Legislature(2015 - 2016)

04/25/2015 09:03 PM CONFERENCE COMMITTEE ON HB72 AND HB73


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                29TH ALASKA STATE LEGISLATURE                                                                                   
                        FIRST SESSION                                                                                           
            CONFERENCE COMMITTEE ON HB72 and HB73                                                                               
                        April 25, 2015                                                                                          
                          9:03 P.M.                                                                                             
                                                                                                                                
9:03:25 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Chair Neuman called the Conference Committee meeting on                                                                         
HB72 and HB73 to order at 9:03 p.m.                                                                                             
                                                                                                                                
MEMBERS PRESENT:                                                                                                              
                                                                                                                                
House:                                                                                                                          
Representative Mark Neuman, Chair                                                                                               
Representative Steve Thompson                                                                                                   
Representative Les Gara                                                                                                         
                                                                                                                                
Senate:                                                                                                                         
Senator Pete Kelly, Vice-Chair                                                                                                  
Senator Anna MacKinnon                                                                                                          
Senator Donny Olson                                                                                                             
                                                                                                                                
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 72      APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                 
                                                                                                                                
HB 73      APPROP: MENTAL HEALTH BUDGET                                                                                         
                                                                                                                                
CS FOR HOUSE BILL NO. 72(FIN)                                                                                                 
                                                                                                                                
     "An  Act  making  appropriations  for  the  operating  and                                                                 
     loan  program   expenses  of  state  government   and  for                                                                 
     certain  programs and  capitalizing  funds; and  providing                                                                 
     for an effective date."                                                                                                    
                                                                                                                                
SENATE CS FOR CS FOR HOUSE BILL NO. 72(FIN) am S                                                                              
                                                                                                                                
     "An  Act  making  appropriations  for  the  operating  and                                                                 
     loan  program   expenses  of  state  government   and  for                                                                 
     certain   programs   and  capitalizing   funds;   amending                                                                 
     appropriations; and providing for an effective date."                                                                      
                                                                                                                                
And                                                                                                                             
                                                                                                                                
CS FOR HOUSE BILL NO. 73(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."                                                                                                        
                                                                                                                                
SENATE CS FOR CS FOR HOUSE BILL NO. 73(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."                                                                                                        
                                                                                                                                
9:03:36 PM                                                                                                                    
                                                                                                                                
DEPARTMENTS                                                                                                                   
                                                                                                                                
Department of Administration                                                                                                    
Department of Fish and Game                                                                                                     
Department of Health and Social Services                                                                                        
Department of Transportation and Public Facilities                                                                              
University of Alaska                                                                                                            
Department of Education and Early Development                                                                                   
                                                                                                                                
Chair  Neuman communicated  that  the committee  would take  up                                                                 
all remaining  open  items in  HB 72  and HB 73,  based on  the                                                                 
motion  sheets  distributed  to  members  earlier  in  the  day                                                                 
(copy  on  file),  dated April  25,  2015,  for  the  following                                                                 
departments:                                                                                                                    
                                                                                                                                
9:03:53 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF ADMINISTRATION                                                                                                  
                                                                                                                                
Vice-Chair  Kelly MOVED  to ADOPT  the  Chair's recommendation                                                                  
on    the   following    items    for   the    Department    of                                                                 
Administration:                                                                                                                 
                                                                                                                                
     Item 1     Senate                                                                                                          
     Item 6     House                                                                                                           
     Item 7     House                                                                                                           
     Item 8     Senate                                                                                                          
     Item 9     House                                                                                                           
     Item 10    House                                                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Vice-Chair  Kelly  MOVED to  REOPEN Item  3 in  the  Department                                                                 
of Administration.                                                                                                              
                                                                                                                                
There  being  NO   OBJECTION,  Item  3  was  back   before  the                                                                 
Committee.                                                                                                                      
                                                                                                                                
Vice-Chair  Kelly  MOVED to  RESCIND  its action  adopting  the                                                                 
Senate on Item 3.                                                                                                               
                                                                                                                                
There  being   NO  OBJECTION,   the  committee  rescinded   the                                                                 
adoption of the Senate intent for Item 3.                                                                                       
                                                                                                                                
Vice-Chair Kelly MOVED to ADOPT the House for Item 3.                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
The action  closed all  conferencable items  in the budget  for                                                                 
the Department of Administration.                                                                                               
                                                                                                                                
9:05:05 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF FISH AND GAME                                                                                                   
                                                                                                                                
Vice-Chair  Kelly  MOVED  to REOPEN  Items  10  and  25 in  the                                                                 
Department of Fish and Game.                                                                                                    
                                                                                                                                
There  being NO OBJECTION,  Items  10 and 25  were back  before                                                                 
the Committee.                                                                                                                  
                                                                                                                                
Vice-Chair  Kelly  MOVED to  RESCIND  its action  adopting  the                                                                 
Senate  plus  $200  thousand  on  Item  10  and  to  adopt  the                                                                 
Senate on Item 25.                                                                                                              
                                                                                                                                
Representative  Gara OBJECTED  for the  purpose of discussion.                                                                  
He  relayed  that  the  Senate  version  was  a  $500  thousand                                                                 
decrement  to  the   Marine  Mammal  program.  He   asked  what                                                                 
services  would  be impacted  by the  decreases.  He  corrected                                                                 
his figure to $394 thousand.                                                                                                    
                                                                                                                                
Co-Chair Neuman ask Mr. Teal to respond.                                                                                        
                                                                                                                                
David  Teal,  Director,  Legislative  Finance  Division,  asked                                                                 
Representative Gara to repeat his question.                                                                                     
                                                                                                                                
Representative   Gara  asked   what  services   would   not  be                                                                 
provided with the suggested cut to the program.                                                                                 
                                                                                                                                
9:06:35 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:06:48 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
James Armstrong,  Staff,  Senator Pete  Kelly relayed that  the                                                                 
commissioner  of  Department of  Fish  and Game  asked for  the                                                                 
amendment  but  was out  of  town  for two  weeks.  The  Senate                                                                 
discussed  the change with  the House  and found it  agreeable.                                                                 
It was a request made by the department.                                                                                        
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
There   being  NO  OBJECTION,   the   committee  RECINDED   its                                                                 
previous ACTIONS on Items 10 and 25.                                                                                            
                                                                                                                                
Vice-Chair  Kelly  MOVED   to ADOPT   the  Senate  plus  $105.9                                                                 
thousand for Item 10 and the House for Item 25.                                                                                 
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
The action  closed all  conferencable items  in the budget  for                                                                 
Department of Fish and Game.                                                                                                    
                                                                                                                                
9:07:49 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                                                                      
                                                                                                                                
Vice-Chair   Kelly  MOVED  to   ADOPT  the  following   in  the                                                                 
Department of Health and Social Services' budget:                                                                               
                                                                                                                                
     Item 1     House for both fund sources                                                                                     
     Item 2     Senate                                                                                                          
     Item 3     Senate                                                                                                          
     Item 4     House for both fund sources                                                                                     
     Item 5     House                                                                                                           
     Item 6     Senate for both fund sources                                                                                    
     Item 7     House                                                                                                           
     Item 8     House minus $50.0 thousand                                                                                      
     Item 9     Senate for both fund sources                                                                                    
     Item 10    Senate for both fund sources                                                                                    
     Item 11    Senate for both fund sources                                                                                    
     Item 12    Senate for both fund sources                                                                                    
     Item 13    Senate                                                                                                          
     Item 14    House for both fund sources                                                                                     
     Item 15    Senate                                                                                                          
     Item 16    Add new intent to read: It is the intent of                                                                     
                the legislature that reductions to the                                                                          
                Juneau Pioneer Home be taken from the                                                                           
                contractual line rather than from the                                                                           
                personal services line to ensure that                                                                           
                staffing levels for direct care are                                                                             
                sufficient.                                                                                                     
                                                                                                                                
