Legislature(2023 - 2024)ADAMS 519
03/27/2023 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 || HB41 | |
| Amendments | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 39 | TELECONFERENCED | |
| += | HB 41 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 27, 2023
9:05 a.m.
9:05:19 AM
CALL TO ORDER
Co-Chair Johnson called the House Finance Committee meeting
to order at 9:05 a.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Alexei Painter, Director, Legislative Finance Division;
Remond Henderson, Staff, Representative DeLena Johnson.
SUMMARY
HB 39 APPROP: OPERATING BUDGET/LOANS/FUND; SUPP
HB 39 was HEARD and HELD in committee for further
consideration.
HB 41 APPROP: MENTAL HEALTH BUDGET
HB 41 was HEARD and HELD in committee for further
consideration.
Co-Chair Johnson reviewed the meeting agenda. The committee
would hear proposed operating budget amendments.
HOUSE BILL NO. 39
"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. 41
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
9:07:04 AM
^AMENDMENTS
9:07:09 AM
Co-Chair Johnson directed members to Language Amendment
Packet 1 (copy on file).
Representative Stapp MOVED to ADOPT Amendment L 1, 33-
GH1347\B.3 (Marx, 3/23/23) (copy on file):
Agency: Health
Appropriation: Senior and Disabilities Svcs
Allocation: Senior/Disabilities Svcs Admin
Transaction Details
Title: Development of Cost Allocation Assessment
Tool (FY24-FY26)
Section: Language
Type: MultiYr
Funding
1002 Fed Rcpts 698.5
1003 GF/Match 420.5
Explanation
This amendment proposal increases funding for the
Senior Disabilities Services Admin allocation, to
allow the division to create a Cost Allocation
Assessment Tool.
The Assessment Tool would provide better
predictability of budget needs, more flexibility and
enhanced beneficiary choice and self-direction.
Successful implementation of this tool would allow the
division to work towards the elimination of the IDD
waitlist.
Representative Josephson OBJECTED for discussion.
Representative Stapp explained that the amendment and its
counterpart Amendment L 2 would look at providing a
multiyear appropriation to assist the Division of Senior
and Disabilities Services administration with developing an
assessment tool that would help the division use resources
more efficiently and better reflect its beneficiaries'
needs and choices regarding the IDD [intellectual and
developmental disabilities] waitlist. He believed it would
be the first step in allowing the division to start the
process of eliminating the waitlist. He detailed that the
legislature had passed HB 281 in 2022, which provided
intent language for the Department of Health (DOH)
specifying the legislature's intent for the department to
develop a five-year plan in collaboration with stakeholders
to eradicate the waitlist for the IDD waiver and to prevent
the waitlist from other home and community based waivers.
Additionally, the department would submit a plan to the
finance co-chairs and the Legislative Finance Division
(LFD) by December 20, 2022. The report had effectively
stated that an essential piece of the plan would be the
creation of the assessment tool [addressed in the Amendment
L 1]. The language was amended because it was a multiyear
appropriation; therefore, requiring a language amendment.
The multiyear appropriation gave the department time to use
and spend the funds in order to leverage federal funding.
Representative Stapp explained that the amendment provided
$420,500 in general funds to senior and disabilities
services to hire staff and develop the tool. The amendment
would also provide $698,500 in federal receipts. However,
he WITHDREW the AMENDMENT given the nature of the state's
current fiscal situation and decline in the spring revenue
forecast. [Note: the amendment was offered and adopted the
following day. See minutes dated 3/28/23 9:00 a.m. for
detail.]
9:10:15 AM
AT EASE
9:10:56 AM
RECONVENED
Representative Stapp WITHDREW Amendment L 2, 33-GH1347\B.4
(Marx, 3/23/23) (copy on file). [Note: the amendment was
offered and adopted the following day. See minutes dated
3/28/23 9:00 a.m. for detail.]
9:11:30 AM
Representative Ortiz MOVED to ADOPT Amendment L 3, 33-
GH1347\B.6 (Marx, 3/23/23):
Page 66, lines 20 - 21:
Delete "Alaska marine highway system fund (AS
19.65.060)"
Insert "general fund"
Representative Cronk OBJECTED.
Representative Ortiz explained that the amendment was a
fund source change for Alaska Marine Highway System (AMHS)
backfill language in the event the state did not receive
all federal receipts appropriated in HB 39. The calendar
year budget for AMHS vessel operations currently included
$83 million in federal receipt authority. The amount was in
addition to approximately $21 million undesignated general
funds (UGF) and $10 million designated general funds (DGF).
He noted there were still ongoing discussions about how
much federal funding the state would receive. Under the
current operating budget bill, if the state did not receive
$83 million in federal receipts, the department was
directed to draw down the AMHS fund. He read from a
prepared statement:
Last year, the governor signed into law an act that
would keep the AMHS fund from being swept. The intent
of this is to allow receipt money to grow in the fund
so we can use it at a future date. For example, the
current $1 billion or so of federal dollars available
for ferry capital and operating expenses is a five-
year appropriation, so if this federal appropriation
is not renewed, we will be relying fully on our own
means again. The problem then is, if we draw on this
fund now, we're negating the intent of that
legislation; therefore, I'm proposing we switch the
language to direct the department to use UGF instead
of AHMS fund money if there's any shortfall in federal
receipts.
