Legislature(2021 - 2022)ADAMS 519
04/29/2021 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB69 || HB71 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 29, 2021
9:43 a.m.
9:43:18 AM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 9:43 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Alexei Painter, Director,
Legislative Finance Division; Kelly Cunningham, Analyst,
Legislative Finance Division; Remond Henderson, Staff,
Representative DeLena Johnson; Megan Wallace, Director,
Legislative Legal Services, Alaska State Legislature;
Representative Matt Claman; Representative Sara Hannan;
Representative Cathy Tilton.
PRESENT VIA TELECONFERENCE
Dom Pannone, Administrative Services Director, Department
of Transportation and Public Facilities, Office of
Management and Budget, Office of the Governor; Brent
Goodrum, Deputy Commissioner, Department of Natural
Resources; Megan Wallace, Director, Legislative Legal
Services, Alaska State Legislature; Leslie Isaacs,
Administrative Service Director, Department of
Administration, Office of Management and Budget, Office of
the Governor; Scott Jordan, Director, Division of Risk
Management, Department of Administration.
SUMMARY
HB 69 APPROP: OPERATING BUDGET/LOANS/FUNDS
CSHB 69(FIN) was REPORTED out of committee with
five "do pass" recommendations, five "no
recommendation" recommendations, and one "amend"
recommendation.
HB 71 APPROP: MENTAL HEALTH BUDGET
CSHB 71(FIN) was REPORTED out of committee with
eight "do pass" recommendations, two "no
recommendation" recommendations, and one "amend"
recommendation.
9:44:01 AM
Co-Chair Foster reviewed the meeting agenda. The committee
would hear amendments on the operating budget.
HOUSE BILL NO. 69
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 71
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making
supplemental appropriations; and providing for an
effective date."
9:44:38 AM
Co-Chair Foster relayed that the committee would take up
the amendment process. He expected some amendments would be
bundled together. He explained that the amendment numbers
may not be in order. He asked members to notify him if
there was any confusion about the document that was being
addressed (copy on file). He would begin with the
governor's amendments. He asked the Office of Management
and Budget (OMB) director to put himself on the record for
any questions.
9:45:27 AM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, explained Amendment GA 1 related to
the Department of Transportation and Public Facilities
(DOT) northern region highways and aviation in the amount
of $330,000 unrestricted general funds (UGF). The
supplemental amendment applied to FY 21 and was intended to
pay for the cost of a winter storm event in the northern
region.
Co-Chair Foster MOVED to ADOPT Amendment GA 1 (copy on
file):
Department of Transportation and Public Facilities
Highways, Aviation and Facilities
Northern Region Highways and Aviation
Northern Region Winter Storm Event
A supplemental request for $331.0 is required to fund
the additional resources necessary to address an
extreme unexpected weather event. On April 2, 2021,
Northern Region experienced an unprecedented winter
event that the National Weather Service reports set a
new record for the most snow fall in a single event
during the month of April and is the
second-highest snow fall event on record for the area.
This event resulted in 12-22 inches of snowfall within
approximately 48 hours, followed by unseasonably high
winds. This caused extreme drifting, avalanches,
closed several roadways, and put many of DOT&PF's
roadways in a very difficult or hazardous driving
condition. The temperatures at the time of the event
hovered around 32 degrees, making the snow composition
high in moisture content.
Following the heavy snowfall and high winds,
temperatures dropped significantly within 24 hours to
well below zero, freezing much of the remaining snow
and ice to the roadways. This caused additional safety
concerns for the traveling public and made it
incredibly difficult to remove. In order to promptly
respond to this event, address roadway safety, and
return the infrastructure to pre-storm condition
(including protecting infrastructure from damage
during spring thaw), the region was required to
leverage additional resources (materials, overtime,
and contractor services).
Vice-Chair Ortiz OBJECTED for discussion.
Co-Chair Foster asked if the amendment pertained to the
haul road.
Mr. Steininger replied that he did not have the name of the
road on hand.
Representative Wool stated that he supported plowing roads
in Interior Alaska. He shared that he had been in Fairbanks
during the storm. He reasoned that it should not be
necessary to appropriate a line item budget for every
snowstorm. He noted it had been a light winter until the
event had taken place. He did not want to hamstring DOT,
but he thought it was unusual the department had not been
financially prepared.
9:48:19 AM
Mr. Steininger replied that typical plowing and road
maintenance was included in the DOT budget. He stated that
budgets for road maintenance had been constrained over the
past several years. Consequently, when there was a large
snow event requiring overtime and additional materials, the
department typically could not absorb the cost within its
normal budget without curtailing other maintenance
activities later in the year.
Co-Chair Foster highlighted various testifiers available
online for questions.
Representative Josephson shared that he had previously
lived in the Fairbanks area and was inclined to support the
funding. He noted there were numerous people in the
building that did not support spending beyond the SB 26
limit [Permanent Fund appropriation limit legislation
passed in 2018]. He referenced conversations that had been
taking place for years about concerns related to
overspending. He thought the funds could conflict with the
desire to pay a Permanent Fund Dividend (PFD) or fund the
capital budget. He thought the funding would compete with
those other items.
Mr. Steininger believed the question related to the zero
sum game of allocating resources. He stated that the safety
of road maintenance was a priority. He explained that the
supplemental amendment would ensure other road maintenance
was not curtailed to accommodate a one-time need from an
emergency event.
Vice-Chair Ortiz referenced the explanation about the DOT
cutbacks over recent years. He asked if the department
could speak about the particular area of department
spending. He asked for information on how the department's
current [financial] resources compared to four years
earlier. He asked how much funding had been cut in the past
four years.
Mr. Steininger responded that he did not have the
information on hand. He deferred the question to the
department.
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR (via
teleconference), believed one of the significant budget
changes for the northern region in the past several years
was a shift of roughly 25 percent of maintenance and
operations to federal funds, which drastically limited the
amount of reactive activities DOT could perform. He
explained that when the particular storm hit there had been
a chance of freezing and of the impacts worsening if not
addressed quickly. He detailed that state funding had been
cut approximately 25 percent in the past several years as
the state had migrated to using federal funds for
preventative maintenance.
9:52:42 AM
Representative Wool thought plowing snow fell under a
separate category from maintenance. Additionally, he
believed it had been a low snow year aside from the
specific storm. He believed the department had a snow
removal budget. He asked if one storm had knocked the
department off even in a low snow year.
Mr. Pannone replied that the snowstorm had been unexpected
on the verge of springtime. The event had required
contractors to truck snow out. He detailed that
preventative maintenance was allowed with federal funds to
preserve the life of an asset. He explained that normal
maintenance was in reaction to a weather event, which was
not federally eligible. He elaborated that the event had
not been in the department's budget for the year; it had
been an unanticipated expense DOT did not have funds for.
Representative Wool asked if the department had spent less
than normal on plowing prior to the event. He thought it
would allow for some surplus in the plowing budget.
Mr. Pannone responded that he did not have the information
on the plowing for the year. He reported that the storm
event exceeded the department's budget.
Vice-Chair Ortiz WITHDREW the OBJECTION.
Representative Carpenter OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Thompson, Wool, Edgmon, Johnson,
Josephson, Ortiz, Foster, Merrick
OPPOSED: Carpenter, Rasmussen
The MOTION PASSED (9/2). There being NO further OBJECTION,
Amendment GA 1 was ADOPTED.
9:56:36 AM
Co-Chair Foster MOVED to ADOPT Amendment GA 218 (copy on
file):
Department of Transportation and Public Facilities
Administration and Support
Statewide Aviation
GA 218
This Federal authority will allow the utilization of
FM CARES revenue for operational updates to the
Airport Security Plan (ASP), for the department's 15
Category III rural airports Get passenger service),
which is ineligible for standard AIP funding as it is
operational in nature. The Transportation Security
Administration requires the department to update these
plans.
Tasks include:
• a standardized, statewide ASP template
• six fully rewritten ASPs (Gustavus; Petersburg;
Wrangell; Yakutat; Sitka; and Dillingham)
• nine updated ASPs (Adak; Kodiak; King Salmon;
Bethel; Barrow; Cordova; Nome; Kotzebue; and
Deadhorse)
• the creation of two security guidebooks, one for
airport tenants and one for leasing staff
• training
Co-Chair Merrick OBJECTED for discussion.
Mr. Steininger explained the amendment for DOT would direct
$181,000 in Coronavirus Aid, Relief, and Economic Security
(CARES) Act receipts from the Federal Aviation
Administration (FAA) for FY 22. The increment would allow
for an update to the airport security plan. He explained
that the cost was not typically allowable under the Airport
Improvement Program (AIP) federal receipts; however, it was
allowable under the incoming FAA CARES Act funds. He
elaborated that the increment would enable the department
to update its airport security plan for category III rural
airports (airports that received jet service).
Representative Josephson asked how the legislature had
appropriated the FAA CARES Act funds.
Co-Chair Foster asked to hear from the Legislative Finance
Division (LFD).
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
answered that a portion of the funds had been used to
offset General Fund expenditures for rural airports;
however, several million in additional funds remained that
could be used in future years or for capital projects. He
reported there were more than enough FAA CARES Act funds
available for the increment.
9:58:58 AM
Representative Carpenter asked about a hypothetical
scenario where there was no federal CARES Act funding
available for the increment. Under the scenario, he
wondered if the state would be required to use state funds
to meet a federal requirement.
Mr. Steininger answered that the airport security plan was
not eligible for the annual federal AIP receipts. He
confirmed that without CARES Act funding, it would require
a General Fund expenditure. He deferred to Mr. Pannone for
further detail.
Mr. Pannone replied that the item would normally have been
a request likely for state funds. The item was a one-time
need and could not be absorbed in the budget. He elaborated
that DOT had seen the opportunity to request using [CARES
Act] funds for the one-time update of the security plan.
Representative Carpenter remarked it was a good thing the
state had received excess federal funds for FY 22.
Co-Chair Merrick WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment GA 218 was
ADOPTED.
10:00:51 AM
Co-Chair Foster MOVED to ADOPT Amendment GA 215 (copy on
file):
Department of Administration
Alaska Public Offices Commission
GA 215
Statement of Costs for Alaska Public Offices
Commission (Ballot Measure 2)
The passing of this ballot measure requires additional
oversight, regulation, filer education, and
enforcement activities for the Alaska Public Offices
Commission requiring an additional Associate Attorney
I position (17A) (-$91,500) and associated overhead
costs including computer equipment, core services, and
general supplies (~$9,000). Approximately 50
programming hours will be required to design, test,
and deploy additional disclosure forms within the
agency's online filing program (~$2,850).
Background: Ballot Measure 2 passed in the 2020
general election making changes to campaign disclosure
reporting requirements. The measure will go into
effect during the upcoming April 2021 Anchorage
municipal election cycle and requires independent
expenditure groups involved in candidate election
activities to report lo the Alaska Public Offices
Commission within 24 hours of receiving a
contribution. It also requires the contributor to
report within 24 hours of contributing to a group.
Provisions extend these same reporting requirements to
independent expenditure groups and their contributors
involved in ballot measure campaign activities.
Co-Chair Merrick OBJECTED for discussion.
Mr. Steininger explained the amendment related to the
Department of Administration (DOA) Alaska Public Offices
Commission (APOC) in the amount of $100,500 UGF. The
amendment would accommodate cost increases as a result of
Ballot Measure 2. The costs included the addition of a
position and programming work needed in order to update
APOC's system to accommodate new requirements under the
ballot measure.
Co-Chair Merrick WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment GA 215 was
ADOPTED.
10:01:54 AM
Co-Chair Foster MOVED to ADOPT Amendment GA 216 (copy on
file):
Department of Administration
Alaska Public Offices Commission
GA 216
Statement of Costs for Alaska Public Offices
Commission {Ballot Measure 2)
The passing of this ballot measure requires additional
oversight, regulation, filer education, and
enforcement activities for the Alaska Public Offices
Commission requiring an additional Associate Attorney
I position {17A) (~$91,500) and associated overhead
costs including computer equipment, core services, and
general supplies (~$9,000). Approximately 50
programming hours will be required to design, test,
and deploy additional disclosure forms within the
agency's online filing program (-$2,850).
Background: Ballot Measure 2 passed in the 2020
general election making changes to campaign disclosure
reporting requirements. The measure will go into
effect during the upcoming April 2021 Anchorage
municipal election cycle and requires independent
expenditure groups involved in candidate election
activities to report to the Alaska Public Offices
Commission within 24 hours of receiving a
contribution. It also requires the contributor to
report within 24 hours of contributing to a group.
Provisions extend these same reporting requirements to
Independent expenditure groups and their contributors
involved in ballot measure campaign activities.
Vice-Chair Ortiz OBJECTED for discussion.
Mr. Steininger explained that the amendment was related to
the implementation of Ballot Measure 2 and included $2,900
in one-time costs associated with updating APOC's
electronic system for collection of information.
Vice-Chair Ortiz WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment GA 216 was
ADOPTED.
10:02:32 AM
Co-Chair Foster MOVED to ADOPT Amendment GA 217 (copy on
file) [note: due to the length of the amendment it is not
fully included, see copy on file for additional detail]:
Department of Natural Resources
Fire Suppression, Land & Water Resources
Mining, Land & Water
GA 217
Advancing State's Rights in Navigability and Revised
Statute 2477 (FY22-24)
Advancing State's Rights in navigability and RS2477
(Revised Statute 2477) is focused on maximizing
Alaskans' access to, and use of, the lands and natural
resources of our state. This strategy/Initiative will
advance state sovereignty by advocating for and
protection of the rights the State acquired at
statehood, review of federal land use plans and
rulemaking to ensure State projects and access to our
resources remain on track.
Co-Chair Merrick OBJECTED for discussion.
Mr. Steininger explained the amendment pertained to the
Department of Natural Resources (DNR) Division of Mining,
Land and Water in the amount of $695,000 UGF for advancing
the state's rights for navigable waterways as well as
defense of state rights on resource development and other
lands related items. The temporary increment included three
PCNs [position control numbers] from FY 22 through FY 24.
Representative Josephson requested an "at ease."
10:03:38 AM
AT EASE
10:07:21 AM
RECONVENED
Co-Chair Foster noted the committee was considering GA 217.
Representative Wool noted that the amendment category
included fire suppression. He asked how fire suppression
pertained to the amendment.
Mr. Steininger replied that the first line of the amendment
"fire suppression, land and water resources" was the
appropriation the division allocation fell under. The
division shared an appropriation with fire suppression, but
the amendment did not pertain to fire suppression.
Representative Carpenter asked for more information on the
relationship between the Public Access Assertion and
Defense (PAAD) unit and the Office of History and
Archaeology.
Mr. Steininger replied that the PAAD unit worked with the
Office of History and Archaeology to do some of the
necessary historical and archaeological work to defend the
state's rights issues on management of its land and
resources.
Co-Chair Foster asked to hear from DNR.
BRENT GOODRUM, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES (via teleconference), relayed that the PAAD unit
did the heavy lifting for the department and state on
navigable waters and RS 2477 access statewide. He
elaborated that the PAAD unit had a working relationship
with the Office of History and Archeology. He stated it was
critically important in many of the RS 2477 works to go
back in history to prove access across specific routes. He
explained that the legislature had codified over 600 RS
2477s throughout the state. He detailed that the department
generally funded the work via an RSA [reimbursable services
agreement]. The effort looked to place a historian within
the PAAD unit as the administration anticipated more
litigation with the new federal administration on RS 2477
access rights that were critical in ensuring the state had
full enjoyment and use of its rights gained at statehood.
10:10:48 AM
Co-Chair Merrick WITHDREW the OBJECTION.
Vice-Chair Ortiz OBJECTED.
Representative Josephson remarked that the issues were
complicated, and he did not know how all Alaskans viewed
them. He was concerned that the funding pitted the state
against the federal government in an unnecessary and
uncooperative way. He believed it impacted areas people
want for wilderness without seeing the abuse of every
easement. He recalled the Klutina Lake dispute the state
engaged in with Native Alaskans in the Ahtna area north of
Cordova and noted there had been a recent partial
settlement. He saw that some of the funding in the proposed
amendment would go towards the Ambler Road. He stated that
the proposed 200-mile road would kick up dust and impact
subsistence. He had traveled to meet with people in the
region, particularly in the Allakaket area, and had been
unimpressed by the project. He stated the project was a
great money maker for its benefactors and would provide
some jobs; however, he noted it would leave some issues
behind. He stressed that the benefit to the state treasury
was de minimis. He highlighted that the project was
strongly opposed by tribes in the area. He added that Doyon
also had concerns, but it had reached a recent agreement.
He did not support the funding.
Representative Rasmussen opposed the amendment. She stated
that it did not seem like the tasks were best served by a
full-time employee. She would be more comfortable looking
at contracting to get some of the items accomplished
without growing the number of permanent state positions.
Representative Carpenter MOVED to ADOPT a conceptual
amendment to change the increment to a one-time expense.
Vice-Chair Ortiz objected for discussion.
Representative Carpenter sensed that the committee may not
approve the amendment because it created full-time
positions into the future. He was weary of creating full-
time positions; however, he saw a need. He stated that the
conceptual amendment was a compromise, and the legislature
could decide whether it wanted to continue the expense
during the next budget cycle.
10:15:00 AM
Co-Chair Foster was supportive of efforts to gain access to
lands. He relayed there was a national park on the Seward
Peninsula where residents would like to get through for
recreational purposes. He supported the amendment.
Vice-Chair Ortiz asked if the $695,000 would be spread out
equally over three years.
Mr. Steininger explained that the increment would be
$695,000 per year for three years.
Representative Rasmussen asked if amending the amendment to
a one-time increment would automatically eliminate the one
full-time position. She asked if it was necessary to
specify the positions would be temporary.
Representative Carpenter explained the intent of the
proposed conceptual amendment was to authorize $695,000 and
three permanent full-time positions for one year. The idea
was to return the following year and decide whether to
continue the funding.
Co-Chair Foster asked to hear from DNR.
Mr. Goodrum replied there was significant uncertainty about
job security when recruiting a position funded as a one-
time increment. He explained that the proposal was a three-
year effort from FY 22 through FY 24. He stated that the
next three years would be a "slog" at times with the
federal government. He understood Representative
Josephson's concerns that the issues were not necessarily
fights the state wanted to pick; however, the
administration felt it was critical to establish the
state's rights inherited at statehood for current and
future generations and afforded by the equal footing
doctrine when the state entered the union. He was
supportive of the three-year funding [in the original
amendment]. He reiterated there were many challenges with a
one-time increment including the ability to hire quality
people in the positions.
10:18:09 AM
Representative LeBon appreciated the effort by
Representative Carpenter to help move the program forward;
however, he echoed Co-Chair Foster's comments about the
importance of access and RS 2477 issues. He stated that the
issues were worth protecting and funding on a three-year
basis. He opposed the conceptual amendment and supported
the original amendment.
Co-Chair Foster relayed that he was inclined to support
funding for the full three years after hearing from Mr.
Goodrum.
Representative Rasmussen asked if there were currently any
funded unfilled positions within the division.
Mr. Goodrum replied there were some vacant positions within
the Division of Mining, Land and Water. For example, the
department had the PAAD unit work for months to identify
navigable waters, which the administration had recently
unveiled on March 26. The department had put the public and
federal agencies on notice about the navigable waters that
went through Alaska National Interest Lands Conservation
Act (ANILCA) and National Parks Service units and the
Tongass, which were owned and should be rightfully managed
by the state. He reported that in order to do the
accelerated work, the department had to use about $17,000
internally to get other assistance in creating the GIS
[geographic information system] layer that was important to
share with the public. He relayed resources had been tight
and the PAAD unit had a deficit of about $600,000 since FY
16. The department was trying to reconstitute some of the
previous capacity in order to move forward on the important
state's rights issues.
10:20:29 AM
Representative Edgmon believed Amendment GA 217 was
twofold. First, he believed the amendment would take
advantage of American Rescue Plan Act (ARPA) funds to
offset the amount. Second, he interpreted the amendment as
aiming to build a capacity in light of what the current
federal administration would present in terms of the
state's rights issue. He noted there was another amendment
for $4 million that appeared to tie into the same issue. He
was concerned what the issue could mean for rural
preference for subsistence rights. He thought the impact
may be de minimis or not. He knew there was concern that
the effort could bring the entire prospect up again, in
terms of navigability. He asked whether Mr. Goodrum could
allay some of his concerns.
Mr. Goodrum answered that the navigability initiative
pertained to ownership rights the state received at
statehood. He elaborated that the U.S. Supreme Court in the
Sturgeon decision unequivocally ruled that the navigable
waters, particularly in ANILCA units created after
statehood in 1980, were not public lands to be administered
by the federal government, but were in holdings; therefore,
the state had the right and authority to help manage the
lands. He deferred to the Department of Fish and Game (DFG)
on issues related to subsistence and the management of fish
and wildlife. He stressed that from a land ownership
perspective, the state was the rightful owner; therefore,
it was the state that managed access and other things with
regard to navigable waters.
Representative Edgmon believed that based on the response,
the rural preference for subsistence went away given the
transaction going from federal control to state control. He
did not know to what degree, but it was a concern. He was
not supportive of the amendment.
10:23:17 AM
Co-Chair Foster supported Representative Edgmon's
statements and hoped the funds were not used in a way that
was in opposition to subsistence. He clarified that his
support for the amendment pertained to land access and the
use of old historical trails that may route through a
national park.
Representative Rasmussen noted there were many tough
decisions facing the legislature when it came to limited
funding for projects across the state. She thought the
project appeared to be important and she hoped that the
department would look at some of its vacant positions and
potentially reprioritize.
Representative Carpenter WITHDREW conceptual Amendment 1.
Vice-Chair Ortiz MAINTAINED his OBJECTION to Amendment GA
217.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Carpenter, Johnson, LeBon, Merrick,
Foster
OPPOSED: Ortiz, Rasmussen, Edgmon, Josephson, Wool
The MOTION PASSED (6/5). There being NO further OBJECTION,
Amendment GA 217 was ADOPTED.
10:25:47 AM
Co-Chair Foster relayed there was no Amendment GA 218. He
shared that Amendments GA 219 and GA 220 were both related
to oil and gas tax credits. Additionally, there was a
committee member amendment on the topic in the amendment
packet. He informed the committee that the amendments would
be considered later in the meeting.
10:26:41 AM
Co-Chair Foster MOVED to ADOPT Amendment HLS, 132-
GH1509\N.26 (Marx, 4/28/21) (copy on file) [note: due to
the length of the amendment it is not included in its
entirety, see copy on file for complete detail].
Description:
Technical Amendment
Ensure all supplementals and reappropriations have
appropriate effective dates
Sections 4 through 27 should have an immediate
effective date, with the exception of the following
reappropriations that should have a 6/30/2 I effective
date:
Sec. II
Sec. 20
Sec. 34(h), RPLs for community direct payments
Sec. 35 DOC federal man-day carryforward
Sec. 36(b) DEED grants to educational entities
and nonprofit and nongovernment organizations
Sec. 45(m)(2) Medicaid reappropriation for School
Bond Debt
Sec. 47(i) Medicaid reappropriation for REAA
Add supplemental section for Insurance (matches Sec. 6
from the Governor's fast-track supplemental HB 68).
Change Section 26 (Community Block Grants) to an
estimate and match the Governor's request (instead of
"not to exceed")
Add section 7 (supplemental capital section) to
capital lapse section
Remove erroneous transfer of$47,200 from numbers
section associated with DHSS split
Remove inadvertent double funding of Blood Bank Grant
($2,300 UGF from Numbers section)
Corrected AHFC Dividend funding in FY21 to avoid
$16,100 over-appropriation
Co-Chair Merrick OBJECTED for discussion.
Mr. Painter explained that the amendment had several parts
and was a series of technical fixes to the CS identified by
LFD and Legislative Legal Services. He relayed that the
first page of the amendment [shown above] provided a
summary of the proposed changes. He explained that most of
the changes were to effective dates to ensure all of the
supplementals had the correct dates. He detailed that the
reappropriation items had a June 30, 2021 effective date to
allow the reappropriation to be effective when the funding
was available. He elaborated that all of the other
supplemental items had an immediate effective date under
the amendment. He noted previously some of the items had a
June 30 effective date, which could cause delays.
Mr. Painter explained that the next item added a
supplemental section for insurance. He detailed the
provision was typically included in the capital budget, but
it had been inadvertently left out the prior year when the
capital bill was rolled into the operating bill. The item
would allow funding received by the state from insurance
claims to be spent by agencies. The next item was a
technical fix to Section 26, community block grants. He
expounded that the section had inadvertently included the
language "not to exceed," however, it should be an
estimate, which was corrected by the amendment. The next
item added the supplemental capital sections to the capital
lapse section of the bill, ensuring the projects would
lapse as capital projects.
Mr. Painter relayed there had been an erroneous transfer
item left in from the governor's DHSS split that
transferred funding. He explained that most of the items
had not been accepted because the item was not moving
forward. He elaborated that one of the items had been
inadvertently copied forward and caused an issue of
$47,200. Additionally, there had been inadvertent duplicate
funding of $2,300 for the Blood Bank grant in the numbers
and language sections of the bill. The amendment removed
$2,300 from the numbers section; the amount remained in the
language section. The amendment also corrected the Alaska
Housing Finance Corporation (AHFC) dividend usage in FY 21.
There had been an inadvertent over appropriation of the
dividend by $16,100.
10:29:41 AM
Co-Chair Foster explained that the amendment was technical
in nature.
Co-Chair Merrick WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment HLS 1 was
ADOPTED.
10:30:40 AM
AT EASE
10:38:55 AM
RECONVENED
Co-Chair Foster MOVED to ADOPT Amendment HLS 2 (copy on
file).
Representative Rasmussen OBJECTED. She WITHDREW Amendment
HLS 2 and relayed her intent to address the item in the
capital budget.
Co-Chair Foster noted that Amendment HLS 2 was an FY 21
supplemental for $5 million for an energy study that would
be taken up during the capital budget process.
Representative Rasmussen MOVED to ADOPT Amendment HLS 3
(copy on file):
Fiscal Year: FY 21 Supplemental
Department: Department of Environmental Conservation
Appropriation: Environmental Health
Allocation: Environmental Health
Add: 457.7 UGF (1004)
Delete: 457.7 CPVEC (1166)
Explanation: The current use of the CPVEC for
shellfish testing is not a designated use of the fund.
