Legislature(2015 - 2016)
05/17/2016 07:25 PM House HB256
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29TH ALASKA STATE LEGISLATURE
SECOND SESSION
CONFERENCE COMMITTEE ON HB 256 and HB 257
May 17, 2016
7:25 p.m.
7:25:14 PM
CALL TO ORDER
Chair Kelly called the Conference Committee meeting on HB
256 and HB 257 to order at 7:25 p.m.
MEMBERS PRESENT:
Senate:
Senator Pete Kelly, Chair
Senator Anna MacKinnon
Senator Lyman Hoffman
House:
Representative Mark Neuman, Vice-Chair
Representative Steve Thompson
Representative Les Gara
MEMBERS ABSENT
None
ALSO PRESENT:
David Teal, Director, Legislative Finance Division; fiscal
analysts with the Office of Management and Budget and
Legislative Finance Division; and aides to committee
members and other members of the Legislature.
SUMMARY
HB 256 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 256 was HEARD and HELD in committee for
further consideration.
HB 257 APPROP: MENTAL HEALTH BUDGET
HB 257 was HEARD and HELD in committee for
further consideration.
DEPARTMENTS:
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
LAW
NATURAL RESOURCES
REVENUE
UNIVERSITY OF ALASKA
FUND CAPITALIZATION
FY16 SUPPLEMENTALS
LANGUAGE
STATEWIDE SALARY ADJUSTMENTS
FISCAL NOTES
CS FOR HOUSE BILL NO. 256(FIN)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; repealing appropriations; making
supplemental appropriations; and providing for an
effective date."
SENATE CS FOR CS FOR HOUSE BILL NO. 256(FIN)
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; repealing appropriations; making
supplemental appropriations; and providing for an
effective date."
and
CS FOR HOUSE BILL NO. 257(FIN)
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making
supplemental appropriations; and providing for an
effective date."
SENATE CS FOR CS FOR HOUSE BILL NO. 257(FIN)
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
7:26:04 PM
Chair Kelly communicated that the committee would take up
all remaining open items in HB 256 and HB 257, based on the
motion sheets distributed to members earlier in the day
(copy on file), dated May 17, 2016 for the following
departments: Department of Commerce, Community and Economic
Development, Law, Department of Natural Resources,
Department of Revenue, University of Alaska, Fund
Capitalization, FY 16 Supplemental, Language, Statewide
Salary Adjustments, and Fiscal Notes.
7:26:36 PM
AT EASE
7:26:46 PM
RECONVENED
7:26:59 PM
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
Vice-Chair Neuman MOVED to ADOPT the Chair's recommendation
on the following items for the Department of Commerce,
Community and Economic Development:
Item 2 Senate
Item 3 Senate - Amend language to read
It is the intent of the Legislature that the Tourism
Marketing Board develop a plan to phase out reliance
on unrestricted general funds for marketing, moving
towards a self-sustaining program funded by industry
to be implemented in the FY18 budget and present the
plan to the House and Senate Finance Committees by
November 1, 2016.
Item 7 Senate
Item 8 House
Item 9 Senate
7:27:49 PM
Representative Gara OBJECTED to Item 2. He understood that
the tourism industry was vital to the state. He stressed
that, other than the cruise ship industry, the state did
not receive revenue from the tourism industry. He felt that
the House proposal, which saved $1.35 million was the more
appropriate action in a time of a $4 billion fiscal crisis.
Chair Kelly shared that there was a spreadsheet that
reflected a significant amount of tourism money returned to
the treasury.
A roll call vote was taken on the motion.
IN FAVOR: Kelly, Neuman, MacKinnon, Thompson, Hoffman
OPPOSED: Gara
The MOTION PASSED (5/1).
7:30:04 PM
AT EASE
7:30:16 PM
RECONVENED
There being NO further OBJECTION, it was so ordered. The
action closed all conferencable items in the budget for the
Department of Commerce, Community and Economic Development.
DEPARTMENT OF LAW
Vice-Chair Neuman MOVED to ADOPT the Chair's recommendation
on the following items for the Department of Law:
Item 1 House
There being NO OBJECTION, it was so ordered. The action
closed all conferencable items in the budget for the
Department of Law.
DEPARTMENT OF NATURAL RESOURCES
Vice-Chair Neuman MOVED to RESCIND the motion on Item 2 for
the Department of Natural Resources. There being NO
OBJECTION, Item 2 was before the committee.
Vice-Chair Neuman MOVED to ACCEPT Senate, less $100
thousand for Item 1.
There being NO OBJECTION, it was so ordered. The action
reclosed all conferencable items in the budget for the
Department of Natural Resources.
DEPARTMENT OF REVENUE
Vice-Chair Neuman MOVED to ADOPT the Chair's recommendation
on the following items for the Department of Revenue:
Item 4 Senate and revise the language appropriation
to reflect Permanent Fund Dividend Fund as the fund
source.