Representative Ortiz noted he had received word from the
department earlier in the day that there was only $23.4
million currently in the AMHS fund. He explained that if
the federal funding was not received, the AMHS did not have
sufficient funding to cover the need.
9:14:33 AM
Representative Josephson asked what the circumstance would
be where the state did not receive the federal funding.
Representative Ortiz responded that he was not privy to the
conversations between the Department of Transportation and
Public Facilities (DOT) and the federal government to know
what would cause the funding to not be available. He knew
the details had not yet been worked out in terms of the
matching fund source and other. He explained that until the
details were worked out, there remained a potential the
federal funds would not all be available, which would cause
AMHS to run out of funds fairly quickly and negatively
impact the summer season.
Representative Cronk MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Galvin, Hannan, Josephson, Ortiz
OPPOSED: Stapp, Tomaszewski, Coulombe, Cronk, Edgmon,
Foster, Johnson
The MOTION FAILED (4/7).
9:16:59 AM
Representative Ortiz MOVED to ADOPT Amendment L 4, 33-
GH1347\B.7 (Marx, 3/23/23) (copy on file):
Page 75, lines 13 - 17:
Delete all material and insert:
"(s) The sum of $21,350,000 is appropriated from the
general fund to the oil and gas tax credit fund (AS
43.55.028)."
Representative Cronk OBJECTED.
Representative Ortiz explained that the amendment would cut
oil and gas tax credit obligations in the FY 24 fiscal
cycle. The budget currently specified the state was
estimated to spend a little over $42 million UGF to
purchase oil and gas tax credits. He stated that because of
the recent decline in projected revenue, the legislature
would be looking for resources to fund the budget. The
amendment would make additional funding available for
appropriations in other areas by reducing oil and gas tax
credit payments by $21,350,000.
Representative Stapp MOVED to ADOPT conceptual Amendment 1.
He shared Representative Ortiz's concerns regarding fiscal
liability; however, the oil and gas tax credits were debts
owed by the state. The conceptual amendment would add $7
million to the decrement of $21,350,00, resulting in a
decrement of $14,350,000.
9:19:05 AM
AT EASE
9:19:14 AM
RECONVENED
Co-Chair Foster supported the conceptual amendment. He
remarked that $42 million had been the original anticipated
number, but the updated oil price forecast put the oil tax
credits at about $27 million or $28 million. The conceptual
amendment would be about half of the original estimate.
9:20:11 AM
AT EASE
9:24:11 AM
RECONVENED
Representative Stapp clarified conceptual Amendment 1 to
Amendment L 4. The conceptual amendment would effectively
make the total sum of the payment $28,350,000.
There being NO OBJECTION, conceptual Amendment 1 to
Amendment L 4 was ADOPTED.
9:25:00 AM
Representative Stapp WITHDREW the OBJECTION to the
amendment. There being NO further OBJECTION, Amendment L 4
was ADOPTED as amended.
Representative Hannan MOVED to ADOPT Amendment L 5, 33-
GH1347\B.8 (Marx, 3/23/23) (copy on file):
Page 58, line 9:
Delete "$1,763,043,926"
Insert "$881,521,963"
Page 58, line 12:
Delete "$1,763,043,926"
Insert "$2,644,565,889"
Representative Stapp OBJECTED.
Representative Hannan explained the amendment. She stated
that with the spring revenue forecast, LFD had presented to
the other body that allocating 50 percent of the percent of
market value (POMV) to the Permanent Fund Dividend (PFD)
would overdraw the state's budget and create an overdraw of
the POMV by a minimum of 1.6 percent by FY 32 (more than $1
billion). She elaborated that the Earnings Reserve Account
(ERA) would be so depleted it could be exhausted within a
couple of years of that. The amendment would shift the
current 50/50 split to a 75/25 split [between government
services and the PFD]. She reported that LFD modeling
showed the 75/25 split to be sustainable over time and
deficits would not occur in the operating budget until
2029. She noted the deficits were comparably modest,
requiring only a relatively small Constitutional Budget
Reserve (CBR)/Statutory Budget Reserve (SBR) withdrawal.
Additionally, it would not result in an overdraw of the
ERA. She noted that members had received handouts showing a
comparison of the 50/50 and 75/25 presented to the other
body the previous Friday afternoon (copy on file). She
believed the change was prudent to having a sustainable
budget and PFD.
9:27:20 AM
Representative Stapp was opposed to the amendment. He
stated the budget included $135 million in ongoing
operating budget increments. He opined that in order for
Alaska to get its fiscal house in order, everyone had to
give something. He elaborated that the statutory PFD had
been reduced with the hopes of finding an equitable
solution to the amount of revenues and expenses. He stated
that one-time money was cheaper than "forever" money and he
did not believe it was a long-term fiscal solution to
reduce one-time appropriations and add forever
appropriations into the budget, especially given
inconsistency in long-term revenue projections. He remarked
that it may even make the proposed appropriation unviable
in the next fiscal year.
