Legislature(2021 - 2022)ADAMS 519
05/04/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB70 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 70 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 4, 2021
1:33 p.m.
1:33:16 PM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 1:33 p.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
SUMMARY
HB 70 APPROP: CAP; REAPPROP; SUPP; AMEND
HB 70 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the meeting agenda.
HOUSE BILL NO. 70
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
making appropriations to capitalize funds; and
providing for an effective date."
1:34:00 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, introduced a PowerPoint
presentation titled "State of Alaska Office of Management
and Budget: House Finance Committee FY2022 Capital
Overview: HB 68, HB 70, HB 71, HB 84," dated May 4, 2021
(copy on file). He began on slide 2 and explained there
were capital budget items across several appropriation
vehicles introduced by the governor. He detailed that HB 70
was the governor's standard FY 22 capital budget and HB 71
was the mental health budget inclusive of mental health
capital items. He elaborated that HB 70 included some
supplemental capital items effective in FY 21, HB 68
represented the fast track supplemental items, and HB 84
represented regular supplemental items.
Mr. Steininger reported that the FY 22 total was just under
$1.5 billion in capital projects, of which, $62.2 million
was funded with unrestricted general funds (UGF). He listed
the FY 21 supplemental items at slightly over $142 million.
He characterized the net reduction in FY 21 UGF spending as
a bit of a misnomer. He explained that the reduction was a
repeal of prior year capital projects completed on time and
under budget. He elaborated that the money was deposited
into the Alaska Capitol Income Fund. He detailed that the
deposit appeared as a positive in the operating budget; the
reduction was netted out with the positive in the operating
budget and showed up in the capital budget as designated
general fund (DGF) spending primarily on deferred
maintenance.
1:35:57 PM
Mr. Steininger turned to slide 3 and addressed a deferred
maintenance backlog facing the state. He highlighted that
capital budget proposals showed a fairly significant sum of
money dedicated to deferred maintenance due to the
substantial backlog of just under $600 million excluding
the university. The number was about $2 billion with the
inclusion of university facilities. He explained that the
university had been excluded from the deferred maintenance
numbers shown on slide 3 because the university tracked its
deferred maintenance separately and it did not show the
scale of the distribution nearly as well to add a $1.4
billion column. He pointed out that the majority of the
backlog was located in the Department of Transportation and
Public Facilities (DOT). The second largest backlog fell
under the Department of Administration (DOA) given the
department's responsibility for managing many of the
state's office buildings. He remarked that agencies with a
greater number of facilities tended to have more of a
backlog in deferred maintenance.
Co-Chair Merrick asked about a breakdown for DOT deferred
maintenance in terms of facilities versus roads and
bridges.
Mr. Steininger replied that he would follow up with the
information.
1:37:39 PM
Mr. Steininger reported that the administration had
allocated just under $65 million across several
appropriation vehicles in proposed deferred maintenance
spending. He detailed that about $13.4 million had been
included as fast track supplemental items. He explained
that there had been no appropriation for deferred
maintenance expenditures in the FY 21 capital budget. He
elaborated that with the understanding that a supplemental
bill would not pass early in the session, the
administration had allocated the majority of the deferred
maintenance proposals into FY 22. He noted that certain
projects had been included in the fast track supplemental
that would enable projects to begin once the bill had
passed. The slide showed a breakdown of statewide deferred
maintenance for general state buildings, public building
fund (primarily office buildings, and court facilities that
were managed separately).
Co-Chair Merrick noted that Representative Carpenter had
joined the meeting.
Mr. Steininger turned to slide 5 and provided an FY 22
capital budget snapshot by department. He highlighted that
the largest percentage of the funds were directed to DOT
for the Surface Transportation Infrastructure Program (sic)
[Statewide Transportation Improvement Program (STIP)]. He
pointed to a larger dollar figure in the "FY22 Other" funds
column than was typical in the capital budget. He explained
that part of the proposal was to utilize bonding through
the Alaska Housing Finance Corporation (AHFC) to fund the
state match requirements of the STIP, the Airport
Improvement Program, and the Village Safe Water Program. He
explained that the aforementioned programs were the areas
with the most significant federal match on General Fund
dollar spending. The administration's proposal would use
AHFC bonding in order to take advantage of low interest
rates to meet the need.
Vice-Chair Ortiz looked at slides 4 and 5 and asked if
deferred maintenance for statewide schools was included in
the figures.
