Legislature(2021 - 2022)ADAMS 519
03/16/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB281 || HB282 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 16, 2022
2:42 p.m.
2:42:43 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 2:42 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Brodie Anderson, Staff, Representative Neal Foster; Neil
Steininger, Director, Office of Management and Budget,
Office of the Governor.
PRESENT VIA TELECONFERENCE
Marie Marx, Attorney, Legislative Legal Services.
SUMMARY
HB 281 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 281 was HEARD and HELD in committee for
further consideration.
HB 282 APPROP: MENTAL HEALTH BUDGET
HB 282 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the agenda for the afternoon.
2:43:31 PM
AT EASE
2:44:45 PM
RECONVENED
Co-Chair Foster continued that the committee would be
reviewing the committee substitute for HB 281.
HOUSE BILL NO. 281
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 282
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making capital
appropriations and supplemental appropriations; and
providing for an effective date."
2:45:21 PM
Co-Chair Merrick MOVED to ADOPT proposed committee
substitute for HB 281, Work Draft 32-GH2686\R (Marx,
3/15/22).
Co-Chair Foster OBJECTED for discussion.
Co-Chair Foster invited his staff to the table to review
the changes in the bill.
2:45:55 PM
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER,
orientated members to the documents in front of them and
explained the documents were numbered 1 through 6 (copies
on file):
Document 1 UGF Summary
Document 2 All Funds Summary
Document 3 Transaction Compare HCS 2 from HCS 1
Document 4 Supplemental Summary
Document 5 Supplemental Transaction Compared to
HCS 2 from Gov
Document 6 Fiscal Summary
Mr. Anderson indicated that Alexei Painter with the
Legislative Finance Division would walk through document 6.
He reported that the committee substitute (CS) version R
reflected numbers from the spring revenue forecast and the
addition of $3.6 billion of new revenue. The CS had been
delayed until after the spring forecast had been released
in order to respond to the increased revenue. He explained
that HB 281 included changes from version N, introduced on
March 3, 2022, and the changes were reflected in the
current version R. The most significant changes were the
governor's supplemental items and the increase in new
revenue spending related to forward funding of education.
He noted that these changes would be discussed later in the
meeting.
2:49:29 PM
Mr. Anderson asked members to refer to document 2, All
Funds Summary. He directed members' attention to halfway
down page 1 which showed the summaries for agency
operations. The total change, seen in columns 4 and 5, was
a decrement of $390.7 thousand. Further down the page, the
total for statewide items showed an increase of $1.36
billion. He explained that the majority of the increase was
due to the forward funding of education.
2:50:51 PM
Mr. Anderson asked members to turn to page 2 of document 2
and drew attention to the funding summary. This section
showed the totals for all funds presented in the budget,
from CS 1 [SB 162(FIN) version W] to CS 2 [CS for HB 281
version R]. There was no change in federal funding. There
was a reduction in the $390.7 thousand in other funds and
an increase of $28.1 million in designated general funds.
Finally, there was an increase of $1.3 billion of
unrestricted general funds.
2:51:47 PM
Mr. Anderson directed members' attention to version R of HB
281 (copy on file) and stated that he would walk members
through the changes. The first change was on page 1 lines 3
through 5, which reflected a title change and added a
single capital item, which he noted would be explained
later in the walkthrough in more detail. The second title
change was the addition of the Constitutional Budget
Reserve (CBR) and reflected in lines 4 through 5. There
were also changes in Section 1, which was known as the
numbers section. The first change begun on page 3 on lines
27 through 29 and showed a decrement of $186.6 thousand to
the Office of Information Technology. The Health and Social
Services (HSS) subcommittee denied all increments related
to Executive Order (EO) 121, which was the funding of a
Department of Technology officer under the Department of
Administration, and it was removed to be consistent with
the will of the subcommittee.
Mr. Anderson continued to page 17, lines 28 through 29,
which reflected a decrement of $204.1 thousand to the
Office of Management and Budget. He explained that the
decrement pertained to the Administrative Service Director
position, which was housed within the governor's office.
