Legislature(2023 - 2024)ADAMS 519
01/25/2024 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| HB89 | |
| HB50 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 89 | TELECONFERENCED | |
| += | HB 50 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
January 25, 2024
1:33 p.m.
1:33:09 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
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
Eleilia Preston, Staff, Representative Julie Coulombe; Leah
Van Kirk, Heath Care Policy Advisor, Department of Health;
John Crowther, Deputy Commissioner, Department of Natural
Resources; Haley Payne, Deputy Director, Division of Oil
and Gas, Department of Natural Resources; Representative
Stanley Wright; Representative Andrew Gray.
PRESENT VIA TELECONFERENCE
Jen Griffis, Vice President, Policy and Advocacy, Alaska
Children's Trust; Jessica Parker, Superintendent, Little
Mountain Movers and Mountain City Christian School;
Stephanie Berglund, CEO, Thread; Bryana Garcia-DeLaCruz,
Program Director, Alaska Early Childhood Advocacy Group;
Kari Sagel, Director, Early Childhood Coalition; Brett
Huber, Commissioner, Alaska Oil and Gas Conservation
Commission.
SUMMARY
HB 89 DAY CARE ASSIST./CHILD CARE GRANT PROGRAM
HB 89 was HEARD and HELD in committee for further
consideration.
HB 50 CARBON STORAGE
HB 50 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 89
"An Act relating to the day care assistance program
and the child care grant program; and providing for an
effective date."
1:34:49 PM
Co-Chair Foster noted that there was a proposed committee
substitute for the bill.
Co-Chair Johnson MOVED to ADOPT the proposed committee
substitute for HB 89, Work Draft 33-LS0518\S (Bergerud,
1/3/24).
Co-Chair Foster OBJECTED for discussion.
1:35:44 PM
Representative Julie Coulombe, Sponsor, introduced HB 89
and thanked the committee for hearing the bill. She and her
staff had updated the presentation on the bill to answer
questions that had arisen in the prior year. She relayed
that the governor had stated that he wanted make Alaska
more affordable for families and she shared in his vision.
In order to accomplish the vision, there needed to be
affordable child care that was accessible to families.
Child care was a workforce issue and if it were more
available and affordable, many Alaskans would be able to
return to work and become more reliable workers. Young
families were leaving the state for many reasons such as
housing challenges, education, training, and the
availability of child care. The lack of child care was
estimated to cost Alaskan employers $152 million in
employee absences and turnover, but she thought it was a
solvable issue. She relayed that HB 89 was a call to the
private sector to view child care as an employee benefit
and a call to the public sector to update the ways in which
families were supported as well as the way that the child
care industry was regulated.
Representative Coulombe indicated that she was a member of
the governor's Child Care Task Force and she had heard of
the problems surrounding the child care sector. She had
spoken with private businesses that were open and willing
to help employees with child care but were uncertain where
to start. She had met with child care providers that had
shared with her the ways in which regulations hindered the
businesses and prevented the businesses from thriving. The
recommendations that came from the task force addressed the
concerns. She noted that HB 89 moved in the same direction
as the recommendations of the task force.
Representative Coulombe shared that she was recently asked
by a conservative colleague why it was the responsibility
of the government to provide child care. She had been
wrestling with the same question and remarked that she did
not think it was the responsibility of the government to
provide child care; however, the government could create an
environment that encouraged businesses to offer child care
benefits, make it easier to start a child care business,
and encourage local communities to create innovative
choices for different kinds of care. The government could
also assist parents in accessing child care and enable the
parents to grow the household income.
Representative Coulombe emphasized that the bill would not
propose to spend a significant amount of short-term money
on the situation, but it proposed a long-term incentive for
the communities to solve the problem. She highlighted that
women comprised of about 60 percent of Alaska's workforce
and the state was in the top 10 percent in the nation in
terms of working women. As long as Alaska's housing,
energy, and grocery prices continued to increase, parents
would need to work harder in order to stay afloat. She
urged that it was time for the legislature to work with the
governor and act on the pressing issue of child care in the
state.
1:39:28 PM
ELEILIA PRESTON, STAFF, REPRESENTATIVE JULIE COULOMBE,
offered the sectional analysis (copy on file). She
explained that Section 1 through Section 21 were concerning
the tax credits and were not necessary to go through in
detail. She indicated that Section 1 related to offsetting
costs eligible for insurance tax credits, the income tax
education credits, the oil and gas producer education tax
credits, the property tax education credits, the mining tax
education credits, and the floating fisheries business tax
credits. She noted that Sections 2 and forward were
intended to increase the maximum individual tax credit
limit from $1 million to $3 million. She stated that
Section 3 would add a new section to adjust the maximum
individual tax credit limit every five years for inflation.
Ms. Preston continued to Section 22 and Section 23, which
were both regarding conforming language to change "day
care" to "child care." Section 24 contained conforming
language to child care and also stated that the monthly
household income limit for an eligible family to receive
assistance was 105 percent of the median household income
in Alaska, adjusted for family size. She read through
Section 25 through Section 38 as follows:
Section 25: Amends AS 47.25.011 regarding
administrative costs of program contractors with
conforming language to "child care." Section 26:
Amends 47.25.021 with conforming language from "day
care" to "child care."
Section 27: Amends 47.25.031 with conforming language
from "day care" to "child care."
Section 28: Amends AS 47.25.041 Contributions of
Parents. This section provides that the parent or
guardian contribution for child care assistance shall
not be greater than 7% of the family monthly income.
This was a recommendation of the Governor's Task Force
on Child Care
Section 29: Amends 47.25.051 with conforming language
from "day care" to "child care."
Section 30: Adds new subsection AS 47.25.051(c) to
require the department to use a market rate study for
each region served by the program to determine the
actual amount of assistance available for assistance.
Section 31: Amends 47.25.071(b) with conforming
language from "day care" to "child care."
