Legislature(2015 - 2016)

05/17/2016 07:25 PM HB256


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07:25:14 PM Start
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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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