Mr. Steininger noted that the presentation did not include
any of the general obligation bond proposals. He explained
that the AFHC bond proposals were included because they
were in the governor's standard capital budget. He relayed
that the general obligation bond proposal put forward by
the administration addressed school major maintenance;
however, it was not included in the normal capital budget.
He elaborated that the administration had a separate
proposal to address the need, which was not included in the
current presentation.
1:40:58 PM
Representative Josephson referred to the governor's
proposal to fund three items with an AHFC bond proposal. He
recalled the Village Safe Water Program as one of the items
and asked Mr. Steininger to repeat the first two.
Mr. Steininger replied that the other items were the
Airport Improvement Program and the STIP. He noted the two
items were the primary DOT capital programs.
Co-Chair Merrick asked for clarification on the meaning of
STIP.
Mr. Steininger answered that the STIP was the DOT program
responsible for building and improving most of the DOT
owned roads throughout the state. He detailed that there
was a 90/10 match (90 percent federal and 10 percent
state).
Co-Chair Merrick asked how STIP projects were prioritized.
Mr. Steininger provided a high level answer and noted that
DOT could give more detail. He explained there was an
annual process where DOT ranked the projects and put them
on the STIP with cost estimates. He expounded that the list
was sent to the Federal Highway Administration for review.
Co-Chair Merrick noted DOT would address the committee
later in the week.
Mr. Steininger turned to slide 6 and addressed projects by
department beginning with the Department of Commerce,
Community and Economic Development (DCCED). He relayed that
projects included in the FY 22 capital budget primarily
were standard projects included annually such as community
block grants and the Natural Petroleum Reserve-Alaska
(NPRA) Impact Grant Program. He elaborated that the
projects recurred annually and generally had a fairly
generous federal to state ratio. He highlighted there was a
substantial amount of federal funding for community block
grants [$60 million] with very little state match required
[$6 million].
Mr. Steininger continued to address slide 6. He relayed
there were fewer opportunities for discretionary capital
spending, meaning most projects relied on the federal
match. He noted he would bring attention to new, one-time
projects throughout the presentation. He pointed to item 3
showing an increment for the replacement of the Alcohol
Marijuana Control Office (AMCO) case management system
funded with 50 percent UGF and 50 percent program receipts.
He highlighted item 8 showing a $5 million grant for the
Alaska Travel Industry Association (ATIA). He remarked that
the slide reflected the governor's December proposal and
subsequent amendments. He explained that some of the items,
like the grant to ATIA, may be accomplished through the
plans the state had been working to develop for use of
federal relief. He referenced discussion around using
American Rescue Plan Act (ARPA) funding for tourism
marketing and noted there may be some discretionary items
that could fit within the category - details that were not
known when the budget had been developed.
1:44:52 PM
Co-Chair Foster looked at item 6 on slide 6 showing $13
million for bulk fuel upgrades in the Alaska Energy
Authority (AEA) partially funded by the Power Cost
Equalization (PCE) endowment. He stated that statute
outlined uses for PCE funds. He referenced the waterfall
funding structure. He explained that originally PCE was
intended solely for the PCE Fund for energy assistance in
rural Alaska. He detailed that several years back a change
had been made that enabled any leftover funding to be used
for community assistance. He elaborated that any remaining
funding could then go toward renewable energy within AEA.
He asked if the administration considered bulk fuel
upgrades to be part of AEA's renewable energy.
Alternatively, he asked if the item was outside of the
scope of all three. He asked about the administration's
thoughts on using PCE funds for the highlighted purpose.
Mr. Steininger explained that based on the available funds
in the CBR and available revenues to the state when the
budget had been developed, the administration had looked
for fund sources to satisfy some of the needs that may be
slightly outside of the statutory designation but that
still fit within the goal of reducing power costs. He
explained that the fund source had been selected due to an
unavailability of UGF when the budget had been drafted.
1:46:53 PM
Mr. Steininger moved to the Department of Corrections on
slide 7. The bill would allow for the installation of seven
new facility body scanners at a cost of $1.5 million UGF.
He noted that the request put forward the past year had not
been accommodated when the capital budget had been merged
into the operating budget. The bill included $1.5 million
for the Point Mackenzie Correctional Farm Produce
Processing Plant. The increment would allow the plant to
distribute produce grown at Point Mackenzie to other
prisons. He briefly highlighted four standard increments
for the Department of Environmental Conservation on the
second half of the slide, including clean water, drinking
water, and two components for the Village Safe Water
program.