Representative  Gara  OBJECTED.  He  pointed  to Item  5  which                                                                 
related  to the state's  foster care system.  He conveyed  that                                                                 
the  number of  foster youth  had  grown significantly  in  the                                                                 
previous  five  years  from  about  17  hundred  to  almost  25                                                                 
hundred.   He   emphasized   that   staffing   shortages   were                                                                 
chronic.  In a recent letter  he had received  from the  Office                                                                 
of  Children  Services  (OCS),  it referred   to itself  as  an                                                                 
agency  in crisis.  He did  not want  sympathy  for the  agency                                                                 
but rather  to ponder  the children  the agency  was unable  to                                                                 
serve.  He  discussed  a  study  from  three  years  previously                                                                 
that  showed OCS  was  over 50  staff  short. Since  that  time                                                                 
the number  of foster youth  had grown to  the point where  the                                                                 
staff  shortage  was  more likely  80  to  90 staff  short.  He                                                                 
understood  that the state  could not afford  to pay for  80 or                                                                 
90  additional  OCS staff.  He  opined  that without  staff  at                                                                 
OCS  kids  were being  left  in  foster care  for  a  lengthier                                                                 
time and  costing the  state more  money. He  relayed that  the                                                                 
state  had  849 foster  youth  waiting  for  an  adoptive  home                                                                 
because  of the lack  of social  workers  available to  address                                                                 
the  cases. He  explained  that  the state  paid  a daily  rate                                                                 
for foster  care for  each child.  He added  that it also  cost                                                                 
the  child  because  it  was  every  day  that  the  child  was                                                                 
without  a loving home.  He concluded  that without the  needed                                                                 
number  of   social  workers  in   the  system  problems   were                                                                 
exacerbated.  Currently,   the  homelessness  rate  for  foster                                                                 
care  youth  was   about  40  percent.  He  detailed   that  20                                                                 
percent  of kids  were actually  homeless  coming  out of  care                                                                 
and  the remaining  20  percent  of  kids  couch-surfed.  There                                                                 
was also  a 27  percent incarceration  rate  for foster  youth.                                                                 
He  emphasized  that  the  state  held  guardianship   for  the                                                                 
foster  care youth.  He did  not believe  in  leaving a  system                                                                 
in  place  that the  agency  had  described  as one  in  crisis                                                                 
where  kids were  left  languishing  in foster  care,  bouncing                                                                 
between 5,  10, and 15  homes. He believed  that by not  having                                                                 
necessary  social  workers in  place,  the state  would pay  in                                                                 
moral  fiber   and  in   more  costs   related  to  crime   and                                                                 
homelessness.  He  did not  believe  the  Committee's  approach                                                                 
was  reasonable  in addressing  a  system  that was  in  crisis                                                                 
and  producing  a  40  percent  homelessness  rate  for  foster                                                                 
youth.                                                                                                                          
                                                                                                                                
He  reviewed that  the  Senate  number was  money  freed up  by                                                                 
the department  and  identified as  a no-cost  item. The  state                                                                 
had  been  able  to take  in  $3  million  of  additional  Tana                                                                 
funds   of  which   $2   million   were  designated   to   hire                                                                 
additional  social  workers.  He  believed  it  was  the  right                                                                 
thing to  do hiring staff  the state knew  it needed. He  would                                                                 
not be  supporting the  amendment and  was pretty disappointed                                                                  
in the change.                                                                                                                  
                                                                                                                                
Representative Gara MAINTAINED his OBJECTION.                                                                                   
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:  Representative    Thompson,    Senator     McKinnon,                                                                 
Representative Neuman, Senator Kelly                                                                                            
OPPOSED: Representative Gara, Senator Olson                                                                                     
                                                                                                                                
The  MOTION PASSED  (House  2/1,  Senate  2/1). The  House  for                                                                 
Item 5 was ADOPTED.                                                                                                             
                                                                                                                                
Representative   Gara  OBJECTED   further.  He  expressed   his                                                                 
objection  concerning  Item  13.  He  was  concerned  with  the                                                                 
estimate  the state would  have to pay  for people that  needed                                                                 
Medicaid  services.  If  the amount  of  people  increased  and                                                                 
more  had to be  paid, it  would cost  the state  more. If  the                                                                 
amount  of people  decreased,  it would  cost  the state  less.                                                                 
He viewed  that the  larger decrement  in Item  13 was only  an                                                                 
estimate  of what  the  state would  have  to pay  in  Medicaid                                                                 
over  the  next year.  He  wondered  if he  was  correct  about                                                                 
Item 13.                                                                                                                        
                                                                                                                                
Mr.  Teal responded  that  the motion  was $20  million  versus                                                                 
$11 million.  He  added that  Representative  Gara was  correct                                                                 
in saying  that if the  state cut too  much there would  likely                                                                 
be  a need  for a  supplemental.  The representative  was  also                                                                 
correct  in saying it  was an estimated  amount. Currently,  it                                                                 
was  impossible  to  determine  the  need  for  a supplemental                                                                  
under either option.                                                                                                            
                                                                                                                                
Representative  Gara  asked Mr.  Teal  whether  the amount  was                                                                 
an  estimate  the   state  would  have  to  pay  for   Medicaid                                                                 
services.  The state  was obligated  to pay  for the  services.                                                                 
If the  number  ended up  being higher,  the  state would  have                                                                 
to  pay  for  it. If  the  number  ended  up  being  less  than                                                                 
anticipated,  the state  would see  a savings.  The number  was                                                                 
just an estimate. He wanted to know if he was accurate.                                                                         
                                                                                                                                
Mr. Teal answered, "It is."                                                                                                     
                                                                                                                                
Representative  Gara  WITHDREW  his OBJECTION  on  action  Item                                                                 
13.                                                                                                                             
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
This  action  closes  the conferencable  items  in  the  budget                                                                 
for the Department of Health and Social Services.                                                                               
                                                                                                                                
9:14:56 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES                                                                              
                                                                                                                                
Vice-Chair   Kelly  MOVED  to   ADOPT  the  following   in  the                                                                 
Department of Transportation and Public Facilities' budget:                                                                     
     Item 33    House                                                                                                           
     Item 38    House                                                                                                           
     Item 39    House                                                                                                           
     Item 48    House                                                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
The action  closed all  conferencable items  in the  Department                                                                 
of Transportation and Public Facilities' budget.                                                                                
                                                                                                                                
9:15:30 PM                                                                                                                    
                                                                                                                                
UNIVERSITY OF ALASKA                                                                                                          
                                                                                                                                
Vice-Chair   Kelly  MOVED  to   ADOPT  the  following   in  the                                                                 
University of Alaska's budget:                                                                                                  
                                                                                                                                
     Item 1     Senate                                                                                                          
     Item 2     Senate                                                                                                          
     Item 3     Senate                                                                                                          
     Item 4     Senate                                                                                                          
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
The   action   closed   the   conferencable   items   for   the                                                                 
University of Alaska's budget.                                                                                                  
                                                                                                                                
9:16:00 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT                                                                                 
                                                                                                                                
Vice-Chair   Kelly  MOVED  to   ADOPT  the  following   in  the                                                                 
Department of Education and Early Development's budget:                                                                         
                                                                                                                                
     Item 1     No selection is required. Decisions will be                                                                     
                made in Language Items 6 and 11.                                                                                
     Item 8     House for both fund sources                                                                                     
     Item 9     Senate plus $550.0 thousand                                                                                     
     Item 10    Senate                                                                                                          
     Item 12    Senate for both fund sources                                                                                    
     Item 13    Senate                                                                                                          
     Item 14    Senate                                                                                                          
     Item 15    Senate                                                                                                          
     Item 16    House                                                                                                           
     Item 17    House                                                                                                           
     Item 18    House                                                                                                           
     Item 19    Senate                                                                                                          
     Item 20    Senate                                                                                                          
     Item 22    Senate                                                                                                          
     Item 24    Senate                                                                                                          
                                                                                                                                
Representative  Gara  OBJECTED.  He  referred  to Item  1.  His                                                                 
understanding  was  that  in addition  to  the $32  million  in                                                                 
grant  money cuts another  $18  million would  be cut from  the                                                                 
budget.  If he  was  accurate  he would  object.  Currently  he                                                                 
was willing to remove his objection.                                                                                            
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
There being NO OBJECTION, Item 1 was so ordered.                                                                                
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
The   action   closed   the   conferencable   items   for   the                                                                 
Department of Education and Early Development's budget.                                                                         
                                                                                                                                
Representative   Gara   asked  if   the  Committee   would   be                                                                 
discussing the language section.                                                                                                
                                                                                                                                
Co-Chair  Neuman  responded  that the  language  section  would                                                                 
be discussed next.                                                                                                              
                                                                                                                                
9:17:53 PM                                                                                                                    
                                                                                                                                
LANGUAGE SECTIONS                                                                                                             
                                                                                                                                
Vice-Chair Kelly MOVED to ADOPT the  following in the  Language                                                                 
Sections of the budget:                                                                                                         
     Item 1     Senate                                                                                                          
     Items 2, 3, and 4    No selection is required                                                                              
     Item 5     Senate                                                                                                          
     Items 7 and 8 No selection is required                                                                                     
     Item 9     Senate                                                                                                          
     Item 12    No selection is required                                                                                        
                                                                                                                                
