Legislature(2017 - 2018)HOUSE FINANCE 519

03/10/2017 08:30 AM FINANCE

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Audio Topic
08:33:54 AM Start
08:34:37 AM HB57 || HB59
09:26:27 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued from 3/9/17 1:30 Meeting --
+= HB 57 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Moved CSHB 57(FIN) Out of Committee
+= HB 59 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Moved CSHB 59(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
May recess to Sunday 3/12/17 at 12:00 PM, if
necessary
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 10, 2017                                                                                            
                         8:33 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
8:33:54 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Seaton called the House Finance Committee meeting                                                                      
to order at 8:33 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Louise Stutes; Representative Gary Knopp                                                                         
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 57     APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          CSHB 57(FIN) was REPORTED out of committee with a                                                                     
          "do pass" recommendation.                                                                                             
                                                                                                                                
HB 59     APPROP: MENTAL HEALTH BUDGET                                                                                          
                                                                                                                                
          CSHB 59(FIN) was REPORTED out of committee with a                                                                     
          "do pass" recommendation.                                                                                             
                                                                                                                                
Co-Chair Seaton addressed the agenda for the meeting.                                                                           
                                                                                                                                
HOUSE BILL NO. 57                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;   repealing    appropriations;   making                                                                    
     supplemental  appropriations and  reappropriations, and                                                                    
     making  appropriations  under   art.  IX,  sec.  17(c),                                                                    
     Constitution  of   the  State   of  Alaska,   from  the                                                                    
     constitutional budget  reserve fund; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
HOUSE BILL NO. 57                                                                                                             
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;   repealing    appropriations;   making                                                                    
     supplemental  appropriations and  reappropriations, and                                                                    
     making  appropriations  under   art.  IX,  sec.  17(c),                                                                    
     Constitution  of   the  State   of  Alaska,   from  the                                                                    
     constitutional budget  reserve fund; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
8:34:37 AM                                                                                                                    
                                                                                                                                
Co-Chair  Foster  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute  for   HB  57   (FIN),  Work   Draft  30-GH1855\N                                                                    
(Wallace, 3/9/17).                                                                                                              
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
Representative Wilson spoke to  her objection. She had known                                                                    
that  all of  the amendments  she put  forward would  not be                                                                    
adopted. She  shared that  she had offered  a number  of the                                                                    
amendments  because she  believed  the  committee needed  to                                                                    
have  some discussions.  She elaborated  that the  committee                                                                    
needed  to  discuss  government's  role and  how  much  they                                                                    
should be  funding each area.  She stated it was  not merely                                                                    
about the programs, but about  how many things the state had                                                                    
started paying  for that  had initially  been paid  for with                                                                    
federal funds  or because Alaska  was a small state  and had                                                                    
not had some  of the organizations able to meet  some of the                                                                    
needs. She underscored that it  was no longer the situation.                                                                    
She  continued  that  the  state   had  urban  areas,  great                                                                    
nonprofits,  and ways  of raising  funds that  had not  been                                                                    
present in  the past. She  relayed that the  current version                                                                    
of  the budget  was  larger  than it  had  been  a few  days                                                                    
earlier.  She   thought  the  state   would  never   have  a                                                                    
sustainable budget with additional  spending. She stated the                                                                    
legislature  was  presently  talking about  an  income  tax,                                                                    
motor  fuel tax,  and  other  to fill  the  budget gap.  She                                                                    
stressed  that  the  Permanent  Fund  had  been  taken  from                                                                    
Alaskans  the previous  year and  the current  bill proposed                                                                    
taking it again.  She stated the bill would  take $4 billion                                                                    
from the  Permanent Fund earnings  reserve. She  reasoned it                                                                    
was not  only about the  $4 billion, but about  the earnings                                                                    
the  fund would  no longer  receive because  of taking  more                                                                    
than necessary from the reserve.                                                                                                
                                                                                                                                