Shellfish and shellfish growing waters would require
testing whether or not there was a cruise ship
industry, and the tests are required regardless of
whether there is nearby cruise ship activity.
Co-Chair Foster OBJECTED for discussion.
Representative Rasmussen explained she had learned the item
was not a designated use of the CPVEC [Commercial Passenger
Vessel Environmental Compliance] fund. She elaborated that
the Department of Law (DOL) and Legislative Legal Services
had indicated the use was not legal. The amendment would
replace the CPVEC funding with $457,700 UGF.
Co-Chair Foster clarified the amendment would be in the FY
21 supplemental and would replace the entire amount coming
from the cruise ship head tax with UGF.
Vice-Chair Ortiz did not support the amendment. He stated
that the use of CPV [commercial passenger vessel] funds had
been used for shellfish for the past eight or nine years.
He elaborated that the use had not been challenged during
that time and was not part of the lawsuit brought forward
in relationship to the way communities were using some of
the CPV funds. He stated that it had never been an issue
for anyone up to the current point. He questioned whether
it would be a good use of UGF funds at a time when funds
were limited.
10:42:02 AM
Representative Carpenter asked if there was someone
available from Legislative Legal Services who could speak
to the amendment.
Co-Chair Foster replied that there was not a representative
from Legislative Legal present. He asked Mr. Painter to
address the amendment.
Mr. Painter prefaced his remarks by stating he is not an
attorney. He shared information based on his prior
conversations with Legislative Legal Services on the topic.
He detailed that under the federal constitution, taxes
collected on interstate commerce could only be used on
direct costs related to that item. For example, certain
airport revenues could only be spent on airports. He
explained that the attorneys thought the use of funds
stretched a bit too far from being a direct cost of the
passenger vessels because shellfish testing would be
necessary with or without the presence of cruise ships.
Co-Chair Foster noted that amendments could always be set
aside if the committee needed follow up by Legislative
Legal Services.
Representative Carpenter thought it would be good to hear
from Legislative Legal Services on the topic.
Representative Josephson referenced Vice-Chair Ortiz's
remarks that there had never been litigation on the issue
in the past. He observed that the cruise ship industry
would litigate at any opportunity it wanted. For example,
the industry had challenged the use of the funds for the
humpback whale statue [located in Juneau]. He asked for
verification that the industry had not challenged the
shellfish testing monies.
Mr. Painter affirmed there had not been a legal challenge
on the topic. He added that the [cruise ship] industry had
broad legal challenges about local community spending but
not on state spending.
Representative Josephson asked about the health of the fund
given the absence of cruise ships in the past year.
Mr. Painter replied there had been a fairly healthy balance
prior to COVID-19. He did not know the current balance of
the CPV fund.
Representative Thompson asked if the shellfish industry
contributed any money toward the testing.
10:45:30 AM
Mr. Painter replied in the negative. He detailed there was
not currently a fee for the service. He expounded that DEC
had done a study in the past about whether a fee structure
could be established; the study had determined there would
be minimal revenue that the industry could bear
economically. He believed there was a related statute. He
noted the topic had been discussed in subcommittee, but the
industry did not currently pay fees. He added there had
been a proposal to implement a fee by the governor in the
past couple of years; however, it had been rejected by the
legislature.
Vice-Chair Ortiz referenced a packet he had distributed to
members on the topic [labeled "HB 69 Additional Info Ortiz
to Amendment HLS 3"] (copy on file). The packet included
testimony submitted by an oyster producer specifying the
cost of sending the samples for testing to Anchorage was
$20,000 annually. He remarked that it was possible to argue
that protecting the public via restaurant inspections and
other ways related to food consumption was one of DEC's
duties. He stated that the testing requirement was a
protection of the general public. He noted that the oyster
farmer also testified that he supplied seven or eight
cruise lines with his product. He reasoned in that sense
the cruise ship passengers were directly being protected by
the testing taking place. He concluded that while the
industry did not contribute to the testing cost, there was
a significant cost of providing the samples up to the
testing facility.
10:48:09 AM
Representative Wool surmised the shellfish industry paid
for the shipping but not the testing of the shellfish. He
stated he had been in the restaurant business for many
years and had been required by DEC to have his water tested
regularly to protect the public. He stated that he had paid
thousands of dollars per year for the testing. He
understood that water was different than shellfish as it
was easier to transport. He asked if there were other
things the CPV fund was used for that could be considered a
stretch as far as the use of the funds. He understood that
cruise ship passengers ate shellfish and wanted to be
protected.
Mr. Painter replied not that he was aware of. He relayed
that at one point the state was using the funding source to
pay for fish tissue monitoring, which had a nexus to the
cruise ship industry but was not directly related. He
stated that generally the funds were used for the cost of
regulating the industry.
Representative Wool asked if the fish tissue study
[funding] was discontinued due to pressure from the cruise
ship industry claiming it was an inappropriate use of the
funds. Alternatively, he asked if the fish tissue study had
been deemed no longer necessary.
Mr. Painter answered it had been designed as a short-term
program, but he could verify.
10:50:39 AM
Representative Rasmussen noted the cost breakdown provided
by the oyster farmer [included in the packet provided by
Vice-Chair Ortiz] was mostly operating costs for wages,
fuel, and other related items. She observed that getting
the test off appeared to be very expensive, but she
believed much of the expense was operating cost incurred
directly by the business.
Mr. Painter responded to an earlier question about the
CPVEC fund balance. He reported that the fund balance was
projected as slightly negative in FY 21 at approximately
-$149,000. He stated that without a cruise ship season the
fund balance was projected to be -$4 million in FY 22 due
to the regular expenditures coming out of the fund.
Representative Rasmussen asked if the fund was currently in
the negative.
Mr. Painter answered that if there were no cruise ships in
FY 22 the fund balance would be -$4 million. He elaborated
that if there were cruise ships in the later half of the
fiscal year, the fund could potentially make some of the
money back.
Representative Rasmussen asked for detail on the deficit.
She asked what would happen if the fund source for
shellfish testing remained CPVEC and the balance of the
fund for FY 21 was negative. She asked if the state would
incur a greater deficit or be unable to release the funds.
Mr. Painter answered that the legislature would need to
address the item as expenditures, which could not occur if
there were no funds. He relayed that it would likely be an
allowable use of ARPA funds to backfill lost revenue, but
the legislature would need to appropriate the funding.
Representative Josephson asked if the CVPEC fund was the
funding source for the ocean ranger program as well.
Mr. Painter replied, "Not directly." He elaborated there
were two separate fees including the $4 fee for ocean
rangers and the sliding scale environmental compliance fee
based on the size of vessels. He explained that the fees
went into the same account but were tracked separately.
10:53:25 AM
Representative Josephson was sensing the amendment was
imperative and not discretionary. He stated that the item
could not be funded with deficit spending. He asked if the
department could absorb the cost another way.
Mr. Painter believed the department would have to reduce
expenditures.
Co-Chair Foster asked to hear from Legislative Legal
Services on the legality of the use of CPV funds for
shellfish testing.
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE (via teleconference), answered that
tonnage clause and federal law required that money derived
from state taxes or fees must be used for service to the
vessel or to enhance the safety and efficiency of
interstate commerce. The question about whether using the
funds for shellfish testing was an appropriate use under
federal restrictions was unresolved. She shared there was a
district court case in Alaska in 2018 that reiterated any
permissible tax or fee may only be expended for services to
the vessel and may not used solely for the benefit of
passengers. She stated it sounded like there were some
potential creative arguments that the testing did benefit
passengers; however, Legal Services saw some risk because
the funds were not being used for services related to
vessels or going directly to interstate commerce.
10:56:40 AM
Vice-Chair Ortiz asked if the particular use of the funds
had not been challenged as of yet. He asked how long the
funds had been used to pay for shellfish testing.
Ms. Wallace answered that she did not know how long the
practice had taken place. She confirmed that the specific
use of funds had not been contested. She advised there was
some risk because it was unclear whether the use of funds
was acceptable.
Representative Wool remarked that Mr. Painter had stated
there was currently a small balance in the fund and the
potential for a -$4 million balance after FY 22. He asked
Mr. Painter to elaborate on other recurring expenses paid
by the fund.
Mr. Painter answered that the other uses were related to
the regulation of the cruise ship industry by DEC. While
the state did not anticipate large cruise ship vessels in
the current year, he did not believe the industry planned
to layoff all of its employees because it would be
difficult to lay them off for a year and bring them back.
He added there were smaller vessels expected in the current
year, but they tended to pay a lower fee on the sliding
scale; therefore, revenue would be much lower.
Representative Wool asked for verification the same number
of people would still have to be paid in the absence of
large ships coming in.
Mr. Painter replied it was his understanding that DEC would
not want to cease the program and restart it the following
year.
Representative Carpenter MOVED to AMEND Amendment HLS 3 by
changing the fund source to newly available federal funds
(fund code 1269).
Representative Wool OBJECTED. He understood there was ARPA
funding and UGF, but he thought it ultimately would all
impact the bottom line and the money available. He thought
it appeared to be a bit of a shell game.
10:59:54 AM
Representative Carpenter explained the intent and logic
behind the conceptual amendment was to put a finite
[funding] source toward a problem that needed to be
resolved. He noted he would have a conceptual amendment
following the current amendment. He elaborated that the
state was trying to grow the shellfish industry and the
problem [related to testing] was not going away. He
stressed the need for a better solution for shellfish
testing. He detailed that the second conceptual amendment
would make it the intent of the legislature to require the
department to come back to the legislature the following
session with a way forward for the industry to make testing
more cost effective and to lay out the options.
Representative Josephson stated his understanding that the
conceptual amendment to Amendment HLS 3 would change the
fund source from 1004 to 1269.
Representative Carpenter believed the fund code 1269 was
new federal money coming in via ARPA.
Co-Chair Foster acknowledged that Mr. Painter confirmed
fund code 1269 was the fund code associated with the ARPA
money.
Representative Wool stated that ARPA had rules the
legislature had not yet seen. He asked if the item would
fall under lost revenue because cruise ship head tax had
been paying for the testing and there had been a decline in
the funding source.
11:01:49 AM
Mr. Painter answered that he believed the expense would be
an allowable use of the federal ARPA funds. He noted there
was uncertainty until the federal guidelines were received.
He reasoned that to the extent the state was funding
government services due to lost revenue, it would appear to
be an eligible expense.
Representative Johnson referenced a later amendment by
Representative Rasmussen and asked if it would change the
fund source from CPVEC.
Representative Rasmussen stated that her next amendment
related to the issue would split a receipt authority with
designated funds and ask the industry and state to split
the cost of the fees in FY 22. She clarified that the
current amendment under discussion [Amendment HLS 3]
pertained to FY 21.
Co-Chair Foster clarified that two amendments dealt with
the same issue. The current amendment dealt with the FY 21
budget and would pay for shellfish testing with UGF. The
proposed conceptual amendment would change the fund source
to ARPA funds. The second amendment by Representative
Rasmussen [not yet introduced] would split the fund source
50/50 between shellfish growers and UGF.
11:03:57 AM
Representative Thompson thought that $30 million of the
incoming federal funds was for small businesses. He asked
if shellfish testing would be an allowable use of the
funds.
Mr. Painter answered that the CS currently included $630
million of flexible ARPA funds out of the $1.019 billion to
be received by the state. He elaborated that the $30
million [referenced by Representative Thompson] was part of
the $630 million. The amendment would add an additional
$457,000 to the $630 million.
Co-Chair Foster asked if the expenditure would be allowable
under the small business portion of the ARPA funding.
Mr. Painter replied that the small business portion
currently in the CS was specific to grants to small
businesses. The shellfish testing would not fit within the
appropriation; however, it was likely a broadly allowable
use of the same fund source.
Co-Chair Foster surmised that perhaps the shellfish testing
was not considered lost revenue; however, it could
potentially be considered an eligible use of ARPA funds
based on an earlier conversation.
Mr. Painter agreed that the item pertained to state lost
revenue, not small business lost revenue, which had been
referenced in a specific appropriation.
11:06:05 AM
Representative Rasmussen asked if it would be possible to
get the conceptual intent language in writing to ensure the
proposed language was clear.
Representative Carpenter would prefer to offer a second
amendment in writing after the committee was finished
discussing the first conceptual amendment.
Representative Wool remarked on Representative Thompson's
comment about small business. He reasoned that because the
shellfish industry was not currently paying for the
testing, it was not an expense the industry incurred;
however, it was a state expense coming from the lost
revenue from the cruise ship industry. He would like to see
a resolution to the testing issue going forward. He thought
it was a stretch to say the cost was legitimate because
cruise ship passengers ate seafood. He asked if marijuana
industry testing would be covered by the same fund source
because tourists visited marijuana shops. He did not
believe so. He supported moving the funding source to ARPA,
especially due to the deficit in the CPVEC fund. He
reiterated his desire for a resolution going forward. He
WITHDREW his OBJECTION.
11:08:01 AM
There being NO further OBJECTION, conceptual Amendment 1 to
Amendment HLS 3 was ADOPTED.
Representative Rasmussen requested to roll the amendment in
light of a new amendment coming forward.
Representative Rasmussen WITHDREW her motion to ADOPT
Amendment HLS 3 [note: the withdrawal of the amendment
negated action on the previously adopted conceptual
Amendment 1. The conceptual amendment was reoffered and
adopted again at approximately 11:27 a.m.].
11:09:10 AM
AT EASE
11:19:53 AM
RECONVENED
Co-Chair Foster returned to the previous amendment.
Representative Rasmussen MOVED to ADOPT Amendment HLS 3.
Co-Chair Foster OBJECTED for discussion.
Representative Carpenter moved conceptual Amendment 2 to
Amendment HLS 3 (copy on file):
It is the intent of the legislature that the
Department of Environmental Conservation return to the
legislature recommendations for how to reduce the cost
of shellfish testing no later than January 19, 2022.
Co-Chair Foster OBJECTED for discussion.
Representative Carpenter read the above amendment language.
He explained that hopefully the shellfish industry was
growing, and it was necessary to reduce the cost to the
state and potentially to the farmer/fisherman.
Representative Wool appreciated the intent, but he thought
the issue was about who paid for the testing and what funds
were used. He noted that currently CPV funds were used to
pay for the shellfish testing. He recognized the motion to
change the fund source to either UGF or ARPA funding for
the year. He thought there was likely a certain cost of
shipping seafood to Anchorage for lab testing unless the
economy of scale increased and made it feasible to have
another testing site elsewhere. He thought the issue was
more about how to pay for the service than the actual cost.
11:22:16 AM
Representative Carpenter stressed that to the small
business owner it was all about cost. He explained it was
the reason the argument was being made that the state
needed to continue to cover the fee. He stated the issue
was about economy of scale because there were a small
number of farmers. He highlighted the cost would be spread
across a greater number if there were many farmers, which
could create cost savings and increase the affordability
for farmers. In the long-term, he wanted the industry to
have the ability to pay for its testing; however, $20,000
[per year] was a significant problem for a small business.
He supported continuing to subsidize testing with state
funds for an industry that was working to get off the
ground. He suggested that DEC report back to the
legislature on how to reduce the cost in a sustainable way
industry could afford.
Representative Rasmussen clarified that the $20,000
referenced had been provided by Vice-Chair Ortiz as
operating cost for a local farmer. She stated the amount
reflected annual operating costs, not the per test cost.
Representative Carpenter remarked that he was using the
numbers the committee had been using in the discussion. He
stated he did not know the actual numbers. He remarked that
from previous discussion in the last legislative cycle, the
testing was cost prohibitive for farmers; therefore, the
state had continued to pick up the tab.
Vice-Chair Ortiz stated that the $20,000 was an annual
cost, not a per testing cost. He clarified that the costs
outlined referred directly to the cost of getting samples
to the state. He explained that the cost was not a part of
the business's normal everyday operations; it reflected a
cost to get the samples to the state. He detailed that the
previous year the legislature had discussed the testing
required for dairy industry products. He explained that
while there were few dairy farms, their products were
required to be tested. He informed the committee that the
cost continued to be paid for by the state. He stated at a
certain point it was necessary to decide whether the
legislature would be supportive of industry by fostering
jobs and bolstering the economy.
11:26:12 AM
Representative Edgmon appreciated the intent of the maker
of the motion. He remarked that the committee could spend
hours on the topic. He stressed that shellfish poisoning
was a serious issue in Alaska and for cruise ship
passengers. He supported the original amendment.
Representative Johnson also appreciated the amendment.
Representative Thompson asked for confirmation that
conceptual Amendment 1 had been adopted.
Co-Chair Foster clarified that conceptual Amendment 1 to
Amendment HLS 3 had been adopted; however, Amendment HLS 3
had subsequently been withdrawn and reoffered. He explained
it would be necessary to revisit conceptual Amendment 1 [if
it was the will of the committee].
Co-Chair Foster WITHDREW his OBJECTION to conceptual
Amendment 2 to Amendment HLS 3.
There being NO further OBJECTION, conceptual Amendment 2 to
HLS 3 was Adopted.
11:27:55 AM
Co-Chair Foster explained that the committee needed to
revisit the first conceptual amendment if there was a
desire to do so.
Representative Carpenter MOVED to ADOPT conceptual
Amendment 1 to replace the UGF funding code 1104 to [ARPA]
funding code 1269.
There being NO OBJECTION, conceptual Amendment 1 to
Amendment HLS 3 was ADOPTED.
Co-Chair Foster WITHDREW his OBJECTION to Amendment HLS 3
as amended.
Co-Chair Foster summarized the amendment as amended. He
explained that the amendment would fund the shellfish
testing cost of $457,000 per year with ARPA funds [instead
of CPVEC funding]. The amendment had also been amended to
include intent language.
Vice-Chair Ortiz asked for verification the amendment only
related to FY 21.
Co-Chair Foster agreed.
Vice-Chair Ortiz stated he did not have an objection.
Representative Edgmon needed clarification. He asked for
verification that the amendment would reduce that amount of
offset funding available from ARPA by almost $500,000
because it used the funds for a purpose that was not
initially intended. He asked if it was the intent of the
amendment.
Co-Chair Foster agreed. The amendment used ARPA funds
instead of UGF or cruise ship head tax.
11:30:55 AM
AT EASE
11:34:08 AM
RECONVENED
Co-Chair Foster provided clarity on Amendment HLS 3 as
amended. He explained that currently the budget allocated
70 percent of the $1 billion in flexible ARPA funding for
FY 21 and FY 22 and 30 percent for FY 23 or FY 23 and FY
24. The point had been made that spending approximately
$500,000 to ARPA funds on the shellfish testing would mean
less available federal funding for capital expenditures in
FY 22 or less funding available in FY 23.
Representative Wool realized there were some leftover funds
that could go to the capital budget or the PFD. He stated
that the CPV fund would be in the red. He asked what would
happen to the shellfish testing if there was no money in
the fund to pay for it.
Representative Carpenter agreed it was a good question. He
pointed out that if the attorneys decided the current
funding source was illegal, the legislature would be faced
with the decision of how to fund the service going forward.
He hoped to have a better understanding from the department
on how to reduce cost and make a good decision on how to
fund the service going forward in the following year.
11:37:14 AM
Representative Edgmon OBJECTED to Amendment HLS 3 as
amended.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Wool, Carpenter, Josephson, LeBon,
Ortiz, Rasmussen, Merrick
OPPOSED: Edgmon, Johnson, Foster
The MOTION PASSED (8/3). There being NO further OBJECTION,
Amendment HLS 3 as AMENDED was ADOPTED.
11:38:38 AM
Co-Chair Foster noted the committee would address
amendments for the numbers section of the budget.
Representative Carpenter MOVED to ADOPT Amendment H DOA 1
(copy on file):
Department of Administration
Risk Management
H DOA 1 - Reestablish the Office of Enterprise
Analytics and Associated Positions
Re-establish the Office of Enterprise Analytics and
associated positions.
Representative Josephson OBJECTED.
Representative Carpenter explained the amendment would
reestablish the Office of Enterprise Analytics and two
permanent full-time positions that had been removed in
subcommittee.
Representative Wool shared that he had been on the
Department of Administration (DOA) subcommittee that had
removed the positions. He was uncertain the office had been
removed. He stated that that Mr. [Russell] Rappel Schmid
was still employed; therefore, he believed the office was
still established. He wondered whether the aforementioned
employee was still employed by the office.
11:40:49 AM
Co-Chair Foster asked who Representative Wool was referring
to.
Representative Wool replied that Mr. Rappel Schmid had been
hired to head the Office of Enterprise Analytics. He stated
that the individual had come from the inspector general at
the U.S. Postal Service in Washington, D.C., similar to
Commissioner Tshibaka. He understood that Ms. Tshibaka had
left her position as commissioner, and he did not know
whether Mr. Rappel Schmid was still employed by the office.
He restated his belief that the office was still open, but
two employees that had been removed. He did not see the
point in funding the office if Mr. Rappel Schmid was no
longer there.
Representative Carpenter responded that in consultation
with the administration, removing two of the employees
presented a problem for getting the work done by one
individual. He was not certain whether the individual was
still with the office. He stated that the budget decision
may impact whether the employees continued. He noted that
the department was online and could speak to why the
administration may want to retain the positions.
LESLIE ISAACS, ADMINISTRATIVE SERVICE DIRECTOR, DEPARTMENT
OF ADMINISTRATION, OFFICE OF MANAGEMENT AND BUDGET, OFFICE
OF THE GOVERNOR (via teleconference), confirmed that Mr.
Rappel Schmid still held the position. He relayed that the
[subcommittee] budget would reduce the Office of Analytics
down to one PCN.
Representative Wool recalled that the subcommittee had
tried to look up the PCN, but the position was exempt, and
the salary information was not available. He surmised that
the subcommittee had deleted two positions, which the
amendment would reinstate. He asked for verification that
the office would have three positions if the amendment was
adopted.
Mr. Isaacs responded in the affirmative.
11:44:04 AM
Representative Johnson asked how the two positions were
funded.
Mr. Isaacs answered that the positions were currently
funded in the Division of Risk Management.
Representative Johnson asked if the positions were funded
with receipts from risk management.
Mr. Isaacs stated his understanding of the question.
Representative Johnson highlighted that the amendment
stated the positions were funded with interagency receipts.
Mr. Isaacs confirmed that the funding source for the
Division of Risk Management was interagency receipt
authority.
Co-Chair Foster stated his understanding that the division
billed agencies as the work was performed. He asked for
clarification on Representative Johnson's question.
Representative Johnson noted that the funding source was
not general fund receipts and she wondered about the origin
of the receipts used. She asked what division receipts were
used to fund the two positions.
Co-Chair Foster followed up with an example. He explained
that if the Office of Enterprise Analytics performed work
for the Department of Commerce, Community and Economic
Development (DCCED), it billed DCCED. Likewise, if the
office performed work for the Department of Corrections
(DOC), it billed DOC. He surmised it just depended on where
the work was being done. He asked if his understanding was
accurate.
11:46:17 AM
Mr. Isaacs answered in the affirmative. The work would be
done with an RSA [reimbursable services agreement].
Representative Carpenter stated that the Office of Data
Analytics was somewhat new to the state and the Division of
Risk Management. He explained that other departments had
analysts looking for fraud, waste, and abuse. He elaborated
that the employees and the capacity for what the division
was able to do involved data analytics that looked for
savings within the state budget. He highlighted that DOA
touched all departments and the ability for risk management
to find savings within the state made sense. He relayed
that the office had already identified savings of
approximately $7 million that had been passed onto the
appropriate agencies to deal with. He clarified that the
office did not have authority to deal with what it found;
it found proposed savings and sent the information to the
appropriate agencies. He reiterated that the function had
not previously existed, and the CS would eliminate the
office after only one to two years of experience. He
believed it was important to give it some time to show the
state could find ways to improve within its agencies. He
did not want to pull the rug out from underneath an office
that appeared to be working before it really got underway.
11:48:46 AM
Representative Wool referenced that Mr. Rappel Schmid was a
recent hire who had worked at USPS in Washington, D.C. with
former Commissioner Tshibaka. He reported that the
subcommittee had been unable to find a PCN for Mr. Rappel
Schmid and could not find how much the individual made. He
stated there was a lot of opacity the subcommittee had not
been comfortable with. He was not claiming there was not
potential for good work. He shared that the office had
talked about savings but had been unable to identify any
actual savings as of yet. He referenced fraud
investigations and believed it had just been starting up.
He remarked that the commissioner [Commissioner Tshibaka]
had left to run for [U.S.] Senate and he did not know what
direction the office would go. He did not know what the
current commissioner or Mr. Rappel Schmid would do with the
office. He was dubious of refunding a program that may be
tenuous. He stated that without the transparency the
subcommittee had been looking for, it had not been
comfortable including the funding. He reiterated that Mr.
Rappel Schmid did not have a PCN.
11:50:08 AM
Representative Johnson was trying to determine how much
savings had been accomplished over the past year. She
reasoned it was one thing to say receipts would come from
another department just to hire someone to take a look at
things. She stated it was another thing to say a person in
a position was saving the state money and the position was
in essence paying for itself.
Mr. Isaacs replied that in terms of identifying the amount
of savings, areas of potential savings had been identified
and were under review. He explained that the savings had
not yet been confirmed. He stated that the department did
not have a number in terms of savings achieved.
Representative Johnson asked how the department would
suggest the accountability if the positions were added back
in. She referenced transition in staff and was trying to
identify how to move forward. Legislators had been told
savings would be identified and evaluations were being
made. She wondered if it was reasonable for the legislature
to be asking for something more specific.
Mr. Isaacs answered that the process had brought the future
of the Office of Enterprise Analytics to light. He shared
that the positions provided data reporting and analysis
services for DOA and other departments. He explained that
the work performed by the office looked down the road into
the future. He elaborated that the department was still
trying to get the unit on a firm foundation. The department
knew the benefits were there and could be realized, but it
needed more time to mature the unit and have the clear
definition the legislature was seeking. Some of the
services the department was looking to provide in the
future included the identification of cost savings,
database management, automated business intelligence
reporting, data governance and training, and the open data
portal that would be supported by the unit. He stated that
the robust nature of analytics was more than the narrowly
defined scope discussed in the subcommittee process.
11:54:45 AM
Representative Johnson stated her understanding that the CS
would remove two of three positions. She asked whether one
person was enough to do the job. She asked if the two
positions were needed.
Mr. Isaacs replied that if two positions were removed, the
workload would be in excess of what the one remaining PCN
could cover.
