Legislature(2023 - 2024)ADAMS 519
05/04/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| SB98 | |
| SB25 | |
| HB125 | |
| HB38 | |
| HB81 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 25 | TELECONFERENCED | |
| += | HB 125 | TELECONFERENCED | |
| + | HB 81 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 98 | TELECONFERENCED | |
| += | HB 38 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
May 4, 2023
1:41 p.m.
1:41:59 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:41 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe (via teleconference)
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Matthew Harvey, Staff, Senator James Kaufman; Trevor
Jepsen, Staff, Representative McKay, Sponsor;
Representative Will Stapp, Sponsor; Bernard Aoto, Staff,
Representative Will Stapp; Ryan McKee, Staff,
Representative George Rauscher; Pam Leary, Director,
Treasury Division, Department of Revenue; Senator James
Kaufman, Sponsor; Alexei Painter, Director, Legislative
Finance Division; Representative Tom McKay, Sponsor.
PRESENT VIA TELECONFERENCE
Megan Hillgartner, Natural Resource Manager, Division of
Mining, Land and Water, Department of Natural Resources;
Peter Buist, Representing self, Fairbanks; Linda Hulbert,
self, Fairbanks.
SUMMARY
SB 98 AK PERM FUND CORP. & PCE ENDOWMENT FUND
CSSB 98 (FIN) was REPORTED out of committee with
ten "do pass" recommendations and one amend
recommendation and with three previously
published fiscal impact fiscal notes: FN1 (REV),
FN2 (REV), and FN3 (REV).
SB 25 REPEALING FUNDS, ACCOUNTS, AND PROGRAMS
CSSB 25 (FIN) was REPORTED out of committee with
nine "DO PASS" recommendations, and one amend
recommendation and with one previously published
zero fiscal note: FN1 (LEG).
HB 125 TRAPPING CABINS ON STATE LAND
HB 125 was REPORTED out of committee with nine
"do pass" recommendations and one amend
recommendation and with one previously published
fiscal impact note: FN1 (DNR).
HB 38 APPROPRIATION LIMIT; GOV BUDGET
HB 38 was HEARD and HELD in committee for further
consideration.
HB 81 VEHICLES/BOATS: TRANSFER ON DEATH TITLE
HB 81 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting agenda.
SENATE BILL NO. 98
"An Act relating to state ownership of submerged land
underlying navigable water within the boundaries of
and adjacent to federal areas; and providing for an
effective date."
1:45:40 PM
Co-Chair Foster discussed the agenda. He began the meeting
with a continuation of SB 98 from the morning meeting. He
noted that the committee would continue hearing the SB 98
fiscal note from the Department of Revenue (DNR). He
explained that the department could lose $1.179 million if
the bill was adopted. The department wanted to backfill the
loss with Undesignated General Funds (UGF). He relayed that
he had discussed the situation with the bills sponsor and
determined that there were two options. There was a
possibility to zero out the fiscal note or keep the fiscal
note as is with a one year transition period to offer the
department time to figure out ways to backfill the funding
or request and justify the full amount again in the FY 2025
budget. He preferred the one year transition option.
1:47:14 PM
PAM LEARY, DIRECTOR, TREASURY DIVISION, DEPARTMENT OF
REVENUE, explained the basis for the fiscal note. She
delineated that the division managed $48 billion in
investments and had a budget of roughly $11.7 million for
FY 24. The cost allocation plan divided all costs that
equated to its total budget among all the funds it managed.
She elaborated that around 80 percent of the funds the
treasury managed were the Alaska Retirement Management
Board (ARMB) funds and the remaining funds were treasury
funds like the Power Cost Equalization Fund (PCE), Public
School Funds and a whole host of other funds that were
funded through UGF. The fiscal note was an estimate and was
based on the $1.178 million that was calculated to manage
the fund based on the cycle. However, with the current
lower value of the fund the amount was approximately $900
thousand. She informed the committee that treasury charged
endowment type funds a maximum floor of 10 basis points.
She shared that it was an efficient way to manage many
funds. When a fund was removed, the costs needed to be
reallocated amongst the other funds. Because the funds were
funded by UGF, she merely changed the funding source in the
fiscal note. She elucidated that every year the division
calculated its cost allocation plan and reallocated funds
based on the assets under its management. Therefore, each
year management costs vary and PCE typically amounted to 2
percent of all the assets treasury managed, the two percent
would be reallocated among all the other funds it managed,
and they would be charged accordingly.
1:50:31 PM
Representative Josephson asked why the ARMB fund would be
charged more if the fiscal note was adopted. Ms. Leary
responded that in the future, the treasury would charge all
of the management costs out to all of the funds it managed
on a pro rata share, the retirement funds would have a
greater share of all the assets. She reminded the committee
that the divisions process was very efficient which kept
its costs very low when compared to other funds managed
elsewhere.