Representative Wilson  believed the  budget showed  that the                                                                    
legislature  would  prefer  to  drain  the  highest  earning                                                                    
savings  account instead  of using  an  account that  earned                                                                    
little  to no  interest.  She surmised  that  at some  point                                                                    
there would  only be one other  way to get the  money - from                                                                    
the people - when savings  could have been earning the money                                                                    
instead. She  would prefer  to utilize  the earnings  off of                                                                    
its   savings  versus   taxing  hardworking   Alaskans.  She                                                                    
reasoned that  Alaskans were contributing to  nonprofits and                                                                    
schools. She reiterated she  had offered numerous amendments                                                                    
because there  was much discussion  the committee  needed to                                                                    
have. She  spoke about the  new amendment process  and noted                                                                    
members had been told much  of the discussion would occur in                                                                    
the  committee  process  instead of  in  subcommittees.  She                                                                    
emphasized  that  the  discussion   had  not  occurred.  She                                                                    
referenced a  previous discussion  about whether  a forester                                                                    
position  in  Haines  was  needed.  She  believed  the  real                                                                    
question was  what had happened  to the timber  receipts and                                                                    
timber economy  in Haines, Ketchikan,  and other  areas that                                                                    
previously had  sawmills. She spoke to  economic development                                                                    
in  the  timber,  mining, oil,  and  other  industries.  She                                                                    
stressed  it was  the way  to fill  the fiscal  gap, not  by                                                                    
taxing or creating a larger  deficit. She was not supportive                                                                    
of the budget.                                                                                                                  
                                                                                                                                
8:39:03 AM                                                                                                                    
                                                                                                                                
Vice-Chair Gara  thought the numbers were  very difficult to                                                                    
understand for people not sitting  on the finance committee.                                                                    
He  believed  one  of  the media  outlets  had  been  having                                                                    
trouble with the  issue. He clarified that  the current bill                                                                    
continued to cut the budget.  He relayed that the budget was                                                                    
down  almost  $3.5  billion  since  2013.  He  compared  the                                                                    
current  budget to  the governor's  vetoed  budget from  the                                                                    
previous  year  (noting  that  the  governor  had  vetoed  a                                                                    
significant amount)  and relayed agency spending  of general                                                                    
funds was down  by $61 million. He thought one  of the media                                                                    
reports  had  mistakenly  reported  it as  an  increase.  He                                                                    
reasoned  that  statewide  spending   could  not  really  be                                                                    
controlled in terms of retirement,  and school bond debt was                                                                    
down  $81 million  in general  funds. He  did not  think the                                                                    
legislature could  play the  game of  comparing unrestricted                                                                    
general  funds  (UGF)  and designated  general  funds  (DGF)                                                                    
because the  fund sources had  been used  interchangeably in                                                                    
the  past  couple years.  He  continued  that the  preceding                                                                    
year, to reduce the appearance  of the use of general funds,                                                                    
designated  general funds  from  the  Higher Education  Fund                                                                    
were used  to fund the  retirement debt. He  reiterated that                                                                    
overall state general funds were  down $61 million in agency                                                                    
spending and $81 million in statewide items.                                                                                    
                                                                                                                                
Co-Chair Seaton corrected that the  statewide total was down                                                                    
$20  million.   The  total  reduction  between   agency  and                                                                    
statewide operations was $81 million.                                                                                           
                                                                                                                                
Vice-Chair Gara  appreciated the  correction as he  had been                                                                    
referencing the  wrong line in  his document.  He reiterated                                                                    
that the total  general fund spending was  down $81 million.                                                                    
He  concluded that  anyone  who  wanted to  argue  it was  a                                                                    
budget increase was  not using the numbers.  He believed the                                                                    
important question was how the  budget was impacting humans,                                                                    
children, and seniors. He underscored  that without a fiscal                                                                    
plan, classroom  funding would remain  flat. He had  heard a                                                                    
comment  that  education  funding   had  increased,  but  he                                                                    
countered that  the increase related to  debt service, pupil                                                                    
transportation,   and  retirement   payments  owed   in  the                                                                    
Teachers' Retirement  System (TRS).  He emphasized  that the                                                                    
money  going  to  classrooms  was   down  over  $20  million                                                                    
compared to  several years earlier.  He continued  that many                                                                    
legislators  would  like to  get  to  a point  where  school                                                                    
funding  would be  aligned  with actual  costs  in order  to                                                                    
avoid  teacher  layoffs.  He  hoped  to  get  there  by  the                                                                    
following year; however, a fiscal  plan was needed. He noted                                                                    
that  Representative  Wilson  wanted a  smaller  budget  and                                                                    
furthered that even  if the committee had  adopted every one                                                                    
of  her  proposed  amendments,   the  state's  savings  were                                                                    
disappearing. He  believed the amendments  merely rearranged                                                                    
the  budget  components,  but  the  attempt  ultimately  was                                                                    
futile.  He elaborated  that within  two  years the  state's                                                                    
savings would be depleted.                                                                                                      
                                                                                                                                
