Legislature(2019 - 2020)ADAMS ROOM 519

07/09/2019 01:00 PM FINANCE

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Audio Topic
01:01:02 PM Start
01:02:43 PM Impact of Veto Override
03:18:21 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Impact of Veto Override TELECONFERENCED
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                  SECOND SPECIAL SESSION                                                                                        
                       July 9, 2019                                                                                             
                         1:01 p.m.                                                                                              
1:01:02 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:01 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Tammie Wilson, Co-Chair                                                                                          
Representative Jennifer Johnston, Vice-Chair                                                                                    
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
MEMBERS ABSENT                                                                                                                
Representative Ben Carpenter                                                                                                    
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
ALSO PRESENT                                                                                                                  
Nils  Andreassen,   Executive  Director,   Alaska  Municipal                                                                    
League, Juneau;  Representative Sara  Hannan; Representative                                                                    
Grier  Hopkins,  Representative Andi  Story;  Representative                                                                    
Harriet    Drummond;     Representative    Louise    Stutes;                                                                    
Representative Adam Wool.                                                                                                       
PRESENT VIA TELECONFERENCE                                                                                                    
Jim  Johnsen, President,  University  of Alaska,  Anchorage;                                                                    
Marissa Sharrah,  President, Fairbanks Chamber  of Commerce,                                                                    
Fairbanks;   Laurie   Wolf,    President,   Foraker   Group,                                                                    
Anchorage;  Diane  Kaplan,  President  and  Chief  Executive                                                                    
Officer,  Rasmuson  Foundation, Anchorage;  Steve  Lundgren,                                                                    
Member, Alaska Banker's  Association, Fairbanks; Jeff Twait,                                                                    
Alaska   State   Homebuilding  Association,   Kenai;   Becky                                                                    
Hultberg, President, Alaska State  Hospital and Nursing Home                                                                    
Association,  Anchorage;   Jim  Roberts,   Senior  Executive                                                                    
Liason, Alaska  Native Tribal Health  Consortium, Anchorage;                                                                    
Ken  Helander, Advocacy  Director, AARP,  Anchorage; Melanie                                                                    
Bahnke, President and CEO, Kawerak  Inc., Nome; Dave Landis,                                                                    
Mayor, Ketchikan  Gateway Borough, Kenai;  Benjamin Mallott,                                                                    
Vice President, Alaska Federation of Natives, Anchorage;                                                                        
IMPACT OF VETO OVERRIDE                                                                                                         
Co-Chair  Foster  indicated  that  the  committee  would  be                                                                    
taking invited testimony from fourteen organizations.                                                                           
^IMPACT OF VETO OVERRIDE                                                                                                      
1:02:43 PM                                                                                                                    
JIM  JOHNSEN,  PRESIDENT,  UNIVERSITY OF  ALASKA,  ANCHORAGE                                                                    
(via teleconference),  spoke to the negative  effects of the                                                                    
potential vetoes.  He referred to the  document, "Impacts of                                                                    
Budget Vetoes on University of Alaska" (copy on file):                                                                          
          Historically   Unpreceded  Divestment   in  Higher                                                                    
          Education  ? Veto  resulted in  a $135  million GF                                                                    
          cut - the largest reduction in UA's history                                                                           
          ?  Unprecedented   within  higher   education  and                                                                    
          historically  unparalleled  in  magnitude  amongst                                                                    
          public universities nationally                                                                                        
          ?  UA  represented  32 percent  of  the  total  $$                                                                    
          Governor vetoed                                                                                                       
          ?  41 percent  reduction to  the state  portion of                                                                    
          UA's budget                                                                                                           
          ?   Single   action      sudden,   untenable   and                                                                    
          devastating reduction    implemented 3 days before                                                                    
          start of fiscal year                                                                                                  
          ?  When combined  with $51  million in  prior year                                                                    
          cuts,  cumulative reduction  of  $186 million  (49                                                                    
          percent) over the last 6 years:                                                                                       
               o State funding has dropped from $378                                                                            
               million to $192 million                                                                                          
          ? Over 1,200 faculty and staff already gone                                                                           
          ?  Over 50  academic and  degree programs  already                                                                    
     Key Points                                                                                                                 
          ? Vetoes strike  an institutional and reputational                                                                    
          blow from which UA may likely never recover                                                                           
          ? Cripples  one of  Alaska's most  important tools                                                                    
          for economic  growth and diversity    just when we                                                                    
          need both.                                                                                                            
          ?  Impacts  the  ability   of  employers  to  hire                                                                    
          skilled  graduates     harming  Alaska's  economic                                                                    
          ? Every  university and  campus will  be impacted,                                                                    
          and  will likely  result in  the  need to  shutter                                                                    
          some community campuses outright                                                                                      
          ? Impacts  every student and program  in the state                                                                    
          and calls  into question  UA's ability  to fulfill                                                                    
          its constitutional mission                                                                                            
          ? State's  annual investment is critical    allows                                                                    
          UA to go get the other 60 percent of its budget                                                                       
          ? A  $135 million UGF  cut will actually  create a                                                                    
          $200 million revenue hole when  the impacts on all                                                                    
          non-state  revenue sources  are factored  in: i.e.                                                                    
          enrollment  declines,  tuition   and  fee  revenue                                                                    
          losses, research, federal and private giving                                                                          
            o UA estimates a related loss of $45 million (-                                                                     
            37 percent) in federal funds                                                                                        
     Immediate Impacts                                                                                                          
          ?  Immediate hiring,  travel  and contract  freeze                                                                    
          have been instituted                                                                                                  
          ?  60  day  furlough  notices  have  already  been                                                                    
          issued to university staff system wide                                                                                
          ?  Moody's  placed  UA ratings  under  review  for                                                                    
          downgrade on July 2nd                                                                                                 
               o The review will focus on the Special                                                                           
               Session outcome and the magnitude of the                                                                         
               final budget reduction                                                                                           
          ? Board of Regents  directed management to prepare                                                                    
          a   declaration  of   Financial  Exigency   to  be                                                                    
          considered  at the  emergency  Board meeting  next                                                                    
          Monday July 15th                                                                                                      
          ? What is Financial Exigency?                                                                                         
               o Rarely used procedure which permits the                                                                        
               rapid downsizing and/or discontinue of                                                                           
               units, programs, services, and personnel                                                                         
               o Permits unilateral decisions to reduce                                                                         
               salaries or modify terms of employment, to                                                                       
               include termination                                                                                              
               o Permits the unprecedented removal of                                                                           
               tenured faculty (whose tenure normally                                                                           
               provides lifetime guarantee of employment)                                                                       
          ? Financial  Exigency is a drastic  action, due to                                                                    
          the  potential  for creating  severe  reputational                                                                    
          harm  with students,  alumni, faculty,  employers,                                                                    
          donors, and investors                                                                                                 
     If veto is not overturned?                                                                                                 
          ?  An  additional  1,300-2,000 staff  and  faculty                                                                    
          will  lose their  jobs o  UAA alone  is estimating                                                                    
          the  loss of  700 jobs  and 40  degree programs  o                                                                    
          2,000+  total  loss,   when  direct  and  indirect                                                                    
          employment impacts are combined (ISER)                                                                                
          ? According to ISER,  UA direct losses alone, will                                                                    
          offset  gains   from  other  sector   of  Alaska's                                                                    
          ? Further  consolidation of programs  and academic                                                                    
          options across  the system; reduce  or discontinue                                                                    
          programs outside core                                                                                                 
          ? Current students  will see academic disruptions,                                                                    
          program closures and possible  need to transfer to                                                                    
          other   campuses   within   the   UA   System   or                                                                    
          universities outside of Alaska                                                                                        
          ? Potential closure of some community campuses                                                                        
               o  Community   campuses  receive  significant                                                                    
               administrative  and   overhead  support  from                                                                    
               UAF, UAA  and Statewide    against  which the                                                                    
               entire veto was levied                                                                                           
          ? Significant accreditation risk  due to the speed                                                                    
          and urgency with which  programs and campuses will                                                                    
          have to be reorganized                                                                                                
          ?  University  athletics  possibly  eliminated  in                                                                    
            Continued  increase in tuition and  student fees                                                                    
            in  the face of  already declining  enrollment -                                                                    
          making  post-secondary  education in  Alaska  less                                                                    
          accessible and affordable                                                                                             
               o UA's fall 2019 semester shows a systemwide                                                                     
               (-5.9 percent) decline in applications                                                                           
                 ? UA Anchorage (-5.1 percent);                                                                               
                 ? UA Fairbanks (-8.1 percent);                                                                               
                 ? UA Southeast (-0.7 percent)                                                                                
          ?  Immediate  damage  to   UA's  standing  as  the                                                                    
          world's   leading   Arctic  research   institution                                                                    
          offering  international   expertise  in  physical,                                                                    
          biological and social sciences                                                                                        
               o Leader in studying the changing Arctic -                                                                       
               impacts on our people, culture, environment                                                                      
               and economic livelihood                                                                                          
               o Loss of faculty and graduate students, and                                                                     
               accompanying funding                                                                                             
               o Diminishes success of receiving federal                                                                        
               grants    agencies uncertain about UA's                                                                          
          ?  Impacts go  far beyond  Alaska's borders;  UA's                                                                    
          world   class  research   institutions  like   the                                                                    
          International Arctic  Research Center  (IARC), the                                                                    
          Institute  of Arctic  Biology (IAB),  Institute of                                                                    
          Northern   Engineering   (INE)   and   Geophysical                                                                    
          Institute (GI) and are players  on the world stage                                                                    
          addressing   international    scientific   issues,                                                                    
          defense and homeland security                                                                                         
          ?  May require  merging  or  elimination of  major                                                                    
          research institutes    which are solving important                                                                    
          real-world problems    and in many  cases bringing                                                                    
          in  significant  third-party   investment  to  our                                                                    
          ? Jeopardizes  retention of major  research assets                                                                    
          such  R/V Sikuliaq  and the  Toolik Field  Station                                                                    
          operated  on   behalf  of  the   National  Science                                                                    
     Order of Magnitude Operating Amounts (UGF)                                                                                 
            Current annual tuition revenue: $135 million                                                                        
          ?  Fairbanks campus  total  state operating:  $126                                                                    
          ?  Anchorage campus  total  state operating:  $104                                                                    
          ? Facilities Maintenance: $45 million                                                                                 
          ? All community campuses: $36 million                                                                                 
         ? UAS total state operating: $21 million                                                                               
          ? Statewide: $18 million                                                                                              
          ? UA athletics programs: $13 million                                                                                  
     UA has already discontinued or suspended over 50                                                                           
     degree and certificate programs in the last four year:                                                                     
         ? GC Clinical Social Work Practice (UAA)                                                                               
          ? MS Applied  Environmental Science and Technology                                                                    
          ? MS Engineering Management (UAA)                                                                                     
          ? MS Science Management (UAA)                                                                                         
          ? AAS Computer Information and Office Systems                                                                         
         ? PhD Clinical-Community Psychology (UAF)                                                                              
          ? BA and BBA Economics (UAF)                                                                                          
          ? AAS Apprenticeship Technology (UAS)                                                                                 
         ? Certificate Automotive Technology (UAS)                                                                              
          ? Assoc. of Business (UAS)                                                                                            
          ? MS Arctic Engineering (UAA)                                                                                         
          ? OEC Sustainable Energy (UAA)                                                                                        
         ? AAS Small Business Administration (UAA)                                                                              