Representative  Gara  OBJECTED.  He  stated  that  it  was  his                                                                 
understanding  that the  education cuts in  the budget  were in                                                                 
Items  6  and 11.  He  remarked  that  he was  looking  at  the                                                                 
language  for the  first  time  and viewed  it as  complex.  He                                                                 
wanted  an explanation  of the  language and  of the total  cut                                                                 
being  proposed  in addition  to  the  cut  of $32  million  in                                                                 
grant monies.                                                                                                                   
                                                                                                                                
Mr. Teal  responded that  the item that  was chosen was  Item 1                                                                 
which  dealt with  crime victim  intent language.  He  referred                                                                 
to  Item  5 and  explained  that  it  dealt  with  federal  and                                                                 
other  program  receipts  and  would  eliminate  the  need  for                                                                 
going  to  the  Legislative  Budget  and  Audit  Committee  for                                                                 
additional    federal    receipt   authority    for    Medicaid                                                                 
expansion.  It would  require  going  to the  full legislature                                                                  
for  approval.  He  explained  that  Item 9  was  shared  taxes                                                                 
moving the aviation fuel out of the general funds.                                                                              
                                                                                                                                
Co-Chair  Neuman  interrupted   Mr.  Teal  to  clarify  whether                                                                 
Representative  Gara'  questions  were  regarding  Items 6  and                                                                 
11.                                                                                                                             
                                                                                                                                
Representative  Gara  answered that  his first  questions  were                                                                 
about Items 6 and 11.                                                                                                           
                                                                                                                                
Mr. Teal  relayed that Items  6 and 11  had not been  addressed                                                                 
presently.                                                                                                                      
                                                                                                                                
Representative Gara clarified that the items were open.                                                                         
                                                                                                                                
Mr. Teal responded, "At this point."                                                                                            
                                                                                                                                
Representative   Gara  indicated   that  he  had  a   few  more                                                                 
objections.                                                                                                                     
                                                                                                                                
Senator  Olson  asked  if it  was  true that  cuts  were  being                                                                 
considered in the amount of $32 million.                                                                                        
                                                                                                                                
Senator McKinnon called for a point of order.                                                                                   
                                                                                                                                
9:20:39 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:21:33 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative  Gara OBJECTED  to Item 5.  He noted that  there                                                                 
had been  26 legislative  hearings  on Medicaid  expansion  and                                                                 
reform  in the year  to date.  He thought that  there had  been                                                                 
more  hearings on  Medicaid than  anything  with the  exception                                                                 
of Marijuana  of which  there had been  about 125 hearings.  He                                                                 
believed  that DHSS had  demonstrated that  they would  be able                                                                 
to save  $600 million  in state  money over  the following  six                                                                 
years.  He did not  agree with  dragging the  issue out  in the                                                                 
middle  of a  fiscal crisis.  He  suggested that  by  expanding                                                                 
Medicaid  money  would be  freed  up to  spend in  other  areas                                                                 
such   as   education,   children's    services,   and   senior                                                                 
services.  He opined  that  blocking  Medicaid without  a  bill                                                                 
through  Item 5 was not  the right course  to take,  especially                                                                 
with the potential savings of $600 million.                                                                                     
                                                                                                                                
9:22:58 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:23:18 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Neuman  asked  if there  was  further  discussion  on                                                                 
Item 5.                                                                                                                         
                                                                                                                                
Representative Gara MAINTAINED his OBJECTION.                                                                                   
                                                                                                                                
A roll call vote was taken on Item 5.                                                                                           
                                                                                                                                
IN FAVOR:  Representative    Thompson,    Senator    MacKinnon,                                                                 
Senator Kelly, Representative Neuman                                                                                            
OPPOSED: Senator Olson, Representative Gara                                                                                     
                                                                                                                                
The MOTION PASSED (House 2/1, Senate 2/1).                                                                                      
                                                                                                                                
9:24:01 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:24:38 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Neuman asked if there was  any objection to Item 1 and                                                                 
Item 9.                                                                                                                         
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
The  action closed  the  conferencable  items  1, 5,  and 9  in                                                                 
the  Language  section of  the  budget.  [Note: Representative                                                                  
Gara reconsidered and objected. See immediately below.]                                                                         
                                                                                                                                
Representative Gara  OBJECTED to  Item 9.  [Representative Gara                                                                 
reconsidered  and objected  for  the purpose  of reviewing  the                                                                 
items].                                                                                                                         
                                                                                                                                
Co-Chair Neuman  allowed the objection  but wanted to  keep the                                                                 
meeting moving.                                                                                                                 
                                                                                                                                
Representative Gara remarked that he  was trying to keep up but                                                                 
noted that  it was the first  time he had seen the  cut sheets.                                                                 
He relayed  that Item 9 addressed  the issue as to  whether the                                                                 
local communities  were  going to receive  cruise ship  revenue                                                                 
that they were  statutorily entitled to or if there  would be a                                                                 
delay. He  could not decipher  what was being proposed  in Item                                                                 
9.                                                                                                                              
                                                                                                                                
Co-Chair Neuman commented that  Representative Gara was looking                                                                 
at the incorrect item number. He  should be looking at Item 10.                                                                 
He directed Mr. Teal to review Item 9.                                                                                          
                                                                                                                                
Mr. Teal explained Item 9 affected  aviation fuel. In the House                                                                 
version  the  appropriation  of $200  thousand  distributed  to                                                                 
communities came  out of the  general fund. It turned  out that                                                                 
the $200 thousand  was not general fund  money because aviation                                                                 
tax collections  were dedicated  to be  used only  at airports.                                                                 
The  Senate  language took  the  funds  from the  general  fund                                                                 
portion and  moved it  into Section B  and stipulated  that the                                                                 
$200  thousand  would  be  refunded   from  the  surcharge.  He                                                                 
concluded  that it  was the  same money,  the same  communities                                                                 
receiving the money,  and the proper source of  the money being                                                                 
identified.                                                                                                                     
                                                                                                                                
Representative  Gara  thanked  Co-Chair Neuman  for  correcting                                                                 
him. He was concerned about Item 10 not Item 9.                                                                                 
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
The  action closed  the  conferencable  items  1, 5,  and 9  in                                                                 
the Language Sections of the budget.                                                                                            
                                                                                                                                
9:27:08 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:28:07 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Kelly MOVED  to ADOPT the following  in the Language                                                                 
Section:  Item  10  and  to  ADOPT  Amendment  29-GH1780\F.A.7                                                                  
Wallace  4/16/15, which  includes the  original House  language                                                                 
and a new subsection.                                                                                                           
                                                                                                                                
     Page 80, following line 23:                                                                                                
                                                                                                                                
     Insert new subsections to read:                                                                                            
                                                                                                                                
     "(c)  The amount necessary  to pay  the first seven  ports                                                                 
     of  call  their  share  of  the  tax  collected  under  AS                                                                 
     43.52.220   in  calendar   year  2015   according   to  AS                                                                 
     43.52.230(b),    estimated    to   be   $15,500,000,    is                                                                 
     appropriated  from  the commercial  vessel  passenger  tax                                                                 
     account  (AS 43.52.230(a))  to the  Department of  Revenue                                                                 
     for  payment to  the ports  of  call for  the fiscal  year                                                                 
     ending June 30, 2016.                                                                                                      
                                                                                                                                
     (d)  If  the  amount  available  for appropriation   under                                                                 
     (c)  of this section  is less than  $15,500,000, then  the                                                                 
     appropriation   made  in (c)  of  this  section  shall  be                                                                 
     reduced in proportion to the amount of the shortfall."                                                                     
                                                                                                                                
Co-Chair  Neuman OBJECTED  for the purpose  of explanation.  He                                                                 
directed Mr. Teal to describe the amendment.                                                                                    
                                                                                                                                
Mr.  Teal  explained  that  Section   C  was  included  in  the                                                                 
House.  It paid  the communities'  ports  of  call their  share                                                                 
of  what  was referred   to as  the  "Cruise  Ship  Head  Tax."                                                                 
Under  Section D,  a new section,  the payments  were  prorated                                                                 
to  the  ports  of  call  if  the  balance  in  the  fund  plus                                                                 
calendar  year  2015  revenue   was insufficient   to  pay  all                                                                 
communities  their  share  of  collection.   It  was  prorating                                                                 
language.                                                                                                                       
                                                                                                                                