Mr. Steininger moved to slide 8 and reviewed the Department
of Fish and Game (DFG) capital budget items. He pointed to
two funding increments to address the Pacific cod disaster
and 2018 Sockeye salmon disaster. Item 3 included federal
and General Fund match in addition to $750,000 UGF to allow
the state to research species that may be considered for
the Endangered Species Act. The funding would also enable
the state to do work (funded by the federal government)
related to species placed under the Endangered Species Act.
He highlighted items 8 and 9 as the standard sport fish and
wildlife management projects matched with funding from the
Fish and Game Fund.
Mr. Steininger continued to review DFG increments on slide
8. He pointed out facility maintenance and improvement
items including the Copper River boat launch (item 5). He
noted that item 6 - facilities, vessels, and aircraft
maintenance repair and upgrades - had been separated from
the main deferred maintenance appropriation because the
main appropriation tended to focus on state facilities. He
elaborated that a direct appropriation to DFG enabled the
department to use the funding for maintenance on vessels
and aircraft that were often left out of discussions that
typically related to vertical facilities.
1:49:46 PM
Mr. Steininger advanced to slide 9 and reviewed the Office
of the Governor items including statewide deferred
maintenance. He elaborated that the increment allowed the
governor's office to prioritize projects across all state
agencies. He explained that many agencies had facilities.
The goal was to ensure that money was being directed to
deferred maintenance projects at the highest need of the
state. Item 2 was a capital project for the Division of
Elections to implement 2020 Ballot Measure 2.
Mr. Steininger addressed items in the Department of Health
and Social Services (DHSS) budget on slide 9. He noted
there were several items that were not necessarily deferred
maintenance but needed work at some of the facilities run
by DHSS including the Ketchikan Pioneer Home and the Palmer
Veterans and Pioneer Home. Item 3 was an appropriation for
the Health Information Exchange, often called the Hi-Tech
program. He noted the program was in its last year and the
appropriation would be the final funding. He highlighted
item 9, a reappropriation to capital projects from the
Office of the Governor. He detailed that several years back
a few information technology projects had been appropriated
to the Office of the Governor for other state agencies. The
administration had discovered that the change had slowed
the process down instead of providing additional management
oversight; therefore, the authority would be reappropriated
to the managing departments.
1:51:51 PM
Mr. Steininger reviewed items for the Department of
Military and Veterans Affairs (DMVA) on slide 10. He
reviewed item 2, an increment for the mass notification
system for Joint Base Elmendorf Richardson ($2.5 million
General Fund match/$2.5 million federal receipts). Item 3
was an increment for Joint Base Elmendorf Richardson
digital control, generator, and preventative maintenance.
He noted that some of the maintenance items for DMVA were
separately appropriated outside of the statewide increment
because DMVA was often able to leverage federal receipts
for facility maintenance.
Representative Wool asked about projects on military bases.
He asked when the state was responsible to pay for things
on federal military bases.
Mr. Steininger answered that because there was a shared
state responsibility with DMVA, there were facilities on
the base that were used by DMVA. He noted there was also a
shared responsibility included in the operating budget for
some of the maintenance. He elaborated that it could get
complicated because some of the maintenance was completely
paid for within the [U.S.] Department of Defense budget and
did not flow through the state. He explained that the items
on slide 10 reflected facilities the state was responsible
for that had some shared costs with the federal government.
Mr. Steininger moved to slide 11 and reviewed items in the
Department of Natural Resources (DNR) budget. He
highlighted a $4.5 million specialty agricultural crop
block grant (item 1). Item 2 was for critical minerals
mapping referred to as Earth MRI (previously known as
3DEEP). Item 4 was an increment for geological mapping for
energy development. He explained that items 2 and 4 used
general funds to leverage federal match. Item 5 was
Cooperative Water Resource Program Pass-through funding to
USGS for Stream Gaging Projects. Item 7 was an increment
related to land sales and the development of new
subdivisions funded with state land disposal income (money
received when state land was sold - a portion of which
could be used to promote and manage the sale of new state
lands).
1:55:04 PM
Mr. Steininger continued to review the items in the DNR
budget on slide 12. Item 10 was an increment for national
recreational trails that was primarily federally funded,
but also used some Parks Division receipts. Item 11 was for
state park electronic fee stations. He elaborated that
previous appropriations used for building electronic fee
stations had shown some successes in the collection of fees
without as much involvement by parks staff. He highlighted
the Kenai River Bookey Parcel Purchase and Eagle Rock
Bookey Parcel Improvements paid for with Exxon Valdez Oil
Spill Settlement (EVOSS) funds.