Representative Thompson noted that the positions would be
funded with interagency receipts. He asked if there were
sufficient interagency receipts to cover the costs for the
past year. He asked if there would be sufficient incoming
interagency receipts in the future.
Mr. Isaacs answered that there had been one RSA implemented
for approximately $35,000. There had not been sufficient
receipts to cover the full cost of the office. Moving into
the future, the idea was to continue the development of the
RSAs and find an equitable way use the interagency receipt
process to cover the costs of the office. He reported that
discussions on the issue were underway in the department
and with OMB.
11:57:21 AM
Representative Carpenter stressed that as the world became
smaller with advent of internet and all of the data
systems, the concept of enterprise analytics became vital.
He stated it was a confusing world with all of the
different systems and difficult to manage. He believed the
employees would be very important for efficiency in state
government and bringing the state into the 21st century.
He noted that Mr. Scott Jorden was available online and may
be able to speak to the future of data analytics.
SCOTT JORDAN, DIRECTOR, DIVISION OF RISK MANAGEMENT,
DEPARTMENT OF ADMINISTRATION (via teleconference), asked
Representative Carpenter to repeat the question.
Representative Carpenter complied. He asked about the
successes the data analytics office had achieved thus far.
He asked Mr. Jordan to explain why savings identified were
not yet actualized. Additionally, he asked about the future
for the office.
Mr. Jordan replied that the office had identified $7.2
million in savings; however, the office did not have the
authority to realize the savings. The possible savings had
been brought to DOA's attention and pertained to the
Department of Health and Social Services. He explained that
DOA hoped the savings would continue to be identified and
that more agencies would continue to use the data analytic
services. The office currently had a single RSA that was
with DHSS related to Medicaid.
Representative Carpenter asked if DOA expected to continue
to grow or use the program as is.
Mr. Jordan confirmed that the department expected the
program to grow. He did not know whether it would grow
within risk management as it was not necessarily the risk
management model. He elaborated that the office had
originally been put under the division because of the
intent to look at fraud, waste, and abuse within the
workers' compensation program; however, about a year back
the department discussed whether it was a good fit. The
department continued to discuss the issue internally and
with OMB about where the group would eventually land. He
stated the program was beneficial and the usefulness of
data analytics would continue to grow.
12:01:17 PM
Representative Edgmon believed the committee was taking a
deep policy dive into an issue the subcommittee had already
put forward. He stated there were a number of amendments
that proposed to reduce government and eliminate positions,
which he believed would be outside of the work done by the
two positions. He shared that he had worked for the state,
in the private sector, and as a legislator. He observed
that when there was a desire to cut budgets and when it was
needed, he did not believe significant analysis was
necessary to do so. He understood the importance of the
work being done by the positions. He had been at the table
when the commissioner had come before the committee in
February to lay out the multiyear endeavor. He added that
the work had to have the full support of the commissioner
and administration. He elaborated that the work involved
automation and the elimination of positions and employees.
He would continue to support the subcommittee's work and
would not be supporting the amendment.
Co-Chair Foster relayed that he would take the last several
questions.
Representative Wool concurred with Representative Edgmon.
He highlighted that the two positions had been hired in
recent months. He remarked that the fraud detected by the
office related to Medicaid and had not been acted on or
confirmed. He remarked that data was needed for analytics.
He highlighted that the subcommittee had tried and was
unable to determine Mr. Rapple Schmid's PCN, where it was
located, and how much money he made. He stated the
subcommittee had been unable to get transparency, honesty,
and straightforwardness. He supported business analytics
and intelligence, but he wanted to see transparency and a
full debate and presentation on the topic. He stated the
information provided to the subcommittee had left more
questions than answers. He did not support the amendment.
12:04:45 PM
Representative Thompson asked if there was a mechanism in
place where the legislature would receive a report on
results found by the office. He understood the office could
not reduce an agency's budget. He asked if a report would
be received in order to allow the legislature to address
the findings in the next budget cycle.
Mr. Jordan responded that he did not believe there was any
requirement at present because the program was new;
however, it had been the intent of the commissioner's
office to require a report back to the legislature.
Representative LeBon supported the amendment. He looked at
the issue from the perspective of the private sector. He
explained that banks had internal auditors and operations
that constantly looked at the bank's efficiencies to
realize a more profitable business operation. He believed
that to assume the state should not have a similar function
would be na?ve. He stressed that the function should be in
place. He stated it was up to the DOA commissioner to
oversee the office and provide fiscal oversight to ensure
agencies were doing the best they could for all Alaskans.
He stated that without the function in place, they would
not be doing their complete job.
12:06:47 PM
Representative Carpenter provided wrap up on the amendment.
He explained that the office could not currently claim
successes because it did not have the authority to make the
changes it identified. The analysts were tasked with using
data analytics to locate items in other departments needing
scrutiny. He thought legislators could likely understand
the dynamics and challenges that would apply within
departments on whether the findings were acted upon. He
reiterated the analysts were identifying things they could
not force action on. He thought the issue may speak to a
greater policy call of needing something like an inspector
general who could have authority to force some changes.
Representative Carpenter emphasized that the office was
necessary as things were increasingly digitized. He stated
the work was used by other states, countries, and companies
to keep in a straight line. He believed Alaska needed to be
doing the work, which would enable it to be smarter with
data systems. He found it disingenuous to say the service
was needed, while cutting it instead of making
improvements. He stated that the administration had
testified it was still looking for the right place for the
office. He recognized that perhaps the current location was
not the correct spot, but he did not believe the office
should be eliminated to find the right place.
Representative Carpenter reasoned that if the office had
identified $7 million in potential savings, he thought the
legislature should be asking what happened to the
recommendation. He thought perhaps the reason something may
not have been brought to the legislature because there
could be legal implications. He provided a hypothetical
scenario where someone was facing legal implications that
should not be discussed publicly. He thought it was
possible when talking about locating fraud, waste, and
abuse. He thought the legislature should be asking the
aforementioned questions rather than pulling the rug out
from under the office.
Co-Chair Foster MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Johnson, LeBon, Thompson, Merrick
OPPOSED: Wool, Edgmon, Josephson, Ortiz, Rasmussen, Foster
The MOTION to adopt Amendment H DOA 1 FAILED (5/6).
Co-Chair Foster recognized Representative Matt Claman in
the audience.
Co-Chair Foster indicated the committee would recess until
1:10 p.m.
12:10:44 PM
RECESSED
2:26:27 PM
RECONVENED
Co-Chair Foster noted there had been some technical
glitches. The public could currently not see the meeting
online, but it was being recorded and posted after the
meeting. He relayed that the phone lines were not currently
available. He highlighted that Amendments 9, 10, and 11 had
been added to the packets.
2:28:20 PM
Representative Josephson MOVED to ADOPT Amendment H DOA 2
(copy on file):
The state has statutory and constitutional obligations
to provide legal counsel to defendants who are unable
to pay for legal defense.
Increases in prosecutor staff in the Department of Law
create corresponding increases in the workload of the
Public Defender Agency.
The Governors FY22 budget request includes an
increment of $3 million UGF for 19 new prosecution
positions to be focused on sexual assault and sexual
abuse crimes. The House Finance Committee has included
this increment in HB 69/HB 71.
This amendment provides Public Defender staff to
handle the anticipated increased caseload resulting
from the Department of Law increment.
Co-Chair Foster OBJECTED for discussion.
Representative Josephson explained that the Department of
Law (DOL) had asked for $3 million for 19 new prosecution
positions to combat the state's worst position in the
country on sexual assault and abuse. He had chaired the DOL
subcommittee that had been eager to include the funds for
DOL as a show of support. He stated that based on his
experience he expected that there would have been a similar
budget request for the Public Defender Agency and Office of
Public Advocacy in order to create some balance and parity.
He was surprised there had not been a budget request in
that regard. He characterized the channel for that funding
as more ambiguous or opaque than the funds for DOL. The
proposed amendment was a response to the situation.
Representative Josephson noted that on page 23, lines 16
through 20 of the CS, the subcommittee had included the
following recommendation:
Any future requests for increase for increased
appropriations for criminal prosecutors be accompanied
by budgetary documentation that captures not just the
costs to the Department of Law, but also to the
Judiciary, Department of Corrections, Department of
Public Safety, Department of Administration, and other
impacted agencies.
Representative Josephson explained that the above language
had been offered by minority members in the subcommittee
and there had been considerable discussion from minority
members about the need to create balance. He stated that
frequently prosecutors could not move forward faster
because the defense was not prepared. He noted that the
defense was not required to be prepared all that rapidly.
He referenced the 120-day speedy trial rule. He detailed
that the rule was only exercised in the exception due to
the need for discovery and other things. The amendment was
for public defenders.
2:30:56 PM
Co-Chair Foster WITHDREW the OBJECTION.
Representative Rasmussen OBJECTED.
Representative Wool appreciated the amendment. He had been
on the Department of Administration subcommittee where they
had heard from the Office of Public Assistance [Advocacy]
that performed a similar job to public defenders. He
remarked that not everyone charged with a crime used the
public defenders; some people had private lawyers. He
stated that although $3 million had been added for
prosecutors, it did not necessarily mean the exact same
number of public defenders were needed. He could see
lowering the number or using some of the funding for the
Office of Public Advocacy.
2:32:25 PM
Representative Rasmussen MAINTAINED the OBJECTION.
Representative Carpenter MOVED to AMEND Amendment H DOA 2
to cut the proposed funding and permanent full-time
positions in half.
Representative Rasmussen OBJECTED. She stated that without
an offsetting decrement somewhere else or knowing how the
workload would change for the public defenders, she would
be more open to a supplemental in the following year if
additional help was needed [financially]. She did not
believe it was responsible to add close to $1.5 million and
seven or eight new positions to the state budget.
Representative Josephson supported conceptual Amendment 1
to Amendment H DOA 2.
Representative Rasmussen highlighted that the original
amendment included 15 new positions. She asked if the
conceptual amendment would reduce the number to seven or
eight.
Representative Carpenter stated that the conceptual
amendment included seven positions.
Representative Rasmussen MAINTAINED her OBJECTION to
conceptual Amendment 1 to Amendment H DOA 2.
Co-Chair Foster clarified that the conceptual amendment
would cut the funding in the original amendment in half and
would reduce the new positions to seven.
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Edgmon, Johnson, Josephson, LeBon,
Ortiz, Thompson, Wool, Foster, Merrick
OPPOSED: Rasmussen
The MOTION PASSED (10/1). There being NO further OBJECTION,
conceptual Amendment 1 to Amendment H DOA 2 was ADOPTED.
Co-Chair Foster WITHDREW the OBJECTION to Amendment H DOA 2
as amended.
Representative Rasmussen OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Edgmon, Johnson, Josephson, LeBon, Ortiz,
Thompson, Wool, Carpenter, Merrick, Foster
OPPOSED: Rasmussen
The MOTION PASSED (10/1). Amendment H DOA 2 as amended was
ADOPTED.
2:37:10 PM
Representative Thompson WITHDREW Amendment H DOA 3 (copy on
file).
2:37:33 PM
Representative Josephson MOVED to ADOPT Amendment H DOC 1
(copy on file):
Department of Corrections
Administration and Support
Recruitment of Correctional Officers
Wordage
It is the intent of the legislature that the
Department uses a portion of the funds in this
allocation for temporary duty assignments of
Correctional Officers to work with the Recruitment and
Retention unit on development of Correctional Officer
recruitment strategies and materials, outreach to
potential Correctional Officer applicants, and
communication and assistance during the application
process.
It is also the intent of the legislature that the
Department submits a report to the Co-Chairs of
Finance and the Legislative Finance Division no later
than December 1, 2021, detailing the Correctional
Officer recruitment activities and results achieved
with the $400.0 UGF increment included in the FY21 and
FY22 operating budgets, as compared to the recruitment
activities and results in FY15-FY20, and documenting
the involvement of Correctional Officers in FY21 and
FY22 recruitment efforts.
Co-Chair Foster OBJECTED for discussion.
2:37:58 PM
AT EASE
2:38:23 PM
RECONVENED
Representative Josephson explained the amendment. He
detailed that corrections officers continued to have dire
recruitment and retention challenges. He was hopeful some
of the problem would be solved by separate legislation (HB
55) that had been heard by the committee several times. He
highlighted that the House had helped establish a
recruitment unit the previous year funded with
approximately $850,000, which had been reduced in
conference committee to $400,000. He detailed that the
recruitment unit had been filled by two people who had not
previously worked for the department. Additionally, a half-
time position had either recently been filled or was still
open (classified as a temporary duty assignment). He hoped
the hire would come from the correctional officer ranks.
The intent of the amendment was to urge the Department of
Corrections (DOC) to hire the position from within.
Additionally, the amendment asked the department to give an
update to the House Finance Committee co-chairs on December
1. He stressed that the situation was a recruitment crisis.
Representative Carpenter asked for verification that the
backup following the amendment in the packet included the
wordage for Amendment H DOC 1.
Representative Josephson agreed.
Co-Chair Foster WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment H DOC 1 was
ADOPTED.
2:40:57 PM
Representative Josephson asked to hear Amendments H DOC 2
and H DOC 3 together. He MOVED to ADOPT Amendment H DOC 2
and Amendment H DOC 3 (copy on file):
Department of Corrections
Population Management
Amendment H DOC 2
Correctional Officer Recruitment
Create 1 PFT Correctional Officer IV position in the
Correctional Academy that will work with the
Recruitment and Retention unit in the Administration
and Support Appropriation by developing and
implementing recruitment strategies and assisting
hiring managers by coordinating and participating in
the Correctional Officer hiring process.
Department of Corrections
Population Management
Amendment H DOC 3
Correctional Officer Recruitment and Training
The department has a significant Correctional Officer
vacancy problem that results in excessive overtime
expenditure and security challenges, which also
contribute to morale and retention difficulties.
The addition of an experienced Correctional Officer to
the Recruitment and Retention team will contribute
significantly to recruitment success.
The legislature created the Recruitment and Retention
unit in FY21 with three positions which the department
filled as an Administrative Officer and an
Administrative Assistant with the remaining $65.0
Personal Services funds directed to revolving,
temporary duty assignments of Correctional Officers,
Probation Officers, healthcare and other staff to
assist with job fairs and outreach to those applicant
groups.
This amendment is proposed in the belief the team will
benefit from the addition of a Correctional Officer
who has personal experience working in Alaska
institutions. If the position description and
classification process prevent use of a Correctional
Officer in this role, the purpose of the increment
will not be achieved and the $137.0 UGF funding should
lapse.
Co-Chair Foster OBJECTED for discussion.
Representative Josephson explained the amendment. He
referenced a document from the Alaska Correctional Officers
Association [dated April 5, 2021] provided to committee
members (copy on file). He highlighted DOC was losing about
120 of its correctional officers per year. He believed
there were approximately 1,000 correctional officers. He
reported that DOC currently had 129 vacant correctional
officer positions. The department needed to fill 75
positions in order to reopen the Palmer Correctional
Center. He stressed there was a massive problem with
officer burnout. He elaborated there was mandatory
overtime, which may work well for a single person, but it
was not good for a family person. He referenced a "CGL
staffing study" commissioned by the department outlining
the number of staff needed in prisons for safety and
efficiency. The department was short about 207 individuals
based on the recommendations in the study.
Representative Josephson stressed that the overtime was
costing the state $10.3 million. The department requested
$137,000 to hire a person with experience as a corrections
worker. He referenced studies showing it was best if
recruits talked to corrections officers. He shared that his
staff had spent time talking with DOC's administrative
services director and classifications. His office had
concluded that if the new hire was drawn from the pool of
instructors at the corrections academy, they would be
classified as a corrections officer and could be seconded
to the recruitment unit.
Representative Josephson thought the amendment reflected a
win-win. He highlighted that the Department of Public
Safety spent $1.3 million for 871 positions, while, within
DOC there was a $400,000 recruitment for over 2,000
positions. He stated that DOC would love to be treated like
DPS, but he stated the position was diminished relative to
DPS's efforts. He reminded committee members that the
amendment would bring the cost of the overall unit to
$537,000. He pointed out that the House stood by $850,000
the previous year, but it had been reduced. He stated the
proposal was consistent with action taken by the House the
prior year.
2:45:47 PM
Representative Johnson observed that the troopers had two
positions in the recruitment and retention unit. She
referenced a document specifying the remaining $65,000 was
for personal service funds to temporary duty reassignments
of correctional officers. She asked if the information was
currently accurate.
Representative Josephson replied in the affirmative, but
the corrections officers would note that the TDY person
could be representing recruitment for medical professionals
and probation officers. He explained there was some concern
that the units experiencing a dearth of recruits would not
be satisfied and the problem would fester. He added that
the troopers' recruitment had two full-time staff and eight
retired troopers. He expounded that DPS used people who
knew about trooper life to interview recruits.
Representative Johnson appreciated the intent of the
amendment. She stated her understanding there had been
adequate staffing levels within DOC when the Palmer
facility had closed and there had still been overtime. She
was inclined propose dividing the amount in the amendment
in half for one full-time position. She observed it
appeared there was currently half a position based on the
$65,000. She intended for the person or multiple people to
rotate on and off like the troopers. She stated her
understanding the troopers had two people who rotated on
and off the recruitment unit.
Representative Johnson MOVED conceptual Amendment 1 to
Amendment H DOC 2 and Amendment H DOC 3 to divide the
proposed $137,000 in half to fund one full-time position.
Representative Josephson requested an "at ease."
2:49:38 PM
AT EASE
2:50:17 PM
RECONVENED
Representative Josephson OBJECTED to the conceptual
amendment. He appreciated the conceptual amendment;
however, he clarified that the $65,000 was a rotation of
several people. He reminded members the amount pertained to
temporary duty (TDY). Additionally, there was no guarantee
the workers would come from the corrections ranks (they
included dentists, doctors, and probation officers). He
referenced Representative Johnson's statement that the
situation was like DPS. He clarified that was not the case.
He referenced a DPS organizational chart showing eight
individuals who were retired state troopers. He elaborated
there was a squad of people working on recruitment for
troopers. He underscored that the corrections officers
merely wanted a small sample size of the amount troopers
had.
Representative Wool shared that the previous year he had
been on the DOC subcommittee and had worked on the
recruitment unit topic. He had advocated for $800,000, but
it had been reduced to $400,000. He stated there were
currently three full-time positions. He believed the TDY
position was full-time. He thought the funding had been
split between two different offices or divisions. He
clarified there were two administrative staff and a full-
time corrections officer. He elaborated that the person
would rotate out. He explained that in a year the
individual may be swapped out with a probation officer or
someone in healthcare, but the department could keep it as
corrections. He stated that cutting a position in half
would not combine to make a full position. He clarified the
position would be a fourth person from the academy who was
a corrections officer full-time.
Representative Wool did not support the conceptual
amendment. He recognized there was a recruitment problem.
He stated the recruitment unit had just been implemented;
therefore, they did not currently know the results. He
remarked that the comparison to troopers was not apples-to-
apples. He elaborated that there was substantial background
work when hiring troopers. He stated that troopers carried
guns in public and were responsible for enforcing laws. He
stressed it was a different job and recruitment. He
reiterated his opposition to the conceptual amendment.
2:53:30 PM
Representative LeBon recalled the discussion the prior year
that corrections officers needed a dedicated recruitment
effort with a team of recruiters. He asked if the team had
been put in place in error. Alternatively, he wondered if
more help had been needed to the overwhelming aspect of the
problem. He asked for verification there were two
administrative positions and one recruiter. Additionally,
he asked if the recruiter was not a correctional officer
and therefore, did not know how to recruit a correctional
officer.
Representative Josephson replied that Representative LeBon
was largely correct. He detailed that one of the
individuals had been hired from DPS. One of the positions
was titled recruitment officer/administrative assistant II
and another was an administrative assistant II. He noted it
was a unit of 2.5 or 3 positions. He remarked that the
correction union and its workers wanted actual corrections
officers doing recruitment, but that had not taken place.
He recognized the department may be doing so with the TDY
position; however, the results had not been impressive thus
far. He stressed that the amendment hammered the concept
home to the administration. He explained that the amendment
asked DOC to not hire anyone for the position if the
department did not fill it with a correctional officer.
Representative LeBon thought it sounded like a failure to
communicate problem. He was in disbelief the legislature
was trying to fix a failure to communicate problem with the
union and DOC by adding more money and another position to
the budget. He opposed the amendment.
Representative Wool clarified that the recruitment unit was
only recently fully staffed; therefore, there were no
results in yet. He elaborated that DOC had hired a
director, administrative assistant, and a TDY corrections
officer. He explained that the situation had taken longer
than expected. He agreed that an added correctional officer
would help; however, he noted that recruitment officers did
not always perform the same job they were recruiting for.
For example, a hospital recruiter was not necessarily a
doctor even though they were hiring doctors. He stated that
the recruiters were human resources professionals. He
confirmed the person hired had come from DPS. He stated
that adding another person who was a dedicated correctional
officer may help. He agreed the department needed to build
the numbers up.
2:57:21 PM
Representative Rasmussen asked if they were speaking
specifically to the amendment to the amendment.
Co-Chair Foster clarified they should be speaking to
conceptual Amendment 1, which would cut the proposed amount
in half.
Representative Rasmussen asked to vote on the issue.
Representative Josephson clarified that the proposed
conceptual Amendment 1 would cut the $137,000 in half.
Co-Chair Foster agreed.
Representative Josephson MAINTAINED the OBJECTION.
A roll call vote was taken on conceptual Amendment 1 to
Amendment H DOC 2 and Amendment H DOC 3.
IN FAVOR: Johnson, Carpenter
OPPOSED: Josephson, LeBon, Ortiz, Rasmussen, Thompson,
Wool, Edgmon, Foster, Merrick
The MOTION to amend Amendment H DOC 2 and Amendment H DOC 3
FAILED (2/9).
Representative Rasmussen believed there could be
contributing factors to recruitment challenges. She
highlighted a current bill sponsored by Representative
Josephson that could help the situation. She stated that
because the program had just been implemented, she was
struggling to add another position before success of the
program had been determined.
3:00:15 PM
Representative Thompson referenced the $10.3 million in
overtime highlighted by Representative Josephson. He asked
if the cost reflected the overtime only portion above the
base wage.
Representative Josephson believed the answer was yes based
on the document he had provided to the committee. The
document showed increasing total correctional officer
overtime. He relayed that in FY 15, the state had spent
$3.4 million on overtime compared to the current $10.3
million. He stressed that many correctional officers were
working 16-hour days and morale was devastated. He asked
the committee to spend $137,000 on a correctional officer
to interview future correctional officers to try to reduce
the $7 million growth in overtime.
Representative Carpenter understood there was an issue with
recruiting and the number of correctional officers. He
asked if the administration was supportive of the measure.
Alternatively, he wondered if the legislature would be
forcing something on the department that would not come to
fruition because of a lack of support. He shared that his
experience from military service there was a duty on
soldiers, sailors, and other service members to do their
duty as recruiting agents for a number of years. He
explained that the individuals were sent to recruiting
school. He did not believe a correctional officer, a
mechanic, or an infantry soldier would necessarily be a
good recruiter without training. He valued the idea that a
person considering a correctional officer position would
want to speak with a correctional officer. He believed the
issue was likely a larger systemic problem than merely
hiring additional recruitment staff. He thought the
amendment was the wrong solution.
3:04:12 PM
Representative LeBon believed the legislature had provided
the tools for the commissioner's office and the union
leadership to work together to solve the problem. He stated
the issue was about the will of working together. He
continued that if the administration agreed a correctional
officer should be in a lead position, the administration
should make it happen. He did not know whether there was an
internal structure that did not allow for flexibility in
the situation. He believed the legislature had sufficiently
funded DOC for the work. He noted that the legislature had
increased the DOC budget for recruitment efforts the
previous year. He thought the two entities needed to work
together and include correctional officer input. He did not
support another $137,000 in the budget for the two entities
to work better together.
Representative Rasmussen asked what happened with the
lapsed funds from unfilled positions in the previous year.
Representative Josephson responded that he did not know the
answer.
Representative Rasmussen asked to roll the amendment until
the committee could hear from the department. She would be
supportive of using lapsed funds in place of general funds
to fill the position or to use one of the current vacant
PCNs to fill the need if it was important to the
department.
Co-Chair Foster asked to hear from Mr. Painter.
Mr. Painter clarified his understanding of the question. He
relayed that some of the lapsed DOC funding would be
covered with overtime because the time needed to be filled.
He elaborated that any lapsed funds would go to the general
fund at the end of the fiscal year. He explained that
lapsed funds would not be a reliable ongoing fund source
for a position because the legislature would have to
reappropriate the funds at the end of the year, and they
would not be available the following year.
3:07:13 PM
Representative Rasmussen clarified she wondered about the
amount of lapsed funds from the prior year.
Mr. Painter replied that he did not have the number on
hand. He reported the amount had been substantial,
primarily due to COVID-19 and the use of federal funding in
place of general funds. He elaborated that the amount
lapsed due to unfilled positions versus systemic changes
due to COVID-19 would be difficult to answer.
Representative Rasmussen requested the last three years of
lapsed funds for vacant positions in DOC.
Mr. Painter answered that the legislature did not budget by
line items by fund source; therefore, LFD would not
necessarily know what portion of the lapsed funds were due
to vacant positions or other factors. He noted that the
department may have the information.
Co-Chair Foster asked if Representative Rasmussen would
like to roll the amendment to hear from the department.
Representative Rasmussen replied affirmatively. She stated
it was alarming if there was not a breakdown of the lapsed
funds.
3:09:10 PM
Representative Thompson recalled that when the Palmer
Correctional Center had closed, the corrections officers
had been transferred to other prison institutions in
Alaska. He stated that overtime had increased even with the
availability of numerous corrections officers. He remarked
that overtime had been as high as $8 million to $10 million
for several years. He did not believe the unit could help
retain corrections officers. He highlighted that the
troopers had a full recruiting unit and did not have
complete success. He believed part of the difficulty
recruiting was due to the nature of the work.
Representative LeBon appreciated the desire for more
information, but he preferred to vote on the amendments. He
was amenable to a deeper discussion in the future if the
budget item was needed. He believed the department had the
necessary internal resources from work done by the
legislature the previous year, in order to accomplish what
was needed with recruitment.
Representative Josephson appreciated Representative
Rasmussen's desire to be thorough and consider options, but
he was ready to address the amendments with a vote and move
forward.