1:51:29 PM
Representative Hannan understood that the fiscal note
overestimated the costs in FY 2025 and in the outgoing
years the costs would be zeroed out. Ms. Leary responded in
the negative and explained that the treasury would still
need the $1.179 million to manage all of the funds that the
treasury managed. If one fund was taken away, there would
be fewer dollars in total to cover costs. Representative
Hannan asked for confirmation that there would still be a
need for additional UGF of an uncertain amount in the
future if there was a transitionary year to figure a way to
recover the costs. Ms. Leary responded in the affirmative
and reiterated that treasury refigured its cost allocation
plan each year. She maintained that each year was always a
guessing game. She exemplified the Constitutional Budget
Reserve (CBR) and noted that when the balance was large
there was more charges to all the underlying funds and in
particular UGF, which funded the CBR. She reported that as
the CBR diminished, more costs were charged to the
retirement funds. She reiterated that treasurys process
was efficient because they could manage hundreds of funds
with one team.
Co-Chair Foster understood that the fund source on the
fiscal note would switch from Designated General Funds
(DGF) to UGF. The revenue treasury gained from charging PCE
become DGF. He asked if all the other revenue from
investment charges would be UGF. Ms. Leary responded in the
negative. She explicated that that the retirement funds
were the source of funds for 80 percent of treasurys work,
which was not necessarily UGF, but the majority of the
costs would be UGF funded for the first year. She
characterized it as a simple approach since the treasury
budget was built on professional estimates. Typically,
treasury requested slightly more than estimated, factoring
in the amount the investments were expected to grow.
1:55:45 PM
Co-Chair Edgmon asked if she had a sense of when the PCE
fund would be transferred to the Permanent Fund if the bill
were to pass. Ms. Leary responded that it would occur
quickly after the bill took effect. She referenced the $200
million in losses suffered by the fund, and reminded the
committee that $50 million was in spending, totaling losses
of 15 percent. She communicated that as of the end of April
2023, PCE experienced about 7.5 percent in returns. She
reminded the committee of the volatility of the market and
that the funds were subject to market fluctuations. Co-
Chair Edgmon understood that the management team for all of
treasurys funds worked on a fixed cost basis and was not a
fee based third party contract oriented management. He
ascertained that treasury operated as a fixed cost in-house
management team. Ms. Leary responded that the majority of
the costs were fixed costs especially for PCE types of
funds. She expounded that there was a small amount paid in
management fees to companies such as SMP 500 for equities
and SCI for international equities, which were embedded in
the costs. The fees were based on the assets that were
managed but were very small and were spread across all
assets. She concluded that primarily all the divisions
costs were fixed.
Co-Chair Edgmon presumed that the cost allocation plan
happened at the beginning of the calendar year and not the
fiscal year. He deduced that if that were the case and the
fund was already transferred in July 2024, he wondered
whether the costs could be allocated amongst the other
funds and not require any UGF. Ms. Leary answered that the
division did the cost allocation plan just before the new
year and were currently engaged in the process. She
furthered that the majority of the transferred costs would
be UGF because they transferred costs to funds that were
being managed and supported by UGF. Some costs would be
allocated to the ARMB and other funds, but all costs would
be allocated out and PCE accounted for 2 percent of
management costs, therefore, the division would need a
funding source and some part of that would be UGF.
1:59:45 PM
Representative Josephson recalled Ms. Learys statement
that $978 million was the correct figure versus the $1.179
million. Ms. Leary answered in the affirmative and
indicated that 10 basis points of the current value would
be the amount that was spread among other costs.
Co-Chair Foster asked what the will of the committee
regarding the fiscal note was.
2:00:44 PM
AT EASE
2:02:02 PM
RECONVENED
2:02:14 PM
Co-Chair Edgmon asked if there was a way to take an
alternative approach to the fiscal note. Ms. Leary
responded that in terms of managing all the divisions
funds they needed the full amount of its budgetary request,
it was a question of how the costs were going to get
allocated. She furthered that for PCE and other endowment
funds, the division switched to charging a minimum floor of
10 basis points, which resulted in needing less UGF because
UGF did not support the bulk of the costs since other funds
were paying 10 basis points. She disclosed that the average
of all the treasury funds was 4 to 5 basis points of total
costs. She had been able to decrease reliance on UGF by
charging a minimum floor of 10 basis points. Removing one
of the funds caused all of the costs to return and would
primarily rely on UGF and in future years the costs would
be reallocated to all of the funds that the treasury
managed, which was also supported by UGF. She determined
that treasury needed its requested funding in order to
manage all of its funds, even if there was a reduction of
one or two funds to manage. Co-Chair Edgmon asked if there
was a scenario where the fiscal note could be zeroed out
and the department could request supplemental funding to
recoup costs. Ms. Leary responded that she did not see a
way to zero out the fiscal note unless she started firing
people. She thought the treasury was doing a good and
efficient job with the amount of funding it received and
zeroing out the fiscal note would harm its ability to
manage the rest of the funds.
Co-Chair Edgmon determined that he supported the fiscal
note and the benefits that could be derived from having the
Alaska Permanent Fund Corporation (APFC) manage the PCE
portfolio. He also supported the bill.
2:06:09 PM
Co-Chair Foster asked if Representative Galvin still wanted
to offer an amendment.
Representative Galvin responded that she was contemplating
offering the amount of $978 thousand for the fiscal note.