The position was removed to be consistent with the actions
of the HSS subcommittee. He turned to Section 3 on page 53
and directed attention to line 16. The item showed an
increase of $21.8 million in the higher education fund
which offset an unrestricted general fund (UGF) reduction
on page 52, line 6. He explained that the standard practice
had been to fund Alaska scholarships with monies from the
higher education fund when available, but CS 1 repopulated
the fund, therefore Version R [CS 2] removed the mechanics
of the spending from the higher education fund.
Co-Chair Foster shared his understanding that the higher
education fund had been refilled and that change was
represented in the dollar amounts.
Representative Carpenter asked Mr. Anderson to repeat the
location of the change.
2:56:10 PM
Mr. Anderson relayed that the item appeared on page 52,
line 6, which detailed UGF changes. He turned to the
supplemental budget documents beginning on page 59, Section
7. He drew attention to documents 4 and 5. The two
documents included all the actions that were taken to
include supplemental items requested by the governor. He
indicated that page 2 of document 4 showed the UGF totals.
He turned to document 5 and stated that it showed all items
requested by the governor and all items that had been
included in CS 2. He concluded that it was a direct
comparison between the governor's request and what was now
in CS 2.
2:58:06 PM
Representative Josephson asked where the supplemental
budget summary and action were located within the
documents.
Mr. Anderson responded that the summaries started on page
59 in Section 7 and ended on page 67.
2:59:00 PM
Mr. Anderson moved to Section 10 of the bill on page 68. It
reflected a supplemental capital item, which was combined
with the two supplemental operating budget requests. It
completed the Department of Health and Social Services'
(DHSS) requests to address the cyber-attack that happened
in the department.
2:59:59 PM
Mr. Anderson moved to page 71 where the language section
began. He referred to lines 1 through 3 which referred to
the funding for fiscal year (FY) 22 and FY 23 of the Alaska
Court System. The funding intended to address the backlog
of trial court cases due to the COVID-19 pandemic. He
remained on page 71 on line 19 and continued through page
72, line 15. The section addressed the change in the
process of federal funding allocation in the Department of
Transportation and Public Facilities (DOT). The change
needed to be included in the supplemental language section
because the Alaska Marine Highway System (AMHS) was
included in the language section of the 2021 supplemental.
3:01:31 PM
Mr. Anderson moved to page 73 of the bill, lines 13 through
19, which referenced a capital item that assisted the
Alaska Longshore Division (ALD) that was impacted by the
pandemic. The item was funded by Covid State and Local
Fiscal Recovery Funds (CSLFRF) to assist ALD because the
employers of the longshoremen were not eligible for
employment relief. In 2020, relief was provided through the
Coronavirus Aid, Relief, and Economic Security (CARES) Act
but it was not an ongoing appropriation. The item intended
to help Alaska workers and was turned into a capital budget
item through the advice from Legislative Legal Services. It
would be used to maintain the health insurance component
for employees and their families.
3:02:54 PM
Mr. Anderson moved to page 89, line 27, through page 90,
line 20. He indicated that it related to debt and other
obligations, and directed attention to subsection D. He
explained that CS 2 before members included additional debt
obligations for municipalities, ports, harbors, and other
projects. He noted that seven additional projects were
included. The debt obligations were authorized by HB 528 in
Chapter 115 of session law from 2002, which obligated the
state to fully reimburse those debts.
3:04:06 PM
Mr. Anderson moved to fund capitalization beginning on page
98 of the CS, lines 3 through 6. He stated that the items
were in direct response to the increased revenues in the
spring revenue forecast. The CS added $150 million in oil
tax credits to the previous $199 million projection,
totaling $349 million. He reiterated that this was due to
the spring revenue forecast as well as the formula used to
generate oil tax credits.
3:05:02 PM
Mr. Anderson continued on lines 11 through 15 of page 98
and indicated that the section proposed forward funding the
education formula by depositing $1.2 billion into the
public education fund.
3:05:33 PM
Representative Wool asked for clarification that the amount
[$1.2 billion] did not reflect a proposed increase to the
Base Student Allocation (BSA). He asked if the number would
reflect an increase in BSA in the FY 23 budget.