Item 5 Senate
There being NO OBJECTION, it was so ordered. The action
closed all conferencable items in the budget for the
Department of Revenue.
UNIVERSITY OF ALASKA
Vice-Chair Neuman MOVED to ADOPT the Chair's recommendation
on the following items for the University of Alaska.
Item 11 Senate for both items
There being NO OBJECTION, it was so ordered. The action
closed all conferencable items in the budget for the
University of Alaska.
FUND CAPITALIZATION
Vice-Chair Neuman MOVED to ADOPT the Chair's recommendation
on the following items for the Fund Capitalization motion
sheet:
Item 1 House plus $132,079,900 (bringing the total
appropriation to the Public Education Fund to
$1,151,064,400).
Representative Gara OBJECTED. He wondered whether the money
would cover the $50 Base Student Allocation (BSA) increase.
Mr. Teal replied that it did not cover the $50 BSA
increase, therefore the amount was approximately $12.9
million less than the Senate version.
Representative Gara recalled that the House and Senate
budgets covered the $50 BSA increase. Mr. Teal agreed, but
the item was conferencable, because it was funded in
different ways.
Representative Gara wondered how the decision was made to
eliminate the BSA increase. Mr. Teal replied that it was
the conference committee motion.
A roll call vote was taken on the motion.
IN FAVOR: Kelly, Neuman, MacKinnon, Thompson, Hoffman
OPPOSED: Gara
The MOTION PASSED (5/1).
There being NO further OBJECTION, it was so ordered. The
action closed all conferencable items in the Fund
Capitalization motion sheet.
FY 16 SUPPLEMENTALS
Vice-Chair Neuman MOVED to ADOPT the Chair's recommendation
on the following items within the FY 16 Supplemental motion
sheet:
Item 1 House minus $14 million
Item 2 House
Item 3 House
Item 4 Senate
Item 5 House
Item 6 Senate
Representative Gara OBJECTED for discussion.
Representative Gara looked at Items 2 and 3, and wondered
whether the amounts were the requests from the Alaska
Retirement Management (ARM) Board for the Public Employees'
Retirement System (PERS) and Teachers' Retirement System
funding level.
7:36:22 PM
JAMES ARMSTRONG, STAFF, SENATOR PETE KELLY, replied that
they were not requests from the ARM Board. He stated that
the appropriations were made in the Senate Finance
Committee.
Representative Gara looked at Item 4 and queried the effect
on school funding. Mr. Teal replied that Item 4 would have
capitalized the Public Education Fund, so there was extra
money in the fund. The Item allowed, under the House's
plan, to reduce the deposits of the capitalization of the
fund by $145 million per year for FY 17, FY 18, and FY 19.
He stated that the conference committee declined that
action with Item 1, so the money no longer pre-funded
education.
Representative Gara queried Item 1. Mr. Teal replied that
he was referring to Item 1 of the Fund Capitalization
motion sheet.
Representative Gara queried the decisions behind Items 5
and 6. Mr. Armstrong replied that Item 5 capitalized the
higher education with $80 million. He noted that higher
education funds had been used for PERS and TRS, so the
money almost replenished the funds. He furthered that Item
6 repealed the FY 16 inflation proofing, which was
estimated at $47 million.
Representative Gara OBJECTED to Item 4. He felt that
education was inadequately funded.
Representative Gara WITHDREW the OBJECTION.
There being NO further OBJECTION, it was so ordered. The
action closed the FY 16 Supplemental motion.
LANGUAGE
Vice-Chair Neuman MOVED to ADD a new legislative intent
Item 5 within the Language motion sheet.
Representative Gara OBJECTED to read.
7:40:18 PM
AT EASE
7:41:13 PM
RECONVENED
7:41:17 PM
Representative Gara OBJECTED to the MOTION. He felt that
requiring the administration to review all their
regulations would be at a cost, but noted that there were
no costs attached to the appropriation.
Vice-Chair Neuman explained that the intent was for an
examination of reductions within the departments.
Representative Gara stressed that fairness in budgeting
should allow for money to be applied to the Item.
7:44:39 PM
Vice-Chair Neuman remarked that the administration
continually examined regulations.
Representative Gara MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Neuman, MacKinnon, Thompson, Hoffman, Kelly
OPPOSED: Gara
The MOTION PASSED (5/1). There being NO OBJECTION, it was
so ordered.
7:45:18 PM
Vice-Chair Neuman MOVED to ADOPT New Item 5, Amendment 29-
GH2740\U.12 Wallace 4/5/16 (copy on file).
7:45:37 PM
AT EASE
7:46:03 PM
RECONVENED
Vice-Chair Neuman MOVED to ADOPT new Item 6, Amendment 29-
GH2740\U.16 Martin/Wallace 5/16/16 (copy on file).