Co-Chair Neuman WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
Representative  Gara  OBJECTED.  He and  asked Mr.  Teal  about                                                                 
Section  D. He understood  prorating  if cruise  ship head  tax                                                                 
revenue  was  less  than  $15.5  million.  He  wondered  if  he                                                                 
should  be concerned  about any  other appropriation  from  the                                                                 
cruise ship head tax that he did not see in the amendment.                                                                      
                                                                                                                                
Mr. Teal  responded  that there  was no  appropriation  listed.                                                                 
The  amendment simply  prorated  the  $15.5 million.  He  added                                                                 
that  there might  be  other  appropriations  of the  head  tax                                                                 
money.   In  general,   if  the   ports  of   call  money   was                                                                 
distributed   with  money  left   over,  the  funds   could  be                                                                 
appropriated  to  communities for  capital  projects.  However,                                                                 
the specific section made no appropriation.                                                                                     
                                                                                                                                
Senator  MacKinnon commented  that  there was  an issue  inside                                                                 
of the  account which was  the reason  for the Senate  flagging                                                                 
it for  further discussion.  She explained  that the state  was                                                                 
advancing  money  prior  to the  cruise  ship tax  money  being                                                                 
received  by  the state.  It  was overestimated  in  the  prior                                                                 
year  in   receipts  to  other   communities.  Section   D  was                                                                 
clarifying  that  if  $15.5  million  was  received,  it  would                                                                 
then be  distributed  to the ports  of call.  If the money  was                                                                 
not received  the  money would  be prorated.  To her  knowledge                                                                 
there were  no other places  the particular  money was  used to                                                                 
somehow  short communities.  The problem  became an issue  when                                                                 
the   state  was   confronted   with  a  fiscal   deficit   and                                                                 
continued  to  draw  from its  savings.  In  other  words,  the                                                                 
state  was  advancing   general  funds  and  anticipating   and                                                                 
waiting  for  the taxes.  She  would be  continuing  to  follow                                                                 
the issue  to try to  resolve it in  the following legislative                                                                  
session.                                                                                                                        
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
Senator  Olson stated  that it  was his understanding  that  it                                                                 
was an  internal issue  that the  state was  trying to  address                                                                 
making  sure  that  there were  no  real  objections  from  the                                                                 
communities involved.                                                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
9:32:19 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:33:16 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Kelly MOVED to ADOPT the following in the Language                                                                   
Section and to ADOPT Amendment 29-GH1780\F.A.17 Wallace                                                                         
4/25/15, which addressed Language Items 6 and 11:                                                                               
                                                                                                                                
     Page 77, lines 5 - 10:                                                                                                     
                                                                                                                                
     Delete all material and insert:                                                                                            
                                                                                                                                
     "(c)  The sum  of $157,000,000  is appropriated  from  the                                                                 
     in-state  natural  gas  pipeline  fund (AS  31.25.100)  to                                                                 
     the public education fund (AS 14.17.300).                                                                                  
                                                                                                                                
     (d)  The  amount   necessary,  after  the  appropriations                                                                  
     made  in (c) of this  section and  in sec. 28(c),  ch. 16,                                                                 
     SLA  2014,  as  amended  by  sec. 30  of  this  Act,  when                                                                 
     added  to the  balance of  the public  education fund  (AS                                                                 
     14.17.300)   on   June   30,   2015,   estimated   to   be                                                                 
     $950,555,700,  to  fund the  total amount  for the  fiscal                                                                 
     year  ending  June  30,  2016,  of  state  aid calculated                                                                  
     under  the public  school  funding formula  under AS  14.l                                                                 
     7.410(b)  multiplied   by  0.9859,  is appropriated   from                                                                 
     the  general  fund  to  the  public   education  fund  (AS                                                                 
     14.17.300).                                                                                                                
                                                                                                                                
     (e)  If the amount  of the  appropriation  made in (c)  of                                                                 
     this    section   is   less    than   $157,000,000,    the                                                                 
     appropriation   made  in (d)  of  this  section  shall  be                                                                 
     reduced  on  a  dollar-for-dollar   basis,  equal  to  the                                                                 
     amount of the reduction in (C) of this section."                                                                           
                                                                                                                                
     Reletter the following subsections accordingly.                                                                            
                                                                                                                                
     Page 80, line 29, following "Sec. 30.":                                                                                    
                                                                                                                                
     Insert "PUBLIC EDUCATION FUND."                                                                                            
                                                                                                                                
     Page 80, line 30:                                                                                                          
                                                                                                                                
     Delete "$1,002,568,100"                                                                                                    
     Insert "$77,008,600"                                                                                                       
                                                                                                                                
     Page81, line9:                                                                                                             
     Delete all material.                                                                                                       
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 81, line 10:                                                                                                          
     Delete "secs. 33 and 34"                                                                                                   
     Insert "sec. 33"                                                                                                           
                                                                                                                                
Representative Gara OBJECTED.                                                                                                   
                                                                                                                                
Co-Chair  Neuman directed  Mr. Teal to  describe the  amendment                                                                 
to the committee.                                                                                                               
                                                                                                                                
Mr.  Teal directed  the  committee members  and  the public  to                                                                 
refer  to  the spreadsheet  at  the  back  of the  amended.  He                                                                 
suggested  that the  spreadsheet  went in  chronological  order                                                                 
more  than in  the amendment  itself.  On the  spreadsheet  the                                                                 
$1.249  billion shown  on line  1 was  a projected  balance  of                                                                 
the Public  School Trust  Fund prior to  any amendments  on the                                                                 
FY  15  operating  budget.  The  amount  was  intended  to  pay                                                                 
foundation  and  pupil  transportation  costs  in  FY  16.  The                                                                 
state  forward funded  a year.  He continued  that lines  2 and                                                                 
3 reflected  the action  in Amendment  F.A.17  on lines 21  and                                                                 
22.  In  looking  at  the  amendment  it  showed  that  it  was                                                                 
replacing  $1.02  billion  with  $77 million.  It  reduced  the                                                                 
deposit  in FY  15 that  was made  to the Public  School  Trust                                                                 
Fund  to $77  million eliminating  the  deficit for  FY 15.  He                                                                 
added that  the $1.125  billion reduction  gave an FY 15  year-                                                                 
end   balance  of   $123  million   and  also   reflected   the                                                                 
beginning  balance  in  FY  16  on  line  4.  He  moved  on  to                                                                 
explain  line  5.A  that  showed   the  full  projected  FY  16                                                                 
foundation  amount,  $1.168 billion.  On  line 5B  it showed  a                                                                 
proration  percentage of  98.59 percent.  He explained  that on                                                                 
line  5.C the  formula would  be  short-funded  by about  $16.5                                                                 
million  if it were  prorated to  the 98.59  percent. Line  5.D                                                                 
showed  that  the  amount  distributed   in  FY  16  to  school                                                                 
districts  via the  foundation  formula would  be about  $1.152                                                                 
billion.  If line 6 was  added, pupil  transportation costs  of                                                                 
$79.2  million,  the total  would  equal $1.231  billion  shown                                                                 
on line  7. He furthered  that with the  FY 15 balance  on line                                                                 
4, the  FY 16  balance needed  to  be about  $1.108 billion  as                                                                 
depicted  on line  8. The  money came  from  two sources;  $157                                                                 
million  came from  Alaska  Stand  Alone Pipeline  (ASAP)  fund                                                                 
code 1229  shown on line  9 which corresponded  to lines  3 and                                                                 
4 on  Amendment  F.A.17. He  pointed out  that line  10 was  an                                                                 
estimate  of the general  funds needed  to fund the  foundation                                                                 
formula at  98.59 of full  funding which  was shown on  lines 5                                                                 
through  10 of  the amendment.  The  effective date  of the  FY                                                                 
16  deposit changed  from  December  1st  to July  1st  because                                                                 
when  there  was  a  balance  carried  forward  the  cash  flow                                                                 
would  have survived  with a  December 1st  date but  currently                                                                 
needed to  be the first  day of the fiscal  year. It needed  to                                                                 
be on  hand in order  to have  the money  for distribution.  He                                                                 
directed  committee members  to  turn to the  amendment  itself                                                                 
on  lines  11  through   13  in  Section  E.  The   lines  were                                                                 
contingency  language that  reduced  funding dollar-for-dollar                                                                  
if   the  $157   million   appropriated   in  Section   C   was                                                                 
unavailable.  He  concluded that  the  FY 15  appropriation  to                                                                 
the  public  education  was rescinded  in  order  to  eliminate                                                                 
the  fiscal  gap.  In FY  16  education  was  funded  at  98.59                                                                 
percent  of  full  funding  leaving   a  zero  balance  in  the                                                                 
Public School Trust Fund at the end of FY 16.                                                                                   
                                                                                                                                