However, she did not want to slow the process down and the
amount might seem insignificant in the future. She
supported the fiscal note and the bill.
2:07:08 PM
Representative Stapp agreed with Co-Chair Edgmon and
Representative Galvin. He agreed that the value of
incorporating the fund into the Permanent Fund overrode the
fiscal note concerns. He commented that the APFC took up to
25 basis points to manage a fund versus DORs 10 basis
points. He wondered why DOR did not take higher basis
points off to cover management costs instead of requesting
GF. Ms. Leary responded that moving forward the treasury
was taking higher basis points in total for each fund
because there was less money in total that would be under
management. Representative Stapp commented that the basis
point number did not matter to him. He asked why she would
increase basis points and still need UGF at the same time.
He wondered why she would not merely increase the basis
points to the amount necessary to administer the funds and
not request UGF. Ms. Leary responded that the divisions
costs were fixed, and the basis points calculation occurred
after the costs were determined. She reiterated her answer
that by removing a fund the ten basis points charged
endowment funds needed to get funded through some other
fund and the remaining funds would have a higher basis
point calculation because they would be paying more for
treasury management then they had been. Representative
Stapp understood that removing $1 billion in assets under
management meant the division had to spread its
administrative costs to other funds due to less basis
points. He repeated his question regarding why she needed
to request increased basis points and increased UGF. He did
not understand and hoped for a concise answer for why both
were needed instead of just one. Ms. Leary responded that
she was not asking for additional basis points or more UGF
other than to fill the void in the budget created by
removing the management of PCE. Representative Stapp asked
why not take 13 basis points off the other funds to make up
the loss of assets under management. He asked if it was
possible. He reiterated that he did not understand why she
needed to increase both UGF and basis points. Ms. Leary
answered that it was because a large percentage of the
funds were supported by UGF. She maintained that most of
the funds were UGF funded therefore, UGF was needed to
manage a UGF funded fund.
2:12:18 PM
Representative Ortiz agreed with Co-Chair Edgmon's
sentiments and supported the bill. He asked how much of UGF
went to supporting the treasury annually. Ms. Leary
responded that the amount in FY 22 was nearly $1.8 million
of the total amount. She added that for FY 2024, the amount
decreased to $1 million, which included the PCE fund.
Representative Ortiz was confused by the answer. He
understood her answer as all the UGF used to support
treasury was the amount used to manage PCE. He asked
whether all the money was encapsulated in the $1.8 million
figure. Ms. Leary replied that the retirement plans
accounted for $8 million which was about 80 percent of the
divisions budget. The remainder was through UGF totaling
$1 million, PCE totaling $1.2 million, and the other funds
accounted for around $1.5 million from the Higher Education
Fund, Airport Systems, and the Public Schools Trust fund.
2:14:39 PM
Representative Galvin pondered if the fiscal note were to
be maintained as is in the out years, whether the cost
allocation plan was inclusive of the fiscal note. She
thought it might act as a disincentive to increase the
basis points. She asked why basis points would be increased
if the offset funding was included in the fiscal note. Ms.
Leary replied that the cost allocation plan allocated all
treasurys costs. The amount budgeted was the limit of what
the treasury could spend and as funds grew the divisions
expenses grew as well. She asked Representative Galvin to
repeat part of the question regarding incentives.
Representative Galvin asked what the incentive was to
increase the basis points so that UGF would not be
necessary. The cost impact over the loss of one fund made
sense for the current year. However, she wondered why it
was necessary in the oncoming years. If the fiscal note
stayed in place for the outyears, it would make it more
difficult to make changes that needed to be made to cover
the costs.
Co-Chair Foster interjected that fiscal notes were only
incorporated into the budget for the fiscal years budget
they were written to. In the current case, the amount would
be included in the FY 2024 budget during conference
committee. In subsequent years, the departments would come
before the legislature to request their budgets. He
detailed that DOR would still need to come before the
legislature and ask for funds for future years. The request
could be revisited every year.
2:18:41 PM
Co-Chair Foster thought that SB 98 was an example of a so
called simple bill proving that they were not always
simple.
Co-Chair Edgmon moved to was REPORTED out CSSB 98 (FIN) out
of committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSSB 98 (FIN) was REPORTED out of committee with ten "do
pass" recommendations and one amend recommendation and with
three previously published fiscal impact fiscal notes: FN1
(REV), FN2 (REV), and FN3 (REV).
2:19:44 PM
AT EASE
2:21:28 PM
RECONVENED
SENATE BILL NO. 25
"An Act relating to inactive state accounts and funds;
relating to the curriculum improvement and best
practices fund; relating to the fuel emergency fund
and fuel emergency grants; relating to the special
Alaska Historical Commission receipts account;
relating to the rural electrification revolving loan
fund and loans from the fund; relating to the
Southeast energy fund and grants from the fund; and
relating to the Exxon Valdez oil spill unincorporated
rural community grant fund and grants from the fund."
2:21:55 PM
Co-Chair Foster requested a brief recap of the bill.