Representative Cronk opposed the amendment. He stated that
his district was rural. He highlighted there were no fish
on the Yukon River and residents were spending more money
on food. Additionally, the district had the highest fuel
cost in the state at $15 to $18 per gallon with some places
being 80 cents per kilowatt hour. He underscored that the
PFD was the most vital chunk of funding the state could
provide to individuals, especially in rural Alaska. He
stated that every time the PFD was cut without having a
fiscal plan in place, it harmed rural Alaska.
Co-Chair Foster opposed the amendment. He echoed comments
made by Representative Cronk in terms of the impact on
rural Alaska. He recognized that the state was facing
difficult fiscal times, but residents were also faced with
difficult times, and he did not want to take their PFDs. He
thought the legislature owed it to the people of the state
to help support them in terms of inflation and higher
energy costs.
9:30:01 AM
Representative Ortiz supported the amendment. He remarked
that legislators all had people in their districts who
found the PFD to be very important to their ability to move
forward from year to year. He stated the PFD would continue
to be important to people in the bush in the future. He
stressed a 50/50 PFD was not sustainable. He highlighted
that both caucuses had spoken about the priority to be
fiscally responsible. The amendment created a sustainable
path with PFDs for future generations. He emphasized it was
the right thing to do.
9:31:53 AM
Representative Galvin supported the amendment. She
highlighted that the state would soon be in the red if they
stuck with a 50/50 plan. She remarked that the plan under
the amendment [75/25] appeared to be more fiscally
conservative. She understood it was a difficult decision to
make, particularly in light of individuals who desperately
needed the money to pay their bills. She believed a $1,350
PFD was responsible. She had surveyed her constituents and
estimated that 90 percent supported being fiscally
conservative. The individuals indicated they did not care
about a $2,000 or $3,000 PFD; they cared about public
safety and thriving schools. Her constituents indicated the
need to be fiscally conservative and cognizant of
maintaining the Permanent Fund for the state's future. A
couple of her constituents mentioned Power Cost
Equalization (PCE) as a fiscally important thing to offer
to residents in rural Alaska who needed more opportunity to
be warm. She spoke to the importance of funding renewable
energy opportunities and to help Alaskans remain in their
communities in the short term as well.
Representative Josephson requested to ask Mr. Painter a
question.
Co-Chair Johnson noted that Mr. Painter was in the
audience.
Representative Josephson referred to Representative Stapp's
mention of a $135 million permanent increment in the
operating budget. He asked if Mr. Painter was familiar with
the number.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
believed the figure reflected a total of all the amendments
in the three packets [currently under consideration], not
including supplementals.
9:36:22 AM
AT EASE
9:40:39 AM
RECONVENED
Representative Josephson stated it was his 11th year in the
building. He discussed that former governor Walker had been
elected in 2014 and in June of 2015 he had called the top
minds from industry, scholarship, and everywhere to the
University of Alaska Fairbanks campus. The only part of a
fiscal plan the legislature implemented was SB 26 in 2018.
He acknowledged that the House Ways and Means Committee had
a sales tax bill and Senator Bill Wielechowski had an oil
tax bill, but it was almost April, and he did not believe
any of the proposals would pass. He stressed that the
governor had vetoed a $1 million e-cigarette increase and
had repeatedly said he would refer all taxes to the public
for a vote in 2024. He stated "this is the world we're in,
we don't want to raise revenue. That's bad." He spoke to
the need to be responsible and conservative to balance the
budget. He stated there was a couple of billion in the CBR,
which was "a kick the can for sure." He found no other
alternative than to vote for what he referred to as a
perfectly good amendment.
Representative Tomaszewski opposed the amendment. He stated
the amendment was nothing more than increasing state
spending. He remarked that if the state was given more
money, it would be spent. He pointed out that over the
years the legislature had gone down the road of calling for
a sustainable PFD while increasing spending at alarming
rates. He stated it was a regressive tax against Alaskans.
He underscored that the proposal was not sustainable. He
reasoned that continuing down the path would mean no PFD
[in the future]. He asked where new revenue would come from
for new state spending. He believed it would come in the
form of other taxes to support an ever increasing state
government. He stressed they needed a real fiscal plan. He
noted there were many working on it. He hoped legislators
could join together and work hard for a fiscal plan. He
emphasized his opposition to the amendment.
9:44:52 AM
Co-Chair Edgmon did not view it as a regressive tax or
irresponsible. He viewed it as an eventuality. He stated he
had been very frank with his constituents that there were
tradeoffs involved in a bigger PFD. He believed 75/25 PFD
was too generous in terms of being able to sustain
spending. He stated that Alaska was in the midst of a quiet
crisis, the state was losing people and did not have enough
childcare, workers, or teachers. He rebutted the statements
that rural Alaska would go under without large PFDs. He
cited the importance of regional and village corporation
dividends that had been increasing and could help make the
gap. He highlighted the lack of teachers in the bush.
Additionally, the Power Cost Equalization (PCE) was a
"sitting duck." He believed it called for a larger
discussion and he hoped the legislature got to that point.
He did not see it materializing in the current session. He
stated it was "bad on us" for not making the topic a higher
priority. He believed it deserved a larger discussion in a
separate bill or perhaps a special session. He would not
support the amendment at present.