          ? MS Resource Economics (UAF)                                                                                         
          ? BA and BS Sociology (UAF)                                                                                           
          ? BS General Science (UAF)                                                                                            
          ? BA Chemistry (UAF)                                                                                                  
          ? Educational Technology (UAS)                                                                                        
          ? AAS Law Enforcement (UAS)                                                                                           
1:13:28 PM                                                                                                                    
Co-Chair  Wilson thanked  the University  president for  his                                                                    
testimony. She queried the state  and federal funding levels                                                                    
from three  years prior;  the cost  of tuition;  and compare                                                                    
those numbers to the current year.                                                                                              
President  Johnsen agreed  to provide  that information.  He                                                                    
stated that  the numbers  had declined  over that  period of                                                                    
time. He  stated that he  had the  UGF numbers, but  did not                                                                    
have the DGF or other fund numbers.                                                                                             
Co-Chair Wilson  wondered whether President Johnson  had the                                                                    
state  funding  numbers  from  three  years  prior  and  the                                                                    
current funding.                                                                                                                
President  Johnsen replied  that there  was $378  million in                                                                    
UGF in FY 14; $375 million in  FY 15; $350 million in FY 16;                                                                    
$325  million in  FY 17;  $317 million  in FY  18; and  $327                                                                    
million in the current year.                                                                                                    
Co-Chair  Wilson encouraged  him to  provide the  numbers to                                                                    
the committee.                                                                                                                  
President  Johnsen noted  that the  rate had  increased, but                                                                    
the revenue had declined along with enrollment.                                                                                 
Co-Chair  Wilson asked  whether scholarship  recipients were                                                                    
included in the numbers.                                                                                                        
President  Johnsen responded  that  they  were included.  He                                                                    
clarified that a tuition dollar was a tuition dollar.                                                                           
Representative  Josephson  asked  if   the  actual  cut  was                                                                    
because of the failure to exceed money for grants.                                                                              
President  Johnsen  thought   Representative  Josephson  was                                                                    
1:17:53 PM                                                                                                                    
Representative Josephson wondered  whether President Johnson                                                                    
could  wait until  early August  to  give a  last chance  to                                                                    
provide aide to the University.                                                                                                 
President  Johnsen replied  that  the  University needed  to                                                                    
take action as  soon as possible. He  remarked that furlough                                                                    
notices had  been sent  to 2500  staff members.  He remarked                                                                    
that the notice  could be withdrawn, but there  needed to be                                                                    
action taken in the event of there being no options.                                                                            
Representative Josephson surmised  that the extreme scenario                                                                    
that  may  be  considered  could  not  be  shared  with  the                                                                    
committee,  because  there  was  an  attempt  to  not  cause                                                                    
further anxiety.                                                                                                                
President  Johnsen agreed.  He explained  that there  was an                                                                    
attempt to lead a  critically important Alaskan institution,                                                                    
which required the faculty, students,  and staff to stay and                                                                    
be positive.  He furthered that  they were  the fiduciaries,                                                                    
so  it   would  be  irresponsible   to  not  plan   for  all                                                                    
1:20:54 PM                                                                                                                    
MARISSA SHARRAH,  PRESIDENT, FAIRBANKS CHAMBER  OF COMMERCE,                                                                    
FAIRBANKS  (via   teleconference),  read  from   a  prepared                                                                    
     My name is Marisa Sharrah and I'm the president and                                                                        
     CEO of the Greater Fairbanks Chamber of Commerce.                                                                          
     The   Fairbanks   Chamber   is  a   business   advocacy                                                                    
     organization that  represents 700 businesses  mostly in                                                                    
    the Interior but also scattered throughout Alaska.                                                                          
     The  Fairbanks Chamber  has advocated  for a  Long-Term                                                                    
     Fiscal Plan for  Alaska for 6 straight years.   We want                                                                    
     government to  be more  efficient and  reduce spending.                                                                    
     We  want policies  that encourage  resource development                                                                    
     and  business  friendly  practices  that  communication                                                                    
     Alaska  in  "Open  For Business".  In  2017,  we  added                                                                    
     language  to our  legislative priority  to call  for an                                                                    
     appropriate and timely capital budget annually.                                                                            
     The  Fairbanks  Chamber  also has  a  long  history  of                                                                    
     advocating   for   the   University   of   Alaska.   We                                                                    
     recognizing the  Fairbanks campus  is an  integral part                                                                    
     of our  community that  produces highly  trained talent                                                                    
     that our  businesses rely  on to  fill jobs  and remain                                                                    
     competitive  and   successful.     UAF  is   a  vibrant                                                                    
     university that  is crucial not  only for  the training                                                                    
     of  our community's  workplace professionals,  but also                                                                    
     the  research and  development  endeavors necessary  to                                                                    
     address  our  state's  crucial challenges.    I  cannot                                                                    
     count  the   number  of  times   I've  listened   to  a                                                                    
     presentation or been in a  conversation with one of our                                                                    
     business members  where they've been talking  about the                                                                    
     innovative  work and  research that  their company  has                                                                    
     partnered with the University  of Alaska Fairbanks onto                                                                    
     tackle  industry  challenges  that turn  into  economic                                                                    
     wins  for  their  companies, our  communities  and  the                                                                    
     Back  in  February,  when   the  Governor  dropped  the                                                                    
     revised  budget, a  sense of  urgency  started to  grow                                                                    
     from across  the business community here  in Fairbanks.                                                                    
     Many businesses  began to imagine  what UAF  might look                                                                    
     like  after such  a  drastic cut  to  their budget.  As                                                                    
     imagery  of  a  smaller,   less  responsive,  and  less                                                                    
     productive University  began to take shape,  the ripple                                                                    
     effects that would  be felt in our  community could not                                                                    
     be ignored.  UAF is  known for producing our engineers,                                                                    
     accountants,      scientists,     bankers,      medical                                                                    
     professionals, teachers,  social workers, firefighters,                                                                    
     business    professionals,    construction    managers,                                                                    
     paralegals,   process   technicians,  early   childhood                                                                    
     educators,  pilots,  biologists,  counselors,  artists,                                                                    
     conservationists,   special  education   teachers,  and                                                                    
     community leaders  of all types.   Jeopardizing  UAF is                                                                    
     jeopardizing  our future  professionals and  the future                                                                    
     of much our business.                                                                                                      
     The vetoes  are staggering and  are not at  all in-line                                                                    
     with the  Fairbanks Chamber's position  that we  need a                                                                    
     soft-landing approach.   While it's true  the Fairbanks                                                                    
     Chamber  supports   downward  pressure   on  government                                                                    
     spending,  we also  realize that  if these  cuts aren't                                                                    
     methodical and  strategic, we stand  to lose  more than                                                                    
     we gain.   There  is real  concern that  tremendous and                                                                    
     immediate job losses created by  the vetoes will spur a                                                                    
     series of continued job losses  induced by the slowdown                                                                    
     of  our economy.   There  is  also real  concern of  an                                                                    
     influx  of people  leaving Fairbanks  and the  state in                                                                    
     search of abundant opportunities  in other parts of our                                                                    
     country.   That would put  our job market  in distress.                                                                    
     These  drastic  cuts  will create  measurable  negative                                                                    
     consequences for businesses.                                                                                               
     We  urge  our  legislature  to  keep  Alaska  Open  for                                                                    
     business.  We  need and expect our  legislature to work                                                                    
     collaboratively to  find compromises that  get Alaskans                                                                    
     a   reasonable  dividend,   a   balanced  budget   with                                                                    
     responsible  cuts, and  a capital  budget that  doesn't                                                                    
     leave hundreds of millions of  dollars in federal match                                                                    
     money  on  the   table.    These  vetoes   need  to  be                                                                    
     overridden for the benefit of all Alaskans.                                                                                
1:24:42 PM                                                                                                                    
LAURIE  WOLF,  PRESIDENT,   FORAKER  GROUP,  ANCHORAGE  (via                                                                    
teleconference),  provided  information  about  the  Foraker                                                                    
Group and  its mission. She  talked about working  in strong                                                                    
partnership with the State of  Alaska. She stressed that the                                                                    
vetoes would  have a  broad and  deep detrimental  impact on                                                                    
the people of Alaska. She  stated that the non-profit sector                                                                    
represented a  wide variety  of organizations  that provided                                                                    
public service.  She remarked that every  Alaskan family was                                                                    
the beneficiary  of a  non-profit, because  non-profits were                                                                    
woven into  the fabric of  the communities. She  shared that                                                                    
non-profits played  a critical role in  the state's economy,                                                                    
both  as  major employers  and  as  revenue generators.  She                                                                    
stated that  nationwide non-profits  employed 10  percent of                                                                    
the  workforce, and  made up  an average  17 percent  of all                                                                    
employment in  Alaska. She stated  that over  one-quarter of                                                                    
the non-government employment in the  state was tied to non-                                                                    
profits  in both  indirect and  direct effect.  She stressed                                                                    
that  no  industry  in  Alaska  could  prosper  without  the                                                                    
strength  of the  non-profit sector.  The non-profit  sector                                                                    
provided  a return  on investment  by leveraging  public and                                                                    
private resources.                                                                                                              
Co-Chair  Foster indicated  Representative  Wool had  joined                                                                    
the meeting.                                                                                                                    
1:33:29 PM                                                                                                                    
DIANE  KAPLAN,   PRESIDENT  AND  CHIEF   EXECUTIVE  OFFICER,                                                                    
RASMUSON FOUNDATION, ANCHORAGE  (via teleconference), gave a                                                                    
brief background  of the  Rasmuson Foundation.  She stressed                                                                    
that the Rasmuson  Foundation had never tried  to impose its                                                                    
agenda  on the  legislature  or on  any administration.  She                                                                    
stressed that  there was always  work to find  common ground                                                                    
and  areas of  alignment  to work  on  together. She  shared                                                                    
that, currently there were many  areas in which Rasmuson and                                                                    
the state work  in collaboration. She announced  that in the                                                                    
most recent  years, both the  state and  Rasmuson Foundation                                                                    
donors   combined  forces   to  generate   $6  million   for                                                                    
renovations  for  every  domestic violence  shelter  in  the                                                                    
state, for which  they did a dollar for dollar  match to the                                                                    
state.  She  shared  that,  over  the  last  several  years,                                                                    
Rasmuson  Foundation had  provided  $5  million in  matching                                                                    
money to  the Alaska  Housing Finance Corporation  (AHFC) in                                                                    
grants for  teacher, health professional, and  public safety                                                                    
housing; and  the Senior  Citizen Housing  Development fund.                                                                    
She shared that  the Rasmuson Foundation was  poised to give                                                                    
another $5  million to  AHFC for matching  funds for  all of                                                                    
its  programs, elderly  funding, disability  funding, public                                                                    
safety, and  health profession funding in  January; but were                                                                    
waiting for  a signal from  the administration for  a desire                                                                    
to continue  the partnership  with the  Rasmuson Foundation.                                                                    
She shared that the State  Council on the Arts currently had                                                                    
a budget  of $1.6 million, and  Rasmuson Foundation provided                                                                    
one-third  of that  total,  which was  more  that the  state                                                                    
contributed. She shared that she  was surprised to find that                                                                    
the Rasmuson  dollars were also  vetoed, which  would result                                                                    
no  more arts  in  education.  She stated  that  all of  the                                                                    
Rasmuson  funding  in  the council  was  for  education  and                                                                    
artists in schools. She shared  that there was a partnership                                                                    
with  the state  to  work  on reducing  the  harm caused  by                                                                    
alcohol. She  stated that  Rasmuson Foundation  provided 100                                                                    
percent of  the start up  costs for Pick.Click.Give,  and it                                                                    
has continued  to operate  without state  financial support,                                                                    
but  with  state  cooperation  generating  approximately  $3                                                                    
million per  year for non-profits. She  shared that Rasmuson                                                                    
had  matched the  state  dollar for  dollar  for the  Alaska                                                                    
comprehensive    health   care    blueprint   transformation                                                                    
1:43:52 PM                                                                                                                    
Representative  Josephson surmised  that  one-third of  $1.6                                                                    
million was from Rasmuson for  the arts grant. He also noted                                                                    
the testimony  that asserted  that, along  with the  veto of                                                                    
the state's portion, the Rasmuson  money was also vetoed. He                                                                    
