Legislature(2019 - 2020)ADAMS ROOM 519

02/21/2020 01:30 PM FINANCE

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Audio Topic
01:34:38 PM Start
01:35:36 PM HB205 || HB206 || HB234
01:35:41 PM Governor's Amendments and Supplemental Request Overview: Legislative Finance Division
02:16:38 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+= HB 205 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 206 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
Governor's FY 21 Operating Budget Amendments
Overview by the Legislative Finance Div.
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 234 APPROP:SUPP; REAPPROP; CAP; AMEND; CBR TELECONFERENCED
Heard & Held
Governor's FY 20 Supplemental Budget Amendments
Overview by the Legislative Finance Div.
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 21, 2020                                                                                          
                         1:34 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:34:38 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Foster called the House Finance Committee meeting                                                                      
to order at 1:34 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Co-Chair                                                                                      
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick (via teleconference)                                                                               
Representative Colleen Sullivan-Leonard                                                                                         
Representative Adam Wool                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Cathy Tilton                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Pat Pitney, Director, Legislative Finance Division; Kelly                                                                       
Cunningham, Analyst, Legislative Finance Division.                                                                              
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 205    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
                                                                                                                                
          HB 205 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 206    APPROP: MENTAL HEALTH BUDGET                                                                                          
                                                                                                                                
          HB 206 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 234    APPROP:SUPP; REAPPROP; CAP; AMEND; CBR                                                                                
          HB 234 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
GOVERNOR'S AMENDMENTS AND SUPPLEMENTAL REQUEST OVERVIEW:                                                                        
LEGISLATIVE FINANCE DIVISION                                                                                                    
                                                                                                                                
Co-Chair Foster reviewed the meeting agenda.                                                                                    
                                                                                                                                
HOUSE BILL NO. 205                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain    programs;    capitalizing   funds;    making                                                                    
     appropriations under art.  IX, sec. 17(c), Constitution                                                                    
     of the State of  Alaska, from the constitutional budget                                                                    
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
HOUSE BILL NO. 206                                                                                                            
                                                                                                                                
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
HOUSE BILL NO. 234                                                                                                            
                                                                                                                                
     "An    Act    making    supplemental    appropriations,                                                                    
     reappropriations,  and  other appropriations;  amending                                                                    
     appropriations;     capitalizing      funds;     making                                                                    
     appropriations under art.  IX, sec. 17(c), Constitution                                                                    
     of the State of  Alaska, from the constitutional budget                                                                    
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
1:35:36 PM                                                                                                                    
                                                                                                                                
^GOVERNOR'S AMENDMENTS AND SUPPLEMENTAL REQUEST OVERVIEW:                                                                     
LEGISLATIVE FINANCE DIVISION                                                                                                  
                                                                                                                                
1:35:41 PM                                                                                                                    
                                                                                                                                
PAT   PITNEY,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
provided  a   PowerPoint  presentation   titled  "Governor's                                                                    
Amendments and Supplemental  Request Overview: House Finance                                                                    
Committee,"  dated February  21,  2020 (copy  on file).  She                                                                    
began on slide 2  titled "Governor's Supplemental Requests."                                                                    
The  governor had  proposed $1.117  billion in  unrestricted                                                                    
general  fund   (UGF)  supplemental   requests  for   FY  20                                                                    
including  $271.1 million  operating,  $30 million  capital,                                                                    
and  $815.9 million  for additional  dividend payments  (the                                                                    
dividend  was also  in the  operating budget).  She reported                                                                    
that compared  to FY 19,  the governor's proposed FY  20 UGF                                                                    
supplemental  budget  was  $809 million  higher  and  agency                                                                    
operations  were up  $17.8 million  dollars even  after cuts                                                                    
made  to  the  Alaska  Marine  Highway  System  (AMHS),  the                                                                    
University,  and   the  Department  of  Health   and  Social                                                                    
Services. She explained that the  cuts to the aforementioned                                                                    
items  were offset  by  the  supplemental request  including                                                                    
fire.                                                                                                                           
                                                                                                                                
1:38:26 PM                                                                                                                    
                                                                                                                                
Representative Wool  referenced Ms. Pitney's  statement that                                                                    
the FY  20 budget was  $809 million  higher [than the  FY 19                                                                    
budget]. He asked  how the $815 million  in additional money                                                                    
for an  additional dividend was  accounted for in the  FY 19                                                                    
budget.  He  asked if  the  FY  20  budget was  actually  $6                                                                    
million lower [than  FY 19] if $815 million was  added for a                                                                    
[previous] dividend  and the budget was  $809 million higher                                                                    
[than FY 19].                                                                                                                   
                                                                                                                                