9:47:04 AM
Representative Coulombe supported remarks by Representative
Tomaszewski. Her largest problem with taking more from the
PFD was the absence of a fiscal plan. She believed it would
result in the growth of government and did not solve any
problems in the long-term. She thought the 50/50 split was
a good compromise. She stated it could help in the short-
term and put pressure on the legislature to develop a
fiscal plan.
Representative Hannan provided wrap up on Amendment L 5.
She recognized that the amendment alone was not a fiscal
plan. She wished the legislature had active discussions
about revenue occurring. She noted that even when the
legislature began discussing revenue, it would take two
years for new revenue to begin. She stated that the
operating budget put the state at a substantial deficit
with a 50/50 PFD. The proposal would result in a draw from
the CBR and would put the ERA at risk. She thought the most
fiscally prudent thing to do was to fund an operating
budget that allowed licensing to continue, public safety to
be protected, and public schools to function. She
emphasized that because there were not other options for
revenue, it was necessary to look at how savings were used.
She believed a reduction from a 50/50 to a 75/25 split was
the most responsible action at present. She urged members'
support.
9:49:17 AM
Representative Stapp MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Hannan, Josephson, Ortiz, Galvin
OPPOSED: Stapp, Tomaszewski, Coulombe, Cronk, Foster,
Edgmon, Johnson
The MOTION to adopt Amendment L 5 FAILED (4/7).
9:50:09 AM
Representative Galvin WITHDREW Amendment L 6, 33-
GH1347\B.12 (Marx, 3/24/23) (copy on file).
Representative Cronk MOVED to ADOPT Amendment Sup 1, 33-
GH1347\B.9 (Marx, 3/24/23) (copy on file):
Page 55, following line 8:
Insert a new subsection to read:
"(e) Section 65(e), ch. 11, SLA 2022, is amended to
read:
(e) In addition to the amounts appropriated in sec. I.
ch. 11, SLA 2022, [OF THIS ACT] for the purpose of
providing boarding stipends to districts under AS
14.16.200, the sum of $2,133,950 is appropriated from
the general fund to the Department of Education and
Early Development for that purpose for the fiscal
years [YEAR] ending June 30, 2023, and June 30, 2024."
Co-Chair Foster OBJECTED for discussion.
Representative Cronk explained that the amendment allowed
the remaining funds transferred into the extended
residential schools program to extend into FY 24. He
detailed that a senator had added $4.2 million for the
purpose of providing additional boarding stipends to
regional boarding schools. He explained that half of the
funding had been vetoed, but the amendment would allow the
remaining funds to be used in FY 24.
9:52:19 AM
AT EASE
9:52:51 AM
RECONVENED
Co-Chair Foster supported the amendment. He relayed that
the amendment did not add any new money; it merely extended
the ability for residential schools to use the money.
Representative Galvin supported the amendment. She believed
it was important for families to have choices and she
understood it was important for rural communities to have
the travel funds and other for people to access the
boarding school opportunities.
Representative Hannan asked for verification that the
program provided stipends to boarding schools in Mt.
Edgecumbe, Galena, and Bethel. She asked if she was missing
any other schools.
9:54:16 AM
AT EASE
9:54:40 AM
RECONVENED
Representative Cronk answered that his list included
Galena, Nenana, Kuskokwim, Kotzebue, Nome, and Chugach.
Co-Chair Foster WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment Sup 1 was
ADOPTED.
9:55:14 AM
Co-Chair Johnson MOVED to ADOPT Amendment Sup 2, 33-
GH1347\B.5 (Marx, 3/23/23):
Page 83, following line 4:
Insert a new bill section to read:
"* Sec. 39. Section 65(d), ch. 11, SLA 2022, is
repealed."
Renumber the following bill sections accordingly.
Page 83, line 13:
Delete "and 32(d) - (g)"
Insert "32(d) - (g), and 39" 10
Page 83, line 14:
Delete "and 32(d)- (g)"
Insert "32(d)- (g), and 39"
Page 83, line 16:
Delete "and 33 - 40"
Insert "33 - 38, 40, and 41"
Page 83, line 18:
Delete "and 33 - 40"
Insert "33 - 38, 40, and 41"
Page 83, line 19:
Delete "Section 40"
Insert "Section 41"
Page 83, line 20:
Delete "and 32(d) - (g)"
Insert "32(d) - (g), and 39"
Page 83, line 22:
Delete "secs. 41 - 43"
1Insert "42 - 44"
Co-Chair Foster OBJECTED for discussion.
Co-Chair Johnson explained that the amendment pertained to
a duplicate appropriation. The amendment would repeal
$1,647,500 of UGF multiyear language appropriation to
expand the Washington, Wyoming, Alaska, Montana, and Idaho
(WWAMI) class size from 20 to 30 students. The governor was
also proposing an amendment for the same amount in the FY
24 budget rendering the appropriation from FY 23
unnecessary. She stated it was a cleanup amendment that
made no change to the WWAMI expansion.
9:56:36 AM
Representative Josephson asked to hear from Mr. Steininger
on the record.
Co-Chair Johnson offered to have Mr. Painter speak to the
amendment.