Section 32: Amends 47.25.071(g) with conforming
language from "day care" to "child care."
Section 33: Adds new subsection AS 47.25.071(i) to
allow the department to award grants to child care
facilities that are the highest performing and highest
quality.
Section 34: Amends AS 47.25.095(2) to update the
definition of "child care facility" to include an
establishment recognized by the federal government.
Section 35: Amends AS 47.25.095(3) to add conforming
language to the definition of "child care" (from "day
care").
Section 36: Repealer section
Section 37: Adds uncodified law directing the
department to submit the child care assistance
program, as amended by this bill, to the federal
government for approval.
Section 38: Adds uncodified law providing a
conditional effective date of January 1, 2025, if the
program is approved by the US Department of Health and
Human Services.
Ms. Preston relayed that Section 39 through Section 42
changed the effective date and the Department of Education
and Early Development (DEED) could speak to the change in
more detail.
1:43:03 PM
Representative Coulombe requested that the committee hold
questions until the end of the presentation.
Ms. Preston introduced the PowerPoint Presentation "HB 89"
dated January 24, 2024 (copy on file). She began on slide 2
and explained that HB 89 addressed the lack of affordable,
quality child care. She read the following impacts of the
problem on slide 2:
• Worsens labor shortages
• Endangers children
• Undermines families' economic security
• Decreases workforce participation
Ms. Preston advanced to slide 3 and indicated that HB 89
provided a solution by strengthening the child care sector,
improving access to child care for families, and helping
parents return to the workforce. She continued to slide 4
and shared that Alaska was in a childcare crisis due to
labor shortages, a declining number of child care
providers, and low wages.
Ms. Preston advanced to slide 5 and read the approaches
proposed in HB 89 to solve the problem:
• Expands the number of families who can use child
care assistance
• Incentivizes tax breaks for employers to donate
to child care facilities
• Increases the maximum tax credit
• Aligns the assistance level to reflect the actual
cost of care
Ms. Preston moved to slide 6 and relayed that according to
the U.S. Chamber of Commerce Foundation, Alaska was losing
$152 million annually due to employee turnover and
absences. The child care crisis was impacting the workforce
as a whole, not only families with children. She read from
the slide:
• Currently, state rate is based on market rate
study.
• Alaska Department of Health is contracting with
McKinley Group to complete the study by July 31,
2024
• Must be approved by the Federal Government
Representative Coulombe added that currently, the market
study was based on the rates currently charged by child
care providers, but the revenue was not enough to sustain
the businesses. If a child care provider charged parents
for the actual cost of operation, parents would be priced
out of the market. Businesses struggled to stay afloat
because income was lower than expenses and part of her goal
in the prior year was to determine the actual cost of care.
The contracting with the McKinley Group was currently in-
process and the study completion date had been moved back
to July 31, 2024. She suggested that committee members may
have heard that the governor wanted to hold back on
creating a plan for child care because he was waiting for
the results of the study. She understood that the federal
government needed to approve the methodology before the
study could move forward.
Co-Chair Foster noted that Representative Hannan had joined
the meeting.
1:46:42 PM
Ms. Preston explained that HB 89 solved the child care
problem by changing the eligibility requirements to receive
assistance. Presently, families making up to 85 percent of
the state median income of $60,144 were eligible for
assistance. The bill would raise the eligibility threshold
to 105 percent of the state median income, changing the
cutoff to an income of $73,920. Most middle-class families
in the state were currently not able to afford child care,
but HB 89 would enable the department to scale the subsidy
level based on need. The lack of affordable care equated to
severe labor shortages in every industry. The bill would
help alleviate the shortages by expanding the number of
families who could afford care and would make it possible
for more Alaskans to return to work. Families who were
eligible for assistance were not required to pay anything
in excess of 9 percent of the family income, but the bill
would change the cap to 7 percent.
Representative Coulombe explained that the system currently
required families to pay copays and assistance would not
cover the entire child care bill. Not only would the copay
increase for every child, but families had to cover the
discrepancy between the amount of money provided through
assistance and the actual cost of child care.
Co-Chair Foster noted that Representative Stanley Wright
and Representative Andrew Gray were present in the
audience.
Ms. Preston continued on slide 10 to explain how offsetting
child tax credits would help solve the problem. The
following entities would be able to write off contributions
to the child care sector:
• State net income tax (corporate)
• Mining License tax
• Fisheries Business Tax
• Fishery Resource Landing Tax
• Oil and Gas Production tax
• Oil and Gas Property tax and Insurance tax
Representative Coulombe moved to slide 11 and explained
that she included information on HB 223 in the presentation
because it acted as a background of what she was trying to
accomplish with HB 89. The educational tax credits were
lowered in 2018 and lowered again again in 2019. The cap
could be seen on the slide for 2018 through 2021; it
started at $5 million in 2018, decreased to $1 million in
2019, and remained at $1 million through 2021. She
clarified that up to $1 million could be written off for an
educational tax credit. She relayed that HB 233 would
increase the cap to $3 million. She thought providing the
chart on HB 233 would help provide some context for HB 89
because the tax credits operated the same way in both
bills. She recalled that Representative Josephson had asked
a question in the prior year about the local taxes. She
clarified that it was her understanding that the credit
would come exclusively from the state.
Ms. Preston concluded the presentation.
Co-Chair Foster asked if there were questions from the
committee.
1:51:39 PM
Representative Hannan asked if a company could simply pay
for its workers' child care and add it as an employee
benefit while also receiving a tax credit for it.
Representative Coulombe responded in the affirmative. The
bill listed many types of contributions such as building a
child care center, improving an existing child care center,
or raising funds to help cover child care costs.
Representative Galvin appreciated the work of the sponsor.
She understood that entities already paying a corporate tax
would get a credit. She presumed that families associated
with eligible industries [listed on slide 10] would have an
increased opportunity to receive a tax credit. She asked if
there had been discussion about extending the opportunity
to other industries.
