman was referencing. She
admitted that the circumstances were so difficult - both
the problems and the solution. She mentioned the word
"Compromise" and a long-term vision for the state. She
emphasized that there had to be a complete plan in the
current year.
Representative Guttenberg welcomed the testifiers. He
encouraged them to come often.
3:41:07 PM
Vice-Chair Gara asked if she wanted to see continued cuts.
Ms. N. Singh responded that she did not want to see further
cuts.
Co-Chair Foster discussed housekeeping.
SENATE BILL NO. 107
"An Act relating to the Alaska capital income fund."
3:46:12 PM
Co-Chair Foster relayed that it was the first hearing for
the legislation.
3:46:33 PM
SENATOR ANNA MCKINNON, SPONSOR, read the Sponsor Statement
(copy on file):
The State of Alaska maintains over 2,200 facilities,
which span over 14 entities, including the University
of Alaska and the Court system. These facilities total
19 million square feet of space and have a combined
replacement value of $8.6 billion.
The State's current outstanding deferred maintenance
backlog totals over $1.84 billion, which peaked in
FY2012 at $2.3 billion. With current funding levels
and no consistent funding source, the deferred
maintenance backlog is expected to trend up, causing
our facilities to fall into disrepair.
The Alaska capital income fund was created in 2006 and
receives an annual deposit of the earnings from the
Amerada Hess Settlement invested by the Permanent
Fund.
Senate Bill 107 envisions using these funds, which
cannot be used for dividends, to provide reliable
annual funding for preventative and deferred
maintenance. It is important we set up this mechanism
to continue to preserve our investment in these
facilities as the infrastructure ages and cost for
repairs and replacement increases.
3:48:09 PM
Representative Kawasaki wondered whether the language
restricted the use of the funds.
Co-Chair MacKinnon stated that she could not put restraints
on the use of the fund. The main intent of the bill was to
encourage future legislatures to spend the funding on
deferred maintenance.
Representative Kawasaki surmised that the bill could not
constrain other legislatures, but wanted to establish the
intent of the fund.
Co-Chair MacKinnon responded agreed.
Representative Kawasaki asked how much was in the fund at
present.
Co-Chair MacKinnon responded that it had a 6 percent
interest rate at approximately $26 million.
3:50:48 PM
Representative Thompson had been concerned with deferred
maintenance. He stressed that there were many deferred
maintenance projects.
Co-Chair Foster noted the other testifiers available for
questions.
Representative Wilson asked about the prioritization list.
Co-Chair MacKinnon responded that the capital budget
chairman would take the budget from the government to
evaluate the use of appropriations or general fund dollars
on an annual basis. The fund could be redirected to
prioritize deferred maintenance.
Representative Wilson wondered if there had been an
assessment of all of the smaller buildings, and whether
those buildings were still utilized. She queried who
decided whether a building be closed permanently .
Co-Chair MacKinnon responded that the state did most of the
prioritization, and thought some of the bill needed to go
through a more formal process.
3:54:45 PM
Representative Neuman asked why the bill was needed. The
bill was an advisory bill. He understood the importance of
maintaining buildings, but felt that the bill gave away the
appropriation authority of the legislature.
Co-Chair MacKinnon posed the question as to why the state
would not put its best foot forward to address deferred
maintenance. It was a step in the right direction. She
appreciated the question.
Representative Neuman asked about the naming of the fund,
and whether it bound future legislatures.
Co-Chair MacKinnon suggested that any future legislature
could do what it wanted.
Co-Chair Foster recognized Representative Reinbold in the
audience.
3:59:21 PM
Co-Chair Seaton asked if the item would be a part of the
capital budget or the operating budget.
Vice-Chair Gara did not want to vote for empty legislation.
Co-Chair MacKinnon stressed that the state had a budget
deficit, and the bill helped to assign funds for needed
deferred maintenance.
4:04:03 PM
Vice-Chair Gara commented that she was in the company of
Governor Walker and the previous governor.
Co-Chair Foster thanked the presenter and indicated he
would be setting the bill aside. He reviewed the agenda for
the following meeting.
SB 107 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
4:05:45 PM
The meeting was adjourned at 4:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 107 Sponsor Statement version A 04.13.2017.pdf |
HFIN 5/2/2017 1:30:00 PM |
SB 107 |
| 2017_02-EffectOfAlaskaFiscalOptionsOnChildrenAndFamilies.pdf |
HFIN 5/2/2017 1:30:00 PM |
HFIN Children's Trust |
| Northern Economics Final+Letter+Report- HFIN 5-2-17 040717.pdf |
HFIN 5/2/2017 1:30:00 PM |
HFIN |
| Summary 2017_02-EffectOfAlaskaFiscalOptionsOnChildrenAndFamilies_summary.pdf |
HFIN 5/2/2017 1:30:00 PM |
HFIN Summary Children's Trust |
| HFC Foraker Group 5-2-17 final share pptx.pdf |
HFIN 5/2/2017 1:30:00 PM |
|
| ACT Testimony1.pdf |
HFIN 5/2/2017 1:30:00 PM |
|
| Kaplan 2017_05_01_13_18_32.pdf |
HFIN 5/2/2017 1:30:00 PM |
HFIN Fiscal Ploicy Kaplan |