Mr. Painter stated that the prior session, the legislature
made a multiyear appropriation of $1.65 million. He
reported that the governor's FY 24 budget included the same
amount coming from the Higher Education Fund. He explained
that additional students would not enter the [WWAMI]
program until FY 25; therefore, the appropriation addressed
by the amendment was not necessary and would lapse to the
general fund at the end of FY 24 if no action was taken.
Co-Chair Foster WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment Sup 2 was
ADOPTED.
9:58:30 AM
AT EASE
9:59:54 AM
RECONVENED
Representative Josephson MOVED to ADOPT Amendment Sup 3,
33-GH1347\B.11 (Marx, 3/24/23):
Page 55, line 10:
Delete "secs. 19(c)"
Insert "secs. 20(c)" 4
Page 55, following line 16:
Insert a new bill section to read:
"* Sec. to. SUPPLEMENTAL UNIVERSITY OF ALASKA. The sum
of $3,000,000 is reappropriated from the unexpended
and unobligated balance of the appropriation made in
sec. 74, ch. 11, SLA 2022, page 185, lines 20 - 21
(University of Alaska, heavy oil recovery method
research and development - $5,000,000) to the
University of Alaska for the Pilgrim Hot Springs
geothermal prospect project for the fiscal years
ending June 30, 2023, and June 30, 2024."
Renumber the following bill sections accordingly.
Page 83, lines 5 - 6:
Delete "secs. 10, 16(a), (b), (c)(1), and (d), l9(c) -
(e), 26(a), 29(b) and (c), 31, 32(a) - (k) and (n) -
(p), and 33(a) - (c)"
Insert "secs. 11, 17(a), (b), (c)(1), and (d), 20(c)-
(e), 27(a), 30(b) and (c), 32, 33(a)- (k) and (n)-
(p), and 34(a)- (c)"
Page 83, lines 13 - 18:
Delete all material and insert:
"(b) If secs. 7 - 12, 23(b), 31(d), and 33(d) - (g) of
this Act take effect after June 30,2023, secs. 7 - 12,
23(b), 3 l(d), and 33(d)-(g) of this Act are
retroactive to June 30, 2023.
(c) If secs. 1-3, 13-22, 23(a)and(c)-(t), 24-
26,27(a),28-30,31(a)-(c),(e),and (f), 32, 33(a) - (c)
and (h)- (p), and 34 - 41 of this Act take effect
after July l, 2023, secs. 1 - 3, 13 - 22, 23(a) and
(c) - (t), 24 - 26, 27(a), 28 - 30, 3 l(a) - (c), (e),
and (t), 32, 33(a) - (c) and (h) - (p), and 34 - 41 of
this Act are retroactive to July 1, 2023."
Page 83, line 19:
Delete "Section 40"
Insert "Section 41"
Page 83, line 20:
Delete "Sections 7 - 11, 22(b), 30(d), and 32(d) -
(g)"
Insert "Sections 7 - 12, 23(b), 31(d), and 33(d) -
(g)"
Page 83, line 21:
Delete "26(b)"
Insert "27(b)"
Page 83, line 22:
Delete "secs. 41 - 43"
Insert "secs. 42 - 44"
Representative Stapp OBJECTED.
Representative Josephson explained the amendment. He stated
he had a history of deferring to the university because he
believed in its mission. The legislature had made a
multiyear appropriation of $5 million for heavy oil
recovery with a focus on developing the Ugnu play located
deep underneath Prudhoe and Kuparuk. He stated the oil was
highly viscous, expensive to reach, and did damage to the
environment. He had contributed to some of the damage of
balancing the pros and cons when he had voted for Willow.
He stated there was some national uproar about Willow, but
he had looked at the state's treasury and his job as a
state legislator and had to balance the positives and
negatives.
Representative Josephson explained that the amendment would
reappropriate funds from the heavy oil recovery research
program to Pilgrim Hot Springs geothermal prospect. He had
vetted the amendment intensely and strongly believed the
funds were unspent. The amendment would be a nod to the
state's future, which he stated would have to be renewables
and things like geothermal prospects rather than things
akin to the Alberta tar sands project.
Co-Chair Foster opposed the amendment. He relayed that
Pilgrim was near his hometown of Nome. He did not recall
the university asking for the funding and he did not
believe the university had a plan at Pilgrim or workers in
place. The last time the university had worked at Pilgrim
he had been told the water was not hot enough for
commercial purposes. Additionally, he wondered whether the
new landowners (a conglomeration of tribal and Native
organizations in the area) had been consulted on whether
they wanted the research done there. He suspected they may
be interested if the water was commercially viable, but he
did not believe they had been consulted.
10:03:30 AM
Representative Stapp spoke against the amendment. He stated
the heavy oil research program at the University of Alaska
Fairbanks was producing many tangible results. He reminded
committee members that Alaska was effectively a resource
development state and any type of investment the state made
in research increased the state's ability to ensure it had
the revenue generated from the program to ensure Alaska had
a bright future through continued resource development. He
viewed the amendment as an attempt to kill the "golden
goose."
Representative Galvin declared a conflict of interest. She
thought her family stood to benefit from the studies. She
relayed that her family is an oil and gas family. She asked
to be recused from the vote due to her family potentially
benefiting from the study.
Co-Chair Foster OBJECTED.