Vice-Chair  Gara expounded  that without  a fiscal  plan the                                                                    
budget would require the use  of the earnings reserve, which                                                                    
would mean at some point there  was no money for a dividend.                                                                    
He stressed that the proposed budget  was part of a plan. He                                                                    
supported  finding rational  cuts  to the  budget, which  he                                                                    
believed   the  current   budget  did.   He  addressed   the                                                                    
Department   of  Health   and  Social   Services  that   was                                                                    
responsible  for   caring  for  seniors,   abused  children,                                                                    
disabled  individuals,  and  other.  He  stressed  that  the                                                                    
agency had been  cut by $30 million. He stated  that at some                                                                    
point inflation would  need to be recognized.  He added that                                                                    
it  had been  factored in  the budget  process up  to a  few                                                                    
years  back.  He  underscored  that at  some  point  it  was                                                                    
necessary to  fund schools and  the University.  He remarked                                                                    
that cuts  to the University  were hindering its  ability to                                                                    
bring in grant funding. He reasoned  that it did not work to                                                                    
provide  inadequate education  to a  child in  fourth grade,                                                                    
while  planning  to get  them  the  education they  deserved                                                                    
later  on. He  emphasized that  it was  not possible  to fix                                                                    
what had  been lost  in fourth grade.  He spoke  to attempts                                                                    
made by others to cut pre-K.  He stated the public had asked                                                                    
the legislature to spend money  on programs that worked, but                                                                    
not  on programs  that did  not  work. He  relayed that  the                                                                    
evidence was  that pre-K worked.  He stated that if  a child                                                                    
was lost  by third grade,  significant money would  be spent                                                                    
to get less  achievement and success. He detailed  that if a                                                                    
child was caught up, they succeeded.                                                                                            
                                                                                                                                
Vice-Chair  Gara continued  to  discuss cuts  that had  been                                                                    
proposed  to   things  like  suicide   prevention,  domestic                                                                    
violence shelters,  homeless shelters  for youths,  and food                                                                    
banks. He  stressed that  at some point  the cuts  would rip                                                                    
apart  the fabric  of society.  He continued  that the  cuts                                                                    
would rip apart the contract  between the well off and those                                                                    
who  lived  with difficulty.  He  stated  that the  proposed                                                                    
budget  kept the  contract together  even with  budget cuts.                                                                    
The  proposed budget  strategically  made cuts  and did  not                                                                    
merely  cut for  the sake  of cutting.  He believed  cutting                                                                    
domestic violence  shelters and education qualified  as cuts                                                                    
for  the  sake  of  cutting.  He  stressed  the  legislature                                                                    
represented the people - human  beings who deserve the right                                                                    
to  opportunity and  dignity. He  specified that  the budget                                                                    
did what it  could with the money available.  He reasoned it                                                                    
was also necessary  to consider what the budget  would do to                                                                    
the  economy. He  stated that  the Institute  of Social  and                                                                    
Economic Research (ISER) had  indicated that cutting another                                                                    
$1 billion from  the budget meant 15,000  public and private                                                                    
sector  jobs would  be lost.  He noted  that 9,000  jobs had                                                                    
already been  lost in  the past year.  He believed  the cuts                                                                    
would extend the  current recession for three  to ten years.                                                                    
He  reiterated his  concerns about  cuts.  He remarked  that                                                                    
parents  would  decide they  did  not  want to  raise  their                                                                    
children in  schools with  dramatically reduced  budgets. He                                                                    
believed  the legislature  needed to  get serious  about the                                                                    
issue. He stated  the arbitrary cuts that  would harm people                                                                    
had been  debated by the  committee for days. He  added that                                                                    
some of  the proposed  cuts in amendments  had been  cuts to                                                                    
positions that had  already been cut and  would therefore be                                                                    
a   double  cut,   which  had   been  communicated   by  the                                                                    
Legislative  Finance  Division  and agencies.  He  concluded                                                                    
that  the  current budget  was  rational  and minimized  the                                                                    
harm.  He  stated  it  was  not  the  legislature's  job  to                                                                    
maximize the harm.                                                                                                              
                                                                                                                                