Ms. Pitney replied  that she would answer  the question with                                                                    
a following spreadsheet.                                                                                                        
                                                                                                                                
Representative  LeBon   considered  a  scenario   where  the                                                                    
governor's supplemental  request of  $815.9 million  for the                                                                    
2019  dividend was  paid with  an additional  draw from  the                                                                    
Permanent Fund Earnings Reserve  Account (ERA). He asked Ms.                                                                    
Pitney if  she had an  opinion on the  Constitutional Budget                                                                    
Reserve  (CBR)  balance  at  $491 million  and  its  use  of                                                                    
working capital for the state operating budget.                                                                                 
                                                                                                                                
Ms. Pitney answered  that the projected CBR  balance of less                                                                    
than $500  million was very  risky for the state  because it                                                                    
was  the  only  remaining   reserve  account  that  was  not                                                                    
expected to be  a source of ongoing revenue.  She added that                                                                    
the governor's  proposal for an  additional $815  million to                                                                    
go  to the  [2019]  dividend would  overdraw  the POMV.  She                                                                    
added that the reduction in  the CBR was other spending. She                                                                    
elaborated that in addition to  the significant depletion of                                                                    
the CBR,  the budget required  an overdraw of the  POMV from                                                                    
the  Permanent Fund.  The  POMV was  anticipated  to be  the                                                                    
ongoing  revenue  stream.  Overdrawing the  POMV  just  once                                                                    
would cost the state $40 million annually in POMV revenue.                                                                      
                                                                                                                                
1:41:17 PM                                                                                                                    
                                                                                                                                
Co-Chair  Johnston stated  her  understanding  that for  the                                                                    
state's daily cash  management needs the balance  in the CBR                                                                    
should be $400 million to $500 million.                                                                                         
                                                                                                                                
Ms. Pitney  replied that  the treasury  put money  into cash                                                                    
management  when  the General  Fund  was  at or  below  $400                                                                    
million. She explained that perhaps  the treasury would draw                                                                    
on  the  CBR  at  that  amount  or  take  a  draw  from  the                                                                    
anticipated POMV appropriation. The  threshold used was $400                                                                    
million.  She noted  that  the treasury  drew  from the  CBR                                                                    
often in chunks of $400 million to $500 million.                                                                                
                                                                                                                                
Co-Chair Johnston  stated it was her  understanding that the                                                                    
POMV draw  from the  Permanent Fund  happened earlier  - she                                                                    
believed the  money had  been taken  since March.  She asked                                                                    
for verification  that it became  more difficult  to balance                                                                    
cash management  during closeout from  one year to  the next                                                                    
and  sometimes  there was  a  spiked  to a  relatively  high                                                                    
period due to a lack of revenue.                                                                                                
                                                                                                                                
Ms. Pitney would have to follow  up on the specifics - there                                                                    
were charts  that showed  when the draws  took place.  A CBR                                                                    
balance  of  below  $500  million  changed  the  flexibility                                                                    
available and all of the money  from POMV would have to come                                                                    
first. The more  money invested and held  with the Permanent                                                                    
Fund or the  more money invested in the CBR,  the more money                                                                    
the  dollars  earned. The  existing  asset  was being  drawn                                                                    
down,  which   took  away  its   ability  to   earn  dollars                                                                    
throughout the year.                                                                                                            
                                                                                                                                
Co-Chair  Johnston stated  it was  her understanding  it was                                                                    
not clear  that unstructured draws  could be taken  from the                                                                    
ERA to use as it as  a cash management system similar to how                                                                    
the  CBR  had been  used.  She  asked  if Ms.  Pitney  would                                                                    
suggest  the  legislature  obtain  a legal  opinion  on  the                                                                    
issue.                                                                                                                          
                                                                                                                                
Ms. Pitney replied that a legal  opinion would be a point of                                                                    
clarification on the issue.                                                                                                     
                                                                                                                                