Mr. Anderson responded that the increase was not reflected.
3:06:10 PM
Representative Josephson indicated that forward funding was
unimpeachable in that it was backed by dollars instead of
just intention.
Mr. Anderson replied that it mandated that $1.2 billion be
placed into a fund that could be spent at a later time.
Representative Wool noted that there was an additional
supplemental $50 million included in the bill that would
act as a backstop if the BSA bill [HB 272] did not pass. He
asked whether the $50 million would be automatically
removed if the BSA legislation passed.
Mr. Anderson indicated that the $50 million would be
removed if the BSA legislation or a similar bill were to
pass.
3:07:18 PM
Co-Chair Foster explained that the $1.25 billion would be
used for forward funding of education and was not
necessarily an increase to the budget. Once the Senate
completed its version of the budget, the conference
committee process would begin and all the bills that had
been passed would be rolled into the conference committee
versions of the bills. If the BSA bill passed, then $57
million would be added to the FY 23 budget. He noted that
it was a two-year component, and that $71 million would be
added for the purpose of forward funding in FY 24. He
reiterated that these choices would be cemented during the
conference committee process.
Representative LeBon asked if the forward funding dollar
amount had to remain unchanged in future budgets in order
to be exempt from a governor's veto.
Mr. Anderson thought either Marie Marx from Legislative
Legal Services or Alexei Painter from the Legislative
Finance Division could answer the question.
Representative LeBon shared his understanding that a
legislature had to accept the forward funding dollar amount
unchanged to ensure there would not be a reduction in
funding in the future.
3:09:31 PM
MARIE MARX, ATTORNEY, LEGISLATIVE LEGAL SERVICES (via
teleconference), explained that the forward funding of
education, which included a delayed effective date, was
different than what was proposed in HB 281. Under HB 281,
the funding would come from existing money with no delayed
effective date. These existing funds would be used by the
legislature to forward fund education. The money would be
transferred to the public education fund on July 1, 2022,
and would consist of existing funds.
Co-Chair Foster invited Mr. Anderson to continue.
3:11:22 PM
Mr. Anderson drew attention to page 105 of the bill, lines
4 through 12. He indicated that the section detailed the
reverse sweep provision for the CBR. He noted that because
CS 1 put funds back into the account after the FY 21 sweep,
a reverse sweep would be required if the legislature wanted
those funds to remain in those accounts.
Co-Chair Foster relayed that there were 15 sweepable funds
and the section stated that the legislature did not want
the funds swept.
Mr. Anderson concluded his review of the changes.
Co-Chair Foster had 10 notable items he had complied into a
summary. The items included forward funding of education
and paying for scholarships. The scholarships would be paid
for with monies from the higher education fund since the
fund was being refilled. He explained that the municipal
bonds were similar to school bond debts. The state had
partnered with communities starting in 2002 for various
projects which were normally put into the budget. He shared
his understanding that the governor had vetoed similar
projects in the last few years. He noted that all positions
had been pulled from the Division of Family Services due to
the split of the Department of Health and Social Services
into the Department of Health and the Department of Family
and Community Services. Due to the increase in oil prices,
the formula that determined oil and gas tax credits
dictated that the credits would come at an additional cost.
The reverse sweep would also come in to play for all the
funds that had been refilled. He reiterated Mr. Anderson's
earlier statement that longshoremen were included in the
governor's supplemental to allow them to receive pandemic
relief benefits. Finally, the funds for the cyber-attack
were in the supplemental.
3:14:52 PM
Representative Josephson considered the [state] attorney
general's memo on the effective date. He shared his
understanding of the memo that if the governor were to sign
the operating budget prior to midnight on June 30, 2022,
the items in the budget would need to funded from funds
that would be swept. He asked for further information.
3:15:43 PM
Mr. Anderson noted Representative Josephson was referencing
the reverse sweep. He deferred to Marie Marx.