Mr. Steininger addressed items in the Department of Public
Safety (DPS) budget on the second half of slide 12. He
relayed that DPS marine fisheries patrol improvements were
funded by federal receipts. The budget included funding for
equipment replacement at the state crime laboratory (item
3) to ensure the lab was up to date in providing adequate
evidence for cases. The budget also included funding for
the replacement of worn or outdated field equipment for
wildlife troopers and state troopers.
1:56:50 PM
Mr. Steininger turned to slides 13 and reviewed items in
the Department of Revenue (DOR) budget. Items 1 through 9
were all Alaska Housing Finance Corporation (AHFC)
appropriations for housing programs including rental relief
assistance, teacher and health housing, senior housing,
energy efficiency, and various grants for different housing
related items. He continued to slide 14 and highlighted
three additional AHFC energy efficiency programs.
Mr. Steininger looked at the Department of Transportation
and Public Facilities (DOT) budget items on the second half
of slide 14. He highlighted funding for the third year of
the computerized maintenance management system in the
amount of $1.5 million UGF. He detailed that the software
system was used to categorize and rank maintenance of state
facilities and inform the decision on the $49 million
appropriation to the Office of the Governor for statewide
deferred maintenance. He briefly noted there were several
weigh stations needing repair and replacement [item 2] and
$15 million for typical annual vessel overhaul for the
Alaska Marine Highway System.
1:58:20 PM
Representative Edgmon looked at the AHFC supplemental
housing development program on slide 13. He had heard
concerns that the budget underfunded the program. He
detailed that AHFC was able to effectively leverage the
program and fully funding the program returned a
considerable amount of work and effort. He looked at the
AHFC energy programs weatherization increment (item 10) at
the top of slide 14. He remarked that the state was
challenged for funding, but in an ideal world the increment
would be much higher. He stressed that the program had
tremendous value in terms of jobs and economic development.
He shared that the program resulted in energy cost savings
of 30 to 40 percent in homes.
Vice-Chair Ortiz asked Representative Edgmon what the
weatherization program funding level had been in past years
when there had been more UGF available.
Representative Edgmon answered that in 2008 and 2009 there
had been $300 million in the program when oil prices had
been around $146 to $147 [per barrel]. He reported that
approximately 15 percent of the homes in the state had been
weatherized. He stressed it had been a tremendous value in
his region where there were many older homes. He detailed
that the program had resulted in jobs and value for the
money.
Representative LeBon looked at DPS items on slide 12. He
reported that the [House Finance] DPS subcommittee had
looked at a request for nearly $1.5 million for vehicles,
radios, and other safety equipment items that it had
declined to fund in the operating budget. He asked if the
capital budget request was to offset the action taken by
the subcommittee. He asked if there was any connection to
the action.
Mr. Steininger answered there was no connection to the
action taken by the DPS subcommittee, but there was a
connection to the original proposal. He elaborated that
addressing how the state managed the cost of replacement of
worn out equipment for troopers could be considered an
ongoing operating cost. The capital budget item would
enable the troopers to catch up with some needs. He
explained that the proposal to add funding to the base
budget would have baked in the funding as an annual
operating cost.
Representative LeBon surmised that if the subcommittee had
approved $1.5 million, the $500,000 increment would not be
included in the capital budget.
2:01:45 PM
Mr. Steininger advanced to a continuation of DOT increments
on slide 15. The slide included funding for the airport
improvement program and STIP. Items 6 and 8 were the
associated federal receipts with the state match shown in
items 9 and 10 as AHFC bonds. He noted that the use of AHFC
bonding required passage of a separate bill to authorize
the issuance of the bonds. The slide included a couple of
standard projects such as the international airport
systems, federal emergency projects, and Federal Transit
Administration (FTA) grants. He noted that item 14 on the
slide did not reflect a late amendment put forward by the
administration the previous day that would raise the FTA
grant amount to $30 million.
2:03:25 PM
Mr. Steininger continued to review DOT items on slide 16.
He highlighted a mental health coordinated transportation
project annually recurring in the mental health budget. He
moved to item 18, an increment for the Anton Anderson
Memorial and Portage Lake Tunnel capital improvements using
tunnel toll receipts. Additionally, the slide included a
reappropriation of capital projects from DOA to DOT for
capital projects on public building fund buildings. He
expounded that with the proposed shift of the public
building fund management to DOT, it was necessary to
reassign some of the older capital projects that were not
yet complete to DOT management.
Mr. Steininger briefly highlighted the one request from the
Alaska Court System for statewide deferred maintenance on
court-owned facilities [on slide 16].