Co-Chair  Foster   highlighted  that  over  the   years  the                                                                    
legislature had been told that  the CBR balance should be at                                                                    
least  $1 billion.  More recently  the legislature  had been                                                                    
told  $400  million  was  part   of  a  MOU  [memorandum  of                                                                    
understanding]  and  was  an absolute  minimum  balance.  He                                                                    
noted that the  $400 million number was  not necessarily the                                                                    
minimum recommended.  He asked  if the  $400 million  was in                                                                    
the MOU.                                                                                                                        
                                                                                                                                
1:45:38 PM                                                                                                                    
                                                                                                                                
Ms. Pitney answered the $400  million was the point that the                                                                    
treasury made certain there where  funds in the General Fund                                                                    
to account  for the  cashflow. The MOU  did not  address the                                                                    
CBR balance. The memorandum directed  borrowing from the CBR                                                                    
if the  treasury balance fell  below $400 million  to ensure                                                                    
there  was always  a minimum  of $400  million in  available                                                                    
assets for the cash management  of the state. She referenced                                                                    
testimony  by Mike  Barnhill (Deputy  Commissioner with  the                                                                    
Department of Revenue) that the  CBR should have the highest                                                                    
minimum balance possible if the  fund was used as an ongoing                                                                    
revenue  stream.  She  relayed  that  until  the  structural                                                                    
deficit was addressed,  having as much money in  the CBR was                                                                    
important. Under  a scenario with no  structural deficit, $1                                                                    
billion  would  be  the   minimum  recommended  balance  (20                                                                    
percent of the state's annual  revenue). She stated that the                                                                    
balance should  be closer to  $1.5 billion to $2  billion on                                                                    
an ongoing basis, based on the size of the state's budget.                                                                      
                                                                                                                                
Representative  Josephson stated  that the  administration's                                                                    
current  position was  that the  money listed  in the  first                                                                    
bullet [on  slide 2]  would be funded  using an  overdraw of                                                                    
the  SB  26  [Permanent  Fund legislation  passed  in  2018]                                                                    
number  and that  the  FY  21 dividend  would  be funded  by                                                                    
drawing down the CBR to $400 million to $500 million.                                                                           
                                                                                                                                
Ms. Pitney replied that the statements were correct.                                                                            
                                                                                                                                
Representative  Knopp  provided  his  understanding  of  Ms.                                                                    
Pitney's  statements. He  asked for  verification that  with                                                                    
the supplementals  the FY 20  budget was higher than  all of                                                                    
the FY 19 actuals, even with the vetoes.                                                                                        
                                                                                                                                
Ms. Pitney agreed.                                                                                                              
                                                                                                                                
Representative   Knopp  asked   for  verification   that  it                                                                    
included all of  the vetoes and not just the  AMHS. He asked                                                                    
if the FY 20 budget was $17.8 million higher than FY 19.                                                                        
                                                                                                                                
Ms. Pitney referred  to a table showing a  UGF comparison on                                                                    
slide  4. She  pointed  to the  $5.8 billion  appropriations                                                                    
total for  FY 19 in the  first column. The governor's  FY 20                                                                    
proposal including  the supplementals was $6.6  billion. She                                                                    
looked  at column  1,  line 7  and  highlighted that  agency                                                                    
operations totaled $3.9  billion in FY 19. Column  2, line 7                                                                    
showed  an FY  20  agency operations  total  of $4  billion.                                                                    
There  was a  reduction in  statewide items  associated with                                                                    
community  assistance, school  debt  reimbursement, and  oil                                                                    
tax credits. The largest increase  was the additional PFD of                                                                    
$815 million shown  in column 2, line 16. Column  4, line 13                                                                    
showed  a total  Permanent Fund  difference of  $932 million                                                                    
from  FY  19 to  FY  20.  Column 4,  row  5  showed a  total                                                                    
appropriations difference of  $809 million from FY  19 to FY                                                                    
20.                                                                                                                             
                                                                                                                                
1:51:25 PM                                                                                                                    
                                                                                                                                
Ms. Pitney turned to a  table titled "Short Fiscal Summary -                                                                    
FY20 with  Governor's Supps/FY21 Governor's  Amended Budget"                                                                    
(reflecting   all  funds)   on   slide  3.   Prior  to   the                                                                    
supplementals the  FY 20 ending  value was over  $2 billion.                                                                    
The  FY  21  balance  had  been  projected  at  nearly  $600                                                                    
million, but the  number had declined to  $491 million under                                                                    
the governor's proposal.                                                                                                        
                                                                                                                                