This new intent language is in the members' packets.
It adds intent language that the Department of Revenue
transfer management and investment responsibility of
the budget reserve fund to the Alaska Permanent Fund
Corporation under AS 37.10.430(a).
Vice-Chair Neuman restated the motion.
There being NO OBJECTION, it was so ordered. The action
reclosed the Language motion sheet.
STATEWIDE SALARY ADJUSTMENTS
Vice-Chair Neuman MOVED to RESCIND the motion in adopting
Item 2.
7:47:28 PM
AT EASE
7:47:58 PM
RECONVENED
7:48:13 PM
Representative Gara OBJECTED for DISCUSSION. He recalled
that the legislature had approved all the negotiated
contracts. He wondered if the intent was to update for
additional negotiated contracts. Mr. Teal replied in the
affirmative. He stated that the Mt. Edgecumbe bargaining
unit would be added to the approved bargaining agreements.
Representative Gara WITHDREW the OBJECTION. There being NO
OBJECTION, Item 2 was before the committee.
Vice-Chair Neuman MOVED to AMEND the Conference Committee
Salary and Benefit Adjustment language to include the
collective bargaining agreement for the Teachers Education
Association of Mount Edgecumbe.
Representative Gara OBJECTED for DISCUSSION. He surmised
that all of the other approvals, plus the Teachers
Education Association of Mt. Edgecumbe. Mr. Teal agreed.
Representative Gara queried and explanation of subsection
C. Mr. Teal explained that subsection C was a provision
that must be ratified by the members of the bargaining
agreement and approved by the legislature. He furthered
that the legislative approval was invalid if they are not
approved by the bargaining unit.
Representative Gara surmised that the existing contract
remained in place until an agreement was met. Mr. Teal
agreed.
Representative Gara WITHDREW the OBJECTION.
There being NO further OBJECTION, the MOTION PASSED.
Vice-Chair Neuman MOVED to ADOPT new Item 3 to incorporate
salary adjustments.
Representative Gara OBJECTED for DISCUSSION.
Vice-Chair Neuman explained Item 3:
Item 3 adds salary adjustments for an Alaska Care
Health Insurance rate increase to address the
declining health insurance reserve balance. The total
increase is $2.675 million and consists of:
$477 thousand designated general funds
$1 million 570 thousand other state funds
$628 thousand federal funds
The details on the amount by fund source are included
in the members' packet and will be made available on
Legislative Finance Division's website.
7:52:13 PM
Chair Kelly clarified that the first amount was $2.675
million.
Representative Gara OBJECTED for DISCUSSION. He surmised
that the Item adopted the governor's proposal on the health
insurance rates. Chair Kelly replied that it was not the
full amount.
Mr. Teal furthered that the Item did not include the UGF
portion. It only contained the DGF, the other funds, and
the federal funds. He stated that there was approximately
$5.7 million of UGF, which was excluded because it could
not be determined whether the reserve would be emptied,
because there was no way of knowing the claims. He
explained that, should the reserves get dangerously low,
the Item would allow for the administration to raise rates
at any point in the year by giving them the authority to
spend the non-UGF receipts.
Representative Gara remarked that the governor had proposed
an additional "cushion" of GF money to cover the insurance
costs during the year, and $5 million was removed, which
could result in rate increases. Mr. Teal replied in the
affirmative, and explained that it was projected that the
reserves would be low.
Representative Gara wondered whether the governor proposed
an additional $5 million, and was not in the conference
committee proposal. Mr. Teal agreed, and explained that the
governor's proposal would have increased the rate for every
salary.
Representative Gara recalled that the governor had proposed
an additional $5 million in UGF, in order to minimize the
chance of raising employee contribution rates. He asked for
further information. Mr. Teal explained that the governor
asked for UGF.
Representative Gara surmised that the governor's proposal
would have been be a "cushion" to cover the employee rated,
with the additional $5 million. Mr. Teal replied that it
was the employer-paid rates, and not employee-paid rates.
Representative Gara understood that it was a matter of
whether the state paid later in the supplemental or
currently pay with UGF, without any impact on employee rate
payments. Mr. Teal replied that it would not affect what
the employees contribute, and only affected the employer
portion. He remarked that it did not force the rate
increase, but rather only allowed the rate increase.
Representative Gara WITHDREW the OBJECTION.
There being NO further OBJECTION, it was so ordered. The
action reclosed the Statewide Salary Adjustments' motion
sheet
7:57:56 PM
FISCAL NOTES
Vice-Chair Neuman MOVED to ADOPT the documents with the
following footers:
"FY17 Fiscal Note Section to HB 256" as section 2 of
HB 256
"FY17 Fiscal Note Section to HB 257" as section 2 of
HB 257
7:58:51 PM
AT EASE
7:59:38 PM
RECONVENED
7:59:47 PM
Representative Gara announced that he had two separate
fiscal note documents. Mr. Armstrong replied that the
bottom right footers had the bill labeled on them.