Co-Chair  Seaton reviewed  the  handouts  in member  packets                                                                    
(copies on  file). He  advised members  to notice  that some                                                                    
handouts  pertained  to  UGF   and  others  to  GF-only.  He                                                                    
recognized Representative Louise Stutes in the audience.                                                                        
                                                                                                                                
8:51:17 AM                                                                                                                    
                                                                                                                                
Representative  Pruitt  asked   whether  the  committee  was                                                                    
speaking to  the objection to the  adoption of the CS  or if                                                                    
it was the final discussion.                                                                                                    
                                                                                                                                
Co-Chair Seaton answered it was the final discussion.                                                                           
                                                                                                                                
Representative   Pruitt   commented   that   it   had   been                                                                    
fascinating  "sitting  over  on  this  side  of  the  budget                                                                    
discussion  this year."  He acknowledged  co-chairs for  the                                                                    
respectfulness   they   had    shown   during   the   budget                                                                    
subcommittee   process.   Additionally   he   credited   the                                                                    
departments. He explained  that in the majority  of cases in                                                                    
the current budget, the reductions  had been brought forward                                                                    
by the agencies  as opposed to the  legislature. He provided                                                                    
the  Department  of  Transportation  and  Public  Facilities                                                                    
(DOT) as an  example and noted the  legislature had actually                                                                    
increased  the DOT  budget above  the  agency's request.  He                                                                    
wanted  to  make sure  to  give  agencies the  credit  where                                                                    
credit was due.                                                                                                                 
                                                                                                                                
Representative  Pruitt  spoke  to  his  concerns  about  the                                                                    
current budget. He  discussed that there had  been work done                                                                    
by the  agencies and the  House Finance Committee.  He added                                                                    
that  overall the  committee  had  increased the  governor's                                                                    
proposed budget. He  did not believe the  current budget was                                                                    
aligned  with  the  public's  desires.  He  pointed  to  the                                                                    
decision to use a substantial  portion of the Permanent Fund                                                                    
earnings reserve  account to fund  the budget and  set aside                                                                    
for  other things.  He  recalled knocking  on  doors in  his                                                                    
district and  relayed there  were people  who would  like to                                                                    
see government cut to the  exact amount of revenue coming in                                                                    
and  who did  not support  any  use of  the Permanent  Fund.                                                                    
However, there were  numerous people who fell  in the middle                                                                    
- people  who understood that  the reserve account  may need                                                                    
to be  accessed, but who  were distrusting of the  way money                                                                    
was currently  being spent on  government. He  believed that                                                                    
with substantial  revenue reductions, many  individuals were                                                                    
asking for  something they could  point to. He did  not know                                                                    
that  a  1  percent   reduction  to  agency  operations  was                                                                    
significant  enough. He  recognized  there was  also a  debt                                                                    
service component as well.                                                                                                      
                                                                                                                                
Representative    Pruitt   continued    that   under    fund                                                                    
capitalization,  the committee  had reduced  what it  had to                                                                    
pay on tax credits, which did  not mean the tax credits were                                                                    
not  still owed.  Additionally,  it meant  state could  find                                                                    
itself in  a position where  the companies were going  to be                                                                    
taken over by  the people who invested  money. He elaborated                                                                    
that New  York agencies could potentially  own the companies                                                                    
and substantial  amounts of  the state's  debt. He  noted he                                                                    
had  mentioned credit  ratings and  had been  told that  the                                                                    
state was not  going to borrow any money.  He countered that                                                                    
most of the  time the state did not believe  it was going to                                                                    
borrow money,  but then  something came  along like  a large                                                                    
gasline  that the  state did  not  have the  credit for.  He                                                                    
believed  the  legislature needed  to  be  cognizant of  the                                                                    
state's credit if the conversation was going to continue.                                                                       
                                                                                                                                
Representative   Pruitt   was   very  concerned   that   the                                                                    
legislature was making policy in  the budget by not having a                                                                    
discussion and settlement on how  to provide the sustainable                                                                    
revenue approach. He continued  that instead, the policy had                                                                    
been  inserted  into the  budget  ad  hoc. He  believed  the                                                                    
strategy  differed   from  the   request  of   the  business                                                                    
community that was  asking for a stable  approach. He wanted                                                                    
to settle the issue in  a committee discussion and align the                                                                    
budget in conference committee.                                                                                                 
                                                                                                                                