1:52:12 PM                                                                                                                    
                                                                                                                                
Ms. Pitney turned  to a bar chart on slide  5 reflecting UGF                                                                    
revenue and  budget with a  bar chart. The green  portion of                                                                    
the chart  reflected traditional  oil-based revenue  and the                                                                    
gray portion  represented the  POMV draw  from the  ERA. The                                                                    
light blue  portion of the  chart reflected the  overdraw of                                                                    
the POMV  to cover the  additional dividend included  in the                                                                    
governor's  proposal.  There   were  three  bars  reflecting                                                                    
different  variations of  the FY  20 budget.  The first  bar                                                                    
labeled "FY20"  represented the budget when  the legislature                                                                    
had adjourned special session the  previous summer, with the                                                                    
addition of  the governor's vetoes.  The second  bar labeled                                                                    
"FY20  w/ Gov  Sups thru  2-4"  reflected the  FY 20  budget                                                                    
including  the early  February [2020]  supplemental package.                                                                    
The third  FY 20 bar  labeled "FY20  w/ Gov Sups  thru 2-20"                                                                    
reflected   the  FY   20  budget   with   the  most   recent                                                                    
supplemental request.  She highlighted  the last bar  on the                                                                    
slide showing the governor's FY 21 budget as amended.                                                                           
                                                                                                                                
Representative  Sullivan-Leonard highlighted  a transfer  by                                                                    
the legislature of a little over  $5 billion from the ERA to                                                                    
the corpus of  the Permanent Fund. She asked  where it would                                                                    
appear  on  the  graph  and whether  it  was  considered  an                                                                    
additional ERA draw.                                                                                                            
                                                                                                                                
Ms.  Pitney answered  that the  transfer was  not considered                                                                    
spending. The action reflected the  movement of one asset to                                                                    
another asset or government to government.                                                                                      
                                                                                                                                
Representative  Sullivan-Leonard  considered the  additional                                                                    
ERA draw.  She stated  that the  $815 million  reflected the                                                                    
governor's preexisting desire to fund a full PFD in FY 20.                                                                      
                                                                                                                                
Ms.  Pitney answered  that  the gray  portion  of the  chart                                                                    
represented  the POMV  of  just over  $3  billion. The  blue                                                                    
shaded  area  on the  chart  reflected  the additional  $815                                                                    
million spend proposed by the governor.                                                                                         
                                                                                                                                
Representative  Wool referenced  the  last two  bars on  the                                                                    
right  for  FY  20  with  the supplemental  and  FY  21.  He                                                                    
observed  that the  PFD  was  the same  for  both years  and                                                                    
reflected  a  full statutory  PFD.  He  looked at  the  pink                                                                    
portion  of  the bars  showing  the  net fund  transfer.  He                                                                    
surmised that in FY 20 the PFD  was paid by the ERA draw and                                                                    
in  FY  21  it was  paid  with  a  CBR  draw. He  asked  for                                                                    
verification  that the  pink portion  of the  FY 21  bar was                                                                    
larger because of a larger fund transfer from the CBR.                                                                          
                                                                                                                                
1:56:03 PM                                                                                                                    
                                                                                                                                
Ms.  Pitney  answered  in the  affirmative.  The  governor's                                                                    
proposed  supplemental  budget   would  pay  the  additional                                                                    
dividend  for FY  20 with  funding from  the ERA.  Under the                                                                    
proposed FY 21  budget, the ERA would pay the  PFD first and                                                                    
the remaining funds would pay  for government. She explained                                                                    
that any  remaining needs  would be funded  by the  CBR. She                                                                    
clarified that  FY 20 with  the supplemental  was structured                                                                    
differently than the governor's proposal in FY 21.                                                                              
                                                                                                                                
Co-Chair Foster  knew the  transfer versus  an appropriation                                                                    
was always a  confusing topic. He explained  that paying out                                                                    
a  "payback"  dividend would  be  money  coming out  of  the                                                                    
treasury. Whereas,  a transfer  moved from  one part  of the                                                                    
treasury  to the  other  and was  still  within the  state's                                                                    
purview.                                                                                                                        
                                                                                                                                
Ms. Pitney agreed.                                                                                                              
                                                                                                                                
Ms.  Pitney turned  to slide  6 titled  "FY20 Supps  and CBR                                                                    
Headroom." The  statutory CBR headroom  was $250  million in                                                                    
FY 20.  The governor's recent supplemental  package was $301                                                                    
million and exceeded the headroom by $51 million.                                                                               
                                                                                                                                