Ms. Marx understood Representative Josephson was
referencing the attorney general's memo on the effective
date for the FY 22 appropriations. She deferred to the
executive branch on its position but assumed that the
position would be the same. If the appropriations were
passed, the question was on whether the appropriations
could be spent without being subject to the sweep on June
30, 2022. It was unclear whether the funds would be
available for appropriations. It was the administration's
perspective that as long as the bill was passed by the
legislature and signed by the governor, nothing else would
need to be done to make the appropriations "validly
committed." She relayed that prior to the sweep, it was
the attorney general's view that the FY 22 appropriations
could be spent. She noted that she did not know if the same
would be true for FY 23.
3:17:59 PM
Representative Josephson indicated that there was no
information stating that the administration's position had
changed. He shared his understanding that as long as an
effective date was adopted before June 30, 2022, and the
governor signed the bill prior to July 1, 2022, the monies
could be swept. This meant that all programs would still be
funded for FY 23 at least as an annual appropriation. He
asked if his understanding was correct.
Ms. Marx responded that the attorney general had made a
distinction between an effective date and whether funds
were validly committed. The majority of FY 22
appropriations had an effective date of July 1, 2021, but
the question was whether the funds were validly committed
prior to that date. She believed that the attorney
general's opinion was that no further action needed to be
taken for the funds to be effective. She reiterated that as
long as the bill had been passed by the legislature and
signed by the governor, it was the attorney general's
opinion that the funds were validly committed even though
the appropriations were not effective until July 1, 2021,
according to the express language of the appropriation
bill. She noted that the opinion of Legislative Legal
Services on the matter differed from the attorney general's
opinion.
Representative Johnson asked if the administration could
comment.
Co-Chair Foster invited Mr. Steininger to the table.
3:20:28 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, responded that Ms. Marx's summary
of the attorney general's opinion was accurate. He stated
that if an appropriations bill was signed into law by the
governor prior to June 30, appropriations could be
considered validly committed from sweepable funds. Since
the opinion had been released, he had also looked at the
Governmental Accounting Standards Board's rules on what
could be considered an "assigned balance," particularly in
regard to an organization having an effective date.
According to the board, once a bill was signed into law it
could be considered an assigned balance, and the effective
date would dictate when spending could begin.
3:21:52 PM
Representative Carpenter had a question regarding the
energy relief payment. He suggested that only the people
eligible for a Permanent Fund Dividend (PFD) payment would
also be eligible for the energy relief payment.
Co-Chair Foster agreed and indicated that issue had not
been fully vetted. He thought there would still be an
opportunity to make any necessary changes. He asked Mr.
Anderson for more details on the process.
Mr. Anderson indicated that the criteria for the energy
relief check would be established based on the same
criteria used by the Department of Revenue to determine PFD
eligibility. This information was included in CS 1 and CS
2.
Co-Chair Foster WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 32-GH2686\R was ADOPTED.
Co-Chair Foster indicated he intended to take up amendments
beginning on Monday, March 21, 2022. Amendments for HB 281
and HB 282 were due to his office by Friday, March 18, 2022
at 5:00 p.m. He hoped to release an amendment packet by
Sunday, March 20, 2022.
HB 281 and HB 282 were HEARD and HELD in committee for
further consideration.
ADJOURNMENT
3:24:49 PM
The meeting was adjourned at 3:24 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 281 CS FIN #1 UGF Summary031622.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| HB 281 CS FIN #2 All Funds Summary 031622.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| HB 281 CS FIN #3 HCS1 to HCS2 Trans Comp 031622.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| HB 281 CS FIN #4 Supplemental Summary 031622.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| HB 281 CS FIN #5 Supp Gov to HCS2 Trans Compare 031622.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| HB 281 CS FIN #6 ShortFiscalSummaryFY23 HCS2 031622.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| HB 281 CS WorkDraft v.R 031522.pdf |
HFIN 3/16/2022 1:30:00 PM |
HB 281 |
| DOR Spring 2022 Revenue Forecast Presentation HFIN 2022.03.15.pdf |
HFIN 3/16/2022 1:30:00 PM |
|
| DOR Response to HFIN Spring 2022 RSB Presentation 2022.03.28.pdf.pdf |
HFIN 3/16/2022 1:30:00 PM |