Representative Josephson provided wrap up on the
amendments. He responded to Representative LeBon's
statements and questioned whether DOC had the necessary
resources. He thought Representative Wool must have made a
good case that the department needed $850,000 because it
had passed the House unanimously [the previous year]. He
noted the amount had been reduced to $400,000 in conference
committee. He informed the committee there had been no
correctional officer hired to do the job. He believed the
funding in the amendment was an investment worth making. He
agreed with Representative Thompson that it was not
sustainable to require people to work 16-hour days
indefinitely.
3:12:01 PM
Co-Chair Foster WITHDREW the OBJECTION.
Representative Rasmussen OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Josephson, Ortiz, Edgmon, Johnson, Foster
OPPOSED: LeBon, Rasmussen, Thompson, Wool, Carpenter,
Merrick
The MOTION to adopt Amendments H DOC 2 and H DOC 3 FAILED
(5/6).
3:13:08 PM
Representative Rasmussen MOVED to ADOPT Amendment H DEC 3
(copy on file):
Department of Environmental Conservation
Environmental Health
H DEC 3 Fund Change for Shellfish Funding
Replace Commercial Passenger Vessel Environmental
Compliance (CPVEC) fees with a combination of
Undesignated General Fund and Designated General
Funds.
This proposal recommends a 50/50 split between GF and
DGF.
The current use of the CPEVC for shellfish testing is
not a designated use of the fund. Shellfish and
shellfish growing waters would require testing whether
or not there was a cruise ship industry, and the tests
are required regardless of whether there is nearby
cruise ship activity.
Vice-Chair Ortiz OBJECTED.
Representative Rasmussen MOVED to AMEND Amendment H DEC 3.
The conceptual amendment would change from a 50/50 split to
an 80/20 split between state UGF and the shellfish
industry, respectively, until a better solution was found.
She estimated it was roughly $1,200 in designated general
funds in receipt authority and the state would maintain its
partnership with the industry.
There being NO OBJECTION, conceptual Amendment 1 to
Amendment H DEC 3 was ADOPTED.
Vice-Chair Ortiz MAINTAINED the OBJECTION to Amendment H
DEC 3 as amended.
Representative Wool asked if the committee had heard the
amendment earlier.
Co-Chair Foster clarified that the earlier amendment was
for FY 21, whereas the current amendment pertained to FY
22. He explained that the committee had elected to use ARPA
funds to cover the cost in FY 21.
Co-Chair Foster clarified that the current amendment would
use 80 percent UGF and 20 percent DGF from businesses [to
pay for shellfish testing in FY 22].
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Rasmussen, Thompson, Carpenter, Johnson,
Merrick
OPPOSED: Ortiz, Wool, Edgmon, Josephson, Foster
The MOTION PASSED (6/5). There being NO further OBJECTION,
Amendment H DEC 3 was ADOPTED.
3:16:45 PM
AT EASE
3:17:20 PM
RECONVENED
Vice-Chair Ortiz MOVED to ADOPT Amendment H DFG 1 (copy on
file):
Department of Fish and Game
Sport Fisheries
H DFG 1 - Funding for Crystal Lake and DIPAC
Hatcheries.
Crystal Lake hatchery is contracted by the Department
of Fish and Game. It previously received a portion of
funds generated by the sport fish license surcharge
that was created to pay off the bond debt obligation
for the construction and maintenance of two state
owned hatcheries. This surcharge sunset in 2020 and a
new bill to reinstate ii is making its way through the
Legislature. The Department reports that this
legislation, if passed this year, could potentially
generate over $5 million in additional Fish and Game
fund revenue for Sport Fish in FY22.
DIPAC Hatchery suffered considerable loss of stock due
to system failures caused by storms this past winter.
Of this funding. $150.0 is intended for DIPAC to help
recoup any additional operating expenses they incurred
because of this.
There is an ample amount of funds in the Fish & Game
fund to cover this one time increment.
Representative Rasmussen OBJECTED for discussion.
Vice-Chair Ortiz explained that the Crystal Lake Hatchery
was contracted by the Department of Fish and Game. The
hatchery had previously received a portion of funds
generated by the sportfish license surcharge created to pay
off the bond debt obligation for the construction and
maintenance of the two state-owned hatcheries. He informed
members the surcharge had sunset in 2020 and a new bill to
reinstate the fee was currently making its way through the
legislature. He noted the committee had previously heard
the bill. He emphasized that even if the bill passed in the
current year, it would not impact the FY 22 budget. He
relayed that the funds were necessary for in order for
Crystal Lake Hatchery to continue producing king salmon in
Petersburg. Additionally, $150,000 was needed by DIPAC
hatchery [in Juneau], which suffered considerable loss of
stock due to system failures caused by winter storms. He
detailed that a small one-time increment of $150,000 was
meant to help recoup any additional operating expenses
DIPAC incurred due to the system failures. He relayed there
was an ample amount of funding in the Fish and Game Fund to
cover the one-time funding DGF increment. He understood
there was $7.6 million in the Sportfish Division section of
the Fish and Game Fund and $11 million in the fund overall.
Representative LeBon asked how the hatcheries in Fairbanks
and Anchorage interfaced with the amendment.
Vice-Chair Ortiz replied that the amendment did not pertain
the hatcheries in Fairbanks and Anchorage.
Representative LeBon asked for verification that the
Crystal Lake Hatchery had been part of the funding in the
past.
Vice-Chair Ortiz agreed that Crystal Lake Hatchery had
received funding from a surcharge put on licenses.
Representative LeBon stated that the Fairbanks and
Anchorage hatcheries were also beneficiaries of the funding
through their bonded indebtedness. He recalled back to a
debate on the legislation pertaining to the subject. He
asked for verification that the amendment solidified the
"piece of the pie" for the Crystal Lake Hatchery.
3:20:50 PM
Vice-Chair Ortiz stated that whether separate legislation
passed would not solve the problem for the Crystal Lake
Hatchery in the current year. He explained that the
collection of the funds had been suspended in 2020. He
emphasized that the impact of the separate bill on funding
for the Crystal Lake Hatchery, DIPAC, or the hatcheries in
Anchorage and Fairbanks was a different issue. The
amendment made sure staff at the Crystal Lake Hatchery knew
beginning FY 22 there were funds in place to raise king
salmon in August 2021.
Representative LeBon remarked that the hatchery had been
around for a while and had a fairly well established
funding stream for a given number of budget cycles. He
asked for verification that the legislature needed to tap a
different funding source for the current budget cycle.
Vice-Chair Ortiz replied in the negative. He clarified that
the funding source of approximately $500,000 came from the
fish license surcharge that paid for the debt service on
the bonds for the two other hatcheries. He explained that
the source had been suspended in 2020. He noted it may be
reinstated in the future, but it did not solve the problem
for Crystal Lake in the coming summer.
Representative Thompson stated there was no guarantee the
separate legislation would pass. He noted that the bill
specified the department would decide where the money was
needed. He clarified that the legislation did not designate
a given amount to each hatchery on an annual basis. He
thought that letting the department decide would make more
sense than designating a specified amount to various
hatcheries. He thought the issue should be left up to the
department to decide which hatcheries needed money in the
coming year. He did not like designating funds to one
hatchery and overriding what the DFG may want. He was not
in favor of the amendment.
3:24:14 PM
Representative Carpenter was not familiar with the DIPAC
hatchery. He noted the amendment indicated the Crystal Lake
Hatchery was contracted. He asked if the entities were
private businesses contracted by the state.
Vice-Chair Ortiz asked for a repeat of the question.
Representative Carpenter noted the amendment indicated the
Crystal Lake Hatchery was contracted. He surmised it was a
private business. He asked if DIPAC was also a private
business.
Vice-Chair Ortiz confirmed that DIPAC was not a state-owned
hatchery.
Representative Carpenter asked if the business had
insurance protection against loss of stock that would have
kicked in under the circumstances.
Vice-Chair Ortiz replied that he did not know. He added
that he had spoken to the operator of the DIPAC hatchery
and there was no question the hatchery needed the funds.
Representative Rasmussen asked if the $150,000 intended for
DIPAC was the amount needed to keep the hatchery from a
dire situation. Alternatively, she asked if the entire
$650,000 was a dire need.
Vice-Chair Ortiz responded that he knew the issue had to be
addressed at Crystal Lake, but he also knew that DIPAC
received some of the money distributed out of the surcharge
funds on a regular basis. He elaborated that he had
contacted DIPAC prior to writing the amendment and the
manager had been definitive on the need for the money in
order to continue operations. He noted it was a different
situation than things discussed by Representative LeBon
such as maintenance. The money was needed to enable the
hatcheries to continue raising king salmon for the
sportfish industry and commercial fishing in Southeast
Alaska.
3:27:34 PM
Representative Rasmussen asked for the significance of the
breakout of $150,000 versus the total expenditure.
Vice-Chair Ortiz answered that the $150,000 was for DIPAC
and the $500,000 was for Crystal Lake.
Representative Rasmussen asked if there had been a system
failure at the Crystal Lake facility as well that caused
the need for the $500,000. Alternatively, she wondered if
the hatchery had been receiving the $500,000 for a given
period of time.
3:28:15 PM
AT EASE
3:39:38 PM
RECONVENED
Co-Chair Foster noted there was a handout from Vice-Chair
Ortiz [titled "Table 1. - Revenue and payments of Hatchery
Bond surcharge by fiscal year." from the Legislative
Finance Division (copy on file)].
Vice-Chair Ortiz explained the handout showed the history
of revenue collected with the surcharge on fish licenses
(discussed with HB 80). He pointed to the left showing the
amount of money taken in over the years under surcharge
revenue. The document showed the amount put towards
Southeast Alaska king salmon enhancement primarily at
Crystal Lake and a smaller amount at DIPAC. He explained
the potential passage of HB 80 would not solve the problem
for the two locations for the upcoming fiscal year. He
referenced earlier questions about the other hatcheries and
explained that the state paid for the Anchorage and
Fairbanks hatcheries in the operating budget, which it did
not do for Crystal Lake or DIPAC.
Representative LeBon thanked Vice-Chair Ortiz for the
additional information. He remarked that he supported the
separate legislation Vice-Chair Ortiz had been working on.
He noted the one-time increment proposed by the amendment
and asked if the legislature would have to address the
issue again the following session if the separate
legislation did not pass.
Vice-Chair Ortiz responded affirmatively.
Representative LeBon expressed his support for the
amendment.
Representative Thompson asked whether the two Southeast
hatcheries that contracted with the state had requested the
funding.
Vice-Chair Ortiz replied in the affirmative.
Representative Thompson asked if DFG supported the
amendment.
Vice-Chair Ortiz shared that he had spoken to the DFG
commissioner who had communicated that the funding for
Crystal Lake was not taken care of for the coming year.
Representative Thompson asked if the amendment funding
pertained to upgrades.
Vice-Chair Ortiz clarified that the amendment did not
pertain to any upgrades. The amendment would assist the
hatcheries in the ability to raise king salmon. He
reiterated that the funding was not related to upgrading
facilities; it would pay for the cost of raising king
salmon in the coming summer.
Representative Thompson asked for verification that DIPAC
had been negatively impacted by a storm.
Vice-Chair Ortiz replied in the affirmative.
Representative Thompson asked if the amendment would direct
$150 million to DIPAC.
Vice-Chair Ortiz clarified that the increment was $150,000.
Representative Thompson asked if the repair from storm
damage should be in the capital budget.
Vice-Chair Ortiz answered that $150,000 was for unexpected
costs caused by the windstorm. He relayed that DIPAC had
lost its king salmon and coho brood in the past year. He
explained that the funds would go directly to one-time
costs incurred as a result of the storm. He stated that
capital budget was more about maintenance, runways, and
other similar things. He clarified that the amendment
pertained to a one-time fiscal loss that caused the
hatchery to lose its entire king salmon brood in the past
year and ensured the hatchery's ability to raise the king
salmon in the current year. He reminded committee members
the funds would come from the sportfish portion of the Fish
and Game Fund with a balance of $7.6 million and a total
fund balance of $11 million. Additionally, when the license
program was suspended, there had been $3.5 million. He had
not yet been able to track where the funding was, but it
was his understanding that $3.5 million should be added to
the Fish and Game Fund.
Representative Thompson was supportive of the surcharge and
hoped the separate legislation passed.
3:46:09 PM
Representative Rasmussen WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment H DFG 1 was
ADOPTED.
Co-Chair Foster recognized Representative Sara Hannan in
the audience.
3:46:59 PM
Representative Carpenter MOVED to ADOPT Amendment H HSS 1
(copy on file):
Department of Health and Social Services
Behavioral Health
H HSS 1 Reduce authority for Sobering Centers
Transitioning to Medicaid 1115 Waiver
Agencies that provide alternatives for seriously
mentally ill adults or adults experiencing substance
use disorders are transitioning to more clinically
managed services that are eligible for payment through
the 1115 demonstration waver under Medicaid. As a
result, can be reduced due federal reimbursement of
services.
Representative Josephson OBJECTED for discussion.
Representative Carpenter read the amendment description
[shown above].
Representative Josephson disagreed. He detailed that the
Department of Health and Social Services (DHSS) testified
that the facility located in Bethel serving the Yukon
Kuskokwim Corporation (YKC) could not use the 1115 waiver
to recoup needed funds. He elaborated that the facility
provided safe shelter for inebriants in the Bethel area who
would otherwise pass through jail or the local hospital
emergency room. He shared that the facility had been
created as a joint effort between DHSS, YKC, the City of
Bethel, and the Alaska Mental Health Trust Authority
(AMHTA). He relayed that his subcommittee had been very
supportive of the program. He stated that DHSS
characterized the 1115 waiver as something like a cure-all,
which he did not agree with. He relayed that DHSS had
conceded the point on the specific issue [pertaining to the
Bethel facility]. He believed the cut was not warranted.
Representative Carpenter provided wrap up on the amendment.
He stated the amendment would delete a $200,000 increment
for YKC. He highlighted that YKC had received about
$600,000 in Coronavirus Aid, Relief, and Economic Security
(CARES) Act funding. He stated that YKC had sufficient
funding, and no one would be without a roof over their head
due to the amendment. He reasoned that in a time of limited
funds, it was not necessary to spend the money at present.
Representative Josephson had been told by Representative
Tiffany Zulkosky that the $600,000 in CARES Act funding was
not for the Bethel facility. He had been told the funding
was a 23-hour COVID-19 quarantine location operated by YKC
in another facility.
Representative Carpenter replied that he only had the
information from the administration. He thought perhaps the
conflict should be solved.
Co-Chair Foster asked if Representative Carpenter was
suggesting hearing from the administration. He noted that
the phone lines were still down. He asked Representative
Carpenter if he wanted to withdraw the amendment and take
it up at a later time.
3:51:33 PM
AT EASE
4:03:22 PM
RECONVENED
Co-Chair Foster reported the committee was trying to reach
someone from DHSS on the amendment.
Representative Carpenter WITHDREW Amendment H HSS 1 with
intent to offer it at a later time [note: Amendment H HSS 1
was taken up again at approximately 4:55 p.m.].
Co-Chair Foster noted that DHSS amendments would be held
until a later time when the department was available.
4:04:20 PM
Representative Carpenter MOVED to ADOPT Amendments H DOL 2,
H DOL 7, H DOL 9 (copy on file):
Department of Labor and Workforce Development
Commissioner and Administrative Services
H DOL 2 - Delete Vacant Research Analyst Position
Delete vacant Research Analyst position located in
Juneau
Department of Labor and Workforce Development
Labor Standards and Safety
H DOL 7 Delete Vacant Office Assistant Position
Delete vacant Office Assistant position in Anchorage.
This position has been vacant for more than 12 months.
Essential job duties have been distributed to other
staff with little Impact to service.
Department of Labor and Workforce Development
Labor Standards and Safety
H DOL 9 - Delete Vacant Administrative
Delete Administrative Assistant position located in
Anchorage. This position has been vacant for more than
12 months. Essential job duties have been distributed
to other staff with little impact to services.
Representative Josephson OBJECTED.
Representative Carpenter explained the amendments related
to vacant positions. He elaborated that the position under
Amendment H DOL 2 had been vacant since 2018, the position
under H DOL 7 had been vacant since January 15, 2020, and
the position under H DOL 9 had been vacant since April 15,
2020. He stated that the administration did not need the
vacancies and had requested their removal from the budget.
Co-Chair Foster asked if the amendment pertained to a
proposal by the administration that had been rejected by
the subcommittee.
Representative Carpenter answered that he did not know.
Representative Wool recalled that the reductions had been
rejected by the Department of Labor and Workforce
Development (DLWD) subcommittee. He did not remember the
explanation and had not been aware of the vacancy times.
Co-Chair Foster stated his understanding that the items had
been part of the governor's proposed budget and had not
been accepted by the subcommittee.
Representative Wool believed they were budget action items
that were rejected. He did not recall with 100 percent
surety.
Representative Wool remarked that the money was not spent
if the vacancies were not filled. He reasoned that in some
ways there was no harm in leaving a vacant position if a
department was merely looking for the right person or if it
was a recruitment problem.
Representative Rasmussen stated she did not understand why
the legislature would keep funding a position that had been
vacant for three years with over $100,000 General Fund
liability if the position were to be filled. She did not
know what the justification would be for keeping a position
the department had been operating without for three years.
4:07:55 PM
Representative Josephson MAINTAINED the OBJECTION.
Representative Carpenter provided wrap up on the
amendments. The first vacancy was a research analyst
position that had been unfilled since 2018, the others were
a vacant office assistant position and administrative
assistant position within the Division of Labor Standards
and Safety. He reported that the department was working
through consolidation efforts and did not need the
positions. He would understand if there were recruitment
efforts that may warrant keeping a vacancy open; however,
the department did not want the positions and did not want
to recruit for them. He stated the reduction was a way the
department could continue to perform its work without
eliminating employees. The amendment would mean vacant
positions would not be funded.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Thompson, Carpenter, Johnson, LeBon
OPPOSED: Edgmon, Josephson, Ortiz, Wool, Merrick, Foster
The MOTION to adopt Amendments H DOL 2, H DOL 7, and H DOL
9 FAILED (5/6).
4:10:30 PM
Representative LeBon MOVED to ADOPT Amendment L H LAW 1,
32-GHJ509\N.l3 (Marx, 4/27/21) (copy on file):
Department of Law
Civil Division Except Contracts Relating to
Interpretation of Janus v AFSCME
L H LAW 1 - Statehood Defense Outside Counsel and
Expertise (FY2021-2025)
This funding would support the Dept. of Law, Civil
Division's efforts to defend the State's right to
develop and protect the State's natural resources,
access to lands, and the management of fish and
wildlife resources for FY21-FY25. Funding for this
program was included in HB 68 (the Governor's Fast-
Track Supplemental), but not included in HB 69.
Representative Josephson OBJECTED.
Representative LeBon explained the amendment would restore
$4 million in UGF for the Department of Law as requested in
the governor's budget to support the efforts by the Civil
Division to defend the state's right to develop and protect
its natural resources. He elaborated that the amendment
would help with the access to lands and the management of
fish and wildlife resources. He detailed that the amendment
would give the department the option to seek outside
counsel related to the aforementioned issues. He stated
that the federal pushback the state was experiencing
related to its rights to develop its own resources may
require more specialized legal representation. He shared
that when he had worked as a banker, there were times
outside legal counsel had been sought if the nature of the
legal question had warranted more specialized legal
assistance.
Representative Josephson MOVED to AMEND Amendment L H LAW 1
to reduce the expenditure to $1 million.
Co-Chair Foster OBJECTED for discussion.
Representative Josephson explained the amendment to the
amendment. He relayed that he had chaired the DOL
subcommittee, and the subcommittee had heard from the
deputy attorney general Cori Mills that the amount was for
four years of expenditure. He did not see the harm in
funding one year with the intent to revisit the topic in
January 2022.
Co-Chair Foster WITHDREW the OBJECTION.
There being NO further OBJECTION, conceptual Amendment 1 to
Amendment H LAW 1 was ADOPTED.
4:13:21 PM
AT EASE
4:14:33 PM
RECONVENED
Co-Chair Foster asked his staff and Mr. Painter to speak to
the timing on the amendment. He noted that the committee
had not specified which year the conceptual amendment
pertained to and what the ramifications were.
Mr. Painter explained the original amendment was multiyear,
FY 21 through FY 25. The amendment to the amendment had
changed it to a one year item in FY 21 only. He posed the
question as to whether the item should be for FY 21 and FY
22.
Co-Chair Foster believed Representative Josephson had
intended the conceptual amendment to apply to FY 22. He
stated his understanding the intent was for the legislature
to assess (at the end of FY 22) whether the funds had been
used in the way the committee had in mind. He thought there
were some concerns about not wanting to use funds to do
things that may be averse to subsistence, for example.
Representative Josephson was willing to withdraw his past
amendment. He clarified his intent for the conceptual
amendment to apply to FY 22. He stated it was fine if the
amendment applied to the next two months and FY 22.
Representative Carpenter MOVED to RESCIND previous action
on Amendment H LAW 1.
There being NO OBJECTION, it was so ordered.
Representative Josephson MOVED to AMEND Amendment H LAW 1
to reduce the amount to $1 million for use in the remainder
of FY 21 through FY 22.
Representative LeBon OBJECTED to conceptual Amendment 1. He
suggested a $2 million appropriation.
Representative Rasmussen did not believe the committee
could add a conceptual amendment to a conceptual amendment.
Co-Chair Merrick called for an "at ease."
4:18:03 PM
AT EASE
4:18:38 PM
RECONVENED
Co-Chair Foster clarified that conceptual Amendment 1 would
reduce the appropriation [from $4 million in the original
amendment] to $1 million for FY 21/FY 22.
Representative LeBon withdrew his proposal to the
conceptual amendment. He did not support the proposed
reduction down to $1 million in conceptual Amendment 1. He
expressed his intent to offer a conceptual amendment to
change the funding to $2 million following a vote on
conceptual Amendment 1.
Representative LeBon MAINTAINED the OBJECTION to conceptual
Amendment 1.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Wool, Edgmon, Johnson, Josephson,
Ortiz, Merrick, Foster
OPPOSED: Thompson, Carpenter, LeBon
The MOTION PASSED (8/3). There being NO further OBJECTION,
conceptual Amendment 1 to Amendment H LAW 1 was ADOPTED.
4:21:03 PM
Representative LeBon stated that he did not know whether
conceptual Amendment 2 would apply after the adoption of
conceptual Amendment 1. He MOVED to AMEND Amendment H LAW 1
as amended to $2 million.
Co-Chair Merrick OBJECTED.
Representative LeBon spoke to conceptual Amendment 2. He
believed $1 million was light for the intended purpose.
Additionally, the original timeline in Amendment H LAW 1
was the better part of five years. He noted the previously
adopted conceptual amendment reduced the timeline to 1 year
and $1 million. He thought if the committee was going to
adjust the dollar amount by 75 percent to $1 million, it
should adjust the timeline to 2 years. He believed $2
million was a better number.
Co-Chair Foster asked for clarification on the timeframe.
Representative LeBon replied the $2 million was for the
remainder of FY 21 through FY 22.
Co-Chair Merrick MAINTAINED the OBJECTION.
Representative Johnson stated her understanding that
conceptual Amendment 2 would change the total amount to $2
million.
Representative LeBon agreed that the conceptual amendment
could add an additional $1 million or a new number of $2
million. He added that if the amendment failed, the amount
would default to $1 million.
Representative Wool highlighted that the funding was for
statehood defense for the DOL Civil Division that already
had numerous attorneys. He remarked that the funding was
for things that may or may not arise. He added that the
original amendment included a timeframe of multiple years
beyond the current administration. He pointed out that if
there was a new administration, the legislature did not
know what that administration would want to do. He believed
$1 million was sufficient.
Representative Johnson remarked that there was a new
[federal] administration and she thought it appeared the
state was faced with defending its lands and resources more
than ever. She believed there should be additional funding
for use defending Alaska's statehood rights. She shared
that when she had worked for the city, it often had to hire
outside counsel. She pointed out that when dealing with the
federal government, sometimes it was necessary to hire
counsel that worked with the federal government regularly.
She noted it was sometimes necessary to hire counsel out-
of-state. She thought the funding was a good insurance
against what the state may have to do. She noted the
appropriation did not mean the department had to spend all
of the funding.
Representative LeBon asked to hear from Mr. Steininger with
the Office of Management and Budget.
4:25:13 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, asked Representative LeBon to
clarify the question.
Representative LeBon asked Mr. Steininger to provide
background on the benefit of the funding that would enable
Alaska to defend its interests for resource development,
fish and wildlife, and other.
Mr. Steininger answered that the original funding request
of $4 million over several years was relatively constrained
from what the administration thought it may need. He
elaborated that over the last several months there had been
between 10 and 15 cases where the state had to join a case,
file suit, or take some other action with DOL to defend
statehood rights. He highlighted areas particularly
impacting natural resources through the Department of Fish
and Game, the Department of Environmental Conservation, and
the Department of Natural Resources on lands access issues.
The money would also be used to partner with organizations
representing other legal defense of lands rights. He used
Voice of the Arctic as an example and explained the
organization collaborated with communities, tribal
entities, and Alaska Native Claims Settlement Act (ANCSA)
organizations to defend interests in their regions. He
concluded that the administration viewed the $4 million as
the beginning of what may be a larger need throughout the
course of the current presidential administration.
Representative LeBon appreciated the input from Mr.
Steininger.
Representative Thompson thought it was an important issue
facing the state, especially in light of the new federal
administration. He stated that DOL was anticipating many
cases arising in the near future. He remarked that the
funding would ensure the department had the financial
resources needed to pursue the cases.
Representative Edgmon did not want to get into a deep
philosophical discussion about being in favor or against
resource development. He did not believe it was warranted.
He pointed out that the amendment included forward funding
because it went into the future, which the [state]
administration had looked askance in other areas.
Additionally, he noted the amendment perceived there would
be forthcoming issues. He did not believe the issues were
currently at the table. He underscored his belief that $1
million for one year was ample funding when the state had a
$1.2 billion deficit. He remarked that 70 percent of Alaska
was locked up in federal land, which was not desirable. He
stated the desire to increase resource development and to
work with the Biden Administration. He stated the Biden
Administration was being characterized as the boogie man
from the start, while at the same time, the state was
receiving billions of [federal] dollars. He thought $1
million was fine and he was prepared to support $1 million
the following year. He stressed that he wanted to start
forward funding other areas of the budget as well if the
full funding was adopted. He thought it was only fair.