wondered  whether the  money was  contingent on  the state's                                                                    
Ms. Kaplan responded that he was correct.                                                                                       
Representative Josephson surmised  that Rasmuson, no strings                                                                    
attached,  said  that  they would  give  one-third  of  $1.6                                                                    
million, and the governor responded, "we don't want it."                                                                        
Ms. Kaplan  responded that the  Rasmuson Foundation  had not                                                                    
had that conversation.  She stated that there was  a hope to                                                                    
meet with the administration since  December, so she did not                                                                    
know  the intention  of that  veto. She  explained that  the                                                                    
programs  were  not  created  by  the  Rasmuson  Foundation,                                                                    
rather  were  programs  created   by  the  state  where  the                                                                    
foundation   added   additional   money   for   the   served                                                                    
communities operated by the State Arts Council.                                                                                 
Representative   Josephson   extrapolated  that   from   Ms.                                                                    
Kaplan's  testimony  about   organizations  such  as  Claire                                                                    
House, there  was an indication  that some people  would die                                                                    
as a consequence of the  descriptions. He surmised that some                                                                    
people would not get the shelter and needed protections.                                                                        
Ms.  Kaplan indicated  that no  one wanted  to be  at Claire                                                                    
House,  because the  residents only  ended up  there out  of                                                                    
desperation. She  wondered where  those people would  go, if                                                                    
they  were told  that they  could only  be there  in limited                                                                    
hours. She  did not know  the answer to the  problem created                                                                    
with the vetoes.                                                                                                                
1:47:20 PM                                                                                                                    
STEVE LUNDGREN, MEMBER, ALASKA BANKER'S ASSOCIATION,                                                                            
FAIRBANKS (via teleconference), read from a prepared                                                                            
     My name  is Steve  Lundgren, I'm  president and  CEO of                                                                    
     Denali State Bank in Fairbanks, Alaska.                                                                                    
     I appreciate  the opportunity to  address you  today on                                                                    
     behalf of the Alaska Bankers Association.                                                                                  
     The Alaska  Bankers Association represents all  7 banks                                                                    
     that have physical offices in Alaska.                                                                                      
     Combined,  we hold  over $12  billion in  deposits, and                                                                    
     employ  more than  2,500  banking professionals  across                                                                    
     127 branch offices statewide.                                                                                              
     We compete  head-to-head with each other  for deposits,                                                                    
     loans,  and customers,  however we  come together  thru                                                                    
     the Alaska Bankers Association  to monitor and weigh-in                                                                    
     on  issues  that  impact the  Alaska  economy  and  our                                                                    
     banking industry as a whole.                                                                                               
     We  rally to  support issues  we believe  are good  for                                                                    
     Alaska,  and we  rally against  issues we  believe will                                                                    
     harm Alaska, Alaska residents,  the Alaska economy, and                                                                    
     our customers.                                                                                                             
     We travel as  an association to Juneau  every year, and                                                                    
     we've  met with  many  of you.    Our primary  speaking                                                                    
     point over the last several  years is to advocate for a                                                                    
     stable budget  climate and a  long term fiscal  plan, I                                                                    
     emphasize "long  term", that includes  withdrawals from                                                                    
     the  permanent  fund,  and  that  results  in  in  soft                                                                    
     landing for our economy.                                                                                                   
     My purpose  for speaking  to you today  is to  tell you                                                                    
     that all 7  banks in Alaska are aligned  in our request                                                                    
    that the Legislature override the governors vetoes.                                                                         
     At  our  nature,  we're  fiscal  conservatives  and  we                                                                    
     support  right-sized   government.    We   believe  the                                                                    
     legislature  has  moved  in this  direction  in  recent                                                                    
     years, and we support the legislature's budget.                                                                            
     We believe that a "long  term" plan that allows time to                                                                    
     absorb  budget reductions  with a  planned approach  is                                                                    
     better  than an  immediate  budget shock  to the  state                                                                    
     that we  believe will result in  immediate and enduring                                                                    
     economic harm.                                                                                                             
     We're concerned  about the extreme consequences  to our                                                                    
     local  and state  economies if  no action  is taken  to                                                                    
     override the  governor's vetoes.   The impact  of these                                                                    
     vetoes  to our  university,  public  health system  and                                                                    
     local  communities  is  too   much  too  soon.    Fewer                                                                    
     employees and students means  fewer residents and fewer                                                                    
     dollars  circulating through  our economy,  and reduced                                                                    
     business activity.   There will be  downstream effects,                                                                    
     prolonging uncertainty and  increasing risk, leading to                                                                    
     higher costs  for Alaska's businesses and  families and                                                                    
   a lower level of economic opportunity in the future.                                                                         
     Private capital investment needs  a stable state budget                                                                    
     climate  utilizing a  combination of  spending less,  a                                                                    
     rules   based  framework   for  withdrawals   from  the                                                                    
     Permanent Fund, and securing new revenues.                                                                                 
     We  support  a  comprehensive, stable  and  sustainable                                                                    
     approach employing  these options over a  more measured                                                                    
     time  frame  to  avoid  erosion of  our  education  and                                                                    
     public  assistance   institutions,  and   business  and                                                                    
     consumer confidence.                                                                                                       
     Our future  depends on  our leaders  reaching consensus                                                                    
     on a  stable, sustainable  budget solution  amid wildly                                                                    
     diverse and passionate opinions.   The legislature took                                                                    
     the bold  step of reducing  the budget by  $190 million                                                                    
     in one year, an additional  $379 million in vetoes goes                                                                    
     too far.                                                                                                                   
     We  have heard  that private  spending will  migrate to                                                                    
     the state  to offset  the decrease in  public spending.                                                                    
     We don't believe private spending  will be available to                                                                    
     offset the  loss of  funding to  the university  and to                                                                    
     other programs either cut or lost through the vetoes.                                                                      
     Our  member banks  have many  individual concerns  that                                                                    
     may  impact  one  bank differently  than  other  banks,                                                                    
     however we  all come  together to  support a  full veto                                                                    
     As an example,  I'll share 2 individual  concerns of my                                                                    
     Of our 77  employees, 21 have either  graduated from or                                                                    
     have  attended University  of  Alaska  Fairbanks.   The                                                                    
     budget vetoes put  the future of UAF at risk.   I don't                                                                    
     know where my bank will  find the local educated talent                                                                    
     I need to  run Denali State Bank without UAF.   Many of                                                                    
     my bank business customers have the same concern.                                                                          
     Secondly,  all  banks  have  a  significant  investment                                                                    
     portfolio of  many millions of dollars.   Our portfolio                                                                    
     includes  government bonds  issued in  Alaska, as  does                                                                    
     all  our  member banks.    I  received this  unsettling                                                                    
     communication   Monday   from   one  of   our   outside                                                                    
     investment advisors.                                                                                                       
     "Denali State  Bank owns a  University of  Alaska Bond.                                                                    
     Last week, the governor  vetoed $135mm in state funding                                                                    
     dollars due to  the university for FY2020.   This would                                                                    
     be a 41 percent YoY  decrease in state funding and will                                                                    
     have  an enormous  impact on  the  university and  will                                                                    
     lead  to various  downgrades if  the state  legislation                                                                    
     approves of this  veto.  Both S and P  and Moody's have                                                                    
     already  put  the  underlying  rating  on  reviews  for                                                                    
     downgrade.  No  precedent stands for a  YoY funding cut                                                                    
     such  as  this,  especially   for  a  state's  flagship                                                                    
     university.    The   only  somewhat  similar  situation                                                                    
     happened in Illinois during  their budget impasse, when                                                                    
     various  colleges  and community  colleges  experienced                                                                    
     multi-notch  downgrades   after  their   state  funding                                                                    
     dollars were cut.  We  wouldn't be surprised to see the                                                                    
     University carrying a  BBB rating if this  is their new                                                                    
     So you can see that people  are watching, and this is a                                                                    
     current example of the  potential far reaching negative                                                                    
     impacts if the vetoes are not overridden.                                                                                  
     In closing, I can't put  into words how serious this is                                                                    
     and  how important  it is  to  override the  governor's                                                                    
   veto package.  Please vote for a full veto override.                                                                         
     Thank you  for the  opportunity to  talk with  you, and                                                                    
     I'm happy to respond to questions if you have any.                                                                         
Co-Chair Foster asked testifiers to submit their prepared                                                                       
statements to housefinance@akleg.gov.                                                                                           
1:55:29 PM                                                                                                                    
Vice-Chair  Johnston felt  that  there was  quite  a bit  of                                                                    
economic activity going on in  Fairbanks with mining and the                                                                    
military bases.  She wondered whether there  was an increase                                                                    
in capital investment in Fairbanks over the year.                                                                               
Mr. Lundgren  replied in the  affirmative. He said  that the                                                                    
Banker's  Association  had  experienced   a  soft  and  flat                                                                    
economy  in  Alaska  over  recent   years.  He  stated  that                                                                    
Fairbanks was a  bright spot, because of  the military base.                                                                    
He shared that tourism was  also experiencing a strong year.                                                                    
He  remarked that  mining was  looking  favorable. He  noted                                                                    
increased activity  on the North  Slope, which  was positive                                                                    
for Fairbanks.                                                                                                                  
Vice-Chair  Johnston wondered  whether the  budget would  be                                                                    
rewritten  with smaller  portfolio of  loans, if  the vetoes                                                                    
were to remain.                                                                                                                 
Mr.  Lundgren replied  that he  had concerns  and the  board                                                                    
would be meeting  to discuss its options.  He suggested that                                                                    
unless  the  vetoes  were overridden,  the  bonds  would  be                                                                    
Vice-Chair  Johnston   asked  if  Mr.  Lundgren   had  heard                                                                    
anything regarding municipal bonds.                                                                                             
Mr.  Lundgren   responded  that  the  rating   agencies  and                                                                    
investment advisors  were likely  just finding out  what was                                                                    
happening in Alaska.                                                                                                            
Vice-Chair  Johnston wondered  about breaking  the Permanent                                                                    
Fund unstructured draw. She wondered  if it would affect the                                                                    
banking industry.                                                                                                               
Mr.  Lundgren  suspected  that  it would  not  have  a  full                                                                    
negative impact.                                                                                                                
Vice-Chair  Johnston  expressed  her  appreciation  for  Mr.                                                                    
Lundgren's testimony.                                                                                                           
2:00:43 PM                                                                                                                    
Co-Chair Wilson asked whether Alaska's  bond rating would be                                                                    
affected if the state kept  having a deficit and filling its                                                                    
Mr. Lundgren  suspected that the rating  agencies would have                                                                    
a problem.                                                                                                                      
Co-Chair  Wilson  asked if  Mr.  Lundgren  was advocating  a                                                                    
step-down approach.                                                                                                             
Mr.  Lundgren indicated  his  organization  would support  a                                                                    
step-down approach.                                                                                                             
Representative   LeBon   asked   if   the   Alaska   Banking                                                                    
Association had  taken a  position on a  way to  fill budget                                                                    
Mr.  Lundgren  responded  that he  supported  a  rules-based                                                                    
approach in order to support state government.                                                                                  
Representative Josephson  asked if  Mr. Lundgren  had stated                                                                    
that Mr. Lundgren supports the operating budget as written.                                                                     
Mr.  Lundgren replied  that  the  association supported  the                                                                    
budget approved by the legislature.                                                                                             
Representative  Josephson  surmised   that  the  association                                                                    
supported a  budget without a  deficit, with a  $600 million                                                                    
Mr. Lundgren responded, "That's correct."                                                                                       
2:05:55 PM                                                                                                                    
JEFF  TWAIT, ALASKA  STATE  HOMEBUILDING ASSOCIATION,  KENAI                                                                    
(via teleconference), read a letter  submitted to members on                                                                    
the prior day:                                                                                                                  
     As I  stated at  the beginning of  this letter,  we met                                                                    
     last week  as a legislative committee  to discuss these                                                                    
     vetoes.  For  those  that   aren't  familiar  with  our                                                                    