2:04:15 PM
Representative LeBon looked at slide 13 and mentioned the
Cold Climate Research Center in Fairbanks located near the
University of Alaska. He recalled hearing the program had
received AHFC funding.
Mr. Steininger believed the program had received AHFC
funding directly in the past. He would have to follow up
with funding history details.
Representative LeBon believed the AHFC dividend included a
carve out for the Cold Climate Research Center.
Mr. Steininger responded that he would follow up with the
information.
Mr. Steininger addressed a table showing FY 21 supplemental
capital projects on slide 18. He noted that the negative
amounts in the table represented reappropriations of
capital projects completed under budget. He expounded that
the funds primarily went to the Alaska Capital Income Fund
to support deferred maintenance projects.
2:06:24 PM
Mr. Steininger turned to slide 19 showing outstanding
supplemental capital projects that were not incorporated
into the operating budget. He noted that the operating
budget had included quite a few of the governor's
supplemental requests. He highlighted a $1.5 million
increment for deferred maintenance on court system
buildings, $500,000 to cover DFG facility, vessel, and
aircraft maintenance, and $5.9 million for general
statewide deferred maintenance. He noted that the $5.9
million for deferred maintenance was significantly less
than the funding in the FY 22 budget to account for the
fact that the administration would only be able to deploy a
small amount of the money in the timing provided once a
supplemental bill passed. However, there were more urgent
deferred maintenance needs or items that could be
benefitted by starting prior to July 1.
2:07:40 PM
Mr. Steininger advanced to slide 20 and continued reviewing
outstanding supplemental capital projects. He highlighted a
$4 million capital project for DOL prosecutor recruitment
and housing. The increment was related to the increase in
prosecutor positions in the FY 22 budget to allow for
advance recruiting. He reported that several items included
in the FY 21 budget request for DMVA had not made it
through the budget process due to the truncated session;
therefore, the administration had put the items forward in
the supplemental budget. He detailed that most of the items
were maintenance related for DMVA facilities including the
Bethel Readiness Center, Kotzebue Readiness Center, and
statewide roof repairs. The budget also included a
reappropriation from DOA for the Alaska Land Mobile Radio
System (ALMR) outstanding capital projects. He relayed that
the program had moved from DOA to DMVA; therefore, the
projects needed to be trued-up and moved to the correct
department.
2:08:45 PM
Co-Chair Merrick asked about the justification for using
higher education funds for DOL prosecutor housing and
recruitment.
Mr. Steininger answered that when the administration had
included the item in the fast track supplemental bill,
there had been an effort to avoid using UGF in order to
move the item through the process as there were some urgent
needs in the fast track supplemental. He elaborated that in
the interest of avoiding the use of dwindling UGF or CBR
funds (at the time the CBR projections showed the fund near
the lowest possible balance), the administration had looked
to other funds with available balances to meet some of the
needs. He clarified that the administration was not trying
to draw any connection between the purposes of the higher
education fund and the need to address sexual assault; the
higher education fund was merely a fund source that could
satisfy the funding need.
Representative Wool asked for the definition of a readiness
center [increments shown on slide 20].
Mr. Steininger deferred to DMVA for detail. He understood
that the facilities were located around the state for
members of the guard to convene for training or other
activities.
2:10:48 PM
Mr. Steininger reviewed additional outstanding supplemental
capital projects on slide 21. The slide included an
increment of $3.25 million for DNR to assess landslide
hazards. The funding would allow for advanced warning of
events should a landslide occur and cause a tsunami. He
reviewed a reappropriation of a prior year capital project
for DOR. The reappropriated funds would be used for tax
expertise and economic impact analysis of any tax proposals
that may come forward. Additionally, the slide included
reappropriations of unexpended balances of DOT capital
projects that came in under budget.
Vice-Chair Ortiz looked at the first item on slide 21. He
asked if the Alaska landslide hazards request was annual or
specific to an event.
Mr. Steininger answered that the funding was for a specific
item and was not an annual recurring cost. He did not have
the detail on the event.
Co-Chair Merrick thanked Mr. Steininger for the
presentation.
2:12:38 PM
AT EASE
2:14:03 PM
RECONVENED
HB 70 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the schedule for the following
morning.
ADJOURNMENT
2:14:54 PM
The meeting was adjourned at 2:14 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 70 HFIN Capital Budget OMB Overview 5.4.2021.pdf |
HFIN 5/4/2021 1:30:00 PM |
HB 70 |