Co-Chair Edgmon stated that Representative Galvin's family
would not individually benefit from the study. He explained
that if the amendment went through, collectively everyone
on the committee would benefit. He noted that
Representative Galvin's declaration of a conflict of
interest was on the record, and it was appropriate to
require her to vote.
Co-Chair Johnson confirmed that Representative Galvin would
be required to vote.
Representative Cronk opposed the amendment. He stated that
oil revenue currently brought in about $3.5 billion. He
underscored that without replacing the revenue, there would
be no PFD and the state would be drawing on the ERA.
Representative Tomaszewski opposed the amendment. He
believed UAF was doing a great job with the heavy oil
research. He opposed taking away the funding or the
university.
Representative Stapp MAINTAINED the OBJECTION.
Representative Josephson provided wrap up on the amendment.
He relayed that one of the top leaders in the climate
action/advocacy groups vetted the amendment; therefore, he
trusted that the Pilgrim Hot Springs was the proper place
to receive the money. He referenced Representative Stapp's
mention of tangible results. He stated the problem was
there would be tangible results. He thought the state
needed to pivot away from the specific type of project. He
took Representative Cronk's point, but highlighted that in
FY 16, the state received $1.2 billion from severance tax
royalties. He stressed they were trying to build a fiscal
policy around something that was incredibly volatile, which
would only continue. He asked for members' support.
10:08:20 AM
A roll call vote was taken on the motion to adopt Amendment
Sup 3.
IN FAVOR: Josephson, Ortiz, Hannan
OPPOSED: Stapp, Tomaszewski, Coulombe, Cronk, Galvin,
Edgmon, Foster, Johnson
The MOTION to adopt Amendment Sup 3 FAILED (3/8).
10:09:09 AM
Co-Chair Johnson invited her staff to explain the
amendment.
Co-Chair Johnson MOVED to ADOPT Sup 4, 33-GH1347\B.13
(Marx, 3/25/23) (copy on file) [note: due to the length of
the amendment it has not been included in the minutes. See
copy on file for detail].
Co-Chair Foster OBJECTED for discussion.
REMOND HENDERSON, STAFF, REPRESENTATIVE DELENA JOHNSON,
explained that Amendment Sup 4 would roll the supplemental
bill HB 54 into the operating budget excluding all capital
items and fast track supplemental items. He noted the fast
track supplemental had passed the House and was currently
in the other body. There were also several technical
changes made by LFD and the Office of the Governor. There
was an attached report included after page 19 of the
amendment prepared by LFD. He offered to review the
document if the committee desired.
Representative Ortiz requested additional detail. He stated
it was the first the committee had seen of the proposal. He
believed it merited additional explanation.
Mr. Henderson explained that the supplemental bill had been
presented to the Office of Management and Budget (OMB) in
full detail previously. The amendment incorporated the
supplemental into the operating bill. He deferred the
question for additional detail.
Co-Chair Johnson asked to hear from Mr. Painter.
Mr. Painter explained that the amendment began with the
numbers section and was followed by the language section.
He referenced an attached report comparing the differences
in the amendment and the governor's operating supplementals
that were not included in the fast track.
Mr. Henderson noted that the report was attached following
page 19 of the amendment (copy on file).
Mr. Painter relayed that the three-page report showed the
differences between the governor's supplementals excluding
the fast track and items for the supplemental effective
date that were already included in the operating bill.
Co-Chair Johnson noted that fast track supplemental and
capital items were not included in the amendment to avoid
duplication.
10:14:03 AM
Representative Ortiz pointed to a document after page 19 of
the amendment labeled "Amendment offered in the House."
Co-Chair Johnson clarified that page 19 was last page of
the drafted amendment. There was a report following the
amendment.
Representative Ortiz requested a brief at ease to find the
document being referenced.
10:14:47 AM
AT EASE
10:20:36 AM
RECONVENED
Co-Chair Johnson noted the request by Representative Ortiz
to speak to the differences between the supplemental and
Amendment Sup 4. She asked for an explanation.
Mr. Henderson addressed page 1 of the Sup 4 backup document
(copy on file). The first item was $44.9 [million] and the
amendment changed the WWAMI funding for contractual
increases from UGF to Higher Education Funds.
Representative Ortiz asked for verification that the
original supplemental funded the item with UGF and the
amendment changed the fund source to the Higher Education
Fund.
Mr. Henderson agreed.
Representative Galvin asked, "Is this a precedent? Has this
ever happened before in this way?"
Mr. Henderson answered it had been stated earlier there was
an increment in the FY 24 budget by the governor that
changed the WWAMI program funding source to the Higher
Education Fund. The amendment was consistent with the
governor's action.
Mr. Henderson highlighted a fund source change on page 2
for Southeast regional fisheries management from UGF to fee
structured. The agency was working with a source of funds
with the Pacific Marine Fisheries Commission to pay for
deferred maintenance. He added there was a possibility the
item should be funded in the capital budget.
10:23:28 AM
Representative Josephson asked for verification that the
amendment put a deferred maintenance item in the operating
budget.
Mr. Painter replied that the governor "was appropriating
that." He explained that the amendment did not put forward
the item. He clarified that the item would not be a fund
change, "it would just be not adding general funds to
supplement the existing funding, which the governor is
proposing to do."