Representative  Gara  spoke to  his objection.  He wondered  if                                                                 
the amendment  eliminated  all forward  funding for  education.                                                                 
He asked if the forward funding would be at zero.                                                                               
                                                                                                                                
Mr. Teal responded affirmatively.                                                                                               
                                                                                                                                
Representative   Gara  noticed  that  much  of  the   amendment                                                                 
affected  the  current  budget   year.  He  asked  whether  the                                                                 
change  in FY  15  in education  funding  affected  the  amount                                                                 
that was appropriated to schools during FY 15 at all.                                                                           
                                                                                                                                
Mr. Teal responded in the negative.                                                                                             
                                                                                                                                
Representative   Gara  relayed   his  understanding   was  that                                                                 
instead  of fully  funding what  was passed  the previous  year                                                                 
the legislature  would be  funding education  at 98.59  percent                                                                 
which  equated to  a $16.4 million  reduction  in K-12  funding                                                                 
in addition  to the $32  million reduction  made in an  earlier                                                                 
budget. He asked Mr. Teal if he was correct.                                                                                    
                                                                                                                                
Mr. Teal answered in the affirmative.                                                                                           
                                                                                                                                
Representative   Gara   believed   he   understood   what   was                                                                 
happening  and had  two objections.  First,  he suggested  that                                                                 
by  forward  funding  the  state  had seed  money  of  over  $1                                                                 
billion  to  help   the  state  get  through  tough   financial                                                                 
years.  In the  budget  before the  committee  the legislature                                                                  
was eating  up the full  $1.2 billion so  that it would  not be                                                                 
available  in future lean  years. If the  state maintained  the                                                                 
$1.2  billion it  would  be able  to  use $50  million  dollars                                                                 
here  or  there  until  the  state  came  out  of  its  current                                                                 
fiscal  crisis.  By  spending   the entire   $1.2  billion  the                                                                 
state had  essentially removed  a tool  for adequately  funding                                                                 
education.                                                                                                                      
                                                                                                                                
Representative   Gara   relayed   his  second   objection.   He                                                                 
pointed  out that the  $16.4 million reduction  in addition  to                                                                 
the $32  million reduced  previously equated  to a $48  million                                                                 
reduction  for the state's  public schools.  He opined  that it                                                                 
was  a devastating  amount  of funding  cuts.  Although he  was                                                                 
well  aware of  the state's  fiscal  crisis he  believed  there                                                                 
were  smarter   ways  to  deal   with  it.  He  suggested   the                                                                 
possibility  of  saving  the  state  $6  million  by  expanding                                                                 
Medicaid.  He also  spoke of oil  tax reform.  He claimed  that                                                                 
currently  the state was  paying out $650  million more  in tax                                                                 
credits  over the  following two  years to  oil companies  than                                                                 
what the  state was  receiving  in production  tax revenue.  He                                                                 
attributed this to the hole in the state's budget.                                                                              
                                                                                                                                
Vice-Chair  Kelly interjected  that he had  heard enough  about                                                                 
oil  tax credits.  He opined  that  the discussion  was  almost                                                                 
always disingenuous.                                                                                                            
                                                                                                                                
9:42:32 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:44:05 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Neuman asked Representative  Gara  if he had  another                                                                 
question.                                                                                                                       
                                                                                                                                
Representative   Gara  responded   that  he  did  not   have  a                                                                 
question  but  commented  that  with  a total  $48  million  in                                                                 
education  reductions  in the  current  year it  equaled  close                                                                 
to a  5 percent  cut in education  funding.  He suggested  that                                                                 
the reductions  combined  with a lack  of public commitment  to                                                                 
education  was a  recipe for  parents  to leave  the state.  He                                                                 
acknowledged  that  there  was  a  philosophical  disagreement                                                                  
between  legislators.  He did  not  believe education  was  the                                                                 
place  to cut claiming  there were  other areas  of the  budget                                                                 
that could be decreased.                                                                                                        
                                                                                                                                
Co-Chair  Neuman  asked  if  the  $32  million   referenced  by                                                                 
Representative   Gara  was   money  outside   of  the   funding                                                                 
formula.  He wondered  if  the reduction  outside  the  formula                                                                 
was part of Governor Walker's budget recommendations.                                                                           
                                                                                                                                
Mr.  Teal  responded  that  it  was  part   of the   governor's                                                                 
original  budget. It was  a complicated  question. He  supposed                                                                 
that  the  $32  million  could  not be  seen  as  a  reduction,                                                                 
rather it was a planned increase that did not occur.                                                                            
                                                                                                                                
Vice-Chair  Kelly stated  that he was going  to point out  that                                                                 
it  was  a  planned  increase.   He  liked  the  way  Mr.  Teal                                                                 
phrased  it.  He   added  that  the  $16.5  million   was  also                                                                 
anticipating  a  planned  increase  in  the  $50  base  student                                                                 
allocation  (BSA)  that was  passed in  the previous  year.  It                                                                 
was not  a one-to-one. He  had been trying  to figure out  some                                                                 
general  numbers. In the  previous year  when the price  of oil                                                                 
was $120  per barrel the  legislature voted  for a $50  million                                                                 
BSA  increase  and some  other  additional  increases.  He  did                                                                 
not think  the legislature  would have  voted affirmatively  if                                                                 
the  price  of oil  had  been $45  per  barrel.  The  increases                                                                 
were being  pulled  back. He  also mentioned  that the  forward                                                                 
funding  of education  had  not  been spent,  it  was just  not                                                                 
going to  be recharged.  In most  of the budgets  there  was an                                                                 
additional  $1.1  million  or  $2  billion  and  education  was                                                                 
forward-funded  a  year.  However, the  legislature  would  not                                                                 
be doing  so in  the current  year  because the  state did  not                                                                 
have the  money. One  of the  reasons the state  could not  get                                                                 
the  money was  due  to not  having  a  3/4 majority  vote.  He                                                                 
suggested  it  might be  something  to  add to  the  Minority's                                                                 
list so that the legislature could forward fund education.                                                                      
                                                                                                                                
Senator  Olson asked  about line  9. It was  his understanding                                                                  
that  for  some  reason  if  there   was  a  shortfall  in  the                                                                 
following  year's education  funding  that $157  million  would                                                                 
be taken from the ASAP project.                                                                                                 
                                                                                                                                
Mr. Teal  explained that  the intention  of Section D was  that                                                                 
the state  would take the  balance carried  forward from  FY 15                                                                 
(projected   to  be   about  $123   million),   add  the   $157                                                                 
appropriated  in Section  C, and  add general  funds to get  to                                                                 
98.59 percent of the full formula funding.                                                                                      
                                                                                                                                
Senator  Olson wanted  to clarify  that $157  million would  be                                                                 
gone from the ASAP project.                                                                                                     
                                                                                                                                
Mr.  Teal indicated  that  Section  C  took $157  million  from                                                                 
the  ASAP project  and appropriated  it  to the  Public  School                                                                 
Trust Fund.                                                                                                                     
                                                                                                                                
Vice-Chair  Kelly added that  money would  be left in the  ASAP                                                                 
account to continue working towards a pipeline.                                                                                 
                                                                                                                                
Co-Chair  Neuman believed  that instead  of further  reductions                                                                 
from  the  general  fund  there  would  be  less  general  fund                                                                 
money  added plus  the $157  million  plus the  other funds  to                                                                 
get  to   the  appropriation   amount   needed  for   education                                                                 
funding.                                                                                                                        
                                                                                                                                
Representative   Gara  declared   that   he  would  be   voting                                                                 
against  the  amendment.   He wanted   to  know  whether  there                                                                 
would  be a chance  to make  comments and  to direct  questions                                                                 
to Mr.  Teal at the end.  He wanted to  further understand  the                                                                 
overall impact of the budget.                                                                                                   
                                                                                                                                
Co-Chair  Neuman  encouraged  Representative  Gara  to ask  his                                                                 
questions.                                                                                                                      
                                                                                                                                