Representative Coulombe responded she was not certain she
could answer the question.
Representative Galvin understood that the number of
families eligible for assistance would be increased. She
wondered if there was a way to expand the number of "seats"
for those who need child care.
Representative Coulombe responded that her plan was to
increase the capacity of the child care industry by
incentivizing the private sector and infusing funds into
the child care industry. There was space in the child care
centers and there were empty rooms in the buildings because
the centers could not find workers. Her approach was to
motivate the private sector to get involved and increase
funds to the child care industry to start increasing the
number of children and families served. There were few
child care centers that were overpopulated and most centers
were severely underattended.
Representative Galvin understood that the state had come up
with standards for best practices for child care. She was
aware that the university system had a small program for
child care providers. She wondered if there were any other
actions the state could take to address the problem apart
from increasing wages.
1:56:55 PM
Representative Coulombe noted that DOH recently expanded
the program for child care providers and suggested that the
department speak to the details. She heard a presentation
from the University of Alaska Anchorage (UAA) and there
were many scholarships being offered to help students
become trained and earn higher wages due to acquiring
advanced training. The program deteriorated during the
COVID-19 pandemic, but it was being built up again. In any
sector, an employee with more training would receive higher
wages and many child care centers hired employees with no
experience or training. Most centers paid for the employees
to receive training, which was another financial burden for
the centers. She was excited about the UAA program.
Representative Galvin thought she saw something about
grants for highest quality child care centers.
Representative Coulombe thought DOH could provide a better
response to the question. She relayed that there would be
financial incentives through Thread to "climb the quality
ladder."
Co-Chair Foster reminded the committee that testifiers were
available to answer questions.
Representative Stapp had heard about child care issues and
thought that Representative Coulombe had worked tirelessly
to solve the problem. He asked if the task force had any
recommendations pertaining to dependent care accounts that
allowed individuals and families to contribute money for
child care. He remarked that a dependent care account
allowed individuals and families to contribute up to $5,000
for the purpose of child care and the contributions had
been capped at $5,000 for over a decade.
Representative Coulombe responded that she did not think
the task force addressed the issue. She thought it was a
great idea.
2:01:18 PM
LEAH VAN KIRK, HEALTH CARE POLICY ADVISOR, DEPARTMENT OF
HEALTH, responded to Representative Stapp that the task
force had not yet addressed the issue. There had been a
focus on exploring employer-based benefits and there were
currently 33 recommendations in the task force's initial
report submitted on December 1, 2023. The task force was
open to hearing recommendations and hearing interest
specifically related to the issue.
Representative Stapp asked if there were any regulatory
issues that DOH needed to address. He wondered if any
regulatory issues or statutory issues were serving as
impediments to licensing new child care facilities.
Representative Coulombe responded in the affirmative. There
were significant regulatory recommendations, most of which
could come through the department and would not need to be
changed statutorily. A major challenge to child care
facilities was licensing. There were currently no
electronic forms on the department's website and the
process was difficult to navigate. In order to apply for a
license, an interested party needed to print out the form
and put it in the mail. There were easy solutions to many
of the problems and there were many recommendations around
licensing, background checks, and lack of online resources.
Ms. Van Kirk added that during the first six months of the
meetings, the task force focused on the following three
recommendation categories: workforce, employer-based
programs, and licensing. The task force identified many
issues that could be easily addressed through regulation.
Some of the ways in which the task force could address the
issues included the methodology used when a state rate was
adopted, child care administrative requirements, and the
training available through the university.
Representative Stapp thanked Representative Coulombe for
her work on the bill.
2:05:11 PM
Representative Josephson asked if the funding sources under
the bill would continue the child care development fund and
add a tax credit to it.
Representative Coulombe responded in the affirmative.
Representative Josephson understood that the forgone
revenue was in the range of $4.7 million. He asked if he
was correct.
Representative Coulombe responded that it was difficult to
predict who would take advantage of the opportunities
proposed by the bill. The educational tax credits claimed
within ten years were $65 million and contributions to
education were $97 million. She emphasized that the process
was considered a slow build. She had done significant
resource around tax credits and the various possibilities,
and she was hopeful that participation would be high. She
opined that it was an investment in the state.
Representative Josephson was reminded that at the height of
the pandemic, the state received $22 million in one year.
He wondered if the money in the bill was thought to be
significant enough to improve the problem and free up
sufficient resources for parents and for the workforce to
be paid adequately.
Representative Coulombe responded that the bill would not
fix everything but that it was a start. She did not think
that the comparison to the pandemic was relevant as the $22
million infusion was intended to save child care centers
that were closing down. Her intention was for there to be a
slow investment building over a long period of time. She
relayed that even with the $22 million investment, many
child care centers had to close. Involving the private
sector and increasing access would lead to a better outcome
than throwing a significant amount of money at a problem.
2:08:49 PM
Representative Ortiz asked if the task force had looked at
programs in other states and how other states were
addressing the problem.
Ms. Van Kirk responded in the affirmative. The task force
also met with the federal Office of Child Care to learn
what was happening on a national level that was making a
difference in other states. The task force had engaged
local, state, and national partners to help inform its
decisions.
Representative Ortiz explained that he was able to go to a
national legislators conference a few years prior and
learned about a model in another state to improve child
care. The plan was a different model based on the state
providing resources to businesses to subsidize the
businesses and use resources to further entice new
employees through the cash subsidies provided by the state.
He understood that the proposal in the bill was based on a
tax credit model. He asked if there was a measurement as to
how much of an impact the tax credit route would "cover the
issue" in relationship to child care needs in Alaska. For
example, he was confused as to how the fisheries resource
landing tax credit would work. He asked how big the bill's
impact would be on the overall problem and wondered if
there was an estimate.