     association,  we are  a trade  association  made up  of                                                                    
     builders,  remodelers,  suppliers, lending  institutes,                                                                    
     title  companies  and  other  support  businesses  that                                                                    
     involve  housing. We  have  6  local associations  from                                                                    
     across  the  state   including,  The  Kenai  Peninsula,                                                                    
     Anchorage,  The  Matsu  Valley, Fairbanks,  Juneau  and                                                                    
     Ketchikan.  Our legislative  committee  is  made up  of                                                                    
     members from  each of these local  associations. As you                                                                    
     can see we  are made up of areas  with diverse industry                                                                    
     that affects each  local economy, so, to  have met last                                                                    
     week and voted almost  unanimously to weigh in opposing                                                                    
     these  veto's is  somewhat  telling.  Now that  housing                                                                    
     isn't  directly targeted  in these  cuts is  also worth                                                                    
     noting.  "you might  ask  why are  we  so opposed  then                                                                    
     since we aren't a special  interest group with a dog in                                                                    
     the  direct fight  and are  typically thought  of as  a                                                                    
     more right  leaning organization.  I think that  can be                                                                    
     summed up best  this way. When we go out  to DC or come                                                                    
     to Juneau to  talk about housing issues  we are neither                                                                    
     R's  or  D's or  I's  we  are  simply  H's We  are  for                                                                    
     housing,  for  shelter  for   our  friends  and  fellow                                                                    
     Alaskans. This  economic recovery that we  are starting                                                                    
     to  realize  in  Alaska  is  at  best  fragile  in  its                                                                    
     beginning.  Several  things  are needed  to  sustain  a                                                                    
     recovery  and yet  one significant  event  can send  it                                                                    
     back  the other  way or  extend the  bobbing along  the                                                                    
     bottom. I will  tout the housing industry  as being the                                                                    
     best indicator  as to  economic recovery.  Enticing new                                                                    
     people into  the state can  easily be broken down  to a                                                                    
     few simple categories,  ones I think we  would all look                                                                    
     at if we were a business  or a family looking to make a                                                                    
     move  here.  1.)  Job Opportunities,  2)  The  cost  of                                                                    
     living, 3) Public Safety, 4)  the quality of education,                                                                    
     and  5) the  quality of  health care.  These deep  cuts                                                                    
     will affect  each of these categories  negatively.  The                                                                    
     governor has  stated that the private  sector will lead                                                                    
     the  recovery  after  these  cuts  go  into  effect.  I                                                                    
     believe what he  isn't taking into account  is one very                                                                    
     important factor that  we all need to  be cognizant of,                                                                    
     it  is Consumer  Confidence. Consumer  confidence is  a                                                                    
     very hard  to quantify  aspect of  an economy,  yet one                                                                    
     that our industry keeps its  finger on the pulse of all                                                                    
     the  time.  People  will  buy  groceries,  clothes  and                                                                    
     essential necessities without  consumer confidence, but                                                                    
     they will not buy automobiles,  remodel, buy or build a                                                                    
     house and probably not even  keep up on the maintenance                                                                    
     of  their   properties  if  their  confidence   is  not                                                                    
     present.  I  saw  this first  hand  when  the  Governor                                                                    
     rolled  out his  proposed  budget at  the beginning  of                                                                    
     this session when  Wildwood Prison in Kenai  was in the                                                                    
     crosshairs.  The immediate  reaction was  one of  panic                                                                    
     and fear by the  people personally impacted followed by                                                                    
     tightening by those people that  were looking to invest                                                                    
     in a  new home or  remodeling their existing  house. As                                                                    
     it  was  stated in  the  earlier  letter, every  dollar                                                                    
     spent on  housing is circulated into  the local economy                                                                    
     7  times  before that  dollar  leaves  the area,  those                                                                    
     dollars are  spent on going  out to dinner, going  to a                                                                    
     movie,  signing  your child  up  for  dance classes  or                                                                    
     youth    hockey.  All things  that  stimulate  a  local                                                                    
     economy. And  finally I hesitate  to dip my toe  in the                                                                    
     PFD  water,  and  I  do  so from  my  own  beliefs  not                                                                    
     necessarily  from  the  Builders  Association.  I  feel                                                                    
     there are 2  types of people regarding  the PFD, either                                                                    
     you want your  dividend or you need it.  For those that                                                                    
     truly  need it,  I  believe they  will  feel more  than                                                                    
     $1,400.00  in diminished  services  if  they receive  a                                                                    
     full dividend and services are  cut. Now I am in almost                                                                    
     every  way are  right wing  republican, but  I am  also                                                                    
     aware that services in in  which the government is here                                                                    
     to  provide  must  be funded.  Can  these  services  be                                                                    
     tasked with  running more efficiently?  Absolutely, and                                                                    
     they  need  to  be.  But this  deficit  wasn't  created                                                                    
     overnight and  the fix  should not  and cannot  be done                                                                    
     overnight as well.  You all have a heavy  lift ahead of                                                                    
     you and appreciate  the job you do for  the good people                                                                    
     of this state. And I  thank you for inviting the Alaska                                                                    
     State Homebuilding Association to testify today.                                                                           
2:13:39 PM                                                                                                                    
Representative LeBon noted that  homebuilders in Alaska were                                                                    
in their construction season. He  wondered how the potential                                                                    
client  list was  viewing the  future,  with potential  home                                                                    
building starting in 2020.                                                                                                      
Mr.  Twait replied  that the  positive environment  had been                                                                    
withdrawn slightly.  He shared  that low interest  rates had                                                                    
propped up the environment, so  there was still momentum. He                                                                    
shared that Kenai  was doing fairly well, but  had talked to                                                                    
some communities that were still struggling.                                                                                    
Representative LeBon  wondered whether  the number  of homes                                                                    
that were started  on a spec-basis would go to  near zero as                                                                    
builders would not want to  take the financial risk to build                                                                    
a home in  the hope that a builder would  materialize in the                                                                    
next six to nine months.                                                                                                        
Mr.  Twait   Responded  replied   that  there   was  minimal                                                                    
speculative  building  in  the   state,  especially  in  the                                                                    
smaller communities.                                                                                                            
Representative Knopp  asked about  members that were  not in                                                                    
agreement.  He   wondered  what   they  thought   about  the                                                                    
potential impacts.  He asked the  reasoning behind  the non-                                                                    
support of the letter.                                                                                                          
Mr. Twiat responded that there was one vote that was not in                                                                     
support of the letter, but felt that the reason was                                                                             
probably due to location.                                                                                                       
2:17:29 PM                                                                                                                    
BECKY HULTBERG, PRESIDENT, ALASKA STATE HOSPITAL AND                                                                            
NURSING HOME ASSOCIATION, ANCHORAGE (via teleconference),                                                                       
read from a prepared statement:                                                                                                 
     For the  record, my name is  Becky Hultberg.  I  am the                                                                    
     President/CEO of the Alaska  State Hospital and Nursing                                                                    
     Home Association. I am also  a lifelong Alaskan born in                                                                    
     Anchorage and raised in Kenai.                                                                                             
     A recent  letter to the  editor in the  Washington Post                                                                    
     written in  response to  Alaska's budget  situation was                                                                    
     entitled  "Memo to  Alaskans: Things  Cost Money.  " It                                                                    
     went  on to  talk about  how you  can't expect  to have                                                                    
     services without paying  for them. I want  to talk from                                                                    
     an economic  and health care perspective  about what it                                                                    
     will mean  if we stop  paying for these  public "things                                                                    
     that cost money."                                                                                                          
     It's hard to have  this conversation without addressing                                                                    
     the  narrative  that  government spending  is  'out  of                                                                    
     control'. For  context, in a  March 24  presentation to                                                                    
     the   Alaska   council    of   school   administrators,                                                                    
     Legislative  Finance  Director  David Teal  provided  a                                                                    
     graphic  showing that  Alaska's  per capita  inflation-                                                                    
     adjusted spending today  is at about the  same level it                                                                    
     was in 1980.  We are spending more in  total today than                                                                    
     we were in 1980, because  of inflation and because more                                                                    
     people  live  here. But  on  a  per person,  inflation-                                                                    
     adjusted basis we  are spending about the  same. In the                                                                    
     late 1970's,  oil fields were  coming online. It  was a                                                                    
     new  era for  Alaska,  but the  boom  years were  still                                                                    
     ahead  of us.  Today, the  boom  is behind  us, but  we                                                                    
     still have  good years  ahead if  we're smart.  So what                                                                    
     can we  learn from that  chart? Can government  be more                                                                    
     efficient?  Yes.  Can we  manage  costs  better?   Most                                                                    
     definitely.  By historical  standards,  do  we have  an                                                                    
     out-of-control  budget? Data  simply  does not  support                                                                    
     that conclusion.                                                                                                           
     We've  managed general  fund  cost  growth in  Medicaid                                                                    
     through  collaboration with  the Legislature,  DHSS and                                                                    
     the  provider  community.  From  FY  2015     FY  2018,                                                                    
     general fund spending in  Medicaid was relatively flat,                                                                    
     while  we provided  coverage for  tens of  thousands of                                                                    
     additional  Alaskans. The  Medicaid  cost growth  curve                                                                    
     also   flattened.   These   are  successes   that   the                                                                    
     governor's  cuts put  in jeopardy.  Let's talk  about a                                                                    
     few of those cuts.                                                                                                         
     First, the  governor has cut an  additional $50 million                                                                    
     in  Medicaid  general  funds   above  the  $70  million                                                                    
     reduced by  the legislature. This does  not account for                                                                    
     lost federal funds, which  roughly doubles that amount.                                                                    
     DHSS   presented  a   plan  to   the  Legislature   for                                                                    
     reductions  of about  $100 million,  but  much of  that                                                                    
     plan is unattainable. There is  no plan for the balance                                                                    
     of  the reduction,  except for  vague promises  of "CMS                                                                    
     waivers." First,  the Medicaid  program is  in statute,                                                                    
     so benefits  must be provided to  eligible individuals.                                                                    
     Second, CMS  does not have  a magic wand to  waive that                                                                    
     will allow the state  to massively reduce costs without                                                                    
     significant  changes  to  eligibility,  utilization  or                                                                    
     We don't know  what the impacts of these  cuts will be,                                                                    
     because there is no plan,  but given the dollar amount,                                                                    
     they  could be  extreme.  They  will affect  vulnerable                                                                    
     Alaskans,  because   children,  the  elderly   and  the                                                                    
   disabled are the populations driving Medicaid costs.                                                                         
     Yesterday, DHSS put  out an RFP for an  advisor to help                                                                    
     them  achieve   these  cost  savings.  That   makes  it                                                                    
     apparent that they  do not have a plan. Let  me be very                                                                    
     clear,  a  cut of  this  magnitude  without a  plan  or                                                                    
     analysis  of the  impact  on people  is  the height  of                                                                    
     irresponsibility. It is likely  that Medicaid will need                                                                    
     a  significant  supplemental  next  year  or  that  the                                                                    
     governor will make  unwise and arbitrary administrative                                                                    
     We are concerned about other  cuts affecting the safety                                                                    
     net. First,  cuts to  homelessness assistance,  while a                                                                    
     relatively  small  amount  of   money  will  have  huge                                                                    
     impacts. According  to Catholic Social  Services, these                                                                    
     cuts will  cause a 48 percent  increase in homelessness                                                                    
     in  Anchorage.   Some  people   will  lose   access  to                                                                    
     permanent  housing, and  shelter  beds  will close.  An                                                                    
     increase in homelessness will also  mean an increase in                                                                    
     crime and emergency department costs.                                                                                      
     It  is   widely  acknowledged  that  we   already  have                                                                    
     behavioral   health  system   in  crisis.   Demand  has                                                                    
     increased, while  state services,  such as  capacity at                                                                    
     API, have decreased.  As we work to  improve the system                                                                    
     and transform  care, cuts  in behavioral  health grants                                                                    
     will further  strain a system  already at  the breaking                                                                    
     point. These, combined  with other state administrative                                                                    
     reductions, will  not only  set back  much of  the good                                                                    
     work  that  has  occurred,  but will  result  in  fewer                                                                    
     Alaskans    getting   treatment.    The   consequences?                                                                    
     Increases  in substance  abuse, homelessness  and crime                                                                    
     as well as emergency departments at capacity.                                                                              