Representative  Gara did  not agree with  the characterization                                                                  
that there  were no  cuts to  education. In  the previous  year                                                                 
the  one-time   grant  money  equaled   $43  million.   In  the                                                                 
current  year it was proposed  at $32  million, an $11  million                                                                 
reduction.  He   viewed  it  as  an  offset  to   the  $50  BSA                                                                 
increase  in the budget.  He continued that  by going from  $43                                                                 
million  to $32  million  in the  last year's  education  bill,                                                                 
education  was basically  flat  funded. He  specified that  $32                                                                 
million  and $18  million  in reductions,  $50  million  total,                                                                 
equated  to  a $200  reduction  per  student  since  the  prior                                                                 
year. He could not agree to the cuts.                                                                                           
                                                                                                                                
Representative  Gara mentioned  hearing  discussions about  the                                                                 
Constitutional  Budget  Reserve (CBR)  but the  current  budget                                                                 
remained  billions   of  dollars  short-funded   based  on  the                                                                 
anticipated revenue. He asked if he was accurate.                                                                               
                                                                                                                                
Mr.  Teal  asked  Representative  Gara  to clarify  if  he  was                                                                 
talking about FY 15 or FY 16.                                                                                                   
                                                                                                                                
Representative Gara responded, "FY 16."                                                                                         
                                                                                                                                
Mr. Teal  reported that  the FY 16 budget  was short-funded  by                                                                 
approximately $3.2 billion.                                                                                                     
                                                                                                                                
Representative   Gara  remarked  that  the  budget  before  the                                                                 
committee  had approximately  $3.2 billion  in excess  expenses                                                                 
versus anticipated revenue. He asked if he was correct.                                                                         
                                                                                                                                
Co-Chair  Neuman clarified  that the  budget  had a deficit  of                                                                 
over  $3 billion  because  of the  loss  of revenue  coming  to                                                                 
the state due to low oil prices.                                                                                                
                                                                                                                                
Vice-Chair  Kelly remarked  that the budget  the committee  was                                                                 
currently  putting together  in  the meeting  would reflect  an                                                                 
approximate   cut  of  $822  million  cut  from  the   previous                                                                 
year's  budget.   He  speculated  that  if  the  budgets   were                                                                 
placed  side-by-side  Mr. Teal  would argue  that it  reflected                                                                 
a $1.2 billion reduction.                                                                                                       
                                                                                                                                
Representative Gara maintained his objection.                                                                                   
                                                                                                                                
A  roll call  vote  was  taken  on Amendment  29-GH1780\F.A.17                                                                  
Wallace 4/25/15.                                                                                                                
                                                                                                                                
IN FAVOR:  Senator   MacKinnon,    Representative     Thompson,                                                                 
Senator Kelly, Representative Neuman                                                                                            
OPPOSED: Representative Gara, Senator Olson                                                                                     
                                                                                                                                
The MOTION PASSED (House 2/1, Senate 2/1).                                                                                      
                                                                                                                                
9:52:47 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:54:15 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Neuman called the meeting back to order.                                                                               
                                                                                                                                
Vice-Chair Kelly MOVED  to ADOPT the following  in the Language                                                                 
Section  and  to   ADOPT  Amendment   29-GH1780\F.A.2   Wallace                                                                 
4/16/15,  relating to  the Constitutional  Budget Reserve  Fund                                                                 
and  Higher Education  Investment  Fund,  which  addresses  new                                                                 
Language Item 13:                                                                                                               
                                                                                                                                
     Page 1, line 2, following "appropriations;":                                                                               
                                                                                                                                
     Insert   "making  appropriations   under  art.   IX,  sec.                                                                 
     17(c),  Constitution  of  the State  of Alaska,  from  the                                                                 
     constitutional budget reserve fund;"                                                                                       
                                                                                                                                
     Page 80, following line 31:                                                                                                
                                                                                                                                
     Insert new bill sections to read:                                                                                          
     "* Sec. 31. CONSTITUTIONAL BUDGET RESERVE FUND.                                                                            
                                                                                                                                
     (a)  If  the  unrestricted  state  revenue  available  for                                                                 
     appropriation  in  fiscal  year  2015 is  insufficient  to                                                                 
     cover  the general  fund appropriations  that take  effect                                                                 
     in  fiscal  year 2015,  the amount  necessary  to  balance                                                                 
     revenue    and    general    fund    appropriations     is                                                                 
     appropriated   to  the  general   fund  from  the   budget                                                                 
     reserve  fund  (art.  IX,  sec. 17,  Constitution  of  the                                                                 
     State of Alaska).                                                                                                          
                                                                                                                                
     (b)  If  the  unrestricted  state  revenue  available  for                                                                 
     appropriation  in  fiscal  year  2016 is  insufficient  to                                                                 
     cover  the general  fund appropriations  that take  effect                                                                 
     in  fiscal  year 2016,  the amount  necessary  to  balance                                                                 
     revenue    and    general    fund    appropriations     is                                                                 
     appropriated   to  the  general   fund  from  the   budget                                                                 
     reserve  fund  (art.  IX,  sec. 17,  Constitution  of  the                                                                 
     State of Alaska).                                                                                                          
                                                                                                                                
     (c)  The unrestricted  interest  earned  on investment  of                                                                 
     general  fund balances  for the fiscal  years ending  June                                                                 
     30,  2015,  and June  30,  2016,  is appropriated  to  the                                                                 
     budget  reserve fund  (art. IX, sec.  17, Constitution  of                                                                 
     the  State  of Alaska).  The  appropriation  made in  this                                                                 
     subsection   is   intended   to  compensate   the   budget                                                                 
     reserve  fund  (art.  IX,  sec. 17,  Constitution  of  the                                                                 
     State  of Alaska)  for  any lost  earnings  caused by  use                                                                 
     of   the  fund's   balance   to  permit   expenditure   of                                                                 
     operating   and  capital  appropriations   in  the  fiscal                                                                 
     years  ending  June  30,  2015,  and  June  30,  2016,  in                                                                 
     anticipation   of  receiving  unrestricted   general  fund                                                                 
     revenue.                                                                                                                   
                                                                                                                                
     (d)  The  appropriations  made  in  (a)  and (b)  of  this                                                                 
     section   are   made    under   art.   IX,   sec.   17(c),                                                                 
     Constitution of the State of Alaska.                                                                                       
                                                                                                                                
     *Sec.  32.  HIGHER  EDUCATION  INVESTMENT  FUND.  If,  and                                                                 
     only  if, the appropriation  made in  sec. 31 (a)  of this                                                                 
     Act  fails to  pass  upon an  affirmative  vote of  three-                                                                 
     fourths   of   the   members   of  each   house   of   the                                                                 
     legislature    and   the   unrestricted   state    revenue                                                                 
     available   for appropriation   in  fiscal  year  2015  is                                                                 
     insufficient  to  cover the  general  fund appropriations                                                                  
     that  take   effect  in  fiscal  year  2015,   the  amount                                                                 
     necessary    to  balance    revenue   and   general   fund                                                                 
     appropriations  is  appropriated  from the  Alaska  higher                                                                 
     education   investment   fund   (AS  37.14.750)   to   the                                                                 
     general fund."                                                                                                             
                                                                                                                                
      Renumber the following bill sections accordingly.                                                                         
                                                                                                                                
     Page 81, following line 7:                                                                                                 
                                                                                                                                
     Insert a new bill section to read:                                                                                         
     "*  Sec.  35.  CONTINGENCY.  The  appropriation  from  the                                                                 
     Alaska  higher education  investment  fund (AS  37.14.750)                                                                 
     made  in  sec.  32  of  this  Act  is  contingent  on  the                                                                 
     failure  of  the  appropriation  made  in  sec.  31(a)  of                                                                 
     this  Act  to pass  upon  an affirmative  vote  of  three-                                                                 
     fourths   of   the   members   of  each   house   of   the                                                                 
     legislature."                                                                                                              
                                                                                                                                
      Renumber the following bill sections accordingly.                                                                         
                                                                                                                                
     Page 81, line 8:                                                                                                           
                                                                                                                                
     Delete "Sections 30 and 32"                                                                                                
     Insert "Sections 30, 3 l(a), 3 l(c), and 34"                                                                               
                                                                                                                                
     Page 81, line 10:                                                                                                          
                                                                                                                                
     Delete "secs. 33 and 34"                                                                                                   
     Insert "secs. 36 and 37"                                                                                                   
                                                                                                                                
Representative Gara OBJECTED.                                                                                                   
                                                                                                                                
Co-Chair Neuman asked Mr. Teal to explain the amendment.                                                                        
                                                                                                                                