Representative Coulombe was not certain what the impact
would be. She was unsure of any other way to develop a
sustainable model other than by involving the private
sector, which was one of the priorities of the task force.
Private businesses needed to understand that it would be a
benefit to workers. She was trying to shift the mindset of
the private sector. The bill also established a program to
partner with private sector entities which would appoint an
individual to help the private sector understand how to set
up a child care center and how to receive benefits to help
pay for child care for the workers. She thought it was more
of a mindset shift and the first step towards addressing
the problem.
2:13:06 PM
Representative Ortiz appreciated Representative Coulombe
bringing the bill forward and clarified that his questions
were not intended to discredit her efforts. He understood
that the fiscal note stated that the bill would cost either
$194 million or $194,000. He asked which figure was
correct.
Representative Coulombe suggested that Ms. Van Kirk speak
to the fiscal note.
Ms. Van Kirk explained that the fiscal note referred to by
Representative Ortiz was not the most recent version and
there would be an updated fiscal note which would assess
the committee substitute. She indicated that the fiscal
note would be available publicly after the meeting.
Representative Coulombe clarified that it was $194,000 not
$194 million.
Representative Ortiz understood that it was the cost to
provide staff within the state to implement the program.
Ms. Van Kirk responded in the affirmative.
Representative Coulombe explained that the fiscal note was
the only note she could get because it was difficult to
determine the impact of the subsidy. There was a
forthcoming fiscal note but it could not be released until
the committee substitute was adopted.
Representative Hannan asked Ms. Van Kirk what the vacancy
rate was in the child care licensing office and whether
there had been high turnover rates. Skilled staff were
needed in order to help anyone through the licensure
process. She thought it was important to ensure that there
were enough employees to process the licenses if the bill
were to pass.
Ms. Van Kirk responded that she could not speak to the
specific vacancy rate of the child care licensing office,
but the leadership and managers at the office had been
consistent for many years. Administering the
recommendations in the bill would require additional staff.
Representative Coulombe noted that Anchorage had its own
licensing office and although there were no vacancies,
there had been significant turnover in the last few years
and there was some inexperience in the office. The state
licensing office had been at the task force meetings and
there was no talk of significant vacancies within the state
office.
2:17:33 PM
Co-Chair Edgmon appreciated the work that Representative
Coulombe and her staff had put in to the bill. He
understood that the task force had not finished its work
and that the bill and the task force were separately
addressing the same issue. He asked if he understood
correctly.
Representative Coulombe replied that the recommendations
were specifically proposed in the initial report released
by the task force. There were more recommendations in
addition to the ones in the first report. She emphasized
that the recommendations in the bill were in-line with the
recommendations proposed by the task force. There would be
a second report with updated recommendations.
Ms. Van Kirk responded that the task force had examined
many specific and broad areas over the past six months.
There had been 15 meetings with presenters at almost every
meeting and many of the recommendations in the first report
were included in the bill.
Co-Chair Edgmon remarked that many legislators had attended
events within the state and outside of the state to learn
what other states were doing to improve child care. He
noted that the systems in other states were well-
established, including relationships with federal agencies,
modeling, and state funding streams. He asked if it was the
eventual direction the task force would bring to the
legislature in terms of building on what Alaska had in
place. He understood that it was difficult to make a child
care center work without state assistance. He asked what
the long term goal was for the task force.
Ms. Van Kirk responded that when the task force made its
final recommendations, there would be many multi-faceted
approaches to child care in the state. The approaches would
include a combination of federal and state resources,
regulatory changes, and partnerships with private
businesses and organizations. She found it encouraging that
many Alaskans were interested in the solution, even those
Alaskans without children. The task force office had
received many calls from employers asking what they could
do to support the workforce in Alaska. She anticipated
there being a broad approach to how the task force could
address some of the issues with child care.
2:22:04 PM
Co-Chair Edgmon noted that broadband was also coming to
mind because it was not economically feasible without
assistance from the federal government. He asked if it was
the sponsor's goal that the state put together a model that
involved the private sector but also involved government
assistance in order to make child care centers economically
viable.
Representative Coulombe responded in the affirmative. She
saw a big opportunity to get the private sector involved.
She noted that it was important to see what other fund
sources would come into play once the final report was
released by the task force. The governor had said that he
was holding off on doing anything major on the state level
until the final report was released. She had looked at many
other states and how the states were addressing child care
problems, but many solutions that worked in other states
were unlikely to work in Alaska. She was unable to find a
model in another state that would work in Alaska unchanged.
The rural and urban divide and small population was a
significant factor in the state. Some other states were
putting hundreds of millions of dollars into child care,
but those states had different industries and did not have
a budget as volatile as Alaska's budget. The task force had
been examining other models and trying to implement pieces
that would work in Alaska. Once the final report was
released, it would be easier to determine whether the state
or the federal government should be providing assistance
and what the communities could do to help.
Co-Chair Edgmon understood that the bill changed "day care"
to "child care." He thought the definition of child care
could be applied to a number of activities, such as pre-
natal visits and early intervention. He asked if the
definition of child care was as all-encompassing as it
needed to be or would the definition broaden once the task
force had completed its work.
2:25:49 PM
Representative Coulombe explained that the definition
change from day care to child care came from the child care
sector. Many child care providers felt disrespected due to
low wages and lack of training. The change was an offering
of respect to workers in the industry. The task force
discussed at length what could be done to elevate the
profession of child care, and terminology was important.
She presumed that the term would eventually evolve to
"early childhood education."
Co-Chair Foster WITHDREW the OBJECTION.
There being NO further OBJECTION, Work Draft 33-LS0518\S
was ADOPTED.
Co-Chair Foster relayed that the committee would hear from
invited testifiers on HB 89.