Representative Pruitt had been  very surprised there was not                                                                    
a single thing the Republican  Minority could offer that the                                                                    
House  Majority could  support. He  stated the  Majority had                                                                    
proven to the  public that the two sides did  not get along.                                                                    
He remarked  that the Minority  had been told  no repeatedly                                                                    
without  conversation.  He commended  Representative  Wilson                                                                    
for doing  the work that she  did. He believed she  had done                                                                    
what she  had been instructed  to do  - to look  at surgical                                                                    
cuts.  He  added that  she  had  not offered  amendments  in                                                                    
subcommittee  because members  had been  told they  were not                                                                    
allowed  to. He  continued that  members had  been told  the                                                                    
only  thing that  would be  discussed was  programs, but  no                                                                    
programs had  been cut during the  subcommittee process, and                                                                    
programs  offered  in the  full  committee  had been  turned                                                                    
down.  He stated  they [the  Minority] had  offered surgical                                                                    
cuts  to the  full finance  committee and  not a  single one                                                                    
could  be entertained.  He stressed  that at  some point  in                                                                    
time the House Majority would  need the Minority because the                                                                    
budget  could not  ultimately pass  without  their help.  He                                                                    
asked why none  of the amendments had  even been considered.                                                                    
He  remarked there  had been  $30  increments proposed  that                                                                    
would  merely go  back  to 2016.  He had  wanted  to have  a                                                                    
strategic conversation, but that had not occurred.                                                                              
                                                                                                                                
Representative Pruitt  appreciated proving the  public right                                                                    
- that  there was no  bipartisanship in the  legislature. He                                                                    
noted  he   had  voted  in   support  of   several  Majority                                                                    
amendments.   He  reiterated   that   there   had  been   no                                                                    
conversation or debate about the  amendments proposed by the                                                                    
Minority.  He was  frustrated and  believed he  was speaking                                                                    
for  numerous people  in the  public. He  stated the  public                                                                    
wanted  the  legislature  to  cut the  budget  and  to  work                                                                    
together. He agreed that the  public did not want the budget                                                                    
to  harm people.  He  stressed that  the  public wanted  the                                                                    
legislature  to  accept  the  reality  that  the  Alaska  of                                                                    
tomorrow  would  differ from  the  Alaska  of the  past.  He                                                                    
underscored  that if  the legislature  could  not adjust  to                                                                    
that  reality it  would saddle  the next  generation with  a                                                                    
debt  it could  not pay.  He restated  his objection  to the                                                                    
current version of the budget  and noted that a conversation                                                                    
had not occurred.                                                                                                               
                                                                                                                                
9:02:04 AM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  referred   to  the  spreadsheets                                                                    
provided to  the committee  (copy on  file). He  thanked the                                                                    
previous  chairs  of  the  committee   for  their  work  and                                                                    
remarked there  had been significant budget  reductions over                                                                    
the  past  several  years.  He  acknowledged  Representative                                                                    
Thompson  as   a  former  co-chair  of   the  committee.  He                                                                    
discussed that he  had been on both sides -  in the Minority                                                                    
and  currently in  the Majority  -  and the  work was  never                                                                    
easy.  He recognized  that  even when  the  state had  money                                                                    
there  were   aspects  of  the  budget   process  that  were                                                                    
difficult. He  reiterated that cuts  to the budget  over the                                                                    
years had  been significant.  The current  financial picture                                                                    
was a  result of  how the economy  had been  structured over                                                                    
the  years.  He  reminded  the committee  that  all  of  the                                                                    
amendments over the  years were not a snapshot  in time, but                                                                    
a  result of  something that  had been  put in  place for  a                                                                    
reason - perhaps in times  of financial surplus. He spoke to                                                                    
the   goal    of   increasing   efficiencies    and   making                                                                    
improvements.  He underscored  that the  committee had  done                                                                    
significant work on  the budget over the  years. He recalled                                                                    
working as  a staffer  in the building  when oil  prices had                                                                    
been around  $12 [per barrel]  - the situation had  not been                                                                    
easy.  He  spoke  to  the   importance  of  recognizing  the                                                                    
historic process that  went back much farther  than 2015. He                                                                    
spoke to  necessary considerations about what  the state was                                                                    
required to do, what it should be doing, and other.                                                                             
                                                                                                                                