Mr. Teal  pointed out  that Subsection  A reflected  the  FY 15                                                                 
draw  or appropriation   from the  CBR  that required  a  super                                                                 
majority  vote to pass.  He relayed that  Section B was  the FY                                                                 
16  appropriation  from  the CBR  that  also required  a  super                                                                 
majority   vote  to  be  affective.   Section  C  appropriated                                                                  
earnings  or interest  to  the  CBR from  the general  fund  if                                                                 
money  was  drawn   from  the  CBR  for  cash  flow   purposes.                                                                 
Typically,  a draw  would occur  early in a  fiscal year  prior                                                                 
to revenue  flowing into  the state coffers.  If the state  had                                                                 
cash flow  needs it might  take a draw  from the CBR.  However,                                                                 
the  action was  not considered  a super  majority  draw if  it                                                                 
was paid  back  within a  year. In  order to  categorize it  in                                                                 
such  a way,  the draw  was considered  a loan  which  included                                                                 
an  appropriation  of  interest   from  the  general  fund.  It                                                                 
applied  to both FY  15 and FY16  and did  not require a  super                                                                 
majority vote.                                                                                                                  
                                                                                                                                
Mr.  Teal went  on to  explain  Section D.  He  stated that  it                                                                 
contained  the provision  that  outlined the  requirement  of a                                                                 
super majority  vote for  Sections A and  B. Section 32  stated                                                                 
that if  there was a shortage  of revenue  to make the  general                                                                 
fund  appropriations   for  FY  15  the  amount  necessary   to                                                                 
balance  the general  fund  appropriations  would  come out  of                                                                 
the  Alaska Higher  Education  Investment  Fund.  As  mentioned                                                                 
earlier,  the  language  was  back-stop   language.  Since  the                                                                 
conference  committee  adopted  Amendment  F.A.17  the  state's                                                                 
deficit  should have been  eliminated because  it started  with                                                                 
about  a $3.8  billion  deficit.  He reported  that  there  was                                                                 
$2.8  billion in  the Statutory  Budget Reserve  (SBR)  leaving                                                                 
a deficit  of  approximately  $1 billion.  By  removing the  FY                                                                 
15 deposit  of $1.125 billion  from the  ` the state  currently                                                                 
had a  surplus projected  to be  about $125  million in  FY 15.                                                                 
He  was uncertain  if  the  amount would  be  sufficient  given                                                                 
the  volatility  of  oil  prices  and  revenue  currently.  The                                                                 
provision  would  appropriate  money  from  the  Alaska  Higher                                                                 
Education  Investment Fund  to fill a  deficit if it  occurred.                                                                 
Section  35 was  the contingency  language  that confirms  that                                                                 
Section  32  (the   draw  from  the  Alaska  Higher   Education                                                                 
Investment   Fund)  went   into  effect   only  if  the   super                                                                 
majority vote failed.                                                                                                           
                                                                                                                                
Representative Gara MAINTAINED his OBJECTION.                                                                                   
                                                                                                                                
Senator  Olson asked  Mr.  Teal about  Section  31,  Subsection                                                                 
C. He  wondered if the  provisions in  these sections had  been                                                                 
used in previous legislatures when there were shortfalls.                                                                       
                                                                                                                                
Mr. Teal  answered that  the language  had occurred ever  since                                                                 
2004.  In terms  of  draws  a legal  opinion  differentiated  a                                                                 
short  term cash flow  draw from  a true  super majority  draw.                                                                 
It  had  occurred   in  several  budgets  and  had   been  used                                                                 
frequently.                                                                                                                     
                                                                                                                                
Senator  Olson stated  since 2004  he believed  there had  been                                                                 
surpluses  in intervening  years  where  it was  not  necessary                                                                 
to  access  the  fund.  He  asked  for  verification  from  Mr.                                                                 
Teal.                                                                                                                           
                                                                                                                                
Mr.  Teal  confirmed  that in  most  of the  years  there  were                                                                 
surpluses. In 2004 and 2005 there were not surpluses.                                                                           
                                                                                                                                
Senator  Olson  asked  if  that  was  when  the  provision  was                                                                 
implemented.                                                                                                                    
                                                                                                                                
Mr. Teal responded, "Yes."                                                                                                      
                                                                                                                                
Representative  Gara  referred to  Subsection  C, the  interest                                                                 
section.  He  asked  how  much  money  would  be  transferred,                                                                  
roughly.                                                                                                                        
                                                                                                                                
Mr. Teal  commented  that it  was difficult  to say  currently.                                                                 
He claimed  that it  might be  zero. The short  term cash  flow                                                                 
draws from  the CBR might  not be accessible  because in  order                                                                 
to take  them the Department  of Revenue  and other  certifying                                                                 
authors  would  have to  indicate  that  there would  be  money                                                                 
available  to repay  the  draws. Conceivably,   they would  not                                                                 
be  able to  certify  that the  money  would be  available.  If                                                                 
there  were no  draws, there  would  be no interest.  If  draws                                                                 
were made,  essentially  borrowing, from  the CBR the  interest                                                                 
amount would  be minimal  in terms of  percentages. He  thought                                                                 
the  interest  rate  would  parallel  the  rate  at  which  the                                                                 
general fund earned money, approximately 1 percent.                                                                             
                                                                                                                                
Representative   Gara  asked  for  a  rough  dollar  amount  if                                                                 
there was a draw.                                                                                                               
                                                                                                                                
Mr. Teal  responded that  he could not  because it depended  on                                                                 
the  cash flow  needs. He  could not  predict  what they  would                                                                 
be in the future.                                                                                                               
                                                                                                                                
Representative   Gara   referred  to   Section   32  that   had                                                                 
language  which  allowed  money to  be  taken from  the  Alaska                                                                 
Higher  Education  Investment  Fund.  He  asked  what  for  the                                                                 
current balance of the fund.                                                                                                    
                                                                                                                                
Mr.  Teal   responded   that  there   was  approximately   $460                                                                 
million.                                                                                                                        
                                                                                                                                
Representative  Gara asked  if Section  32 would  only be  used                                                                 
if  the  state  budget  was  short  for FY  15.  He  wanted  to                                                                 
clarify whether Section 32 applied for FY 16.                                                                                   
                                                                                                                                
Mr. Teal responded in the affirmative.                                                                                          
                                                                                                                                
Representative  Gara  asked  Mr.  Teal  if  he  thought  a  CBR                                                                 
super  majority vote  was needed  to balance  the FY 16  budget                                                                 
currently before the committee.                                                                                                 
                                                                                                                                
Mr. Teal  answered that  the projected  deficit was about  $3.2                                                                 
billion  and   there  was  no   language  getting  money   from                                                                 
anywhere  else. The  budget was  simply short  $3.2 Billion  at                                                                 
present.                                                                                                                        
                                                                                                                                
Representative   Gara  restated  his  question.  He  asked  Mr.                                                                 
Teal if  he believed a  super majority  vote would be  required                                                                 
to access the CBR funds for FY 16.                                                                                              
                                                                                                                                
Mr.  Teal   stated  that  a  super   majority  vote   would  be                                                                 
required to access the needed amount from the CBR.                                                                              
                                                                                                                                
Representative   Gara  asked  if  there  was  any   other  fund                                                                 
besides  the CBR identified  in  the budget  to cover the  $3.2                                                                 
billion deficit.                                                                                                                
                                                                                                                                
Mr. Teal  responded  that Representative  Gara  had not  missed                                                                 
anything.                                                                                                                       
                                                                                                                                
Senator  Olson referred  to Section  31, Subsection  C where  a                                                                 
loan  was  essentially  being  taken  and paid  back  within  a                                                                 
year. He  wanted to know  what the consequences  would be  if a                                                                 
loan was not paid back within the year.                                                                                         
                                                                                                                                
Mr.  Teal did  not know.  He reiterated  that  the loans  could                                                                 
not be  made unless a  finance officer  could certify that  the                                                                 
money  would  be  available.  At  present,  a  finance  officer                                                                 
could not certify that the money would be available.                                                                            
                                                                                                                                
Senator  Olson shared his  concern about  being able to  access                                                                 
the money  and to be able  to repay it  within a year  based on                                                                 
current projections.                                                                                                            
                                                                                                                                
Mr. Teal  announced that  that was his  point; there might  not                                                                 
be interest payments because of an inability to draw funds.                                                                     
                                                                                                                                