2:28:06 PM
JEN GRIFFIS, VICE PRESIDENT OF POLICY AND ADVOCACY, ALASKA
CHILDREN'S TRUST (via teleconference), testified in support
of HB 89. She explained that the Alaska Children's Trust
focused on the prevention of child abuse and neglect. The
trust supported policies that increased economic security
for families and provided foundational early education
support for children, and HB 89 would accomplish both. The
average family in Alaska was currently spending 15 percent
to 30 percent of the household income on child care, and 51
percent of families reported that a parent could not fully
participate in the work force due to child care issues.
Alaska was ranked forty-fourth in the nation in economic
well-being and 34 percent of children in the state had
parents who lacked secure employment. She emphasized that
HB 89 would increase the eligibility limit for child care
which would allow more families to access affordable child
care and provide the opportunity to participate in the
workforce to more parents. Parents able to access proper
child care reported reduced stress and increased economic
stability, which were both vital factors in decreasing the
risk of child abuse and neglect. Quality child care
increased children's readiness for school and eventually,
the work force. She noted that although the bill would not
solve all problems related to child care, it was an
important step forward. She urged support for HB 89.
2:30:30 PM
JESSICA PARKER, SUPERINTENDENT, LITTLE MOUNTAIN MOVERS AND
MOUNTAIN CITY CHRISTIAN SCHOOL (via teleconference),
testified in support of HB 89. She relayed that she had
seen the struggles of inadequate child care at the schools
for which she was superintendent, Little Mountain Movers
and Mountain City Christian School. The increased demand
for child care had resulted in a massive waiting list for
the schools. The existing regulations limited the capacity
of the schools to efficiently staff and provide appropriate
space for children. There were only three remaining infant
care programs in Anchorage as more and more day care
centers were forced to close due to strict requirements and
a reduction in grant opportunities. The schools had a
capacity of 120 children and she would like to extend it to
300 children. There was a waitlist of 88 children but due
to staffing ratios, it was cost adverse to open up space
for the children on the waitlist. She thought that HB 89
would bring much needed relief by changing day care
assistance and the child care grant program. The bill would
recognize the diverse needs of the child care facilities in
the state. She applauded the legislature for taking up the
bill which would have a positive impact on child care in
the state.
2:33:20 PM
STEPHANIE BERGLUND, CEO, THREAD, ANCHORAGE (via
teleconference), explained that Thread was a nonprofit that
provided statewide services to strengthen access to
affordable and high-quality education with a focus on child
care. She shared that Thread served more than 10,000
families, 2,000 early educators, and 430 early childhood
programs every year. Child care had always been a sector
with institutional challenges, but the challenges had been
increasing in recent years. Since 2020, over 25 percent of
licensed child care programs in the state had closed and
the child care workforce was struggling due to low wages
and often few benefits. Fewer families were able to access
affordable and quality child care services.
Ms. Berglund continued that businesses were not able to
recruit and retain quality employees due to struggles with
child care and employees felt unable to fully participate
in the workforce. The most recent data showed that
businesses were greatly impacted by families struggling
with child care, including poor attendance and loss in
productivities. Lack of quality child care was costing
businesses an estimated $152 million per year. Employees
were not able to achieve their goals or contribute to the
economy without quality child care.
Ms. Berglund argued that HB 89 would support child care and
strengthen the subsidy program. There were many areas of
child care that still needed to be improved upon, but the
bill would be a start. She remarked that too few families
participated in the child care assistance program because
many families could not qualify or access resources under
the current structure. Even if families were receiving
assistance, they were still required to pay the difference
between the assistance received and the actual cost of
child care, which was still unaffordable for many families.
Ms. Berglund shared that in 2023, Thread partnered with the
McKinley Group to conduct a statewide household survey to
collect information about child care directly from
families. She relayed that 585 families with over 1000
children were surveyed. She shared that 74 percent of
respondents reported that the highest barrier to child care
was the lack of providers, followed by cost at 60 percent.
Families in urban areas cited cost as a higher factor than
families in rural areas. Over half of families reported
that the ability of household members to remain employed or
work more hours was impacted by the availability of child
care. In 2019, only 22 percent of families surveyed
reported that child care was a barrier to being employed or
working more hours. Child care was expensive and had
outpaced inflation over the last few years. Quality child
care was expensive to provide and expanded support was
needed for low-income families. The bill would allow more
families to qualify for assistance and thus allow more
families to participate in child care. Child care policies
and child care reimbursement rates were currently based on
the market rates and did not consider the true cost of
care, which made it an unstable foundation for the child
care system. Thread was encouraged to see increased studies
and research and was looking forward to seeing the research
inform new policies. She relayed that Thread was pleased to
endorse HB 89 and to encourage legislators to consider
other policies that would reduce child care costs for
parents.
2:40:03 PM
Representative Stapp asked whether Thread offered its
employees a dependent care account through a flexible
spending account (FSA).
Ms. Berglund responded in the negative. She relayed that
Thread offered paid family leave.
Representative Josephson understood that the state
contribution in the prior year was $7.5 million. He assumed
that none of the funds had lapsed and were spent
purposefully. He asked if Ms. Berglund knew at which point
in the fiscal year the money had been spent in its
entirety.
Ms. Berglund replied that that the department could offer
more specific figures. She noted that Thread had partnered
with the state for child care improvements and some of the
remaining federal pandemic relief dollars were in the final
year of spending. Thread was in the final stages of
planning and executing some final grants to child care
programs as there was an open grant opportunity for child
care called the Focus on Child Care Grant. The focus grant
would be the last broad-based, non-competitive grant for
all child care programs to receive federal relief dollars.
Representative Josephson commented that he liked the bill.
He was concerned that the goal was to return to the
previous "normal" for a state direct subsidy while adding
tax credits. He presumed that it was in the $6 million to
$7 million dollar range per year and he asked how far the
money could go.
Ms. Berglund responded that the department would be able to
respond to the question in more detail.
Co-Chair Foster OPENED public testimony.