     Cuts to  the university will also  have consequences on                                                                    
     health care.  Our industry relies on  the university to                                                                    
     provide  a trained  workforce. Given  the magnitude  of                                                                    
     the  budget reduction,  it  is hard  to  see how  these                                                                    
     programs  are held  harmless. Health  care is  a labor-                                                                    
     intensive business.  If staffing and  recruitment costs                                                                    
     go up, health care costs for all will increase.                                                                            
     Finally,  the elimination  of  adult preventive  dental                                                                    
     demonstrates  the  governor's  willingness  to  take  a                                                                    
     penny-wise  but  pound-foolish  approach. How  does  it                                                                    
     make  sense to  pay for  dental care  in the  emergency                                                                    
     department, but not for preventive services?                                                                               
     For those who  believe government is too  big, there is                                                                    
     another path.  You can believe  in the need  for budget                                                                    
     cuts  AND believe  that the  governor's chosen  methods                                                                    
     will  wreak havoc  on  the  state. If  the  goal is  to                                                                    
     reduce  costs  strategically  AND  maintain  a  livable                                                                    
     place,  responsible  reductions  are  achievable  on  a                                                                    
     glidepath,  giving   organizations,  the   economy  and                                                                    
     people time to adjust.                                                                                                     
     This body  has endorsed that approach.  The Legislature                                                                    
     has  worked with  stakeholders and  industry to  reduce                                                                    
     the  size  of  state   government,  while  helping  our                                                                    
     economy emerge from a recession.  I want to thank every                                                                    
     legislator sitting here  today and some who  are not in                                                                    
     the  room.  You have  reduced  the  size of  government                                                                    
     responsibly  and thoughtfully,  without destroying  our                                                                    
     economy and  the state  we love.  We can  continue that                                                                    
     work   together,   with  industry,   stakeholders   and                                                                    
     government  working collectively  for the  good of  the                                                                    
     state. Or we can  choose the governor's blunt approach,                                                                    
     which  will bring  recession and  pain. The  governor's                                                                    
     vetoes put that choice in stark relief.                                                                                    
     It's misleading to talk about  these cuts in isolation,                                                                    
     as if they  exist in silos. In fact,  the complexity of                                                                    
     health  care  means  that  there  are  interacting  and                                                                    
     compounding effects.                                                                                                       
     Our  economy is  like a  pond.  When you  drop a  large                                                                    
     boulder  in  a  small  pond, it  creates  a  wave  that                                                                    
     affects  the entire  shoreline. The  ripple effects  of                                                                    
     disruption will  mark everything  in their  path. Those                                                                    
     who will believe their lives  and their quality of life                                                                    
     will be unaffected by the  governor's cuts are na?ve at                                                                    
     best. We  are all  impacted by homelessness  and crime.                                                                    
     We  all  count on  open  emergency  departments in  our                                                                    
     community to  provide lifesaving care.  Businesses rely                                                                    
     on a  functioning public  infrastructure so  that their                                                                    
     employees  have access  to health  care, education  and                                                                    
     livable  communities.  The  governor's cuts  put  these                                                                    
     things, which we take for granted, in jeopardy.                                                                            
     I want  to thank this  body, other legislators  and all                                                                    
     Alaskans  who  have  weighed in  during  this  critical                                                                    
     time. You  have charted a responsible  course. You have                                                                    
     reduced the state budget in  a responsible way. This is                                                                    
     not a  time for  soundbites, but a  time to  reflect on                                                                    
     real impacts  on people and  on our community.  This is                                                                    
     about  our economy,  our  livelihoods, our  communities                                                                    
     and the future of our state.                                                                                               
     Thank  you for  your time  and for  the opportunity  to                                                                    
2:25:32 PM                                                                                                                    
Vice-Chair   Johnston  wondered   whether   the  state   was                                                                    
responsible  for  the  bill  until  there  was  a  different                                                                    
relationship established  if a provider gave  treatment to a                                                                    
Medicaid patient.                                                                                                               
Ms.  Hultberg  replied  in the  affirmative.  She  explained                                                                    
that, in  an environment  where the department  was reducing                                                                    
the budget for  the department, and the  department runs out                                                                    
of funding,  the providers would still  provide services and                                                                    
the state must pay the  bill. She explained that there would                                                                    
be a  situation where  the state  would need  a supplemental                                                                    
appropriation  to  enable the  program  to  continue to  pay                                                                    
providers,  or the  state would  stop paying  providers. She                                                                    
stressed that the money would still be owed.                                                                                    
Vice-Chair Johnston noted the  billing program from a couple                                                                    
of  years  prior.  She  wondered   if  the  billing  problem                                                                    
affected the larger  or smaller providers. She  asked if any                                                                    
provider  business  closed due  to  a  lack of  the  state's                                                                    
Ms. Hultberg replied that thought  that there were providers                                                                    
that  had to  shut their  doors  as a  result of  a lack  of                                                                    
prompt payment.                                                                                                                 
2:28:40 PM                                                                                                                    
JIM ROBERTS,  SENIOR EXECUTIVE LIASON, ALASKA  NATIVE TRIBAL                                                                    
HEALTH  CONSORTIUM,  ANCHORAGE  (via  teleconference),  read                                                                    
from a prepared statement:                                                                                                      
     Members of  the Committee,  my name  is Jim  Roberts, I                                                                    
     serve   as    Senior   Executive   Liaison,    in   the                                                                    
     Intergovernmental  Affairs  Department for  the  Alaska                                                                    
     Native Tribal Health Consortium (ANTHC).                                                                                   
     ANTHC and Southcentral  Foundation co-manage the Alaska                                                                    
     Native Medical  Center, the tertiary care  hospital for                                                                    
     over  173,000  AN/AI  people   in  Alaska.  ANTHC  also                                                                    
     provides a  wide range  of statewide  public, community                                                                    
     and   environmental   health  programs   and   services                                                                    
     throughout  the state.    ANTHC  directly employs  over                                                                    
     3,000  employees  and  contributes  indirectly  to  the                                                                    
     employment of  many other people throughout  the health                                                                    
     and other economic sectors of our State.                                                                                   
     It is  important to note that  Congress has established                                                                    
     a special statutory framework  for the participation of                                                                    
     the  Tribal  health  system   in  Medicaid.    Congress                                                                    
     created a  unique financing arrangement in  Medicaid to                                                                    
     allow  states  to  claim 100  percent  Federal  Medical                                                                    
     Assistance  Percentage  (FMAP)  for  services  provided                                                                    
     through  tribal   facilities  in  recognition   of  the                                                                    
     federal government's  obligation to fund  tribal health                                                                    
     The important  point here is that  Congress established                                                                    
     this framework to  not burden the States  with the cost                                                                    
     of  health care  delivered  through  the Tribal  health                                                                    
     system.   The result  of this  policy is  that Medicaid                                                                    
     services delivered through the  ATHS are budget neutral                                                                    
     to the State; and any  type of Medicaid reductions will                                                                    
     have an adverse impact  on tribal providers as Congress                                                                    
     intended    Medicaid    collections    to    supplement                                                                    
     appropriations provided to the Tribal health system.                                                                       
     After  extensive   legislative  hearings,   debate  and                                                                    
     public  input, the  Legislature  arrived  at a  painful                                                                    
     $70.2 million cut in Medicaid  funding for FY 2020.  We                                                                    
     are  concerned  that  rather   than  working  with  the                                                                    
     Legislature  to achieve  additional  cost savings,  the                                                                    
     Governor has  unilaterally cut the Medicaid  program by                                                                    
     $50  million   and  eliminated   Adult  Dental.     The                                                                    
     financial impact will be greater  when the lost federal                                                                    
     matching funds are considered.   The $50 million cut by                                                                    
     the Governor,  on top of  the $70 million  reduction by                                                                    
     the  Legislature, will  have a  harmful  impact on  the                                                                    
     ATHS  and  the  rural  communities  we  serve.    These                                                                    
     reductions will result in  less services being provided                                                                    
     by  the  ATHS  and  result  in  higher  emergency  room                                                                    
     utilization, more emergency  travel being required, the                                                                    
     elimination of  behavioral health services  will result                                                                    
     in other costs presenting  in law enforcement and court                                                                    
     Tribal   health   providers  have   utilized   Medicaid                                                                    
     resources to increase the capacity  to deliver care and                                                                    
     provide additional  services previously  available only                                                                    
     through  non-tribal providers  at reduced  FMAP to  the                                                                    
     State. This  increased capacity to deliver  care within                                                                    
     the tribal  health system  provides ongoing  savings to                                                                    
     the State's general fund and  will be diminished by the                                                                    
     current reductions.                                                                                                        
     In  addition, the  increased capacity  provides savings                                                                    
     to  the  State  for non-Native  Medicaid  beneficiaries                                                                    
     residing in rural areas  where few non-tribal providers                                                                    
     are  available,  thereby  decreasing  costs  associated                                                                    
     with travel  and higher-acuity  care that  might result                                                                    
     due to the  lack of locally-available care.   This will                                                                    
     have a significant impact on  the economy of our State.                                                                    
     It will result in  less employment opportunities and it                                                                    
     will reduce the level of  goods and services that ANTHC                                                                    
     purchases  from  the   private  sector  when  providing                                                                    
     health  care.          Important to  note  is that  the                                                                    
     governor's  $50 million  veto does  not  come with  any                                                                    
     type  of implementation  plan on  how these  reductions                                                                    
     would be achieved.  It  is irresponsible to put forward                                                                    
     such significant  cuts without a plan  or consideration                                                                    
     of the  consequences of  these reductions.   A  vote to                                                                    
     override   the  governor's   vetoes  does   not  signal                                                                    
     disagreement with the goal to  provide an efficient and                                                                    
     cost-effective Medicaid  program.   On the  contrary, a                                                                    
     vote to  override the $50 million  unallocated Medicaid                                                                    
     cut   and  elimination   of  adult   preventive  dental                                                                    
     services   recognizes   the   rightful  role   of   the                                                                    
     Legislature   in  the   Medicaid  program   design  and                                                                    
     structure,  restoring its  ability to  continue working                                                                    
     toward sustainable and sensible program improvements.                                                                      
     On behalf  of ANTHC,  I strongly  urge you  to consider                                                                    
     the negative  impact this  will have  on the  health of                                                                    
     Alaskans  and  the overall  economy  of  the State  and                                                                    
     override the governor's Medicaid vetoes.                                                                                   
Mr. Roberts strongly urged members to override the                                                                              
governor's vetoes regarding Medicaid funding.                                                                                   
2:34:03 PM                                                                                                                    
KEN HELANDER, ADVOCACY DIRECTOR, AARP, ANCHORAGE (via                                                                           
teleconference), read from a prepared statement:                                                                                
     Thank you, Co-Chairs Wilson and  Foster, and Vice Chair                                                                    
     Johnston, for  inviting AARP to testify  this afternoon                                                                    
     regarding the  governor's vetoes.   I am  Ken Helander,                                                                    
     Advocacy Director for AARP  Alaska, our state's largest                                                                    
     membership  organization with  85,000 members  over the                                                                    
     age of 50.   Although we are concerned with  all of the                                                                    
     governor's line  item vetoes, I am  focusing my remarks                                                                    
     on his zeroing  out of funding for  the Senior Benefits                                                                    
     The  Senior Benefits  Program was  created  in 2007  as                                                                    
     something of  a reiteration of the  old Longevity Bonus                                                                    
     Program  that  was  completely phased  out  under  Gov.                                                                    
     Murkowski.    The  old  program  paid  a  monthly  cash                                                                    
     benefit to  Alaskans 65 and  older regardless  of their                                                                    
     need for it.  Senior  Benefits came into being with the                                                                    
     recognition that  though not all older  Alaskans needed                                                                    
     this money,  there are  some who do.   These  are often                                                                    
     single or widowed  older women who may  have lost their                                                                    
     economic  security caring  for  a  dependent spouse  or                                                                    
     child.   Or it might  have been  a low wage  worker who                                                                    
     never had  a chance to  save and whose  Social Security                                                                    
     amount is very small.   It also includes many who lived                                                                    
     and worked  by subsistence,  not building  a retirement                                                                    