Mr. Henderson turned to page 3 of the backup document. He
explained that the governor had a supplemental in FY 23 in
the same amount. The amendment would extend the item to
multiyear in order to enable the funds to be expended
through FY 24.
Representative Galvin looked at $130,000 [pertaining to the
Southeast Region fisheries management] on page 2. She did
not see the item included under commercial fisheries in the
other section.
Mr. Painter replied that the report showed the increment in
the governor's column and not the House column; therefore,
it was not included in the bill.
10:25:24 AM
Mr. Henderson asked Mr. Painter to explain the item on page
4.
Mr. Painter explained that the items on page 4 had been put
forward in the governor's original supplemental bill and
the governor had subsequently reversed them as an amended
item. He detailed that rather than including them and
reversing them, they were not included in the amendment.
The items showed as being in the governor's budget, but it
was a net zero.
Representative Josephson asked for an explanation of the
Alaska Housing Finance Corporation (AHFC) component [on
page 4 of the backup document].
Mr. Painter replied that the governor's original
supplemental budget contained an error and reflected the
item as a numbers item for $127 million. The item should
have been a language item carrying forward prior funds. The
language item the governor put forward in his amendments
was included in Amendment Sup 4. He clarified that the
mistaken number was not necessary and was not included in
the current amendment.
Representative Stapp looked at a decrement of $208,300 for
the Department of Military and Veterans Affairs (DMVA). He
noted that the final column indicated the funds were being
added instead of reduced. He asked if it was an error.
Co-Chair Johnson wanted to get through the report and
return to questions afterwards.
10:27:39 AM
Mr. Henderson spoke to the change on page 5 where
$18,416,000 was removed [from AMHS]. The amount of federal
funding that would be received during the 2023 calendar
year was not yet known. Additionally, the FY 22
expenditures were not yet known and there could be some
carry forward funding available for use in FY 23. The item
had been removed at present, but it could be added by the
other body and taken up in conference committee if
additional clarification was received pertaining to the
federal funding.
Representative Ortiz surmised the effect of the item was to
potentially remove funds from federal receipts to the
Marine Highway Fund. He asked for verification it would be
another tap on the Marine Highway Fund if it was carried
out.
Mr. Painter replied that the governor's item would be. He
stated, "this is not included." He stated that the federal
receipts were not realizable based on the "application
federal government." The governor proposed to replace
federal funding with Marine Highway funds. He clarified
that the amendment did not address AMHS fund sources.
10:29:28 AM
AT EASE
10:42:35 AM
RECONVENED
Co-Chair Johnson requested an explanation of page 6 of the
handout [pertaining to Amendment Sup 4].
Mr. Henderson showed the removal of $2.8 million UGF
[pertaining to the Clean Air Protection Fund]. He explained
the item had previously been funded with COVID-19 funds. He
detailed that an established fee schedule had been halted
due to COVID. The department had reestablished the fee
schedule and planned to start collecting funds from
permittees during FY 24 to capitalize the [Clean Air
Protection] fund.
Representative Josephson asked if the item was related to
cruise ships. Additionally, he assumed the increment
protected clean air and asked if it would be funded at $2.8
million.
Mr. Painter responded that the item did not pertain to
cruise ships. The funding pertained to air quality permits
for permittees. He explained that the fund was required for
the state to have primacy over the Air Quality Program. An
updated fee schedule had been rolled out in 2020, but when
the COVID pandemic hit, the schedule had been suspended.
There was currently a -$2.8 million balance in the fund.
The item in the governor's budget would bring the balance
to $0. The effect of not adding the item would mean the
negative balance would have to be made up with increased
fees in future years.
10:45:31 AM
Co-Chair Johnson believed Representative Ortiz may have a
conceptual amendment.
10:46:06 AM
AT EASE
10:47:08 AM
RECONVENED
Co-Chair Johnson remarked that they were running overtime.
Representative Ortiz understood but stressed that what
happened to AMHS was important and he believed it merited
the time.
Representative Ortiz requested to hear from Mr. Steininger.
10:47:50 AM
AT EASE
10:50:07 AM
RECONVENED
Representative Ortiz MOVED to ADOPT conceptual Amendment 1
to Amendment Sup 4. The amendment would replace $18,416,300
in federal receipts with the same amount coming from the
Marine Highway Fund. The result would include the item in
the budget moving forward.
Co-Chair Foster stated his understanding that the
conceptual amendment would move the $18 million in federal
receipts to the Marine Highway Fund (DGF). He thought
Representative Ortiz had intended to use a UGF fund source.
He asked for clarification.
10:51:21 AM
AT EASE
10:51:40 AM
RECONVENED
Co-Chair Johnson asked to hear from Mr. Painter.
Mr. Painter clarified that Amendment Sup 4 did not have any
fund change related to the AMHS. The conceptual amendment
would add a fund change for AMHS. There was currently
nothing in the original amendment dealing with the item.
Co-Chair Foster asked what the [conceptual] amendment would
do.
Mr. Painter explained the conceptual amendment would add a
fund source change from federal receipts to the Marine
Highway Fund. The conceptual amendment would add the item
to Amendment Sup 4.