Representative Edgmon did not know how far $1 million would
go towards attorney costs. He speculated that fees of $500
to $600 per hour likely would lead to another $1 million.
He stressed that court cases went on forever. He shared
that he had been in the Capitol Building when the Hickel
Administration had spent $29 million fighting the statehood
compact. He stated the expenditures had gotten the state
nowhere other than possibly some legal precedence. He
emphasized that he was a pro-resource development as anyone
else at the table and he likely would join in the spirit of
some of the administration's law suits. However, in the
spirit of being fiscally prudent, $1 million would get the
job done. He elaborated that the issue should be taken up
again the following session on an as needed basis if $1
million or $2 million more was needed in the coming year
due to a lawsuit with the 9th circuit court or something
that needed to go to the supreme court.
4:30:11 PM
Representative Rasmussen aligned herself with the comments
made by the prior speaker. She acknowledged the importance
of the issue and reasoned there were supplemental budgets
in place if needed. She agreed that $1 million was
sufficient funding. She opposed the conceptual amendment.
Co-Chair Merrick and Representative Josephson MAINTAINED
the OBJECTION to conceptual Amendment 2 to Amendment H LAW
1.
Representative LeBon suspected the amendment to increase
the amount to $2 million would fail. He expressed
appreciation for support for the $1 million.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Carpenter, Johnson, LeBon
OPPOSED: Wool, Edgmon, Josephson, Ortiz, Rasmussen,
Merrick, Foster
The MOTION to adopt conceptual Amendment 2 to Amendment H
LAW 1 FAILED (4/7).
4:32:08 PM
Co-Chair Foster returned to Amendment H LAW 1 as amended at
$1 million.
There being NO OBJECTION, Amendment H LAW 1 was ADOPTED as
AMENDED.
4:32:44 PM
Representative Carpenter MOVED to ADOPT Amendment H LAW 3
(copy on file):
Department of Law
H LAW 3 - Add Back Funding to Maintain Agency Core
Operations
Offered by Representative Carpenter
Adds back funding to maintain the agency core
operations that were deleted by the subcommittee.
Representative Josephson and Representative Rasmussen
OBJECTED.
Representative Carpenter explained the amendment. He
explained that the amendment would restore funding to
maintain core agency operations deleted by the
subcommittee.
Representative Josephson communicated that the DOL
subcommittee had looked at the department's budget very
carefully. The subcommittee had determined the department
could withstand a cut in a component called contractual
services within the Labor and State Affairs Section. He
elaborated that the subcommittee had found the department
to be violating the law on outside contracts. He detailed
that the subcommittee had found evidence, which he had on
hand, that DOL had spent $199,000 on what the legislature
had said was a prohibited contract. He pointed out that the
governor had signed the bill, which he believed had been HB
205. The subcommittee had communicated to the department
that it was not respecting the legislature's appropriation
authority. The subcommittee had also told DOL that the
department did not need the funds and should not have it
for the purpose it had been used for. He relayed that for
the aforementioned reasons, the subcommittee had deemed the
funding unnecessary.
Representative Rasmussen MAINTAINED the OBJECTION.
Representative Carpenter provided wrap up on the amendment.
He stated that he would take it very seriously if someone
was violating the law and there was a process that should
be followed. He stated that punitive action by the
legislature in cutting budgets was not one of the actions
that should be taken. He thought that because the
administration and department could move money around, the
amendment really meant the $200,000 would eliminate one
attorney position at a time when attorneys were needed in
the department. He stated that the funding would have an
impact on Child in Need of Aid cases, statehood defense,
revenue protection, elections, unemployment matters,
ethics, labor, and labor negotiations.
A roll call vote was taken on the motion.
IN FAVOR: Johnson, LeBon, Rasmussen, Thompson, Carpenter
OPPOSED: Wool, Edgmon, Josephson, Ortiz, Merrick, Foster
The MOTION to adopt Amendment H LAW 3 FAILED (5/6).
4:36:32 PM
Representative Carpenter MOVED to ADOPT Amendment H LAW 4
(copy on file):
Department of Law
Administration and Support
H LAW 4 - Restores one position and UGF equal to
position cost
This amendment would restore one position and UGF
funding that was deleted by the House Subcommittee.
This position is currently funded with Inter-Agency
Receipt Authority, so the Subcommittee's UGF reduction
would force the agency to take the UGF from another
position within the appropriation. This amendment
would restore proper funding to the Department of
Law's Administration and Support Division, which is
one of the smallest in the executive branch.
Representative Rasmussen and Representative Josephson
OBJECTED.
Representative Carpenter explained the amendment would
restore one position and UGF funding that had been deleted
by the subcommittee. He read the amendment explanation
above.
Representative Josephson opposed the amendment. He
explained that the position in question was the chief of
staff to the attorney general. He detailed that the
position had not existed in 2018. The position had been
first filled by Ed Sniffen (a one-time attorney general
nominee). He stated that the position had historically been
unnecessary and was currently unfilled. Additionally, the
department would not need a UGF decrement elsewhere. He
elaborated that the Civil Division and the Criminal
Division had both contributed towards the funding of the
position. He stated that without the position the funds
would go back where they came from and there was no
prejudice to the two main divisions. He relayed that if the
department wanted a deputy chief of staff, it could fund
the position with increased interagency receipts.
Representative Rasmussen opposed the amendment. She stated
that Alaska's fiscal reality could not support every
position.
Representative Johnson recalled that the attorney general
had testified to the committee about the need for the
positions to help fight the state's sexual assault problem.
She supported the amendment because she wanted to help the
attorney general succeed with the mission.
Representative Josephson MAINTAINED the OBJECTION.
Representative Carpenter provided wrap up on the amendment.
He stated DOL had taken a PCN from one of the divisions and
reclassified it to create the chief of staff position. He
explained that the subcommittee had deleted general funds;
however, the position was funded with interagency receipts.
He clarified that the decreased funding actually cut the
executive assistant or special assistant position that were
funded with general funds. He thought there was confusion
about what was happening in regard to the cut of general
funds. He elaborated that the new attorney general had
stated the department did not need a chief of staff
position and that it would be reclassified. He highlighted
that the department wanted the position to go back to
combatting the state's high rates of sexual assault and
domestic violence. He thought it would be a mistake to
eliminate the funding and position. He encouraged members
to support the amendment.
4:40:50 PM
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Johnson, LeBon, Thompson
OPPOSED: Edgmon, Josephson, Ortiz, Rasmussen, Wool,
Merrick, Foster
The MOTION to adopt Amendment H LAW 4 FAILED (4/7).
4:41:44 PM
Representative Josephson MOVED to ADOPT Amendment H MVA 1
(copy on file):
Department of Military and Veterans Affairs
H MVA 1 - Restore Civil Air Patrol Funding
In FY21, the legislature funded the Civil Air Patrol
at $250.0 UGF, which was a decline from $500.0. The
Governor vetoed all FY21 funding. This amendment would
restore the legislature's support for the Civil Air
Patrol.
The Civil Air Patrol (CAP) is a nonprofit, volunteer
organization and the official auxiliary of the United
States Air Force whose primary purpose is search and
rescue operations.
When conducting search and rescue as an asset of the
Air Force or other federal agencies. the costs for the
CAP missions are paid by those agencies.
The state appropriation will pay for utilities and
insurance at facilities where CAP aircraft are stored
and fuel for nonemergency operations such as
proficiency flights for pilots and crew.
The Civil Air Patrol locates emergency beacons and
assists in dozens of search and rescue missions in
Alaska each year. CAP aircrews from the Alaska Wing
provided aerial support and transport platforms to the
U.S. Coast Guard during the Covid pandemic.
The relatively small amount of state funding provided
through this amendment will support a significant
volunteer contribution to the safety of Alaskans.
Representative Rasmussen OBJECTED for discussion.
Representative Josephson explained the amendment. He shared
that he had a constituent who cared immensely about the
Civil Air Patrol. He found it hard to imagine not being
supportive of the organization. He cited an Anchorage Daily
News article dated July 2019 specifying that the Civil Air
Patrol had conducted six search and rescue missions and
located 34 emergency beacons that lead to six lives being
saved. He highlighted that the governor had vetoed the
funding. He did not support the cut and wanted to
communicate to the administration that the legislature's
values were to save the six lives and its willingness to
spend $250,000 to do so.
Representative LeBon supported the amendment. He shared
that he had chaired the Department of Public Safety
subcommittee the past two budget cycles. He had included
the funding in both budgets, but the funding had not
survived the red pen [the governor's vetoes]. He thought
perhaps three times was the charm. He thanked
Representative Josephson for bringing the amendment
forward.
Representative Rasmussen WITHDREW the OBJECTION.
Co-Chair Merrick OBJECTED.
Representative Josephson provided wrap up on the amendment.
He relayed that in 2018 the funding had been $500,000. He
explained that the proposed funding in the amendment was
not overly generous. The funding would help with things
like the cost of fuel and related expenses. He concluded
that the funds would help make Alaska's skies safer and
rescue fellow Alaskans in distress.
A roll call vote was taken on the motion.
IN FAVOR: Edgmon, Johnson, Josephson, LeBon, Ortiz,
Rasmussen, Thompson, Wool, Foster
OPPOSED: Carpenter, Merrick
The MOTION PASSED (9/2). There being NO further OBJECTION,
Amendment H MVA 1 was ADOPTED.
4:45:31 PM
Representative Josephson MOVED to ADOPT Amendment H DNR 2
(copy on file):
Department of Natural Resources
Division of Agriculture
H DNR 2 - Report to Legislature
The Division of Agriculture's mission is to promote
and encourage development of an agriculture industry
in the State, which will improve local food security
and state independence.
In recent years, the department has endured
significant budget cuts and disruptions in staffing,
but a renewed interest from the administration in
prioritizing Alaska agriculture is a welcome and
exciting change.
This intent language is designed to support robust
reporting and accessibility, planning for the future,
and an understanding of the impacts of the new 2021
Alaska Micro-Grants for Food Security Program so that
similar subsequent opportunities can be optimized.
Representative Carpenter OBJECTED for discussion.
Representative Josephson read the last paragraph of the
amendment explanation above. He explained that the intent
language would also ensure reports for program participants
were available online. He noted that some of the
information was available, but some of the information was
opaque or inaccessible.
4:46:37 PM
AT EASE
4:50:56 PM
RECONVENED
Representative Carpenter WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment H DNR 2 was
ADOPTED.
4:52:14 PM
Co-Chair Foster noted the committee would return to
amendments for the Department of Health and Social Services
(DHSS).
Representative Carpenter MOVED to ADOPT Amendment H HSS 1
(copy on file):
Department of Health and Social Services
Behavioral Health
H HSS 1 - Reduce authority for Sobering Centers
Transitioning to Medicaid 1115 Waiver
Agencies that provide alternatives for seriously
mentally ill adults or adults experiencing substance
use disorders are transitioning to more clinically
managed services that are eligible for payment through
the 1115 demonstration waver under Medicaid. As a
result, can be reduced due federal reimbursement of
services.
Representative Josephson OBJECTED.
Representative Carpenter requested to have subject matter
experts address the committee. He asked about the
administration's intent in regard to moving the funding to
the 1115 waiver.
Mr. Steininger apologized that no one from DHSS was
available to testify due to technical difficulties. He
answered that the intent was to move the services,
including sobering centers into 1115 waiver covered
services, which allowed for claiming and federal cost
sharing under Medicaid. He explained that the services
could be claimed under Medicaid via the waiver. He
elaborated that the department had a regulations package
currently in effect that covered the services. He stated
that the providers should be able to transition over to
claiming through Medicaid.
Representative Josephson asked if his memory was accurate
that testimony in subcommittee had stated the 1115 waiver
could not fully cover the cost of the program.
KELLY CUNNINGHAM, ANALYST, LEGISLATIVE FINANCE DIVISION,
answered in the affirmative. She elaborated that the
subcommittee had been told the program could not bill under
Medicaid because sobering was not a medical service.
Representative Josephson MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Johnson, Carpenter, Thompson, Rasmussen
OPPOSED: Josephson, LeBon, Ortiz, Wool, Edgmon, Merrick,
Foster
The MOTION to adopt Amendment H HSS 1 FAILED (4/7).
4:56:00 PM
Representative Carpenter MOVED to ADOPT Amendment H HSS 2
(copy on file):
Department of Health and Social Services
Behavioral Health
H HSS 2 - Reduce Behavioral Health Treatment and
Recovery Grants
Per the Department these funds are not needed. The
Grants have been reduced over time as support for
these types of activities has shifted to the Medicaid
1115 Waiver. Additionally, the funding in the
Marijuana Education and Treatment Fund is unlikely to
be available in future years.
Representative Josephson OBJECTED.
Representative Carpenter read the amendment explanation
above. He thought funding behavioral health grants was
likely an inappropriate use of the Marijuana Education and
Treatment Fund [MET].
Representative Josephson believed the grants were an
appropriate use of the MET funds. He stated that the MET
funds itemized eligible expenditures and behavioral health
grants were included on the list. He referenced a letter
from Volunteers of America describing how the 1115 waiver
did not fully work for certain behavioral health programs.
He referred to a conversation with Ms. Ripley of the Mat-Su
Health Foundation about Nugent's Ranch. He shared that he
had first heard about Nugent's Ranch as a state prosecutor.
He stated that the term was heard constantly in criminal
court. He explained that the ranch was a farm in Mat-Su
where people could get treatment. He thought program
participants contributed to operation of the facility. He
expounded that the program provided more than 28 days of
inpatient treatment. He highlighted that the 1115 waiver
only provided 28 days. He pointed out that the 1115 waiver
included a bed limit of 16; however, Nugent's Ranch had
more than 16 beds. He agreed that was great and saved money
for the state, but expenditure for behavior grants in
actual dollars had dropped.
Representative Josephson relayed that he had letters from
Tom Chard with the Alaska Behavioral Health Association
describing the same thing - there was an adjustment period
to get to the 1115 waiver and to match programs to the 1115
waiver, if possible. Additionally, he had a letter from Jim
Myers, CEO of Alaska Behavioral Health describing the same
thing. He highlighted a letter from John Regitano, the
executive director of Family Centered Services of Alaska.
He referenced repeated comments how the 1115 waiver could
be a square peg in a round hole. He shared that his
subcommittee had looked at the issue and had found
interesting and creative, lawful, and transparent ways to
fund an increase without increasing the UGF spend in the
department overall. He stated that sometimes the department
got ahead of itself in its excitement. For example, the
subcommittee had heard testimony about how the department
felt it could go to a paperless Division of Public
Assistance application profile; however, the department's
fiscal note stated that the goal had not yet been achieved.
He believed the topic under discussion was another example
of the department getting ahead of itself. He opposed the
amendment.
5:00:20 PM
Representative Wool asked for verification that sobering
was not an eligible Medicaid service. He was trying to work
out the different statements by Mr. Steininger and Ms.
Cunningham.
Mr. Steininger qualified that he was not an expert in the
1115 waiver. He stated his understanding the department
that the types of services being delivered became eligible
under the 1115 waiver. He stated the department was seeking
to transition the services and needs through the 1115
waiver.
Ms. Cunningham added the department was currently working
on a program called Crisis Now. Once the program was
implemented, it would be possible to bill for the services
under the 1115 waiver.
Representative Josephson MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Rasmussen, Thompson, Carpenter, Johnson
OPPOSED: Josephson, Ortiz, Wool, Edgmon, Merrick, Foster
The MOTION to adopt Amendment H HSS 2 FAILED (5/6).
5:03:01 PM
Representative Carpenter MOVED to ADOPT Amendment H HSS 7
(copy on file):
Department of Health and Social Services
Children's Services
H HSS 7 - Removes inappropriate funding of activities
not in support of recidivism reduction.
The department is currently negotiating with tribes
regarding the compact; adding this funding now is
premature while negotiations are ongoing.
Representative Josephson OBJECTED.
Representative Carpenter read the amendment description
above.
Representative Josephson spoke to his objection. He noted
that there had already been discussions and negotiations
with tribes would continue in May and June. He explained
that money may be needed to continue the result. He
detailed that Representative Zulkosky who was the chair of
the House Tribal Affairs Committee and co-chair of the
House Health and Social Services Committee had brought the
issue to the subcommittee and had indicated there was
already funding for a portion (something less than the $3.4
million) of the funding. He stated he was not an expert on
the Office of Children's Services (OCS), and he was not
always sure how he felt about the delegation of state
authority to tribes; however, it was understood there was a
problem and that current models were not always working. He
noted it was not due to the OCS social workers in his view.
He explained that the budget item was an effort to try
something different to see if tribes could help take care
of children in need of aid in participation with the state.
5:05:17 PM
Representative Edgmon referenced the Alaska Tribal Child
Welfare Compact implemented in 2017. He drew attention to a
previous amendment that allocated $1 million for the state
to defend itself under the presumption more wealth would be
generated. He highlighted the power and potential of the
compact in its short existence from 2017 to 2018 in the
latter stage of the Walker Administration. He elaborated
that Alaska Natives comprised 15 percent of the population
statewide and accounted for 60 to 70 percent of the
children in state custody, which was extremely
disproportionate. He expounded that try as it might, OCS
had many misses along with its hits. He believed putting a
small amount of money forward at present could save a
tremendous amount of money and get local tribes involved in
the vexing and unsolvable problem at many levels. He stated
the problem continued to plague rural Alaska in epidemic
numbers.
Representative Edgmon believed the funding could save the
state a substantial amount of money in the criminal justice
system. He referenced the Department of Corrections and the
disproportionate number of young Alaska Native males in the
system. He stressed the importance of getting local
villages involved. He believed tribal compacting was the
only way out there. He was disappointed that the money was
not automatically in the budget, but he was very confident
the money would be well spent. He believed the discussions
had produced legitimate negotiations. He underscored that
the compact would result in fewer Alaska Native children in
foster homes, OCS, and in the justice system. He strongly
supported keeping the funding intact. He opposed the
amendment.
Co-Chair Foster opposed the amendment that would remove
funding for a child welfare compact. He aligned his
comments with Representative Edgmon.
Representative Josephson MAINTAINED the OBJECTION.
Representative Carpenter provided wrap up on the amendment.
He highlighted that $1 million was a significant amount of
money. He relayed that $1.6 million in the OCS budget was
already funded for the compact. He thought taking $3.4
million from the recidivism fund (a fund with its own
purpose) for a compact that had not yet been fully agreed
to seemed like putting the cart before the horse. He
recognized the need that needed to be addressed. He
believed the legislature needed to be good stewards of the
state's money and ensure agreement was reached with all
parties on the amount of money that needed to be
appropriated. He stated there was a process underway,
including seed money of $1.6 million that had already been
appropriated for the purpose. He did not believe the
additional $3.4 million should be appropriated until an
agreement had been reached.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Thompson, Carpenter, Johnson, Merrick
OPPOSED: Ortiz, Rasmussen, Wool, Edgmon, Josephson, Foster
The MOTION to adopt Amendment H HSS 7 FAILED (5/6).
5:11:19 PM
Representative Rasmussen MOVED to ADOPT Amendment H HSS 8
(copy on file):
Department of Health and Social Services
Children's Services
H HSS 8 - Recruitment and Retention Intent Language
Funding was added in the HSS Subcommittee process to
address critical and longstanding problems with
recruitment and retention of caseworkers in the Office
of Children's Services by adding targeted funding for
retention bonuses, behavioral health support, and
tuition reimbursement for caseworkers. This funding
and corresponding Intent language will help ensure
longevity within the Office of Children's Services and
provide the necessary sidebars to protect both the
agency and employees.
For example, before receiving a recruitment or
recruitment incentive, an employee must sign a written
agreement to complete a specified period of employment
with the agency. The service agreement must specify
the length, commencement, and termination dates of the
service period; the amount of the incentive; the
method and timing of incentive payments; the
conditions under which an agreement will be terminated
by the agency; any agency or employee obligations if a
service agreement is terminated (including the
conditions under which the employee must repay an
incentive or under which the agency must make
additional payments for partially completed service);
and any other terms and conditions for receiving and
retaining a recruitment incentive. The agency may not
commence a recruitment incentive service agreement
while an employee receives retention Incentive
payments without a service agreement or during the
service period established by an employee's relocation
or retention incentive service agreement.
Representative Josephson OBJECTED for discussion.
Representative Rasmussen explained the amendment added
intent language for recruitment and retention funds added
in the subcommittee process. She detailed that the language
would require the department to establish an incentive plan
and adopt a termination of service agreement. She
elaborated that the amendment would provide necessary
sideboards to protect the employees and the department.
Representative Josephson explained that the subcommittee
had learned from DHSS there were already $1,000 bonuses
that had been agreed to with the unions serving the
specific class of workers addressed by the amendment. He
relayed the subcommittee had been moved by testimony from
the OCS director who presented on the severity of the
problem retaining workers. The proposal had been that
social workers had to work two years. He highlighted that
Representative Rasmussen's amendment language was a little
more intense, but he did not find it objectionable.
Representative Josephson WITHDREW the OBJECTION.
Representative Wool recalled when the initial amendment had
passed, and the committee had heard about the incentive
bonus pay that came after two years. He thought it seemed
like a long time. He referenced Amendment H HSS 8 language
specifying that "the service agreement must specify, the
length, commencement, and termination dates of the service
period." He did not think it was necessary to specify the
length. He thought that if an employee had been there two
years, they would get a bonus. He was not familiar enough
with the initial bonus structure to implement sideboards.
He remarked that given the high turnover and stress, the
workers should likely get paid a little more, which may
help retain employees. He did not think it was possible in
the subcommittee due to too many budget constraints but was
enough to give a small bonus after a given period of time.
He thought making the details too specific seemed onerous.
5:14:39 PM
Representative Rasmussen stated her understanding that a
major reason for the additional funding was for retention.
She explained that the intent language would clarify there
was a service agreement in place if an employee were to
leave on the two year and first month mark of employment
and receive the bonus. The goal was to effectively
encourage retention beyond two years.
Representative Wool thought an employee should earn a bonus
at the two year mark even if they quit a month later. He
imagined the pay was not extremely high. He understood the
burnout period occurred much sooner than the two year mark.
Representative Wool OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Rasmussen, Thompson, Carpenter, Edgmon,
Johnson, Josephson, LeBon, Merrick, Foster
OPPOSED: Wool
The MOTION PASSED (10/1). There being NO further OBJECTION,
Amendment H HSS 8 was ADOPTED.
5:16:55 PM
Representative Johnson MOVED to ADOPT Amendment H HSS 10
(copy on file):
Department of Health and Social Services
Juvenile Justice
H HSS 10 - Delete Program Coordinator
This amendment deletes a Program Coordinator position
in Fairbanks and the associated funding. The
department indicates the work performed by this
position will be performed by probation staff and that
there will be no reduction in services.
Representative Josephson OBJECTED.
Representative Johnson explained the amendment that would
delete a program coordinator position in Fairbanks and the
associated funding. She explained that the department had
requested the deletion of the position and indicated it had
probation staff to take on the work. She relayed that the
position had been vacant for over one year.
Representative Josephson relayed that the subcommittee had
opposed contraction of the specific field office and others
and the delivery of services to youth by computer in
support of a physical presence. He thought the department
should try harder to fill the position. He MAINTAINED the
OBJECTION.
Representative Johnson thought it made sense to have a
budget reflecting true costs. She believed having vacant
positions on the books clouded the staffing levels. She
stated the amendment provided cleanup.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Thompson, Carpenter, Johnson, LeBon,
Merrick
OPPOSED: Wool, Edgmon, Josephson, Ortiz, Foster
The MOTION PASSED (6/5). There being NO further OBJECTION,
Amendment H HSS 10 was ADOPTED.
5:20:22 PM
Representative Thompson MOVED to ADOPT Amendment H HSS 11
(copy on file):
Department of Health and Social Services
Juvenile Justice
H HSS 11 - Delete Juvenile Justice Officer 1/1 in Nome
This position has been vacant since July 2019. The
Division has identified other staff to take over the
occasional transport that is needed without any
reduction in services.
Co-Chair Foster OBJECTED for discussion.
Representative Thompson explained the amendment that would
delete a position in Nome that had been vacant since July
2019. He read the amendment description above.
Co-Chair Foster confirmed that the position had been vacant
for close to two years. He elaborated that the Nome Youth
Facility funding had been vetoed several years back, which
had resulted in the facility's closure. He explained that
youth were now spread across facilities throughout the
state and occasionally there was a need to bring them back
to Nome to attend court hearings or other, which required
staff for transportation. He relayed there were other staff
available currently undertaking the work. He noted that if
a need arose for staff to provide transport, it would be
possible to do a supplemental in the future or he could
request the funding the following year.
Co-Chair Foster WITHDREW the OBJECTION.
Representative Josephson OBJECTED for discussion. He saw
the trend towards centralization of important services. He
imagined a juvenile probation officer being present and
known by the community who could act as a mentor. He
WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment H HSS 11 was
ADOPTED.
Co-Chair Foster relayed the committee would take a break
for dinner.
5:23:18 PM
RECESSED
6:37:57 PM
RECONVENED
Co-Chair Foster highlighted that the committee would
continue hearing DHSS amendments.
Representative LeBon MOVED to ADOPT Amendment H HSS 12
(copy on file):
Department of Health and Social Services
Juvenile Justice
H HSS 12 - Reduce Early Intervention/Diversion Program
to align with referrals
Referrals from the Division of Juvenile Justice to the
Early Intervention/Diversion Program are significantly
lower than they were when the program started. Youth
Courts are an early intervention/diversion program
which is used by the Division of Juvenile Justice for
first time misdemeanor offenders and occasionally the
Alaska Court System for Minor Consuming citations.
They also afford a pro-social activity in which youth
can volunteer and learn about the justice system
through roles as attorneys, judges, etc.
Representative Josephson OBJECTED.
Representative LeBon explained that the amendment would
reduce funding for youth courts by about $88,000. He
clarified that the proposal was not a negative comment
about the program's value. He believed the program was
important. He explained that the authorized budget for the
youth courts had been about $531,000 over the last four or
five years, while the actual program spend had been about
$75,000 to $85,000 per year below the authorized amount. He
pointed out that referrals to the program had also been on
decline. He detailed that in FY 15 there had been 311
referrals compared to 141 referrals in FY 20. He reported
budgeting had remained steady at about $530,000, but the
actual money spent was in decline. The amendment aligned
the budgeted amount with the actual experience of the
program.