Representative  Guttenberg   continued  that  some   of  the                                                                    
discussion had  been that it  was very expensive  to provide                                                                    
things in rural Alaska and  that people should move into the                                                                    
urban  areas. He  reasoned  someone  in Seattle,  Washington                                                                    
could  say  the  same  thing about  the  expense  of  living                                                                    
anywhere in Alaska.  He detailed that at the end  of the day                                                                    
the  state  had  vast resources,  distances,  and  different                                                                    
climates, which  were all major considerations.  He spoke to                                                                    
the  importance  of  remembering  those  things  when  going                                                                    
through the  budget process. He emphasized  it was necessary                                                                    
to use all of the  tools available. He acknowledged that the                                                                    
current budget was  difficult and he did  not believe anyone                                                                    
was happy  with all  of its aspects,  but the  committee had                                                                    
kept  some control.  He noted  that merely  keeping up  with                                                                    
inflation was about $250 million  per year, which the budget                                                                    
was far  below. He  thanked everyone  for the  historic work                                                                    
done over time  to get to the current  point. He underscored                                                                    
the  importance of  remembering  how the  state  got to  the                                                                    
current point,  why things  had been done  in the  past, and                                                                    
what  had been  the right  thing to  do. He  wanted to  pass                                                                    
along the lessons of the past into the future.                                                                                  
                                                                                                                                
9:06:41 AM                                                                                                                    
                                                                                                                                
Representative  Grenn thanked  the individuals  who had  put                                                                    
the bill together  and all of the hands  that contributed to                                                                    
the  process. He  thanked the  other  committee members  for                                                                    
their work.  He discussed learning about  the budget process                                                                    
and how contributions from members  provided a more in depth                                                                    
look  at   various  items.  He  spoke   about  learning  how                                                                    
everything  tied together,  priorities, who  the state  took                                                                    
care of  and kept safe.  He thought the current  budget took                                                                    
care of  all Alaskans  and slowly began  to steer  the state                                                                    
towards  a  bright  future. Additionally,  he  believed  the                                                                    
budget showed  that the legislature  could deal  with crises                                                                    
in  a smart,  caring, and  hardworking way.  He opined  that                                                                    
Alaskans would be  thankful they would be taken  care of and                                                                    
would be part of something  great for the state's future. He                                                                    
believed he could go back to  his community and say that the                                                                    
legislature was  working for the  betterment of  everyone in                                                                    
the  state. He  reiterated his  thanks to  committee members                                                                    
and  shared that  he was  proud to  vote in  support of  the                                                                    
budget.                                                                                                                         
                                                                                                                                
Co-Chair Seaton recognized Representative  Gary Knopp in the                                                                    
audience.                                                                                                                       
                                                                                                                                
9:09:46 AM                                                                                                                    
                                                                                                                                
Representative   Tilton   thanked   some  of   the   finance                                                                    
subcommittee chairs  for the way  they had presented  all of                                                                    
the information.  Although, she noted that  members had been                                                                    
told  what  they  were  not  allowed  to  bring  forward  in                                                                    
subcommittee, which was the reason  the Minority had brought                                                                    
amendments  forward to  the full  committee. She  added that                                                                    
the reporting  of the  vote count  had been  accurate, which                                                                    
she  appreciated. She  also thanked  the agencies  for their                                                                    
work.  She detailed  that the  agencies had  tried to  bring                                                                    
their  receipt authority  closer to  their actuals  in order                                                                    
for  people to  understand  what was  really happening  when                                                                    
looking at budget numbers. She  also thanked the Legislative                                                                    
Finance Division  analysts for working long  hours to answer                                                                    
questions  from the  legislature  as much  as possible.  She                                                                    
understood there was  a desire to minimize  the reduction of                                                                    
the  state employee  headcount,  but she  reasoned that  for                                                                    
many in  the private  sector, keeping their  jobs was  a new                                                                    
bonus.  She stated  that individuals  in the  private sector                                                                    
were happy to have a job.  She relayed that a friend working                                                                    
in the oil  field and he had  taken a 40 percent  pay cut in                                                                    
the past year.  She underscored that he was happy  to have a                                                                    
job and was not asking for a merit increase.                                                                                    
Representative Tilton stated that  her proposal to eliminate                                                                    
the  Serve  Alaska  program was  not  because  she  disliked                                                                    
volunteerism.  She  mentioned  her  volunteer  work  in  her                                                                    
community as a mother. She  believed that the private sector                                                                    
and nonprofits  could take care  of the  responsibility. She                                                                    
stated  the  government  was  taking  money  away  from  the                                                                    
entities.  She  believed  that   forgoing  $1.9  million  in                                                                    
federal grant  money was not compelling  because the private                                                                    
sector and nonprofits  could get the money  and she believed                                                                    
they could  probably do  a better  job distributing  it. She                                                                    
spoke to  the importance  of considering  whether government                                                                    
should  be  providing  a  service   instead  of  asking  how                                                                    
government  could   provide  the  service  better   or  more                                                                    
efficiently.  She  discussed  that   at  the  start  of  the                                                                    
amendment process  the committee  members had  been informed                                                                    
there was significant question about  the validity of the FY                                                                    
16  actual   numbers.  She  and  her   colleagues  had  done                                                                    
significant work  looking back  in the  budget and  had used                                                                    
the  FY 16  numbers. She  asked who  would have  thought the                                                                    
numbers were not  the numbers. She stressed  that the public                                                                    
did not  have access to  analysts and departments  to verify                                                                    
whether the  numbers were real.  She questioned  whether the                                                                    
FY  15 actuals  were real.  She relayed  that dozens  of the                                                                    
Minority amendments had been based on the concept.                                                                              
                                                                                                                                