SENATOR JAMES KAUFMAN, SPONSOR, introduced himself and
provided a brief overview of the bill. He explained that SB
25 was a "simple improvement bill, which reduced
administrative costs and complexity associated with the
maintenance and tracking of accounts that were no longer
needed but were still open. The legislature had a history
of creating accounts that eventually sat dormant or the
original purpose of the account is no longer necessary. The
bill establishes a bi-annual review of funds to identify
funds that are no longer needed. The legislature would
ultimately decide which funds could be closed. He
summarized the bill as an elegant little bill or
performance improvement bill that reduced unneeded
accounts and funds.
Co-Chair Foster asked Senator Kaufman if he wanted to
discuss some of the accounts that could potentially be
eliminated. Senator Kaufman answered that many of the
accounts had names that sounded compelling but were
intensively vetted. He mentioned a handout (copy on file)
included in the bill packet that contains a sample of the
funds for potential elimination.
2:24:32 PM
Alexei Painter, Director, Legislative Finance Division,
explained the zero fiscal note (FN1 (LEG). He indicated
that the Legislative Finance Division (LFD) prepared the
fiscal note and determined that LFD would be able to absorb
the additional duties described in the amending language of
the legislation within its current resources. He added that
the bill required the division to create a report by the
session beginning in 2025.
2:25:24 PM
Representative Galvin cited a list of inactive funds
included in the sponsor statement. She reported that the
sponsor statement mentioned analyzing 39 funds. She
wondered why only five were listed.
2:26:18 PM
MATTHEW HARVEY, STAFF, SENATOR JAMES KAUFMAN, confirmed
that there was a larger list of inactive or unused funds.
He offered that he had received a memo listing which funds
could be repealed under the single subject rule and which
would require specific bills because they affected more
than one section of Alaska Statutes. They began the process
by looking at funds on the single subject rule list and
through the vetting process found stakeholders of various
funds that had contractual obligations or outstanding loans
that were tied to some of the funds, which reduced the list
from 9 funds to 5 funds that were compiled under the single
subject rule. He exemplified that the Rural Electrification
Revolving Loan Fund was duplicative with the Electrical
Service Extension Fund that was currently in use for the
same purpose.
2:27:43 PM
Representative Tomaszewski asked how funds were managed
that were just sitting there. He questioned why there was
no active management and whether the state was spending
General Funds (GF) to manage the inactive funds.
Mr. Painter replied that the funds proposed for repeal all
had a zero balance and did not have a cost associated for
management of the funds. He added that after the failure of
the reverse sweep for a few years, the accounts had a zero
balance. Treasury did not charge basis points to manage
many of the small accounts, it would be impractical to
charge pennies for their management.
2:28:53 PM
Representative Hannan asked about the Fuel Emergency Fund
listed on the sponsor statement. She noted that the reason
for repealing the fund was because the Disaster Relief Fund
statute was amended in 2000 to add fuel shortages as an
allowable use. She determined that the governing statute
for the Disaster Relief Fund appeared to require that a
disaster had to be declared. She discovered that the Fuel
Emergency Fund did not need a disaster declaration to
disperse funds. She wanted to ensure that another
inefficient step was not being created unnecessarily, like
the need to declare an emergency, through elimination of
the fund. Mr. Painter responded that the legislature had
not put money into the fund since 1994. He deduced that
while there were theoretical instances in which the fund
had a purpose, it was left unfunded for decades and could
not serve the purpose. He supposed that the legislature
could begin using the fund again.
Representative Hannan asked if the Disaster Relief Fund
statute required that there be a declared disaster to
expend the funds. Mr. Painter responded in the affirmative.
Representative Hannan expressed concern about eliminating
an emergency fund. She had heard of communities running out
of fuel. In circumstances where a disaster was not
declared, she was apprehensive to eliminate the fund and
was interested in recapitalizing the fund.
Senator Kaufman responded that the Disaster Relief Fund
Statute was amended to add fuel shortages as an allowable
use, making the fund unnecessary.
Co-Chair Foster asked if a disaster would need to be
declared in order to use the Disaster Relief Fund. Senator
Kaufman answered in the affirmative. Co-Chair Foster was
also concerned that there might be uses for the fund.
2:32:58 PM
Representative Josephson assumed that each of the funds
were established under a bill. He asked if there would be
placeholder or hollow statutes without an accompanying
fund. He deduced that under the title of cleanup there
would be laws with no purpose. He asked whether he was
correct. Senator Kaufman found the inverse to
Representative Josephsons scenario and discovered that the
statute had moved on, but the fund still existed. He felt
that the most important aspect of the bill was not the list
but establishing the mechanism to cleanup unused funds.
Co-Chair Edgmon commented that the amount of funds in the
state statutes were expansive. He understood the need to
rid the books of dormant funds. He favored the elimination
of the Fuel Emergency Fund being removed as long as the
Disaster Relief Fund remained. He mentioned that the Bulk
Fuel Loan Upgrade Program in the Capital Budget dealt with
the issue. He questioned how the Fuel Emergency Fund would
be allocated on a programmatic basis acknowledging the fact
that if one community was in need many others would be in
need.
Co-Chair Foster noted his opinion had been swayed by Co-
Chair Edgmon. He voiced that the current process was
working.