Representative Josephson spoke to his objection. He
communicated his understanding that the youth court
reduction was a reflection of the COVID crisis and could
explain the reason costs were down. For example, there had
been no training conference for youth in the past year. He
stressed that decreasing referrals was temporary, not
permanent. He discussed the usefulness of the youth court
program, which diverted young people getting in trouble for
the first time from the Division of Juvenile Justice
criminal justice system. He expounded that once young
people got into the juvenile justice system it could be
difficult to extricate from the system. He stated that
youth court was an inexpensive way to address youth
misdemeanor gateway crimes such as shoplifting and minor
consuming in a way that reduced the financial and human
cost of time in the adult correctional system, which could
otherwise be the eventual outcome. He thought the reduction
was attributable to COVID and the program funding should be
continued at its current level.
6:41:32 PM
Vice-Chair Ortiz shared that he had called a youth court
program director in Ketchikan regarding the amendment. He
had learned that a couple of communities were having a
challenging time recruiting program directors, which may
help explain the decrease in referrals. Some of the
communities did not have program directors, but it did not
mean the youth could not be better served with the program.
He remarked that if the programs were available, youths
would be more likely to stay away from the formal juvenile
justice system and further heartache. He had spoken to the
director of the court system who had spoken very favorably
of the program, the need to maintain it, and how it saved
the overall court system money. He explained that if there
was no program available, there was no other alternative
for juveniles to go forward other than the formal system,
which involved prosecutors and lawyers for the defense. He
stated that while there may have been a temporary reduction
in referrals, it did not mean the trend would continue.
Representative Wool did not believe anyone was debating the
importance of the youth courts. He stated the drop in
referrals was concerning and he thought the decline may be
more than one year. He believed Representative LeBon had
given statistics back to 2015. He thought it sounded like
the program was underutilized. He asked if the funds lapsed
if they were not used. He remarked that minor consumption
and other similar cases should not go to the full court
system. He believed it would be a complete waste of
resources.
6:45:04 PM
Ms. Cunningham stated her understanding of the question.
She shared that the unspent money lapsed; however, the
department would likely use the general funding for another
activity.
Representative Josephson MAINTAINED the OBJECTION.
Representative LeBon provided wrap up. He detailed that in
2019, the authorized budget was $531,000, while the actual
spend was $438,000. He listed the number of referrals at
154 down from a peak of 311 in 2015. He clarified that he
would not be proposing the amendment if he was only looking
one year back. He stated it was an opportunity to realize a
modest cost cut without impacting the program in a material
way. He relayed the funding request was equal to the spend
and based on a historical average of six years, not one
year.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Carpenter, Johnson, LeBon, Rasmussen
OPPOSED: Edgmon, Josephson, Ortiz, Wool, Merrick, Foster
The MOTION to adopt Amendment H HSS 12 FAILED (5/6).
6:48:12 PM
Representative Johnson MOVED to ADOPT Amendment H HSS 13
(copy on file):
Department of Health and Social Services
Public Assistance
H HSS 13 - Delete 68 positions and associated funding.
The department indicates the positions are no longer
needed due to telework and advancing technology
related to Electronic Document Management (EDM). The
division is processing incoming work more efficiently.
1002 Fed Repts (Fed) -2.396,8
1003 GF/Match (UGF) 2,300,0
Representative Josephson OBJECTED.
Representative Johnson explained that originally the
department had asked for the deletion of 101 vacant
positions. She detailed that the subcommittee had retained
68 of the positions. She shared that 80 percent of the 101
positions were currently vacant; however, there were 100
vacant positions total. She elaborated that the positions
would be eliminated by attrition and no layoffs would
occur. She explained that the vacancies were a result of
the electronic submission of documents and benefits. She
highlighted that HB 168 had recently been passed and added
more credence to the situation. She elaborated that when HB
168 had been introduced, one of the reasons it did not have
a fiscal note was because the department was already doing
the things that were intended in the bill. She believed the
decrement in the amendment was reasonable because it was
substantiated by a plan. She stated that the amendment was
associated with a plan by the department for attrition. She
added there was a viable reason as to why the positions
were unnecessary.
Representative Josephson shared that the subcommittee had
looked at the issue and had learned there had been 1,700
seniors who had not received their benefits due to a delay
in processing during COVID. He referenced a single fiscal
note associated with HB 168 specifying that the bill
required the department to provide online applications for
public benefits. He stated the department was currently in
the process of establishing an online application format
for programs administered by the division. The department
had said there was no fiscal impact. The subcommittee had
deleted one-third of the vacancies rather than the entire
amount. He did not believe the system was ready.
6:52:36 PM
Representative Wool thought it seemed the positions would
not need to be cut if they would be lost through attrition.
He asked if the positions were vacant or would be lost via
attrition.
Representative Johnson answered that 20 of the positions
were not vacant. There were currently 100 vacant positions.
She explained that 20 positions in the original 101 were
filled. The intent was to allow the 20 filled positions to
be eliminated via attrition or redistribution. She
elaborated that the 100 vacant positions were not
necessarily the 101 vacancies, but 80 percent of the 1001
positions were vacant. She relayed that some shifting would
take place to make sure people did not lose their jobs.
Representative Josephson MAINTAINED the OBJECTION.
Representative Johnson provided wrap up on the amendment.
She explained the intent was not to have layoffs. The
intent was to eliminate the positions via attrition. She
added that most of the positions were currently vacant.
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Johnson, LeBon, Rasmussen, Thompson,
Merrick
OPPOSED: Wool, Edgmon, Josephson, Ortiz, Foster
The MOTION PASSED (6/5). There being NO further OBJECTION,
Amendment H HSS 13 was ADOPTED.
6:55:44 PM
Representative Carpenter MOVED to ADOPT Amendment L H SAP
2, 32-GH1509\N.28 (Marx, 4/28/21) (copy on file):
Special Appropriations
Extra Contributions to Retirement Trust Funds
L H SAP 2 - Reduce PERS Unfunded Liability Inc
1.000.000.0
Based on current projections this contribution will
result in a funded ratio of 90.5 percent by the
beginning of FY2031 for the PERS Trust.
Representative Josephson and Representative Rasmussen
OBJECTED.
Representative Carpenter stated he was excited to talk
about an opportunity to implement one part of what may come
together as a long-term plan to address the budget deficit.
He explained the amendment would transfer $1 billion from
the Permanent Fund Earnings Reserve Account (ERA) to the
Public Employees' Retirement System (PERS) account. He
stated that PERS had an unfunded liability that cost the
state annually. He detailed that the transfer of $1 billion
would reduce the cost to the budget annually. He stated the
amendment would help fill the gap between revenue and
expenditures. He referenced an actuarial analysis from the
Division of Retirement and Benefits (copy on file) that
showed a 7.38 percent estimated market return for FY 21. He
stated a second document (copy not on file) showed an 18
percent market return for FY 21. The documents showed the
current situation and three columns showing a contribution
of $1 billion in FY 22, $2 billion in FY 22, or $3 billion
in FY 22 to give an example of what would take place when
money was moved into the PERS account.
Representative Carpenter recalled from previous discussions
in a previous legislature that it was not necessarily
desirable to reach a 100 percent funding level in the
accounts because there were fluctuations in investments
between the present and ten years in the future. He
reported that a $1 billion transfer [to PERS] at a ratio of
80 percent funded would reduce the annual unfunded
liability from $196 million to $140 million. He explained
it would reduce the expenditure by approximately $56
million. He elaborated that every following year, there
would be savings between $50 million and $70 million,
assuming average market returns.
Representative Carpenter looked at the second document
showing an 18 percent market return. He noted there it had
been a banner year in the stock market. He stated the
figures on the second document reflected what the end of FY
21 may look like; however, planning for a 7 percent return
may be the wiser thing to do. He shared that a return
somewhere between 7 and 18 percent with a $1 billion
transfer would result in $56 million in savings in FY 23.
He pointed out that the PERS system was currently about 82
percent funded. He explained that the Teachers' Retirement
System (TRS) was about 86 percent funded, which was fairly
close to the goal of 90 percent. He suggested focusing on
PERS and leaving TRS alone.
7:00:55 PM
Representative Josephson asked if there were two documents.
Representative Carpenter clarified there were two
documents, one had just been handed out and one was in
members' packets.
7:01:33 PM
AT EASE
7:02:58 PM
RECONVENED
Co-Chair Foster asked to hear from Mr. Painter.
Mr. Painter asked for a repeat of the question.
Representative Rasmussen asked how much the Permanent Fund
lost annually when the annual draw included an additional
$1 billion.
Mr. Painter answered that the Permanent Fund's current
long-term earnings assumption was 6.75 percent, and a $1
billion draw would reduce earnings by $67.5 million per
year. He explained that the $1 billion draw would not
impact the percent of market value (POMV) draw in the
coming year due to the five-year average and delay, but it
would impact the POMV draw in future years.
Representative LeBon considered the earnings of the
Permanent Fund at 6.75 percent. He asked for the projected
long-term earnings on the PERS investment.
Mr. Painter answered that the current long-term assumption
was 7.38 percent. He elaborated that the Permanent Fund and
retirement may go down in the future. He relayed that
generally over the long-term the accounts had earned
comparable returns.
Representative LeBon estimated it would be an overdraw of
the ERA by around 1.3 percent when looking at the current
value of the fund in relationship to the $1 billion. He
stated that what made the proposal something to consider as
a long-term strategy was not Mr. Painter's statement that
the Permanent Fund and PERS earnings were comparable, but
the annual budget savings. He reasoned it was an investment
into the future and under the current case he suggested it
may be worth considering the overdraw.
Co-Chair Foster shared that he had heard earlier in the day
that the ratings agencies had bumped Alaska's rating up a
bit recently. He stated it seemed every time ratings were
discussed, the issue of potentially overdrawing the ERA and
POMV was an issue and there was always a warning that an
overdraw would result in decreased ratings for the state.
He remarked it was one of many factors.
Representative LeBon believed one of the reasons the
state's rating would go down was an overdraw of the ERA and
how the money was utilized. He suspected a ratings agency
would not punish the state if the funds were used to cover
an unfunded liability.
7:06:40 PM
Representative Edgmon thanked the amendment sponsor for his
creative thinking. He had not seen the full analysis to
currently be comfortable with the proposal. However, it
made him think that in a very good market year, it could be
argued that the Permanent Fund's asset allocation or the
fact that 30 to 36 percent of the fund was equities, the $1
billion would do better and it could be the inverse in a
bad year. He stated he would have to "dust off" quite a few
numbers to feel comfortable with the proposal. He discussed
that in 2013/2014, $3 billion had been taken from the
Constitutional Budget Reserve (CBR) and invested in PERS
and TRS. He recalled the topic had consumed the House
Finance Committee for many days. He believed the proposal
was a creative take at saving money, but he would need more
analysis before being able to support it.
Vice-Chair Ortiz considered the projections of the earnings
on the money in the ERA portion of the Permanent Fund
compared to savings that would result from reducing an
interest payment by paying on the PERS unfunded liability.
He asked what the average net gain would be to the state if
the amendment passed.
Representative Carpenter answered that the net gain to the
state occurred in FY 23 with approximately $55 million to
$56 million less in unfunded liability paid out annually.
He explained the current spend projection for FY 23 was
$196 million on PERS. He elaborated that contributing $1
billion to PERS in the current year would reduce the
unfunded liability spend to $140 million. He referenced
another recent compact with a payment of $20 million each
year [a compact agreed to between the governor and the
University of Alaska] and the angst over the arrangement.
He stated the amendment was an opportunity to obtain
similar savings without much pain. He reasoned the
amendment would mean transferring money from one savings
account to another that were comparable in earnings.
7:10:40 PM
AT EASE
7:19:49 PM
RECONVENED
Representative Johnson relayed that in 2014 she was on the
Alaska Conference of Mayors and had lobbied for the $3
billion transfer to PERS. She highlighted there were a
couple of things that were not obvious in the presentation,
including the value to local governments. She elaborated
that local governments tied into the same rates with PERS
would also see the value moving forward for local
municipalities. Additionally, the unfunded liability had an
impact on the state's bond rating. She elaborated that
paying the unfunded liability down made a difference in the
state's borrowing capacity.
Representative Wool stated that they were only several
years into the SB 26 era POMV draw of 5.25 percent that
would decrease to 5 percent. He wanted to stick with the
plan [under SB 26]. He thought the concept proposed by
Representative Carpenter had merit and was stimulating
conversation; however, he would not vote to overdraw SB 26
based on a 15 minute conversation.
Representative Rasmussen asked if the issue could be
addressed in a single appropriation bill later on.
Co-Chair Foster replied in the affirmative.
Representative LeBon shared that he had been a supporter of
the POMV concept under SB 26. He highlighted the draw began
at 5.25 percent for several years and had decreased to 5
percent. He referenced the lookback average value of the
Permanent Fund ERA and principal. He remarked that the
effective draw was about 4.5 percent. He reasoned if there
was ever time to consider the proposal in the amendment,
the market value was currently up on the Permanent Fund. He
stated it would still hold to the POMV draw to about 4.5
percent. He thought if there was ever a time to look at a
way to save money in the budget going forward without a
material impairment to the Permanent Fund, taking advantage
of the good market days [made sense]. He pointed out the
funds would be transferred from one savings account to
another. He stated it was a compromise to help the state
into the future. He pointed out it was an exciting concept
to think about how soon PERS would be properly funded,
which would increase the state's savings.
7:24:47 PM
Representative Edgmon stressed that the amendment was a
huge policy issue. He believed he and Representative LeBon
had likeminded thinking when it came to the POMV and
overdrawing; however, he considered the committee's
responsibility to take the same approach a trustee would
for the Alaska Permanent Fund Corporation (APFC) in terms
of their investor role. He asked to hear from Mr. Painter
and Mr. Steininger regarding the various viewpoints
including actuarial analysis the committee should examine.
He added there were amendments dealing with the Permanent
Fund Dividend that would overdraw the ERA. Additionally,
there was the POMV draw that would be taken from the ERA.
He asked Mr. Painter how he would see a well-rounded
examination of the proposal unfolding.
Mr. Painter believed there were a few factors to consider.
First, the governor had a bill that would shift the way the
state paid for its PERS contribution (SB 55). There was
also the potential to make other changes that would cause a
transfer to have an even larger impact. For example, when
the transfer had occurred in FY 15, it had been paired with
a substantive bill that changed the repayment timeline. The
Alaska Retirement Management Board (ARMB) was currently
facing the fact that the pension system was underfunded but
the healthcare system was overfunded. He elaborated that
ARMB was potentially trying to resolve the issue by
allowing money to move from one to the other, which could
help increase the funding level total. He explained that
through the other changes proposed by the governor and
other things, there was ability to make a transfer have an
even greater impact than merely a simple transfer. He
clarified he was not saying a simple transfer was
necessarily a bad idea, but there was a potential for even
greater savings when coupled with legislative changes.
Mr. Painter relayed there was a timing aspect as well. He
explained the POMV draw was based on a five-year draw with
a lag; therefore, the impact to revenue would not be fully
felt, but the impact to the budget would be fully felt
immediately. He expounded that to some degree there may be
an advantage of doing a transfer in the current year and
lowering the budget in FY 23, while revenue would not be
impacted until FY 24. There was a short-term benefit aside
from all of the other things he had discussed.
7:28:30 PM
Representative Edgmon appreciated the perspective and
believed it just scratched the surface in terms of the
analysis the legislature may do to look at all of the
different factors including the participation rates in the
defined benefit plan. He added there was legislation, HB 55
[HB 75/SB 55], that would be part of the trend analysis he
would like to look at. He impressed upon the committee that
in order to vote for the amendment he needed much more
information.
Representative Josephson MAINTAINED the OBJECTION.
Representative Carpenter provided wrap up. He appreciated
the dialogue. He thought the conversation was missing a
couple of things. He recognized it was a large policy call,
but it was what solving the structural problem would
require. He stated they were missing the conversation about
what happened with the PFD, taxes, reductions in spending,
and other. He remarked the items were all political
positions/policy calls various members in the legislature
had. He stated the amendment was part of what could be a
comprehensive plan to address the structural deficit. He
reasoned that if nothing else, a conversation had been
started about things the legislature could do to build a
comprehensive plan to solve the deficit problem plaguing
the state for 10 or more years.
Representative Carpenter pointed to the actuarial document
and explained that transferring $2 billion [to PERS] would
save $125 million in FY 23. He asked if it was politically
or fiscally possible to achieve the savings elsewhere. He
relayed that a $2 billion transfer would result in a $70
million payment in FY 23 to the unfunded liability with a
funded ratio of 88 percent. He explained the level would
reach 90 percent within four years after that, which was
where the legislature had heard the level should be in the
past. He clarified he was not suggesting the $2 billion
transfer. He believed the legislature could address its
fiscal problem and merely needed the will to do so.
7:31:50 PM
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Johnson, LeBon, Rasmussen, Thompson
OPPOSED: Edgmon, Josephson, Ortiz, Wool, Merrick, Foster
The MOTION to adopt Amendment L H SAP 2 FAILED (5/6).
7:32:58 PM
Co-Chair Merrick MOVED to ADOPT Amendment L H FND 2, 32-
GH1509\N.6 (Marx, 4/26/21) (copy on file):
Fund Capitalization
No Further Appropriation Required
L H FND 2 - Add $54 million UGF for oil and gas tax
credits
This amendment provides the additional funding to meet
the statutory requirement to pay oil and gas credits.
Representative Rasmussen OBJECTED for discussion.
Co-Chair Merrick explained the amendment. She explained
that originally the governor's budget proposed to pay $60
million for oil and gas tax credits with Alaska Industrial
Development and Export Authority (AIDEA) receipts. She
explained that with the decrease in oil prices, the
forecasted minimum was $114 million, which the governor had
recently proposed to pay entirely with UGF. The amendment
would use AIDEA receipts of $60 million and UGF for the
remaining $54 million to equal the $114 million spring
forecast statutory minimum. She elaborated that the state
no longer offered refundable oil and gas tax credits and no
payments had been made in FY 20 or FY 21. She stated that
the balance of outstanding credits owed was significant,
estimated at $744 million in the Department of Revenue
spring forecast.
Co-Chair Merrick highlighted that as mentioned in the AIDEA
presentation on March 9, the entity had nearly $400 million
in capital reserves. Additionally, AIDEA had supported the
governor's original budget with a resolution. She stated
that whether or not a person agreed with the state tax
credit program was not the question for the day. She
emphasized the most critical issue was whether the state
should follow through with its prior commitments and the
impact of not doing so. She elaborated that the spring
forecast showed oil revenue was recovering from its drastic
decline and future projections looked bright. She relayed
the amendment was a one-time fix. She was grateful AIDEA
had the assets to help during the fiscally difficult time.
She stressed the importance of fulfilling the state's
obligations to send a message that Alaska was open for
business and encourage future investments in resource
development.
Representative Rasmussen WITHDREW the OBJECTION. She
supported the amendment. She supported efforts the state
could make to bring more confidence back to the private
sector to increase investment and make Alaska more
competitive for capital dollars. She believed it could be a
major decision for the legislature to make the commitment
to try to earn capital dollars from the oil and gas
industry again.
7:35:59 PM
Representative Edgmon supported the amendment. He stated it
was not lost on him that numerous Native regional
corporations had debt obligation involved in the $800
million oil tax credits the state had to pay out. He
discussed that the legislature had passed HB 331 in 2018
that created a bond debt type of arrangement, which the
court had struck down. He highlighted that the state was
left with presumably no other avenue but to pay the credits
off year in and year out.
Representative LeBon spoke in favor of the amendment. He
stated he was okay that AIDEA was okay with using some of
its receipts for the obligation. He advised that paying off
the oil and gas tax credits was not AIDEA's primary
purpose. He cautioned that the particular source could be
tapped too often. He viewed use of the $60 million in AIDEA
receipts as a one-time event. He stated the payment would
be due again the following year to retire the oil and gas
tax credits. He hoped people realized that AIDEA was not a
piggy bank to dip into annually.
Vice-Chair Ortiz supported the amendment. He pointed out
that the original oil tax credits were to incentivize the
cost of doing business in Alaska by picking up one-third of
the exploration costs etcetera. He stated the assistance
had been a significant contribution from the state to the
industry. He believed dedicating $114 million would lower
the state's obligation below $600 million. He pointed out
that the committee had argued about subsidizing industry
with around $500,000, while the increment for oil and gas
tax credits was $114 million. He remarked that the state
had been in the business of subsidizing industry.
Representative Rasmussen pointed out that over the past
several decades the oil and gas industry had provided
billions of dollars to the state coffers. She did not
believe the prior comparison was apples-to-apples.
Representative Rasmussen WITHDREW her OBJECTION.
There being NO further OBJECTION, Amendment L H FND 2 was
ADOPTED.
7:40:04 PM
Representative LeBon WITHDREW Amendment L H FND 3, 32-
GH15091N.4 (Marx, 4/26/21) (copy on file).
Co-Chair Foster recognized Representative Cathy Tilton in
the room. He referenced two amendments from the governor.
He relayed that the governor had included $60 million in
AIDEA funds in his initial budget. He elaborated that at
the time, oil prices had been lower. Subsequently, the
governor had reduced the amount being taken from AIDEA and
had included an amendment for $114 million UGF to pay the
credits. He explained the amendments [GA 219 and GA 220]
would be set aside because they had been dealt with in
Amendment L H FND 2.
7:41:43 PM
Co-Chair Foster stated there were two amendments pertaining
to the Permanent Fund, both by Representative Johnson.
Representative Johnson MOVED to ADOPT Amendment L H PFD 1,
32-GH1509\N.l (Marx 4/24/21) (copy on file):
Permanent Fund
Permanent Fund Dividends
L H PFD 1 - Amendment lo provide for a Permanent Fund
Dividend.
This amendment provides for a full statutory Permanent
Fund Dividend.
1041 PFERA(UGF) 2,024,200.0
Representative Rasmussen OBJECTED for discussion.
Representative Johnson explained the amendment would
provide a full statutory PFD. She noted she had two
additional amendments to follow related to funding sources.
She asked if she should speak to the amendments together or
separately.
Co-Chair Foster stated he was under the impression
Representative Johnson had one amendment proposing to pay
the full PFD using ERA funds and one amendment paying for a
full PFD with American Rescue Plan Act (ARPA) and lapsing
Medicaid funds. He asked if Representative Johnson had two
separate PFD amendments.
Representative Johnson agreed but did not see the other
amendment.
7:43:38 PM
AT EASE
7:51:50 PM
RECONVENED
Co-Chair Foster asked to hear from Representative Johnson's
staff.
REMOND HENDERSON, STAFF, REPRESENTATIVE DELENA JOHNSON,
detailed there were two separate amendments dealing with
the Permanent Fund Dividend. He elaborated that one
amendment called for a full statutory PFD with all of the
funding coming from the ERA. The other amendment called for
a full statutory PFD with a portion of the funding coming
from the ERA and a portion coming from ARPA funding. He
stated that the portion of the PFD would amount to about
$383 million. He highlighted a document titled "Impact of
FY22 Overdraws on ERA Balance" (copy on file). The green
bar showed the projected ERA balance out to FY 30 with the
current 13.89 percent earnings and without a POMV draw. The
yellow bar showed what the orange bar showed the ERA
balance with the 6.48 percent return and without a draw
until FY 30. The blue bar showed the ERA balance with a
13.89 percent earnings in FY 21 with 6.2 percent earnings
over the subsequent nine years. Lastly, the purple bar
showed the ERA balance based on a 6.40 percent return in FY
21 through FY 30. He highlighted a decline beginning in FY
24 when inflation proofing came into play.
7:56:04 PM
Representative LeBon asked for verification the chart
assumed sticking with the 5 percent POMV draw in each of
the years.
Mr. Henderson answered in the affirmative. He noted the
chart had been prepared by the Legislative Finance
Division.
Representative LeBon observed there was not information
showing a projected value of the entire fund attached to
the amendment. He asked if there was a reason.
Mr. Henderson replied that it had been an oversight.
Representative Rasmussen MOVED to AMEND Amendment L H PFD
1. Conceptual Amendment 1, 32-GH1509\N.30 (Marx, 4/29/21)
(copy on file):
Page 2, following line 6 of the amendment:
Insert new material to read:
"Page 105, following line 17:
Insert a new bill section to read:
"*Sec. 57. CONTINGENCY. The appropriation made in sec.
32(d) of this Act is contingent on the passage by the
Thirty-Second Alaska State Legislature and enactment
into law by October 1, 2021, of a bill changing the
amount authorized under AS 37.13.145(b) for transfer
by the Alaska Permanent Fund Corporation to the
dividend fund (AS 43.23.045(a))."
Renumber the following bill sections accordingly.
Page 105, line 21:
Delete "secs. 57-59"
Insert "secs. 58-60""
Representative Rasmussen elaborated that the amendment
would include intent language that the appropriation for
the full dividend was contingent on passage of legislation
enacted into law by October 1 changing the authorized
amount under AS 37.13.145(b) for the transfer by the Alaska
Permanent Fund Corporation to the Dividend Fund.
Representative Thompson OBJECTED.
Co-Chair Foster clarified that the amendment was conceptual
Amendment 1 to Amendment L H PFD 1. He explained the main
amendment would pay a full PFD using ERA funds only.
Representative LeBon asked if AS 37.13.145(b) was the 1982
formula law on paying out the PFD.
Representative Rasmussen replied affirmatively.
7:58:43 PM
AT EASE
8:00:25 PM
RECONVENED
Co-Chair Foster clarified that conceptual Amendment 1
applied to Amendment L H PFD 1 by Representative Johnson.
Mr. Henderson clarified that Amendment L H PFD 1 was N.1
[Legislative Legal Services drafting number 32-GH1509/N.1].
Representative Edgmon asked to hear from Legislative Legal
Services. He noted the maker of the conceptual amendment
referred to it as intent language. He asked if the language
was codified as opposed to intent language.
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE, replied that the conceptual amendment to
Amendment L H PFD 1 would add a binding contingency clause
to the full dividend appropriation that would require a
statutory change prior to October 1, 2021 before a PFD
could be expended. She clarified that the conceptual
amendment was not intent language.
Representative Edgmon remarked that former Representative
Paul Seaton had done something similar in the past with the
marrying up of a policy item with a budget item in an
appropriation bill. He asked Ms. Wallace if that was the
case.