Co-Chair Foster reminded interested individuals how to
submit written testimony.
2:44:17 PM
BRYANA GARCIA-DELACRUZ, PROGRAM DIRECTOR, ALASKA EARLY
CHILDHOOD ADVOCACY GROUP (via teleconference), testified in
support of HB 89. She was testifying on behalf of the
Alaska Early Childhood Advocacy Group, which was a group of
nine nonprofits across the state that had joined together
to advocate for increased investment in child care in
Alaska. Over 51 percent of families were not participating
in the workforce to the desired extent because of the lack
of child care. The average child care worker made $29,500
per year which was less than a gas station attendant. The
average Alaska family paid 15 percent to 20 percent of its
income to child care. The bill would not fix everything but
it was a step in the right direction through increasing
access and eligibility for assistance. The business tax
credits would encourage businesses to invest in child care
options for employees. She urged support for HB 89 which
she felt was an important step toward transforming Alaska's
child care sector, supporting children and families, and
benefiting the economy.
2:46:23 PM
KARI SAGEL, DIRECTOR, EARLY CHILDHOOD COALITION (via
teleconference), testified in support of HB 89. She relayed
that the Early Childhood Coalition was in favor of anything
that reduced the burden on families and child care
providers and increased access to early childhood
education. Quality child care prepared children to be ready
for kindergarten and allowed families to make employment
choices that benefited family members as well as the
community. The bill would increase stability for providers
and families. There was a recent focus group that concluded
that early childhood inequities continued to grow and it
was important to address the inequities. The free market
was not a viable economic system for child care and
required municipal, federal, and employer contributions.
She urged support for HB 89.
2:48:33 PM
Co-Chair Foster CLOSED public testimony.
HB 89 was HEARD and HELD in committee for further
consideration.
2:49:41 PM
AT EASE
2:55:16 PM
RECONVENED
HOUSE BILL NO. 50
"An Act relating to the geologic storage of carbon
dioxide; and providing for an effective date."
2:55:46 PM
Co-Chair Johnson MOVED to ADOPT the proposed committee
substitute for HB 50, Work Draft 33-GH1567\R (Dunmire,
1/22/24).
Co-Chair Foster OBJECTED for discussion.
2:56:34 PM
JOHN CROWTHER, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, explained that the proposed committee substitute
would delete a section of HB 50 that had already been
enacted into law in the prior year. The section granted
authority to pursue primacy to the Alaska Oil and Gas
Conservation Commission (AOGCC). He introduced the
PowerPoint Presentation "Recap: HB 50 Carbon Storage" dated
January 25, 2024 (copy on file). He began on slide 2 and
offered an overview of the presentation's agenda.
Mr. Crowther continued to slide 3 and explained that the
intent of HB 50 was to make Alaska's subsurface resources
available for maximum use. The resources were already used
in other ways, but the bill was focused on the
sequestration of carbon dioxide. There were two key
elements that remained in HB 50 that were core to the bill:
enabling the Department of Natural Resources (DNR) to make
state lands available through a leasing program, and to
offer specific regulatory framework to AOGCC as it
administered the program and sought to pursue primacy.
Co-Chair Foster suggested holding questions until the end
of the presentation.
Mr. Crowther advanced to slide 4 and explained that the
bill had nine hearings in the House Resource Committee
(HRC) and five hearings in the House Finance Committee. The
committee substitute passed out by HRC involved the
following changes: several minor drafting style changes, a
modified fund status to ensure that the funds would not be
sweepable, adjusted commercial terms from statute and
directed the terms to be established by regulations,
removed federal 45Q tax credits from AS 43.20.036, and
added carbon dioxide to AS 46.03.022(10)(B) to the
Department of Environmental Conservation's (DEC) pipeline
jurisdiction.
Mr. Crowther continued to slide 5 and offered information
of some developments in the carbon capture utilization and
storage (CCUS) industry. There had been significant
movement in the broad CCUS space in the state as well as
the nation. For example, there were two new facilities in
North Dakota that were actively injecting CO2.
Additionally, Wyoming had issued its first Class VI well
approval in December of 2023 and Louisiana had received
Class VI well primacy from the Environmental Protection
Agency (EPA) in December of 2023. In Alaska, grants had
been issued through the federal Department of Energy (DOE)
to start development on CCUS projects.
3:02:15 PM
BRETT HUBER, COMMISSIONER, ALASKA OIL AND GAS CONSERVATION
COMMISSION, ANCHORAGE (via teleconference), relayed that if
he were to summarize his portion of the presentation, he
would say "we are advancing and things are going well." He
presumed that the committee would like him to go into more
detail.
Co-Chair Foster commented that it was a great summary but
additional detail would be helpful.
Mr. Huber continued to slide 7 and noted that SB 48 had
passed in the prior year, which granted AOGCC the authority
to pursue Class VI primacy from the EPA. The bill included
funds for appropriation for one engineer position and one
assistant position as well as funds for contractual and
legal support.
Mr. Huber continued to slide 8 and explained that for
states that had completed the primacy process, the timeline
ranged from three to six years. The state was presently in
the pre-application phase and AOGCC's goal was to complete
the process in the next two years. He relayed that AOGCC
thought it would be helpful to look to other states to
determine what worked and what did not work in order to
meet the two-year timeline goal. He indicated that AOGCC
only had control over a portion of the process and the
EPA's interaction and approval was at the purview of the
legislature. He added that AOGCC and EPA would collaborate
on the "regulatory crosswalk," which was a comparison
between federal and proposed state regulations. Only once
AOGCC had submitted the complete application package would
it be considered in the application phase with the EPA.
Mr. Huber advanced to slide 9 and gave a brief history of
EPA interactions with AOGCC pertaining to CCUS. Interaction
began with a receipt of a letter of inquiry from EPA
seeking states that were interested in primacy grants and
pursuing Class VI primacy. He had received the letter in
January of 2023 and he had replied on behalf of the state
and submitted a letter of interest. He received notice of
grant availability on November 2, 2023, and AOGCC attended
the grant webinar on November 16, 2023. He relayed that
AOGCC completed its grant application in December of 2023.