2:36:06 PM
Co-Chair Foster OPENED Public Testimony on SB 25.
2:36:36 PM
Co-Chair Foster CLOSED Public Testimony.
2:37:13 PM
Co-Chair Johnson moved to was REPORT CSSB 25(FIN) out of
committee with individual recommendations recommendation
and the accompanying fiscal note.
2:37:32 PM
Representative Ortiz OBJECTED for discussion.
Representative Ortiz guessed that prior to the bill, there
was no one looking at the accounts. He wondered why the
accounts were not being scrutinized prior to the bill and
why was a bill necessary to close the accounts. Senator
Kaufman answered that the opportunity was there, but the
focus and the process was not there. The bill provided the
statutory framework. He believed that the bill created a
routine process that benefitted the state.
Representative Ortiz WITHDREW his OBJECTION.
2:39:27 PM
There being NO OBJECTION, it was so ordered.
CSSB 25 (FIN) was REPORTED out of committee with nine "DO
PASS" recommendations, and one amend recommendation and
with one previously published zero fiscal note: FN1 (LEG).
HOUSE BILL NO. 125
"An Act relating to trapping cabins on state land; and
relating to trapping cabin permit fees."
2:40:44 PM
Co-Chair Foster asked the bills sponsor to provide a brief
recap.
2:41:07 PM
REPRESENTATIVE TOM MCKAY, SPONSOR, gave a brief summary of
the bill. He thanked the committee for the prior discussion
on the bill and asked for members support. He commented
that the legislation provided common sense reform to the
current statutes related to Trapping Cabin Construction
Permits (TCCP).
2:41:57 PM
TREVOR JEPSEN, STAFF, REPRESENTATIVE MCKAY, offered a
PowerPoint Presentation titled "HB 125 Highlights" dated
April 27, 2023 (copy on file). He turned t0 slide 2 titled
Trapping Cabin Permit Process:
Trapping cabin permits currently issued under two
statutes:
AS 38.95.075 Permits for the Use of Trapping
Cabins
AS 38.95.080 Trapping Cabin Construction Permits
Statutes create unnecessary confusion in permitting
process and restricts DNR from permitting cabins under
certain scenarios.
Mr. Jepsen elaborated that the bill combined both
authorization types under one statute. He discussed slide 3
titled AS 38.95.075 Permits for the Use of Trapping
Cabins:
AS 38.95.075 states how the DNR issues permits for
cabins that already exist.
Issue arises with cabins that have lapsed in
ownership/use or have been abandoned.
DNR unable to issues new trapping cabin permits in
these scenarios.
Mr. Jepsen continued that under the current statute, the
Department of Natural Resources (DNR) was unable to permit
many existing cabins on state land due to the restrictive
language of AS 38.95.075, which required proof of use of an
existing cabin prior to August 1, 1984. He moved to slide 4
titled AS 38.95.080 Trapping Cabin Construction
Permits:
AS 38.95.080 authorizes the DNR issues permits for the
construction of new trapping cabins.
1. The person must have an established trapline with
proof of regular use;
2. The person must have a trapline of sufficient length
to justify the need for cabin construction.
38.95.080 also outlines responsibilities of the
department and additional requirements and restrictions
for trapping cabin construction permits.
Mr. Jepsen delineated that the bill combined both
authorization types under one statute providing more
consistency and clarity. He reviewed slide 5 titled HB 125
Highlights:
HB 125 revises AS 38.95.080 (Trapping Cabin
Construction Permits) to include all trapping cabin
permit situations and repeals AS 38.95.075 (Permits
for the Use of Trapping Cabins)
Allows the DNR to permit existing cabins on state
lands.
Updates application fee schedule and sets all related
fees in statute.
Provides further clarity than current statute for
issuing trapping cabin permits.
HB 125 was the result of the House Resources Committee
working with DNR and the Alaska Trappers Association.
Mr. Jepsen pointed out that HB 125 allowed DNR to permit
existing cabins on state lands for trapping if the
applicant did not build a cabin without permission and
demonstrated that they actively used a trapline that
necessitated the use of a cabin for safety purposes. He
emphasized that the bill did not grant exclusive rights to
existing cabins and the department could also issue
multiple permits for the same cabin. The permits for
existing and new cabins do not represent a disposal of
interest or granted preference rights to a future lease or
purchase of land. In addition, the cabins must solely be
used for trapping activities, were for seasonal use only,
and a permittee was prohibited from residing in a trapping
cabin. The department may not impose additional land use
fees.
2:44:36 PM
Representative Josephson asked how many total cabins
currently existed. MR. Jepsen answered that there were 83
active trapping cabins and believed that more existed. He
deferred to DNR for further answer.
2:45:14 PM
MEGAN HILLGARTNER, NATURAL RESOURCE MANAGER, DIVISION OF
MINING, LAND AND WATER, DEPARTMENT OF NATURAL RESOURCES
(via teleconference), responded that there were currently
83 permitted cabins and 12 were pre-statehood cabins.