Ms. Wallace answered there could be a legal issue if
contingency language was added that did not correspond with
the appropriation. She elaborated that because the
conceptual amendment was a contingency clause requiring
action on the PFD formula and the contingency was attached
to the PFD appropriation, while there was never a 100
percent guarantee, she did not believe it would have any
legal issues.
Representative Edgmon asked Ms. Wallace to address the
severability clause in the event litigation was to occur.
He provided a hypothetical scenario where the courts found
the provision unlawful. He asked what the situation would
do to an underlying full PFD.
Ms. Wallace answered that it was difficult to predict what
may happen in litigation or what a court may decide. She
relayed there was generally a severability provision that
the courts would honor. She explained it was a possibility
that if the contingency clause were to be challenged and a
court determined it was invalid or unconstitutional, the
court could sever the single provision and leave the full
PFD appropriation intact, which would allow the full PFD to
be paid without contingency.
8:05:14 PM
Representative Edgmon stated that the contingency clause
was tied to Title 37. He recalled asking Ms. Wallace about
the Wielechowski case in a March committee meeting. He had
asked about the subservience of Title 37 to the supreme
court decision that ruled the legislature's power to
appropriate rose above statute. He asked what role it
played in the contingency language.
Ms. Wallace responded that the Wielechowski case affirmed
that the legislature maintained the power to appropriate
from the ERA in whatever amount it deemed appropriate. The
contingency clause did not prevent the legislature from
making the appropriation. She detailed that the legislature
was identifying certain conditions that must be met before
the full proposed PFD could be expended. She agreed the
cases related; however, she did not foresee the
Wielechowski case foreshadowing any kind of legal issue in
terms of the contingency clause. She believed the issues
were separate. She thought the contingency clause was
likely okay.
Representative Edgmon stated that the legislature would be
within its power to appropriate if the legislature did not
follow the contingency clause. He provided a hypothetical
example where the legislature appropriated a $1,000 PFD for
a total of $600 million to $700 million. He asked for
verification that the legislature would be within the
powers of its ability to appropriate.
Ms. Wallace replied if the legislature were to pass and
enact into law the appropriation with the contingency
language, it would become law that the administration would
be constitutionally required to execute. She elaborated
that the administration would not be able to pay out the
full PFD until the contingency was satisfied. The
legislature on the other hand would retain its power of
appropriation to amend or change the appropriation it
previously passed with the contingency. For example, if
there were a special session and the legislature were to
consider a dividend issue and amended the appropriation as
a statutory change, the legislature would retain the
constitutional power to change or amend its appropriations.
She clarified that the contingency language would not
restrict the legislature from modifying the appropriation
in the future.
8:08:32 PM
Representative Josephson asked about the language in the
conceptual amendment "a bill changing the amount." He asked
what amount the amendment sponsor was referring to.
Representative Rasmussen answered that the language in the
conceptual amendment intended to leave broad power to the
legislature to change to whatever amount it saw fit. She
noted a formula change would be necessary to achieve a full
statutory dividend for the current year.
Representative Wool surmised that under the amendment,
paying out a full statutory dividend required changing the
[formula] amount. For example, the legislature could decide
that 85 percent of the statutory formula would be an amount
change and the legislature could pay out the full PFD in
the current year. He thought it seemed nebulous.
Representative Rasmussen believed it would be difficult to
come to consensus in both bodies and have the executive
branch sign a bill into law that made a minimal change to
the current formula. She thought a larger conversation
about the formula was in order for the state's future.
Representative Carpenter provided a scenario where the
conceptual amendment, the underlying amendment, and the
budget passed. He asked how the appropriation would be
impacted if there was a constitutional amendment change. He
noted the governor had a couple of pieces of legislation
proposing constitutional amendments. He remarked that the
timing of the passage of a constitutional amendment would
require a vote of the people. He asked if the amendment
would impact a constitutional amendment or vice versa.
Ms. Wallace responded that a constitutional change would
not satisfy the contingency in the conceptual amendment;
however, it was something the legislature would want to be
cognizant of. She elaborated that if the discussion
surrounding a change to the formula shifted from a
statutory change to a constitutional amendment, the
legislature would have to amend the conceptual amendment
language to allow a dividend to be paid. Alternatively, the
legislature would have to understand that if the
legislature passed a constitutional amendment, it would not
be eligible to be voted on by the people until the next
general election in 2022 and it would not have the effect
of satisfying the contingency language. She stated there
were various ways the legislature could address the
problem, but it would add another action the legislature
would have to take to complete the package to ensure the
payment of whatever dividend the legislature wanted to pay
in the current year.
8:12:47 PM
Representative Rasmussen asked whether a constitutional
amendment would require repealing the current formula
provision in law. She believed it would be considered a
bill changing the amount authorized.
Ms. Wallace replied that a constitutional amendment would
be accomplished by a joint resolution, which would not make
statutory changes; it would only change provisions of the
constitution. She explained that with a constitutional
change, there would be necessary statutory changes that
would eventually need to be clarified or potentially
amended or repealed by the legislature. To the extent a
constitutional amendment was to pass and obtain voter
approval, the provision would trump whatever statutes
remained on the books. She believed while it would be
recommended for the legislature to also make statutory
changes, she could foresee a circumstance where the actions
may not happen simultaneously.
Representative Rasmussen asked for verification that
nothing barred the legislature from passing something
simultaneously with the two provisions.
Ms. Wallace responded in the affirmative.
Representative LeBon asked if the governor would be able to
line item veto the language in the amendment.
Ms. Wallace answered that she did not believe the language
would be subject to a governor's veto. She shared that the
issue had been litigated in the past under the Knowles
Administration. She relayed there was caselaw from the
Alaska Supreme Court stating that something had to be a sum
of money dedicated to a particular purpose to be subject to
the governor's veto power. She explained that the
conceptual amendment was a language contingency item. She
shared it was the opinion of Legislative Legal Services
that the type of language was not subject to veto. She
noted that considering the subject matter, it may be a gray
area the state supreme court had not specifically
addressed, which could potentially lead to litigation if it
was vetoed and not overridden by the legislature.
8:15:24 PM
Representative LeBon asked about the proposed sunset date
of October 1, 2021. He asked for verification the
contingency language would disappear and revert back to the
original statutory PFD law if no action was taken by the
specified date.
Ms. Wallace responded that the date in the contingency
clause would require the legislature to pass a bill into
law before that date. She stated that the date corresponded
with the current statutes outlining the time by which the
amount of the PFD needed to be announced. She explained
that if the contingency were not met, the dividend would
not be paid. She noted the issue would not impact statutes
substantively in any way.
Representative LeBon asked for verification that the
language would not be valid without a date.
Ms. Wallace replied that if the October 1, 2021 was
deleted, the language would still require passage by the
32nd legislature. She added that not only did the language
have to be passed by the current legislature, it had to be
passed by the specified date.
8:17:18 PM
Representative Wool MAINTAINED the OBJECTION to conceptual
Amendment 1 to Amendment L H PFD 1.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Rasmussen, Merrick
OPPOSED: Edgmon, Johnson, Josephson, Ortiz, Thompson, Wool,
Carpenter, Foster
The MOTION to adopt conceptual Amendment 1 to Amendment L H
PFD 1 FAILED (3/8).
8:18:43 PM
Co-Chair Foster returned to the main amendment and asked if
the sponsor had any comments.
Representative Johnson noted that the proposed fund source
for the full PFD was the ERA.
Representative Rasmussen stated that she could not support
the amendment without the contingency language she had
proposed. She was concerned that without a vehicle to enact
change, the state would not be able to sustain overdraws of
the magnitude proposed in the amendment for more than six
to eight years. She believed it robbed future generations.
She was willing to have the conversation about a one-time
last full statutory PFD, but without the language she could
not support it.
Representative LeBon was concerned about overdrawing the
ERA and the long-term impact on the Permanent Fund. He
appreciated the information showing how an overdraw on the
ERA would impact the fund over a ten-year period. He noted
the impact to the fund principal was missing from the
information. He remarked there was a need to understand the
impact to the principal and the total growth of the fund.
He reasoned that sticking with the 5 percent POMV from SB
26 in addition to the PFD statutory draw of about $2
billion, equaled a total draw of about $5 billion per year.
He reasoned it would require an annual return of
approximately 12 percent in order to sustain the draw,
while continuing to grow. He stated it would be na?ve for
the legislature to believe APFC would achieve double digit
earnings year after year to accommodate annual draws
upwards of $5 billion. He did not support the amendment.
Representative Johnson asked Mr. Henderson whether he was
finished with his remarks on the chart provided.
Mr. Henderson clarified that the amendment did not include
a $5 billion draw each year. He explained that the
amendment proposed a one-time POMV draw above the standard
draw. He directed attention to the ERA projection in FY 21
of approximately $15 billion. He looked at FY 30 and noted
the ERA balance was approximately $14 billion. He explained
that the impact of the one-time draw would not
significantly reduce the ERA balance and did not have the
same impact as draws from the CBR. He suggested that Mr.
Painter could possibly speak to the impact the proposed
draw would have on the fund principal.
8:23:46 PM
Mr. Painter stated that the balance of the principal was
not impacted by draws from the ERA because it consisted of
royalty deposits and inflation proofing on the deposits.
Representative Rasmussen did not know why the proposal was
being pitched as a one-time overdraw if the legislature was
not willing to change the statutory PFD formula. She was
trying to understand what may change the following year
that would not require an additional overdraw without
changing the statutory formula.
Representative Wool remarked that the chart showed how a
one-time overdraw impacted future years. He asked what
would prevent the legislature from repeatedly overdrawing
the fund. He stated the committee had considered another
bill that involved an overdraw. He thought the bill was
worthy of further discussion, but he did not want to vote
to overdraw on that in the current meeting. He did not want
to overdraw for the PFD or anything else. He wanted to
stick to the 5 percent draw. He would vote against any
overdraw proposal.
8:26:01 PM
Mr. Henderson agreed with the fact that Representative
Rasmussen did not want to continue overdraws and her
concern over what would stop it from continuing. He stated
that the good thing about using the method at present was
due to the earnings that had been achieved and would be
achieved in FY 21. He confirmed it would not be a desirable
option to undertake annually.
Representative Rasmussen was trying to understand why
members should believe it would be a one-time overdraw when
there was a lack of willingness to address the formula.
Co-Chair Foster supported the amendment to pay a full PFD.
He stated that individuals with lower incomes relied on the
PFD to pay for food, heating oil, and electricity. He
remarked that the legislature had tried to spread the
burden of the existing fiscal issue facing the state, but
he believed they had spent the past several years further
placing the burden on lower income individuals. He could
not keep doing that to individuals who had to bear the
burden.
8:28:13 PM
Representative Edgmon thanked Representative Johnson for
bringing the amendment forward to discuss the topic, which
was the proverbial elephant in Alaska politics for many
years. He thanked Representative Rasmussen for her
conceptual amendment to address the inevitability of
needing to address the 1982 statute determining the annual
PFD. He noted that legislators all knew the topic would
have to be addressed at some point, which would be very
difficult. He could not support the amendment.
Representative Edgmon believed if the legislature overdrew
the ERA in the current year, it could be overdrawn in the
next year. He shared that there had been many hearings in
his rural district on the topic over the years. He
highlighted various individuals who had come to his
district to speak on the topic including Pat Pitney,
Randall Hoffbeck, and David Teal. He was not claiming he
had full buy-in from his constituents. He elaborated that
like Co-Chair Foster, he had constituents who depended on a
PFD and would give up anything to get a full PFD. He also
had numerous community leaders and constituents who
understood that a full PFD came with tradeoffs. He stated
constituents would not believe him if he promised a full
PFD and no cuts to schools, public safety, transportation,
Village Public Safety Officers (VPSO), and Power Cost
Equalization (PCE). He thought the conversation needed to
happen. He would not be able to support the amendment and
he was prepared to have the discussion with his
constituents. He could not consider cutting teachers and
others down the road without a balanced approach. He
understood a sustainable PFD was very important to
villages, as were schools and PCE.
8:30:59 PM
Representative Rasmussen MAINTAINED the OBJECTION.
Representative Johnson provided wrap up. She stated that an
overdraw could be any number of things, it just happened
the legislature had chosen to make the PFD "the caboose on
the train," which made it appear to be the last thing
overdrawing funding. She believed that not paying the full
statutory PFD had allowed the legislature to kick the can
down the road. She stressed it was difficult to take on the
problem and fix it in order to avoid an overdraw. She
highlighted the governor's proposed constitutional
amendments. She detailed that the governor had communicated
his priority for a constitutional amendment for a POMV
50/50 draw. She stated that a full PFD was the law, and the
conversation was needed. She believed every time
legislators had the conversation it got them closer to a
solution for the future. She thought legislators all knew
structural changes were needed. She appreciated the
conversation.
8:33:21 PM
A roll call vote was taken on the motion.
IN FAVOR: Johnson, Carpenter, Foster
OPPOSED: Josephson, LeBon, Ortiz, Rasmussen, Thompson,
Wool, Edgmon, Merrick
The MOTION to adopt Amendment L H PFD 1 FAILED (3/8).
8:34:21 PM
Representative Johnson MOVED to ADOPT Amendment H PFD 2,
32-GH1509\N.21 (Marx, 4/28/21) (copy on file):
Page 20, line 9:
Delete "2,336,917,700"
Insert "2,304,917,700"
Delete "564,729,200"
Insert "532,729,200"
Page 20, line 18:
Delete "2,309,913,200"
Insert "2,277.913,200"
Adjust fund sources and totals accordingly.
Page 78, following line 23:
Insert a new subsection 10 read:
"(d) The amount authorized under AS 37.l3.145(b) for
transfer by the Alaska Permanent Fund Corporation on
June 30. 2021. estimated to be $2.024.200.000, is
appropriated to the dividend fund (AS 43.23.045(a))
for the payment of permanent fund dividends and for
administrative and associated costs for the fiscal
year ending June 30, 2022, from the following sources:
(1) $267,000,000 from the general fund;
(2) The amount necessary, after the appropriation
made in (1) of this subsection, estimated to be
$1,757,200,000, from the earning reserve account
(AS 37.13.145)."
Reletter the following subsection accordingly.
Page 105, line 9:
Delete the first occurrence of "and(d)"
Insert "(d), and (c)"
Representative Rasmussen OBJECTED.
Representative Johnson explained the amendment would fund a
full statutory PFD from UGF savings achieved by using ARPA
funds for revenue replacement. She clarified that the
action would not use all of the ARPA revenue replacement
funding. The amendment prioritized the payment of the PFD
using some of the ARPA funding, while leaving a substantial
portion of the funding to pay for state services including
capital projects. She stressed the legislature could not
continue to fund state services first, while saying that
the PFD created a larger deficit.
Representative Rasmussen stated that she opposed the
amendment in the absence of any mechanism to guide the
legislature in the tough decisions it was facing and
without a measure in place to assure her constituents that
no income tax would be implemented to pay a larger
dividend.
Representative Rasmussen MAINTAINED the OBJECTION.
8:36:23 PM
Representative Johnson clarified that a portion of the
funding would come from the ERA and the other portion would
come from revenue replaced funds. She pointed out that the
amendment only pertained to a statutory PFD and did not
deal with an income tax in any way.
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Johnson, Foster
OPPOSED: Josephson, LeBon, Ortiz, Rasmussen, Thompson,
Wool, Edgmon, Merrick
The MOTION to adopt Amendment H PFD 2 FAILED (3/8).
8:37:33 PM
Representative Carpenter MOVED to ADOPT Amendment HLS 4
(copy on file):
Department: Department of Law
Fiscal Year: FY 22
Appropriation: Civil Division Except Contracts
Relating to Interpretation of Janus v AFSCME
Structure: Restore title of Civil Division
appropriation to "Civil Division"
Explanation: The agency has indicated that it is
unlikely to expend substantial additional funds on
outside contracts in relation to the interpretation of
Janus v. AFSCME, so it is unnecessary to maintain this
modified structure title.
Representative Josephson OBJECTED.
Representative Carpenter explained that the amendment would
restore the title of the Civil Division appropriation from
"Except Contracts Relating to Interpretation of Janus v
AFSCME" to the original "Civil Division."
Representative Josephson spoke to his objection. He
discussed that March 28, 2020, had been the legislature's
quasi adjournment until it had returned in May. He stated
that at the time of the recess, the legislature had
approved the division of the Department of Law's Civil
Division into two pieces. He stated that 2020 testimony in
subcommittee, the House Finance Committee, and on the House
floor was that the Department of Law was spending $600 per
hour on a contract out of Arlington, Virginia with a firm
called Consovoy. He elaborated that the legislature thought
it was reckless spending and opted to prohibit that type of
spending, particularly when making legal assertions no
other attorney general was making. The legislature had
invited the department to use Alaska attorneys general to
litigate. The state could save money by not allowing what
the legislature had determined to be frivolous spending. He
stated that the governor had signed the bill and struck one
of the two sections the legislature had created.
Representative Josephson elaborated that the governor
arguably should not have vetoed the language he struck.
What had remained was a Civil Division entitled "Civil
Division Except Contracts Relating to Interpretation of
Janus v AFSCME." He remarked that it was an appropriation
and structure in black bold. He stated it was where
legislators, as appropriators, were at the height of their
power. The only way to direct or guide appropriation
expenditures was through an appropriation structure. For
example, he had wanted another recruiter in the Department
of Corrections (DOC). He explained that if the committee
had supported the funding, the money could have been used
in an entirely different way within the section of
appropriations of DOC and there was not much the
legislature could do about it. He stated that if there was
desire to control and direct spending and to use the
legislature's authority at its height, an appropriation
structure was required.
Representative Josephson had learned in October 2020, that
the administration was ignoring the structure the
legislature had created. When he had asked the
administration if it was ignoring the structure, he had
been told yes. He had learned that the administration was
ignoring the structure in cases in Alaska district court in
Anchorage, in federal district court (generally in San
Francisco or Seattle), and in Alaska superior court. He had
brought the issue to the Legislative Budget and Audit
Committee and an audit had been ordered and was ongoing.
Additionally, he had brought the issue to Legislative
Council; a letter had been issued and there had been some
follow-up. He intended to bring the issue up with
Legislative Council again. He shared that he had tried to
get on the Legislative Council docket earlier, but it had
been filled primarily with mitigation regarding COVID.
Representative Josephson had asked Ms. Wallace for a legal
opinion, and she had responded on November 24, 2020. He
found Ms. Wallace's legal opinion to be very persuasive
that the attorney general had violated the law and the
constitution. He quoted from page 5 of the opinion (copy
not on file):
To use those funds to outsource litigation on matters
relating to the interpretation of Janus is a blatant
violation of the purpose identified by the legislature
in making those appropriations. Moreover, despite the
Department of Law's assertions, nothing in the
appropriation at issue prevents the Department of Law
or attorney general from fulfilling its duties as head
legal adviser and litigator. In fact, the Department
of Law could internally pursue matters relating to the
Janus decision without running afoul of the
appropriation language at issue. Thus, the restriction
on contracts in no way restricts the governor's power
or ability to initiate court action on the Janus
matter or any other issue. It will be difficult for
the governor to argue that the legislature was
impermissibly administering a program of expenditures
when the legislature specifically appropriated funds
for the expenditure at issue, but the governor vetoed
that nominal appropriation.
Representative Josephson stated that one of the ironies of
the situation was that the legislature had specified the
administration could not spend on the litigation, with the
exception of $20,000 in one appropriation. He stated that
the governor had struck the language and thus had
effectively indicated he would not spend anything on Janus
outside counsel litigation. He shared that once he had read
the Knowles v Legislative Council decision of 2001, he had
realized there was something far more serious at play
rather than being hung up on the meaning of the Janus
decision and labor v management. He highlighted that the
case the administration cited in its favor was Legislative
Council v Knowles; however, the decision largely favored
the Legislative Council. He remarked on the complexity of
the decision. He stressed that if the legislature could not
direct the appropriation, any administration could ignore
an appropriation structure. He provided an example related
to sportfishing and commercial fishing expenditures. He
reported that the remainder of the structure was currently
included in the budget. He planned to ask Legislative
Council to test the situation and bring it to a head. He
highlighted that Ms. Wallace's opinion suggested there was
a serious violation of the legislature's authority.
8:47:16 PM
Representative Josephson MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Thompson, Carpenter, Johnson
OPPOSED: Ortiz, Wool, Edgmon, Josephson, Rasmussen,
Merrick, Foster
The MOTION to adopt Amendment HLS 4 FAILED (4/7).
8:49:26 PM
AT EASE
8:55:02 PM
RECONVENED
Representative Carpenter MOVED to ADOPT Amendment HLS 6,
32-GH1509\N.19 (Marx, 4/28/21) (copy on file):
Page 39, line 3:
Delete "29,147,000"
Insert "27,252,000"
Delete "29,214,400"
Insert "27,219,400"
Page 39, line 4:
Delete "8.434.900"
Insert "6.439,900"
Adjust fund sources and totals accordingly.
Page 100, following line 7:
Insert a new bill section to read:
"* Sec. 50. LEGISLATIVE OPERATING BUDGET. The amount
necessary, not to exceed $l,995.000, to pay members or
the legislature per diem during legislative sessions
is appropriated from the general fund to the
legislative operating budget for the fiscal year
ending June 30, 2022."
Renumber the following bill sections accordingly.
Page 105, line 9:
Delete "50(a)-(c)''
Insert "5l(a)-(c)"
Page 105, line 18:
Delete "Section 56"
Insert "Section 57"
Page 105, line 21:
Delete "secs. 57 - 59"
Insert "secs. 58 - 60"
Vice-Chair Ortiz OBJECTED for discussion.
Representative Carpenter explained the amendment would
appropriate only four months of per diem for FY 22 for
legislators.
Representative Thompson asked if the amendment pertained to
the regular session only or special sessions as well.
Representative Carpenter replied that it applied to four
months only. He wanted the legislature to get its business
done.
Co-Chair Foster remarked that the issue was typically
addressed by Legislative Council; however, it did not mean
the committee could not address it.
Representative Rasmussen MOVED to AMEND revise the timeline
to three months.
There was an OBJECTION.
Vice-Chair Ortiz asked for a repeat of the conceptual
amendment.
Representative Rasmussen replied that the conceptual
amendment would limit per diem to three months rather than
four.
Representative Johnson opposed the conceptual amendment,
but not the underlying amendment. She noted there was a
constitutional provision for a 120-day session, she found
it appropriate to have per diem to cover the entire
timeframe.
Co-Chair Foster noted the issue had come up in the past. He
had heard the argument that reducing the number of per diem
days encouraged legislators to speed up the process. He
stated that sometimes a more deliberative process was
desired. He had also heard the argument that young families
coming to Juneau did not have a lifetime of earnings to
fall back on. He spoke about trying to encourage
individuals who were just starting out in life to have the
ability to be involved in legislative service. He clarified
he was not advocating one way or another and had not yet
made up his mind.
Co-Chair Merrick supported the conceptual amendment. She
thought it would be motivation for the bodies to organize
in less than 30 days.
Representative Rasmussen spoke to her conceptual amendment.
She appreciated the points brought up by Co-Chair Foster.
She spoke about young families and trying to create an
environment that allowed for diversity and removed barriers
for younger legislators. She shared that her family
incurred almost the entire per diem stipend not including
the mortgage they paid back home during session. She
relayed that a $3,000 monthly salary was eaten up mostly by
her mortgage. She WITHDREW her conceptual amendment. She
highlighted that there were some serious challenges facing
the legislature if it was not willing to implement taxes or
find cuts to the budget.
Representative Wool stated that they were approaching 120
days in a couple of weeks, and he really wanted to go home.
He stated that if the legislature was called to Juneau for
special session during August or September to deal with a
multibillion infrastructure bill or other, he would need
per diem to pay for a hotel. He did not think it was an
incentive to cut off per diem. He clarified that he was not
interested in spending the entire summer in Juneau.
9:01:21 PM
Vice-Chair Ortiz MAINTAINED the OBJECTION.
Representative Johnson spoke to the amendment. She stated
that [in the past] she had a bill that would limit per diem
to 120 days. She felt strongly about the topic. She shared
that cutting per diem did not always make the legislature
work faster. She thought it may be time to revisit the
bill.
Representative Carpenter provided wrap up. He stated that
adversity revealed character. He did not think forcing the
issue would make people do the right thing. He did not
believe it could hurt.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Carpenter, Edgmon, Johnson, LeBon,
Merrick, Foster
OPPOSED: Ortiz, Thompson, Wool, Josephson
The MOTION PASSED (7/4). There being NO further OBJECTION,
Amendment HLS 6 was ADOPTED.
9:04:01 PM
Representative Johnson MOVED to ADOPT Amendment HLS 7, 32-
GH1509\N.20 (Wallace/Marx, 4/28/21) (copy on file):
Page 68, line 11, following "ADMINISTRATION.":
Insert "(a)" 3
Page 68, following line 16:
Insert a new subsection lo read:
"(b) The amount of fees collected under AS
28.10.421(d)(21) during the fiscal year ending June
30, 2021, for the issuance of special request National
Rifle Association plates, estimated 10 be $8,773, is
appropriated from the general fund to Alaska SCTP for
maintenance of scholastic clay target programs and
other youth shooting programs, including travel
budgets to compete in national collegiate competitions
for the fiscal year ending June 30, 202l."
Page 105, line 8:
Delete "secs. 11"
Insert "secs. 11(a)"
Representative Rasmussen OBJECTED for discussion.
Representative Johnson explained that she had been asked to
carry the amendment for a non-finance member. The amendment
specified the amount left over from the National Rifle
Association license plate purchases, after cost to issue,
would be used to maintain the Alaska SCTP for maintenance
of scholastic clay target programs and other youth shooting
programs.
Representative Wool asked what typically happened with
money collected for specialty license plates after the cost
of the plate was covered. He asked if the money went to the
specific group.
Representative Johnson replied that she believed so. She
stated the money was available for appropriation. She
shared that the request had been made by someone
instrumental in having the NRA plates made put into
statute. She did not know whether the funds automatically
went to the organization in question. She noted she was not
up on all of the income from other plates.
Representative Wool used the University of Alaska specialty
plates as an example and believed the proceeds went to the
university. He understood there were scores of other kinds
of unique plates. He was interested to know if the money
was dedicated to the group or up for grabs.