Representative   Tilton  wondered   why  the   numbers  were                                                                    
sacrosanct  if they  could not  depend on  the actuals.  She                                                                    
believed it may be necessary  to look at how the legislature                                                                    
did  its  budgeting.  She  continued   that  the  amount  of                                                                    
spending  reduced  since  FY   15  was  not  a  particularly                                                                    
compelling  argument because  there was  still a  $3 billion                                                                    
fiscal  gap. He  constituents  were looking  at money  being                                                                    
taken from their pockets. She  did not want to reduce "boots                                                                    
on   the   ground"   for   seniors   or   individuals   with                                                                    
disabilities; however,  she wanted core  government services                                                                    
to be  run more  efficiently. She reasoned  that in  her own                                                                    
business  she made  reductions  when she  did  not have  the                                                                    
money to spend. She had done  more with less many times. She                                                                    
added  that she  had lived  through the  1980s and  had done                                                                    
more  with less  in  her business.  She  stated that  agency                                                                    
operations had been  reduced by $400 million since  FY 13 or                                                                    
$600 million in FY 15.                                                                                                          
                                                                                                                                
Representative  Tilton  referred  to  discussion  about  the                                                                    
realities  of  inflation. She  had  added  a percentage  for                                                                    
inflation  in her  proposed  reductions.  The committee  had                                                                    
also  heard that  $61  million in  agency  spending and  $20                                                                    
million  in   statewide  spending  had  been   reduced.  She                                                                    
stressed  that  the committee  had  not  had the  discussion                                                                    
about the  change of UGF,  DGF, or  the motor fuel  tax. She                                                                    
thanked   members   who   supported  her   intent   language                                                                    
amendments  that   had  passed.  She  believed   the  intent                                                                    
language she  had offered was  a "no-brainer."  She detailed                                                                    
that people had been killed on  the streets in Mat-Su due to                                                                    
a  paused project.  She did  not think  there should  be any                                                                    
arguments  over  rectifying  the situation.  She  emphasized                                                                    
that the  policy related  to the  earnings reserve  that had                                                                    
been  put in  the  budget should  have  been discussed.  She                                                                    
stressed  it  was  a  bigger  discussion.  She  opposed  the                                                                    
budget.                                                                                                                         
                                                                                                                                