Representative  Josephson  asked   why  the  additional  $51                                                                    
million could  not be funded  through the  general treasury.                                                                    
He asked  for verification the  legislature did not  have to                                                                    
get the money from the CBR.                                                                                                     
                                                                                                                                
Ms. Pitney  answered that the  spending amount  had exceeded                                                                    
the  balance in  the  UGF  accounts. The  CBR  was the  most                                                                    
traditional place to cover the $51 million.                                                                                     
                                                                                                                                
Representative  Josephson  stated   that  nothing  had  been                                                                    
appropriated for FY 21 at  present. He thought receipts from                                                                    
royalties and  taxes were coming  in, meaning there  must be                                                                    
some funding in the treasury.                                                                                                   
                                                                                                                                
1:59:51 PM                                                                                                                    
                                                                                                                                
Ms. Pitney returned to slide 4  [column 1, row 1] and looked                                                                    
at revenue available for FY  20 estimated at $5.163 billion.                                                                    
She noted  that all of  the supplementals were FY  20 spend.                                                                    
The operating  budget of $4.5  billion [row 6],  the capital                                                                    
budget,  and   original  dividend  exceeded   the  estimated                                                                    
revenue  amount.  The  $51 million  could  come  from  other                                                                    
accounts  such as  Power Cost  Equalization (PCE)  or Higher                                                                    
Education. She  relayed that other  accounts could  be used,                                                                    
but traditionally the  CBR had been used  when available UGF                                                                    
funds were not sufficient.                                                                                                      
                                                                                                                                
Representative Josephson  understood they were  dealing with                                                                    
an FY  20 issue  and they  were trying to  true up  based on                                                                    
needs that  had arisen. He  asked for verification  that the                                                                    
legislature  was  not required  to  only  spend from  FY  20                                                                    
sources for the FY 20 supplemental.  He asked if by law, the                                                                    
legislature was  to treat the funding  of the bill as  if it                                                                    
were June 30, 2019.                                                                                                             
                                                                                                                                
Ms. Pitney  answered that the committee  was considering two                                                                    
bills  - one  impacted FY  20 and  one impacted  FY 21.  The                                                                    
money appropriated  for FY 20 needed  to fit into the  FY 20                                                                    
revenue stream.  She noted  that if there  were FY  20 items                                                                    
that could be  pushed into FY 21, the  legislature could use                                                                    
FY 21 revenue  as a funding source. Based  on the governor's                                                                    
request,  slide  6  showed FY  20  budget  requirements  for                                                                    
dollars associated with FY 20.                                                                                                  
                                                                                                                                
Co-Chair Foster  stated the items  were all  legitimately FY                                                                    
20 expenses. He  recognized that if there was a  way to push                                                                    
some items to FY 21, it  was a possibility. He reasoned that                                                                    
if an  expense was  from FY 20,  it should be  in the  FY 20                                                                    
supplemental. He  noted that the  CBR headroom cap  was $250                                                                    
million and beyond that amount  a three-quarter vote [by the                                                                    
legislature] was required.                                                                                                      
                                                                                                                                
Co-Chair  Johnston remarked  on  the concept  of mixing  two                                                                    
budget years.  She pointed out  that the legislature  had to                                                                    
wrap  up  its budget  and  audit  it for  the  Comprehensive                                                                    
Annual Financial Report (CAFR).                                                                                                 
                                                                                                                                
2:03:48 PM                                                                                                                    
                                                                                                                                
Ms.  Pitney   moved  to  slide  7   titled  "Gov  Amendments                                                                    
Addressed in Subcommittee." The  slide showed all items that                                                                    
had   been  addressed   in  subcommittee   that  were   also                                                                    
governor's  amendments. She  explained  that  the items  had                                                                    
been taken care  of in the subcommittee process  and did not                                                                    
need to  be taken care  of in  the amendment process  for FY                                                                    
21.                                                                                                                             
                                                                                                                                