Senator  MacKinnon   relayed  that  in  the  current   day  the                                                                 
Senate  Finance Committee  had talked  with the administration                                                                  
about a  cash deficiency  plan. In addition,  she believed  the                                                                 
administration  had set  aside the  10 year  projection on  how                                                                 
to  fund budgets.  She relayed  that  members  were waiting  to                                                                 
hear  from the  administration  about  what happened  if a  3/4                                                                 
vote  failed. It  was  her understanding  the  Majority's  main                                                                 
attempt  to achieve  a  3/4 vote  had  not been  successful  to                                                                 
date.  She furthered  that  the Senate  Finance  Committee  had                                                                 
left it  to the  administration  to define  to the legislature                                                                  
how to access the funds, in what manner and in what order.                                                                      
                                                                                                                                
Representative   Gara   expressed  particular   concern   about                                                                 
draining  or  tapping  into the  Higher  Education  Fund  which                                                                 
was   used    for   needs-based    and   merit-based    college                                                                 
scholarships.  He  thought  draining  the fund  was  premature.                                                                 
He  referred to  a memo  from the  administration  that  stated                                                                 
that for  FY 15 the state  had enough  funds to cover  expenses                                                                 
through  late August or  early September  2015. He did  not see                                                                 
a need  to  dip into  the Alaska  Higher  Education  Investment                                                                 
Fund at  present. He  opined that  the state  had enough  money                                                                 
For FY  15 to get through  the end of  August 2015. He  thought                                                                 
that  the   legislature  would   be  able  to  have   a  budget                                                                 
agreement  prior   to  the  end  of  August.  If  the   current                                                                 
amendment  passed  would  take  money from  the  Alaska  Higher                                                                 
Education  Investment  Fund  before the  legislature  would  be                                                                 
able  to  come  up   with  an  agreement  on  the   budget.  He                                                                 
concluded   that   the   ability   of   the   state   to   fund                                                                 
scholarships  would  be damaged.  He believed  the legislature                                                                  
would  be able  to come  to  an agreement  in short  order.  He                                                                 
saw no  reason to put  the Alaska Higher  Education  Investment                                                                 
Fund at risk under the amendment.                                                                                               
                                                                                                                                
Senator   MacKinnon    argued   that   Representative    Gara's                                                                 
statement  was  inaccurate.  She  reported  that the  only  way                                                                 
that  the Alaska  Higher  Education  Investment  Fund would  be                                                                 
touched was  if the FY  15 budget did  not balance out  between                                                                 
the reserves that were identified to close out FY 15.                                                                           
                                                                                                                                
Co-Chair  Neuman  asked  Mr.  Teal  if  Senator  MacKinnon  was                                                                 
correct.                                                                                                                        
                                                                                                                                
Mr. Teal  responded  affirmatively  and added  that he  thought                                                                 
there  was some  confusion over  FY 15  and FY  16. There  were                                                                 
only  two months  left in  FY 15 with  a projected  balance  of                                                                 
$125 million.  He  though the  state should  be safe.  However,                                                                 
given the  volatility  and uncertainty  of revenue projections                                                                  
the  provision   ensured   that  the  state   had  the   budget                                                                 
covered.   The  Alaska   Higher   Education   Investment   Fund                                                                 
currently  contained   approximately  $80  million   in  excess                                                                 
earnings  generated   by  the  balance  to  the  needs  of  the                                                                 
scholarships  and grants.  If there  was money  taken form  the                                                                 
Alaska Higher  Education  Investment Fund  less than that  [$80                                                                 
million]  should not impact  either grants  or scholarships  in                                                                 
FY 16 or in the future.                                                                                                         
                                                                                                                                
Representative  Gara  relayed  that it  had been  very  clearly                                                                 
stated  by  the  administration   that  the  state  had  enough                                                                 
money  to fund state  operations  through August  15. He  still                                                                 
held  his position  that  the section  was unnecessary  to  the                                                                 
amendment.                                                                                                                      
                                                                                                                                
Representative Gara maintained his objection.                                                                                   
                                                                                                                                
Senator Olson asked to take a brief at ease.                                                                                    
                                                                                                                                
10:09:20 PM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:10:56 PM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Representative Gara MAINTAINED his OBJECTION.                                                                                   
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN   FAVOR:  Representative    Thompson,   Senator   MacKinnon,                                                                 
Senator Olson, Representative Neuman, Senator Kelly                                                                             
OPPOSED: Representative Gara                                                                                                    
                                                                                                                                
The MOTION PASSED (House 2/1, Senate 3/0).                                                                                      
                                                                                                                                
The action  closed the  conference-able  items in the  Language                                                                 
Sections of the budget.                                                                                                         
                                                                                                                                
10:11:42 PM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:12:14 PM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Kelly   MOVED  to  give  Legislative   Finance  and                                                                 
Legislative   Legal   the  ability   to  make   technical   and                                                                 
conforming    adjustments   to    the   Conference    Committee                                                                 
Substitutes for House Bill 72 and House Bill 73.                                                                                
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Vice-Chair  MOVED  to report  CCSHB 72  out of  Committee  with                                                                 
individual recommendations.                                                                                                     
                                                                                                                                
Representative  Gara  OBJECTED.  He  believed  he  had  already                                                                 
spoken to is objection.                                                                                                         
                                                                                                                                
Representative Gara MAINTAINED his OBJECTION.                                                                                   
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:  Senator MacKinnon,   Senator Olson,  Representative                                                                  
Thompson, Senator Kelly, Representative Neuman                                                                                  
OPPOSED: Representative Gara                                                                                                    
                                                                                                                                
The MOTION PASSED (House 2/1, Senate 3/0).                                                                                      
                                                                                                                                
Vice-Chair  MOVED  to report  CCSHB 73  out of  Committee  with                                                                 
individual recommendations.                                                                                                     
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Co-Chair   Neuman   Thanked   Vice-Chair    Kelly   and   James                                                                 
Armstrong  of his staff,  Senator MacKinnon  and Senator  Olson                                                                 
and  Representative   Thompson  and  Representative   Gara  and                                                                 
their  staff. He  also thanked  David  Teal,  Amanda Ryder  and                                                                 
the   exceptional  crew   at   the  Division   of  Legislative                                                                  
Finance.  He also thanked  Megan Wallace,  the drafter  of both                                                                 
bills  at  Legislative  Legal,  Pat  Pitney and  her  staff  at                                                                 
Office  of  Management   and  Budget,  the  Finance   Committee                                                                 
assistants  and secretaries,  and his staff,  Pete Ecklund  and                                                                 
Joan Brown.                                                                                                                     
                                                                                                                                
Co-Chair  Neuman  asked  if there  was  any other  business  or                                                                 
comments from Committee members.                                                                                                
                                                                                                                                
Representative   Gara  asked   about  the   section  on   union                                                                 
contracts,  Item 8.  He relayed  that it  referenced Section  9                                                                 
of HB  73. He  did not  recall there  being  anything on  union                                                                 
contracts  in HB  73, the  mental health  budget.  He asked  if                                                                 
he was correct.                                                                                                                 
                                                                                                                                
Mr. Teal  confirmed  that HB 73  was the  mental health  budget                                                                 
He  clarified that  the  language  paralleled the  language  in                                                                 
HB 72 even though it was not necessarily needed.                                                                                
                                                                                                                                
Representative  Gara  expressed  confusion.  He  recalled  that                                                                 
in prior  action  the committee  did  not approve  a number  of                                                                 
union  contracts. He  did not  know where  to find  them in  HB
73. He  asked that  if a  person were  to vote  in favor  of HB
73 would  they be  voting on  any of the  union contracts  that                                                                 
were addressed in prior committee actions.                                                                                      
                                                                                                                                
Mr.  Teal  answered  that  the  salary  adjustments   were  all                                                                 
removed  whether  they occurred  in HB  73. He  furthered  that                                                                 
there  might   be  some  mental   health  salary  adjustments.                                                                  
However,  those  were  not  tracked  separately.  The  language                                                                 
paralleled,  was  removed  from  both  bills,  and  the  salary                                                                 
adjustments applied across the board.                                                                                           
                                                                                                                                
Co-Chair  Neuman  clarified  that  he was  asking  for  closing                                                                 
comments before moving the bill.                                                                                                
                                                                                                                                
Vice-Chair Kelly MOVED to adjourn the Conference Committee.                                                                     
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CCS  HB 72  was REPORTED  out  of committee  with  a "do  pass"                                                                 
recommendation.                                                                                                                 
                                                                                                                                
CCS  HB 73  was REPORTED  out  of committee  with  a "do  pass"                                                                 
recommendation.                                                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:17:29 PM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:17 p.m.                                                                                         

Document Name Date/Time Subjects