Representative Stapp OBJECTED. He asked if it was a funding
source change to federal receipts or the Marine Highway
Fund.
Mr. Painter clarified that the fund source change would be
from federal receipts to the Marine Highway Fund.
Representative Stapp thought the committee had just
discussed not taking money out of the Marine Highway Fund,
yet the conceptual amendment would take money from the
fund.
Representative Ortiz confirmed that he had concerns about
the Marine Highway Fund based on the fund's balance;
however, currently the federal receipts were not happening.
The funds were intended to go towards AMHS operations and
the fact the funds were not happening was problematic for
AMHS operations. He would support an amendment proposing to
use UGF rather than the Marine Highway Fund. He explained
that the conceptual amendment would at least mean the money
would be there for operations.
10:54:52 AM
Co-Chair Edgmon thought the original amendment proposed to
do what Representative Ortiz's conceptual amendment was
aiming to do.
Mr. Painter clarified that the governor had proposed the
fund source change, but it was not included in Amendment
Sup 4. The conceptual amendment would add the fund source
change to the original amendment.
Co-Chair Edgmon requested an at ease.
10:55:54 AM
AT EASE
10:59:09 AM
RECONVENED
Representative Ortiz provided a wrap up on conceptual
Amendment 1 to Amendment Sup 4. His intent was to try to
ensure the resources were available in order for AMHS to
operate its schedule. He underscored the importance of AMHS
to his constituents. The ferry system operated as a highway
in Southeast Alaska and enabled communities to get things
from point A to point B.
Representative Stapp MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Galvin, Hannan, Josephson, Edgmon, Johnson
OPPOSED: Stapp, Tomaszewski, Coulombe, Cronk, Foster
The MOTION PASSED (6/5).
[Note: vote rescinded and retaken following an at ease.]
11:02:05 AM
AT EASE
11:03:06 AM
RECONVENED
A roll call vote was taken on the motion to allow Co-Chair
Johnson to rescind her vote on conceptual amendment 1 to
Amendment Sup 4.
IN FAVOR: Stapp, Tomaszewski, Coulombe, Cronk, Galvin,
Hannan, Josephson, Ortiz, Edgmon, Foster, Johnson
OPPOSED:
The MOTION PASSED (11/0).
A roll call vote was taken on the motion to adopt
conceptual Amendment 1 to Amendment Sup 4.
IN FAVOR: Galvin, Hannan, Josephson, Ortiz, Edgmon
OPPOSED: Tomaszewski, Coulombe, Cronk, Stapp, Foster,
Johnson
The MOTION to adopt conceptual Amendment 1 to Amendment Sup
4 FAILED (5/6).
Representative Hannan asked if Amendment Sup 4 was
incorporated into the bill if it meant the bills would need
to be revised because the page numbers would change.
Co-Chair Johnson answered there would be conforming changes
made to include the amendment in the operating budget. She
asked Mr. Painter to respond.
Mr. Painter responded that the last motion [when the bills
were reported from committee] would be to give Legislative
Legal Services and LFD the ability to make technical and
conforming changes. He explained that renumbering in order
to add items was one of those changes.
Representative Hannan asked if any of the other amendments
submitted would have to be redone if Amendment Sup 4 were
incorporated into the bill.
Co-Chair Johnson answered in the negative. She clarified
that the amendment numbering had not changed.
11:06:38 AM
Co-Chair Johnson asked if there was any further discussion
on Amendment Sup 4.
Representative Hannan was concerned that Amendment Sup 4
did not address the predicted cost overrun for AMHS. She
detailed that the AMHS funding cycle had shifted from a
fiscal year to a calendar year schedule. She thought the
hollow federal receipt authority would result in a cost
overrun and potential ferry shutdown early on in the summer
season. She did not support the amendment without
addressing the ability for the AMHS to function for the
remainder of 2023.
A roll call vote was taken on the motion to adopt Amendment
Sup 4.
IN FAVOR: Stapp, Tomaszewski, Coulombe, Cronk, Josephson,
Foster, Edgmon, Johnson
OPPOSED: Ortiz, Galvin, Hannan
The MOTION PASSED (8/3). There being NO further OBJECTION,
Amendment Sup 4 was ADOPTED.
HB 39 was HEARD and HELD in committee for further
consideration.
HB 41 was HEARD and HELD in committee for further
consideration.
Co-Chair Johnson reviewed the schedule for the afternoon
meeting.
ADJOURNMENT
11:10:00 AM
The meeting was adjourned at 11:09 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 39 HB 41 Op Budget Language Amendments PKT 1 032723.pdf |
HFIN 3/27/2023 9:00:00 AM |
HB 39 HB 41 |
| HB 39 HB 41 Op Budget Supplemental Amendments PKT 2 032723.pdf |
HFIN 3/27/2023 9:00:00 AM |
HB 39 HB 41 |
| HB 39 HB 41 Op Budget Numbers Amendments PKT 3 032723.pdf |
HFIN 3/27/2023 9:00:00 AM |
HB 39 HB 41 |
| HB 39 Op Budget Lang Amd #5 Backup Hannan 032723.pdf |
HFIN 3/27/2023 9:00:00 AM |
HB 39 |