He had heard that $1.93 million was allocated for each
interested state and grant awards would follow in the
coming spring or summer. The grant term was five years,
which indicated that a protracted primacy process was still
anticipated by EPA.
3:06:52 PM
Mr. Huber continued to slide 10 and noted that as part of
the primacy process, EPA and AOGCC would engage in a
"crosswalk" process that compared state statute and
regulation with federal code. The intent of the EPA was to
confirm that the proposed state processes were as stringent
as federal requirements. The EPA authority for CCUS was
included in the Clean Drinking Water Act. The primacy
process was meant to ensure that that the state was meeting
or exceeding regulatory standards for the protection of
fresh and clean drinking water. There were three areas of
concern identified by the EPA in its initial review of the
CCUS legislation in August of 2023 as listed on the slide:
1. Exceptions or waivers "for good cause" may lead to
stringency questions vs. federal code
2. Liability transfer process and post-closure trust
fund period could be inconsistent vs. federal code
as the EPA requires liability to remain with the
operator for the full, 50-year post-closure period
3. Penalty provisions AOGCC has since determined
proposed penalties should meet or exceed federal code
Mr. Huber relayed that AOGCC had been working closely with
DNR to recommend a path forward. The approach made by
Louisiana seemed like a good model for Alaska as it
provided scrutiny and safeguards to the state through the
end of the 50-year EPA-required monitoring period. He
explained that AOGCC asked for an early review in order to
avoid needing to return to the legislature year after year
to ask for amendment necessary to achieve primacy; however,
it was still possible that statutory amendments would be
necessary in the future.
Mr. Huber continued to slide 11 and remarked that AOGCC was
well-resourced to pursue the primacy effort and for
implementation of the program once primacy was achieved.
There was a strong team dedicated to the process such as a
legal team including support from DOL and contracted
services with a former DOL regulatory attorney. The legal
team would focus on developing the crosswalk and regulation
package as well as the Memorandum of Agreement (MOA). The
commissioners and staff were leading the regulatory package
development, outreach, and public participation efforts, as
well as providing technical input to the legal team. There
were two new positions that would help in the regulatory
package development and AOGCC was presently recruiting for
the roles.
Mr. Huber moved to slide 12 and explained that AOGCC
released a request for information for consultant services
and received six responses. The potential services included
reservoir analysis, reservoir modelling and simulations,
project management, and environmental justice activities
assessments. Request for proposals would be issued nearer
to the end of the primacy process in anticipation of AOGCC
receiving a Class VI storage facility application. The
anticipated issuance date was September of 2025.
Co-Chair Foster suggested holding questions until the end
of the presentation.
3:10:33 PM
HALEY PAYNE, DEPUTY DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, continued the presentation
on slide 14. There had been significant development in CCUS
in other states since HB 50 had been introduced. After
analyzing the strategies in other states, it became clear
that there was not one particular leasing mechanism, public
process, or suite of commercial terms that applied in every
situation or in every state. There was significant variance
between approaches. She noted that none of the other states
had issued minimums in statute for commercial terms, which
was also the case for HB 50. The Texas General Land Office
(TGLO) put forward minimums, but the minimums were only in
the lease sale process. An additional difference between
the process in Texas as compared to a state like Wyoming or
Louisiana was that when Texas passed carbon legislation in
2009, the state commenced TGLO into a study for site
characterization for CO2 and the state was only offering
for sale the tracks that were characterized. The site
characterization study took five years from the time the
legislation passed. She relayed that DNR's strategy would
likely look more similar to Wyoming or Louisiana.
Ms. Payne advanced quickly through slide 15 and moved to
slide 16. The purpose of the slide was to bring forward the
various phases of the CCUS process and legislation. The
slide demonstrated the ways in which HB 50 addressed all of
the CCUS phases from start to end. She stated that the
majority of the components of the bill would be found in
Section 16, which impacted DNR, and Section 33, which
governed the AOGCC.
3:13:29 PM
Mr. Crowther added that the section references on the slide
were not updated to reflect the sections in the proposed
committee substitute, but it would be updated if the
committee substitute were to be adopted.
Ms. Payne continued on slide 17, which detailed the four
major authorizations under HB 50 broken out into the two
different regulatory bodies: DNR and AOGCC. She explained
that DNR would be licensing the state's core space which
would begin with the issuance of a carbon storage
exploration license. The license would allow an operator to
delineate the subsurface and understand what could be used
as a suitable reservoir for injection. The department would
then apply to AOGCC for a carbon storage facility permit,
which would involve a rigorous evaluation of the subsurface
container to ensure the protection of other mineral and
property interests. After a licensee could demonstrate to
DNR that the permit was approved, the licensee would then
be issued a carbon storage lease through DNR. The lease
would authorize the injection of CO2 into the core space
and would act as the governing contract for the duration of
the operations into the post-closure period. The final
authorization was the closure certificate, which would be
issued by AOGCC. The certificate would be issued after an
operator had ceased injection operations and had been able
to demonstrate that the site was stabilized and met all
regulatory requirements.
Ms. Payne continued to slide 18, which included the
expected timeline for the four authorizations detailed on
slide 17. She relayed that the process would begin with the
issuance of a carbon storage exploration license which
would transition into a carbon storage lease once the AOGCC
permit had been issued. She highlighted that the timeline
was an estimate and was based on projects in North Dakota.
The comparison was not perfect and it was possible that the
process could take longer in Alaska. The slide also
indicated the outlay of the number of capital expenditures
that would be required prior to operations.
Co-Chair Foster surmised that the major change in the
committee substitute was the deletion of Section 3. He
thanked the testifiers for the update on the CCUS field. He
asked if members had questions.