     savings or substantial Social Security.                                                                                    
     In  any   case,  these  are  older   Alaskans  who  are                                                                    
     economically poor.   How poor?   Those who  qualify for                                                                    
     the largest  Senior Benefit  amount ($250/mo)  can have                                                                    
     no  more  (often less)  than  $949/month  income!   The                                                                    
     middle benefit  amount is $175/mo for  persons who have                                                                    
     incomes  below the  100 percent  Federal Poverty  Level                                                                    
     ($1265/mo),   and  for   the  current   lowest  benefit                                                                    
     ($76/mo)  the income  limit is  175 percent  FPL at  no                                                                    
     more than $2214/mo.  It  is difficult to imagine living                                                                    
     on  such  an  income  in Alaska,  especially  when  the                                                                    
     average Senior Beneficiary is 75  years old, likely has                                                                    
     chronic health  problems and must regard  every expense                                                                    
     as a choice between a necessity and a necessity.                                                                           
     When  older  Alaskans  who  qualify  lose  this  income                                                                    
     supplement from  the Senior  Benefits program,  it will                                                                    
     be gone  and irreplaceable.   They are not going  to go                                                                    
     out and  get a job  or ask for a  raise.  They  are not                                                                    
     going to  ask for  help from  mom and  dad.   They will                                                                    
     simply have  permanently lost  a significant  amount of                                                                    
     their  monthly income,  and  therefore their  financial                                                                    
     security.  Unquestionably the loss  of this income will                                                                    
     increase  the risk  of  losing  their independence  and                                                                    
     hasten  their   move  to  a  much   costlier  track  of                                                                    
     dependent care.                                                                                                            
     The Senior Benefits Program is  not a bricks and mortar                                                                    
     program for the  state.  In fact, it  functions in much                                                                    
     the same way as the  Permanent Fund Dividend, though on                                                                    
     a smaller scale.  The  monthly allowance from the state                                                                    
     goes  directly  to  the  senior  beneficiary  who  then                                                                    
     spends  it on  necessary  expenditures  in this  state.                                                                    
     They  certainly are  not  going  to fancy  restaurants,                                                                    
     buying a smart TV or taking a  trip to Hawaii.  It is a                                                                    
     modest financial  stimulus to Alaska's economy  and can                                                                    
     rightly be  regarded as a state  investment rather than                                                                    
     an expense.                                                                                                                
     Being old and poor in  Alaska is not a circumstance for                                                                    
     more  insecurity.   Yet, when  Gov. Dunleavy  announced                                                                    
     his  line item  vetoes on  Friday, June  28th, he  gave                                                                    
     only  three days'  notice  to  beneficiaries that  they                                                                    
     should not expect any more checks.                                                                                         
     This  is  the  current   notice  on  the  state's  DHSS                                                                    
     website:   "July  1, 2019  - Under  the FY  2020 budget                                                                    
     signed   by  Governor   Dunleavy,  the   Alaska  Senior                                                                    
     Benefits Payment  Program will end July  1 and payments                                                                    
     for FY2020  will not occur.  With the state  facing the                                                                    
     challenge  of  aligning  current  state  revenues  with                                                                    
     state  expenditures, this  program is  being eliminated                                                                    
     to contain  costs and reduce dependence  of individuals                                                                    
     on state  funds. Repealing the Senior  Benefits Payment                                                                    
     program  will reduce  the administrative  and financial                                                                    
     burden on state resources."                                                                                                
     Aside from the obvious  disregard of proper notice that                                                                    
     some poor elders will  immediately and permanently lose                                                                    
     up to 25 percent of  their monthly income, this website                                                                    
     notice reiterates  the governor's byline that  it is to                                                                    
     "reduce  dependence  of  individuals on  state  funds."                                                                    
     The individuals in question  ARE dependent, not because                                                                    
     of state  funds, but because  age has a tendency  to do                                                                    
     this  to all  who live  long enough.   Anyone  who owns                                                                    
     stock and watches the exchanges  or Dow Jones, seeing a                                                                    
     drop of 20-25  percent in the value  of their portfolio                                                                    
     would  be stunned  and reeling,  and would  quickly set                                                                    
     about figuring  out how  to make this  up.   Low income                                                                    
     seniors who are dependent  will never be less dependent                                                                    
     than  they are  today,  and certainly  not by  abruptly                                                                    
     cutting   off    a   crucial   source    of   financial                                                                    
     security?.without notice.                                                                                                  
     The governor says  it will be a wash  because they will                                                                    
     get a  larger PFD, and  so it  should not be  a problem                                                                    
     for  these  low   income,  vulnerable  older  Alaskans.                                                                    
     However, there are some things to consider:                                                                                
            Being  cut off  from the  monthly benefit  as of                                                                    
     July  1,  means these  seniors  must  go through  July,                                                                    
     August,  September,  perhaps  part of  October,  before                                                                    
     they ever see any PFD money.   While they live month to                                                                    
     month counting  every penny,  we apparently  now expect                                                                    
     them  to  sustain the  impact  of  losing up  to  $1000                                                                    
     before ever seeing a PFD.                                                                                                  
            Many  forgo a PFD  altogether, knowing  it could                                                                    
     render them ineligible  for other means-tested supports                                                                    
     they  need,  like  many   food  assistance  or  heating                                                                    
     assistance programs.                                                                                                       
            Having  this  significant   portion  of  monthly                                                                    
     income  taken away  can be  seen  as a  penalty or  tax                                                                    
     targeted  specifically at  the  poorest  and oldest  of                                                                    
     Alaskans, a tax  that is not levied  on other Alaskans.                                                                    
     No one  else is being  asked or  required to give  up a                                                                    
     chunk of their  income in order to receive a  PFD.  Why                                                                    
     penalize or  tax these, our  elders who have  the least                                                                    
     to give up?                                                                                                                
            Repealing  the SBP  will "reduce  administrative                                                                    
     and financial burden on state  resources."  When people                                                                    
     lose the ability  to be independent in  their homes and                                                                    
     community, the  next step  is increasing  dependence on                                                                    
     state funds  (Medicaid long  term care)  and/or family.                                                                    
     The  dependency will  not  go away,  and  thus it  will                                                                    
     increase  administrative and  financial burden,  likely                                                                    
     on the  state, but  also on  Alaskan families  who will                                                                    
     have  to take  time off  from or  quit work,  subsidize                                                                    
     finances, and  perhaps have their own  health and well-                                                                    
     being compromised as well.                                                                                                 
            The  most   any  SBP  beneficiary   receives  is                                                                    
     $250/month.   If  that  beneficiary  should lose  their                                                                    
     independence and  have to  move out  of their  home and                                                                    
     into  assisted  living,  the cost  would  be  somewhere                                                                    
     between  $4000-$9000/month.     Skilled   nursing  care                                                                    
     (nursing home) costs close  to $25,000/month in Alaska.                                                                    
     Most often this  cost is assumed by  the state Medicaid                                                                    
     program.  No reduction  of administrative and financial                                                                    
     burden here.                                                                                                               
     In all of  this, there is an apparent  contempt for the                                                                    
     oldest members of  our community.  Some  call them "the                                                                    
     aged" or "the aging."   But Governor Dunleavy is aging;                                                                    
     the  OMB director  is aging;  commissioners are  aging;                                                                    
     all   the  legislators   are  aging;   Republicans  and                                                                    
     Democrats and unaffiliated are  all aging; liberals and                                                                    
     conservatives are all aging;  people of every color and                                                                    
     gender are  aging; children are aging;  the wealthy and                                                                    
     the needy  are aging;  workers and business  owners are                                                                    
     aging;  neighbors  and  friends  are  aging;  petroleum                                                                    
     workers and  farmers are  aging; doctors  and mechanics                                                                    
     are aging.   In fact, nobody is not aging.   All of us,                                                                    
     every  Alaskan, is  aging just  as fast  as the  other.                                                                    
     And  someday  that  senior  who  could  have  sustained                                                                    
     themselves independently  for a little longer  with the                                                                    
     Senior Benefit income help, that  person will be you or                                                                    
     We should not turn our heads  away from our elders.  We                                                                    
     should not  treat them as  burdensome.  We  should look                                                                    
     beyond the  dependencies and  pay very  close attention                                                                    
     to them.   We should  learn everything we  possibly can                                                                    
     from  them.   We should  take  care of  the old  person                                                                    
     we're going to become.                                                                                                     
     Thank you for the opportunity  to give comment today on                                                                    
     behalf of older Alaskans.                                                                                                  
2:43:56 PM                                                                                                                    
Representative LeBon asked  if AARP had taken  a position on                                                                    
the PFD.                                                                                                                        
Mr.  Helander  indicated  that, because  the  PFD  was  very                                                                    
Alaska-specific and AARP was  a national organization, there                                                                    
was no policy to address the  program. He shared that it was                                                                    
believed  that taxes  should be  primarily progressive,  and                                                                    
levied equitably.                                                                                                               
Representative LeBon  asked if the organization  had thought                                                                    
about taking a position.                                                                                                        
Mr.   Helander  responded   that  he   did  not   think  the                                                                    
organization would  take a  position because  of it  being a                                                                    
national  organization. He  reported  that the  organization                                                                    
supported  an  income  taxes and  would  likely  support  an                                                                    
account such as the Permanent Fund.                                                                                             
Co-Chair  Wilson asked  if there  was data  that showed  how                                                                    
many seniors declined the PFD.                                                                                                  
Mr. Helander responded that he did not have any numbers.                                                                        
2:47:37 PM                                                                                                                    
MELANIE BAHNKE,  PRESIDENT AND CEO, KAWERAK  INC., NOME (via                                                                    
teleconference), read from a prepared statement:                                                                                
     For the record, I am  Melanie Bahnke, President and CEO                                                                    
     of  Kawerak,  Inc.,  the  regional  non-profit  in  the                                                                    
     Bering Strait Region.                                                                                                      
     Co-Chairs  Representative   Foster  and  Representative                                                                    
     Wilson, and  Members of the House  Finance Committee, I                                                                    
     want  to express  to  you my  appreciation  to you  for                                                                    
     allowing me  to testify at  this historic point  in our                                                                    
     state's history.  I also  want to thank the legislature                                                                    
     for having  developed a  compromise budget  and uniting                                                                    
     for  Alaska.   Unfortunately, the  vetoes have  had the                                                                    
     effect of  dividing your body  yet again.   Ironically,                                                                    
     this issue of the  vetoes has actually brought Alaskans                                                                    
     from all different kinds of  walks of life together, as                                                                    
     we  unite  in an  unprecedented  way  to call  for  the                                                                    
     legislature to override the vetoes.                                                                                        
     By way of information,  Kawerak employs over 200 people                                                                    
     in our  region and we are  a partner with the  State in                                                                    
     providing services.   We operate a  Head Start program,                                                                    
     which serves over  220 children.  The veto  to the Head                                                                    
     Start  budget will  result of  a  loss of  over half  a                                                                    
     million dollars  in funding for Kawerak.   This funding                                                                    
     provides a match for our  federal Head Start grant.  It                                                                    
     brings in,  for every State  dollar that we use  in our                                                                    
     Head  Start  program,  4 additional  dollars  from  the                                                                    
     federal government.  Our  Village Public Safety Officer                                                                    
     Program  is currently    we  have 3  applicants in  the                                                                    
     process that we've  been told to freeze  the process of                                                                    
     hiring  them.   We do  have 5  VPSOs employed,  so this                                                                    
     means, in  a region with  15 villages, that if  we stay                                                                    
     at 5  VPSOs, two-thirds  of our  villages will  have no                                                                    
     public safety.  We also,  among the other services that                                                                    
     we  partner  with  the  State  for,  we  have  a  Child                                                                    
     Advocacy Center, where we  provide services to children                                                                    
     who  have  been  sexually  abused,  we  provide  family                                                                    
     services,  we provide  Adult  Basic  Education, and  we                                                                    
     also put  people who  are on  welfare to  work.   So we                                                                    
     have a big interest in these vetoes.                                                                                       
     Indirect  cuts  that   are  not  necessarily  affecting                                                                    
     Kawerak but will affect  our region's community members                                                                    