Representative Josephson asked how many would be
grandfathered in under HB 125. Ms. Hillgartner asked what
Representative Josephson meant by grandfathered. She
wondered whether he meant how many cabins would be able to
be permitted under the proposal. Representative Josephson
responded in the affirmative and added that it was his
understanding that additional cabins would be added that
DNR was not aware of. Ms. Hillgartner responded that the 83
cabins were currently permitted. Currently, there was not a
way to know how many trappers would want to use the
existing cabins. Representative Josephson asked if the
cabins were not available to a non-trapper for recreational
use. Mr. Jepsen responded in the affirmative and noted that
the trapper would also have to prove a specific set of
criteria including proof of an existing trapline and that
it necessitated use of a cabin.
Co-Chair Foster moved to the discussion of the fiscal note.
2:47:55 PM
Ms. Hillgartner reviewed the fiscal impact fiscal note FN1
(DNR). She pointed to the control code ggCOj prepared on
03/24/2023. She indicated that the bill revised AS
38.95.080 and repealed AS 38.95.075 that provided for the
issuance of permits for the construction and use of
trapping cabins on state land. The department currently
charged a fee of $160 for an application and $240 for an
annual trapping cabin authorization issued under AS
38.95.075 for an existing cabin. She delineated that the
application fee is $400 and $10 for an annual fee and the
use fee is set at $10 under AS 38.95.080 for the
construction of new cabins. On average the department
issues one authorization under AS 38.95.075 and nine
authorizations under AS 38.95.080 annually. For
authorizations under AS 38.95.080 the department collected
all annual fees for the ten-year permit at once. She
calculated that the revenue amounted to $4,900 per year.
Under the proposed legislation, the application fee would
be set at $100, and the annual use fee set at $25. The
department expected some revenue loss resulting from the
bill. However, the department supported the bill because it
clarified the trapping cabin statutes.
2:50:12 PM
Representative Josephson asked if in a typical year most of
the 83 cabins were unused. Ms. Hillgartner answered that
most of the trapping cabin permits were for the
construction of new cabins. The current statute restricted
the use of existing cabins by requiring proof of use prior
to August 1, 1984.
2:51:28 PM
Co-Chair Foster OPENED public testimony on HB 125.
2:52:01 PM
PETER BUIST, SELF, FAIRBANKS (via teleconference), shared
his prior work and life experience. He testified in support
of HB 125. He thanked the committee for hearing the bill.
He felt that the bill was important to trappers in rural
areas. He reported that many years ago, he helped craft the
original trapper cabin bill and draft the original
regulations. He thought the bill addressed many of the
problems that had come up over the years and was a tribute
to the collaborative efforts of legislators, trappers, and
DNR. He believed that the bill reduced the administrative
burden, reduced DNR trespass problems in rural areas, and
kept the trapper cabin program viable. He urged the
committee to support the bill.
2:53:59 PM
Co-Chair Foster CLOSED public testimony.
2:54:22 PM
Representative Cronk MOVED to report CS HB 125 (RES) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
HB 125 was REPORTED out of committee with nine "do pass"
recommendations and one amend recommendation and with one
previously published fiscal impact note: FN1 (DNR).
2:55:03 PM
Representative McKay thanked the committee for its
consideration.
2:55:43 PM
AT EASE
3:01:11 PM
RECONVENED
HOUSE BILL NO. 38
"An Act relating to an appropriation limit; relating
to the budget responsibilities of the governor; and
providing for an effective date."
3:01:40 PM
REPRESENTATIVE WILL STAPP, SPONSOR, introduced himself and
asked his staff to continue with the PowerPoint
presentation "HJR2 GDP Based Spending Cap" dated May 2,
2023 (copy on file). He reminded the committee that the
bill was previously heard in committee [05/02/23 10:34
A.M.]
3:02:16 PM
BERNARD AOTO, STAFF, REPRESENTATIVE WILL STAPP, continued
on slide 9 titled Current Statutory Limit:
• Currently set under AS 37.05.540(b)
• Enacted in 1986
• Mostly aligns with Appropriations Limit under Article
IX of the Alaska State Constitution.
• "Appropriations from the treasury made in a fiscal
year may not exceed appropriations made in the
preceding fiscal year by more than five percent plus
the change in population and inflation since the
beginning of the preceding fiscal year."
• Change in population is based on an annual estimate by
the Department of Labor & Workforce Development.
• Change in inflation is based on Consumer Price Index
(CPI) Anchorage as prepares by the US Bureau of Labor
Statistics.
Mr. Aoto furthered that the statute also carved out the
exceptions to the appropriation limit in Article 9, Section
16 of the Alaska Constitution and added exceptions to
include the Alaska Mental Heath settlement income account
and specific appropriations made to Alaska Mental Health
Trust Authority (AMHTA) fund.
Mr. Aoto continued on slide 10 titled What does HB 38
do?:
• Aligns with the constitutional proposal in HJR 2 and
uses the trailing average of the 5 previous calendar
years of Real Gross Domestic Product (GDP) for the
State as the metric for the limit.
• Calculating Real GDP
• Takes data for standard GDP calculations by government
agencies, subtracts government spending, and adjust
for inflation.
• 11% of the total average is the limit for all
appropriations not listed as exceptions.