Representative Gara shared that there was not a fiscal note
attached to the oil tax legislation [HB 247] to pay for tax
credits. He surmised that there was a fiscal note for HB
247 of $430 million to pay for the credits. Mr. Teal
replied that the fiscal note was a conference committee
note, and looked at line 20 of the HB 256 document, which
used FY 16 money to make a deposit to the Oil and Gas Tax
Credit Fund. The money would be available beginning in FY
17 to pay tax credits.
Representative Gara did not understand why there would be a
fiscal note for HB 247, which only set the levels for tax
credits, but did not require payment. Mr. Teal responded
that it was not a requirement, but rather capitalized the
fund to utilize the funds for the repayment of credits.
Representative Gara wondered whether there was a $430
million appropriation to pay the tax credits for the
upcoming fiscal year. Mr. Teal replied in the affirmative.
Representative Gara OBJECTED to adopting the fiscal notes.
8:02:48 PM
AT EASE
8:03:20 PM
RECONVENED
8:03:28 PM
Senator MacKinnon declared that the governor had requested
$1.2 billion to pay outstanding tax credits.
Vice-Chair Neuman noted that the legislature had used money
from the Constitutional Budget Reserve (CBR) for oil and
gas work. He furthered that there was some money left over,
so the appropriation used the FY 16 funds to pay the earned
credits in FY 16. He stressed that it did not affect the FY
17 budget.
Representative Gara looked at the FY 16 budget, and noted
that $500 million was granted in case there were
unanticipated FY 16 expenses. He understood that $430
million would be used for FY 17 oil and gas tax credits Mr.
Teal replied that the $430 million was in addition to the
$500 million in the FY 16 budget. He explained that the
total FY 16 appropriation would be $930 million. He
stressed that it was only put in the fund, and did not
necessarily all be paid out. The paying of the credits
depended on the terms of HB 247.
Vice-Chair Neuman stressed that there was already a request
for $775 million in credits for FY 16. He did not believe
the funds could not be used for FY 17.
Representative Gara wondered if the $430 million was in
addition to the oil and gas credit payment. Mr. Teal
replied in the affirmative.
Representative Gara declared that there was a statute that
limited the amount the state was obligated to pay for tax
credits. He explained that the formula was based on the
state's production tax revenue-the less revenue to the
state made for the probability that the state would pay
less in oil and gas tax credits. The formula resulted in
$37 million for the upcoming fiscal year. He shared that
the state could pay more than that number, but felt
uncomfortable appropriating an additional $430 million.
Vice-Chair Neuman felt that the amount did not associate
with HB 247, because it set different tax rates. He shared
that there was some remaining funds from FY 16, so the
legislature could use the money to pay the credits.
Co-Chair MacKinnon stressed that the governor planned to
pay the $770 million in credit. She stated that the number
was compounded because of a veto from the administration.
Representative Thompson declared that the state needed to
show the industry that it paid its bills.
Senator Hoffman stressed that the issue was about paying
the bills now or later. He supported paying the bills
"now."
Chair Kelly restated that there was "leftover" FY 16 money
to currently pay the credits.
8:08:43 PM
Representative Gara wondered if any of the $430 million
came from the CBR approval from the prior year's
legislative session. Mr. Teal replied in the affirmative.
He furthered that there was a $500 million "head room"
approved by the three-quarter vote.
Representative Gara asked for a restatement. Mr. Teal
replied $288 million came from the SBR and the remainder
was from the CBR.
Representative Gara restated that the state had a statutory
obligation of roughly $37 million for FY 17. He wanted to
see the final version of HB 247 before deciding on the
appropriation.
8:11:22 PM
AT EASE
8:11:48 PM
RECONVENED
8:11:52 PM
Co-Chair MacKinnon explained that HB 247 would shape how
the numbers would be paid. She stressed that the money
would not be attached to anything, should HB 247 fail to
pass the legislature.
Representative Gara MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: MacKinnon, Thompson, Hoffman, Kelly, Neuman
OPPOSED: Gara
The MOTION PASSES (5/1). There being NO furthered
OBJECTION, it was so ordered.
Vice-Chair Neuman clarified the motions:
1. Section 2 makes appropriations associated with the
bills listed.
2. If a bill listed either fails to pass, its substance
fails to be incorporated in some other measure, or is
vetoed by the governor; the appropriations associated
with that bill are reduced.
Chair Kelly stated that the meeting would go into recess.
8:14:19 PM
RECESSED UNTIL WEDNESDAY, MAY 18, 2016.
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