9:06:38 PM
Mr. Painter replied there was a statute for license plates
with added costs directing where the costs should go;
however, the legislature had to appropriate the money and
often did not. He elaborated that the revenue from the NRA
license plates had often lapsed to the General Fund instead
of going to the targeted group. He explained that
individuals paid extra for the license plate thinking the
funds would go to the specific group; however, the extra
funding was actually going to the General Fund. He used the
appropriation in the budget to the Blood Bank as an example
of what was designated in statute to happen with the
plates.
Representative Wool surmised that each time someone bought
a license plate for a specialty group, the revenue needed
to be separately appropriated by the legislature to the
group. He stated his understanding that in the case of the
amendment, the recipient would be the NRA, but the
amendment would direct the funding to the other specified
programs.
Mr. Painter clarified the amendment pertained to the NRA
special request plate, but the statutory funding recipient
was Alaska SCTP, not the NRA.
Representative Wool surmised that the Alaska SCTP would be
the recipient of the funds if the amendment passed. He
stated his understanding that otherwise, lacking another
statute, the funding would go to the General Fund. He
believed the legislature would have to pass a statute to
direct the funding to any specialty group. He understood
the funding would lapse to the General Fund if the
amendment did not pass.
Mr. Painter replied in the affirmative. He confirmed that
the legislature had to appropriate the funding annually to
ensure it went to the correct group.
Representative Carpenter asked for a point of
clarification. He asked for verification that the amendment
did not send any money to the NRA.
Mr. Painter agreed. He clarified that the funding would go
to the Alaska SCTP. The license plate was an NRA plate;
however, the funds went elsewhere.
Representative Rasmussen WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment HLS 7 was
ADOPTED.
9:09:42 PM
Representative Wool MOVED to ADOPT Amendment HLS 8, 32-
GH1509 (Marx, 4/28/21) (copy on file):
Page 73, lines 20 - 29:
Delete all material and insert:
"* Sec. 21. SUPPLEMENTAL UNIVERSITY OF ALASKA. The
amount of federal receipts received from the
Coronavirus Response and Relief Supplemental
Appropriations Act, 2021 (P.L. 116-260) and from the
American Rescue Plan Act of 2021 (P.L. 117-2) for
higher education and minority-serving institutions in
the fiscal years ending June 30, 2021, and June 30,
2022, estimated to be $62,742,800, is appropriated to
the University of Alaska for the fiscal years ending
June 30, 2021, June 30, 2022, June 30, 2023, and June
30, 2024, for the following purposes and in the
following estimated amounts:
PURPOSE
University of Alaska higher education emergency
relief funds II and III, institutional portion
ESTIMATED AMOUNT: $42,757,600
PURPOSE
University of Alaska higher education emergency
relief funds II and III student aid portion"
ESTIMATED AMOUNT: $19,985,200
Representative Rasmussen OBJECTED for discussion.
Representative Wool explained the amendment was receipt
authority to allow the University of Alaska to receive
federal Coronavirus Response and Relief Supplemental
Appropriations Act (CRRSAA) and American Rescue Plan Act
(ARPA) funds. He elaborated that federal funding from both
of the acts was going directly to the university for the
institution and student aid. He explained that the amounts
in the amendment were updated to reflect current incoming
funding. The amendment included the allowable dates of
2021/2022 for CRRSAA and 2023/2024 for ARPA.
Co-Chair Foster added that Representative Wool worked with
the university on the amendment language. He shared that he
had seen some of the emails on the topic. He highlighted
that the amendment did not use UGF, it was merely receipt
authority to enable the university to accept federal and
other funds.
Representative Wool confirmed that the amendment contained
no UGF or DGF funding; the funding was coming directly from
the federal government. He expounded that the amendment
also contained the language "higher education and minority
serving institutions," a category the University of Alaska
was included in. He noted that as the committee had seen in
a presentation a couple of weeks earlier, much of the money
coming from the federal government had different
conditions. One of the conditions being that the university
was a minority serving institution. The amendment
formalized that the university is a minority serving
institution in writing.
Representative Rasmussen asked if the receipt authority was
tied to funds designated directly to the university.
Representative Wool replied in the affirmative. He
clarified that the funding was preordained for the
university and gave it the authority to accept the funds.
Representative Rasmussen WITHDREW her OBJECTION.
There being NO further OBJECTION, Amendment HLS 8 was
ADOPTED.
Representative Carpenter MOVED to ADOPT Amendment HLS 5
(copy on file).
Co-Chair Foster OBJECTED for discussion.
9:12:34 PM
AT EASE
9:13:04 PM
RECONVENED
Representative Carpenter MOVED Amendments HLS 5 and HLS 5.1
through HLS 5.7 (copy on file):
Amendment HLS 5, 32-GH1509\N.S (Marx, 4/26/21)
Page 80, line 19:
Delete "power cost equalization endowment Fund
(AS 42.45.070(a))"
Insert "general Fund"
Page 80, lines 27 - 28:
Delete "civil legal services fund (AS 37.05.590)"
Insert "general fund"
Page 93, line 18:
Delete "sec. 47(i)"
Insert "sec. 47(h)" 12
Page 95, line 29, through page 96, line 1:
Delete all material and insert:
"(g) The sum or $30,000,000 is appropriated from
the general fund to the community assistance fund
(AS 29.60.850)."
Reletter the following subsections accordingly.
Page 96, line 8:
Delete "(i)"
Insert "(h)"
Page 103, lines 25 - 26:
Delete "proceeds of the aviation fuel tax or
surcharge levied under AS 43.40"
Insert "general fund"
Page 104, following line 31:
Insert a new subsection to read:
"(b) The sum of $195,957,400 is appropriated to
the general fund from the budget reserve fund
(art. IX, sec. 17, Constitution of the State of
Alaska)."
Reletter the following subsections accordingly.
Page 105, line I, following "Act":
Insert "and (b) of this section" 14
Page 105, line 6:
Delete "(a) and (b)"
Insert "(a) - (c)"
Amendment HLS 5.1
Department of Commerce, Community and Economic
Development
Community and Regional Affairs
HLS 5.1 Fund source change pursuant to Art.9,
Sec. 17(d) of the State Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art.9, Sec. 17(d) of the State
Constitution.
1004 Gen Fund (UGF) 3ll.6
1221 Legal SBIV (DGF) 311.6
Amendment HLS 5.2
Department of Commerce, Community and Economic
Development
Alaska Energy Authority
HLS 5.2 Fund source change pursuant to Art.9,
Sec. 17(d) of the State Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art9, Sec. 17(d) of the State
Constitution.
1004 Gen Fund (UGF) 381.8
1169 PCE Endow (DGF) -381.8
Amendment HLS 5.3
Department of Commerce, Community and Economic
Development
Alaska Energy Authority
HLS 5.3 Fund source change pursuant to Art.9,
Sec. 17(d) of the State Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art9, Sec. 17(d) of the State
Constitution.
Gen Fund (UGF) 32,355.0
1169 PCE Endow (DGF) -32,355.0
Amendment HLS 5.4
Department of Corrections
Community Residential Centers
HLS 5.4 Fund source change pursuant to Art.9,
Sec. 17(d) of the State Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art.9, Sec. 17(d) of the State
Constitution.
1004 Gen Fund (UGF) 1,000.0
1246 RcdvsmFund (DGF) -1,000.0
Amendment HLS 5.5
Department of Corrections
Health and Rehabilitation Services
HLS 5.5 Fund source change pursuant to Art.9,
Sec. 17(d) of the State Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art.9, Sec. 17(d) of the State
Constitution.
1004 Gen Fund (UGF) 2,103.6
1246 RcdvsmFund (DGF) -2,103.6
Amendment HLS 5.6
Department of Corrections
Health and Rehabilitation Services
HLS 5.6 Fund source change pursuant to Art.9,
Sec. 17(d) of the State Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art.9, Sec. 17(d) of the State
Constitution.
1004 Gen Fund (UGF) 2,000.0
1246 Rcdvsmfund (DGF) - 2,000.0
Amendment HLS 5.7
Department of Corrections
Health and Rehabilitation Services
HLS 5.7 Fund source change pursuant to Art.9,
Sec. 17(d) of the Slate Constitution.
Fund source change from DGF to UGF ensuring
continuity of service when funds are swept
pursuant to Art.9, Sec. 17(d) of the State
Constitution.
1004 Gen Fund (UGF) 175.0
1246 RcdvSmFund (DGF) -175.0
Co-Chair Foster OBJECTED for discussion.
Representative Carpenter explained that the first page of
the amendments made an appropriation from the
Constitutional Budget Reserve (CBR) to the General Fund in
the amount of $195 million. He detailed that the remainder
of the amendment documentation changed fund source codes
for important programs from DGF to UGF. He elaborated that
the amendments applied to all of the programs funded with
DGF funds that were subject to the sweep (the
constitutional provision requiring funds remaining in the
General Fund to be swept into the CBR at the end of the
fiscal year). The balance of the accounts would be swept
into the CBR at the end of the fiscal year. He relayed that
except for the amendment that changed the fund source code
from DGF to UGF, each of the programs would continue to be
funded when the sweep occurred.
Representative Carpenter highlighted agencies encompassed
in the amendment including Community and Regional Affairs,
Legal Services, Rural Energy Assistance, Power Cost
Equalization, Community Residential Centers, substance
abuse treatment programs, sex offender management programs,
domestic violence programs, education for offender
rehabilitation, vocational programs, recidivism reduction
grants, education and early development funding for student
and school achievement through Alaska Vocational Technical
Center (AVTEC), libraries, archives, and museums, library
operations, live homework help, program administration for
postsecondary education through the Higher Education Fund,
Washington, Wyoming, Alaska, Montana, and Idaho (WWAMI)
medical education funding, environmental conservation, oil
hazard fund and vessel fund for administrative services,
and more.
Representative Carpenter stated there were many programs
funded through DGF that would stand to be unfunded if the
legislature failed to do its due diligence and ensure the
items remained funded by adhering to the constitutional
requirement of repaying the balance of the CBR. He stated
it was a significant balance the legislature was
constitutionally required to pay. He concluded that the
amendment would ensure programs were funded. He stated that
in the context of having larger discussions, the issue was
important. He detailed that the balance of the funds
included was around $1.5 billion. He asked Mr. Painter for
an estimate of the current balance.
Mr. Painter answered that the current balance of sweepable
funds was estimated at about $1.6 billion due to the higher
investment returns on PCE and so forth.
Representative Carpenter stated that about $1.6 billion
would be in the CBR. He elaborated that as the legislature
was deciding what to do with federal funds, very little of
the conversation thus far had been about how to use the
funds to bridge a gap to some sort of structural change. He
believed the legislature was going to spend the federal
funding on programs members thought were important without
considering the long-term implications. He stated it meant
the funds had to be spent by 2024. He asked what would
happen in 2025 when the structural problem had yet to be
fixed. He reasoned that some type of bridge would be
needed. He stated that luckily there would be several
billion dollars available in the CBR that would enable the
legislature to deal with the structural deficit in the
future. He stated the amendment action was important in the
long-term.
9:19:00 PM
Co-Chair Foster asked for verification that one of the
included funds was the Alaska Marine Highway System (AMHS)
Fund.
Mr. Painter confirmed that it was a sweepable fund.
Co-Chair Foster relayed that the CS included 18 months of
forward funding for AMHS. He stated that if the amendment
were to pass, everything from the PCE Fund to the Higher
Education Fund to the AMHS Fund would not be funded if the
reverse sweep was not achieved.
Mr. Painter answered that in the current CS, there was no
use of the AMHS Fund in FY 22; therefore, there would be no
impact on the specific fund. He added there was a projected
negative balance in the fund for the end of FY 21. He
stated the AMHS Fund would not be impacted by the
amendment.
Co-Chair Foster asked if the 18 months of forward funding
would be impacted.
Mr. Painter replied in the negative. He explained the 18
months of service were not funded with the AMHS Fund. The
funding for the service included federal and general funds.
Co-Chair Foster stated his understanding of the amendment.
He believed if hypothetically the legislature did not
achieve the three-quarter reverse sweep vote, all of
programs would still be paid, but with UGF. For example,
the PCE Fund had a $1 billion balance. He provided a
hypothetical scenario where the PCE Fund earned $50 million
in a year and paid the total out to all of the communities
under PCE. He summarized his understanding that under the
amendment, the state would still pay the cost, but it would
be straight from the General Fund. He stated the problem
was the PCE Fund would no longer be capitalized, and it may
be more in peril in future years. He remarked that it was a
policy call for the legislature as to whether PCE was
funded from the General Fund in the future. He expressed
great hesitation at defunding the accounts for PCE, higher
education, vocational education, recidivism, WWAMI, and
other things if the reverse sweep did not occur. He could
not support the amendment. He asked if his statements were
accurate.
Mr. Painter agreed with the explanation.
9:21:58 PM
Representative Edgmon thought the award for the night for
the big picture thinking went to Representative Carpenter.
He hoped the sponsor offered the amendment on the House
floor because he thought it illustrated the importance of
the reverse sweep and what it meant for funds if the three-
quarter vote was not obtained. He could not support the
amendment but hoped to have the discussion on the floor
because it would help educate many members about the topic.
Representative Josephson strongly opposed the amendment. He
shared that he had spent significant time thinking about
the reverse sweep and trying to reform it. He had a bill
that addressed which of the accounts had to be swept and
which need not be swept. He took Representative Edgmon's
point that the amendment could be a teaching moment;
however, the result would be hollow statutes with grand
ideas but no money to fund them. He stated the situation
would create great consternation and anxiety for different
stakeholders in different ways. He highlighted students as
an example. Additionally, the CBR indebtedness bore no
interest and no penalty. He stated the money was something
"we owe ourselves." He characterized the situation as an
oddity. He remarked that even if the legislature could save
$1.5 billion in the CBR, it was still not enough for a
fiscal plan. He pointed out there had just been an
amendment proposed that would have spent the entire amount.
He referenced discussion about how the legislature could
have used ARPA funding better for structural change. He
countered that much of ARPA funding had restrictions on the
way funds could be used. He stressed that hollow statutes
that could potentially result from the amendment reflected
decades of passion, caring, zeal, and ingenuity. He
underscored the accounts were not to be dispensed with in
that way.
9:24:59 PM
Representative Thompson stated that several years back
there had been fuel tax legislation. He thought he recalled
that aviation fuel tax had to be spent on airports. He
asked Mr. Painter if that was the case.
Mr. Painter agreed there was a federal restriction on how
the money could be spent.
Representative Thompson asked if the funding would be part
of the sweep. He wondered if the funding had to be spent on
airports.
Mr. Painter replied that the fund appeared on the
administration's sweep list. He believed Mr. Steininger may
be able to speak to the reason it had been included on the
list.
9:26:17 PM
Representative Thompson restated his previous question. He
relayed that when the legislature had worked on fuel taxes
in the past, the legislature had learned the aviation fuel
tax had to be spent on airports as specified by federal
regulation.
Mr. Steininger responded that it was his understanding.
Representative Thompson asked why it would be included in
the sweep.
Mr. Steininger answered that he would have to go back to
determine whether it had been included on the
administration's list. He stated that based on the funding
restriction for use on airport purposes, he did not believe
the item would be included on the list. He would have to
take a look.
Co-Chair Foster MAINTAINED the OBJECTION.
Representative Carpenter provided wrap up. He appreciated
the comments and the history behind the current situation.
He remarked on all of the zeal that went into spending
billions of dollars out of the state's savings account
without addressing the structural deficit. He protested and
asked why all of the spending took precedent over
maintaining a stable fiscal structure. He asked why it came
to having the current conversation where the committee was
talking about forcing amendments on PFD discussions and
funding programs and sweeping funds into accounts to get
things done.
Representative Carpenter stated a conversation about big
picture thinking and solving the state's deficit would have
to include some amount of savings that bridged the gap
going forward, in addition to taxes, spending cuts, or some
type of reduction. He remarked that the committee had
chosen not to do those things during the current meeting.
He thought perhaps they would do so in the future. He
furthered that all of the items were parts and pieces of
the puzzle. He remarked that if money was taken out of an
account in the current year, it could be put back in the
following year. He stated it was possible to pull money out
of the PCE account that achieved a greater return on
investment than the CBR. He reasoned the legislature would
not want to do so in the long-term. He questioned why the
legislature would put $13 billion in the CBR for a small
return on investment.
Representative Carpenter underscored that the amendment was
merely a tool in a larger plan that legislators all needed
to participate in, in righting the state's structural
problem. He emphasized that doing nothing would result in
continuing down the same path. He thought it was necessary
to have the courage to make structural changes and do
difficult things to achieve a different result.
9:30:03 PM
A roll call vote was taken on the motion.
IN FAVOR: Carpenter
OPPOSED: Thompson, Wool, Edgmon, Johnson, Josephson, LeBon,
Ortiz, Rasmussen, Merrick, Foster
The MOTION to adopt Amendments HLS 5 and HLS 5.1 through
HLS 5.7 FAILED (1/10).
9:31:40 PM
AT EASE
9:34:49 PM
RECONVENED
Co-Chair Foster noted there was a technical issue with
Amendment HLS 6. He noted that the amendment pertained to
per diem.
Representative Carpenter MOVED to RESCIND action on
Amendment HLS 6. [Note: full discussion on Amendment HLS 6
began at 8:55 p.m.]
Representative Wool OBJECTED.
Representative Carpenter relayed that it had been brought
to the committee's attention by Legislative Legal Services
that the drafted language did not achieve the intended
outcome. He clarified that the amendment would be taken up
at a later date.
Representative Wool WITHDREW the OBJECTION.
There being NO further OBJECTION, action on Amendment HLS 6
was RESCINDED.
9:37:06 PM
Representative Wool MOVED to ADOPT Amendment LS 9 (copy on
file):
Department of Commerce, Community and Economic
Development
Community and Regional Affairs
Named recipient grant to Tanana Chiefs Conference
Sobering Center
The appropriation that supported this program between
FY 18-FY 21 is expiring and this amendment continues
partial funding through FY 22.
1004 Gen Fund 350.0
Representative Rasmussen OBJECTED for discussion.
Representative Wool explained the amendment would partially
fund the sobering center in Fairbanks. He shared that the
center had opened in 2018 and had been very successful. He
detailed that Fairbanks had a problem with homelessness and
chronic inebriates, which had been taxing for the hospitals
and corrections system. He pointed out that neither of the
places were suitable. He elaborated that there had been a
few deaths at the corrections facility because staff was
not really trained for numerous people under these
conditions. He furthered that since the opening of the
sobering center the admits to the hospital had decreased
significantly. Additionally, the Title 47 holds at the
Fairbanks Correctional Center had also decreased
substantially. He highlighted that the number of stays at
the sobering center had increased more than the reduction
at the other two facilities.
Representative Wool informed the committee that the 1115
waiver did not currently apply to sobering facilities. He
stated that it cost money to run the facility. Previously,
there had been a grant from the Department of Health and
Social Services that had funded the facility at its
inception along with another center in Bethel. He relayed
that he had been contacted by the Tanana Chiefs who operate
the sobering center. He believed the annual cost was
slightly over $1 million. The amendment would provide
$350,000, which accounted for approximately one-third of
the annual cost. He had expressed his desire for the Tanana
Chiefs to also find funds internally or from other entities
such as the Native corporation Doyon in Fairbanks,
Fairbanks Native Association, the City of Fairbanks, and
the Borough of Fairbanks. He stated that all of the parties
had an interest in keeping the sobering center open and the
amendment was a good start. He wanted the sobering center
to come up with a plan for the future, so Tanana Chiefs did
not have to come back to the legislature to ask for
funding.
9:40:08 PM
Representative LeBon spoke in support of the amendment. He
shared that it was a critical service provided in his
district in Fairbanks. He shared that he had experience
with the program through his service on the Downtown
Association. He elaborated that the community service
patrol helped transport individuals to safe locations for
treatment at the Fairbanks Memorial Hospital (in his
district), the sobering center, Housing First, or other
locations. He spoke to the need to care for the
individuals. He stated the desire was to graduate the
individuals into to get more permanent long-term assistance
to help get their lives on track. He concluded that the
service under the amendment was a critical first step.
Representative Rasmussen MAINTAINED the OBJECTION.
Representative Wool provided wrap up. He stated the
sobering center was a benefit on many levels. He detailed
that it was a better way to treat and care for individuals
in need of sobering and other social services. He
highlighted that it was superior and cheaper than a
hospital or prison. He elaborated that the staff were
trained for the service. The amendment would provide seed
money to get the center on its way. He noted that hopefully
the operator could sustain the facility through other means
into the future. He did not want to see the center closed
and it was currently scheduled to run out of funding June
30. He emphasized that the center was an essential service
to Fairbanks.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Wool, Edgmon, Josephson, LeBon, Ortiz,
Foster
OPPOSED: Carpenter, Rasmussen, Merrick
Representative Johnson was absent from the vote.
The MOTION PASSED (7/3). There being NO further OBJECTION,
Amendment LS 9 was ADOPTED.
9:43:23 PM
Representative Thompson MOVED to ADOPT Amendment LS 10
(copy on file):
Department of Commerce, Community and Economic
Development
Alaska Gasline Development Corporation
Title: AGDC federal receipts
Type: Language
Explanation: Federal receipts received by the AGDC for
the fiscal year ending June 30, 2022, is appropriated
to the Alaska liquefied natural gas project fund.
Representative Rasmussen OBJECTED for discussion.
Representative Thompson explained that the amendment would
enable the Alaska Gasline Development Corporation (AGDC) to
receive federal funds of up to $50 million should the money
become available. He read from prepared remarks:
The amendment provides the receipt authority and
federal funding for the development of phase I of the
Alaska LNG project, which will be managed by a
subsidiary of AGDC, to leverage federal funds to
construct a natural gas pipeline from the North Slope
to Fairbanks with first gas delivered in 2025. The
authorization positions AGDC to respond quickly should
federal funding from large infrastructure projects be
released. Removing this authority will require
legislative action prior to putting Alaskans to work.
Representative Thompson highlighted that the amendment
brought no cost to the state. He elaborated that the funds
would be deposited into the Alaska Liquefied Natural Gas
Project Fund account. He reported that of the National
Environmental Policy Act (NEPA) permits and state permits,
with the exception of one from the Department of
Environmental Conservation (DEC), had been approved and the
project was shovel ready. He reiterated the amendment would
give receipt authority to AGDC should the federal funding
become available.
9:45:12 PM
Co-Chair Foster noted that the amendment used no state
funds.
Representative Wool looked at Amendment LS 11, which he
assumed was connected to the current amendment.
Representative Thompson replied that Amendment LS 11 would
be next.
Representative Wool remarked that Amendment LS 10 did not
include much language. He cited language from Amendment LS
11:
...authority for the Alaska Gasline Development
Corporation to receive funding from private industry
partners for advancing the commercial and technical
work to move the project to the FEED stage.
Representative Wool thought the project was already at the
FEED [Front End Engineering and Design] stage.
Representative Thompson agreed that the project was
currently at the FEED stage. He relayed that Amendment LS
11 would advance the project beyond the FEED stage.
Representative Rasmussen WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment LS 10 was
ADOPTED.
9:46:38 PM
Representative Thompson MOVED to ADOPT Amendment LS 11
(copy on file):
Department of Commerce, Community and Economic
Development
Alaska Gasline Development Corporation
Title: Add receipt authority for the Alaska Gasline
Development Corporation
Type: Language
Explanation: The amendment requests $50,000,000
receipt authority for the Alaska Gasline Development
Corporation to receive funding from private industry
partners for advancing the commercial and technical
work to move the project to the FEED stage. The
funding from the private sector partners will be
deposited in the Alaska Liquified Natural Gas Fund.
Co-Chair Merrick OBJECTED.
Representative Thompson explained that the amendment was
very similar to Amendment LS 10. The amendment would enable
AGDC to receive up to $50 million from private industry
partners for advancing the work to move the project to the
FEED stage. The amendment gave receipt authority to AGDC
and the funds would be deposited into the Alaska Liquified
Natural Gas Project Fund. He detailed that the Alaska LNG
project had completed its NEPA reviews, the final impact
statement had been published in the federal register in May
2020, all of the required federal permits were in place,
and all state permits with the exception of one from DEC
were in place. The amendment would enable AGDC to continue
working with strategic partners and to advance the project
through commercial negotiations and technical work to
continue the FEED stage. He reiterated the amendment only
pertained to receipt authority. He relayed that if there
were private partners who wanted to invest, the money would
be deposited into the Alaska Natural Gas Project Fund.
Co-Chair Foster remarked that Amendments LS 10 and 11 had
both been included in the governor's budget and were not
included in the CS. He supported the amendments.
Co-Chair Merrick WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment LS 11 was
ADOPTED.
Co-Chair Merrick MOVED to REPORT CS HB 69(FIN) out of
committee with individual recommendations and authorization
for Legislative Finance Division and the Legislative Legal
Services to make any necessary technical and/or conforming
amendments.
There being NO OBJECTION, it was so ordered.
CSHB 69(FIN) was REPORTED out of committee with five "do
pass" recommendations, five "no recommendation"
recommendations, and one "amend" recommendation.
Co-Chair Foster addressed HB 71. He detailed that the
governor had originally proposed using $16 million in
Alaska Mental Health Trust Authority reserves and the CS
had switched the funding source to traditional funding
sources including Alaska Housing Finance Corporation (AHFC)
and UGF.
9:50:12 PM
Co-Chair Merrick MOVED to REPORT CSHB 71(FIN) out of
committee with individual recommendations and authorization
for Legislative Finance Division and the Legislative Legal
Services to make any necessary technical and/or conforming
amendments
There being NO OBJECTION, it was so ordered.
CSHB 71(FIN) was REPORTED out of committee with eight "do
pass" recommendations, two "no recommendation"
recommendations, and one "amend" recommendation.
Co-Chair Foster reviewed the schedule for the following
morning.
ADJOURNMENT
9:52:15 PM
The meeting was adjourned at 9:52 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 69 Carpenter Amendment Backup 042921.pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |
| HB 69 Amendments v.N Pkt 1 042921.pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |
| HB 69 Amendments v.N 042921 Pkt 2.pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |
| HB 69 Conceptual Amendment 2 to HLS 3 042921.pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |
| HB 69 Additional Info Ortiz to Amendment HLS 3 042921.pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |
| HB 69 Amendments with Actions 1 of 2 .pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |
| HB 69 Amendments with Actions 2 of 2.pdf |
HFIN 4/29/2021 9:00:00 AM |
HB 69 |