KELLY  CUNNINGHAM,  ANALYST, LEGISLATIVE  FINANCE  DIVISION,                                                                    
elaborated  that  slide  7 contained  items  that  could  be                                                                    
accepted  or  denied by  the  committee  going forward.  She                                                                    
reviewed the first  two of seven items listed  on the slide.                                                                    
The  first  item was  a  $17.8  million reduction  from  the                                                                    
Department  of  Corrections  tied  to  the  removal  of  the                                                                    
request for  proposal to  send prisoners  out of  state. The                                                                    
subcommittee had  denied the increment and  the governor had                                                                    
also removed it. Additionally,  the finance subcommittee for                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development  had added  carry forward  language [for  Alaska                                                                    
Oil and  Gas Conservation Commission (AOGCC)  receipts]. She                                                                    
communicated that she was available for questions.                                                                              
                                                                                                                                
Co-Chair  Foster  observed  that the  largest  increment  on                                                                    
slide  7 was  the  reduction  of $17.8  million  due to  the                                                                    
out-of-state  contract  for  prisoners that  was  no  longer                                                                    
going forward.  He observed  that other  items on  the slide                                                                    
reflected smaller UGF numbers.                                                                                                  
                                                                                                                                
Representative Carpenter  asked if the  list on slide  7 was                                                                    
exhaustive.                                                                                                                     
                                                                                                                                
Ms. Cunningham  replied that the  list contained all  of the                                                                    
items   LFD  had   identified   as   duplicative  from   the                                                                    
subcommittee action.                                                                                                            
                                                                                                                                
Co-Chair Foster looked at the  Judiciary item of $334,700 to                                                                    
restore   previously   vetoed    funding.   He   asked   for                                                                    
verification the restoration meant there would be no cut.                                                                       
                                                                                                                                
Ms.  Pitney  agreed.  She  clarified   that  the  list  only                                                                    
included amendments  proposed by the governor  that had also                                                                    
been addressed in  subcommittee. Slide 7 did  not include an                                                                    
exhaustive list of amendments. She  noted that the Office of                                                                    
Management and  Budget had presented a  spreadsheet with the                                                                    
full  list of  the governor's  amendments the  previous day.                                                                    
She  was  happy  to  take   any  questions  on  all  of  the                                                                    
amendments.  She  reiterated that  slide  7  was limited  to                                                                    
governor's  amendments that  had already  been addressed  by                                                                    
the finance subcommittees.                                                                                                      
                                                                                                                                
2:07:23 PM                                                                                                                    
                                                                                                                                
Representative Carpenter thought the  information on slide 7                                                                    
was misleading.  He believed the  slide made it  appear that                                                                    
subcommittees only addressed the  items listed on the slide.                                                                    
He referenced a subcommittee  action item for the Department                                                                    
of Law  that was not included  on the slide. He  thought the                                                                    
public  would not  understand why  the  information was  not                                                                    
listed on the slide.                                                                                                            
                                                                                                                                
Ms.  Cunningham   replied  that   slide  7   only  contained                                                                    
governor's amendment  items that had been  duplicated in the                                                                    
subcommittee   process.  She   noted   there  were   several                                                                    
amendments that were  not included on the  slide. The intent                                                                    
of  the  slide was  to  let  the  committee know  the  $17.8                                                                    
million reduction did not need  to be adopted because it had                                                                    
not been approved [by the subcommittee] in the first place.                                                                     
                                                                                                                                
Co-Chair  Foster  clarified  that   the  governor  had  made                                                                    
numerous  amendments and  the  subcommittees  had also  made                                                                    
numerous  amendments.  He  explained  that  the  overlapping                                                                    
amendments were included on the list [on slide 7].                                                                              
                                                                                                                                
2:09:09 PM                                                                                                                    
                                                                                                                                
Representative Wool looked at slide  4, row 5 that showed an                                                                    
$809 million  or 14 percent increase  under the FY 19  to FY                                                                    
20  column.  He asked  if  the  $809 million  reflected  the                                                                    
increase in the PFD from  the ERA in the supplemental budget                                                                    
for FY 20.                                                                                                                      
                                                                                                                                
Ms. Pitney  answered that the  FY 20 column  represented all                                                                    
of  the  governor's   proposed  supplemental  requests.  She                                                                    
clarified the  column reflected the budget  the governor had                                                                    
asked the legislature to consider.                                                                                              
                                                                                                                                
Representative  Wool  understood.  He knew  there  had  been                                                                    
other  supplemental   items  such   as  Medicaid   and  fire                                                                    
[suppression];  however,  the  lion's   share  of  the  $800                                                                    
million was the requested draw from the ERA.                                                                                    
                                                                                                                                
Ms. Pitney agreed.                                                                                                              
                                                                                                                                