• If enacted by FY24, that would equal approximately
$4.9 B.
Mr. Aoto advanced to slide 11 titled "Appropriations
Subject to Limit:
Subject to Limit:
Unrestricted General Funds (UGF) Operating
Expenditures
UGF Capital Expenditures (some exceptions)
Payments for Retirement benefits
Not Subject to Limit:
Permanent Funds Dividends
Appropriations to Permanent Fund/PCE Endowment
Appropriations to a State Savings Account (ex. CBR,
MHTF*)
Appropriations to capitalize state retirement accounts
Direct spending from a Disaster Declaration
Proceeds of bonds that are approved by voters
Appropriations made from Mental Health Trust
Settlement Income Account (AS 37.14.036)
Mr. Aoto elaborated that HB 38 had the same exceptions as
HJR 2, however it maintained the added exceptions for the
appropriations made from the Mental Health Trust Settlement
Income Account (AS 37.14.036) and the Alaska Mental Health
Trust fund. The sponsor had consulted with Legislative
Legal Services regarding the exceptions, and it was
determined that the exceptions were placed in statute as
part of the settlement of the Weiss v State of Alaska case,
the Supreme Court decision that established the AMHTA.
Mr. Aoto continued to slide 12 [no title]. He noted that
the slide contained the same raw data as he presented in
the HJR 2 discussion.
3:05:38 PM
Mr. Aoto advanced to slide 13 [no title]. He pointed to the
graph that depicted the statutory amount and noted that the
blue bars were associated with appropriations subject to
the limit. He detailed that the bar for FY 2024 was
excluded because it included the supplemental amount, which
was currently unknown. He pointed out that the current
statutory limit had instability and rose and fell which
made it difficult to plan year to year. He exemplified the
difference between FY 2009 when the appropriation was under
$5 billion and in FY 2008 it was over $7 billion.
3:07:25 PM
Mr. Aoto turned to slide 14 titled Two Primary Goals:
1. Create an effective appropriations limit to allow
the state more stable long term fiscal viability.
2. Align Alaska Statute with Constitutional proposal.
Mr. Aoto moved to slide 15 [untitled] that included a graph
depicting the current Constitutional Limit and Statutory
Limit and proposals in HB 38 and HJR 2.
Representative Stapp further explained that the orange line
on the graph represented the existing Constitutional limit,
and the blue line was the current statutory limit. He
pointed out that they were not in alignment; the statutory
limit was highly variable versus the Constitutional limit
that was more consistent. He argued that the Constitutional
limit had rendered itself ineffective. He referenced the
FY 2024 limit that was over $10 billion.
3:09:23 PM
Representative Ortiz asked if the bars on slide 15 included
past or current spending on the Permanent Fund Dividend
(PFD).
Mr. Aoto responded that the PFD was an exception to the
appropriations limit and was not reflected in the bars.
Representative Ortiz thought it was odd that the largest
expenditure was not a part of the appropriation limit.
Representative Stapp responded that prior to the
Wielechowski case, the PFD appropriation was never part of
GF. He agreed that the PFD appropriation was the largest
each year. However, he argued that the year to year
inconsistency in the appropriation warranted a separate
solution and if it was included in the modeling, the bill
would be taking a position what the amount of the dividend
should be. He offered to include it in the model if it
helped answer the question. Representative Ortiz understood
that it was a big issue and likely should be kept separate.
However, if the overall goal was a spending cap, it seemed
that the amount spent on the PFD should be considered.
3:11:36 PM
Representative Galvin thought the bill was a good exercise
in realizing the need to level out the states spending.
She cited the graph lines for HB 38 and HJR 2 and noted her
concern that it was inadequate for education spending. She
appreciated the need for a reliable spending limit,
especially to promote trust in government, but she observed
that education spending had not grown to keep pace with
costs. She shared that among her two children that were
born 10 years apart, the older one had much more
educational opportunities in public education than her
younger child. She asked for comment. Representative Stapp
reminded Representative Galvin that the green and black
lines were amended downward in a previous committee of
referral. He was attempting to provide structural balance
and consistency to long-term appropriations and government.
The lines changed if the percentages were amended and might
be conducive to Representative Galvins concerns. He
reiterated that the blue and orange lines were not
consistent and opined that they incentivized bad behavior.
He wanted a long-term vision for future Alaskans by
operating under fiscal constraints. Representative Galvin
recalled that the bill included an appropriation amount
that correlated to roughly the Consumer Price Index (CPI.)
She opined that the legislature needed to determine the
appropriate level of education spending and also an
acknowledgement that government spending could not remain
flat considering inflationary costs. She asked whether
Representative Stapp agreed.
3:15:21 PM
Mr. Aoto answered that she was correct. He added that both
of the current limits each presented a different challenge
because the metric had to be anchored to something. He
elaborated that the Constitutional limit was anchored to a
set amount on a set date that only allowed it to increase
and not adjust to different economic drivers. The statutory
limit changed so drastically from year to year being
predicated on the prior years spending that it could not be
consistently accounted for. He commented that the bills
offered a set amount that adjusted to economic drivers,
which was the Gross Domestic Product (GDP).
