Legislature(2017 - 2018)HOUSE FINANCE 519

05/02/2017 01:30 PM House FINANCE

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

Document Name Date/Time Subjects
SB 107 Sponsor Statement version A 04.13.2017.pdf HFIN 5/2/2017 1:30:00 PM
SB 107
2017_02-EffectOfAlaskaFiscalOptionsOnChildrenAndFamilies.pdf HFIN 5/2/2017 1:30:00 PM
HFIN Children's Trust
Northern Economics Final+Letter+Report- HFIN 5-2-17 040717.pdf HFIN 5/2/2017 1:30:00 PM
Summary 2017_02-EffectOfAlaskaFiscalOptionsOnChildrenAndFamilies_summary.pdf HFIN 5/2/2017 1:30:00 PM
HFIN Summary Children's Trust
HFC Foraker Group 5-2-17 final share pptx.pdf HFIN 5/2/2017 1:30:00 PM
ACT Testimony1.pdf HFIN 5/2/2017 1:30:00 PM
Kaplan 2017_05_01_13_18_32.pdf HFIN 5/2/2017 1:30:00 PM
HFIN Fiscal Ploicy Kaplan