     are the closure of the  Nome Youth Facility, which is a                                                                    
     detention  center  for  youth have  been  incarcerated.                                                                    
     This facility  is slated to  close on July 14th  if you                                                                    
     do not  act to override  the vetoes.  The  adult dental                                                                    
     Medicaid program is impacting  people already.  I heard                                                                    
     just the other day about  a special needs adult who was                                                                    
     going to have his wisdom  teeth removed who was told by                                                                    
     his  provider  that dental  Medicaid  is  no longer  an                                                                    
     option for that.  The  University of Alaska system cuts                                                                    
        we have  currently 76  higher education  scholarship                                                                    
     recipients   in  the   University   of  Alaska   system                                                                    
     statewide.   25 attend  UAF, 20  attend UAA,  14 attend                                                                    
     the  Northwest  campus,  6  attend  the  University  of                                                                    
     Alaska   Southeast,  and   11   are  attending   higher                                                                    
     education in the University of  Alaska, Juneau.  We are                                                                    
     making  progress in  terms of  people  from our  region                                                                    
     seeking  higher  education  and obtaining  degrees  and                                                                    
     becoming employable productive  citizens for the state.                                                                    
     Our homeless  shelter, the Nome Emergency  Shelter Team                                                                    
        I heard,  I  believe it  was  a representative  from                                                                    
     Anchorage who  asked Diane  Kaplan, "Will  these vetoes                                                                    
     actually cause people to die?",  and she wasn't able to                                                                    
     answer  that  directly.   For  our  region,  that's  an                                                                    
     answer that I can provide.   The answer is yes.  We did                                                                    
     have people freezing  on our streets, up  until we were                                                                    
     able to  open an  emergency shelter, especially  in the                                                                    
     winter  time.   It  averages about  20-30 people,  it's                                                                    
     only open  during the winter  when people are  at their                                                                    
     most vulnerable and at risk  of freezing to death.  And                                                                    
     since  the emergency  shelter has  opened, we  have had                                                                    
     zero  instances  of people  freezing  to  death on  the                                                                    
     streets.  I'm  concerned that if their  funding is cut,                                                                    
     we will  see people  dying, or maybe  committing crimes                                                                    
     on purpose  so that they  can go  to jail so  that they                                                                    
     have a roof over their heads.                                                                                              
     I could  go on and  on, but you've been  presented with                                                                    
     the data.   The data  is out  there.  You've  also been                                                                    
     presented  with useful  information.   There have  been                                                                    
     rallies.   I think though,  more than anything,  what I                                                                    
     offer you is  to encourage you to act, to  let you know                                                                    
     that  Alaskans are  paying attention  to what  is going                                                                    
     on.    I'm   not  sure  what  motivated   each  of  you                                                                    
     individually to  seek political  office.   I'm grateful                                                                    
     for your  service.   If it  was to  leave your  mark in                                                                    
     history,  that is  happening now.   This  situation has                                                                    
     made national news.  This  moment, and this legislature                                                                    
     shall be remembered as historic  as Alaska faces a fork                                                                    
     in the  road.  Budgets  passed by  various legislatures                                                                    
     don't go down in history  as memorable.  However, human                                                                    
     rights issues are  always remembered.  This  is a human                                                                    
     rights  issue.   Segregation legislators  were historic                                                                    
     too.   When  Alaska  legislators  considered the  Civil                                                                    
     Rights   law,  which   Elizabeth  Peratrovich   bravely                                                                    
     testified in  favor of, the nay  votes, are remembered.                                                                    
     This is  a human rights  issue and human  rights issues                                                                    
     are always  remembered.  We are  at a fork in  the road                                                                    
     for our  state.   We must  protect our  most vulnerable                                                                    
     people.  You need to override the Governor's vetoes.                                                                       
     When the Governor  was in Nome, I was  very hesitant to                                                                    
     speak  up.   I thought  who  am I  to stand  up to  the                                                                    
     Governor?   And  yet, I  did because  I care  about our                                                                    
     region  and our  State, and  our people.   You,  of all                                                                    
     people, in this state, can  use your voice too, and you                                                                    
     actually wield a much more  powerful weapon than just a                                                                    
     voice, you  have a vote.   You can change the  tide, or                                                                    
     you  can go  down  in  history as  having  stood by  as                                                                    
     Alaska  drowned.   Be  on the  right  side of  history.                                                                    
     Override the vetoes.  Thank you.                                                                                           
2:55:09 PM                                                                                                                    
NILS ANDREASSEN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL                                                                           
LEAGUE, JUNEAU, read from a prepared statement:                                                                                 
     The Alaska  Municipal League  and Alaska  Conference of                                                                    
     Mayors  (ACoM) have  been clear  in our  communications                                                                    
     throughout  the legislative  session     the budget  as                                                                    
     proposed  by  Governor   Dunleavy  and  expressed  most                                                                    
     recently  in  the  form of  vetoes  is  detrimental  to                                                                    
     Alaska's local governments, residents and the economy.                                                                     
     In releasing his vetoes, the  Governor referred to cuts                                                                    
     as  a two-year  process.  The scale  and  scope of  the                                                                    
     vetoes  dismantles   the  good  work  that   this  body                                                                    
     undertook during  the legislative session,  and there's                                                                    
     more  to come.  AML participated  actively through  the                                                                    
     legislative   process.    It   was   your    care   and                                                                    
     consideration  that mitigated  the negative  impacts to                                                                    
    communities, and your action now that is asked for.                                                                         
     We  encourage  your  continued partnership  with  local                                                                    
     leaders  in   strengthening  Alaska,  and   working  on                                                                    
     solutions, together.                                                                                                       
     Local Government Activities                                                                                                
     As  we speak,  it  is local  governments whose  budgets                                                                    
     support first  responders fighting forest fires  on the                                                                    
     Kenai,  in  the Mat  Su,  and  around Fairbanks.  Local                                                                    
     government spending  on law enforcement is  $75 million                                                                    
     more than  the entire budget of  the State's Department                                                                    
     of Public Safety. Local  governments provide 50 percent                                                                    
     of the  State's education funding,  as well as  own and                                                                    
     maintain the  majority of schools  in the  state. Local                                                                    
     governments  maintain   and  operate   Alaska's  entire                                                                    
     coastal  infrastructure  system,   ensuring  ports  and                                                                    
     harbors continue to support  an active fishing industry                                                                    
        the largest  private  employer in  the state.  Local                                                                    
     governments  operate  37   public  power  utilities,  a                                                                    
     handful of  hospitals, and  47 public  libraries. Local                                                                    
     governments   are  busy   in   road  construction   and                                                                    
     maintenance  during  these summer  months,  responsible                                                                    
     for more  than 5,500 road  miles, about equal  to DOT's                                                                    
     responsibilities. Local  governments in  Alaska provide                                                                    
     these  services to  an area  of  252,000 square  miles,                                                                    
     100,000 more than State land ownership.                                                                                    
     It    is   worth    understanding    the   roles    and                                                                    
     responsibilities of local  governments not just because                                                                    
     they are  significant, and in many  ways are fulfilling                                                                    
     State  obligations,  but  because reductions  in  State                                                                    
     support  force  trade-offs  at  the  local  level  that                                                                    
     potentially negatively  impact each of  these services.                                                                    
     When  the  State   cost-shifts  to  local  governments,                                                                    
     decision-making centers  on reallocating  already scant                                                                    
     resources   between   competing   priorities       debt                                                                    
     obligations,   especially,    compete   directly   with                                                                    
     education  and public  safety,  or  insurance for  that                                                                    
     Municipal  budgets were  finalized  more  than a  month                                                                    
     ago.  Budgets  were  negotiated   at  the  local  level                                                                    
     between taxpayers  and their  assembly or  council. Tax                                                                    
     rates were  set based  on those discussions,  to ensure                                                                    
     revenue  commensurate  with  local needs,  taking  into                                                                    
     account the  assumption that the Legislature's  work on                                                                    
     the  budget   would  stand.   A  pre-veto   polling  of                                                                    
     municipalities indicated the  majority were keeping tax                                                                    
     rates  stable,  consistent   with  taxpayer  interests.                                                                    
     These factors  enter into municipal  conversations with                                                                    
     credit  rating   agencies,  as  well,  which   are  now                                                                    
     affected by the Governor's vetoes.                                                                                         
     For those  local governments with property  taxes, mill                                                                    
     rates are  set annually. The opportunity  to change the                                                                    
     mill rate will  be next year, at  which point residents                                                                    
     could potentially  see two  years' worth  of increases,                                                                    
     if  these  vetoes stand  and  the  State continues  its                                                                    
     divestment   of  obligations.   For  those   without  a                                                                    
     property  tax,  new  or   increased  taxes  could  take                                                                    
     anywhere from  3 to  9 months to  be proposed  and pass                                                                    
     through  local  processes.  And there  are  some  local                                                                    
     governments  whose revenue  is  in  place through  PILT                                                                    
     agreements  with  resource development  companies,  and                                                                    
     these can't just be renegotiated.                                                                                          
     The   circumstance  of   every   local  government   is                                                                    
     different. For  some, in the  short term they  can make                                                                    
     do. For  all, the long-term consequences  of vetoes and                                                                    
     continued  budget  cuts  will negatively  impact  their                                                                    
     capacity   to   deliver  essential   public   services,                                                                    
     increase  quality of  life for  residents, and  fulfill                                                                    
     their  responsibilities  as political  subdivisions  of                                                                    
     the State.                                                                                                                 
     Direct Impacts to Local Governments                                                                                        
     The total direct budgetary  impact to local governments                                                                    
     is approximately  $55,647,565, mainly from  School Bond                                                                    
     Debt Reimbursement but also including                                                                                      
            OWL Broadband                                                                                                       
          Municipal Capital Project Reimbursement                                                                               
            Local Emergency Planning Committee                                                                                  
         Human Services Community Matching Grants                                                                               
     Additionally,  the veto  of  $30  million in  Community                                                                    
     Assistance Fund  recapitalization will  directly impact                                                                    
     local governments in the years to come.                                                                                    
     A   50   percent   reduction  to   school   bond   debt                                                                    
     reimbursement   breaks    the   State's    promise   to                                                                    
     communities;  roughly  speaking  it  means  that  local                                                                    
     governments  will  pick  up   the  majority  of  school                                                                    
     construction   costs   in   support  of   the   State's                                                                    
     Constitutional obligation. Similarly,  vetoing the debt                                                                    
     reimbursement  for  municipal   capital  projects  that                                                                    
     improved   ports  and   harbors   across  Alaska   will                                                                    
     negatively  impact those  communities  and the  fishing                                                                    
     industry. Some  local governments  will be  better able                                                                    
     to manage  this than others, but  cost-shifting will be                                                                    
     directly felt by local taxpayers.                                                                                          
     AML  is  concerned  that the  Governor  chose  to  veto                                                                    
     capitalizing  the  Community   Assistance  Fund,  which                                                                    
     essentially reduces  Community Assistance in FY21  by a                                                                    
     third.  This, coming  off reductions  just a  few years                                                                    
     back of 50  percent, presents an undue  burden on local                                                                    
     governments.  The long-term  viability of  many smaller                                                                    
     local governments will be at  risk   we know that local                                                                    
     taxes increase when  Community Assistance is decreased.                                                                    
     This program  has seen not only  significant reductions                                                                    
     over  the years    from  $140  million in  1985 to  its                                                                    
     current  $30 million     but also  not  kept pace  with                                                                    
     inflation.   Many   of    those   receiving   Community                                                                    
     Assistance  are  truly   dependent  on  this  dwindling                                                                    
     revenue to perform  the duties required of  them by the                                                                    
     Economic Impacts                                                                                                           
     To  make  up for  the  reduction  to school  bond  debt                                                                    
     reimbursement, this will mean as  much as 15 percent of                                                                    
     some local  governments' annual tax revenue.  While you                                                                    
     may   have  seen   media   reports   of  increases   in                                                                    
     residential    property,   commercial    property   tax                                                                    