Representative Stapp interjected that the benefits of the
bills were that it adjusted the limit based off of
performance based metrics. He reported that the
Constitutional limit stipulated that one-third of the
appropriation limit should be allocated towards capital
investments in the state. He deduced that the authors were
considering building Alaskas future.
Representative Ortiz also believed that considering the
long-term interests of the state was beneficial. He pointed
to the HB 38 limit line on the graph and calculated that in
FY 2023 the state appropriated an amount that was higher
than what was in the states long-term interest. He deduced
that Representative Stapp was inferring that spending above
the limit was money ill-spent. Representative Stapp
reminded Representative Ortiz that in a prior committee the
metrics were amended downward and in the original bills
the line did not exceed the graph.
3:18:59 PM
Co-Chair Foster asked if Representative Stapp could provide
a copy of what the prior graph looked like prior to the
amendments. Representative Stapp agreed to provide the
information and he believed that there was a happy medium
that could be found to apply a structural limitation to
budgetary practices and not intentionally apply excessive
downward pressure on the states current situation.
3:19:55 PM
Co-Chair Foster set an amendment deadline for HB 38 and HJR
2 for the following Wednesday May 10, 2023, at 5:00 P.M. in
order to allow for some modeling and further discussion.
HB 38 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 81
"An Act relating to the transfer of a title on the
death of the owner; and providing for an effective
date."
3:21:10 PM
RYAN MCKEE, STAFF, REPRESENTATIVE GEORGE RAUSCHER, read the
sponsor statement:
The process of probate in the state of Alaska can take
anywhere from six months to several years, and can
cost family members and beneficiaries thousands,
potentially tens of thousands of dollars in legal and
filing fees. While the State Legislature has already
taken great strides to reduce the costs of probate,
there is still much room for improvement.
House Bill 81 continues in spirit with the Uniform
Real Property Transfer on Death Act (URPTDA), which
unanimously passed both the House and Senate in 2014.
URPTDA created the Transfer on Death (TOD) deed, which
allows for non-probate transfers of real property. TOD
deeds allow Alaskans to select a beneficiary who will
receive the property at their passing and removes that
property from the process of probate.
In 2016, legislation similar to HB 81 was introduced
but the legislation failed to pass that session. HB81
is nearly identical, although it expands the concept
to apply both to vehicles and boats that are issued
titles through the state.
HB81 continues the ongoing effort to reduce the costs
of probate for Alaskans and creates a streamlined
service through the DMV through which they can
designate beneficiaries for both cars and boats
through a simple form. The TOD titles will be
available for all boats and vehicles for which the DMV
provides titles, which also includes some mobile
manufactured homes under AS 45.29.102(66). The program
will be self-sustaining through fees.
At no cost to the state, HB 81 will allow countless
Alaskans to pass down boats, vehicles, and some
manufactured homes to beneficiaries with more ease,
and will help simplify and streamline the potentially
complicated, costly, and painful process of probate
following the death of a loved one.
3:24:11 PM
Representative Josephson thought that a surviving spouse
was defined as a husband and a wife. He asked if the
language was amended to be consistent with current law and
whether the change would be objectionable to the sponsor.
Mr. McKee offered to respond after he spoke with the
sponsor.
3:24:56 PM
Representative Galvin determined that the state already had
the provisions for real estate, but it was not in statute
for vehicles and boats. She asked whether she was correct.
Mr. McKee replied in the affirmative.
3:25:26 PM
Representative Josephson deduced that in relation to real
estate the law referred to tenancy in common, but if the
title was just in the name of one spouse or another, he
wondered whether the transfer process would proceed
quickly.
3:26:16 PM
LINDA HULBERT, SELF, FAIRBANKS (via teleconference), shared
that she was not an attorney, but was employed by New York
Life for 33 years and worked with people in the estate and
probate process. She was deeply involved in supporting the
legislation but stressed that she was not an attorney.
Representative Josephson repeated his question. He
explained that when a home was owned jointly by a married
couple it was called tenancy in common. However, in
instances where only one spouse held the title and the
marriage ended, the titled spouse was not considered the
sole owner of the property. He was curious about the ease
of which a house was transferred to the other spouse upon
the death of one spouse.
3:28:21 PM
HB 81 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the morning portion
of the meeting. He noted that the committee would be
recessed until the following morning.
ADJOURNMENT
3:31:17 PM
The meeting was adjourned at 3:31 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 81 Sectional Analysis .pdf |
HFIN 5/4/2023 1:30:00 PM STRA 3/21/2024 1:30:00 PM |
HB 81 |
| HB 81 Supporting Documents.pdf |
HFIN 5/4/2023 1:30:00 PM |
HB 81 |
| HB 81 Sponsor Statement.pdf |
HFIN 5/4/2023 1:30:00 PM STRA 3/21/2024 1:30:00 PM |
HB 81 |
| SB25 Fund Backup Information - LFD Presentation extract 050423.pdf |
HFIN 5/4/2023 1:30:00 PM |
SB 25 |
| HB 125 Public Testimony Rec'd by 050423.pdf |
HFIN 5/4/2023 1:30:00 PM |
HB 125 |