Representative  Josephson  stated   that  the  governor  had                                                                    
vetoed  about $430  million at  the  end of  June 2019.  The                                                                    
legislature had come  back in July and had  tried to restore                                                                    
about  $375  million;  it  had  successfully  restored  $222                                                                    
million.  He  extrapolated  that  it meant  there  was  $200                                                                    
million  the legislature  had wanted  that the  governor had                                                                    
declined.   He asked where  the money was that  the governor                                                                    
had saved by veto.                                                                                                              
                                                                                                                                
Ms. Pitney  answered that Medicaid was  the largest example.                                                                    
The vetoes  enacted in Medicaid  had been requested  back in                                                                    
the  governor's  FY  20   supplemental  budget.  The  agency                                                                    
operating  budget for  FY 20  was now  higher than  what had                                                                    
been finalized after all supplementals for FY 19.                                                                               
                                                                                                                                
Representative  Josephson asked  for verification  that even                                                                    
though Medicaid  had not been  fully funded, the  claims had                                                                    
come in and had been paid.                                                                                                      
                                                                                                                                
Ms. Pitney  answered that the  claims would only be  paid if                                                                    
the supplemental request was appropriated.                                                                                      
                                                                                                                                
2:12:32 PM                                                                                                                    
                                                                                                                                
Representative  Knopp looked  at the  third bullet  point on                                                                    
slide  7 associated  with  the  Department of  Environmental                                                                    
Conservation. He  noted that  the governor's  amended budget                                                                    
added back $164,600.  He observed that the  slide showed the                                                                    
governor   was  proposing   to  collect   $15,000  in   SDPR                                                                    
[statutory  designated] program  receipts.  He believed  the                                                                    
subcommittee  had rejected  the  decrement  [related to  the                                                                    
commercial dairy program].                                                                                                      
                                                                                                                                
Ms. Cunningham would have to  follow up on the question. She                                                                    
had  been  informed that  both  items  had been  adopted  in                                                                    
subcommittee, but she would follow up.                                                                                          
                                                                                                                                
Representative Knopp knew the  commissioner was working with                                                                    
the dairies on the issue. He  noted that a workable deal had                                                                    
been  struck  with  two  dairies   -  one  of  which  was  a                                                                    
nonprofit.  He remarked  that $15,000  in receipt  authority                                                                    
for two dairies could be  substantial. He wondered what deal                                                                    
had been worked  out. He wondered if the  item was something                                                                    
he needed  to look into further  or if "the other"  had been                                                                    
left in place.                                                                                                                  
                                                                                                                                
2:14:03 PM                                                                                                                    
                                                                                                                                
Co-Chair  Johnston noted  that she  had asked  the following                                                                    
question to OMB  as well regarding the  new supplemental and                                                                    
budget. She discussed that in  2019 the legislature had held                                                                    
hearings on a spending cap  bill. She noted the governor had                                                                    
also  introduced  spending  cap  legislation.  She  believed                                                                    
there  would be  other  spending cap  bills introduced.  She                                                                    
asked  if the  governor's proposed  budget met  his spending                                                                    
caps. She requested a report with the information from LFD.                                                                     
                                                                                                                                
Ms. Pitney  discussed that an  area of interest had  been on                                                                    
the mental  health budget forwarded by  Alaska Mental Health                                                                    
Trust Authority (AMHTA) trustees.  She communicated that the                                                                    
subcommittee  actions  and  amendments put  forward  by  the                                                                    
governor included everything the trust had requested.                                                                           
                                                                                                                                
Representative Knopp  communicated the  sense of  urgency to                                                                    
have  responses from  LFD as  soon  as possible  due to  the                                                                    
upcoming amendment deadline for committee members.                                                                              
                                                                                                                                
HB  205  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  206  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  234  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Foster reviewed  the  schedule  for the  following                                                                    
meeting. He RECESSED the meeting  until 5:00 p.m. [note: the                                                                    
meeting never reconvened. A  new meeting began at 5:07 p.m.,                                                                    
see meeting document dated 2/21/20 5:07 p.m. for detail].                                                                       
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:16:38 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:16 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB 205 HB 234 HFC LFD Amendment Presentation 2-21-20.pdf HFIN 2/21/2020 1:30:00 PM
HB 205
HB 234
HB 205 Public Testimony Rec'd by 2.20.20.pdf HFIN 2/21/2020 1:30:00 PM
HB 205