3:17:19 PM
Representative Josephson understood that the bill referred
to the state taking ownership of the asset after ten years.
The federal government had stated that ten years was an
insufficient amount of time and that the industry should
instead control the asset for 50 years. He asked how the
ten-year timeframe was decided upon.
Mr. Crowther responded that the intent with the bill as
drafted was to induce and promote development by
facilitating a company to plan for a ten-year obligation
with the knowledge that the state would take over at the
end of the obligation period. The department viewed the
timeframe as a way to allow corporate entities to better
plan for projects. He relayed that other states were
looking at similar time frames. The restrictions from the
EPA made projects more challenging but also increased the
direct responsibility of the operator. The department was
looking at potential amendments to ensure that the
framework was consistent with EPA guidelines.
Ms. Payne added that the bill was based upon the model that
was developed by the Interstate Oil and Gas Compact
Commission as the recommended best practices. The model
also served as the basis for North Dakota's legislation.
The ten-year period was more than just a demarcation as it
required that an operator demonstrate the stabilization of
the plume at the end of the time period.
Representative Josephson noted that one issue that had been
raised by a geologist in an HRC meeting was that CO2 could
be used to enhance oil recovery. He remarked that there was
a section of the bill on oil and gas recovery. He was
concerned that credits could be "double dipping" in both
regular oil development and in CCUS. He asked if the
language in the bill was clear enough to ensure that
credits could only be utilized once for purposes of
deduction.
3:21:18 PM
Mr. Crowther responded that the bill set appropriate
clarity for when and how credits could be used. He noted
that one of the categories was created by the underlying
federal tax credit as opposed to the state framework.
Operators could also potentially sequester CO2 in a pure
sequestration method and receive a certain level of the 45Q
tax credit. There were also options to sequester CO2 in
certain manners associated with DOR if the CO2 met the
criteria set out in the federal program, in which case an
operator would receive a lesser tax credit. There were
other pressure management activities that might not qualify
for the tax credit but an operator could choose to pursue
the activities. He thought that HB 50 set the correct
framework amongst the various options. All operators were
looking for federal guidance and clarity on some of the
elements of the federal requirements.
Representative Josephson suggested that it would be
beneficial to include an illustration of the types of
credits for the sake of clarity. He thought that a visual
aid might help him understand the differences better.
Production would impact the state's revenue and he wanted
to ensure that the state was not mistakenly allowing
credits to have a dual purpose.
Co-Chair Foster agreed that the issue was new and complex.
He wanted to ensure that committee members were comfortable
with the topic before taking any action on the bill.
3:24:45 PM
Representative Galvin referred to slide 16 and understood
that the long-term monitoring timeframe had changed from
the 50-year window to the 10-year window to help companies
that needed to make plans within a scope that fit a
business model. She wondered if there were any other
considerations that went into the change. She asked for
more detail on the costs of DNR overseeing the program and
wondered if insurance was necessary. She was unsure of the
types of liabilities that would be involved.
Ms. Payne responded that it was envisioned that over the
lifetime of a project, there would be an injection charge
that would be put into a fund that would be available to
pay for the post-closure period. The funds would be in
addition to all the various levels of bonding that would be
required under the Class VI permit. She noted that the EPA
recommended a timeline of 50 years or until an applicant
could demonstrate stabilization of the plume. The funds
were imagined as another form of insurance. She emphasized
that it would have to be proven that the subsurface was
stabilized and it was important to remain nimble to the
geology as well as recognize some corporate limitations.
Representative Galvin wondered if there was any modeling of
what the fund would look like and how it would function.
She recalled that in the prior year, the committee had been
told that sequestration would be a significant source of
revenue.
Ms. Payne responded that the fund was set on a project-by-
project basis and it would depend on the size of the
facility and the amount of CO2 being injected. The
department had not done any modeling because site-specific
plans were not yet available to evaluate, but there were
examples in North Dakota and Louisiana. She reiterated that
the department was looking closely at Louisiana because it
had recently been granted primacy.
Mr. Crowther noted that the committee substitute included
the ten-year timeframe and the associated fund language,
but it was the department's intent to adjust the timeframe
through amendments in the future.
Co-Chair Foster relayed that the committee was out of time
but suggested that members could ask questions and the
testifiers could respond in a follow up.
Representative Hannan noted that the outline of the
presentation spoke to an appendix with a sectional analysis
but it was not in the presentation. She requested to
receive the information. The comments about plume stability
reminded her of the concern about seismic activity and she
remarked that North Dakota and Wyoming had a different
seismic environment than Alaska. She asked how the seismic
activity might impact plume stability. She requested that
her questions be answered in a follow up.
3:31:01 PM
Co-Chair Foster WITHDREW the OBJECTION to adopting the
committee substitute.
There being NO further OBJECTION, Work Draft 33-GH1567\R
was ADOPTED.
Co-Chair Foster went over the agenda for the following
day's meeting.
HB 50 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:32:07 PM
The meeting was adjourned at 3:32 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 89 Summary of Changes v.B to V.S 012524.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB 89 CS WorkDraft HFIN v.S 010324.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB 89 Sectional Analysis v.S 012524.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB 89 Sponsor Statement v.S 012524.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB 89 Presentation v.S 012424 (2).pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB 89 Public Testimony Rec'd by 012425.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| 2024 01 25 HFIN HB 50 DNR CCUS Recap Presentation.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 50 |
| HB 50 CS WorkDraft FIN v.R 012224.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 50 |
| HB 89 TFCC-Recommendations 112023.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB 89 Presentation v.S 012424 (3).pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 89 |
| HB050 Summary of Changes version U to R 1.24.24.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 50 |
| HB 50 DNR Responses to HFIN Questions on 012524 2024 02 14.pdf |
HFIN 1/25/2024 1:30:00 PM |
HB 50 |