Co-Chair   Seaton  wanted   to  make   sure  that   everyone                                                                    
understood  that  he  had requested  the  multi-year  agency                                                                    
summaries in  order for people to  sort out the idea  of UGF                                                                    
and DGF  as if they were  not all money. It  was possible to                                                                    
look  at the  all general  funds  and know  it included  the                                                                    
money the  state had and  all of  the money the  state spent                                                                    
instead of  having some  of it  hidden away  as DGF.  He was                                                                    
pleased that  the spreadsheets were available.  He explained                                                                    
that the totals would show  a restoration of $6.5 million in                                                                    
pupil transportation  funds for the Department  of Education                                                                    
and   Early  Development   and   $1.2   million  for   pre-K                                                                    
representing the philosophies and  priorities of the [House]                                                                    
Majority. He  pointed out  that funds  for wage  freezes had                                                                    
been  backed   out  (because  the  bill   had  not  passed).                                                                    
Additionally,  DGF from  fuel had  been  removed, which  had                                                                    
been put  in the  Department of Public  Safety and  had been                                                                    
moved  to  the  Department   of  Transportation  and  Public                                                                    
Facilities budget. He  detailed that the goal  was to ensure                                                                    
DGF  money was  appropriated  from the  right  place to  the                                                                    
right place. The  use of DGF from the  Higher Education Fund                                                                    
had  also been  taken out  and moved  to UGF.  He elaborated                                                                    
that  the change  made the  budget look  higher, but  it was                                                                    
not; it  was the same amount  of money, but coming  from the                                                                    
appropriate  location. He  hoped that  as the  process moved                                                                    
forward legislators  would look  at the  budgets and  all of                                                                    
the  funds  to see  how  they  were  well managed  and  well                                                                    
designated usage.  He informed members that  the Legislative                                                                    
Finance Division  was preparing  several other  reports that                                                                    
would  be  posted  online  after  the  current  meeting.  He                                                                    
extended thanks  to the division  for all of  its assistance                                                                    
and advice  on crafting  the budget. He  thanked Legislative                                                                    
Legal Services and his staff for their hard work.                                                                               
Representative Foster  MOVED to  report CSHB 57(FIN)  out of                                                                    
Committee  with  individual  recommendations [Note:  it  was                                                                    
subsequently   clarified  that   the  following   roll  call                                                                    
pertained to the adoption of the  CS and not moving the bill                                                                    
from committee].                                                                                                                
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Grenn, Guttenberg, Kawasaki,  Ortiz, Gara, Seaton,                                                                    
Foster                                                                                                                          
OPPOSED: Pruitt, Thompson, Tilton, Wilson                                                                                       
                                                                                                                                
The MOTION PASSED (7/4).                                                                                                        
                                                                                                                                
Representative  Pruitt   noted  that   the  roll   call  had                                                                    
pertained to the adoption of the CS.                                                                                            
                                                                                                                                
Representative Foster  MOVED to  report CSHB 57(FIN)  out of                                                                    
Committee with individual recommendations.                                                                                      
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Guttenberg, Kawasaki, Ortiz,  Gara, Grenn, Foster,                                                                    
Seaton                                                                                                                          
OPPOSED: Pruitt, Thompson, Tilton, Wilson                                                                                       
                                                                                                                                
The MOTION  PASSED (7/4). There being  NO further OBJECTION,                                                                    
CSHB 57(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation.                                                                                                                 
                                                                                                                                
9:24:55 AM                                                                                                                    
                                                                                                                                
Co-Chair   Foster   MOVED   to  ADOPT   proposed   committee                                                                    
substitute  for  HB  59, Work  Draft  30-GH1856\O  (Wallace,                                                                    
3/8/17). There being NO OBJECTION, it was so ordered.                                                                           
                                                                                                                                
Representative Foster  MOVED to  report CSHB 59(FIN)  out of                                                                    
Committee with individual recommendations.                                                                                      
                                                                                                                                
Representative Wilson OBJECTED. She clarified for the                                                                           
record that CSHB 59(FIN) was the mental health budget. She                                                                      
WITHDREW her OBJECTION.                                                                                                         
                                                                                                                                
There being NO further OBJECTION, CSHB 59(FIN) was REPORTED                                                                     
out of committee with a "do pass" recommendation.                                                                               
                                                                                                                                
9:25:54 AM                                                                                                                    
                                                                                                                                
Co-Chair Seaton spoke to the schedule for the following                                                                         
week.                                                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
9:26:27 AM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 9:26 a.m.                                                                                          

Document Name Date/Time Subjects
HB 57 LFD Report HCS3 UGF Only.pdf HFIN 3/10/2017 8:30:00 AM
HB 57
HB 57 LFD Report HCS3 Total Funds.pdf HFIN 3/10/2017 8:30:00 AM
HB 57
HB 57 LFD Report HCS3 Gen Funds.pdf HFIN 3/10/2017 8:30:00 AM
HB 57
HB 57 CS WORKDRAFT v.N 3.9.17.pdf HFIN 3/10/2017 8:30:00 AM
HB 57
HB 59 WORKDRAFT v.O 3.9.17.pdf HFIN 3/10/2017 8:30:00 AM
HB 59