     increases threaten a company's bottom line.                                                                                
     This Governor's veto of  school bond debt reimbursement                                                                    
     increases   Fairbanks   property   taxes   on   Alyeska                                                                    
     Pipeline, Fort Knox, Doyon  Utilities, ACS, Petro Star,                                                                    
     GCI, and Flint Hills   among  the top 10   by more than                                                                    
     In Anchorage,  the Governor's veto of  school bond debt                                                                    
     reimbursement  will  increase  property taxes  for  the                                                                    
     largest  property-owners    including GCI,  ACS, Alaska                                                                    
     Regional,  Providence,   Fred  Meyer,   Enstar,  Hickel                                                                    
     Investment, Alaska Airlines, BP,  Dimond Center, and JL                                                                    
     Properties  by more than $1,000,000.                                                                                       
     Businesses depend  on a  local government's  ability to                                                                    
     provide  infrastructure maintenance  and upgrades,  and                                                                    
     stable fees.                                                                                                               
     Businesses depend  on a  local government's  ability to                                                                    
     support  and  sustain  schools where  the  families  of                                                                    
     employees   can  learn   and  grow.   Similarly,  those                                                                    
     employees evaluate  the quality of life  in a community                                                                    
     to determine  how a locality fits  into their long-term                                                                    
     commitment to a company.                                                                                                   
     Finally,  businesses  depend  on a  local  government's                                                                    
     fiscal  health.  In   2017,  local  government  budgets                                                                    
     planned  for   $2.5  billion  in   expenditures,  which                                                                    
     further enhanced local economic activity.                                                                                  
     Impacts to Partners                                                                                                        
     Vetoes  of this  scope and  scale very  definitely have                                                                    
     the potential  to disrupt the lives  and livelihoods of                                                                    
     community   residents,   the  business   decisions   of                                                                    
     investors, and  the capacity  of our  local governments                                                                    
     to support those organizational  partners who depend on                                                                    
     State funding.                                                                                                             
     We're struck  by the intersection  of so many  of these                                                                    
     vetoes  with Article  7 of  the  Constitution    public                                                                    
     education,  the university,  public health,  and public                                                                    
     welfare.  These are  Constitutional obligations  of the                                                                    
     State that  provide the fundamental building  blocks of                                                                    
     a resilient society and a successful economy.                                                                              
     The outcry  from those impacted is  warranted. From the                                                                    
     nonprofit  sector,  local   governments  recognize  the                                                                    
     importance   of  community   partners,  many   of  whom                                                                    
     collaborate with a borough or  city to provide services                                                                    
     that would  otherwise be  borne by  the State  or local                                                                    
     government. Again, vetoes were  justified with the hope                                                                    
     that  the  philanthropic  and  nonprofit  sector  would                                                                    
     simply "pick  up" the State's responsibilities.  At the                                                                    
     local level, we  know that this sector is  one built on                                                                    
     collaboration  and partnership,  and that  the capacity                                                                    
     of these  partners depends on  the ability  to leverage                                                                    
     federal, state and local funds.                                                                                            
     While the  direct impact to municipalities  may be only                                                                    
     $55  million,  the  indirect impact  is  much  greater.                                                                    
     Local  governments and  their  partners  depend on  the                                                                    
     State  providing many  of the  services that  were just                                                                    
     cut. As political  subdivisions, the interconnectedness                                                                    
     and interdependence between  state and local governance                                                                    
     is of  critical importance. We have  heard from members                                                                    
     who are  especially concerned about the  loss of public                                                                    
     media, housing  and public assistance,  Medicaid, early                                                                    
     education and VPSO funding.                                                                                                
     AML  members  with  University campuses  are  concerned                                                                    
     about vetoes  to that institution.  University campuses                                                                    
     across  the   state  are  often   the  center   of  the                                                                    
     community,  and the  veto of  40 percent  of State  aid                                                                    
     threatens quality  of life, workforce  development, and                                                                    
     the   opportunity  for   residents  to   pursue  career                                                                    
     pathways.  Alaska's  University   system  reflects  its                                                                    
     communities'  interests and  priorities, is  responsive                                                                    
     to  economic  development,  and is  one  of  the  basic                                                                    
     investments necessary  in today's  globally competitive                                                                    
     I don't  have time  to comment on  each of  the vetoes,                                                                    
     but  I  also  know  how   familiar  you  are  with  the                                                                    
     priorities you included in the  budget. AML was pleased                                                                    
     to  be included  in your  deliberations earlier  in the                                                                    
     year,  and  we hope  to  continue  this partnership  by                                                                    
     contributing our understanding  of municipal impacts to                                                                    
     your decision-making.  The Governor has said  that this                                                                    
     is a multi-year process.                                                                                                   
     AML stands  ready to work  with the Legislature  in the                                                                    
     years to come in  support of the State's Constitutional                                                                    
     and statutory  obligations, and  in the  best interests                                                                    
     of   Alaska's   local    governments,   residents   and                                                                    
     businesses.   We   stand   ready  to   collaborate   on                                                                    
     solutions,  including  a  step-down  approach.  And  we                                                                    
     stand ready  to work with  you on a fiscal  policy that                                                                    
     goes beyond  cuts, and focuses  on revenues  that match                                                                    
     the needs and goals of Alaskans.                                                                                           
Co-Chair Wilson asked if none of the communities had                                                                            
changed their mil rate in anticipation of the governor's                                                                        
Mr. Andreassen responded that some communities had changed                                                                      
their mil rates.                                                                                                                
Co-Chair Wilson indicated that Fairbanks had increased its                                                                      
mil rate by 1.5 mills.                                                                                                          
Representative Josephson commented that he took the co-                                                                         
chair's point, and he thought it pitted the communities                                                                         
against each other. He was deeply concerned about it.                                                                           
3:07:53 PM                                                                                                                    
DAVE LANDIS, MAYOR, KETCHIKAN GATEWAY BOROUGH, KENAI (via                                                                       
teleconference), read from a prepared statement:                                                                                
     Good  afternoon   Mr.  Chairman  and  members   of  the                                                                    
     committee.  My  name  is David  Landis,  Mayor  of  the                                                                    
     Ketchikan Gateway Borough,  the largest municipality in                                                                    
     District 36.                                                                                                               
     As you've  heard from others this  afternoon, there are                                                                    
     wide-ranging impacts from these  vetoes, if they stand,                                                                    
     and  they would  deeply affect  all Alaskans  no matter                                                                    
     what  their party  or  political  philosophies, and  no                                                                    
     matter whether  they realize  it yet  are not.  I won't                                                                    
     repeat all of what has been  said by those before me as                                                                    
     it applies  to our municipality  but will note  that we                                                                    
     have a  large University  of Alaska footprint  here, we                                                                    
     have an  ever-increasing Medicaid  eligible population,                                                                    
     and our  population receiving  senior benefits  is also                                                                    
     growing.  Like  Mr.  Andreassen   before  me,  I  would                                                                    
     emphasize that  in large part  these vetoes  are simply                                                                    
     cost  shifts to  municipalities around  the state,  and                                                                    
     that they also  disproportionately impact programs that                                                                    
     bring  additional revenue,  economic activity  and jobs                                                                    
     to the  state. Why on  earth would programs  that bring                                                                    
     in multiple times the amount  of funding from non-state                                                                    
     sources be targeted ?                                                                                                      
     Moving  to specific  impacts to  the Ketchikan  Gateway                                                                    
     Borough,  the broken  promise of  state partnership  in                                                                    
     school  bond debt  reimbursement hits  us the  hardest.                                                                    
     This is  close to a  $1.2 million hit to  the taxpayers                                                                    
     of this community, and again this  is NOT A CUT! It's a                                                                    
     cost shift  to this community. Fortunately,  this year,                                                                    
     the  entire program  was not  eliminated but  we expect                                                                    
     that this will happen  in future years unless something                                                                    
     is done  to protect  it. This  community has  also been                                                                    
     responsible  enough where  this  shift  won't break  us                                                                    
     this year.  But in future  years can we count  on these                                                                    
     promises  being kept?  The fact  is  that education  is                                                                    
     squarely  named   in  the   constitution  as   a  State                                                                    
     responsibility,  and it  can't be  carried out  without                                                                    
     functioning   facilities.   The    Borough   has   been                                                                    
     responsible in planning on projects  such as the needed                                                                    
     replacement of  a school roof and  another school which                                                                    
     needs mechanical  work. These  are in the  CIP pipeline                                                                    
     now,  but  now  we  can't  do  those  projects  without                                                                    
     drastic revisions  of some  type. Please  remember that                                                                    
     other  communities in  Alaska  will be  hurt far  worse                                                                    
     than Ketchikan will be with this particular veto.                                                                          
     The  elimination of  community  assistance, or  revenue                                                                    
     sharing,  will  also  be a  substantial  blow  to  this                                                                    
     community but  make no mistake, in  smaller communities                                                                    
     it  will  be  absolutely devastating,  and  functioning                                                                    
     municipal governments will cease to exist.                                                                                 
     I'll  be honest  -  I've had  serious discussions  with                                                                    
     citizens here  who have raised the  issue of dissolving                                                                    
     the Borough so  that the State can't  keep pushing more                                                                    
     responsibilities   down   to    local   taxpayers   and                                                                    
     residents.  I feel  that there's  a tipping  point that                                                                    
     we're rapidly approaching where                                                                                            
     Alaska residents will make  a calculation whether their                                                                    
     quality  of   life  in  terms  of   health,  education,                                                                    
     welfare,  the  arts,  senior  benefits,  public  radio,                                                                    
     management of  fish and game,  the Marine  Highway, and                                                                    
     many other basic services are  degraded to the point of                                                                    
     them  leaving  the  state  for   good.  These  are  the                                                                    
     questions that  I'm hearing  from our  local residents.                                                                    
     Quite  frankly, I  don't know  how to  answer them.  Do                                                                    
     you? Please  override these  vetoes in  their entirety.                                                                    
     You,   the   legislature,   did  the   hard   work   of                                                                    
     appropriating, and your work should stand.                                                                                 
     Thank  you again  to the  committee for  your time  and                                                                    
     attention. If you have any  questions, I would be happy                                                                    
     to answer.                                                                                                                 
Co-Chair  Foster  asked  for  more  detail  about  community                                                                    
assistance. He  inquired about community assistance  and the                                                                    
overrides devastating certain  smaller communities. He asked                                                                    
Mr. Landis to comment.                                                                                                          
Mr.  Landis  responded  that the  smaller  communities  were                                                                    
charged with  compliance which thy  might opt to  not comply                                                                    
in the future.                                                                                                                  
Co-Chair Foster  asked testifiers  to support  their written                                                                    
3:14:38 PM                                                                                                                    
BENJAMIN  MALLOTT,  VICE  PRESIDENT,  ALASKA  FEDERATION  OF                                                                    
NATIVES,  ANCHORAGE   (via  teleconference),  read   from  a                                                                    
prepared statement.  He stated that his  organization was to                                                                    
enhance the Native community.                                                                                                   
Co-Chair Foster thanked all of the testifiers for their                                                                         
participation. He indicated that the next meeting was t                                                                         
1:00 PM the following day.                                                                                                      
3:18:21 PM                                                                                                                    
The meeting was adjourned at 3:18 p.m.                                                                                          

Document Name Date/Time Subjects
2019 07 09 - Impact of UA Budget Vetoes.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Impact of Veto Overrides
7.09.19 Veto Impacts FBX Chamber of Com. Testimony.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
Response HFIN UA Tuition Revenue HFIN Response wAttachments.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
AML N Andreassen Veto Impact Testimony7.9.19.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
ANTHC Veto Impact testimony 7-9-2019.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
ASHBA J Twait Veto Impacts testimony20190707_0001.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
ASHBA letr to Gov20190707_0001.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
ASHNA Testimony - HF July 9.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
Ken Helander Testimony --AARPVeto Impacts.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
Lundgren Veto Impacts Alaska Banker AssociationTestimony July 9 2019.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
Testimony David Landis. Ketchikan Mayor 09JUL2019.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts
FBX Chamber Veto Impact letter.pdf HFIN 7/9/2019 1:00:00 PM
HFIN Veto Impacts